<PAGE>
CIGNA MONEY MARKET FUND
INSTITUTIONAL CLASS PRINCIPAL UNDERWRITER:
CIGNA Financial Services, Inc.
280 Trumbull Street
One Commercial Plaza
Hartford, CT 06103
PROSPECTUS
MAY 1, 1998
(Revised November 15, 1998)
This Prospectus contains information about the institutional class of CIGNA
Money Market Fund. The Fund is a separate series portfolio of CIGNA Funds Group
(the "Trust"). The investment objective of the Fund 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 money market instruments.
This prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Additional information
about the Fund, contained in a Statement of Additional Information dated May 1,
1998, has been filed with the Securities and Exchange Commission and is
available upon request without charge by writing to the Fund at 100 Front
Street, Suite 300, Worcester, Massachusetts 01601. The Fund's telephone number
is (800) 528-6718. The Statement of Additional Information is incorporated by
reference into this prospectus. The Statement of Additional Information is not a
prospectus.
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PLEASE READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
The Fund's shares are not federally insured or guaranteed by the U.S.
Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other agency. Shares of the Fund involve investment risks, including the
possible loss of principal.
CIGNA MONEY MARKET FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<PAGE>
SUMMARY
The Fund is a diversified management investment company. This prospectus offers
the institutional class of the Fund.
There are risks involved with the Fund. A major change in interest rates or a
default on the Fund's investments could cause the value of your Fund's
investment to change.
The institutional class of the Fund is a "no-load" investment, which means there
are no sales charges or commissions. The institutional class of the Fund has no
12b-1 plan or deferred sales charges.
CIGNA Investments, the Fund's adviser, provides the Fund with investment advice
and other services. The Fund pays CIGNA Investments a management fee for the
management of investments and business affairs. For a discussion of these
services, please see "Management of the Fund."
The above information is qualified in its entirety by the detailed information
appearing elsewhere in this prospectus and the Statement of Additional
Information.
TABLE OF CONTENTS
PAGE
SUMMARY................................................................... 2
EXPENSE TABLE.............................................................. 3
FINANCIAL HIGHLIGHTS....................................................... 4
ABOUT THE FUND............................................................ 5
INVESTMENT PROGRAM......................................................... 5
INVESTMENT RESTRICTIONS.................................................... 7
PURCHASE AND REDEMPTION OF SHARES.......................................... 7
PRICING OF SHARES ......................................................... 9
MANAGEMENT OF THE FUND..................................................... 9
PERFORMANCE INFORMATION.................................................... 11
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.................................. 11
TAX MATTERS................................................................ 11
THE TRUST, ITS SHARES AND BOARD OF TRUSTEES................................ 12
APPENDIX - DESCRIPTION OF MONEY MARKET INSTRUMENTS......................... 14
2
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EXPENSE TABLE
The following Expense Table lists the transaction expenses and annual operating
expenses related to an investment in the institutional class of the Fund.
Shareholder transaction expenses are charges you pay when you buy, sell,
exchange or hold shares of the Fund. The expenses and fees set forth in the
Table are for the fiscal year beginning January 1, 1998.
MONEY MARKET FUND
SHAREHOLDER TRANSACTION EXPENSES
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<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of the offering price)............................................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of the offering price).................................... None
Deferred Sales Load (as a percentage of original purchase price or redemption proceeds as applicable)......................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)........................................................... None
Exchange Fee.................................................................................................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Money Market Fund
Institutional Class
Management Fees/1/...................................................... .35
12b-1 Fees.............................................................. NONE
Other Operating Expenses/2/ (Reflects expense limitation)............... .10
Total Fund Operating Expenses........................................... .45
(Reflects expense limitation. See Footnotes/1/ and /2/ below)
______________________
/1/For a more complete description of the Management Fees, see "Management of
the Fund." CIGNA Investments has voluntarily agreed to reimburse such portion of
its management fee as is necessary to cause the Total Fund Operating Expenses of
the institutional class of the Fund (exclusive of certain expenses) not to
exceed 0.45% of the institutional class' average daily net assets.
