CIGNA FUNDS GROUP, 485APOS, 1999-09-15

CIGNA FUNDS GROUP
485APOS, 1999-09-15

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As filed with the Securities and Exchange Commission on September 15, 1999.

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. 61 |X|
__ -
and
_
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | |
-
_
Amendment No. 61 |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)
-
_
| | 60 days after filing pursuant to paragraph (a)(1)
-

_
| | on (date) pursuant to paragraph (a)(1)
-
_
|x| 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.

Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended.

___________________

PLEASE SEND COMMUNICATIONS TO: JEFFREY S. WINER
C/O CIGNA INVESTMENTS, INC.
900 COTTAGE GROVE ROAD, S-215, HARTFORD, CT 06152-2215
(860) 726-5576

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CIGNA FUNDS GROUP

________________________________________________________________________________
CIGNA CHARTER MUTUAL FUNDS/SM/

PROSPECTUS MONEY MARKET FUND
JANUARY 1, 2000 -----------------
CHARTER MONEY MARKET MUTUAL FUND

FIXED INCOME FUNDS
------------------
CHARTER HIGH GRADE FIXED INCOME MUTUAL FUND
CHARTER CORE PLUS FIXED INCOME MUTUAL FUND
CHARTER ULTRA CORE PLUS FIXED INCOME MUTUAL FUND
CHARTER EMERGING DEBT MUTUAL FUND

BALANCED FUND
-------------
CHARTER BALANCED MUTUAL FUND

EQUITY FUNDS
------------
CHARTER LARGE COMPANY STOCK-GROWTH MUTUAL FUND
CHARTER LARGE COMPANY STOCK-VALUE MUTUAL FUND
CHARTER S&P 500 INDEX MUTUAL FUND
CHARTER SMALL COMPANY STOCK-GROWTH MUTUAL FUND
CHARTER SMALL COMPANY STOCK-VALUE MUTUAL FUND
CHARTER INTERNATIONAL STOCK MUTUAL FUND

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.

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INTRODUCTION
- ------------

CIGNA CHARTER MUTUAL FUNDS ARE SERIES OF CIGNA FUNDS GROUP, A FAMILY OF MUTUAL
FUNDS. EACH SERIES, OR PORTFOLIO, HAS ITS OWN INVESTMENT STRATEGY AND
RISK/REWARD PROFILE. THIS PROSPECTUS DESCRIBES ALL OF THE CLASSES OF EACH FUND.

BECAUSE YOU COULD LOSE MONEY BY INVESTING IN THESE FUNDS, BE SURE TO READ THIS
PROSPECTUS CAREFULLY BEFORE INVESTING.

TABLE OF CONTENTS

PAGE NUMBER

Summary......................................................................
Bar Charts and Performance Tables............................................
Fees and Expenses of the Funds...............................................
Investment Information.......................................................
Management of the Funds......................................................
Pricing of Shares............................................................
Purchase and Redemption of Shares............................................
Dividends and Distributions..................................................
Tax Matters..................................................................
Financial Highlights.........................................................

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FUND SUMMARY
INVESTMENT SUMMARY

CHARTER MONEY MARKET MUTUAL INVESTMENT OBJECTIVE:
FUND
o 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.

PRINCIPAL INVESTMENT STRATEGIES:

o The fund invests exclusively in high-
quality short-term money market
instruments.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o A major change in interest rates or a
default on the fund's investments
could cause the value of your
investment in the fund to change.

o The fund is also subject to manager
risk, which is the chance that poor
security selection will cause the fund
to underperform other funds with
similar investment objectives

o 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.

CHARTER HIGH GRADE FIXED INCOME INVESTMENT OBJECTIVE:
MUTUAL FUND
o Seeks a high level of total return.

PRINCIPAL INVESTMENT STRATEGIES:

o The fund invests in fixed income
securities that, at the time of
purchase, are rated investment grade
by either Moody's Investor Service,
Inc. or Standard and Poor's or a
similar rating agency or, if unrated,
are judged by CIGNA Investments to be
of comparable quality.

o While seeking high total return, CIGNA
Investments, Inc. ("CIGNA
Investments") will also seek to

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maintain an average portfolio yield
consistent with a broad fixed income
index such as the Lehman Brothers
Aggregate Bond Index.

o CIGNA Investments will analyze market
themes, individual security structural
features, pricing, trading
opportunities and issuer credit
quality to select investments.

o CIGNA Investments may allocate fund
assets across different market sectors
and maturities.

o Up to 20% of fund assets may be
invested in foreign currencies.
Dollar denominated foreign securities
do not count against this limitation.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

The fund is subject to the following
principal investment risks:

o This fund's principal risk factor is
market risk.

o Market risk associated with bonds is
related to the level of interest
rates. Generally, as interest rates
rise, the market price of a bond
falls. (A 7% bond is less valuable
once interest rates have risen to 8%
and an investor can get a higher
return elsewhere.) As interest rates
fall, however, the market price of a
bond rises. This "inverse"
relationship is magnified for bonds
with longer maturities. (A bond's
maturity is the length of time
remaining before the borrower must pay
the bondholder the face amount of the
bond.)

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns

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from investment grade fixed income
securities will trail returns from
other asset classes or the overall
securities markets.

o Sector allocation risk, which is the
risk that returns from certain
sectors of fixed income securities
will trail the returns from other
sectors.

o Prepayment risk, which is the risk
that the issuer of a debt security
repays principal prior to a
security's maturity.

CHARTER CORE PLUS FIXED INCOME
MUTUAL FUND INVESTMENT OBJECTIVE:

o Seeks a high level of total return.

PRINCIPAL INVESTMENT STRATEGIES:

o The fund invests primarily in fixed
income securities that, at the time
of purchase, are rated investment
grade by either Moody's Investor
Service, Inc. or Standard and Poor's
or a similar rating agency or, if
unrated, are judged by CIGNA
Investments to be of comparable
quality.

o While seeking high total return,
CIGNA Investments will also seek to
maintain an average portfolio yield
consistent with a broad fixed income
index such as the Lehman Brothers
Aggregate Bond Index.

o The fund may invest up to 25% of its
assets in below investment-grade
bonds. These securities are commonly
called "junk bonds."

o CIGNA Investments will analyze market
themes, individual security
structural features, pricing, trading
opportunities and issuer credit
quality to select investments.

o CIGNA Investments may allocate fund
assets across different market
sectors and maturities.

o Up to 20% of fund assets may be
invested in foreign securities
denominated in foreign currencies.
Dollar denominated foreign securities
do not count against this limitation.

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PRINCIPAL RISKS OF INVESTING IN THE FUND:

The fund is subject to the following
principal investment risks:

o This fund's principal risk factor is
market risk.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from investment
grade and below investment-grade
fixed income securities will trail
returns from other asset classes or
the overall securities markets.

o Sector allocation risk, which is
the risk that returns from certain
sectors of fixed income securities
will trail the returns from other
sectors.

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o Prepayment risk, which is the risk
that the issuer of a debt security
repays principal prior to a
security's maturity.

CHARTER ULTRA CORE PLUS FIXED
INCOME MUTUAL FUND INVESTMENT OBJECTIVE:

o Seeks a high level of total return.

PRINCIPAL INVESTMENT STRATEGIES:

o While seeking high total return,
CIGNA Investments will also seek to
maintain an average portfolio yield
consistent with a broad fixed income
index such as the Lehman Brothers
Aggregate Bond Index.

o The fund may invest up to 35% of its
assets in below investment-grade
bonds. These securities are commonly
called "junk bonds."

o CIGNA Investments will analyze market
themes, individual security
structural features, pricing, trading
opportunities and issuer credit
quality to select investments.

o CIGNA Investments may allocate fund
assets across different market
sectors and maturities.

o Up to 25% of fund assets may be
invested in foreign securities
denominated in foreign currencies.
Dollar denominated foreign
securities do not count against this
limitation.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

The fund is subject to the following
principal investment risks:

o This fund's principal risk factor is
market risk.

o Market risk associated with bonds is
related to

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the level of interest rates.
Generally, as interest rates rise,
the market price of a bond falls. (A
7% bond is less valuable once
interest rates have risen to 8% and
an investor can get a higher return
elsewhere.) As interest rates fall,
however, the market price of a bond
rises. This "inverse" relationship
is magnified for bonds with longer
maturities. (A bond's maturity is
the length of time remaining before
the borrower must pay the bondholder
the face amount of the bond.)

o Compared to higher-quality debt
securities, below investment-grade
bonds involve greater risk of
default or price changes due to
changes in the credit quality of the
issuer. The value of below
investment-grade bonds often
fluctuates in response to company,
political or economic developments
and can decline significantly over
short periods of time or during
periods of general or regional
economic difficulty. During those
times, the bonds could be difficult
to value or sell. These risks are
greater for the Ultra Core Plus
Fixed Income Fund than the Core
Plus Fixed Income Fund, since the
Ultra Core Plus Fixed Income Fund
may invest a greater percentage of
its assets in below investment-grade
bonds.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Sector allocation risk, which is the
risk that returns from certain
sectors of fixed income securities
will trail the returns from other
sectors.

o Prepayment risk, which is that the
issuer of a debt security repays
principal prior to a security's
maturity.

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CHARTER EMERGING MARKET DEBT
MUTUAL FUND INVESTMENT OBJECTIVE:

o Seeks a high level of total return.

PRINCIPAL INVESTMENT STRATEGIES:

o The fund invests primarily in
sovereign bonds of emerging
economies.

o While seeking high total return,
CIGNA Investments will also seek to
maintain an average portfolio yield
consistent with a broad fixed income
index such as the JP Morgan Emerging
Markets Bond Index Plus.

o The fund may invest up to 35% of its
assets in emerging market corporate
bonds.

o The fund may invest up to 10% of its
assets in U.S. Government direct
obligations, U.S. Government
agencies' securities and U.S.
corporate bonds. U.S. Treasury
securities that collateralize Brady
Bonds do not count against this
limitation. o Up to 100% of fund
assets may be invested in foreign
securities denominated in foreign
currencies. Up to 30% of fund assets
may be invested in foreign
securities denominated in either the
Euro or in Yen. No more than 20% of
fund assets will be invested in
foreign securities denominated in
any other single foreign currency.

o The fund may invest in loans,
preferred shares, convertible bonds,
and other instruments that rank low
in the issuer's capital structure.

o The fund may invest in defaulted and
restructured securities.

o CIGNA Investments will analyze
market themes, economic and
political developments, individual
security structural features, cash
flow risk and relative value,
trading opportunities and issuer
credit quality to select
investments.

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o CIGNA Investments may allocate fund
assets across difference market
sectors and maturities.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

The fund is subject to the following
principal investment risks:

o This fund's principal risk factor is
market risk.

o Market risk associated with bonds is
related to the level of interest
rates. Generally, as interest rates
rise, the market price of a bond
falls. (A 7% bond is less valuable
once interest rates have risen to 8%
and an investor can get a higher
return elsewhere.) As interest
rates fall, however, the market
price of a bond rises. This
"inverse" relationship is magnified
for bonds with longer maturities.
(A bond's maturity is the length of
time remaining before the borrower
must pay the bondholder the face
amount of the bond.)

o There are additional risks with
investing in foreign countries, such
as economic, currency, legal
information, political and
transaction risks. As a result of
these additional risks, the fund may
be more volatile than a fund that
invested in domestic fixed-income
securities only. o Compared to U.S.
debt securities, emerging market
debt securities often exhibit
pronounced price volatility, even in
instances where emerging markets
securities have the same rating and
maturity as their U.S. counterparts.
The value of emerging market debt
securities often fluctuates in
response to political, economic, or
company developments and can decline
significantly over short periods of
time or during periods of general or
regional economic difficulty. During
those times, the securities could be
difficult to value or sell.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from emerging
market securities will trail returns

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from other asset classes or the
overall securities markets.

o Sector allocation risk, which is the
risk that returns from certain
emerging markets will trail the
returns from other sectors.

o Prepayment risk, which is that the
issuer of a debt security repays
principal prior to a security's
maturity.

o Currency risk, which is the risk
that the value of a currency in
which fund securities are
denominated drops relative to the
U.S. dollar.

CHARTER BALANCED MUTUAL FUND INVESTMENT OBJECTIVE:

o Seeks a high total return through
capital appreciation and current
income.

PRINCIPAL INVESTMENT STRATEGIES:

o Invests in a combination of equity
securities (primarily common stocks,
and to a lesser extent, securities
convertible into common stocks), and
fixed income securities.

o In selecting common stocks for the
fund, the fund generally chooses
stocks with a yield higher than the
overall equity market. The fund uses
a value-based strategy, focusing on
a company's dividend history and
current financial situation.

o The income securities the fund will
invest in primarily will include
obligations of the U.S. government
and its agencies and investment
grade corporate bonds.

o The fund may invest up to 25% of its
assets in foreign equity and debt
securities.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o This fund's principal risk factor is
market risk.

o Market risk associated with equity
securities such as common stocks is
related to stock-market movements.
In general, stock values fluctuate
in response to activities specific
to a company, as well as

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general market, economic and
political conditions. Stock prices
can fluctuate widely in response to
these factors.

o The fund's emphasis on value stocks
may reduce its volatility and
downside risk. Value stocks in
theory are already underpriced. This
is not guaranteed. A value stock may
never reach what the manager
believes is its full value, or may
even go down in price. In the long
run, the fund may produce more
modest returns than riskier stock
funds as a trade-off for this
potentially lower risk.

o Market risk associated with bonds
is related to the level of interest
rates. Generally, as interest rates
rise, the market price of a bond
falls. (A 7% bond is less valuable
once interest rates have risen to 8%
and an investor can get a higher
return elsewhere.) As interest rates
fall, however, the market price of a
bond rises. This "inverse"
relationship is magnified for bonds
with longer maturities. (A bond's
maturity is the length of time
remaining before the borrower must
pay the bondholder the face amount
of the bond.)

o There are additional risks with
investing in foreign countries,
specifically economic, currency,
information, political and
transaction risks. As a result of
these additional risks, the fund may
be more volatile than a fund that
invested in domestic equities only.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from value stocks
and government and investment grade
bonds in which the fund invests will
trail returns from other asset
classes or the overall stock market.

CHARTER LARGE COMPANY STOCK-
GROWTH MUTUAL FUND INVESTMENT OBJECTIVE:

Seeks long-term capital appreciation.

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PRINCIPAL INVESTMENT STRATEGIES:

o Invests primarily in common stocks
of U.S. and, to a limited extent,
foreign companies that exhibit
strong or accelerating earnings
growth. The median market value or
capitalization of the companies in
which the fund invests is generally
higher than the median market
capitalization of the companies in
the S&P 500 Index.

o The fund focuses on companies with
consistent or rising earnings growth
records and compelling business
strategies. The fund's portfolio
managers study company developments,
including business strategy,
management focus and financial
results, to identify companies with
earnings growth and business
momentum.

o Typically, the fund invests in from
75 to 95 different companies, with
each company's share of total fund
assets ranging from 0.5% to 3.0%.

o The fund emphasizes securities that,
in the investment manager's opinion,
have the potential to rise in price
rather than pay out income.

PRINCIPAL RISK OF INVESTING IN THE FUND:

o This fund's principal risk factor is
market risk. The value of your
investment will fluctuate in
response to stock market movements.
In general, stock values fluctuate
in response to activities specific
to a company, as well as general
market, economic and political
conditions. Stock prices can
fluctuate widely in response to
these factors.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from large
capitalization growth will trail
returns from other asset classes or
the overall stock market.

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CHARTER LARGE COMPANY STOCK-VALUE
MUTUAL FUND INVESTMENT OBJECTIVE:

Seeks long-term growth of capital, income
and a reasonable current return.

PRINCIPAL INVESTMENT STRATEGIES

o Invests primarily in dividend-paying
common stocks of established, large
U.S. companies. Each stock is
purchased when it is undervalued
relative to the stock's individual
history and to the market.
Generally, at the time of purchase,
the stocks are out of favor with the
investment community.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o This fund's principal risk factor is
market risk. The value of your
investment will fluctuate in
response to stock-market movements.
In general, stock values fluctuate
in response to activities specific
to a company, as well as general
market, economic and political
conditions. Stock prices can
fluctuate widely in response to
these factors.

o The amount of income you receive
from the fund will also fluctuate.
The fund's emphasis on large-company
value stocks may reduce its
volatility and downside risk. Value
stocks in theory are already
underpriced, and large-company
stocks tend to be less volatile than
small-company stocks. This is not
guaranteed. A value stock may never
reach what the manager believes is
its full value, or may even go down
in price. In the long run, the fund
may produce more modest returns than
riskier stock funds as a trade-off
for this potentially lower risk.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from large
capitalization value stocks will
trail returns from other asset
classes or the overall stock market.

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CHARTER S&P 500 INDEX MUTUAL
FUND INVESTMENT OBJECTIVE:

o To achieve long-term growth of
capital by investing principally in
common stocks of companies in the
Standard & Poor's 500 Composite
Stock Price Index ("S&P 500"), an
index emphasizing
large-capitalization stocks.

PRINCIPAL INVESTMENT STRATEGIES:

o The Fund attempts to replicate the
composition and total return,
reduced by fund expenses, of the S&P
500. Normally, the fund will invest
at least 80% of its total assets in
common stock of companies which
compose the S&P 500.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o This fund's principal risk factor is
market risk, which is the
possibility that common stock prices
will decline, sometimes
substantially, over short or
extended periods. The stock market
tends to be cyclical, with periods
when stock prices generally decline.

o The fund is also subject to
investment style risk, which is the
risk that returns from large
capitalization stocks will trail
returns from other asset classes or
the overall stock market.

CHARTER SMALL COMPANY STOCK-
GROWTH MUTUAL FUND INVESTMENT OBJECTIVE:

o Seeks long-term capital
appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

o Invests primarily in the common and
preferred stocks of U.S. companies
with market capitalizations between
$30 million and $3 billion. The fund
focuses on growing companies
involved in new product development
and technological breakthroughs.

o The fund's portfolio managers:

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o Look across all sectors of the stock
market to find companies that meet
the fund's investment criteria -
including strong, sustainable unit
growth, consistent earnings,
proprietary products and services
and minimal institutional ownership,
and

o Look for stocks that have the
potential for price appreciation of
50% over the following 18 months and
price/earnings ratios at a discount
relative to their earnings growth
rates.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o The market risk for investments
in smaller companies is higher
than for larger companies.
Stock prices for smaller
companies may change more, and
more quickly, over short time
periods.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other
funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from small
capitalization growth stocks will
trail returns from other asset
classes or the overall stock market.

CHARTER SMALL COMPANY STOCK-
VALUE MUTUAL FUND INVESTMENT OBJECTIVE:

Seeks capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

o Invests primarily in common stocks
of small U.S. companies with market
capitalizations of less than $1
billion whose stock prices are
believed to be

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undervalued. Emphasis at time of
purchase will be on companies that
have market capitalizations of less
than $600 million.

o The fund's securities selection
focuses on companies that are out of
favor with markets or have not yet
been discovered by the broader
investment community.

o The fund's investment manager
generally looks for companies with:

o A low price relative to their
assets, earnings, cash flow or
business franchise;

o Products and services that give
them a competitive advantage;
and

o Strong balance sheets and
strong management.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o The fund's share price may fluctuate
more than that of funds primarily
invested in stocks of mid-sized and
large companies. Occasionally,
small company securities may
under-perform as compared to the
securities of larger companies. They
may also pose greater risk due to
narrow product lines, limited
financial resources, less depth in
management or a limited trading
market for their stocks.

o The fund's investments are often
focused in a small number of
business sectors. In addition, the
fund may invest in certain
securities with unique risks, such
as special situations.

The fund is also subject to:

o Manager risk, which is the chance
that poor security selection will
cause the fund to underperform other

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<PAGE>

funds with similar investment
objectives.

o Investment style risk, which is the
risk that returns from small
capitalization value stocks will
trail returns from other asset
classes or the overall stock market.

CHARTER INTERNATIONAL STOCK MUTUAL
FUND INVESTMENT OBJECTIVE:

Seeks long-term capital appreciation

PRINCIPAL INVESTMENT STRATEGIES:

o The fund invests primarily in common
stocks of well-established companies
located outside the U.S.

o The fund emphasizes medium to large
market capitalization companies that
are best positioned to take
advantage of global change. The fund
may invest up to 100% of its assets
in common stock and other equity
securities traded on recognized
exchanges throughout the world. The
fund may not invest in the stocks of
U.S. companies. The fund will
typically hold from 70 to 90 stocks.

o Up to 15% of fund assets may be
invested in emerging markets.

o The fund may invest only in the
securities of companies
headquartered or principally traded
in countries whose capital markets
are of sufficient size, liquidity
and stability to minimize risk due
to illiquidity or market disruption.

PRINCIPAL RISKS OF INVESTING IN THE FUND:

o There are additional risks with
investing in foreign

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<PAGE>

countries, especially in developing
countries - specifically, economic,
currency, information, political and
transaction risks. As a result of
these additional risks, the fund may
be more volatile than a domestic
stock fund.

o Foreign stocks may not move in
concert with the U.S. markets. The
fund's investments are often focused
in a small number of business
sectors. In addition, the fund may
invest in certain securities with
unique risks, such as forward
foreign currency contracts. The fund
is also subject to: o Manager risk,
which is the chance that poor
security selection will cause the
fund to underperform other funds
with similar investment objectives.

o Investment style risk, which is the
risk that returns from foreign
stocks will trail returns from other
asset classes or the overall stock
market.

YOU CAN LOSE MONEY BY INVESTING IN ANY OF THE FUNDS. THE FUNDS MAY NOT ACHIEVE
THEIR INVESTMENT OBJECTIVES.

-17-

<PAGE>

BAR CHARTS AND PERFORMANCE TABLES
The bar charts and tables shown below provide some indication of the risks of
investing in the funds. The bar charts show changes in the performance of the
funds' shares from year to year over a ten-year period, or life of the fund,
whichever is shorter.

The tables show how the average annual returns of the funds= institutional class
shares, for one, five and ten years (or life of the fund, whichever is shorter)
compare to those of a broad measure of market performance. The returns for the
other classes will be lower than the institutional class returns shown in the
bar chart, due to higher expenses of the other classes.

A fund's past performance does not necessarily indicate how the fund will
perform in the future.

There are bar charts and tables only for the Money Market Fund and the S&P 500
Index Fund, since the other funds offered by this prospectus did not commence
operations until January 2000.

