CIGNA VARIABLE PRODUCTS GROUP, 485BPOS, 1999-04-20

CIGNA VARIABLE PRODUCTS GROUP
485BPOS, 1999-04-20

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<PAGE>

As filed with the Securities and Exchange Commission on April 20, 1999.

Securities Act File No. 33-20333
Investment Company Act File No. 811-5480
================================================================================

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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. 18 |X|
__ -
and
_
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | |
-
_
Amendment No. 18 |X|
__ -

(CHECK APPROPRIATE BOX OR BOXES.)

CIGNA VARIABLE PRODUCTS 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):

If appropriate, check the following box:
_
| | This post-effective amendment designates a new effective date for a
- previously filed post-effective amendment.

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

<PAGE>

CIGNA VARIABLE PRODUCTS GROUP

- --------------------------------------------------------------------------------

Prospectus
May 1, 1999

CIGNA VARIABLE PRODUCTS MONEY MARKET FUND
CIGNA VARIABLE PRODUCTS INVESTMENT GRADE BOND FUND
CIGNA VARIABLE PRODUCTS S&P 500 INDEX 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.

<PAGE>

TABLE OF CONTENTS
PAGE NUMBER

Summary..................................................................... 1

Bar Charts and Performance Tables........................................... 2

Fees and Expenses of the Funds.............................................. 4

Investment Information...................................................... 5

Management of the Funds..................................................... 12

Year 2000 Issues............................................................ 12

Pricing of Shares........................................................... 12

Purchase and Redemption of Shares........................................... 13

Distributions and Federal Income Tax Considerations ........................ 14

Financial Highlights........................................................ 15

<PAGE>

Shares of the funds offered by this prospectus are available and are being
marketed exclusively as pooled funding vehicles for life insurance companies
writing variable annuity contracts and variable life insurance contracts
("Variable Contracts") and for qualified retirement and pension plans
("Qualified Plans").

FUND INVESTMENT OBJECTIVES:
- --------------------------

MONEY MARKET FUND: 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.

INVESTMENT GRADE BOND FUND: To provide as high a level of current
income as possible consistent with
reasonable concern for safety of principal.

S&P 500 INDEX FUND: To provide long-term growth of capital by
investing principally in common stocks.

PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------

MONEY MARKET FUND: Invests exclusively in high-quality short-
term money market instruments.

INVESTMENT GRADE BOND FUND: Invests primarily in fixed rate investment
grade debt securities.

S&P 500 INDEX FUND: Attempts to replicate the composition and
total return, reduced by Fund expenses, of
the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) by investing in
common stocks of companies which make up
the S&P 500.

PRINCIPAL RISKS OF INVESTING
IN THE FUNDS
- ----------------------------

MONEY MARKET FUND: 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.

An investment in the Money Market 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.

<PAGE>

INVESTMENT GRADE BOND FUND: Interest Rate Risk - Changes in interest
rates could cause the value of your
investment to change. The Investment Grade
Bond Fund will be more sensitive to
interest rate changes than the Money Market
Fund since its bonds generally will have
longer maturities.

Credit Risk - Defaults on the Fund's
investments could also cause the value of
your investment to change. Although the
Investment Grade Bond Fund invests
primarily in investment grade debt
securities, there is a higher risk of
default on the Fund's investments than with
the Money Market Fund.

Prepayment Risk - Prepayment of the
securities owned by the Fund can affect the
value of your investment.

S&P 500 INDEX FUND: The Fund is subject to 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 rise and
periods when stock prices generally
decline.

Loss of money is a risk of investing in any of the funds.

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 the life of the funds. There is no bar
chart or table for the Investment Grade Bond Fund because this fund does not
have performance information for a full year. Performance data shown in the bar
charts and tables does not reflect Variable Contract or Qualified Plan charges.
If it did, performance would be lower.

The tables show how the funds' average annual returns for one, five and ten
years compare to those of a broad measure of relevant market performance. A
fund's past performance does not necessarily indicate how the fund will perform
in the future.

[THE INFORMATION SET FORTH BELOW IS APPEARS AS A BAR CHART GRAPHIC]

MONEY MARKET FUND - ANNUAL TOTAL RETURNS

5.19% 5.14%

1997 1998

During the period shown in the bar chart, the highest quarterly return was 1.31%
(for the quarter ended 12/31/97) and the lowest quarterly return was 1.20% (for
the quarter ended 12/31/98).

