<PAGE>
DEAR SHAREHOLDERS:
We are pleased to provide this initial report for Charter Foreign Stock Fund
(the "Fund"), sub-advised by Bank of Ireland Asset Management (U.S.) Limited,
covering the period ended June 30, 2000.
Please read our sub-adviser's update below.
Sincerely,
/s/ Richard H. Forde
Richard H. Forde
CHAIRMAN OF THE BOARD AND PRESIDENT
CHARTER FOREIGN STOCK FUND
SUB-ADVISER'S UPDATE
THE MARKET ENVIRONMENT
Performance among global equity markets was decidedly mixed during the second
quarter, with just nine of the 22 countries that make up the Morgan Stanley
Capital International (MSCI) World Index posting positive performance in U.S.
dollar terms. Among major equity markets, Switzerland, the Netherlands, France
and Australia made gains for the period, but these were outweighed by losses in
other markets, such as the U.S., Japan, the U.K. and Germany.
On a relative basis, continental Europe fared better than other regions in the
technology sell-off that occurred during the quarter -- because of its lower
exposure to technology stocks and the fact that this sector in Europe is biased
towards telecommunications stocks, which fared better than pure technology
issues during the sector rotation.
Investors in the Japanese equity market suffered losses in the quarter, largely
due to the global sell-off in technology stocks, although there is some evidence
that foreign
_
1
<PAGE>
investors are becoming increasingly impatient with the pace of reform there.
Notwithstanding these concerns, on average, Japanese company profits recovered
over the last year, due to ongoing corporate cost-cutting and a pickup in global
demand.
In the rest of the Pacific Rim region, markets on aggregate were in negative
territory for the recent quarter. With the notable exception of Australia,
Pacific equity markets were hit hard by the sharp decline of the NASDAQ and
concerns that U.S. interest rates were going to rise faster than initially
anticipated. By the end of the quarter, however, those fears abated somewhat and
markets began to rebound.
COMMENTS ON THE PORTFOLIO
Turning to the Fund itself, our telecommunication holdings were the primary
contributors to our negative second quarter performance -- in a reversal of some
of the gains achieved earlier this year. Japanese stocks in the technological
innovation theme also disappointed over the period, but this was partly due to
profit-taking. Despite its negative return, the Fund outperformed its benchmark,
driven mainly by financial stocks in the growth in personal savings product
theme and pharmaceutical stocks in the healthcare needs theme.
The portfolio's largest holding, Vodafone AirTouch, was the greatest detractor
from performance. The company was weighed down by worries about the cost of
acquiring licenses and implementing the infrastructure for third generation
mobile phone systems. Japanese-quoted NTT DoCoMo also retreated, primarily as a
result of profit-taking and concerns about the cost of expanding its global
network. Among the Fund's telecommunications stocks, Alcatel bucked the trend by
turning in a strong positive performance for the quarter -- profiting from its
exit from low-growth, low-margin businesses, while making inroads into the
exploding broadband equipment market. Murata Manufacturing was hit by
profit-taking and worries that increases in capacity within the industry could
depress prices. While we anticipate that there will continue to be a
_
2
strong demand for Murata's products going forward, we significantly reduced our
holdings in the company during the first half of the year.
Financial stocks that performed well over the quarter included
Netherlands-quoted ING and Paris-based AXA. ING has begun to execute its
strategy to increase its position in the life insurance business and is reducing
its surplus capital through acquisitions. AXA was another strong performer over
the quarter, during which it announced that its revenue for the first three
months of the year rose by 33% compared to the same period last year.
Aventis, the Franco-German company which was formed by the alliance of
Rhone-Polenc and Hoechst late last year, has seen its earnings growth accelerate
as a result of increased sales in a number of its high-profit drugs, such as the
allergy medicine Allegra. Other notable performers among the portfolio's
pharmaceutical stocks were Swiss-quoted Novartis and U.K.-quoted AstraZeneca.
We continue to hedge a portion of the portfolio's exposure to the Japanese yen.
Over the second quarter, this strategy added value to the portfolio.