[THE FOLLOWING INFORMATION APPEARS AS A BAR CHART]

Money Market Fund - Annual Total Return

8.96% 7.82% 5.75% 3.36% 2.39% 3.43% 5.33% 4.91% 5.27% 5.18%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

During the ten-year period shown in the bar chart, the highest quarterly return
for the Money market Fund was 2.35% (for the quarter ended 6/30/89) and the
lowest quarterly return was 0.55% (for the quarter ended 12/31/93).

MONEY MARKET FUND AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 1998

Past 1 year Past 5 years Past 10 years
Money Market Fund 5.18% 4.82% 5.22%
3-Month U.S. Treasury bills 5.33% 5.31% 5.57%

The Money Market Fund's 7-day annualized yield as of December 31, 1998 was
4.69%.

-18-

<PAGE>

[THE FOLLOWING INFORMATION APPEARS AS A BAR CHART GRAPH]

S&P 500 INDEX FUND - ANNUAL TOTAL RETURN

28.28%

1998

During the period shown in the bar chart, the highest quarterly return for the
S&P 500 Index Fund was 23.31% (for the quarter ended 12/31/98) and the lowest
quarterly return was -10.03% (for the quarter ended 9/30/98).

S&P 500 INDEX FUND AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 1998 (COMMENCED OPERATIONS JULY 1, 1997)

Past 1 year Life of Fund

S&P 500 Index Fund 28.28% 25.95%

S&P 500 28.57% 26.22%

-19-

<PAGE>

FEES AND EXPENSES OF THE FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUNDS.

SHAREHOLDER FEES (ALL FUNDS AND CLASSES)
(FEES PAID DIRECTLY FROM YOUr
INVESTMENT)
- --------------------------------------------------------------------------------

Maximum sales charge (load) imposed
on Purchases (as a percentage
of offering Price) None
Maximum deferred sales charge (load) None

Redemption fee (as a percentage of
Amount redeemed) None

Exchange fee None

HIGH CORE
ANNUAL FUND OPERATING EXPENSES GRADE PLUS
(EXPENSES THAT ARE DEDUCTED FROM MONEY FIXED FIXED ULTRA CORE PLUS
FUND ASSETS) MARKET INCOME INCOME FIXED INCOME EMERGING BALANCED
INSTITUTIONAL CLASS: FUND FUND FUND FUND DEBT FUND FUND
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Management fees .35% .60% .65% .65% 1.00% .75%
Distribution & service (12b-1) fees None None None None None None
Other expenses/1/ .16% .20% .20% .20% .20% .26%
Total Annual Fund Operating Expenses
(before waivers)2 .51% .80% .85% .85% 1.20% 1.01%
Waiver of Fund Expenses ( .06%) ( .30%) ( .35%) ( .30%) ( .55%) ( .21%(

Total Actual Fund Operating Expenses
(after waivers)/2/ .45% .50% .50% .55% .65% .80%

</TABLE>

ANNUAL FUND OPERATING EXPENSES LARGE LARGE SMALL SMALL
(EXPENSES THAT ARE DEDUCTED FROM COMPANY COMPANY S&P 500 COMPANY COMPANY
FUND ASSETS) STOCK-GROWTH STOCK-VALUE INDEX STOCK-GROWTH STOCK-VALUE INTERNATIONAL
INSTITUTIONAL CLASS: FUND FUND FUND FUND FUND STOCK FUND
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Management fees .80% .75% .25% 1.00% 1.00% 1.00%
Distribution & service (12b-1) fees None None None None None None
Other expenses/1/ .24% .24% .14% .26% .26% .30%
Total Annual Fund Operating Expenses
(before waivers)/2/ 1.04% .99% .39% 1.26% 1.26% 1.30%
Waiver of Fund Expenses ( .24%) ( .19%) ( .14%) ( .21%) ( .21%) ( .25%)

Total Actual Fund Operating Expenses
(after waivers)/2/ .80% .80% .25% 1.05% 1.05% 1.05%

</TABLE>

-20-

<PAGE>

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM MONEY
FUND ASSETS) MARKET BALANCED
ADMINISTRATIVE CLASS - A FUND FUND
- -----------------------------------------------------------------------

Management fees .35% .75%
Distribution & service (12b-1) fees None None
Other expenses/1/ .41% .46%
Total Annual Fund Operating Expenses
(before waivers)/2/ .76% 1.21%
Waiver of Fund Expenses ( .06%) ( .21%)

Total Actual Fund Operating Expenses
(after waivers)/2/ .70% 1.00%

ANNUAL FUND OPERATING EXPENSES LARGE LARGE SMALL SMALL
(EXPENSES THAT ARE DEDUCTED FROM COMPANY COMPANY S&P 500 COMPANY COMPANY
FUND ASSETS) STOCK-GROWTH STOCK-VALUE INDEX STOCK-GROWTH STOCK-VALUE INTERNATIONAL
ADMINISTRATIVE CLASS - A FUND FUND FUND FUND FUND STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Management fees .80% .75% .25% 1.00% 1.00% 1.00%
Distribution & service (12b-1) fees None None None None None None
Other expenses/1/ .44% .44% .34% .46% .46% .55%
Total Annual Fund Operating Expenses
(before waivers)/2/ 1.24% 1.19% .59% 1.46% 1.46% 1.55%
Waiver of Fund Expenses ( .24%) ( .19%) ( .24%) ( .21%) ( .21%) ( .30%)

Total Actual Fund Operating Expenses
(after waivers)/2/ 1.00% 1.00% .35% 1.25% 1.25% 1.25%
</TABLE>

HIGH CORE
ANNUAL FUND OPERATING EXPENSES GRADE PLUS
(EXPENSES THAT ARE DEDUCTED FROM FIXED FIXED ULTRA CORE PLUS
FUND ASSETS) INCOME INCOME FIXED INCOME EMERGING
ADMINISTRATIVE CLASS - B FUND FUND FUND DEBT FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Management fees .60% .65% .65% 1.00%
Distribution & service (12b-1) fees .15% .15% .15% .15%
Other expenses/1/ .45% .45% .45% .45%
Total Annual Fund Operating Expenses
(before waivers)/2/ 1.20% 1.25% 1.25% 1.60%
Waiver of Fund Expenses ( .30%) ( .35%) ( .30%) (.55%)

Total Actual Fund Operating Expenses
(after waivers)/2/ .90% .90% .95% 1.05%

</TABLE>

-21-

<PAGE>

HIGH CORE
ANNUAL FUND OPERATING EXPENSES GRADE PLUS
(EXPENSES THAT ARE DEDUCTED FROM MONEY FIXED FIXED ULTRA CORE PLUS
FUND ASSETS) MARKET INCOME INCOME FIXED INCOME EMERGING BALANCED
RETAIL CLASS: FUND FUND FUND FUND DEBT FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Management fees .35% .60% .65% .65% 1.00% .75%
Distribution & service (12b-1) fees .25% .25% .25% .25% .25% .25%

Other expenses/1/ .41% .45% .45% .45% .45% .46%
Total Annual Fund Operating Expenses
(before waivers)/2/ 1.01% 1.30% 1.35% 1.35% 1.70% 1.46%
Waiver of Fund Expenses ( .06%) ( .30%) ( .35%) ( .30%) ( .055%) ( .21%)

Total Actual Fund Operating Expenses
(after waivers)/2/ .95% 1.00% 1.00% 1.05% 1.15% 1.25%

ANNUAL FUND OPERATING EXPENSES LARGE LARGE SMALL SMALL
(EXPENSES THAT ARE DEDUCTED FROM COMPANY COMPANY S&P 500 COMPANY COMPANY
FUND ASSETS) STOCK-GROWTH STOCK-VALUE INDEX STOCK-GROWTH STOCK-VALUE INTERNATIONAL
RETAIL CLASS: FUND FUND FUND FUND FUND STOCK FUND
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Management fees .80% .75% .25% 1.00% 1.00% 1.00%
Distribution & service (12b-1) fees .25% .25% .25% .25% .25% .25%
Other expenses/1/ .44% .44% .34% .46% .46% .55%
Total Annual Fund Operating Expenses
(before waivers)/2/ 1.49% 1.44% .84% 1.71% 1.71% 1.80%
Waiver of Fund Expenses ( .24%) ( .19%) ( .14%) ( .21%) ( .21%) ( .30%)

Total Actual Fund Operating Expenses
(after waivers)/2/ 1.25% 1.25% .70% 1.50% 1.50% 1.50%
</TABLE>

(1) Other expenses for all funds except Money Market and S&P 500 Index Funds
are based on estimated amounts for the current fiscal year.
(2) CIGNA Investments has contractually agreed, until December 31, 2000, to
waive management fees and reimburse the funds if and to the extent total
fund operating expenses exceed the following percentages of average daily
net assets for each fund:

APPLICABLE PERCENTAGE OF AVERAGE DAILY NET ASSETS
INSTITUTIONAL ADMINISTRATIVE-A ADMINISTRATIVE-B RETAIL
<S> <C> <C> <C> <C>

Money Market Fund .45% .70% .NA .95%
High Grade Fixed Income Fund .50% NA .90% 1.00%
Core Plus Fixed Income Fund .50% NA .90% 1.00%
Ultra Core Plus Fixed Income Fund .55% NA .95% 1.05%
Emerging Debt Fund .65% NA 1.05% 1.15%
Balanced Fund .80% 1.00% NA 1.25%
Large Company Stock-Growth Fund .80% 1.00% NA 1.25%
Large Company Stock-Value Fund .80% 1.00% NA 1.25%
S&P 500 Index Fund .25% .35% NA .70%
Small Company Stock-Growth Fund 1.05% 1.25% NA 1.50%
Small Company Stock-Value Fund 1.05% 1.25% NA 1.50%
International Stock Fund 1.05% 1.25% NA 1.50%

</TABLE>

CIGNA Investments may extend its obligation to waive fees and reimburse expenses
beyond December 31, 2000.

-22-

<PAGE>

CIGNA Investments retains the ability to be repaid by a fund if a fund's
expenses fall below the specified limit prior to the end of the fiscal year or
within three years after CIGNA Investments waives management fees or reimburses
fund operating expenses. Reimbursement arrangements can decrease a fund's
expenses and boost its performance.

EXAMPLE

THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUNDS WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

The example assumes that:

o You invest $10,000 in the fund for the time periods indicated;

o Your investment has a 5% return each year; and

o Each fund's operating expenses reflect contractual expense limitations
for the first year. After the first year, the example does not take
into consideration CIGNA Investment's agreement to reduce fund
expenses, and assumes that a fund's operating expenses remain the same
in each year of the applicable period.

Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:

INSTITUTIONAL CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund $ 46 $157 $279 $636
High Grade Fixed Income Fund $ 51 $226
Core Plus Fixed Income Fund $ 51 $236
Ultra Core Plus Fixed Income Fund $ 56 $241
Emerging Debt Fund $ 66 $327
Balanced Fund $ 82 $301
Large Company Stock-Growth Fund $ 82 $307
Large Company Stock-Value Fund $ 82 $297
S&P 500 Index Fund $ 26 $111 $205 $482
Small Company Stock-Growth Fund $ 107 $379
Small Company Stock-Value Fund $ 107 $379
International Stock Fund $107 $388

</TABLE>

ADMINISTRATIVE CLASS-A 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Money Market Fund $ 72 $237 $417 $939
Balanced Fund $102 $364
Large Company Stock-Growth Fund $102 $370
Large Company Stock-Value Fund $102 $360
S&P 500 Index Fund $ 36 $165 $307 $723
Small Company Stock-Growth Fund $127 $442
Small Company Stock-Value Fund $127 $442
International Stock Fund $127 $461
</TABLE>

-23-

<PAGE>

ADMINISTRATIVE CLASS-B 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
High Grade Fixed Income Fund $ 92 $352
Core Plus Fixed Income Fund $ 92 $363
Ultra Core Plus Fixed Income Fund $ 97 $368
Emerging Debt Fund $ 107 $453

</TABLE>

RETAIL CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Money Market Fund $.97 $316 $553 $1,234
High Grade Fixed Income Fund $102 $383
Core Plus Fixed Income Fund $102 $394
Ultra Core Plus Fixed Income Fund $107 $399
Emerging Debt Fund $117 $484
Balanced Fund $127 $442
Large Company Stock-Growth Fund $127 $448
Large Company Stock-Value Fund $127 $437
S&P 500 Index Fund $ 72 $254 $453 $1,030
Small Company Stock-Growth Fund $153 $519
Small Company Stock-Value Fund $153 $519
International Stock Fund $153 $538
</TABLE>

INVESTMENT INFORMATION - OBJECTIVES, STRATEGIES AND RELATED RISKS
- --------------------------------------------------------------------------------
MONEY MARKET FUND

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.

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.

-24-

<PAGE>

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 operational policies that are more restrictive than the
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 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.

HIGH GRADE FIXED INCOME, CORE PLUS FIXED INCOME, ULTRA CORE PLUS FIXED INCOME
AND EMERGING MARKET DEBT FUNDS

STRATEGY/PHILOSOPHY
- -------------------
CIGNA Investment's fixed income investment philosophy is based on our belief
that market inefficiencies exist due to varying investor objectives and time
horizons. The funds capitalize on market inefficiencies by identifying market
cycles, making tactical and decisive

-25-

<PAGE>

sector allocations, and selecting securities through a disciplined process. The
funds do not anticipate movements in U.S. Treasury rates as a primary strategy.

The High Grade Fixed Income, Core Plus Fixed Income and Ultra Core Plus Fixed
Income Funds will invest in a broad array of fixed income sectors including
government and agency securities, corporate bonds, and securitized bonds such as
mortgage backed and asset backed securities. The High Grade Fixed Income Fund
invests in investment grade fixed income securities, while the Core Plus Fixed
Income Fund may invest up to 25% of its assets in below investment grade
securities, and the Ultra Core Plus Fixed Income Fund may invest up to 35% of
its assets in below investment grade securities and may invest to a slightly
greater degree in international, non-U.S. dollar denominated securities.

The Emerging Market Debt Fund will invest primarily in sovereign bonds of
emerging economies.

DECISION MAKING PROCESS
- -----------------------
Investment decisions for the funds follow a three-stage process.

First, the portfolio managers and the strategy team identify key global and
macroeconomic themes they anticipate will drive the fixed income markets. For
example, the team analyzes liquidity trends, monetary and fiscal policy, capital
flows, business cycles, and global indicators such as yield curves and currency
dynamics.

Next, the market themes are translated into portfolio strategies and sector
allocations that are designed to add value and diversify risk. Various
strategies are analyzed and the investment team selects the appropriate
allocation within the risk/reward tolerances for the fund.

Finally, sector specialists buy or sell securities to implement the sector
allocations. The specific investment choices are based on fundamental industry
analysis, independent research, and quantitative analysis of bond structures.

In managing the High Grade Fixed Income Fund, Core Plus Fixed Income Fund, Ultra
Core Plus Fixed Income Fund and Emerging Debt Fund, CIGNA Investments uses the
same strategy and decision making process across all three funds. In addition,
the portfolio construction of the Emerging Debt Fund will also reflect CIGNA
Investments' analysis of relative value across countries, regions, security
structure and market sector.

BALANCED FUND

The fund strives for reasonably consistent total returns over "up" and "down"
market cycles.

o At least 30% of fund assets is invested in each of the following:
o equities; and
o fixed- and variable-income securities.

o Up to 40% of fund assets is allocated according to the portfolio managers'
assessment of business, economic and market conditions. The manager
analyzes the return available from stocks and bonds in deciding how to
invest the fund's assets.

-26

<PAGE>

o May invest in:
o equity securities which usually pay dividends and are
traded on a national securities exchange, although the
fund may also invest in securities traded on regional
stock exchanges on the over-the-counter market;
o investment-grade corporate debt obligations; and
o obligations of the U.S. Government and its Agencies

o May invest up to 25% of total assets in foreign equity and debt securities.

With respect to the fund's investments in common stocks, the fund focuses on
stocks with a yield higher than the overall equity market. This may result in
the fund purchasing the stocks of smaller companies. The market risk for
investments in smaller companies is higher than for larger companies. Stock
prices for smaller companies may change more, and more quickly, over short time
periods.

The income securities the fund will acquire will be obligations of the U.S.
government and its agencies, and corporate bonds rated in one of the four
highest ratings of corporate obligations by Moody's Investor Services, Inc. or
Standard & Poor's or, if not rated, in the manager's opinion, having similar
investment characteristics to those in the top four ratings. Typically, these
income securities will have long or intermediate-term maturities.

LARGE COMPANY STOCK-GROWTH FUND

The fund seeks long-term capital appreciation by investing primarily in
growth-oriented equity securities of medium and large capitalization companies.
The portfolio manager seeks to maximize long-term capital appreciation by
investing primarily in the equity securities of U.S. and, to a limited extent,
foreign companies that exhibit strong or accelerating earnings growth. The
portfolio manager emphasizes individual security selection and may focus the
fund's holdings within the limits permissible for a diversified fund.

The fund follows a flexible investment program in looking for companies with
above average capital appreciation potential. The fund focuses on companies with
consistent or rising earnings growth records and compelling business strategies.
The portfolio manager continually and rigorously studies company developments,
including business strategy, management focus and financial results, to identify
companies with earnings growth and business momentum. In addition, the portfolio
manager closely monitors analysts' expectations to identify issuers that have
the potential for positive earnings surprises versus consensus expectations.
Valuation is of secondary importance and is viewed in the context of prospects
for sustainable earnings growth and the potential for positive earnings
surprises in relation to consensus expectations. The fund considers selling
securities of issuers that no longer meet the portfolio manager's criteria.

o The fund is predominantly invested in dollar-denominated equity securities
traded on U.S. exchanges or over-the counter. These include U.S. common
stock, securities convertible into common stock and preferred stock.

o The fund is typically comprised of 75 to 100 holdings. The maximum
concentration in the top ten holdings is generally 35% to 45%.

-27-

<PAGE>

o The median market capitalization of companies in which the fund
invests is generally higher than the median market capitalization
of companies in the S&P 500 Index.
o The maximum allocation to any one industry/sector is generally
three to four times that of the major S&P industry/sector
weighting.

o Up to 15% of fund assets may be held in cash.

o Up to 15% of fund assets may be invested in foreign securities and
American Depository Receipts. Typically, such holdings represent less than
5% of the portfolio.

LARGE COMPANY STOCK-VALUE FUND

The fund's primary strategy is to investment mainly in dividend-paying common
stocks of established, large U.S. companies. Each stock is purchased when it is
undervalued relative to the stock's individual history and to the market.
Generally, at the time of purchase, the stocks are out of favor with the
investment community. These stocks are expected to produce a relatively high and
stable level of income and to have the potential for long-term capital
appreciation. The fund may also invest in securities that are convertible to
common stocks. In the past, stocks with relatively high dividend yields have
tended to lag the overall stock market during rising markets, and to outperform
it during periods of flat or declining prices.

The portfolio manager with one or more of the following attributes; a strong
proprietary product or service; a low share price in relation to cash flow or
asset values; a new product or development or some other unique situation that
offers attractive prospects for long-term returns and limited risk.

o Normally invests:
o 90% to 100% of assets in highly liquid equity securities, with an emphasis
on New York Stock Exchange issues; and o Up to 10% of assets in cash and
cash equivalents.

o May invest up to 15% of fund assets in convertible securities.

o Although the fund does not make significant investments in securities of
companies based outside the United States, it reserves the right to invest
up to 20% of its assets in foreign securities.

o Holds between 50 and 60 securities, which may include American Depository
Receipts.

o Generally does not invest more than 5% of fund assets in any single
investment.

o A price decline of 10% or more of a security held by the fund will
generally trigger a management review, after which the fund's holdings of
the security may be increased, decreased or held the same.

-28-

<PAGE>

S&P INDEX FUND

The primary objective of the fund is long-term growth of capital by investing
principally in common stocks. The fund will seek to fulfill this objective by
attempting to replicate the composition and total return, reduced by Fund
expenses, of the S&P 500. Under normal conditions, the fund will invest at least
80% of its total assets in equity securities of companies which compose the S&P
500.

The S&P 500 includes 500 selected common stocks, most of which are listed on the
New York Stock Exchange. Each stock in the Index has a unique weighting,
depending on the number of shares outstanding and its current prices. The 500
stocks in the S&P 500 are chosen by Standard & Poor's based on industry
representation, liquidity and stability. The stocks in the S&P 500 are not the
500 largest companies. Rather, the index is designed to capture the returns of
many different sectors of the U.S. economy.

While the fund seeks to match the performance of the S&P 500, its stock
portfolio performance may not match that of the S&P 500 exactly. For example,
the fund's performance will reflect deductions for advisory fees and other
expenses that are not deducted from the performance figures reported for the S&P
500. In addition, while CIGNA Investments generally will seek to match the
composition of the S&P 500 as closely as possible, it may not always invest the
fund's stock portfolio to mirror the S&P 500 exactly. For instance, the fund may
at times have its portfolio weighted differently from the S&P 500 because of the
difficulty and expense of executing relatively small stock transactions. Under
normal conditions, the fund anticipates holding at least 480 of the S&P 500
issues.

The fund may also invest in stock index futures contracts and related options
and in certain short-term fixed income securities (including variable and
floating rate instruments or demand instruments) such as U.S. Government
obligations and repurchase agreements, pending investment in common stocks of
companies in the S&P 500 or to meet anticipated short-term cash needs such as
dividend payments or redemptions of shares. The percentage of the fund's assets
invested in various types of securities will vary in light of existing economic
conditions and other factors as determined by the portfolio manager

The fund is not sponsored, endorsed, sold or promoted by Standard & Poor's
Corporation ("S&P"). S&P makes no representation or warranty, express or
implied, to the record or beneficial owners of shares of the fund or any member
of the public regarding the advisability of investing in securities generally,
or in the fund particularly, or the ability of the S&P 500 to track general
stock market performance. S&P's only relationship to CIGNA Investments or the
fund is the licensing of certain trademarks and trade names of S&P and of the
S&P 500 which is determined, composed and calculated by S&P without regard to
CIGNA Investments or the fund. S&P has no obligation to take the needs of CIGNA
Investments or the fund or the records or beneficial owners of the fund into
consideration in determining, composing or calculating the S&P 500. S&P is not
responsible for and has not participated in the valuation of the fund or the
pricing of the fund's shares or in the determination or calculation of the
equation by which the fund's portfolio investments are to be converted into
cash. S&P has no obligation or liability in connection with the administration,
marketing or trading of the fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 OR
ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY

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<PAGE>

ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY CIGNA INVESTMENTS, RECORD OR BENEFICIAL
OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 OR
ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

SMALL COMPANY STOCK-GROWTH FUND

The fund seeks long-term capital appreciation by investing primarily in the
common and preferred stock of U.S. companies with market capitalizations between
$30 million and $3 billion. Focus is placed on growing companies involved in new
product development and technological breakthroughs.

o The portfolio managers:
o Evaluate all sectors of the stock market to find companies
that meet growth, consistent earnings, proprietary products
and services and minimal institutional ownership; and
o Look for stocks that have the potential for price
appreciation of 50% over the following 18 months and
price/earnings rations at a discount relative to their
earnings growth rates.

o May also invest in American Depository Receipts listed and traded on a
registered U.S. stock exchange.

o Diversification is built into the portfolio through the use of sector and
security weighting limitations, with a maximum allocation to any one
security of 5%. The portfolio is continuously monitored for progress and
change against well-defined expectations and to ensure that a strict
"sell" discipline is maintained.

o Cash will range from 0% to 10% of fund assets.