<PAGE>

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

Past 1 year Since Inception (commenced
Operations March 1, 1996)

Money Market Fund 5.14% 5.13%

3-Month U.S. Treasury bills 5.31% 5.57%

The Money Market Fund's 7-day annualized yield as of December 31, 1998 was
4.71%.

[THE INFORMATION SET FORTH BELOW APPEARS AS A BAR CHART GRAPHIC]

S&P 500 INDEX FUND - ANNUAL TOTAL RETURNS

29.22% -3.99% 37.46% 3.59% 2.97% 0.67% 36.82% 22.48% 33.35% 28.6%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

During the ten-year period shown in the bar chart, the highest quarterly return
was 21.47% (for the quarter ended 12/31/98) and the lowest quarterly return was
- -18.73% (for the quarter ended 9/30/90).

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

Past 1 year Past 5 years Past 10 years*

S&P 500 Index Fund 28.60% 23.67% 18.06%

S&P 500 Index 28.57% 24.06% 19.21%

*Prior to November 1993 the S&P 500 Index Fund was actively managed.

<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.

The table does not reflect charges and deductions which are or may be imposed
under Variable Contracts or Qualified Plans. Please refer to the applicable
Variable Contract prospectus or Qualified Plan documents for any additional
charges.

Investment
Money Grade S&P 500
Market Bond Index
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>

SHAREHOLDER FEES
(fees paid directly from your investments)

Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) None None None
Maximum deferred sales charge (load)
(as a percentage of offering price) None None None
Redemption fee (as a percentage
of amount redeemed) None None None
Exchange fee None None None

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

Management fees 0.35% 0.50% 0.25%
Distribution (12b-1) fees None None None
Other expenses (before waivers) 0.38% 0.15%(1) 0.19%
--------- --------- ---------
Total Annual Fund Operating Expenses (before waivers) 0.73% 0.65% 0.44%
Waiver of Fund Expenses (2) (0.23%) (0.15%) (0.19%)
--------- --------- ---------
Total Actual Fund Operating Expenses (after waivers) (2) 0.50% 0.50% 0.25%

</TABLE>

(1) These expenses are based on estimated amounts for the fiscal year ending
December 31, 1999.

(2) CIGNA Investments has contractually agreed, until April 30, 2000, to waive
management fees and reimburse the funds if and to the extent total annual
fund operating expenses exceed 0.50% of average daily net assets for the
Money Market Fund and the Investment Grade Bond Fund, and 0.25% for the S&P
500 Index Fund. CIGNA Investments may agree to continue to waive management
fees and reimburse expenses after April 30, 2000.

<PAGE>

EXAMPLE

THIS EXAMPLE IS 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 you invest $10,000 in the funds for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
funds' operating expenses reflect contractual expense limitations for the first
year and after that are not limited and remain the same. The Example does not
reflect charges and deductions which are or may be imposed under Variable
Contracts or Qualified Plans. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

MONEY MARKET FUND
1 year 3 years 5 years 10 years
$51 $211 $385 $894

INVESTMENT GRADE BOND FUND
1 year 3 years
$51 $193

S&P 500 INDEX FUND
1 year 3 years 5 years 10 years
$26 $122 $228 $541

INVESTMENT INFORMATION

MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES

The fund's objective is to provide as high a level of current income as is
consistent with the preservation of capital and liquidity and the maintenance of
a stable $1.00 per share net asset value by investing in short-term high quality
money market instruments. The fund invests in money market instruments such as
U.S. Government direct obligations and U.S. Government agencies' securities. In
addition, the fund may invest in other money market instruments such as
asset-backed securities, bankers' acceptances, certificates of deposit,
commercial loan participations, repurchase agreements, time deposits and
commercial paper, all of which will be denominated in U.S. dollars. Bankers'
acceptances, certificates of deposit and time deposits may be purchased from
U.S. or foreign banks. The fund purchases commercial paper primarily from U.S.
issuers but may purchase this type of security from foreign issuers so long as
it is denominated in U.S. dollars.