Rising interest rates across the world (excluding Japan) are putting additional
pressures on already stretched valuations in many stocks. This was particularly
evident in the technology area during the quarter. The decline in share prices
was largely concentrated in those stocks, which are, or have been at, extremely
high valuations relative to their earnings (if indeed they have earnings at
all). This environment has led to a return -- in the short term, at least -- to
value-oriented investment decisions.
PERFORMANCE
For the second quarter and since its inception (01/24/00), the Fund's
Institutional Class returned 0.75% and 7.20%, respectively. The MSCI EAFE Index
returned -3.96% and -4.06%, respectively, for the quarter and year-to-date. The
Fund's Premier and Retail Classes both returned 0.66% for the second quarter and
7.10% since inception.
_
3
<PAGE>
OUTLOOK
Across the globe, technology stocks have showed signs of recovery and by the
beginning of July the ultimate bellwether for tech stocks, the NASDAQ Composite,
had clawed its way back above the 4,000 level. Having said that, there is now a
greater degree of reality in investor perceptions about the technology, media
and telecom sectors.
Margin pressure continues to be a dominant theme globally. Examples of this are
abundant; food producers like Procter & Gamble and Unilever report pricing
pressures, while HSBC announced that it is cutting mortgage rates in the U.K. by
1%, causing further price competition in an already vulnerable sector.
The latest Japanese data continues to paint a confused picture, but that economy
is showing signs of recovery. We believe the sustainability of the recovery in
Japan is very much dependent on continued corporate restructuring, which has
still not reached the levels promised. We will also be looking for continued
improvement in consumer confidence. In the meantime, we have taken profit in
some of our better-performing Japanese investments and have redirected this
money to more value-oriented companies in Europe.
Most of the economies in the Pacific are showing strong signs of recovery, but
have suffered from the perception that a slowdown in the U.S. economy could
adversely affect this recovery. We believe that these fears are somewhat
misplaced because the current strength in economies such as China and India, and
the consequent demand that they are generating for goods and services from the
rest of the region, should cushion the impact of any U.S. slowdown.
Although indexes have broadened somewhat since the beginning of the year the
two-tier market is still evident, particularly in the U.K. where a number of
quality companies are trading at low multiples relative to their growth rates.
Following the very strong performance in
_
4
many of our stocks over the past 12 months, we have taken profits and switched
funds into other lower-valued, more attractive investments.
We continue to believe that a stable or rising interest rate background is
likely to challenge over-stretched stock valuations in the coming months,
particularly for companies where earnings are uncertain, or are some distance
into the future. We believe that the performance of markets will continue to
broaden and we'll look to take advantage of opportunities as they arise to
position the portfolio to benefit from such an occurrence.
_
5
<PAGE>
CHARTER FOREIGN STOCK FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000 (UNAUDITED)
MARKET
NUMBER OF VALUE
SHARES (000)
-----------------------------------------------------------------
COMMON STOCKS - 92.2%
AUSTRALIA - 3.6%
Brambles Industry 1,800 $ 55
National Australia Bank 5,800 97
News Corp. 11,600 160
Telstra Corp. Ltd. 13,950 57
Westpac Banking Corp. 6,600 48
----------
417
----------
BELGIUM - 2.1%
Total Fina Elf 1,620 248
----------
DENMARK - 0.6%
Tele Danmark A/S 1,030 69
----------
FRANCE - 8.6%
Alcatel * 2,945 193
Aventis SA 2,920 213
AXA UAP 1,635 258
Givaudan AG* 16 5
Michelin Cie Gle Des Etabl 1,100 35
Vivendi 3,300 291
----------
995
----------
GERMANY - 3.41%
Bayerische Hypo-Und Vereinbank 1,610 104
Bayerische Motoren Werke AG 4,545 137
E on AG 3,210 155
----------
396
----------
HONG KONG - 3%
Cheung Kong Holdings 7,000 77
China Mobile (HK)* 10,000 88
The Notes to Financial Statements are an integral part of these statements.