If this reimbursement is not sufficient to cause the Total Fund Operating
Expenses from exceeding 0.45%, CIGNA Investments has agreed to pay such other
expenses as is necessary to keep Total Fund Operating Expenses from exceeding
0.45%. These arrangements will continue in effect until April 30, 1999, and
afterwards to the extent described in the Fund's then current prospectus. To the
extent management fees are reimbursed or Fund expenses are paid by CIGNA
Investments, the total return to shareholders will increase. Total return to
shareholders will decrease to the extent management fees are no longer
reimbursed or expenses of a Fund are no longer paid.
/2/Total Fund Operating Expenses for the Money Market Fund for 1997, before
expense reimbursement, were 0.51% of its average daily net assets.
3
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EXAMPLE OF FUND EXPENSES:
The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return,
and (2) redemption at the end of each time period. As noted above, the Fund
charges no redemption fees of any kind.
MONEY MARKET FUND
INSTITUTIONAL CLASS
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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$ 5 $14 $25 $55
The purpose of the Expense Table is to assist the investor in understanding the
various costs and expenses that an investor will bear directly or indirectly.
For the purpose of the example, assume reinvestment of all dividends and
distributions. This example assumes that the estimated voluntary expense
limitations effective in 1998 would be in place for the entire periods
indicated. CIGNA Investments has reserved the right to terminate or revise these
limitations at any time after April 30, 1999. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The following financial highlights of the Fund for a share outstanding
throughout each period have been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report thereon was unqualified. This information
should be read in conjunction with the Fund's financial statements and notes
thereto, which are incorporated by reference in the Statement of Additional
Information and in this Prospectus, and which appears, along with the report of
PricewaterhouseCoopers LLP, in the Fund's' 1997 Annual Report to Shareholders.
For a more complete discussion of the Fund's performance, please see the Fund's
1997 Annual Report to Shareholders which may be obtained without charge by
writing to the Fund or calling (860) 726-3700.
<TABLE>
<CAPTION>
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YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
MONEY MARKET FUND (INSTITUTIONAL CLASS)
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income* 0.0513 0.0479 0.0516 0.0337 0.0237
Net realized and unrealized gains (losses) 0.0001 0.0001 0.0003 - -
on investments ------------- ------------- ------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 0.0514 0.0480 0.0519 0.0337 0.0237
------------- ------------- ------------- ------------- -------------
LESS DISTRIBUTIONS:
Distributions from net investment income (0.0513) (0.0479) (0.0516) (0.0337) (0.0237)
Distributions from realized capital gains (0.0001) (0.0001) (0.0003) - -
------------- ------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS (0.0514) (0.0480) (0.0519) (0.0337) (0.0237)
------------- ------------- ------------- ------------- -------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= =============
TOTAL INVESTMENT RETURN 5.27% 4.91% 5.33% 3.43% 2.39%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000 omitted) $ 171,065 $ 120,505 $ 1,034 $ 16,673 $ 20,508
Ratio of operating expenses to average
net assets 0.44% a 0.45%a 0.80%a 1.00% a 1.00% a
Ratio of net investment income to average
net assets 5.14% b 4.95%b 5.38%b 3.32% b 2.39% b
Portfolio turnover N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
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YEAR ENDED DECEMBER 31,
1992 1991 1990 1989 1988
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<S> <C> <C> <C> <C> <C>
MONEY MARKET FUND (INSTITUTIONAL CLASS)
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income* 0.0334 0.0561 0.0755 0.0861 0.0705
Net realized and unrealized gains (losses) - - - - -
on investments ------------- ------------- ------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 0.0334 0.0561 0.0755 0.0861 0.0705
------------- ------------- ------------- ------------- -------------
LESS DISTRIBUTIONS:
Distributions from net investment income (0.0334) (0.0561) (0.0755) (0.0861) (0.0705)
Distributions from realized capital gains - - - - -
------------- ------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS (0.0334) (0.0561) (0.0755) (0.0861) (0.0705)
------------- ------------- ------------- ------------- -------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= =============
TOTAL INVESTMENT RETURN 3.36% 5.75% 7.82% 8.96% 7.29%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (000 omitted) $ 25,808 $ 32,555 $ 41,818 $ 45,337 $ 47,825
Ratio of operating expenses to average
net assets 0.84% 0.81% 0.81% 0.77% 0.75%
Ratio of net investment income to average
net assets 3.35% 5.66% 7.55% 8.62% 7.04%
Portfolio turnover N/A N/A N/A N/A N/A
</TABLE>
a. Ratios of expenses to average net assets prior to reduction of advisory fee
were 0.51%, 0.69%, 1.21%, 1.11% and 1.02% for the years ended 12/31/97,
12/31/96, 12/31/95, 12/31/94 and 12/31/93, respectively.