DESCRIPTION OF MONEY MARKET INSTRUMENTS

This is a description of the primary types of money market instruments the fund
will own:

U.S. GOVERNMENT DIRECT OBLIGATIONS - Obligations issued by the U.S. Treasury.

<PAGE>

U.S. GOVERNMENT AGENCIES SECURITIES - The U.S. Government has established
certain Federal agencies such as the Government National Mortgage Association as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury or supported by the issuing agencies'
right to borrow from the Treasury.

ASSET-BACKED SECURITIES - include interests in pools of mortgages, loans,
receivables, or other assets. Payment of principal and interest may be largely
dependent on the cash flows generated by the assets backing the securities.

CERTIFICATES OF DEPOSIT - A negotiable interest-bearing instrument with a
specific maturity. Certificates of deposit are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market, prior to maturity.

COMMERCIAL PAPER - The term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from a few days to nine months.

COMMERCIAL LOAN PARTICIPATIONS - Participating interests in loans made by a
bank, or a syndicate of banks represented by an agent bank, to corporate
borrowers. Loan participations may extend for the entire term of the loan or may
extend only for short "strips" that correspond to stated payments on the
underlying loan. The loans underlying such participations may be secured or
unsecured, and the fund may invest in loans collateralized by mortgages on real
property.

REPURCHASE AGREEMENTS - A repurchase agreement is a contract where the seller of
securities (limited to U.S. Government securities, including securities issued
or guaranteed by the U.S. Treasury or the various agencies and instrumentalities
of the U.S. Government) agrees to repurchase the securities at a specified price
on a future date determined by negotiations. The repurchase agreement may be
considered a 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.

OPERATIONAL POLICIES

The fund may follow policies that are more restrictive than the investment
limitations 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.

<PAGE>

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.

INVESTMENT GRADE BOND FUND
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

The fund's objective is to provide as high a level of current income as possible
consistent with reasonable concern for safety of principal. The fund intends to
achieve this objective by investing primarily in fixed rate investment grade
debt securities. Under normal market conditions, the fund will invest at least
65% of its assets in these securities. The fund will consider a security to be
investment grade as long as at least one nationally recognized statistical
rating agency (such as Moody's or S&P) rates the security investment grade. The
fund invests in a diversified portfolio of marketable debt securities. In
addition, the assets of the fund may be invested in obligations of, or
guaranteed by, U.S. banks or bank holding companies that are considered by CIGNA
Investments to be investment grade or better and money market instruments
eligible for purchase by the Money Market Fund.

The Investment Grade Bond Fund also may invest up to 20% of its assets in other
fixed-income securities, including convertible bonds and preferred stocks, and
in common stocks and similar equity securities when they are acquired as parts
of units with fixed-income securities (including warrants or rights to purchase
equity investments) or upon exercise of such warrants or rights or upon the
conversion of convertible bonds.

The fund may invest up to 40% of its assets in foreign entities of which up to
25% may be payable in foreign currencies and traded abroad. Purchases of foreign
securities payable in foreign currencies will be affected either favorably or
unfavorably by changes in the value of the foreign currencies against the U.S.
dollar. Investing in foreign securities payable in foreign currencies carries
increased risk to the fund.

<PAGE>

The fund's assets may include securities that have been purchased on a
when-issued or delayed-delivery basis. Delivery and payment for these securities
could take place a month or more after the date of the transaction, during which
time the value of the purchase commitment will fluctuate with the market for
comparable securities. However, both the payment and interest terms of the
securities are fixed at the time the fund makes a commitment to purchase the
securities. The fund makes these commitments only with the intention of actually
acquiring the securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.

The fund may invest up to 20% of its assets in debt securities of less than
investment grade (i.e., securities rated Ba/BB or below by Moody's and S&P).
These securities are commonly referred to as junk bonds.

The Investment Grade Bond Fund pursues its goals by investing primarily in fixed
rate investment grade debt securities, and to a lesser degree, in convertible
bonds and preferred stocks. These investments are commonly known as fixed-income
investments.

* FIXED-INCOME INVESTMENTS - RISKS IN GENERAL. The value of a fixed-income
investment may fall as a result of factors directly relating to the company
issuing the investment, such as decisions made by its management or a reduction
in its credit rating. An investment's value may also fall because of factors
affecting many companies, such as increased production costs. The value of an
investment may also be affected by general changes in financial market
conditions, such as changing interest rates or currency exchange rates.