SMALL COMPANY STOCK-VALUE FUND

The fund's securities selection focuses on companies that are out of favor with
markets or have not yet been discovered by the broader investment community.

The fund's portfolio manager generally looks for companies with:

o A low price relative to their assets, earnings, cash flow or business
franchise
o Products and services that give them a competitive advantage
o Quality balance sheets and strong management.

The portfolio manager's philosophy is to weigh a security's downside risk before
considering its upside potential, which may help provide an element of capital
preservation. Under normal circumstances, the fund invests at least 65% of its
assets in equity securities of

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<PAGE>

small companies whose market capitalization at the time of initial purchase, is
less than the 12-month average of the maximum market capitalization for
companies included in the Russell 2000 Index (Russell 2000) this average is
updated monthly. The fund's portfolio manager will generally sell a security
when it no longer meets the manager's investment criteria or when it has met the
manager's investment criteria or when it has met the manager's expectations for
appreciation.

o The fund is invested primarily in the common stock of small companies with
market capitalizations of less than $1 billion; however, up to 20% of fund
assets may be invested in the stock of companies with market
capitalizations between $1 billion and $3 billion Emphasis at the time of
purchase will be given to those firms whose market capitalizations are less
than $600 million. Permitted investments also include preferred and
convertible stock and American Depository Receipts listed and traded on
registered U.S. stock exchanges.

o The fund will typically be comprised of 45 to 50 holdings.
o The fund will typically sell stocks by the time they reach
$3 billion in market capitalization.

o Generally, allocation of fund assets to:

o Any single security is between 2.5% and 5% of fund assets;
and
o 25% of assets for any industry.

o Ordinarily, up to 10% of assets may be held in cash, although this
allocation may be increased to 15% when investment conditions warrant.

INTERNATIONAL STOCK FUND

The fund's portfolio manager first identifies economic and business themes that
it believes provide a favorable framework for selecting stocks. Using
fundamental analysis, the investment manager then selects individual companies
best positioned to take advantage of opportunities presented by these themes.

The fund's investment manager generally looks for companies with:

o Securities that are fundamentally undervalued relative to their long-term
prospective earnings growth rates, their historic valuation levels and
their competitors

o Business operations predominantly in well-regulated and more stable foreign
markets

o Substantial size and liquidity, strong balance sheets, proven management
and diversified earnings. A majority of the funds assets are invested in
mid-sized to large capitalization companies. The fund's portfolio manager
will generally sell a security when it no longer meets the manager's
investment criteria or when it has met the manager's expectations for
appreciation.

The fund may invest up to 100% of assets in common stock and other
equity-related securities traded on recognized exchanges throughout the world.
The fund may not invest in U.S. stock.

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<PAGE>

o The fund will typically be comprised of 70 to 90 holdings.
o up to a maximum of 15% of assets may be invested in emerging markets.
o Ordinarily, up to 10% of assets may be held in cash. Cash equivalents may
be dollar-or non-dollar denominated.

o The fund will invest:

o In the securities of companies headquartered or principally traded in
countries whose capital markets are of sufficient size, liquidity and
stability to minimize risk due to illiquidity or market disruption.

o At the discretion of the portfolio manager, and consistent with its stated
style, the portfolio will be diversified to reduce risk.

DERIVATIVE STRATEGIES

o The funds may use derivatives such as forward foreign currency contracts,
swaps, futures contracts and options to try to reduce risk or to increase
return consistent with each particular fund's overall investment objective.
A derivative is a financial contract whose value is based on (or "derived"
from) a traditional security (such as a stock or bond), an asset (such as a
commodity like gold) or a market index (such as the S&P 500).

o Funds that may purchase foreign securities may hedge currency risk (risk
associated with rises in the value of the U.S. dollar versus foreign
currencies) through the use of forward foreign currency contracts. Funds
may also use futures contracts and options to hedge price risk (risk
associated with price changes in current or intended investments in
securities) of fund holdings, to keep cash on hand to meet shareholder
redemptions or other needs while simulating full investment in securities,
and to reduce fund transaction costs by buying futures instead of actual
securities when futures are favorably priced.

There is no guarantee that the funds' derivative strategies will work, or that a
fund may not lose money as a result of using these strategies.

TEMPORARY, DEFENSIVE POSITIONS. The funds (except for the Money Market Fund) may
from time to time, take temporary defensive positions that are inconsistent with
their principal investment strategies by investing in short-term fixed income
securities in attempting to respond to adverse market, economic, political or
other conditions. If a fund takes a temporary defensive position it may not
achieve its investment objective. The S&P 500 Index Fund will take temporary,
defensive positions only in extraordinary circumstances.

SHORT-TERM INVESTMENTS. Each fund (except the Money Market Fund) may, pursuant
to an order obtained by CIGNA Funds Group from the Securities and Exchange
Commission permitting the funds to invest in affiliated money market and
short-term bond funds, invest its cash balances that have not been invested in
portfolio securities in the Money Market Fund. To avoid double advisory fees,
CIGNA Investments will waive or credit its advisory fee for each fund investing
in the Money Market Fund by the amount of the advisory fee incurred by the fund
in connection with its investment in the Money Market Fund.

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<PAGE>

PORTFOLIO TURNOVER. Consistent with its investment policies, a fund will
purchase and sell securities without regard to the effect on portfolio turnover.
Higher portfolio turnover (e.g. over 100% per year) will cause a fund to incur
additional transaction costs and may result in taxable gains being passed
through to shareholders.

CHANGES IN POLICIES. The funds= Trustees may change the funds' goals, investment
strategies and other policies without shareholder approval A fund may not change
its investment objective without shareholder approval.

MANAGEMENT OF THE FUNDS

The investment adviser to the funds is CIGNA Investments, Inc., 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.

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 funds that do not have sub-advisers. Each sub-adviser has this
responsibility for its particular fund. CIGNA Investments is responsible for
selecting and monitoring the performance of the sub-advisers, and for overall
management of the business affairs of all of the funds.

SUB-ADVISERS

CIGNA Investments hires investment sub-advisers who (subject to the control of
the Board of Trustees) independently manage the investment operations of certain
of the funds and determine what investments that fund will purchase and sell.
These sub-advisers, and the funds they manage, are:

BALANCED FUND INVESCO, 7800 E. Union Avenue,
Denver, Colorado. INVESCO and its
affiliated asset management
companies currently manage in excess
of $55 billion of assets as of June
30, 1999 on behalf of tax-exempt
accounts (such as pension and
profit-sharing funds for
corporations and state and local
governments) and investment
companies.

LARGE COMPANY STOCK-GROWTH FUND Morgan Stanley Dean Witter
Investment Management, Inc. ("MSDW
Investment Management"), with
principal offices at 1221 Avenue of
the Americas, New York, New York
10020, conducts a worldwide
portfolio management business and
provides a broad range of portfolio
management services to customers in
the United States and abroad. At
December 31, 1998, MSDW Investment
Management, together with its
affiliated institutional asset
management companies, managed assets
of approximately $163.4 billion.

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<PAGE>

LARGE COMPANY STOCK-VALUE FUND John A. Levin & Co, One Rockefeller
Plaza, 25th Floor, New York, New
York 10020, is an advisory firm
founded in 1982. As of September 30,
1998, Levin managed about $7.3
billion in assets.

SMALL COMPANY STOCK-GROWTH FUND Fiduciary Trust Company
International, Two World Trade
Center, New York, New York 10048.
Founded in 1931 as a New York State
Bank, Fiduciary focuses solely on
providing investment management
services to individuals and
institutions. Total assets under
management as of March 31, 1999 were
about $45 billion.

SMALL COMPANY STOCK-VALUE FUND Berger Associates, Inc., 210
University Boulevard, Suite 900,
Denver, Colorado 80206 serves as
investment adviser, sub-adviser,
administrator or sub-administrator
to mutual funds and institutional
investors. Berger Associates has
been in the investment advisory
business for over 20 years. At
September 1, 1999, Berger Associates
managed about $5 billion in assets.
Berger Associates has in turn hired
Perkins, Wolf, McDonnell & Company
("PWM"), 53 West Jackson Boulevard,
Suite 818, Chicago, Illinois, 60604
to manage the investment operation
of the fund. PWM was organized in
1980 under the name Mac-Per-Wolf Co.
to operate as a securities
broker-dealer. In September 1983,
it changed its name to Perkins,
Wolf, McDonnell & Company. PWM
sub-advises the Berger Small Cap
Value Fund.

INTERNATIONAL STOCK FUND BBOI Worldwide LLC ("BBOI"), 210
University Blvd., Suite 900, Denver,
Colorado 80206 was formed in 1996 as
a joint venture between Berger
associates, Inc. and Bank of Ireland
Asset Management (U.S.) Limited
("BIAM"). BBOI operates a series of
mutual funds for retail and
institutional investors and provides
sub-advisory services to other
investment entities. BBOI has in
turn hired BIAM, 20 Horseneck Lane,
Greenwich, CT 06830 (representative
office); 26 Fitzwilliam Place,
Dublin 3, Ireland (main office) to
manage the investment operation of
the fund. BIAM serves as investment
advisor or sub-advisor to pension
and profit-sharing plans and other
institutional investors and mutual
funds. Bank of Ireland's investment
management group was founded in
1966.

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<PAGE>

PRIOR PERFORMANCE OF THE FUNDS' SUB-ADVISERS

The following tables reflect past investment performance achieved by composites
of portfolios having investment objectives, policies, strategies and risks
substantially similar to those of the funds. Each composite includes all
discretionary, fee-paying accounts and mutual funds (or a segregated portion of
the mutual funds) managed or sub-advised by each respective fund's sub-adviser,
all of which have similar investment profiles. The tables show the annual total
returns and the average annualized total returns for the composites for the one,
three, five and ten-year (or life of the composite, if shorter) periods ended
______________ , 1999. The data is provided to illustrate the past performance
of the various sub-advisers in managing substantially similar accounts as
measured against specified market indices or mutual fund category average and
does not represent the performance of the funds. These performance figures are
based on the actual gross investment performance of the composites. From the
gross investment performance, the total operating expenses for the____________
class of the funds, after expense limitations, have been deducted to arrive at
the net return. Therefore, fund returns may be lower. Investors should not
consider this performance data as an indication of future performance of the
funds.

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<PAGE>

Total Return
Annual Net Total Returns
LIPPER FLEXIBLE PORTFOLIO
YEAR COMPOSITE FUNDS AVERAGE/(1)/
1998
1997
1996
1995
1994
1993
1992

Large Company Stock-Growth
Annual Net Total Returns
YEAR COMPOSITE S&P 500 INDEX/(2)/
1998
1997
1996
1995
1994
1993
1992

Large Company Stock-Value
Annual Net Total Returns
YEAR COMPOSITE S&P 500 INDEX/(2)/
1998
1997
1996
1995
1994
1993
1992

Small Company Stock-Growth
Annual Net Total Returns
YEAR COMPOSITE RUSSELL 2000 INDEX/(3)/
1998
1997
1996
1995
1994
1993
1992

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<PAGE>

Small Company Stock-Value
Annual Net Total Returns
YEAR COMPOSITE RUSSELL 2000 INDEX/(3)/
1998
1997
1996
1995
1994
1993
1992

International Stock
Annual Net Total Returns
MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE,
AUSTRALIA AND
YEAR COMPOSITE FAR EAST INDEX/4/
1998
1997
1996
1995
1994
1993
1992

Balanced
Average Annual Net Total
Returns
LIPPER FLEXIBLE PORTFOLIO
COMPOSITE FUNDS AVERAGE/(1)/
One year
Three years
Five years
Ten years or
Since Inception

Large Company Stock-Growth
Average Annual Net Total Returns

COMPOSITE S&P 500 INDEX/(2)/
One year
Three years
Five years
Ten years or
Since Inception

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<PAGE>

Large Company Stock-Value
Average Annual Net Total Returns

COMPOSITE S&P 500 INDEX/(2)/
One year
Three years
Five years
Ten years or
Since Inception

Small Company Stock-Growth
Average Annual Net Total Returns
COMPOSITE RUSSELL 2000 INDEX/(3)/
One year
Three years
Five years
Since Inception

Small Company Stock-Value
Average Annual Net Total Returns
COMPOSITE RUSSELL 2000 INDEX/(3)/
One year
Three years
Five years
Since Inception

International Stock Composite
Average Annual Net Total Returns
MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE,
AUSTRALIA AND FAR EAST
COMPOSITE INDEX/(4)/
One year
Three years
Five years
Since Inception

All composite performance information assumes reinvestment of all net investment
income and has been adjusted to reflect the deduction of the total operating
expenses of the applicable fund, as limited under the agreement between CIGNA
Investments and CIGNA Funds Group for the applicable fund.

The average annual total return is equivalent to the annual rate of return
which, if earned in each year of the indicated multi-year period, would produce
the actual cumulative rate of return over the time period.

The private accounts that are included in the composites are not subject to the
same types of expenses to which the funds are subject, nor to the
diversification requirements, specific tax restrictions and investment
limitations imposed on the funds by the Investment Company Act of 1940 or
Subchapter M of the Internal Revenue Code. In fact, the expenses of the private
accounts included in the composites are lower than the funds' expenses.
Consequently, if the private accounts included in the composite had been
regulated as investment companies under the federal securities and tax laws, the
composites' performance results would have been lower than what is shown above.

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<PAGE>

The investment results of the composites presented above are not intended to
predict or suggest the returns that might be experienced by the funds or an
individual investor in the funds. Investors should also be aware that the use of
a methodology different from that used above to calculate performance could
result in different performance data and that the methodology used above is not
the SEC standard to calculate total return for mutual funds. As a result, the
performance results may differ from the results calculated according to the
SEC's method.

(1)Lipper Flexible Portfolio Funds Average: An average of the performance of
all mutual funds in the Flexible Portfolio investment objective category. The
mutual funds that comprise the Average allocate their investments across
various asset classes, including domestic common stocks, bonds and money
market instruments, with a focus on total return.
(2)S&P 500 Index (registered trademark of Standard & Poor's Corp.): An unmanaged
index of 500 common stocks, weighted by market capitalization, representing
approximately 75% of NYSE (New York Stock Exchange) capitalization and 30% of
NYSE issues. Index performance includes the reinvestment of dividends and
capital gains.
(3)Russell 2000 Index: A market capitalization-weighted index published by
Frank Russell & Co. that measures the performance of the 2000 smallest
companies in the Russell 3000 Index, which represents approximately 10% of
total market capitalization of the Russell 3000. The index is considered to
be Frank Russell & Co.'s small capitalization index.
(4)Morgan Stanley Capital International Europe, Australia and Far East Index:
Reported in U.S. dollars, based on share prices and reinvested gross
dividends of approximately 1100 companies (only those securities deemed
sufficiently liquid for trading by investors) from the following 19
countries: Australia, Austria, Belgium, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway,
Singapore, Spain, Sweden, Switzerland and the United Kingdom (The EAFE return
shown is net of foreign withholding tax.)

As full compensation for the investment management and all other services
rendered by CIGNA Investments, the funds pay CIGNA Investments based on a
percentage of each fund's average net assets, as follows:

FUND ADVISORY FEE RATE
- ---- -----------------
Money Market Fund 0.35%
High Grade Fixed Income fund 0.60%
Core Plus Fixed Income Fund 0.65%
Ultra Core Plus Fund 0.65%
Emerging Debt Fund 1.00%
Balanced Fund 0.75%
Large Company Stock-Growth Fund 0.80%
Large company Stock-Value Fund 0.75%
S&P 500 Index Fund 0.25%
Small Company Stock-Growth Fund 1.00%
Small Company Stock-Value Fund 1.00%
International Stock Fund 1.00%

CIGNA Investments (not the funds) pays each sub-adviser its respective
sub-advisory fee.

PORTFOLIO MANAGERS:

The individuals primarily responsible for the funds are:

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<PAGE>

<TABLE>

<S> <C>
High Grade Fixed Income,
Core Plus Fixed Income,
Ultra Core Plus and
Fixed Income - ROBERT J. MOORE, ROBERT W. JUSTICH, LELAND E. CRABBE, PH.D. AND IRA EDELBLUM.
ROBERT J. MOORE. Mr. Moore is Chief Investment Officer of CIGNA Investments. He previously
had been co-head of global fixed income at Credit Suisse Asset Management where he oversaw the
U.S. fixed income team and chaired its sector allocation committees. Prior to joining Credit
Suisse in 1987, he was head of a fixed income sales research group at Salomon Brothers. Mr.
Moore holds a B.S. in Finance from Lehigh University and is a member of the Advisory Council
for the Lehigh University Business School.

ROBERT W. JUSTICH. Mr. Justich is Managing Director and senior member of the Global Fixed
Income portfolio management team of CIGNA Investments. Previously, Mr. Justich was a Managing
Director at Credit Suisse Asset Management, where he led the organization's global fixed
income credit function and was directly responsible for approximately $6 billion in fixed
income assets. Prior to joining Credit Suisse in 1995, he spent seven years as Director,
Corporate Bond Trading at Merrill Lynch, focusing on credit research and leading the
development of Merrill's first proprietary corporate bond trading desk. Mr. Justich holds a
B.A. degree and M.B.A. in Finance from Rutgers University.

LELAND E. CRABBE, PH.D. Mr. Crabbe is Managing Director and Core Fixed Income Portfolio
Manager at CIGNA Investments. Previously, he was with Credit Suisse Asset Management where he
worked in fixed income and managed emerging debt portfolios. Prior to joining Credit Suisse,
he was the corporate bond strategist at Merrill Lynch. Mr. Crabbe received his bachelor's
degree from Cal State-Fullerton and earned his master's degree and Ph.D. in economics from
UCLA.

IRA EDELBLUM. Mr. Edelblum is Managing Director and Core Fixed Income Portfolio Manager of
CIGNA Investments. Previously, Mr. Edelblum was with Credit Suisse Asset Management where he
was a portfolio manager specializing in corporate bonds. Mr. Edelblum is a graduate of the
State University of New York (Albany) and holds an M.B.A. from New York University.

Emerging Debt Fund - LELAND E. CRABBE, PH.D.

Balanced Fund - EDWARD C. MITCHELL JR., JAMES O. BAKER, MARGARET W. DURKES and DAVID S. GRIFFIN. They also
manage the INVESCO Total Return Fund. Mr. Mitchell, CFA, president of INVESCO Capital
Management, has managed the INVESCO Total Return Fund since its inception in 1987. Mr.
Mitchell, who began his investment career in 1969, received his B.A. from the University of
Virginia and his M.B.A. from the University of Colorado. He is also a Chartered Investment
Counselor. Mr. Baker, CFA, has been portfolio manager of the INVESCO Total Return Fund since
1997, and a portfolio manager with INVESCO Capital Management since 1992. An investment
</TABLE>

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<PAGE>

professional since 1977, he holds a B.A. from Mercer University. Ms. Durkes, CFA, has been
assistant portfolio manager of the INVESCO Total Return Fund since 1997, and an assistant
portfolio manager of the INVESCO Total Return Fund since 1997, and an assistant portfolio
manager with INVESCO Capital Management since 1993. She earned a B.A. from the Colorado
College. Mr. Griffin, CFA, has been the assistant portfolio manager of the INVESCO Total
Return Fund since 1993. An investment professional since 1983, he received his B.A. from Ohio
Wesleyan University and his M.B.A. from the College of William and Mary.

Large Company Stock-Growth Fund PHILIP W. FRIEDMAN, MARGARET K. JOHNSON and WILLIAM S. AUSLANDER. Philip W. Friedman is a
managing director of MSDW investment management and Morgan Stanley and is head of the
Institutional Equity Group of MSDW Investment management. Prior to joining MSDW Investment
Management in 1997, he was the North American Director of equity research at Morgan Stanley.
From 1990 to 1995, he was a member of Morgan Stanley's Equity Research team. Mr. Friedman
received a B.A. from Rutgers University and a Master of Management from the J.L. Kellogg
School of Management at Northwestern University. Margaret K. Johnson is a principal of MSDW
Investment Management and Morgan Stanley and a portfolio manager in the Institutional Equity
Group. She joined MSDW Investment Management in 1984. She holds a B.A. degree from Yale
college and is a Chartered Financial Analyst. William S. Auslander is a principal of MSDW
Investment Management and Morgan Stanley and a portfolio manager in the Institutional Equity
Group. He joined MSDW Investment management in 1995 as an equity analyst in the Institutional
Equity Group. Prior to joining MSDW Investment Management, he worked at Icahn & Co. for nine
years as an equity analyst. He received a B.A. from the University of Wisconsin at Madison and
an M.B.A. from Columbia University.

Large Company Stock-Value Fund JOHN A. LEVIN and JEFFREY A. KIGNER. Mr. Levin is chairman and chief executive officer of
John A. Levin & Co., Inc. A securities analyst, he has been in the investment industry since
1964. He holds B.S. and L.L.B. degrees from Yale University. Mr. Kigner is co-chairman and
chief investment officer of John A. Levin & Co., Inc. He has been a securities analyst since
1983. Mr. Kigner holds a B.S. from New York University and an M.B.A. from the New York
University School of Business.