b. Ratios of net investment income to average net assets prior to reduction of
advisory fee were 5.07%, 4.71%, 4.91%, 3.22% and 2.37% for the years ended
12/31/97, 12/31/96, 12/31/95, 12/31/94 and 12/31/93, respectively.
* Net investment income per share has been calculated in accordance with SEC
requirements, except that end of the year accumulated
undistributed/(overdistributed) net investment income has not been adjusted
to reflect current year permanent differences between financial and tax
accounting.
4
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ABOUT THE FUND
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The Fund is a separate series of shares of CIGNA Funds Group, a Massachusetts
business trust established by a Master Trust Agreement dated April 10, 1985, and
registered under the 1940 Act as an open-end management investment company. (See
"The Trust, Its Shares and Board of Trustees"). CIGNA Funds Group was formerly
known as CIGNA Annuity Funds Group. The Fund is a mutual fund, an investment
that pools shareholders' money and invests it toward a specified goal. As of
November 15, 1998, all of the shareholders of the Fund were companies affiliated
with CIGNA Corporation.
The Fund intends to qualify as a regulated investment company for Federal Income
Tax purposes. The Fund continuously offers new shares for sale and stands ready
to redeem its outstanding shares at their net asset value. The Fund's investment
adviser, CIGNA Investments, continuously reviews and, from time to time, changes
the portfolio holdings of the Fund in pursuit of the Fund's objective.
INVESTMENT PROGRAM
- ------------------
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 money market
instruments. The Fund intends to invest 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. Commercial paper is purchased primarily from U.S. issuers
but may be purchased from foreign issuers so long as it is denominated in U.S.
dollars. All of these instruments, including commercial loan participations, are
briefly described in the Appendix under "Description of Money Market
Instruments" and are described more fully in the Statement of Additional
Information.
Pursuant to procedures adopted by the Board of Trustees, the Fund may purchase
only high quality securities that 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 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.
5
<PAGE>
The Money Market 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 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. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of their
shareholders.
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 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 a 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
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 each 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.
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
6
<PAGE>
Investments has determined are creditworthy 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.
INVESTMENT RESTRICTIONS
- -----------------------
The Fund's investment objective and the investment restrictions listed below are
among the Fund's fundamental policies, that is, subject to change only by
shareholder approval. See the Statement of Additional Information for other
investment restrictions. All policies stated throughout this prospectus, other
than those identified as fundamental, can be changed without shareholder
approval.
The Fund may not:
1. 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 U.S. Government
securities including securities issued by its agencies and
instrumentalities (or repurchase agreements with respect thereto).
2. 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.
3. Concentrate 25% or more of its total assets in a particular industry.
Investing in cash or high quality money market instruments, for temporary
defensive purposes, securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or repurchase agreements
secured by these instruments shall not be considered investments in a
particular industry. In addition, the Fund may invest up to 100% of its
assets in the financial services industry.