_
6
MARKET
NUMBER OF VALUE
SHARES (000)
-----------------------------------------------------------------
China Unicom* 24,000 $ 51
Hong Kong Electric Holdings 4,000 13
Petrochina Co. Ltd.* 364,000 76
Sun Hung Kai Properties 6,000 43
----------
348
----------
ITALY - 3.0%
ENI Spa 12,595 73
Telecom Italia Spa* 19,800 272
----------
345
----------
JAPAN - 16.67%
Acom Co. 600 50
Bank of Tokyo Mitsubishi Bank 3,000 36
Canon, Inc. 5,000 249
Fuji Photo Film Ltd. 3,000 123
Hitachi Ltd. 15,000 216
Honda Motor Co. 1,000 34
Hoya Corp. 1,000 90
KAO Corp. 2,000 61
Murata Manufacturing Co. 1,000 143
NEC Corp. 7,000 220
Nippon Tel. & Tel. Corp. 7 93
NTT DoCoMo 4 108
Rohm Co. 400 117
Shiseido Co. 3,000 46
Sony Corp. 1,100 103
The Notes to Financial Statements are an integral part of these statements.
_
7
<PAGE>
CHARTER FOREIGN STOCK FUND
INVESTMENTS IN SECURITIES CONTINUED
JUNE 30, 2000 (UNAUDITED)
MARKET
NUMBER OF VALUE
SHARES (000)
-----------------------------------------------------------------
Takeda Chemical Industries 3,000 $ 197
Takefuji Corp. 400 48
----------
1,934
----------
KOREA - 0.6%
Korea Telecom ADR* 820 40
Pohang Iron & Steel Ltd. ADR* 1,050 25
----------
65
----------
NETHERLANDS - 11.62%
ABN-Amro Holdings NV 5,600 137
Ahold (Kon) NV 4,025 118
Elsevier NV 5,042 61
Fortis (Nl) 1,675 49
Heineken Nv 980 60
ING Groep NV Cva 5,680 384
Koninklijke Kpn * 4,160 186
Philips Elec. (Kon)* 2,845 134
Royal Dutch Petroleum 1,960 122
Tnt Post Groep NV 2,350 63
Vnu NV 660 34
----------
1,348
----------
NEW ZEALAND - 0.1%
Telecom Corp. of New Zealand Ltd. 3,000 10
----------
PORTUGUAL - 0.3%
Electricidade De Portugual EDP 1,750 32
----------
SINGAPORE - 1.2%
DBS Holdings 6,000 77
Overseas Chinese Banking Corp. 4,000 28
Singapore Press Holdings 2,000 31
----------
136
----------
The Notes to Financial Statements are an integral part of these statements.
_
8
MARKET
NUMBER OF VALUE
SHARES (000)
-----------------------------------------------------------------
SPAIN - 2.3%
Banco Santander Central 11,000 $ 116
Telefonica CA * 6,950 149
----------
265
----------
SWEDEN - 1.1%
Ericsson * 6,450 128
----------
SWITZERLAND - 8.93%
Alusuisse-Lonza Holdings * 74 48
Lonza Group AG 67 35
Nestle SA 126 252
Novartis AG 114 181
Roche Holdings Ag Gennusscheine 16 156
Schweiz Ruckversicherungs-G * 96 196
UBS AG * 1,150 168
----------
1,036
----------
UNITED KINGDOM - 25.22%
3I Group 2,170 45
Allied Zurich * 8,595 102
Astrazeneca 2,920 136
Barclays 7,220 179
British American Tobacco * 2,363 16
Cable & Wireless * 11,600 196
Cadbury Schweppes * 12,204 80
Diageo * 13,950 125
EMI Group * 5,150 47
Glaxo Wellcome * 6,750 197
Granada Group 15,560 155
Hilton Group PLC * 14,850 52
Invensys 23,322 88
The Notes to Financial Statements are an integral part of these statements.