* INTEREST RATE RISK. The values of fixed-income investments usually rise and
fall in response to changes in interest rates. Declining interest rates
generally raise the value of existing fixed-income investments, and rising
interest rates generally lower the value of existing fixed-income investments.
Changes in the values of fixed-income investments usually will not affect the
amount of income a fund receives from them, but will affect the value of the
fund's shares. Interest rate risk is often greater for investments with longer
maturities.

* PREPAYMENT RISK. Many types of debt securities, including mortgage securities
and asset-backed securities, are subject to prepayment risk. Prepayment risk
occurs when the issuer of a security can prepay principal prior to the
security's maturity. If an investment were to be prepaid during a time of
declining interest rates, a fund might have to reinvest the proceeds in an
investment offering a lower yield, and therefore might not benefit from any
increase in value as a result of declining interest rates. In addition, the
potential impact of prepayment features on the price of a debt security may be
difficult to predict and result in greater volatility.

* CREDIT RISK. Investors normally expect to be compensated in proportion to the
risk they assume. Fixed-income investments of companies with poor credit usually
offer higher yields than those of companies with better credit. Higher-rated
investments generally offer lower-credit risk, but not necessarily lower
interest rate risk. The value of a higher-rated investment still fluctuates in
response to changes in interest rates. The fund may at times invest in "zero
coupon" bonds and "payment-in-kind" bonds. Zero coupon bonds are issued at less
than face value and make payments of interest only at maturity rather than at
intervals during the life of the bond. Payment-in-kind bonds give the issuing
company the option to make interest payments in additional bonds rather than in
cash. Both kinds of bonds allow a company to avoid generating cash to make
current interest payments. These bonds therefore involve greater credit risk and
are typically subject to greater price fluctuations than bonds that pay current
interest in cash.

Up to 20% of the Investment Grade Bond Fund's investments may be in below
investment grade securities. Fixed-income investments rated BB or lower by
Standard & Poor's (or its equivalent) are considered below investment grade and
are commonly known as "junk bonds." The lower ratings of these investments
reflect a

<PAGE>

greater possibility that the issuing companies may be unable to make timely
payments of interest and principal and thus default. There may be an increased
risk of default in adverse economic conditions. If this happens, or is
perceived as likely to happen, the values of those investments will usually
drop. A default or expected default could also make it difficult for a fund to
sell the investments at prices approximating the values the fund had previously
placed on them. Because junk bonds are traded mainly by institutions, they
usually have a limited market, which may at times make it difficult for the fund
to establish their fair value. Credit ratings are based largely on the issuing
company's historical financial condition and the rating agencies' investment
analysis at the time of purchase. The rating assigned to any particular
investment does not necessarily reflect the issuing company's current financial
condition and does not reflect an assessment of an investment's volatility or
liquidity.

* NON-U.S. INVESTMENTS. Non-U.S. investments involve certain special risks. For
example, their values may drop in response to changes in currency exchange
rates, unfavorable political and legal developments, unreliable or untimely
information, or economic and financial instability. In addition, the liquidity
of these investments may be more limited than domestic investments, which means
a fund may at times be unable to sell them at desirable prices. Non-U.S.
settlement procedures may also involve additional risks. These risks are
generally greater in the case of "emerging markets" that typically have less
developed legal and financial systems. Certain of these risks may also apply to
some extent to domestic investments that are denominated in foreign currencies
or that are traded in foreign markets, or to investments in U.S. companies that
have significant foreign operations.

* SMALLER COMPANIES. The Investment Grade Bond Fund may invest in small and
relatively less well-known companies with market capitalizations of less than $1
billion. These companies are more likely than larger companies to have limited
product lines, markets or financial resources, or to depend on a small, less
experienced management group. Investments in smaller companies may trade less
frequently and in limited volume, and their prices may fluctuate more than
investments in other companies. These investments may therefore be more
vulnerable to adverse developments.