Small Company Stock-Growth Fund GRANT R. BABYAK and YVETTE C. BOCKSTEIN. Mr. Babyak, senior vice president, joined Fiduciary
Trust Company International in 1996. An investment professional since 1988, he is responsible
for managing institutional portfolios in the small capitalization sector. Previously, he was
employed as an institutional portfolio manager at Avatar Associates and as a securities
analyst at U.S. Trust Company of New York, Mr. Babyak received a B.A. from Yale College and
an M.B.A. from New York University - Stern School of Business. Ms. Bockstein, Senior Vice
President, is responsible for managing institutional and individual portfolios and the special
situations commingled funds. She joined Fiduciary Trust Company International in 1978. Ms.

</TABLE>

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<PAGE>

<S> <C>
Bockstein holds a B.A. from UCLA and a Certificate en Sciences Econmiques from the Universite
de Bruxelles. Ms. Degener, Senior Vice President, is responsible for managing institutional
portfolios in the small capitalization and special situations sectors. She joined Fiduciary
Trust Company International in 1994. Ms. Degener holds a B.A. from Lake Erie College for
Women.

Small Company Stock-Value Fund ROBERT H. PERKINS. Mr. Perkins has managed the Berger Small Cap Value Fund (formerly the Omni
Investment Fund) since 1985. Mr. Perkins has been employed by Perkins, Wolf, McDonnell &
Company (PWM) since __________ and owns 49% of its outstanding common stock. He also serves as
president and a director of PWM.

International Fund - All investment decisions are made by a team of Bank of Ireland Asset Management (U.S.) Ltd.
Investment professionals.

</TABLE>

CIGNA Funds Group intends to seek an order from the SEC that will permit Board
of Trustees, without prior shareholder approval, to change the terms of any
advisory agreement with a sub-adviser or hire a new investment adviser, either
as a replacement for an existing sub-adviser or as an additional sub-adviser.
However, any change in sub-adviser will be communicated to shareholders in
writing.

PRICING OF SHARES

The price of fund shares is based on each 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 a fund by dividing the number of outstanding
shares of each class into the net assets of a fund attributable to that class.
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 if banks are open.

The funds value their investments for which market quotations are readily
available at market value. They value short-term investments that will mature
within 60 days at amortized cost, which approximates market value. They value
all other investments and assets at their fair value. The funds translate prices
for their investments quoted in foreign currencies into U.S. dollars at current
exchange rates. As a result, changes in the value of those currencies in
relation to the U.S. dollar may affect a fund's NAV. Because foreign markets may
be open at different times than the New York Stock Exchange, the value of a
fund's shares may change on days when shareholders are not able to buy or sell
them. If events materially affecting the values of a fund's foreign investments
occur between the close of foreign markets and the close of regular trading on
the New York Stock Exchange, these investments will be valued at their fair
value.

VALUATION OF MONEY MARKET FUND INVESTMENTS

The Money Market 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 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.

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<PAGE>

PURCHASE AND REDEMPTION OF SHARES

GENERAL INFORMATION

The funds presently offer various methods of purchasing shares (institutional
class, administrative class and retail class), enabling the funds 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.

The administrative and institutional classes are offered primarily to
institutional investors such as retirement plans, corporations, endowments and
foundations. The differences in the fee structures among classes are the result
of their separate fee arrangements for record-keeping and distribution services.
Different fees and expenses will affect performance.

INSTITUTIONAL CLASS SHARES (ALL FUNDS)
The institutional class does not impose any distribution or service fees, and is
generally offered to institutional investors such as employer-sponsored
retirement or savings plans that maintain an omnibus or pooled account with one
or more funds. The institutional class does not provide individualized record
keeping services for beneficial shareholders such as retirement plan
participants.

ADMINISTRATIVE CLASS SHARES (ADMINISTRATIVE CLASS A - EQUITY FUNDS, BALANCED
FUND AND MONEY MARKET FUND; ADMINISTRATIVE CLASS B - FIXED INCOME FUNDS) Both
administrative classes impose a fee to cover the expenses associated with
providing individualized record keeping and related services for each fund
shareholder and beneficial owner of fund shares.

ADMINISTRATIVE CLASS B - 12B-1 PLAN
In addition, the Fixed Income Funds have adopted a plan under Rule
12b-1 of the 1940 Act that allows the administrative class B of each
Fixed Income Fund to pay CIGNA Financial Services ("CFS"), the Funds'
distributor, .15% of its average daily net assets to cover expenses
primarily intended to result in sale of this class of shares of the
Fixed Income Funds. Because these fees are paid out of each Fixed
Income Fund's administrative class B 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.

RETAIL CLASS SHARES (ALL FUNDS)
The retail class imposes a fee to cover the expenses associated with providing
individualized record keeping and related services for each fund shareholder and
beneficial owner of fund shares.

RETAIL CLASS SHARES - 12B-1 PLAN
In addition, the funds have adopted a plan under Rule 12b-1 of the 1940
Act that allows the retail class of each fund to pay for services
provided to retail class shareholders. The retail class will pay CFS
.25% of its average daily net assets for providing shareholder services
to retail class shareholders, such as receiving and processing orders,
answering questions and handling correspondence from shareholders about
their accounts, and similar account administrative services. Because
these fees are paid out of each fund's retail class assets on an
on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales
charges.

HOW TO PURCHASE SHARES

Shares of each 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 funds do not issue share certificates.

-43-

<PAGE>

ELIGIBLE PURCHASERS

Institutional Class (All Funds)

o Institutional class shares are available to Connecticut General Life
Insurance Company ("CG Life") separate accounts offered to qualified
employer-sponsored pension and benefit plans and to other
employer-sponsored benefit plans investing over $100 million in CIGNA Funds
and other CIGNA managed assets with record keeping provided by CG Life or
its affiliate. For the purpose of determining the amount of CIGNA managed
assets, insurance investment products offered by CG Life may be included.
CIGNA managed assets do not include investments in CG Life separate
accounts that purchase mutual fund shares other than CIGNA Charter Mutual
Funds. Also, these plans and other accounts are eligible to purchase
institutional class shares if the plan sponsor confirms a good faith
expectation that investments in CIGNA managed assets by the sponsor and its
employee pension and benefit plans will attain $100 million (using the
higher of purchase price or current market value) within one year of
initial purchase and if the plan sponsor agrees that institutional class
shares may be redeemed and administrative class shares purchased if that
level is not attained.

o Other institutional investors investing over $25 million ($5 million for a
Fixed Income Fund) in the specific CIGNA Charter Mutual Fund in which the
investor wishes to invest and who do not receive record keeping services
from CG Life or its affiliate.

Administrative Classes (Class A - Equity, Balanced and Money Market Funds)
(Class B - Fixed Income Funds)

o Administrative class shares are available to CG Life separate accounts
offered to qualified employer-sponsored pension and
benefit plans and to other employer-sponsored pension and benefit plans
investing over $20 million in CIGNA Funds and other CIGNA managed assets
with record keeping provided by CG Life or its affiliate. For the purpose
of determining the amount of CIGNA managed assets, insurance investment
products offered by CG Life may be included. CIGNA managed assets do not
include investments in CG Life separate accounts that purchase mutual
fund shares other than CIGNA Charter Mutual Funds. Also, these plans are
eligible to purchase the administrative class shares if the plan sponsor
confirms a good faith expectation that investments in CIGNA managed assets
by the sponsor and its employee pension and benefit plans will attain $20
million (using the higher of purchase price or current market value) within
one year of initial purchase and if the plan sponsor agrees that
administrative class shares may be redeemed and retail class shares
purchased if that level is not attained.

o Other institutional investors investing over $1 million in the specific
CIGNA Charter Mutual Fund in which the investor wishes to invest and who do
not receive record keeping services from CG Life or its affiliate, and
individual retirement accounts investing over $1 million in CIGNA Charter
Mutual Funds.

Retail Class (All Funds)

o Retail class shares are available to individual investors,
employer-sponsored pension and benefit plans, and other accounts.

In addition to the asset requirements described above, financial intermediaries
or plan record-keepers, including CG Life and other CIGNA affiliates, may
require retirement plans to meet certain additional requirements, such as
allocation of plan assets or a minimum level of assets per participant, in order
to purchase shares of any class of the funds. Such intermediaries or
record-keepers may also require plans to pay additional charges for services
provided.

-44-

<PAGE>

RETIREMENT AND SAVINGS PLANS AND PLAN PARTICIPANTS

One or more of the funds may be available as investment options in
employer-sponsored or other types of 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 a CIGNA Charter Fund as an investment
option.

BROKERAGE ACCOUNT PURCHASES

All other investors (except for institutional investors eligible to invest in
the institutional class) must purchase shares through CFS. Orders placed through
your brokerage representative are priced as of the close of business on the day
the order is received by CFS, provided CFS receives the order 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. 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 regarding establishing a
brokerage account and purchasing shares may be obtained by calling CFS at
1-888-CIGNA-FS (244-6237)

INSTITUTIONAL INVESTORS
Institutional investors investing in the institutional class of the funds (other
than retirement or savings plan participants) should call CIGNA Funds Services
at 1-800-xxx-xxxx to place orders. Purchase orders are priced as of the close of
business on the day the order is received by CIGNA Funds Services, provided it
receives the order by 4:00 p.m. Eastern Time.

ADDITIONAL INFORMATION:

Each fund reserves the right to limit purchases of shares, or may refuse to sell
shares (including purchases by exchange) of a fund to any person, if in the
judgment of fund management, this is in the best interest of the fund.

Each fund may convert from a portfolio directly holding investment securities to
a "feeder" fund of a "master" fund having substantially the same objectives,
policies and strategies as described in this prospectus if the trustees of the
trust determine it is in the best interests of the fund and its shareholders to
do so. If this were to happen, each fund would seek to achieve its investment
objective by owning shares of a corresponding master fund, which in turn would
own the types of securities and employ the types of policies and strategies
described in this prospectus.

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 (except for institutional investors eligible to invest in
the institutional class) 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. A signature guarantee may be required before
payment can be made on redemption orders. For additional information regarding
redeeming shares from your brokerage account, call CFS at 1-888-CIGNA-FS
(244-6237).

INSTITUTIONAL INVESTORS

-45-

<PAGE>

Institutional investors in the institutional class (other than retirement or
savings plan participants) should call CIGNA Funds Services at 1-800-xxx-xxxx.
Shares will be redeemed at the net asset value next determined after CIGNA Funds
Services receives the redemption request.

FURTHER REDEMPTION INFORMATION.

Redemptions from the funds 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 funds 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.

Each of the funds 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 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.

Investors with CFS brokerage accounts should call 1-888-CIGNA-FS (244-6237) for
account information or to speak to their dealer representative.

Institutional investors in the institutional class should call 1-800-xxx-xxxx.

HOW TO EXCHANGE SHARES.
If you want to switch your investment from one fund to another, you can exchange
your fund shares for shares of the same class of another fund at the respective
net asset values of the funds involved.

The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and have an
adverse effect on all shareholders. In order to limit excessive exchange
activity and otherwise promote the best interests of the funds, the funds
reserve the right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. The fund into which you
would like to exchange may also reject your exchange.

Retirement or savings plans may allow participants to exchange monies from one
investment option to another. Plan participants should check with their employer
or plan administrator for details on the rules governing exchanges in their
plan. Exchanges are accepted by the funds only as permitted by the applicable
retirement or savings plan. Participants= plan administrators or employers can
explain how frequently exchanges are allowed.

DIVIDENDS AND DISTRIBUTIONS

The Money Market Fund declares dividends daily and distributes dividends
monthly. The fixed income funds declare and distribute dividends monthly. The
equity funds and the Balanced Fund declare and distribute dividends annually.

All distributions will be automatically reinvested for you in shares of the fund
making the distribution at the net asset value determined on the record date.

-46-

<PAGE>

TAX MATTERS

TAX EFFECTS OF DISTRIBUTIONS AND TRANSACTIONS

As with any investment, your investment in a fund could have tax consequences
for you. If you are not investing through a tax-advantaged retirement account,
you should consider these tax consequences.

TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are subject to
federal income tax, and may also be subject to state or local taxes.

For federal tax purposes, each fund's dividends and distributions of short-term
capital gains are taxable to you as ordinary income. Each fund's distributions
of long-term capital gains are taxable to you generally as capital gains. The
rates that you will pay on any capital gains distributions will depend on how
long a fund holds its portfolio securities. This is true no matter how long you
have owned your shares in the fund and even though your distributions are
reinvested in shares of the fund.

If you buy shares when a fund has realized but not yet distributed income or
capital gains, you will be "buying a dividend" by paying the full price for the
shares and then receiving a portion of the price back in the form of a taxable
distribution.

Any taxable distributions you receive from a fund will normally be taxable to
you when you receive them, regardless of your distribution option.

TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may result in a
capital gain or loss for federal tax purposes. A capital gain or loss on your
investment in a fund is the difference between the cost of your shares and the
price you receive when you sell them. The Money Market Fund seeks to maintain a
constant net asset value of $1.00 per share, so a sale of shares of this fund
generally will not result in a gain or loss.

-47-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the
funds' financial performance for the past 5 years, or life of the fund,
whichever is shorter. 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 funds' financial statements, are included in the
annual report which is available upon request.

CIGNA MONEY MARKET FUND
YEARS ENDED DECEMBER 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS

Net investment income 0.05 0.05 0.05 0.05 0.03

Net realized and unrealized gain on securities - - - - -
------ ------ ------ ------- ------

TOTAL FROM INVESTMENT OPERATIONS 0.05 0.05 0.05 0.05 0.03
------ ------ ------ ------- ------

LESS DISTRIBUTIONS:

Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.03)

Distributions from capital gains - - - - -
------ ------ ------ ------- ------

TOTAL DISTRIBUTIONS (0.05) (0.05) (0.05) (0.05) (0.03)
------ ------ ------ ------ ------

NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= ======

TOTAL RETURN * 5.18% 5.27% 4.91% 5.33% 3.43%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 229,619 $ 171,065 $ 120,505 $ 1,034 $ 16,693
Ratio of operating expenses to average net assets ** 0.45% 0.44% 0.45% 0.80% 1.00%
Ratio of net investment income to average net assets *** 5.06% 5.14% 4.95% 5.38% 3.32%

</TABLE>

* Total return would have been lower if certain expenses had not been
reimbursed by the Adviser.
** Ratios of expenses to average net assets prior to reimbursement of expenses
were 0.47%, 0.51%, 0.69%, 1.21% and 1.11% respectively, for the 1998, 1997,
1996, 1995 and 1994 periods.
*** Ratios of net investment income to average net assets prior to reimbursement
of expenses were 5.03%, 5.07%, 4.71%, 4.91%, and 3.22% respectively, for the
1998, 1997, 1996, 1995 and 1994 periods.

-48-

<PAGE>

CIGNA S&P 500 INDEX FUND
YEARS ENDED DECEMBER 31,
1998 1997*
- --------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.95 $ 10.00
INCOME FROM INVESTMENT OPERATIONS

Net investment income + 0.13 0.07

Net realized and unrealized gain on securities 2.97 0.95
----- -----

TOTAL FROM INVESTMENT OPERATIONS 3.10 1.02
----- -----

LESS DISTRIBUTIONS:

Dividends from net investment income (0.16) (0.07)

Distributions from capital gains (0.05) -
------ -----

TOTAL DISTRIBUTIONS (0.21) (0.07)
------ ------

NET ASSET VALUE, END OF PERIOD $ 13.84 $ 10.95
======== =======

TOTAL RETURN 28.28% 10.23%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 291,265 $ 105,845
Ratio of operating expenses to average net assets 0.35%a 0.18%a **
Ratio of net investment income to average net
assets 1.27%b 0.79%b **
Portfolio turnover 3% 4%

* For the period from July 1, 1997 (commencement of operations) through
December 31, 1997.
** Not annualized.
a. Ratio of expenses to average net assets prior to the reduction of advisory
fee was 0.43% and 0.36%, respectively, for the period ended December 31,
1998 and for the six months ended December 31, 1997.
b. Ratio of net investment income to average net assets prior to the reduction
of advisory fee was 1.18% and 0.61%, respectively, for the year ended
December 31, 1998 and for the six months ended December 31, 1997.
+ Net investment income per share has been calculated in accordance with SEC
requirements, except that end of year accumulated/undistributed net
investment income has not been adjusted to reflect current year permanent
differences between financial and tax accounting.

-49-

<PAGE>

For investors who want more information about the funds the following documents
are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the funds' investments
is available in the funds' annual and semi-annual reports to shareholders. In
the funds' annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the funds' performance
during their last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the funds 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 funds by contacting the funds at:

CIGNA Financial Services
P.O. Box 150476
Hartford, CT 06115-0476

Telephone: 1-888-CIGNA-FS (244-6237)

You can review and copy the funds' 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 CHARTER MUTUAL FUNDS/SM/
CIGNA CHARTER MONEY MARKET MUTUAL FUND
CIGNA CHARTER HIGH GRADE FIXED INCOME MUTUAL FUND
CIGNA CHARTER CORE PLUS FIXED INCOME MUTUAL FUND
CIGNA CHARTER ULTRA CORE PLUS FIXED INCOME MUTUAL FUND
CIGNA CHARTER EMERGING DEBT MUTUAL FUND
CIGNA CHARTER BALANCED MUTUAL FUND
CIGNA CHARTER LARGE COMPANY STOCK-GROWTH MUTUAL FUND
CIGNA CHARTER LARGE COMPANY STOCK-VALUE MUTUAL FUND
CIGNA CHARTER S&P 500 INDEX MUTUAL FUND
CIGNA CHARTER SMALL COMPANY STOCK-GROWTH MUTUAL FUND
CIGNA CHARTER SMALL COMPANY STOCK-VALUE MUTUAL FUND
CIGNA CHARTER INTERNATIONAL STOCK MUTUAL FUND
(Investment
Company Act
File No. 811-1646)

<PAGE>

APPENDIX - DESCRIPTION OF BOND RATINGS

MOODY'S INVESTORS SERVICE, INC.

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations
(i.e, they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest-rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

A-1

<PAGE>

STANDARD & POOR'S CORPORATION

AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment is EXTREMELY
STRONG.

AA: An obligation rated AA differs from the highest rated obligations only
in small degree. The obligor's capacity to meet its financial commitment on the
obligation is VERY STRONG.

A: An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still STRONG.

BBB: An obligation rated BBB exhibits ADEQUATE protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

Obligations rated BB, B, CCC, CC and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB: An obligation rated BB is LESS VULNERABLE to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B: An obligation rated B is MORE VULNERABLE to nonpayment than obligations
rated BB but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial or economic conditions
will likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.

CCC: An obligation rated CCC is CURRENTLY VULNERABLE to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.

CC: An obligation rated CC is CURRENTLY HIGHLY VULNERABLE to nonpayment.

C: The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.

D: An obligation rated D is in payment default. The D rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of similar action if
payments on an obligation are jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk - such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.

A-2
<PAGE>

C I G N A F U N D S G R O U P
________________________________________________________________________________
CIGNA CHARTER MUTUAL FUNDS/SM/

FIXED INCOME FUNDS
------------------
Charter Money Market Mutual Fund
Charter High Grade Fixed Income Mutual Fund
Charter Core Plus Fixed Income Mutual Fund
Charter Ultra Core Plus Fixed Income Mutual Fund
Charter Emerging Market Debt Mutual Fund

BALANCED FUND
-------------
Charter Balanced Mutual Fund

EQUITY FUNDS
------------
Charter Large Company Stock-Growth Mutual Fund
Charter Large Company Stock-Value Mutual Fund
Charter S&P 500 Index Mutual Fund
Charter Small Company Stock-Growth Mutual Fund
Charter Small Company Stock-Value Mutual Fund
Charter International Stock Mutual Fund

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, 2 0 0 0

This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the prospectus for the funds listed above (the "Funds"),
series of CIGNA Funds Group ("CFG" or the "Trust") having the same date as the
date of this Statement of Additional Information, as may be amended from time to
time. Much of the information contained in this document expands upon subjects
discussed in the prospectus. No investment in shares of the funds should be made
without first reading the prospectus. A copy of the prospectus of the Funds may
be obtained by writing to CIGNA Funds Shareholder Services, 900 Cottage Grove
Road, Hartford, Connecticut 06152-2210.

The financial statements for CIGNA Funds Group for the year ended December 31,
1998, 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, 1998 have been examined by
PricewaterhouseCoopers LLP, independent accountants, whose reports thereon also
are incorporated herein by reference. The Funds' shareholder reports are
available, without charge, upon request, by calling 1-800-528-6718.

Page 1

<PAGE>

TABLE OF CONTENTS
-----------------

PAGE
----

GENERAL INFORMATION ABOUT THE TRUST............................................3
- -----------------------------------

THE FUNDS, THEIR INVESTMENT OBJECTIVES AND POLICIES............................3
- ---------------------------------------------------

CLASSIFICATION.................................................................3
- --------------

INVESTMENT STRATEGIES AND RISKS................................................3
- -------------------------------

FUND POLICIES ................................................................21
- -------------

MANAGEMENT OF THE TRUST.......................................................22
- -----------------------

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................25
- ---------------------------------------------------

INVESTMENT ADVISORY AND OTHER SERVICES........................................26
- --------------------------------------

UNDERWRITER...................................................................28
- -----------

CUSTODIAN AND TRANSFER AGENT..................................................30
- ----------------------------

INDEPENDENT ACCOUNTANTS.......................................................30
- -----------------------

BROKERAGE ALLOCATION AND OTHER PRACTICES......................................30
- ----------------------------------------

CAPITAL STOCK.................................................................32
- -------------

PURCHASE, REDEMPTION AND PRICING OF SECURITIES................................33
- ----------------------------------------------

TAX MATTERS...................................................................35
- -----------

PERFORMANCE INFORMATION.......................................................36
- -----------------------

REDEMPTIONS PAID IN CASH......................................................40
- ------------------------

FINANCIAL STATEMENTS..........................................................40
- --------------------

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, and as further
amended on ______. The Funds are series or separate portfolios 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 assets received by the Trust from the issue or sale of shares of each of its
series of shares, and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors, are specifically allocated to the
appropriate series. They constitute the underlying assets of each series, are
required to be segregated on the books of account, and are to be charged with
the expenses with respect to such series. Any general expenses of the Trust not
readily identifiable as belonging to a particular series shall be allocated by
or under the direction of the Board of Trustees, primarily on the basis of
relative net assets.

Each share of each series represents an equal proportionate interest in that
series with each other share and is entitled to such dividends and distributions
out of the income belonging to such series as are declared by the Board. Upon
any liquidation of the Trust, shareholders of each series of the Trust are
entitled to share pro rata in the net assets belonging to that series available
for distribution.