_
9
<PAGE>
CHARTER FOREIGN STOCK FUND
INVESTMENTS IN SECURITIES CONTINUED
JUNE 30, 2000 (UNAUDITED)
MARKET
NUMBER OF VALUE
SHARES (000)
-------------------------------------------------------------------
Lloyds Tsb Group 13,704 $ 129
Marconi 9,660 126
Old Mutual 2,880 6
P & O 3,210 27
Pearson 2,705 86
Prudential PLC 12,660 185
Railtrack Group PLC 1,800 28
Reuters Group 5,100 90
RMC Group 1,250 16
Shell T & T 29,358 245
Ti Group 5,550 30
Vodafone Airtouch 133,633 540
----------
2,926
----------
TOTAL COMMON STOCKS - 92.2%
(Cost $9,846) 10,698
----------
RIGHTS - 2.9%
(Cost $1)
AXA* 10 1
----------
SHORT-TERM OBLIGATIONS - 4.3%
MONEY MARKET FUND
Charter Money Market Fund 498,000 498
TOTAL SHORT-TERM OBLIGATIONS
(Cost $498) 498
----------
TOTAL INVESTMENT IN SECURITIES - 100%
(Total Cost $10,345) 11,197
Cash and Other Assets Less Liabilities - (0.6%) 65
----------
NET ASSETS - 100.0% $ 11,262
==========
* Non-income producing security.
The Notes to Financial Statements are an integral part of these statements.
__
10
-----------------------------------------------------------------
CHARTER FOREIGN STOCK FUND
TEN LARGEST POSITIONS (UNAUDITED)
(000)
Vodafone Airtouch $ 540 4.7%
ING Groep NV Cva 384 3.3%
Vivendi 291 2.5%
Telecom Italia Spa 272 2.3%
AXA UAP 259 2.2%
Nestle SA 252 2.2%
Cannon, Inc. 249 2.1%
Total Fina Elf 248 2.1%
Shell T & T 245 2.1%
Tekeda Chemical Industries 197 1.7%
-----------------------------------------------------------------
The Notes to Financial Statements are an integral part of these statements.
__
11
<PAGE>
CHARTER FOREIGN STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
(IN THOUSANDS)
--------------------------------------------------------------------------------
ASSETS:
Investments in securities at value (Cost - $10,345) $ 11,197
Cash 1
Foreign currency (Cost $102) 102
Receivable for investments sold 17
Interest and dividends receivable 10
Other 31
---------------
Total assets 11,358
---------------
LIABILITIES:
Payable for investments purchased 56
Accrued advisory fees payable 9
Custodian fees payable 9
Accrued audit and legal fees payable 7
Administrative services payable 6
12b-1 and sub-accounting fees payable to Distributor 4
Other accrued expenses 5
---------------
Total liabilities 96
---------------
NET ASSETS $ 11,262
===============
SHARES OUTSTANDING
Institutional Class ($10.41 net asset value per share) 450
===============
Premier Class ($10.40 net asset value per share) 516
===============
Retail Class ($10.40 net asset value per share) 118
===============
COMPONENTS OF NET ASSETS:
Paid in capital $ 10,854
Undistributed net investment income 202
Accumulated net realized loss on investments and
currencies (646)
Unrealized appreciation of investments 852
---------------
NET ASSETS $ 11,262
===============
The Notes to Financial Statements are an integral part of these statements.
__
12
CHARTER FOREIGN STOCK FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 24, 2000* TO
JUNE 30, 2000 (UNAUDITED)
(IN THOUSANDS)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of taxes withheld of $13,707) $ 89
Interest 169
--------------
258
EXPENSES:
Investment advisory fees 48
Custodian fees and expenses 36
Registration fees 13
Administrative services 9
Auditing and legal fees 8
Sub-accounting fees 7
Shareholder reports 3
12b-1 fees 1
Other 3
--------------
Total expenses 128
Less expenses waived by adviser or distributor (72)
--------------
Net expenses 56
--------------
NET INVESTMENT INCOME 202
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from securities transactions (521)
Net realized loss from currency transactions (125)
Unrealized appreciation of investments 852
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 206
--------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 408
==============
* Commencement of operations
The Notes to Financial Statements are an integral part of these statements.