* ILLIQUID INVESTMENTS. CIGNA Investments believes that opportunities to earn
high yields may exist in investments that are not liquid and that may be
considered speculative. The sale of these investments is usually restricted or
limited by law, which may mean that the fund will not be able to sell them when
CIGNA Investments considers it is desirable to do so or may be able to sell them
only at less than their market value. The Investment Grade Bond Fund may invest
up to 15% of its assets in illiquid investments.

* FREQUENT TRADING. The fund may buy and sell investments relatively often,
which involves higher expenses, including brokerage commissions, and may
increase the amount of taxes payable by shareholders.

PRIOR PERFORMANCE OF A FUND SIMILAR TO THE INVESTMENT GRADE BOND FUND

Because the Investment Grade Bond Fund commenced operation in May 1999 it has no
reportable operating history and performance. The Investment Grade Bond Fund is
modeled after an existing mutual fund, the CIGNA Income Fund, managed by CIGNA
Investments and having investment objectives and policies substantially similar
to the Investment Grade Bond Fund. The portfolio manager for both the Investment
Grade Bond Fund and the Income Fund is Thomas R. Foley. Mr. Foley has been the
portfolio manager of the Income Fund and has been primarily responsible for its
day-to-day management since July 1991. Prior to that, the Income Fund's
portfolio manager was Gary Brown. The Income Fund commenced operations on
October 18, 1982. As of December 31, 1998, its net assets were $1,331,434 and
its sole shareholder was Connecticut General Life Insurance Company.

<PAGE>

Below you will find performance information for the Income Fund. Although the
Investment Grade Bond Fund has substantially similar investment objectives and
policies and the same portfolio manager as the Income Fund, you should not
assume that the Investment Grade Bond Fund will have the same future performance
as the Income Fund. For example, the Investment Grade Bond Fund's future
performance may be greater or less than the performance of the Income Fund due
to, among other things, differences in expenses, asset sizes and cash flow
(particularly, the small size and infrequent purchase and redemption activity of
the Income Fund).

INCOME FUND - AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------

1 YR. 3 YRS. 5 YRS. 10 YRS
----- ------ ------ -------

9.26% 6.51% 6.35% 8.98%

INCOME FUND - ANNUAL TOTAL RETURN
---------------------------------
1998 9.26%
1997 9.10%
1996 1.36%
1995 16.21%
1994 -3.12%
1993 13.36%
1992 7.08%
1991 17.94%
1990 6.15%
1989 14.29%

These performance figures are based on the Income Fund's actual investment
performance, after deduction of operating expenses. From 1982 to 1992, CIGNA
Investments waived management fees and reimbursed the Income Fund if and to the
extent its total annual operating expenses exceeded 0.75%. Since 1993, CIGNA
Investments has waived management fees and reimbursed the Income Fund if and to
the extent its total annual operating expenses exceeded 1.00%. If CIGNA
Investments had not done so, the Income Fund's performance would be lower than
the performance figures shown above. Performance data shown does not reflect
Variable Contract or Qualified Plan charges. If it did, performance, would be
lower.

S&P 500 INDEX FUND
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

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 S&P 500 has a unique weighting,
depending on the number of shares outstanding and its current price. 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 S&P 500 is designed to capture the returns of
many different sectors of the U.S. economy.

<PAGE>

The fund is subject to market risk -- i.e., the possibility that common stock
prices will decline over short or even extended periods. The U.S. stock market
tends to be cyclical, with periods when stock prices generally rise and periods
when prices generally decline.

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 at all times.

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 Money Market Fund
shares, certificates of deposit, commercial paper, commercial loan
participations, bankers' acceptances, 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 CIGNA Investments. Except in extraordinary
circumstances, the fund will not invest in short-term fixed income securities or
hold assets in cash for temporary, defensive purposes.

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 record 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 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.

TEMPORARY, DEFENSIVE POSITIONS. The Investment Grade Bond Fund and S&P 500 Index
Fund may, from time to time, take temporary defensive positions that are
inconsistent with their principal investment strategies by

<PAGE>

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.

CHANGES IN POLICIES. The funds' Trustees may change the funds' goals, investment
strategies and other policies without shareholder approval, except as otherwise
indicated.