THE FUNDS, THEIR INVESTMENT OBJECTIVES AND POLICIES
- ---------------------------------------------------

This Statement of Additional Information provides additional information about
the investment policies and operations of the Funds.

CLASSIFICATION
- --------------

The Funds are diversified, open-end management investment companies.

INVESTMENT STRATEGIES AND RISKS
- -------------------------------

MONEY MARKET FUND
- -----------------

The primary types of money market instruments in which the Money Market Fund may
invest are as follows:

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.

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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 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.

If CIGNA Investments determines that it may be advantageous to invest in other
types of money market instruments, the Money Market Fund may invest in such
instruments, if it is permitted to do so by its investment objective, policies
and restrictions.

OBLIGATIONS OF DEPOSITORY INSTITUTIONS AND COMMERCIAL PAPER OF FOREIGN ISSUERS.
As discussed in the Prospectus, the Money Market 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 additional investment risks compared 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 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 custodian for
the Fund's portfolio securities or by other U.S. or foreign banks under
subcustodian arrangements complying with the requirements of the Investment

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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. As discussed in the prospectus, the Fund may
also invest in U.S. dollar-denominated commercial paper and other short-term
obligations issued by foreign entities. These 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.

RATING AGENCIES. The Money Market 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 Money Market 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 may deem appropriate to determine whether net
asset value of the Money Market Funds, calculated by using available market
quotations, deviates from $1.00 per share and, if so, whether this deviation may
result in material dilution or is otherwise unfair to existing shareholders. In
the event the Trustees determine that a deviation having this 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 Money Market Fund
resulting from the reinvestment of dividend income is reflected by an increase
in the number of shares in the shareholder's account.

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FIXED INCOME FUNDS AND BALANCED FUND
- ------------------------------------

In pursuing their investment objectives, the High Grade Fixed Income Fund, Core
Plus Fixed Income Fund, Ultra Core Plus Fixed Income Fund, Emerging Market Debt
Fund (the "Fixed Income Funds"), and Balanced Fund may invest in the following
types of interest-bearing securities:

(1) Marketable debt securities that are rated "investment-grade" at
the time of purchase, i.e., within the four highest grades
assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or
Standard & Poor's Corporation (AAA, AA, A or BBB).

(2) U.S. Government securities, as described below.

(3) Obligations of, or guaranteed by, U.S. banks or bank holding
companies, which obligations are considered by CIGNA Investments
to have investment qualities comparable to securities which may be
purchased under Item (1) above, although there can be no assurance
that these obligations shall have such qualities.

(4) Money market instruments eligible for purchase by the Money Market
Fund, which instruments are considered by CIGNA Investments to
have investment qualities comparable to securities which may be
purchased under Item (1) above, although there can be no assurance
that said obligations shall have such qualities.

(5) Marketable securities (payable in U.S. dollars) of, or guaranteed
by, the Government of Canada or of a Province of Canada or any
instrumentality or political subdivision thereof.

The Fixed Income Funds' assets may also be invested in other fixed-income
securities, including straight debt and convertible debt securities and
preferred stock. Investment positions may be held in common stock and similar
equity securities (including warrants or rights to purchase equity investments
as described below) when they are acquired as parts of units with fixed-income
securities or upon exercise of such warrants or rights or upon the conversion of
such securities. The Fixed Income Funds also may purchase and sell interest rate
futures contracts and purchase options on futures contracts, foreign currency
contracts and swap agreements, as described later in this Statement of
Additional Information.

U.S. Government securities include a variety of securities that are issued or
guaranteed by the U.S. Treasury, by various agencies of the U.S. Treasury, by
various agencies of the U.S. Government or by various instrumentalities that
have been established or sponsored by the U.S. Government. Treasury securities
include Treasury bills, Treasury notes and Treasury bonds. Treasury bills have a
maturity of one year or less; Treasury notes have maturities of one to ten
years; Treasury bonds generally have a maturity of greater than ten years. The
Federal agencies established as instrumentalities of the U.S. Government to
supervise and finance certain types of activities include the Federal Home Loan
Banks, the Government National Mortgage Association, the Federal National
Mortgage Association, the Federal Land Banks, the Small Business Administration,
the Export-Import Bank, the Federal Intermediate Credit Banks and the Bank for
Cooperatives.

U.S. Government securities may take the form of participation interests in, and
may be evidenced by, deposit or safekeeping receipts. Participation interests
are pro rata interests in U.S. Government securities such as interests in pools
of mortgages sold by the Government National Mortgage Association; instruments
evidencing deposit or safekeeping are documentary receipts for such original
securities held in custody by others.

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U.S. Government obligations, including those that are guaranteed by Federal
agencies or instrumentalities, may or may not be backed by the "full faith and
credit" of the United States. Some securities issued by Federal agencies or
instrumentalities are only supported by the credit of the agency or
instrumentality (such as the Federal Home Loan Banks) while others have an
additional line of credit with the U.S. Treasury (such as the Federal National
Mortgage Association). Certain securities issued by Federal agencies or
instrumentalities backed by the full faith and credit of the U.S. Government
include those issued by the Government National Mortgage Association and the
Small Business Administration. In the case of securities not backed by the full
faith and credit of the United States, the Fund must look principally to the
agency issuing or guaranteeing the obligation for ultimate repayment and may not
be able to assert a claim against the United States itself in the event the
agency or instrumentality does not meet its commitments.

The Fixed Income funds may also invest in:

FOREIGN DEBT SECURITIES. The returns on foreign debt securities reflect interest
rates and other market conditions prevailing in those countries and the effect
of gains and losses in the denominated currencies against the U.S. dollar, which
have had a substantial impact on investment in foreign fixed-income securities.
The relative performance of various countries' fixed-income markets historically
has reflected wide variations relating to the unique characteristics of each
country's economy. Year-to-year fluctuations in certain markets have been
significant, and negative returns have been experienced in various markets from
time to time.

The foreign government securities in which the Funds may invest generally
consist of obligations issued or backed by national, state or provincial
governments or similar political subdivisions or central banks in foreign
countries. Foreign government securities also include debt obligations of
supranational entities, which include international organizations designated, or
backed by governmental entities to promote economic reconstruction or
development, international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development (the
"World Bank"), the European Coal and Steel Community, the Asian Development Bank
and the InterAmerican Development Bank.

Foreign government securities also include debt securities of
"quasi-governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). Debt securities
of quasi-governmental agencies are issued by entities owned by either a
national, state or equivalent government or are obligations of a political unit
that is not backed by the national government's full faith and credit and
general taxing powers. An example of a multinational currency unit is the
European Currency Unit ("ECU"). An ECU represents specified amounts of the
currencies of certain member states of the European Economic Community. The
specific amounts of currencies comprising the ECU may be adjusted by the Council
of Ministers of the European Community to reflect changes in relative values of
the underlying currencies.

BRADY BONDS. Each Fund may invest in so-called "Brady Bonds," which are
securities created through the exchange of existing commercial bank loans to
Latin American public and private entities for new bonds in connection with debt
restructurings under a debt restructuring plan announced by former U.S.
Secretary of the Treasury Nicholas F. Brady (the "Brady Plan"). Brady Bonds may
be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are currently actively traded in the
over-the-counter secondary market for Latin American debt instruments.

Dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on these Brady Bonds generally are collateralized by
cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of rolling interest payments or, in the case of floating
rate

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bonds, initially is equal to at least one year's rolling interest payments
based on the applicable interest rate at that time and is adjusted at regular
intervals thereafter.

All Mexican Brady Bonds issued to date, except New Money Bonds, have principal
repayments at final maturity fully collateralized by U.S. Treasury zero coupon
bonds (or comparable collateral in other currencies) and interest coupon
payments collateralized on an 18-month rolling-forward basis by funds held in
escrow by an agent for the bondholders. Approximately half of the Venezuelan
Brady Bonds issued to date have principal repayments at final maturity
collateralized by U.S. Treasury zero coupon bonds (or comparable collateral in
other currencies), while slightly more than half have interest coupon payments
collateralized on a 14-month rolling-forward basis by securities held by the
Federal Reserve Bank of New York as collateral agent.

Brady Bonds are often viewed as having three or four valuation components: the
collateralized repayment of principal at final maturity; the collateralized
interest payments; the uncollateralized interest payments; and any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constituting the "residual risk").

LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Fund may invest in fixed and floating
rate loans ("Loans") arranged through private negotiations between a foreign
government and one or more financial institutions ("Lenders"). The majority of
the Funds' investments in Loans in Latin America are expected to be in the form
of participations in Loans ("Participations") and assignments of portions of
Loans from third parties ("Assignments"). Participations typically will result
in a Fund having a contractual relationship only with the Lender, not with the
borrower. A participating fund will have the right to receive payments of
principal, interest and any fees to which it is entitled only from the Lender
selling the Participation and only upon receipt by the Lender of the payments
from the borrower. In connection with purchasing Participations, a Fund
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the Loan ("Loan Agreement"), nor any
rights of set-off against the borrower, and a Fund may not directly benefit from
any collateral supporting the Loan in which it has purchased the Participation.
As a result, participating Funds will assume the credit risk of both the
borrower and the Lender that is selling the Participation. In the event of the
insolvency of the Lender selling a Participation, a Fund may be treated as a
general creditor of the Lender and may not benefit from any set-off between the
Lender and the borrower. The Funds will acquire Participations only if the
Lender interpositioned between the Funds and the borrower is determined by the
Adviser to be creditworthy. Each Fund currently anticipates that it will not
invest more than 5% of its net assets in Loan Participations and Assignments.

CONVERTIBLE SECURITIES. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest paid or accrued on debt or the
dividend paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Before conversion, convertible securities have
characteristics similar to nonconvertible debt securities in that they
ordinarily provide a stable stream of income with generally higher yields than
those of common stocks of the same or similar issuers. Convertible securities
rank senior to common stock in a corporation's capital structure but are usually
subordinated to comparable nonconvertible securities. While no securities
investment is completely without risk, investments in convertible securities
generally entail less risk than the corporation's common stock, although the
extent to which such risk is reduced depends in large measure upon the degree to
which the convertible security sells above its value as a fixed-income security.
Convertible securities have unique investment characteristics in that they
generally (1) have higher yields than common stocks, but lower yields than
comparable non-convertible securities, (2) are less subject to fluctuation in
value than the underlying stock since they have fixed-income characteristics and
(3) provide the potential for capital appreciation if the market price of the
underlying common stock increases. Most convertible securities currently are
issued by U.S. companies,

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although a substantial Eurodollar convertible securities market has developed,
and the markets for convertible securities denominated in local currencies are
increasing.

The value of a convertible security is a function of its "investment value"
(determined by its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value. Generally
the conversion value decreases as the convertible security approaches maturity.
To the extent the market price of the underlying common stock approaches or
exceeds the conversion price, the price of the convertible security will be
increasingly influenced by its conversion value. A convertible security
generally will sell at a premium over its conversion value by the extent to
which investors place value on the right to acquire the underlying common stock
while holding a fixed-income security.

The Funds have no current intention of converting any convertible securities
they may own into equity securities or holding them as equity securities upon
conversion, although they may do so for temporary purposes. A convertible
security might be subject to redemption at the option of the issuer at a price
established in the convertible security's governing instrument. If a convertible
security held by a Fund is called for redemption, the Fund will be required to
permit the issuer to redeem the security, convert it into the underlying common
stock or sell it to a third party. The Funds will invest in convertible
securities without regard to their credit rating. See "Risk Factors and Special
Considerations -- Lower-Rated Securities" in the Prospectus.

MORTGAGE-BACKED SECURITIES. The Funds may invest in mortgage-backed securities,
such as those issued by the Government National Mortgage Association ("GNMA"),
the Federal National Mortgage Association ("FNMA"), the Federal Home Loan
Mortgage Corporation ("FHLMC") or certain foreign issuers, as well as by private
issuers such as commercial investment banks, savings and loan institutions,
mortgage bankers and private mortgage insurance companies. Mortgage-backed
securities represent direct or indirect participations in, or are secured by and
payable from, mortgage loans secured by real property. The mortgages backing
these securities include, among other mortgage instruments, conventional 30-year
fixed rate mortgages, 15-year fixed rate mortgages, graduated payment mortgages
and adjustable rate mortgages. The government or the issuing agency typically
guarantees the payment of interest and principal of these securities. However,
the guarantees do not extend to the securities' yield or value, which are likely
to vary inversely with fluctuations in interest rates, nor do the guarantees
extend to the yield or value of the Fund's shares. These securities generally
are "pass-through" instruments, through which the holders receive a share of all
interest and principal payments from the mortgages underlying the securities,
net of certain fees.

Yields on pass-through securities are typically quoted by investment dealers and
vendors based on the maturity of the underlying instruments and the associated
average life assumption. The average life of pass-through pools varies with the
maturities of the underlying mortgage loans. A pool's term may be shortened by
unscheduled or early payments of principal on the underlying mortgages. The
occurrence of mortgage prepayments is affected by various factors, including the
level of interest rates, general economic conditions, the location, scheduled
maturity and age of the mortgage and other social and demographic conditions.
Because prepayment rates of individual pools vary widely, it is not possible to
predict accurately the average life of a particular pool. For pools of fixed
rate 30-year mortgages, a common industry practice in the U.S. has been to
assume that prepayments will result in a 12-year

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average life. At present, pools, particularly those with loans with other
maturities or different characteristics, are priced on an assumption of average
life determined for each pool.

Although certain mortgage-related securities are guaranteed by a third party or
are otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a Fund purchases a mortgage-related security at
a premium, that portion may be lost if there is a decline in the market value of
the security whether resulting from increases in interest rates or prepayment of
the underlying mortgage collateral. As with other interest-bearing securities,
the prices of such securities are inversely affected by changes in interest
rates. However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true because in periods of
declining interest rates mortgages underlying securities are prone to
prepayment. In periods of falling interest rates, the rate of prepayment tends
to increase, thereby shortening the actual average life of a pool of
mortgage-related securities. Conversely, in periods of rising rates the rate of
prepayment tends to decrease, thereby lengthening the actual average life of the
pool. However, these effects may not be present, or may differ in degree, if the
mortgage loans in the pools have adjustable interest rates or other special
payment terms, such as a prepayment charge. Actual prepayment experience may
cause the yield of mortgage-backed securities to differ from the assumed average
life yield. Reinvestment of prepayments may occur at higher or lower interest
rates than the original investment, thus affecting a Fund's yield. For this and
other reasons, a mortgage-related security's stated maturity may be shortened by
an unscheduled prepayment on underlying mortgages and, therefore, it is not
possible to predict accurately the security's return to a Fund. Mortgage-
related securities provide regular payments consisting of interest and
principal. No assurance can be given as to the return a Fund will receive when
these amounts are reinvested.

The rate of interest on mortgage-backed securities is lower than the interest
rates paid on the mortgages included in the underlying pool due to the annual
fees paid to the servicer of the mortgage pool for passing through monthly
payments to certificate holders and to any guarantor, such as GNMA, and due to
any yield retained by the issuer. Actual yield to the holder may vary from the
coupon rate, even if adjustable, if the mortgage-backed securities are purchased
or traded in the secondary market at a premium or discount. In addition, there
is normally some delay between the time the issuer receives mortgage payments
from the servicer and the time the issuer makes the payments on the
mortgage-backed securities, and this delay reduces the effective yield to the
holder of such securities.

COLLATERALIZED MORTGAGE OBLIGATIONS. The Funds may also purchase collateralized
mortgage obligations ("CMOs") issued by a U.S. Government instrumentality which
are backed by a portfolio of mortgages or mortgage-backed securities. The
issuer's obligations to make interest and principal payments is secured by the
underlying portfolio of mortgages or mortgage-backed securities. Generally, CMOs
are partitioned into several classes with a ranked priority by which the classes
of obligations are redeemed. These securities may be considered mortgage
derivatives. The Funds may only invest in CMOs issued by FHLMC, FNMA or other
agencies of the U.S. Government or instrumentalities established or sponsored by
the U.S. Government.

CMOs provide an investor with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-related securities. Issuers of CMOs
frequently elect to be taxed as pass-through entities known as real estate
mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. Coupons can be fixed or variable. If variable, they can move with or in
the reverse direction of interest rates. The coupon changes could be a multiple
of the actual rate change and there may be limitations on what the coupon can
be. Cash flows of pools can also be divided into a principal only class and an
interest only class. In this case the principal only class will only receive
principal cash flows from the pool. All interest cash flows go to the interest
only class. The relative payment rights of the various CMO classes may be
structured in many ways, either sequentially or by other rules of priority.
Generally, payments of principal

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are applied to the CMO classes in the order of their respective stated
maturities, so that no principal payments will be made on a CMO class until all
other classes having an earlier stated maturity date are paid in full.
Sometimes, however, CMO classes are "parallel pay," i.e. payments of principal
are made to two or more classes concurrently. CMOs may exhibit more or less
price volatility and interest rate risk than other types of mortgage-related
obligations.

The CMO structure returns principal to investors sequentially, rather than
according to the pro rata method of a pass-through. In the traditional CMO
structure, all classes (called tranches) receive interest at a stated rate, but
only one class at a time receives principal. All principal payments received on
the underlying mortgages or securities are first paid to the "fastest pay"
tranche. After this tranche is retired, the next tranche in the sequence becomes
the exclusive recipient of principal payments. This sequential process continues
until the last tranche is retired. In the event of sufficient early repayments
on the underlying mortgages, the "fastest-pay" tranche generally will be retired
prior to its maturity. Thus the early retirement of a particular tranche of a
CMO held by a Fund would have the same effect as the prepayment of mortgages
underlying a mortgage-backed pass-through security as described above.

ASSET-BACKED SECURITIES. Each Fund may invest in asset-backed securities, which
represent participations in, or are secured by and payable from, assets such as
motor vehicle installment sales, installment loan contracts, leases of various
types of real and personal property and receivables from revolving credit
(credit card) agreements. The Funds may also invest in other types of
asset-backed securities that may be available in the future. Such assets are
securitized through the use of trusts and special purpose corporations. Payments
or distributions of principal and interest may be guaranteed up to certain
amounts and for a certain time period by a letter of credit or a pool insurance
policy issued by a financial institution unaffiliated with the trust or
corporation. The estimated life of an asset-backed security varies with the
prepayment experience with respect to the underlying debt instruments. The rate
of such prepayments, and hence the life of the asset-backed security, will be
primarily a function of c current market rates, although other economic and
demographic factors will be involved. In certain circumstances, asset-backed
securities may be considered illiquid securities subject to the percentage
limitations described above. Asset-backed securities are considered an industry
for industry concentration purposes, and a Fund will therefore not purchase any
asset-backed securities which would cause 25% or more of a Fund's net assets at
the time of purchase to be invested in asset-backed securities.

Asset-backed securities present certain risks that are not presented by other
securities in which a Fund may invest. Automobile receivables generally are
secured by automobiles. Most issuers of automobile receivables permit the loan
servicers to retain possession of the underlying obligations. If the servicer
were to sell these obligations to another party, there is a risk that the
purchaser would acquire an interest superior to that of the holders of the
asset-backed securities. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws, the
trustee for the holders of the automobile receivables may not have a proper
security interest in the underlying automobiles. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on these securities. Credit card receivables are
generally unsecured, and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due.

ZERO COUPON SECURITIES. Each Fund may invest in "zero coupon" U.S. Treasury,
foreign government and U.S. and foreign corporate debt securities, which are
bills, notes and bonds that have been stripped of their unmatured interest
coupons and receipts or certificates representing interests in such stripped
debt obligations and coupons. Each Fund currently anticipates that zero coupon
securities will not exceed 5% of its net assets. A zero coupon security pays no
interest to its holder prior to maturity. Accordingly, such securities usually
trade at a deep discount from their face or par value and will be subject to
greater fluctuations of market value in response to

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changing interest rates than debt obligations of comparable maturities that make
current distributions of interest. The Funds anticipate that they will not
normally hold zero coupon securities to maturity. Federal tax law requires that
a holder of a zero coupon security accrue a portion of the discount at which the
security was purchased as income each year, even though the holder receives no
interest payment on the security during the year.

STRUCTURED NOTES. The Funds may invest in structured notes. The distinguishing
feature of a structured note is that the amount of interest and/or principal
payable on the notes is based on the performance of a benchmark asset or market
other than fixed-income securities or interest rates. Examples of a benchmark
include stock prices, currency exchange rates and physical commodity prices.
Investing in a structured note allows a Fund to gain exposure to the benchmark
market while fixing the maximum loss that the Fund may experience in the event
that the market does not perform as expected. The performance tie can be a
straight relationship or leveraged, although the Adviser generally will not use
leverage in its structured note strategies. Normally, these bonds are issued by
U.S. Government Agencies and investment banks arrange the structuring. Depending
on the terms of the note, a Fund may forego all or part of the interest and
principal that would be payable on a comparable conventional note; a Fund's loss
cannot exceed this foregone interest and/or principal. An investment in a
structured note involves risks similar to those associated with a direct
investment in the benchmark asset. Structured notes will be treated as illiquid
securities for investment limitation purposes.

PREFERRED STOCKS, COMMON STOCKS, WARRANTS. The Funds may also invest in
preferred stocks with yields that are attractive, provided that such investments
are otherwise consistent with the investment objectives and policies of the
Fund. A preferred stock is an equity security that entitles the holders to a
priority in liquidation over holders of the issuer's common stock. In
liquidation, the holders of preferred stock are subordinate to the holders of
the issuer's debt obligations. Typically, preferred stocks include the right to
receive regular dividend payments and may also include conversion rights, put
and call obligations and other features. In determining whether to invest in any
particular stock, CIGNA Investments will consider all relevant factors,
including the dividend yield, its conversion features, if any, its liquidity,
and the overall financial condition of the issuer. Under normal circumstances, a
Fund will not invest more than 10% of its assets in preferred stock.

The Fund will not acquire common stocks, except when (i) attached to or included
in a unit with income-generating securities that otherwise would be attractive
to the Fund; (ii) acquired through the exercise of equity features accompanying
convertible securities held by the Fund, such as conversion or exchange
privileges or warrants for the acquisition of stock or equity interest of the
same or different issuer; or (iii) in the case of an exchange offering whereby
the equity security would be acquired with the intention of exchanging it for a
debt security issued on a "when-issued" basis.