4. Borrow money, issue senior securities, or pledge, mortgage or hypothecate
its assets, except that the Fund may borrow to the extent permitted by
the 1940 Act, and pledge, mortgage or hypothecate its assets as security
for borrowings.
PURCHASE AND REDEMPTION OF SHARES
- ---------------------------------
GENERAL INFORMATION
This prospectus offers shares of the institutional class of the Fund. You may
obtain information on other classes of the Fund by calling 1-800-528-6718.
INSTITUTIONAL CLASS SHARES
Institutional class shares of the Fund will be offered to employer-sponsored
retirement or savings plans, such as tax-qualified pension and profit-sharing
plans and 401(k) thrift plans, as well as 403(b) custodial accounts for
non-profit and charitable organizations; corporations; banks; trust companies;
savings and loan associations; broker-dealers; insurance companies; charitable
foundations; and other institutional investors.
7
<PAGE>
HOW TO PURCHASE SHARES
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.
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 (except for affiliates of CIGNA Corporation) must purchase shares
through CIGNA Financial Services, Inc. ("CFS"). Orders 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. A completed Application is required to establish a new brokerage
account. Purchase orders must be accepted by CFS. CFS reserves the right to
reject any purchase order.
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
RETIREMENT AND SAVINGS PLAN PARTICIPANTS.
Plan participants should contact their plan administrator for information on how
to redeem Fund shares.
BROKERAGE ACCOUNT REDEMPTIONS.
All other investors must redeem shares through their brokerage account with CFS.
A signature guarantee may be required before payment can be made on redemption
orders.
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, the investor 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 shares are issued before the
investor's check has cleared, the transmittal of any proceeds from the
redemption of the shares will occur upon clearance of the check, which may take
up to 15 days.
8
<PAGE>
The Fund reserves the right to suspend the right of redemption and to postpone
the date of payment upon redemption for up to seven days and for such other
periods as the 1940 Act or Securities and Exchange Commission ("SEC") may
permit.
TELEPHONE SERVICES
If you are a retirement or savings plan participant and have questions or want
information about your plan account, contact your plan administrator.
All other investors should contact their dealer representative.
PRICING OF SHARES
- -----------------
The net asset value of the Fund is calculated by the Fund's custodian, State
Street Bank and Trust Company ("State Street"), 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. 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 and on Good Friday, so long as
banks are open, and on any other day on which there is a sufficient degree of
trading in a Fund's investments that the current net asset value of its shares
might be materially affected. Portfolio securities and other assets are valued
on the basis of market quotations or, if quotations are not readily available,
by a method that the Trust's Board of Trustees believes accurately reflects fair
value. 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
Money market investments are generally 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 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
its shareholders prior to any such 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.
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, including 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 $60
billion. CIGNA Investments' mailing address is 900 Cottage Grove Road, Hartford,
Connecticut 06152.
The Trust, on behalf of the Funds, employs CIGNA Investments to manage the
investment and reinvestment of the assets of the Fund.
9
<PAGE>
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 Trust and the 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 an annual rate of 0.35% of the value of the
Fund's average daily net assets.
The Fund will bear its own expenses. Operating expenses for each Fund generally
consist of all costs not specifically borne by CIGNA Investments, including
investment management fees, fees for necessary professional and brokerage
services, costs of regulatory compliance, compensation of trustees not
affiliated with CIGNA Corporation and costs associated with maintaining legal
existence. Trust-wide expenses not attributable to any particular portfolio of
the Trusts will be allocated among the portfolios on a pro rata basis based upon
each portfolio's average net assets.
CIGNA Investments has voluntarily agreed, until April 30, 1999, and thereafter
to the extent described in the Fund's then-current prospectus, to reimburse the
Fund's institutional class 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) exceed 0.45% of the average daily net assets of the
class.
As long as this temporary voluntary expense limitation continues, it may lower
the Fund's expenses and increase its yield. CIGNA Investments retains the
ability to be repaid by a Fund if expenses fall below the specified limit prior
to the end of the fiscal year. Unless otherwise specified, reimbursement
arrangements can be terminated without notice.