MANAGEMENT OF THE FUNDS

The investment adviser to the funds is CIGNA Investments, an indirect,
wholly-owned subsidiary of CIGNA Corporation. CIGNA Investments also serves as
investment adviser for other investment companies, and for a number of pension,
advisory, corporate and other accounts. CIGNA Investments and other affiliates
of CIGNA Corporation manage combined assets of approximately $63 billion. CIGNA
Investments' mailing address is 900 Cottage Grove Road, Hartford, Connecticut
06152.

Pursuant to a Master Investment Advisory Agreement, CIGNA Investments manages
the investment and reinvestment of the assets of the funds.

Subject to the control and periodic review of the Board of Trustees, CIGNA
Investments determines what investments shall be purchased, held, sold or
exchanged by the funds. CIGNA Investments is also responsible for overall
management of the business affairs of the funds.

As full compensation for the investment management and all other services
rendered by CIGNA Investments, the funds paid CIGNA Investments the following
amounts for calendar year 1998: $73,471 for the Money Market Fund; and $395,006
for the S&P 500 Index Fund. CIGNA Investment's fee for managing the funds, as a
percentage of each fund's average daily net assets, is as follows:

Money Market Fund - 0.35%
Investment Grade Bond Fund - 0.50%
S&P 500 Index Fund - 0.25%

Thomas R. Foley has had primary responsibility for the day-to-day management of
the Investment Grade Bond Fund since its inception. He has been a Managing
Director of CIGNA Investments since 1995, and before that was a Vice President.

YEAR 2000 ISSUES

The funds could be adversely affected if the computer systems used by CIGNA
Investments and the funds' other service providers do not properly process and
calculate date-related information relating to the end of this century and the
beginning of the next. While year 2000-related computer problems could have a
negative effect on the funds, both in their operations and in their investments,
CIGNA Investments is working to avoid such problems and to obtain assurances
from service providers that they are taking similar steps. No assurances,
though, can be provided that the funds will not be adversely impacted by these
matters.

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 fund by dividing the number of outstanding shares of the
fund into the net assets of the fund. Net assets are the excess of a fund's
assets over its

<PAGE>

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.

The Investment Grade Bond and S&P 500 Index 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 may be valued at their fair value.

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
Money Market 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.

PURCHASE AND REDEMPTION OF SHARES

Shares may be purchased only by Eligible Purchasers. Eligible Purchasers are
limited to: (1) those separate accounts established by life insurance companies
that serve as the underlying investment vehicles for Variable Contracts; and (2)
Qualified Plans. Shares may not be purchased by individuals or by the general
public. The Board of Trustees of CIGNA Variable Products Group may broaden or
limit the definition of Eligible Purchasers. Purchase of shares is subject to
acceptance by each fund. Fund shares are sold exclusively to and redeemed by
Eligible Purchasers on a continuous basis.

Purchase and redemption orders received by life insurance companies and
Qualified Plans on a given business day from their Variable Contract owners or
Qualified Plan participants, as the case may be, will be effected at the net
asset value of the applicable fund on that business day if the orders are
received by a fund in proper form and in accordance with applicable requirements
on the next business day. It is each Eligible Purchaser's responsibility to
properly transmit purchase and redemption orders and payments in accordance with
applicable requirements. Individuals may not place orders directly with a fund.
The funds do not issue share certificates. Please refer to the prospectus of
your life insurance company's Variable Contract or Qualified Plan documents for
information on how to invest in a fund.

Investments by Eligible Purchasers in a fund are expressed in terms of full and
fractional shares of a fund. All investments in a fund are credited to an
Eligible Purchaser's account immediately upon acceptance of the investment by
the fund.

The offering of shares of any fund may be suspended for a period of time and
each fund reserves the right to reject any specific purchase order. Purchase
orders may be refused if, in CIGNA Investment's opinion, they would disrupt the
management of a fund.

<PAGE>

Each fund normally pays for shares redeemed within seven days after the life
insurance company that issued the Variable Contract or the Qualified Plan
receives the redemption request. However, a fund may suspend redemption or
postpone payment for any period when:

- - the NYSE closes for other than weekends and holidays
- - the SEC restricts trading on the NYSE;
- - the SEC determines that an emergency exists, so that a fund's (1) disposal
of investment securities, or (2) determination of net asset value, is not
reasonably practicable; or
- - the SEC permits, by order, for the protection of fund shareholders.