Warrants are, in effect, longer term call options. They give the holder the
right to purchase a given number of shares of a particular company at specified
prices within certain periods of time. The purchaser of a warrant expects that
the market price of the security will exceed the purchase price of the warrant
plus its exercise price, thus resulting in a profit. However, since the market
price may never exceed the exercise price before the expiration date of the
warrant, the purchaser of the warrant risks the loss of the entire purchase
price of the warrant.

Warrants generally trade in the open market and may be sold rather than
exercised. Warrants are sometimes sold in unit form with other securities of an
issuer. Units of warrants and common stock may be employed in financing
unseasoned companies. The purchase price varies with the security, the life of
the warrant and various other investment factors. Investments in warrants,
valued at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets.

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Considerations of liquidity and preservation of capital mean that these Funds
may not necessarily invest in instruments paying the highest available yield at
a particular time. These Funds may, consistent with their investment objective,
attempt to maximize yields by buying and selling portfolio investments in
anticipation of or in response to changing economic and money market conditions
and trends. These Funds may also invest to take advantage of what are believed
to be temporary disparities in the yields of the different segments of the
market or among particular instruments within the same segment of the market.
These policies, as well as the relatively short maturity of obligations which
may be held by these Funds, may result in frequent changes in portfolio
holdings. There usually are no brokerage commissions as such paid in connection
with the purchase of fixed income securities of the type in which these Funds
may invest. See "Brokerage Allocation" for a discussion of underwriters'
commissions and dealers' spreads involved in the purchase and sale of portfolio
securities.

CORE PLUS FUND AND ULTRA CORE PLUS FUND
- ---------------------------------------

As noted in the prospectus, these Funds may purchase debt securities rated below
investment grade, i.e., securities that are rated Ba or lower by Moody's
Investors Services, Inc. or BB or lower by Standard & Poor's Corporation.

Included among the below investment-grade, high risk securities in which the
Fund may invest are securities issued in connection with corporate
restructurings such as takeovers or leveraged buyouts. Securities issued to
finance corporate restructurings may have special credit risks due to the highly
leveraged conditions of the issuer. In addition, such issuers may lose
experienced management as a result of the restructuring. Also, the market price
of such securities may be more volatile to the extent that expected benefits
from the restructuring do not materialize.

Because investors generally perceive that there are greater risks associated
with the medium to lower rated securities of the type constituting high-yield,
high risk securities, the yields and prices of these securities may tend to
fluctuate more than those for higher rated securities. In the lower quality
segments of the fixed income securities market, changes in perceptions of an
issuer's creditworthiness tend to occur more frequently and in a more pronounced
manner than do such changes with respect to higher quality segments of the fixed
income securities market, causing greater yield and price volatility.
Commissions and underwriting spreads associated with the purchase of below
investment-grade bonds are typically higher than those associated with the
purchase of high grade bonds.

Below investment-grade securities are often referred to as high yield or junk
bonds and are typically considered "high risk" securities. High yield bonds may
be subject to certain risk factors to which other securities are not subject to
the same degree. An economic downturn tends to disrupt the market for below
investment-grade bonds and adversely effect their values. Such an economic
downturn may be expected to result in increased price volatility of below
investment-grade bonds and of the value of the Fund's shares, and an increase in
issuers' defaults on such bonds.

Also, issuers of below investment-grade bonds are substantially leveraged, which
may impair their ability to meet their obligations. In some cases, the high
yield securities in which a Fund invests are subordinated to the prior payment
of senior indebtedness, thus potentially limiting the Fund's ability to recover
full principal or to receive payments when senior securities are in default.
When the secondary market for below investment-grade bonds becomes increasingly
illiquid, or in the absence of readily available market quotations for high
yield bonds, the relative lack of reliable, objective data makes the
responsibility of the Trustees to value the Fund's securities more difficult,
and judgement plays a greater role in the valuation of portfolio securities.
Also, increased illiquidity of the below investment-grade bond market may affect
the Fund's ability to dispose of portfolio securities at a desirable price.

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The credit rating of a security does not necessarily address its market value
risk. Also, ratings may from time to time, be changed to reflect developments in
the issuer's financial condition. Below investment-grade bonds have speculative
characteristics which are apt to increase in number and significance with each
lower rating category. Also, prices of below investment-grade bonds have been
found to be less sensitive to interest rate changes and more sensitive to
adverse economic changes and individual corporate developments than more highly
rated investments.

Certain laws or regulations may have a material effect on the Fund's net asset
value and investment practices. For example, legislation requiring
federally-insured savings and loan associations to divest their investments in
below investment-grade bonds may further adversely affect the market for such
bonds.

EQUITY FUNDS AND BALANCED FUND
- ------------------------------

Large Company Stock-Growth Fund
Large Company Stock-Value Fund
S&P 500 Index Fund
Small Company Stock-Growth Fund
Small Company Stock-Value Fund
International Stock Fund

These Funds are referred to as the Equity Funds.

In pursuing their investment objectives, the Equity Funds and the Balanced Fund
may invest in the following types of securities:

EQUITY SECURITIES. Equity Securities generally represent an ownership interest
in an issuer, or may be convertible into or represent a right to acquire an
ownership interest in an issuer. While there are many types of equity
securities, prices of all equity securities will fluctuate. Economic, political
and other events may affect the prices of broad equity markets. For example,
changes in inflation or consumer demand may affect the prices of all equity
securities in the United States. Similar events also may affect the prices of
particular equity securities. For example, news about the success or failure of
a new product may affect the price of a particular issuer's equity securities.

COMMON STOCKS. Common stocks represent an ownership interest in a corporation,
entitling the stockholder to voting rights and receipt of dividends paid based
on proportionate ownership.

DEPOSITARY RECEIPTS. Depositary Receipts represent an ownership interest in
securities of foreign companies (an "underlying issuer") that are deposited with
a depositary. Depositary Receipts are not necessarily denominated in the same
currency as the underlying securities. Depositary Receipts include American
Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other
types of Depositary Receipts (which, together with ADRs and GDRs, are
hereinafter collectively referred to as "Depositary Receipts"). ADRs are
dollar-denominated Depositary Receipts typically issued by a U.S. financial
institution which evidence an ownership interest in a security or pool of
securities issued by a foreign issuer. ADRs are listed and traded in the United
States. GDRs and other types of Depositary Receipts are typically issued by
foreign banks or trust companies, although they also may be issued by U.S.
financial institutions, and evidence ownership interests in a security or pool
of securities issued by either a foreign or a U.S. corporation. Generally,
Depositary Receipts in registered form are designed for use in the U.S.
securities market and Depositary Receipts in bearer form are designed for use in
securities markets outside the United States.

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Depositary Receipts may be "sponsored" or "unsponsored." Sponsored Depositary
Receipts are established jointly by a depositary and the underlying issuer,
whereas unsponsored Depositary Receipts may be established by a depositary
without participation by the underlying issuer. Holders of unsponsored
Depositary Receipts generally bear all the costs associated with establishing
unsponsored Depositary Receipts. In addition, the issuers of the securities
underlying unsponsored Depository Receipts are not obligated to disclose
material information in the United States and, therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the Depositary Receipts. For
purposes of a Fund's investment policies, the Fund's investments in Depositary
Receipts will be deemed to be an investment in the underlying securities, except
that ADRs may be deemed to be issued by a U.S. issuer.

PREFERRED STOCKS. Preferred Stocks are securities that evidence ownership in a
corporation and pay a fixed or variable stream of dividends. Preferred Stocks
have a preference over Common Stocks in the event of the liquidation of an
issuer and usually do not carry voting rights. Because Preferred Stocks pay a
fixed or variable stream of dividends they have many of the characteristics of a
Fixed Income Security and are, therefore, included in both the definition of
Equity Security and Fixed Income Security.

RIGHTS. Rights represent the right, but not the obligation, for a fixed period
of time to purchase additional shares of an issuer's Common Stock at the time of
a new issuance, usually at a price below the initial offering price of the
Common Stock and before the Common Stock is offered to the general public.
Rights are usually freely transferable. The risk of investing in a Right is that
the Right may expire prior to the market value of the Common Stock exceeding the
price fixed by the Right.

WARRANTS. Warrants give holders the right, but not the obligation, to buy Common
Stock of an issuer at a given price, usually higher than the market price at the
time of issuance, during a specified period. Warrants are usually freely
transferable. The risk of investing in a Warrant is that the Warrant may expire
prior to the market value of the Common Stock exceeding the price fixed by the
Warrant.

CONVERTIBLE SECURITIES. Convertible Securities are securities that may be
exchanged under certain circumstances for a fixed number of shares of Common
Stock or other Equity Securities. Convertible Securities generally represent a
feature of some other type of security, such as a Fixed Income Security or
Preferred Stock, so that, for example, a Convertible Fixed Income Security would
be a Fixed Income Security that is convertible into Common Stock. Convertible
Securities may be viewed as an investment in the current security or the
security into which the Convertible Securities may be exchanged and, therefore,
are included in both the definition of Equity Security and Fixed Income
Security.

FOREIGN INVESTMENT - Additional Risks (all funds)

Investing in foreign securities involves certain special considerations which
are not typically associated with investing in the equity securities or fixed
income securities of U.S. issuers. Foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards and may have
policies that are not comparable to those of domestic issuers. As a result,
there may be less information available about foreign issuers than about
domestic issuers. Securities of some foreign issuers are generally less liquid
and more volatile than securities of comparable domestic issuers. There is
generally less government supervision and regulation of stock exchanges, brokers
and listed issuers than in the United States. In addition, with respect to
certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, political and social instability, or diplomatic
developments

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which could affect U.S. investments in those countries. The costs of investing
in foreign countries frequently is higher than the costs of investing in the
United States. Although the Funds' Advisers endeavor to achieve the most
favorable execution costs in portfolio transactions, fixed commissions on many
foreign stock exchanges are generally higher than negotiated commissions on U.S.
exchanges.

Investments in securities of foreign issuers generally are denominated in
foreign currencies. Accordingly, the value of a Portfolio's assets, as measured
in U.S. dollars may be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. A Fund may incur costs in
connection with conversions between various currencies.

Certain foreign governments levy withholding or other taxes on dividend and
interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion of foreign withholding taxes will reduce
the income received from investments in such countries. The Funds may be able to
claim a credit for U.S. tax purposes with respect to any such foreign taxes.

FOREIGN EQUITY SECURITIES. Foreign equity securities are equity securities of
an issuer in a foreign country.

FOREIGN BONDS. Foreign bonds are fixed income securities issued by a foreign
government, government-related or a private issuer in a foreign country.

RUSSIAN EQUITY SECURITIES. The registration, clearing and settlement of
securities transactions involving Russian issuers are subject to significant
risks not normally associated with securities transactions in the United States
and other more developed markets. Ownership of Equity Securities in Russian
companies is evidenced by entries in a company's share register (except where
shares are held through depositories that meet the requirements of the 1940 Act)
and the issuance of extracts from the register or, in certain limited cases, by
formal share certificates. However, Russian share registers are frequently
unreliable and a Fund could possibly lose its registration through oversight,
negligence or fraud. Moreover, Russia lacks a centralized registry to record
securities transactions and registrars located throughout Russia or the
companies themselves maintain share registers. Registrars are under no
obligation to provide extracts to potential purchasers in a timely manner or at
all and are not necessarily subject to effective state supervision. In addition,
while registrars are liable under law for losses resulting from their errors, it
may be difficult for a Fund to enforce any rights it may have against the
registrar or issuer of the securities in the event of loss of share
registration. Although Russian companies with more than 1,000 shareholders are
required by Russian law to employ an independent registrar, in practice, such
companies have not always followed this law. Because of this lack of
independence of registrars, management of a Russian company may be able to exert
considerable influence over who can purchase and sell the company's shares by
illegally instructing the registrar to refuse to record transactions on the
share register. Furthermore, these practices may prevent a Fund from investing
in the securities of certain Russian companies deemed suitable by its Adviser
and could cause a delay in the sale of Russian Securities by the Fund if the
company deems a purchaser unsuitable, which may expose the Fund to potential
loss on its investment.

MATTERS RELATING TO ALL FUNDS
- -----------------------------

Except as described under "Fund Policies," the foregoing investment policies are
not fundamental and the Board of Trustees may change such policies without
shareholder approval. The Board will not change a Fund's investment objectives
without the required shareholder vote as set forth in "Fund Policies" below.
There is risk inherent in any investment, and there is no assurance that any of
the strategies and methods of investment available to any Fund will result in
the achievement of its objectives.

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Each Fund's investments must be consistent with its investment objective and
policies. Accordingly, not all of the security types and investment techniques
discussed in this Statement of Additional Information are eligible investments
for each of the Funds.

SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. Each 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). A 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. A Fund will only make commitments to purchase when-issued or delayed
delivery securities with the intention of actually acquiring such securities,
but a 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
a 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. A 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. Each Fund may invest up to 15% (10% for the Money Market
Fund) 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. The Fund's investment adviser 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.

BORROWING. Each Fund may borrow from banks or through reverse repurchase
agreements to the extent permitted by the 1940 Act. If a 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
assets, and may borrow from a bank in an amount not exceeding 33 1/3% of its
total assets.

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FUTURES CONTRACTS. A stock index assigns relative values to the common stocks
included in the index and the index fluctuates with changes in the market values
of the common stocks so included. A stock index futures contract is a bilateral
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between
the stock index value at the close of the last trading day of the contract and
the price at which the futures contract is originally struck. There is no
physical delivery of the underlying stocks in the index.

Generally, a Fund will only enter into stock index futures contracts as a hedge
against changes resulting from market conditions in the values of the securities
held or which the Fund intends to purchase. When the fund anticipates a
significant market or market sector advance, the purchase of a stock index
futures contract affords a hedge against not participating in such advance.
Conversely, in anticipation of or in a general market or market sector decline
that adversely affects the market values of the fund's portfolio of securities,
the Fund may sell stock index futures contracts. The S&P 500 Index Fund's use of
stock index futures includes purchasing S&P 500 futures contracts pending
investment in the S&P 500.

An interest rate futures contract is an agreement between two parties to buy and
sell a debt security for a set price on a future date. A Fund generally may
enter into interest rate futures contracts for the purpose of hedging debt
securities in their portfolios or the value of debt securities which the Funds
intend to purchase. For example, if a fund owned long-term debt securities and
interest rates were expected to increase, it might sell interest rate futures
contracts. If, on the other hand, a fund held cash reserves and interest rates
were expected to decline, it might purchase interest rate futures contracts.

In cases of purchases of futures contracts, an amount of cash and cash
equivalents, equal to the market value of the futures contracts (less any
related margin deposits), will be deposited in a segregated account with the
Fund's custodian to collateralize the position and ensure that the use of such
futures contracts is unleveraged. Unlike when a Fund purchases or sells a
security, no price is paid or received by a Fund upon the purchase or sale of a
futures contract. Initially, a Fund will be required to deposit with the
custodian for the Fund for the account of the broker a stated amount, as called
for by a particular contract, of cash or U.S. Treasury bills. This amount is
known as "initial margin." The nature of initial margin in futures transactions
is different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions.

Rather, the initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the applicable Fund upon
termination of the futures contract, assuming all contractual obligations have
been satisfied. Subsequent payments, called "variation margin," to and from the
broker will be made on a daily basis as the price of the futures contract
fluctuates making the long and short positions in the futures contract more or
less valuable, a process known as "marking-to-market." For example, when a Fund
has purchased a stock index futures contract and the price of the underlying
stock index has risen, that position will have increased in value and the Fund
will receive from the broker a variation margin payment with respect to that
increase in value. Conversely, where a Fund purchases a stock index futures
contract and the price of the underlying stock index has declined, the position
would be less valuable and the Fund would be required to make a variation margin
payment to the broker. Variation margin payments would be made in a similar
fashion when a Fund purchases an interest rate futures contract. At any time
prior to expiration of the futures contract, a Fund may elect to close the
position by taking an opposite position which will operate to terminate the
Fund's position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid by or released to
the Fund and the Fund realizes a loss or a gain.

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OPTIONS ON FUTURES CONTRACTS. An option on a futures contract gives the
purchaser (the Fund) the right, in return for the premium paid, to assume a
position in a futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise price at any time
during the option exercise period. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put) at a specified
exercise price at any time during the period of the option. Upon exercise of the
option, the assumption of offsetting futures positions by the writer and holder
of the option will be accompanied by delivery of the accumulated cash balance in
the writer's futures margin account which represents the amount by which the
market price of the futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of the option on
the futures contract. If an option on a futures contract is exercised on the
last trading date prior to the expiration date of the option, the settlement
will be made entirely in cash equal to the difference between the exercise price
of the option and the closing price of the futures contract on the expiration
date.

The S&P 500 Index Fund's use of options on futures contracts is discussed in the
prospectus. The other Funds may purchase put options on futures contracts to
hedge against the risk of falling prices for their portfolio securities, and may
purchase call options on futures contracts as a hedge against a rise in the
price of securities which they intend to purchase. Options on futures contracts
may also be used to hedge the risks of changes in the exchange rate of foreign
currencies. The purchase of a put option on a futures contract is similar to the
purchase of protective put options on portfolio securities or a foreign
currency. The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security or a foreign
currency. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the underlying
securities or currency, it may or may not be less risky than ownership of the
futures contract or underlying securities or currency.

RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS. There are several risks in
connection with the use of futures contracts and related options as hedging
devices. One risk arises because of the imperfect correlation between movements
in the price of hedging instruments and movements in the price of the stock,
debt securities or foreign currency which are the subject of the hedge. If the
price of a hedging instrument moves less than the price of the stocks, debt
securities or foreign currency which are the subject of the hedge, the hedge
will not be fully effective. If the price of a hedging instrument moves more
than the price of the stock, debt securities or foreign currency, a Fund will
experience either a loss or a gain on the hedging instrument which will not be
completely offset by movements in the price of the stock, debt securities or
foreign currency which are the subject of the hedge. The use of options on
futures contracts involves the additional risk that changes in the value of the
underlying futures contract will not be fully reflected in the value of the
option.

Successful use of hedging instruments by a Fund is also subject to below
investment-grade ability to predict correctly movements in the direction of the
stock market, of interest rates or of foreign exchange rates (foreign
currencies). Because of possible price distortions in the futures and options
markets and because of the imperfect correlation between movements in the prices
of hedging instruments and the investments being hedged, even a correct forecast
by the Funds' investment adviser's of general market trends may not result in a
completely successful hedging transaction.

It is also possible that where a Fund has sold futures contracts to hedge its
portfolio against a decline in the market, the market may advance and the value
of stocks or debt securities held in a Fund's portfolio may decline. If this
occurred, a Fund would lose money on the futures contracts and also experience a
decline in the value of its portfolio securities. Similar risks exist with
respect to foreign currency hedges.

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Positions in futures contracts or options may be closed out only on an exchange
on which such contracts are traded. Although the Funds intend to purchase or
sell futures contracts or purchase options only on exchanges or boards of trade
where there appears to be an active market, there is no assurance that a liquid
market on an exchange or board of trade will exist for any particular contract
or at any particular time. If there is not a liquid market at a particular time,
it may not be possible to close a futures position or purchase an option at such
time. In the event of adverse price movements under those circumstances, a Fund
would continue to be required to make daily cash payments of maintenance margin
on its futures positions. The extent to which the Fund may engage in futures
contracts or related options will be limited by Internal Revenue Code
requirements for qualification as a regulated investment company and the Fund's
intent to continue to qualify as such. The result of a hedging program cannot be
foreseen and may cause the portfolio of the Fund to suffer losses which it would
not otherwise sustain.

FOREIGN CURRENCY TRANSACTIONS. A Fund holding securities denominated in
currency other than U.S. dollars may engage in currency exchange transactions to
protect against uncertainty in the level of future currency exchange rates.

Generally, Funds may engage in both "transaction hedging" and "position
hedging". When a Fund engages in transaction hedging, the Fund enters into
foreign currency transactions with respect to specific receivables or payables,
generally arising in connection with the purchase or sale of portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging, a Fund will attempt to protect itself against
a possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.

A Fund may purchase or sell a foreign currency on a spot (or cash) basis at the
prevailing spot rate in connection with the settlement of transactions in
portfolio securities denominated in that foreign currency. A Fund may also enter
into contracts to purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures contracts.

For transaction hedging purposes a Fund may also purchase exchange-listed call
and put options on foreign currencies. A put option on currency gives the Fund
the right to sell a currency at a specific exercise price. A call option on
currency gives a Fund the right to purchase a currency at a specific exercise
price. The time when call and put options are exercisable depends on whether the
options are American options or European options. American options are
exercisable at anytime during the option period. European options are
exercisable only on a designated date.

When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated or an increase in
the value of currency for securities which the Fund expects to purchase, when
the Fund holds cash or short-term investments. In connection with position
hedging, a Fund may purchase put or call options on foreign currency and foreign
currency futures contracts and buy or sell forward contracts and foreign
currency futures contracts. The Funds may also purchase or sell foreign currency
on a spot basis.

The precise matching of the amounts of foreign currency exchange transactions
and the value of the portfolio securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the dates the currency exchange transactions are entered into and the
dates they mature. For example, it may be necessary for a Fund to

Page 20

<PAGE>

purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security or securities being hedged is
less than the amount of foreign currency a Fund is obligated to deliver and a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the amount
of foreign currency a Fund is obligated to deliver.

Transaction and position hedging do not eliminate fluctuations in the underlying
prices of the securities which a Fund owns or intends to purchase or sell. They
simply establish a rate of exchange which one can achieve at some future point
in time. Additionally, although these techniques tend to minimize the risk of
loss due to a decline in the value of the hedged currency, they tend to limit
any potential gain which might result from the increase in value of such
currency.

Regardless of whether a Fund's investment adviser determines that it is
advisable to hedge a Fund's currency risk, the Funds will have to convert their
holdings of foreign currencies into U.S. dollars from time to time. Although
foreign exchange dealers generally do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies.

FORWARD CURRENCY CONTRACTS. A forward currency contract is an agreement between
two parties to purchase and sell a specific quantity of a currency at a price
specified at the time of the contract, with delivery and settlement at a
specified future date. In the case of purchases of forward currency contracts,
an amount of cash and cash equivalents, equal to the market value of the
portfolio security sold, will be deposited in a segregated account with the
Trust's Custodian to collateralize the position and ensure that the use of such
contracts is unleveraged.