The investment management fee payable by the Fund during 1997 and total Fund
expenses during 1997, both as a percentage of average daily net assets, were as
follows:
<TABLE>
<CAPTION>
TOTAL FUND
EXPENSES
(EXCLUDING
FEE WAIVER
INVESTMENT MANAGEMENT AND EXPENSE
FEE REIMBURSEMENT)
<S> <C> <C>
Money Market Fund (institutional class) .35% .51%
</TABLE>
CIGNA Investments personnel may invest in securities for their own account
pursuant to a code of ethics that establishes procedures for personal investing
and restricts certain transactions.
State Street serves as transfer agent and dividend disbursing agent for the
Fund. State Street is also custodian of the assets of the Fund.
From time to time, the Funds may pay brokerage commissions on portfolio
transactions to brokers who may be deemed to be affiliates of CIGNA Corporation
under the 1940 Act. See the Statement of Additional Information for further
details.
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DISTRIBUTOR
CFS acts as the principal underwriter and distributor of the Fund's shares
pursuant to a distribution agreement with the Funds. CFS will pay the cost of
printing and mailing prospectuses and sales literature to potential investors
and any advertising expenses incurred by it in connection with its distribution
of shares of the Fund.
PERFORMANCE INFORMATION
- -----------------------
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Mutual fund performance is commonly measured as
total return and/or yield.
Total return quotations will, unless otherwise indicated, be calculated
according to a standard formula described in regulations issued by the SEC. This
formula equates an amount invested in the Fund at the beginning of a stated
period to the value of that investment (assuming reinvestment of all dividends
and capital gains) at the end of the period. The resulting return quote is an
average annual total return across the stated period.
In addition, the Fund may calculate its total return pursuant to non-standard
formulas (such as a cumulative return across a stated period), provided that
standard return quotes for the one-, five- and ten-year periods (or from the
Fund's inception, if shorter) ending no earlier than the end of the last
calendar quarter are illustrated with equal prominence.
Yield quotations for the Fund will be calculated according to the applicable
standard formula described in regulations issued by the SEC. Yield refers to the
income generated by an investment in a fund over a given period of time,
expressed as an annual percentage rate. For the Money Market Fund, the
applicable formula is based on a stated seven-day period. The change in value of
a hypothetical pre-existing account across the stated period (assuming
reinvestment of dividends) is divided by the value of such an account at the
beginning of the period. The result is then multiplied by 365/7. This yield is
an annualized yield. The Fund may also calculate its effective annualized yield
by adding "1" to the annualized yield, raising the sum to a power equal to
365/7, and subtracting "1" from the result.
Also, the Fund may compare its performance in advertisements, sales literature
and reports to shareholders to applicable market indices, such as the Donoghue
Money Market Institutional Averages. The Fund may also compare its performance
to performance data of similar mutual funds as published by services such as
Lipper Analytical Services, Inc., Morningstar, Inc. and Donoghue's Money Fund
Average. The Fund may also include in performance information evaluations of the
Fund published by nationally recognized financial publications.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
- -----------------------------------------
The Fund declares dividends daily and distributes dividends monthly.
All such distributions will be automatically reinvested for you in shares of the
Fund.
TAX MATTERS
- ---------------------
The Fund intends to qualify under the Internal Revenue Code of 1986, as amended
(the "Code"), as a regulated investment company ("RIC") for each taxable year.
The Fund intends to satisfy requirements under the Code relating to the
distribution of net income so that, in general, the Fund will not be subject to
Federal income tax ("FIT").
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The Fund is subject to a nondeductible 4% excise tax if it does not meet certain
distribution requirements under the Code. The Fund intends to make sufficient
distributions to avoid this excise tax.
Distributions of net investment income and of any net short-term capital gain
are taxable as ordinary income to shareholders. Distributions of net capital
gain, if any, 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. The Fund does not expect to make any capital gain
dividends. Shortly after the end of each year, the Fund will inform shareholders
of the amount and FIT 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 if the value of Fund shares has changed.