CIGNA Variable Products Group does not foresee any disadvantage to Variable
Contract owners arising out of the fact that the Trust offers its shares for
products offered by life insurance companies which may or may not be affiliated
with each other or that it offers its shares to Qualified Plans. Nevertheless,
the CIGNA Variable Products Group Board of Trustees intends to monitor events in
order to identify any material irreconcilable conflicts which may possibly arise
between Variable Contract owners and participants under Qualified Plans and to
determine what action, if any, should be taken in response. If a conflict were
to occur, one or more life insurance company separate accounts or Qualified
Plans might withdraw its investment in a fund. This might force the fund to sell
portfolio securities at disadvantageous prices.

DISTRIBUTIONS AND FEDERAL INCOME TAX CONSIDERATIONS

Each fund's policy is to distribute substantially all of its net investment
income and net realized capital gains each year. A fund may distribute net
realized capital gains only once a year. Each fund pays these distributions to
the life insurance company issuing the Variable Contract or the Qualified Plan,
which automatically reinvest the distributions in additional fund shares at no
charge.

Each fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The
Code relieves a regulated investment company from certain Federal income tax and
excise tax, if the company distributes substantially all of its net investment
income and net realized capital gains. See the SAI for a more complete
discussion.

Each fund must meet asset diversification requirements under Section 817(h) of
the Code and the related regulation of the United States Treasury Department.
Each fund intends to comply with these diversification requirements.

The sole shareholders of the funds are life insurance companies issuing Variable
Contracts and Qualified Plans. Consequently, this prospectus does not discuss
the federal income tax consequences at the shareholder level. For information
concerning the federal income tax consequences to owners of Variable Contracts
and Qualified Plan participants, including the failure of a fund to meet the
diversification requirements discussed above, see the Prospectus for the
Variable Contract or your Qualified Plan documents.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the
funds' financial performance for the past 5 years. Certain information
reflects financial results for a single fund share. The total returns in
the table represent the rate that an investor would have earned on an
investment in a fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers
LLP, whose reports, along with the funds' financial statements, are
included in the annual reports which are available upon request.

MONEY MARKET FUND

YEAR ENDED DECEMBER 31, MARCH 1, 1996 + TO
1998 1997 DECEMBER 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.04
Net realized and unrealized gain on - - -
securities ------ ------ ------

TOTAL FROM INVESTMENT OPERATIONS 0.05 0.05 0.04
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment (0.05) (0.05) (0.04)
Distributions from capital gains - - -
------ ------ ------
TOTAL DISTRIBUTIONS (0.05) (0.05) (0.04)
------ ------ ------

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

TOTAL RETURN * 5.14% 5.19% 4.18%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 28,612 $ 14,540 $6,003
Ratio of operating expenses to average 0.50% 0.50% 0.42%
net assets **
Ratio of net investment income to average 4.98% 5.07% 4.10%
net assets ***

</TABLE>

+ Commencement of operations.
* 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 0.73%, 1.11% and 1.28%, respectively, for the 1998, 1997 and 1996
periods.
*** Ratios of net investment income to average net assets prior to
reimbursement of expenses were 4.75%, 4.40% and 3.24%, respectively,
for the 1998, 1997 and 1996 periods.

<PAGE>

S&P 500 INDEX FUND
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $15.83 $12.40 $10.75 $ 8.19 $ 9.20
------- ------- ------- ------- -------

INCOME FROM INVESTMENT OPERATIONS
Net investment income* 0.34 0.25 0.22 0.21 0.19
Net realized and unrealized gain (loss) 4.14 3.86 2.17 2.80 (0.13)
------- ------- ------- ------- -------

TOTAL FROM INVESTMENT OPERATIONS 4.48 4.11 2.39 3.01 0.06
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income (0.40) (0.32) (0.29) (0.27) (0.14)
From capital gains (0.18) (0.36) (0.45) (0.18) (0.85)
In excess of net capital gains - - - - (0.08)
------- ------- ------- ------- -------