In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks and their customers). A forward contract
generally has no deposit requirements, and no commissions are charged at any
stage for trades.

Forward currency contracts are less liquid than currency futures contracts, and
there is an increased risk of default by the counterparty as compared to futures
contracts. Forward currency contracts differ from currency futures contracts in
certain other respects as well. For example, the maturity date of a forward
contract may be any fixed number of days from the date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward currency contracts are traded directly
between currency traders so no intermediary is required. A forward contract
generally requires no margin or other deposit.

At the maturity of a forward contract, a Fund may either accept or make delivery
of the currency specified in the contract, or at or prior to maturity enter into
a closing transaction involving the purchase or sale of an offsetting contract.
Closing transactions with respect to forward contracts are usually effected with
the currency trader who is a party to the original forward contract. There is no
assurance that the Fund will be able to close a forward contract prior to
maturity and, under such circumstances, the Fund may have exposure to adverse
changes in exchange rates.

LOANS AND OTHER DIRECT DEBT INSTRUMENTS.
- ---------------------------------------

Direct debt instruments are interests in amounts owed by a corporate,
governmental, or other borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments are subject to each
Fund's policies regarding the quality of debt securities.

Page 21

<PAGE>

Purchaser of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any NRSRO. If a Fund does not
receive scheduled interest or principal payments on such indebtedness, the
Fund's share price and yield could be adversely affected. Loans that are fully
secured offer a Fund more protections than an unsecured loan in the event of
non-payment of scheduled interest or principal. However, there is no assurance
that the liquidation of collateral from a secured loan would satisfy the
borrower's obligation, or that the collateral could be liquidated. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a risk
that the government entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal when due.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associates with owing and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, the Fund could be held liable as a
co-lender. Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary. Direct debt instruments that are not in the
form of securities may offer less legal protection to a Fund in the event of
fraud or misrepresentation. In the absence of definitive regulatory guidance,
each Fund relies on CIGNA Investments' research in an attempt to avoid
situations where fraud or misrepresentation could adversely affect the Fund.

A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, each Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be subject
to the claims of the agent's general creditors, the Fund might incur certain
costs and delays in realizing payment on the loan or loan participation and
could suffer a loss of principal or interest.

Each Fund (except the Money Market Fund, to a limited degree) limits the amount
of total assets that it will invest in any one issuer or in issues within the
same industry. For purposes of these limitations, each Fund generally will treat
the borrower as the "issuer" of indebtedness held by the Fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between each Fund and the borrower, if the participation
does not shift to the Fund the direct debtor-creditor relationship with the
borrower, SEC interpretations requires the Fund, in appropriate circumstances,
to treat both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an issuer of
indebtedness may restrict a Fund's ability to invest in indebtedness related to
a single financial intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent many different
companies and industries.

SECURITIES LENDING. A Fund may lend securities to parties such as
broker-dealers or institutional investors.

Securities lending allows a Fund to retain ownership of the securities loaned
and, at the same time, to earn additional income. Since there may be delays in
the recovery of loaned securities, or even a loss of rights in collateral
supplied should the borrower fail financially, loans will be made only to
parties deemed by CIGNA Investments, Inc. to be of good standing. Furthermore,
they will only be made if, in the Fund's investment adviser's judgment, the
consideration to be earned from such loans would justify the risk.

Page 22

<PAGE>

CIGNA Investments understands that it is the current view of the SEC Staff that
a fund may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash equivalents
(e.g. U.S. Treasury bills or notes) from the borrower; (2) the borrower must
increase the collateral whenever the market value of the securities loaned
(determined on a daily basis) rises above the value of the collateral; (3) after
giving notice, the fund must be able to terminate the loan at any time; (4) the
fund must receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or other
distributions on the securities loaned and to any increase in market value; (5)
the fund may pay only reasonable custodian fees in connection with the loan; and
(6) the Board of Trustees must be able to vote proxies on the securities loaned,
either by terminating the loan or by entering into an alternative arrangement
with the borrower.

Cash received through loan transactions may be invested in any security in which
a Fund is authorized to invest. Investing this cash subjects that investment, as
well as the security loaned, to market forces (i.e., capital appreciation or
depreciation).

SOVEREIGN DEBT OBLIGATIONS. A Fund may purchase sovereign debt instruments
issued or guaranteed by foreign governments or their agencies, including debt of
Latin American nations or other developing countries. Sovereign debt may be in
the form of conventional securities or other types of debt instruments such as
loans or loan participations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable or
unwilling to repay principal and interest when due, and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment of principal and interest may depend on political as well as economic
factors.

SWAP AGREEMENTS

The Funds may enter into swap agreements such as interest rate, index and
currency exchange rate swaps. These transactions would be entered into in an
attempt to obtain a particular return when it is considered desirable to do so,
possibly at a lower cost to the Fund than if the Fund had invested directly in
the asset that yielded the desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard swap transaction, two
parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments, which
may be adjusted for an interest factor. The gross returns to be exchanged or
"swapped" between the parties are generally calculated with respect to a
"notional amount," i.e. the return on or increase in value of a particular
dollar amount invested at a particular interest rate, in a particular foreign
currency, or in a "basket" of securities representing a particular index.

Most swap agreements entered into by a Fund calculate the obligations of the
parties to the agreement on a "net basis." Consequently, a Fund's current
obligations (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's current obligations under a swap agreement will be accrued daily
(offset against amounts owed to the Fund), and any accrued but unpaid net
amounts owed to a swap counterparty will be covered by the segregation of assets
determined to be liquid by CIGNA Investments, to limit any potential leveraging
of the Fund's portfolio. Obligations under swap agreements so covered will not
be construed to be "senior securities" for purposes of the Funds' investment
restriction concerning senior securities. A Fund will not enter into a swap
agreement with any single party if the net amount owed or to be received under
existing contracts with that party would exceed 5% of the Fund's assets.

Whether a Fund's use of swap agreements will be successful in furthering its
investment objective will depend on the Fund's investment adviser's ability to
predict correctly whether certain types of investments are likely to produce

Page 23

<PAGE>

greater returns than other investments. Because they are two-party contracts and
because they may have terms of greater than seven days, swap agreements may be
considered to be illiquid investments. Moreover, a Fund bears the risk of loss
of the amount expected to be received under a swap agreement in the event of the
default or bankruptcy of a swap agreement counterparty. A Fund will enter into
swap agreements only with counterparties that meet certain standards for
creditworthiness (generally, such counterparties would have to be eligible
counterparties under the terms of the Funds' repurchase agreement guidelines).
Certain restrictions imposed on the Funds by the Internal Revenue Code may limit
a Fund's ability to use swap agreements. The swaps market is a relatively new
market and is largely unregulated. It is possible that developments in the swaps
market, including potential government regulation, could adversely affect a
Fund's ability to terminate existing swap agreements or to realize amounts to be
received under such agreements.

FUND POLICIES
- -------------

The Funds are 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.

A Fund may not:

1. Borrow money or issue senior securities except that a 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.

3. Concentrate 25% or more of its total assets in a particular industry,
except the Money Market 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 a Fund 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 a 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 U.S. Government
securities including securities issued by its agencies and
instrumentalities (or repurchase agreements with respect thereto).

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<PAGE>

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, a Fund may not change its investment objective without shareholder
approval.

TEMPORARY DEFENSIVE POSITION. While assuming a temporary defensive position, a
Fund may invest in the types of short-term fixed income investments number in
which the Money Market Fund may invest, and may also invest in the Money Market
Fund.

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 (except for Mr.
Forde, who is not a Trustee of CIGNA Variable Products Group), and holds a
similar position as Director and/or executive officer of CIGNA Investment
Securities, Inc. (f/k/a INA Investment Securities, Inc.) Correspondence with any
Trustee or officer may be addressed to the Trust, c/o CIGNA Investments, S-210,
900 Cottage Grove Road, Hartford, CT 06152-2210.

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
adviser).

RICHARD H. FORDE*, 45, Trustee; Senior Managing Director and President of CIGNA
International Investment Advisors, Ltd.; Chairman of the Board and President,
CIGNA Funds Group and other investment companies in CIGNA Funds' complex. Mr.
Forde is also an officer or director of various other entities which are
subsidiaries or affiliates of CIGNA.

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
Financial Officer, Friendly Ice Cream Corporation (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.

Page 25

<PAGE>

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 CIGNA Investment Securities, Inc. (f/k/a INA Investment
Securities, Inc.); Assistant Vice President, CII.

JEFFREY S. WINER, 41, Senior Counsel, CIGNA; Vice President and Secretary, CIGNA
Funds Group, CIGNA Institutional Funds Group, CIGNA Variable Products Group,
CIGNA High Income Shares and CIGNA Investment Securities, Inc. (f/k/a 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.

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<PAGE>

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 1998:

Pension or Total
Retirement Compensation from
Aggregate Benefits Accrued Trust and CIGNA
Name of Person, Compensation from As Part of Trust Estimated Annual Fund Complex Paid
Position with Trust Trust Expense Benefits Upon Retirement to Trustees(d)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

R. Bruce Albro (a) $ -0 $ -0- $ -0- $ -0-

Hugh R. Beath, Trustee (b) $ 1,800 -0- -0- $25,400

Richard H. Forde, Trustee, Chairman and
President -0- -0- -0- -0-

Russell H. Jones, Trustee $ 1,800 -0- -0- $25,400

Thomas C. Jones, Trustee -0- -0- -0- -0-

Paul J. McDonald, Trustee (c) $ 1,800 -0- -0- $25,400

------------ ----------- ------------ ------------
$ 5,400 $ -0- $ -0- $76,200
============ =========== ============ ============
</TABLE>

- --------------------
(a) Mr. Albro retired from CIGNA Corporation and resigned from the Trust in
1998.

(b) All but $1,525 of Mr. Beath's 1998 compensation was deferred under a plan
for all CIGNA funds in which he had an aggregate balance of $213,647 as of
December 31, 1998.

(c) All but $1,525 of Mr. McDonald's 1998 compensation was deferred under a
plan for all CIGNA funds in which he had an aggregate balance of $135,397
as of December 31, 1998.

(d) There were four (4) investment companies besides the Trust in the CIGNA fund
complex.

Page 27

<PAGE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ---------------------------------------------------

As of April 1, 1999, record and beneficial owners of five percent or more of the
shares of the Money Market Fund were as follows:

PERCENTAGE OF
SHAREHOLDER ADDRESS OWNERSHIP
<S> <C> <C>

CIGNA HealthCare of California, Inc. 505 North Brand Blvd. 29.8%
Glendale CA 91205

CIGNA Community Choice (Arizona 11001 N. Black Canyon Highway 6.6%
corporation) Phoenix, AZ 85029

CIGNA HealthCare of Texas, Inc. 600 Las Colinas Blvd., Suite 1100 9.8%
Irving, TX 85029

CIGNA HealthCare of Virginia, Inc. 4050 Innslake Drive 6.1%
Glen Allen, VA 23060

Healthsource North Carolina, Inc. 701 Corporate Center Drive 10.2%
Raleigh, NC 27607

</TABLE>

As of April, 1999, owners of five percent or more of the shares of the S&P 500
Index Fund were as follows:

SHAREHOLDER ADDRESS PERCENTAGE OF
OWNERSHIP
<S> <C> <C>

Insurance Company of North Two Liberty Place
America 1601 Chestnut St.
Philadelphia PA 19192 19.0%

CIGNA Property And Casualty Two Liberty Place
Insurance Company 1601 Chestnut St.
Philadelphia PA 19192 51.0%

CIGNA Insurance Company Two Liberty Place
1601 Chestnut St.
Philadelphia PA 19192 19.0%

Pacific Employers Insurance Two Liberty Place
Company 1601 Chestnut St.
Philadelphia PA 19192 11.0%
</TABLE>

The Trustees and officers do not own any Fund shares. By virtue of owning more
than 25% of the shares of the Money Market Fund, CIGNA Healthplan of California
is deemed to control the Money Market Fund. This control does not affect the
voting rights of other Fund shareholders. CIGNA Healthplan of California is an
indirect, wholly owned subsidiary of CIGNA Corporation.

Page 28

<PAGE>

INVESTMENT ADVISORY AND OTHER SERVICES
- --------------------------------------

The investment adviser to the Fixed Income Funds 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' mailing address is 900 Cottage Grove Road, Hartford, Connecticut
06152.

SUB-ADVISERS

TOTAL RETURN FUND INVESCO, 7800 E. Union Avenue,
Denver, Colorado. INVESCO and its
affiliated asset management
companies currently manage in excess
of $ billion of assets as of
December 31, 1998 on behalf of
tax-exempt accounts (such as pension
and profit-sharing funds for
corporations and state and local
governments) and investment
companies.

LARGE COMPANY STOCK-VALUE FUND John A. Levin & Co, One Rockefeller
Plaza, 25th Floor, New York, NY
10020, is an advisory firm founded
in 1982. As of September 30, 1998,
Levin managed about $7.3 billion in
assets.

SMALL COMPANY STOCK-GROWTH FUND Fiduciary Trust Company, Two World
Trade Center, New York, NY 10048.
Founded in 1931 as a New York State
Bank, Fiduciary focuses solely on
providing investment management
services to individuals and
institutions. Total assets under
management as of March 31, 1999 were
about $45 billion.

SMALL COMPANY STOCK-VALUE FUND Berger Associates, Inc., 210
University Boulevard, Suite 900,
Denver, CO 80206 serves as
investment adviser, sub-adviser,
administrator or sub-administrator
to mutual funds and institutional
investors. Berger Associates has
been in the investment advisory
business for over 20 years. At
September 1, 1999, Berger Associates
managed about $5 billion in assets.
Berger Associates has in turn hired
Perkins, Wolf, McDonnell & Company
("PWM"), 53 West Jackson Boulevard,
Suite 818, Chicago, Illinois, 60604
to manage the investment operations
of the fund. PWM was organized in
1980 under the name Mac-Per-Wolf Co.
to operate as a securities
broker-dealer. In

-29-

<PAGE>

September 1983, it changed its name
to Perkins, Wolf, McDonnell &
Company. PWM sub-advises the Berger
Small Cap Value Fund.

INTERNATIONAL STOCK FUND BBOI Worldwide LLC ("BBOI"), 210
University Blvd., Suite 900, Denver,
Colorado 80206 was formed in 1996 as
a joint venture between Bank of
Ireland Asset Management (U.S.)
Limited ("BIAM"). BBOI operates a
series of mutual funds for retail
and institutional investors and
provides sub-advisory services to
other investment entities. BBOI
has in turn hired BIAM, 20 Horseneck
Lane, Greenwich, CT 06830
(representative office); 26
Fitzwilliam Place, Dublin 3, Ireland
(main office) to manage the
investment operation of the fund.
BIAM serves as investment advisor or
sub-adviser to pension and
profit-sharing plans and other
institutional investors and mutual
funds. Bank of Ireland's investment
management group was founded in
1966.

Pursuant to the Master Investment Advisory Agreement between the Trust and CIGNA
Investments, CIGNA Investments manages the investment and reinvestment of the
assets of the Funds that do not have sub-advisers. Each sub-adviser has this
responsibility for its particular fund. CIGNA Investments is also responsible
for evaluating and monitoring the performance of the sub-advisers.

Subject to the control and periodic review of the Board of Trustees of the
Trust, CIGNA Investments and the sub-advisers determine what investments shall
be purchased, held, sold or exchanged for the account of the Funds. 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 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 1999 the total expenses of the Office of the Treasurer for all funds in the
CIGNA fund complex will not exceed $466,000 and the expenses of the Office of
the Secretary are not expected to exceed $149,000. The portion of these expenses
allocated to each Fund for calendar year 1999 are not expected to exceed the
following amounts:

Page 30

<PAGE>

Office of Office of
The Treasurer the Secretary
------------- -------------

Money Market Fund $78,513 $25,104
S&P 500 Index Fund $96,116 $30,732

In 1998 the costs reimbursed by the Funds for the Office of the Treasurer and
the Office of the Secretary totaled $180,131($138,454 - Office of the Treasurer;
$41,677 - 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, each Fund pays CIGNA Investments a separate fee
computed daily and paid monthly at annual rates based on a percentage of the
value of the applicable Fund's average daily net assets as follows:

Money Market Fund 0.35%
High Grade Fixed Income Fund 0.60%
Core Plus Fixed Income Fund 0.65%
Ultra Core Plus Fixed Income Fund 0.65%
Emerging Market Debt Fund 1.00%
Total Return Fund 0.75%
Large Company Stock-Growth Fund 0.80%
Large Company Stock-Value Fund 0.75%
S&P 500 Index Fund 0.25%
Small Company Stock-Growth Fund 1.00%
Small Company Stock-Value Fund 1.00%
International Stock Fund 1.00%

Trust-wide expenses not identifiable to any particular series of the Trust will
be allocated among the series. CIGNA Investments has voluntarily agreed, until
December 31, 1999, to reimburse the Funds 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 Administrative Administrative Retail
Class Class-A Class-B Class
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>

Money Market Fund 0.45% 0.70% n/a 1.00%
High Grade Fixed Income Fund 0.50% n/a 0.90% 0.85%
Core Plus Fixed Income Fund 0.50% n/a 0.90% 0.90%
Ultra Core Plus Fixed Income Fund 0.55% n/a 0.95% 0.95%
Emerging Market Debt Fund 0.65% n/a 1.05% 1.20%
Total Return Fund 0.80% 1.00% n/a% 1.20%
Large Company Stock-Growth Fund 0.80% 1.00% n/a 1.20%
Large Company Stock-Value Fund 0.80% 1.00% n/a 1.20%
S&P 500 Index Fund 0.25% 0.35% n/a 0.65%
Small Company Stock-Growth Fund 1.05% 1.25% n/a 1.45%
Small Company Stock-Value Fund 1.05% 1.25% n/a 1.45%
Page 31

<PAGE>

International Stock Fund 1.05% 1.25% n/a 1.45%

</TABLE>

CIGNA Money Market Fund (Institutional Class) incurred a management fee of
$882,061, $446,085, and $111,530 in 1998, 1997 and 1996, respectively. However,
due to the expense limitation, CIGNA Investments waived $64,440, $81,881 and
$78,697 of this fee in 1998, 1997 and 1996, respectively.

CIGNA S&P 500 Index Fund (Institutional Class) incurred a management fee of
$431,355 and $82,658 in 1998 and 1997, respectively. However, due to the expense
limitation, CII waived $144,534 of this fee for 1998 and waived all of its fee
and reimbursed $43,969 to the Fund in 1997.

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'
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 1998.

Each fund has adopted a plan under Rule 12b-1 of the 1940 Act that allows the
retail class of each fund to pay for services provided to retail class
shareholders. The retail class will pay CIGNA Financial Services, Inc. (CFS)
.25% of its average daily net assets for providing shareholder services to
retail class shareholders, such as receiving and processing orders, answering
questions and handling correspondence from shareholders about their accounts,
and similar account administrative services.

The principal types of shareholder service activities that providers will
furnish under the plan 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 Fixed Income Funds have adopted a plan under Rule 12b-1 of the 1940 Act that
allows the Administrative Class-B of each Fixed Income Fund to pay CFS up to
0.15% of its average daily net assets for activities intended to result in
distribution of Fixed Income Fund shares.

The principal types of distribution activities that providers will furnish under
the plan for the Administrative Class-B are formulating and implementing
marketing and promotional activities; printing and distributing prospectuses to
prospective shareholders, and other activities primarily intended to result in
the sale of Administrative Class-B shares.

The Funds anticipate that the plans will result in increased sales of Fund
shares and an increase in the amount of assets in the Funds, 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.

Continuance of a plan is subject to annual approval by a vote of the Trustees,
including a majority of the Trustees who are not interested persons of the Funds
and who have do direct or indirect interest in the plan or related arrangements
(the "Qualified Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a plan must be likewise approved by the Trustees and
the Qualified Trustees. No plan may be amended in order to increase materially
the costs which the Funds may bear for distribution pursuant to such plan
without also being approved by a majority of the outstanding voting securities
of the fund or the relevant class of the fund, as the case may be. A plan
terminates automatically in the event of its assignment and may be terminated
without penalty, at any time, by a vote of a majority of the Qualified Trustees
or by a vote of a majority of the outstanding voting securities of the Funds or
the relevant class of the Funds, as the case may be.

CUSTODIAN AND TRANSFER AGENT
- ----------------------------

The Trust's 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.

INDEPENDENT ACCOUNTANTS
- -----------------------

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.
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 and the
sub-advisers (the "Advisers") on behalf of their clients, including the Funds,
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.

Page 33

<PAGE>

In seeking best execution, the Advisers 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 the Advisers 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 the
Advisers 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 the Advisers' overall responsibilities to the
client for whose account such portfolio transaction is executed and other
accounts advised by the Advisers or accounts advised by other investment
advisers which are related persons of the Advisers.

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 the
Advisers 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 the Advisers, and not
all such services are necessarily used by an Adviser in connection with the
specific account that paid commissions to the broker/dealer providing such
services.

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, the Advisers 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 an Adviser's
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, the Advisers 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. The Money Market Fund paid no brokerage
commissions in 1998, 1997 or 1996. During 1998 and 1997, the S&P 500 Index Fund
paid $53,151 and $37,741 in commissions, substantially all of which was paid to
firms which provide research services to CIGNA Investments.

CIGNA advises that Sanford C. Bernstein & Co., Inc. ("Sanford Bernstein"), 767
Fifth Avenue, New York, NY 10153, reported that as of December 31, 1998 it held
18,836,626 shares, or 9.1%, of the outstanding common stock of CIGNA. Sanford
Bernstein also reported sole voting power as to 10,300,452, shared voting power
as to 2,248,782, and sole dispositive power as to 18,836,626 of these shares.
Wellington Management Company, LLP ("Wellington"), 75 State Street, Boston, MA
02109, reported that as of December 31, 1998 it held 11,704,980

Page 34

<PAGE>

shares, or 5.67%, of the outstanding common stock of CIGNA. Wellington also
reported sole voting power as to none, shared voting power as to 1,492,130, and
shared dispositive power as to all of these shares.

Neither the Trust nor any Adviser 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, Administrative and Retail classes of the Funds represent
interests in each 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, and the
Administrative and Retail classes have exclusive voting rights on matters
relating to their record keeping arrangements, and the Retail class has
exclusive voting rights on matters pertaining to its 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 each 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 that
series or class but which would require a separate vote of another series or
class.