Any gain or loss 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.
Tax-exempt shareholders will generally not be subject to FIT on amounts
distributed to them.
Pursuant to the Code and IRS regulations, the Fund will withhold FIT 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 FIT 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 Funds.
THE TRUST, ITS SHARES AND BOARD OF TRUSTEES
- -------------------------------------------
The Board of Trustees of the Trust is authorized in the Trust's Master Trust
Agreement to create new series of shares without the necessity of a vote of
shareholders of the Trust. The capitalization of the Trust consists solely of an
unlimited number of shares of beneficial interest with a par value of $0.001
each.
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.
Under the Master Trust Agreement no annual or regular meetings of shareholders
are required. Meetings of shareholders of a portfolio will be held from time to
time to consider matters requiring a vote of such shareholders in accordance
with the requirements of the 1940 Act, state law or the provisions of the Master
Trust Agreement. It is not expected that shareholder meetings will be held
annually.
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 a portfolio of the Trust. On any matter submitted
to a vote
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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 portfolio or class of shares, a separate vote of shareholders of that
portfolio or class would be required. Shareholders of a portfolio or class would
not be entitled to vote on any matter which does not affect that portfolio or
class but which would require a separate vote of another portfolio 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 such 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.
The Master Trust Agreement provides that the Trustees of the Trust shall hold
office during the existence of the Trust, except as follows: (a) any Trustee may
resign or retire; or (b) any Trustee may be removed by a vote of shareholders
holding not less than two-thirds of the outstanding shares of the Trust, or at
any time by written instrument signed by at least two-thirds of the Trustees and
specifying when such removal becomes effective. The Trustees are required to
call a meeting for the purpose of considering the removal of a person serving as
Trustee if requested in writing to do so by the holders of not less than 10% of
the outstanding shares of the Trust.
A majority of the Trustees is not affiliated with CIGNA Corporation or any of
its subsidiary companies. The Trustees meet quarterly to review the results of
the Fund, to monitor investment activities and practices, and to review and act
upon future plans for the Fund. The role of the Trustees is not to approve
specific investment purchases and sales, but rather to exercise a control and
review function.
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APPENDIX
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DESCRIPTION OF MONEY MARKET INSTRUMENTS
U.S. GOVERNMENT DIRECT OBLIGATIONS - Bills, notes, and bonds issued by the U.S.
Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES - Certain Federal agencies such as the
Government National Mortgage Association have been established 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.
BANKERS' ACCEPTANCES - A bill of exchange or time draft drawn on and accepted by
a commercial bank. It is used by corporations to finance the shipment and
storage of goods and to furnish dollar exchange. Maturities are generally six
months or less.
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.
TIME DEPOSITS - A non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market.
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 a Fund may invest in loans collateralized by mortgages on real
property. Each Fund will limit its investments in commercial loan participations
to those which are considered by the Trustees (with the advice of CIGNA
Investments) to be of comparable quality to permitted commercial paper
investments.
REPURCHASE AGREEMENTS - A repurchase agreement is a contractual undertaking
whereby 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 loan by a Fund to the issuer of the
agreement, a bank or securities dealer, with the U.S. Government security
serving as collateral for the loan.
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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. Such 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.
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CUSTODIAN AND TRANSFER AGENT:
State Street Bank and Trust Company
225 Franklin Street Boston,
Massachusetts 02110
CIGNA FUNDS GROUP
CIGNA MONEY MARKET FUND
INSTITUTIONAL CLASS
INVESTMENT ADVISER:
CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152
INDEPENDENT ACCOUNTANTS:
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
PRINCIPAL UNDERWRITER:
CIGNA Financial Services, Inc.
280 Trumbull Street MAY 1, 1998
One Commercial Plaza (REVISED NOVEMBER 15, 1998)
Hartford, CT 06103