__
13
<PAGE>
CHARTER FOREIGN STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JANUARY 24, 2000* TO
JUNE 30, 2000 (UNAUDITED)
(IN THOUSANDS)
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 202
Net realized loss from securities and foreign currency
transactions (646)
Unrealized appreciation of investments 852
-----------------
Net increase in net assets from operations 408
-----------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Institutional Class -
Premier Class -
Retail Class -
-----------------
Total distributions to shareholders -
-----------------
CAPITAL SHARE TRANSACTIONS:
Institutional Class
Net proceeds from sales of shares 4,500
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions -
-----------------
4,500
Cost of shares redeemed -
-----------------
4,500
-----------------
Premier Class
Net proceeds from sales of shares 5,328
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions -
-----------------
5,328
Cost of shares redeemed (151)
-----------------
5,177
-----------------
Retail Class
Net proceeds from sales of shares 1,196
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions -
-----------------
1,196
Cost of shares redeemed (19)
-----------------
1,177
-----------------
Net increase from Fund share transactions 10,854
-----------------
NET INCREASE IN NET ASSETS 11,262
NET ASSETS:
Beginning of period -
-----------------
End of period (including undistributed
net investment income of $202) $ 11,262
=================
* Commencement of operations
The Notes to Financial Statements are an integral part of these statements.
__
14
CHARTER FOREIGN STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS CONTINUED
FOR THE PERIOD JANUARY 24, 2000* TO
JUNE 30, 2000 (UNAUDITED)
(IN THOUSANDS)
--------------------------------------------------------------------------------
TRANSACTIONS IN CAPITAL STOCK
INSTITUTIONAL CLASS
Shares sold 450
Shares issued in reinvestment of dividends and
distributions -
450
--------------
Shares redeemed -
--------------
Net increase in shares outstanding 450
==============
PREMIER CLASS
Shares sold 530
Shares issued in reinvestment of dividends and
distributions -
--------------
530
Shares redeemed (14)
--------------
Net increase in shares outstanding 516
==============
RETAIL CLASS
Shares sold 120
Shares issued in reinvestment of dividends and
distributions -
--------------
120
Shares redeemed (2)
--------------
Net increase in shares outstanding 118
==============
* Commencement of operations
The Notes to Financial Statements are an integral part of these statements.
__
15
<PAGE>
CHARTER FOREIGN STOCK FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES. Charter Foreign Stock Fund is a separate
series of CIGNA Funds Group, a Massachusetts business trust (the "Trust"). The
Trust is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Charter Foreign Stock
Fund seeks long-term capital appreciation by investing principally in common
stocks of well established companies located outside the U.S. The Trust offers
three classes of shares: Institutional Class, Premier Class and Retail Class.
Expenses of the Fund are borne pro rata by the holders of each class of shares,
except that each class bears expenses unique to that class (including any
applicable sub-accounting or 12b-1 distribution fee). Shares of each class would
receive their pro rata share of net assets of the Fund if the Fund were
liquidated. In addition, the Trustees approve separate dividends on each class
of shares. Institutional Class Shares have a separate transfer agent charge and
no distribution fee or sub-accounting fee. The Premier Class Shares have a
sub-accounting fee. The Retail Class Shares have a 12b-1 fee and a
sub-accounting fee.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
A. SECURITY VALUATION - Equity securities, including warrants, that are listed
on a national securities exchange or part of the NASDAQ National Market System
are valued at the last sale price or, if there has been no sale that day, at the
last bid price. Prices are taken from the primary market in which the security
trades. Short-term investments with remaining maturities of up to and including
60 days are valued at amortized cost, which
__
16
approximates market. Short-term investments that mature in more than 60 days are
valued at current market quotations. Other securities and assets of the Fund are
appraised at fair value as determined in good faith by, or under the authority
of, the Board of Trustees.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-date, and interest income is recorded on
the accrual basis. Securities gains and losses are determined on the basis of
identified cost.