When issued, shares of the Funds 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 Funds are sold on a continuous basis without any initial sales
charge at the Fund's net asset value per share

Page 35

<PAGE>

RETIREMENT AND SAVINGS PLAN PARTICIPANTS. The Funds may be available as an
investment option in employer-sponsored or other type of 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 a Fund as an investment option.

BROKERAGE ACCOUNT PURCHASES. All investors other than affiliates of CIGNA
Corporation or employer sponsored or other type of retirement or savings plan
participants or institutional investors eligible to invest in the Institutional
Class 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.

Institutional investors eligible to purchase Institutional Class shares must
place orders through CIGNA Funds shareholder services.

The Funds reserve the right to revise their redemption procedures on 30-days'
notice. The Funds 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 a Fund not
reasonably practicable.

PRICING. Each 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

Page 36

<PAGE>

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.

The series of shares of the Trust is treated as a separate association taxable
as a corporation.

Each 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, each Fund must, among other things
meet the following requirements: A. each 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. each 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).

Each 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.

Each 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, 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.

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<PAGE>

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 Funds 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. Each Fund may provide performance
information in reports, sales literature and advertisements. Each Fund may also,
from time to time, quote information about the Fund published or aired by
publications or other media entities which contain articles or segments relating
to investment results or other data about the Fund. The following is a list of
such publications or media entities:

<TABLE>

Advertising Age Financial Times Kiplinger
Barron's Financial Weekly Money
Barron's/Nelson's Financial World Mutual Fund Forecaster
Best's Review Forbes Nation's Business
Broker World Fortune New York Times
Business Week Global Investor Pension World
Changing Times Hartford Courant Pensions & Investments
Christian Science Monitor Institutional Investor Personal Investor
Consumer Reports Insurance Forum Philadelphia Inquirer
Economist Insurance Weekly The Times (London)
Equity International International Business USA Today
FACS of the Week Week U.S. News & World Report
Far Eastern Investing Wall Street Journal
Economic Review Investor's Chronicle Washington Post
Financial Adviser Investor's Daily CNN
Financial Planning Journal of the American CNBC
Financial Product News Society of CLu & ChFC PBS
Financial Services Week

</TABLE>

Page 38

<PAGE>

Each Fund may also compare its performance to performance data of similar mutual
funds as published by the following services:

Bank Rate Monitor
Lipper Analytical Services Stanger Report
CDA Investment Technologies, Inc. Weisenberger
Frank Russell Co. Micropal, Ltd.
InterSec Research Donoghues
Mutual Fund Values (Morningstar)

Each Fund's performance may also be compared in advertising to the performance
of comparative benchmarks such as the following:

Standard & Poor's 400 Index
Standard & Poor's 500 Stock Index Bond Buyer Index
Dow Jones Industrial Average NASDAQ
EAFE Index COFI
Consumer Price Index First Boston High Yield Index
Lehman Bond Indices

Each Fund may also compare its performance to rates on Certificates of Deposit
and other fixed rate investments such as the following:

10 year Treasuries
30 year Treasuries
90 day Treasury Bills

Advertising for a Fund may from time to time include discussions of general
economic conditions and interest rates, and may also include references to the
use of those Funds as part of an individual's overall retirement investment
program. From time to time, sales literature and/or advertisements for any of
the Funds may disclose the largest holdings in the Fund's portfolio.

From time to time, the Funds' sales literature and/or advertisements may discuss
generic topics pertaining to the mutual fund industry. This includes, but is not
limited to, literature addressing general information about mutual funds,
variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning, inflation.

Although performance data may be useful to prospective investors in comparing
with other funds and other potential investments, investors should note that the
methods of computing performance of other potential investments are not
necessarily comparable to the methods employed by the Fund.

TOTAL RETURN QUOTATIONS
- -----------------------

The standard formula for calculating total return, as described in the
prospectus, is as follows:

P(1+T)/n/=ERV

Where P = A hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.

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<PAGE>

ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods
(or fractional portion of such period).

Cumulative total return across a stated period may be calculated as follows:

P(1+V)=ERV

Where P = A hypothetical initial payment of $1,000.
V = cumulative total return.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.

The average annual total returns for each of the named Funds (institutional
class), for the 1, 5 and 10 year periods (or since inception, if shorter) ended
December 31, 1998, were as follows:

PERIODS ENDED DECEMBER 31, 1998
-------------------------------
1 YEAR 5 YEARS 10 YEARS
------ ------- --------

Money Market Fund............................ 5.18% 4.82% 5.22%
S&P 500 Index Fund*.......................... 28.28%

*The Inception date of the CIGNA S&P 500 Index Fund was July 1, 1997.

YIELD QUOTATIONS
- ----------------

The standard formula for calculating yield for each Fund except the Money Market
Fund, as described in the Prospectus, is as follows:

Where:

a = dividends and interest earned during a stated 30-day period.
For purposes of this calculation, dividends are accrued
rather than recorded on the ex-dividend date. Interest earned
under this formula must generally be calculated based on the
yield to maturity of each obligation (or, if more
appropriate, based on yield to call date).

b = expenses accrued during period (net of reimbursements).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

YIELD = 2[((a-b)/(c x d) + 1)/6/ -1]

Page 40

<PAGE>

The standard formula for calculating annualized yield for the Money Market Fund,
as described in the Prospectus, is as follows:

Y = V\1\ - V\O\ x 365
----------- ---
V\o\ 7

Where Y = 7 day annualized yield.
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.
V\1\ - V\O\ = base period return.
----------
V\o\

The annualized yield for the CIGNA Money Market Fund for the 7 days ended
December 31, 1998 was 4.69%.

The standard formula for calculating effective annualized yield for the Money
Market Funds, as described in the Prospectus, 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 for the 7 days ended
December 31, 1998 was 4.80%.

For the purpose of the annualized yield and effective annualized yield, the net
change in the value of the hypothetical 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.

REDEMPTIONS PAID IN CASH
- ------------------------

Pursuant to Rule 18f-1 under the Investment Company Act of 1940, as amended,
each Fund has committed to pay in cash all requests for redemption by any
shareholder of record, limited in amount with respect to each shareholder during
any 90 day period to the lesser of $250,000 or 1% of the net assets of the Fund
at the beginning of such period. This election is irrevocable while such Rule is
in effect unless the Securities and Exchange Commission by order upon
application permits the withdrawal of the Fund's notification of election.
Redemptions by any one shareholder during any 90 day period in excess of
$250,000 or 1% of the net assets of the Fund may be made in readily marketable
securities.

Page 41

<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, incorporated by reference to Post-Effective
Amendment No. 57 to Registration Statement filed electronically
October 2, 1998.

a. (i) Amendment No. 1 to Second Amended and Restated Master Trust
Agreement of Registrant dated _____________, 1999, to be filed by
amendment.

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 incorporated by reference 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 as 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.

d. (i) Side Letter to the First Amended and Restated Master Investment
Advisory Agreement dated __________, 1999 between CIGNA Funds
Group and CIGNA Investments, Inc., to be filed by amendment.

d. (ii) The Sub-Advisory Agreement dated ___________, 1999 between CIGNA
International Investment Advisors, Ltd. and BBOI Worldwide, LLC,
to be filed by amendment.

d. (iii) The Sub-Advisory Agreement dated ____________, 1999 between CIGNA
Investments, Inc. and Berger Associates, Inc., to be filed by
amendment.

d. (iv) The Sub-Advisory Agreement dated ____________, 1999 between CIGNA
Investments, Inc. and Fiduciary Trust Company International, to be
filed by amendment.

d. (v) The Sub-Advisory Agreement dated ____________, 1999 between CIGNA
Investments, Inc. and INVESCO, to be filed by amendment.

d. (vi) The Sub-Advisory Agreement dated ____________, 1999 between CIGNA
Investments, Inc. and John A. Levin & Co., to be filed by
amendment.

d. (vii) The Sub-Advisory Agreement dated ____________, 1999 between CIGNA
Investments, Inc. and Morgan Stanley Dean Witter Investment
Management, Inc., to be filed by amendment.

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.

C-1

<PAGE>

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. 59 to Registration Statement filed
electronically January 19, 1999.

g. (i) The Custodian Fee Schedule Effective January 1, 1999 relative
to the Custodian Contract hereinbefore filed as Exhibit g,
incorporated by reference to Post-Effective Amendment No. 59 to
Registration Statement filed electronically January 19, 1999.

g. (ii) 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.

g. (iii) Side Letter to the Custodian Contract between CIGNA Funds Group
and State Street Bank and Trust Company dated ____________, 1999,
to be filed by amendment.

g. (iv) The Price Source Authorization Agreement pursuant to the Custodian
Contract among State Street Bank and Trust Company and CIGNA
Funds, incorporated by reference to Post-Effective Amendment No.
60 to Registrant's Registration Statement filed electronically
April 30, 1999.

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) The Transfer Agent Operations Fee Schedule For CIGNA Money Market
Fund Effective January 1, 1999 relative to the Transfer Agency and
Service Agreement hereinbefore incorporated by reference as
Exhibit h, incorporated by reference to Post-Effective Amendment
No. 59 to Registrant's Registration Statement filed electronically
January 19, 1999.

h. (ii) 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. (iii) 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.

h. (iv) 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. (v) 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. (vi) Sub-Accounting Services Agreement For The Retail Service Class of
CIGNA Money Market Fund (A Series of CIGNA Funds Group) dated as
of April 1, 1999, incorporated by reference to Post-Effective
Amendment No. 60 to Registrant's Registration Statement filed
electronically April 30, 1999.

h. (vii) Sub-Accounting Services Agreement For The Retail Service Class of
the Charter Fund /SM/ series of CIGNA Funds Group dated _________,
to be filed by amendment.

*h. (viii) Power of Attorney.

C-2
<PAGE>

i. Consent of Counsel, to be filed by amendment.

j. Consent of PricewaterhouseCoopers LLP, to be filed by amendment.

k. None.

l. None.

m. Rule 12b-1 Plan of CIGNA Money Market Fund (A Series of CIGNA
Funds Group) dated as of October 27, 1998, incorporated by
reference to Post-Effective Amendment No. 58 to Registrant's
Registration Statement filed electronically December 2, 1998.

m. (i) Rule 12b-1 Plan of the Charter Fund /SM/ series of CIGNA Funds
Group dated __________, to be filed by amendment.

n. 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.

n. (i) Amendment to Dual Class Plan Pursuant to Rule 18f-3 For CIGNA
Funds Group dated as of October 27, 1998, incorporated by
reference to Post-Effective Amendment No. 58 to Registrant's
Registration Statement filed electronically December 2, 1998.

n. (ii) Multi Class Plan Pursuant to Rule 18f-3 for CIGNA Money Market
Fund dated as of October 27, 1998, incorporated by reference to
Post-Effective Amendment No. 58 to Registrant's Registration
Statement filed electronically December 2, 1998.

n. (iii) Multi Class Plan Pursuant to Rule 18f-3 for the Charter Fund /SM/
series of CIGNA Funds Group dated ___________, to be filed by
amendment.

- --------------
* Filed Herewith.

C-3

<PAGE>

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, as amended, 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.

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 CIGNA Investment Securities, Inc. (f/k/a INA Investment Securities, Inc.)
("CIS"), all of which (except for CIS 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 or 195
Broadway, 9th Floor, New York, NY 10007

The Trusts and each of their series of shares - 100 Front Street,
Suite 300, Worcester, Massachusetts 01601

CIS - Two Liberty Place, 1601 Chestnut Street, Philadelphia,
Pennsylvania 19192

C-4

<PAGE>

Substantial business and other connections of the Directors and officers during
the past two fiscal years follow:

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.*
and CIGNA Financial Futures, Inc.*

Thomas C. Jones President, 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, CIGNA Investment
Securities, Inc. (f/k/a INA Investment
Securities, Inc.)

Jean H. Walker Director and Senior Vice President, CII;
Chief Financial Officer, CIGNA Investment
Management, a division of CIGNA
Corporation*; previously Chief Financial
Officer, Group Insurance division, CIGNA
Corporation.****

Mary Louise Casey Senior Managing Director, CII; Director and
Senior Managing Director, CIGNA Investment
Advisory Company, Inc.*; Director Global
Portfolio Strategies, 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.**; Chairman of the Board,
President and Trustee CIGNA Funds Group,
CIGNA High Income Shares, CIGNA
Institutional Funds Group and CIGNA
Investment Securities, Inc. (f/k/a INA
Investment Securities, Inc.); President
CIGNA Variable Products Group.

Robert J. Moore Senior Managing Director, CII, CIGNA
Investment Advisory Company, Inc.* and CIGNA
International Investment Advisors, Ltd.**;
Chief Investment Officer, CIGNA Investment
Management-Retirement Services, a division
of CIGNA Corporation*; previously Managing
Director, Head of Fixed Income Portfolio
Management and Research, Credit Suisse Asset
Management, NY, NY.

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.

C-5

<PAGE>

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 CIGNA
International Investment Advisors, Ltd.**;
previously Vice President, CII and CIGNA
International Investment Advisors, Ltd.**

Richard H. Chase Managing Director, CII.

Rosemary C. Clarke Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*

Rosemary S. Cleaves Managing Director, CII; previously President
and Director, Global Portfolio Strategies,
Inc.*

Leland E. Crabbe Managing Director, CII; previously Portfolio
Manager, Credit Suisse Asset Management, NY,
NY.

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.*

Ira Edelblum Managing Director, CII; previously Portfolio
Manager, Credit Suisse Asset Management, NY,
NY.

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.

Dennis P. Hannigan Managing Director, CII.

Debra J. Height Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*

William H. Jefferis Managing Director, CII; previously Vice
President, CII.

David R. Johnson Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*

C-6

<PAGE>

Robert W. Justich Managing Director, CII; previously Managing
Director, Credit Suisse Asset Management,
NY, NY.

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.*

Bret E. Meck Managing Director, CII.

Stephen J. Olstein Managing Director, CII.

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.

John A. Shaw Managing Director, CII.

Thomas P. Shea, III Managing Director, CII.

Joseph W. Springman Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*

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.

Mary C. LaBelle Senior Vice President, CII; Human Resources
Head, CIGNA Investment Management, a
division of CIGNA Corporation*; previously
Human Resources, Aeltus Investment
Management, a division of Aetna Corporation,
Hartford, CT.

C-7

<PAGE>

Victor E. Saliterman Senior Vice President, CII; previously
Senior Manager-Strategic Services, Anderson
Consulting, NY, NY (Consulting Services).

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.

R. Thomas Clemmenson Vice President, CII.

Maryanne P. dePreaux 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.*

Robert W. Eccles Vice President, Finance & Risk Management;
previously Vice President.

Mark W. Everette 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.*

Amy F. Hatfield Vice President, CII.

John Hurley Vice President, CII.

Chuel D. Hwang Vice President, CII.

Steven F. Jacobs Vice President, CII.

Edward B. Johns Vice President, CII.

Thomas J. Keene Vice President, CII.

Joseph R. Kennedy Vice President, CII.

Mark S. Korinek Vice President, CII.

C-8

<PAGE>

Daryl Krivanec Vice President, CII.

James R. Lagasse Vice President, CII.

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.*

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.

Elisabeth Piker Vice President, CII.

Thomas J. Podgorski 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.

Kevin W. Schmitt Vice President, CII.

John R. Schumann Vice President, CII.

Philip Spak Vice President, CII.

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.

Michael J. Walker Vice President, CII.

Carey A. White Vice President, CII.

William S. Woodsome Vice President, CII.

C-9

<PAGE>

Alfred A. Bingham III Assistant Vice President, CII; Vice
President and Treasurer, the Trusts and
CIGNA Investment Securities, Inc. (f/k/a INA
Investment Securities, Inc.)

Susan L. Cooper Secretary, CII, CIGNA Investment Advisory
Company, Inc.*, CIGNA International
Investment Advisors, Ltd.**, CG Trust
Company*, Global Portfolio Strategies,
Inc.*, CIGNA Financial Services, Inc.***,
Connecticut General Life Insurance Company*;
Assistant Corporate Secretary, CIGNA
Corporation****; previously Associate,
Robinson Donovan Madden & Barry, P.C.,
Springfield, MA (Law Firm).

In addition, certain companies not affiliated with CIGNA serve as investment
sub-advisers to the CIGNA Charter Funds /SM/. Following are the names of these
companies, the series they sub-advise, their principal business addresses and
the substantial business and other connections of the Directors and officers of
the companies during the past two fiscal years:

INTERNATIONAL STOCK FUND BBOI Worldwide LLC
[address to be provided by amendment]

[substantial business and other connections of the sub-adviser and
its officers and Directors to be provided by amendment]

SMALL COMPANY STOCK-VALUE FUND Berger Associates, Inc.
210 University Boulevard
Suite 900
Denver, CO 80206

[substantial business and other connections of the sub-adviser and
its officers and Directors to be provided by amendment]

SMALL COMPANY STOCK-GROWTH FUND Fiduciary Trust Company International
[address to be provided by amendment]

[substantial business and other connections of the sub-adviser and
its officers and Directors to be provided by amendment]

TOTAL RETURN FUND INVESCO
7800 E. Union Avenue
Denver, CO [zip code to be provided
by amendment]

[substantial business and other connections of the sub-adviser and
its officers and Directors to be provided by amendment]

LARGE COMPANY STOCK-VALUE FUND John A. Levin & Co.
One Rockefeller Plaza
25th Floor
New York, NY 10020

[substantial business and other connections of the sub-adviser and
its officers and Directors to be provided by amendment]

- -----------------------
*900 Cottage Grove Road, Bloomfield, CT
**Park House, 16 Finsbury Circus, London, England
***280 Trumbull Street, One Commercial Plaza, Hartford, CT
****One Liberty Place, 1650 Market Street, Philadelphia, PA

C-10

<PAGE>

LARGE COMPANY STOCK-GROWTH FUND Morgan Stanley Dean Witter Investment
Management, Inc.
1221 Avenue of the Americas
New York, NY 10020

[substantial business and other connections of the sub-adviser and
its officers and Directors to be provided by amendment]

ITEM 27. PRINCIPAL UNDERWRITERS.
- --------------------------------

(a) CIGNA Financial Services, Inc. is the principal underwriter for CIGNA Funds
Group and for its series.

(b) The officers and Directors of CIGNA Financial Services, Inc. as of August
31, 1999 are:

Name and Principal Positions and Offices Positions and Offices
Business Address*** With Underwriter With Registrant
- -------------------- --------------------- ---------------------
<S> <C> <C>

Willard S. Bashan Member Board of Directors --------
Byron D. Oliver Member Board of Directors --------
Mark A. Parsons Member Board of Directors --------
David C. Scheinerman Member Board of Directors --------

Robin A. Leavitt President --------
Alan F. Monbaron Vice President,
Chief Financial Officer
Assistant Treasurer, --------
Mark A. Parsons Vice President, --------
Chief Counsel
Stephen C. Stachelek Vice President, --------
Treasurer
Daniel E. Wright Vice President
Assistant Treasurer,
Compliance Officer --------
Julia M. Kozlowski Assistant Vice President --------
Susan L. Cooper Secretary --------
Thomas L. Pierce Assistant Secretary --------
Margaret I. Whiteman Assistant Secretary --------
Pamela S. Williams Assistant Secretary --------
Bruce P. Chapin Assistant Treasurer --------
Brian J. Coroso Assistant Treasurer
Assistant Compliance Officer --------
Joy B. Erickson Assistant Treasurer
Assistant Compliance Officer --------

</TABLE>

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.

- ------------------
***280 Trumbull Street, One Commercial Plaza, Hartford, CT

C-11

<PAGE>

ITEM 29. MANAGEMENT SERVICES.
- -----------------------------

None.

ITEM 30. UNDERTAKINGS.
- ----------------------

Not Applicable.

C-12

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, Registrant, CIGNA Funds Group has
duly caused this Amendment No. 61 to the Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City of Bloomfield, and
State of Connecticut on the 15th day of September, 1999.

CIGNA Funds Group

Richard H. Forde
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, as amended, this
Amendment No. 61 to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.

SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

Richard H. Forde Chairman of September 15, 1999.
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 September 15, 1999.
------------------------------------ (principal
Alfred A. Bingham III 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.

Hugh R. Beath Thomas C. Jones
Richard H. Forde Paul J. McDonald
Russell H. Jones

By: /s/ Jeffrey S. Winer September 15, 1999.
-----------------------------------
Jeffrey S. Winer

</TABLE>

C-13

<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

and

_
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | |
-
_
Amendment No. 61 |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

h. (vii) Power of Attorney.

<PAGE>
Exhibit h(vii)

CIGNA FUNDS GROUP
CIGNA INSTITUTIONAL FUNDS GROUP
CIGNA VARIABLE PRODUCTS GROUP

POWER OF ATTORNEY

The undersigned hereby appoint Alfred A. Bingham III and Jeffrey S. Winer, each
of them singly and with full power of substitution, attorney-in-fact and agent
for me and in my name and on my behalf in any and all capacities to sign any
Registration Statement under the Securities Act of 1933, as amended, any
Registration Statement under the Investment Company Act of 1940, as amended, or
any filing under the securities laws of any of the states of the United States
of America or of any jurisdiction ("Blue Sky Law") for CIGNA Funds Group, CIGNA
Institutional Funds Group and CIGNA Variable Products Group and any amendment to
any such Registration Statement or any Blue Sky Law filing with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, and under
the Investment Company Act of 1940, as amended, or with the appropriate state
agency under the applicable Blue Sky Laws, to file such Registration Statements,
amendments and filings and generally to do and perform all things necessary to
be done in that connection, hereby ratifying and confirming my signature as it
may be signed by said attorney-in-fact and agent to any and all Registration
Statements and amendments thereto and to any and all Blue Sky Law filings and
amendments thereto and ratifying and confirming all other acts that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue of this
appointment.

Signed this 27th day of April, 1999. /s/ Richard H. Forde
------------------------------------------
Richard H. Forde
Chairman of the Board, President
and Trustee
CIGNA Funds Group
CIGNA Institutional Funds Group

/s/ Richard H. Forde
------------------------------------------
Richard H. Forde
President
CIGNA Variable Products Group

/s/ Hugh R. Beath
------------------------------------------
Hugh R. Beath, Trustee

/s/ Russell H. Jones
------------------------------------------
Russell H. Jones, Trustee

/s/ Thomas C. Jones
------------------------------------------
Thomas C. Jones, Trustee

/s/ Paul J. McDonald
------------------------------------------
Paul J. McDonald, Trustee