C. FEDERAL TAXES - For federal income tax purposes, each fund in the Trust is
taxed as a separate entity. It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income and capital gains to its
shareholders. Therefore, no federal income or excise taxes on realized income or
net capital gains have been accrued.
D. DIVIDENDS - Dividends from net investment income and net capital gains, to
the extent such gains would otherwise be taxable to the Fund, are declared and
distributed annually.
Dividends and distributions are recorded by the Fund on the ex-dividend date.
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. To the extent that
such differences are permanent, a re-classification to paid in capital may be
required.
E. CURRENCY TRANSLATION AND FORWARD CURRENCY CONTRACTS - Foreign currency
amounts are translated into U.S. dollars at the prevailing exchange rates as
follows: assets and liabilities at the rate of exchange at the end of the
__
17
<PAGE>
CHARTER FOREIGN STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) CONTINUED
period, purchases and sales of securities and expenses at the rate of exchange
prevailing on the dates of such transactions. The Fund from time to time may
enter into foreign currency transactions to convert to and from different
foreign currencies and to convert foreign currencies to and from the U.S.
dollar. The Fund enters into these transactions either on a spot basis at the
spot rate prevailing in the foreign currency exchange market or uses forward
currency exchange contracts to purchase or sell foreign currencies. Realized and
unrealized gains and losses on foreign currency transactions represent foreign
exchange gains and losses arising from the sale of holdings of foreign
currencies, foreign currency exchange rate fluctuations between trade dates and
settlement dates on securities transactions, and the difference between the
amounts of interest and dividends recorded on the books of the Fund and the
amount actually received.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Investment
advisory fees are paid or accrued to TimesSquare Capital Management, Inc.
("TimesSquare"), certain officers and directors of which are affiliated with the
Fund. Such advisory fees are based on an annual rate of 1.00% applied to the
average daily net assets of the Fund. TimesSquare has voluntarily agreed to
reimburse the Fund for any amount by which its expenses (including the advisory
fee but excluding interest, taxes, transaction costs incurred in acquiring and
disposing of portfolio securities, and extraordinary expenses) exceed 1.05%
annually of average daily net assets for the Institutional Class, 1.25% annually
of average daily net assets for the Premier Class, and 1.50% annually for the
Retail Class, until April 30, 2001 and thereafter to the extent described in the
Fund's then current prospectus. TimesSquare retains the ability to be repaid by
the Fund if the Fund's expenses fall below the
__
18
specified limit prior to the end of the fiscal year or within three years after
TimesSquare waives management fees or reimburses Fund operating expenses.
For administrative services, the Fund reimburses TimesSquare for a portion of
the compensation and related expenses of the Trust's Treasurer and Secretary and
certain persons who assist in carrying out the responsibilities of those
offices. For the six months ended June 30, 2000, the Fund paid or accrued
$9,395.
With respect to Retail Class shares, the Fund has adopted a 12b-1 plan which
requires the payment of 0.25% annually ($1,208 through 6/30/00) to CIGNA
Financial Services, Inc. ("CFS"), the Fund's distributor. The fees received from
the 12b-1 plan are used for services provided to the Retail Class and expenses
primarily intended to result in the sale of such shares. Premier and Retail
Class shares are also subject to a sub-accounting fee payable to CFS equal to
0.25% annually ($5,678 and $1,208, respectively, through 6/30/00). The
sub-accounting and 12b-1 fees will be waived as necessary to limit Premier and
Retail Class expenses, as a percentage of average net assets, to the amounts
described above until April 30, 2001 and thereafter to the extent described in
the Fund's then current prospectus.
TimesSquare and CFS are indirect, wholly-owned subsidiaries of CIGNA
Corporation.
3. TRUSTEES' FEES. Trustees' fees represent remuneration paid or accrued to
trustees who are not employees of CIGNA Corporation or any of its affiliates.
Trustees may elect to defer all or a portion of their fees which are invested in
mutual fund shares in accordance with a deferred compensation plan.
__
19
<PAGE>
CHARTER FOREIGN STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) CONTINUED
4. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities,
excluding short-term obligations, for the six months ended June 30, 2000 were
$11,175,345 and $1,240,364, respectively.
At June 30, 2000, the cost of securities for federal income tax purposes was
$10,344,515. The Fund had net unrealized appreciation of investment of
$852,009, consisting of gross unrealized appreciation of $1,332,366 and gross
unrealized depreciation of $480,357 for federal income tax purposes.
5. CAPITAL STOCK. The Fund is a separate series of the Trust which offers an
unlimited number of shares of beneficial interest, without par value. At June
30, 2000, Life Insurance Company of North America, an indirect wholly-owned
subsidiary of CIGNA Corporation, owned 92% of the Fund.
__
20
6. FINANCIAL HIGHLIGHTS. The following per share data is computed on the basis
of a share outstanding throughout the period:
<TABLE>
<CAPTION>
INSTITUTIONAL PREMIER RETAIL
CLASS CLASS CLASS
----------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
1/24/00(4) 1/14/00(4) 1/14/00(4)
TO TO TO
(UNAUDITED) 6/30/00 6/30/00 6/30/00
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.20 0.18 0.17
Net realized and unrealized gain on securities 0.21 0.22 0.23
-------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 0.41 0.40 0.40
-------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income - - -
Distributions from capital gains - - -
-------- -------- --------
TOTAL DISTRIBUTIONS - - -
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.41 $ 10.40 $ 10.40
======== ======== ========
TOTAL RETURN (1) 7.20% (2) 7.10% (2) 7.10% (2)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.05% (3) 1.25% (3) 1.50% (3)
Net investment income 4.48% (3) 3.96% (3) 3.86% (3)
Fees and expenses waived or borne by the Adviser or
Distributor 1.30% (3) 1.36% (3) 1.38% (3)
Portfolio turnover 14% (2) 14% (2) 14% (2)
Net assets, end of period (000 omitted) $ 4,684 $ 5,358 $ 1,200
</TABLE>
(1) Had the Adviser or Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
(2) Not annualized.
(3) Annualized.
(4) Commencement of operations.
__
21
<PAGE>
CHARTER FOREIGN STOCK FUND
Charter Foreign Stock Fund is an open-end, diversified management investment
company that invests primarily in common stocks of well-established companies
located outside the U.S. The investment adviser is TimesSquare Capital
Management, Inc., 900 Cottage Grove Road, Hartford, Connecticut 06152. The Fund
is distributed by CIGNA Financial Services, Inc., P.O. Box 150476, Hartford, CT
06115-0476 (telephone: 1.888.CIGNA.FS or 1.888.244.6237).
TRUSTEES
Hugh R. Beath
ADVISORY DIRECTOR, ADMEDIA CORPORATE ADVISORS, INC.
Richard H. Forde
SENIOR MANAGING DIRECTOR, TIMESSQUARE CAPITAL MANAGEMENT, INC.
Russell H. Jones
VICE PRESIDENT AND TREASURER, KAMAN CORPORATION
Thomas C. Jones
PRESIDENT, CIGNA RETIREMENT AND INVESTMENT SERVICES &
CHAIRMAN OF THE BOARD, TIMESSQUARE CAPITAL MANAGEMENT, INC.
Paul J. McDonald
SPECIAL ADVISOR TO THE BOARD OF DIRECTORS,
FRIENDLY ICE CREAM CORPORATION
OFFICERS
Richard H. Forde
CHAIRMAN OF THE BOARD AND PRESIDENT
Alfred A. Bingham III
VICE PRESIDENT AND TREASURER
Jeffrey S. Winer
VICE PRESIDENT AND SECRETARY
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CIGNA FINANCIAL SERVICES, INC.
P.O. Box 150476 . Hartford, CT 06115-0476
www.cigna.com . Member NASD/SIPC
545725
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CIGNA FUNDS GROUP
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CHARTER FUNDS/SM/
CHARTER
FOREIGN
STOCK
FUND
Semiannual Report
June 30, 2000
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CIGNA Financial Services, Inc.