TOTAL DISTRIBUTIONS (0.58) (0.68) (0.74) (0.45) (1.07)
------- ------- ------- ------- -------

NET ASSET VALUE, END OF PERIOD $19.73 $15.83 $12.40 $10.75 $ 8.19
======= ======= ======= ======= =======

TOTAL INVESTMENT RETURN 28.60%** 33.35%** 22.48%** 36.82% 0.67%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $206,475 $116,308 $71,513 $66,283 $54,728
Ratio of operating expenses to average net 0.25% a 0.25% a 0.60% a 0.73% 0.78%
assets 2.14% b 1.93% b 1.78% b 2.05% 2.23%
Ratio of net investment income to average 2% 4% 4% 4% 4%
net assets
Portfolio turnover

</TABLE>

a. Ratios of expenses to average net assets prior to expense reimbursements
were 0.44%, 0.55% and 0.64% for the 1998, 1997 and 1996 periods,
respectively.
b. Ratios of net investment income to average net assets prior to expense
reimbursements were 1.95%, 1.63%, and 1.74% for the 1998, 1997 and 1996
periods, respectively.
* Net investment income per share has been calculated in accordance with SEC
requirements, with the exception that end of year accumulated
undistributed/(overdistributed) net investment income has not been
adjusted to reflect current year permanent difference between financial
and tax accounting.
** Total return would have been lower if certain expenses had not been
reimbursed by the Adviser.

<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 each fund's annual and semi-annual reports to shareholders. In
the fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected a fund's performance
during its 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 Variable Products Group
900 Cottage Grove Road
Hartford, CT 06152-2210
Telephone: 1-800-528-6718

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 VARIABLE PRODUCTS GROUP

CIGNA VARIABLE PRODUCTS MONEY MARKET FUND
CIGNA VARIABLE PRODUCTS INVESTMENT GRADE BOND FUND
CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND

(Investment
Company Act
file no. 811-1646)

<PAGE>

CIGNA VARIABLE PRODUCTS GROUP

- --------------------------------------------------------------------------------
Prospectus
May 1, 1999

CIGNA VARIABLE PRODUCTS MONEY MARKET FUND
CIGNA VARIABLE PRODUCTS S&P 500 INDEX 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.

<PAGE>

TABLE OF CONTENTS

PAGE NUMBER

Summary.................................................................... 1

Bar Charts and Performance Tables.......................................... 2

Fees and Expenses of the Funds............................................. 4

Investment Information..................................................... 5

Management of the Funds.................................................... 8

Year 2000 Issues........................................................... 8

Pricing of Shares.......................................................... 8

Purchase and Redemption of Shares.......................................... 9

Distributions and Federal Income Tax Considerations ....................... 9

Financial Highlights....................................................... 11

<PAGE>

FUND INVESTMENT OBJECTIVES:
- --------------------------

MONEY MARKET FUND: 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.

S&P 500 INDEX FUND: To provide long-term growth of capital by
investing principally in common stocks.

PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------

MONEY MARKET FUND: Invests exclusively in high-quality short-
term money market instruments.

S&P 500 INDEX FUND: Attempts to replicate the composition and
total return, reduced by Fund expenses, of
the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) by investing in common
stocks of companies which make up the S&P
500.

PRINCIPAL RISKS OF INVESTING
IN THE FUNDS
- ----------------------------

MONEY MARKET FUND: 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.

An investment in the Money Market 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.

S&P 500 INDEX FUND: The Fund is subject to 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 rise and periods when stock
prices generally decline.

Loss of money is a risk of investing in any of the funds.

<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 the life of the funds. Performance data
shown in the bar charts and tables does not reflect Variable Contract or
Qualified Plan charges. If it did, performance would be lower.

[THE INFORMATION SET FORTH BELOW APPEARS AS A BAR CHART GRAPHIC]

MONEY MARKET FUND - ANNUAL TOTAL RETURNS

5.19% 5.14%

1997 1998

During the period shown in the bar chart, the highest quarterly return was
1.31% (for the quarter ended 12/31/97) and the and the lowest quarterly return
was 1.20% (for the quarter ended 12/31/98).

<PAGE>

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

Past 1 year Since Inception
(commenced Operations
March 1, 1996)

Money Market Fund 5.14% 5.13%

3-Month U.S. Treasury bills 5.31% 5.57%

The Money Market Fund's 7-day annualized yield as of December 31, 1998 was
4.71%.

[THE INFORMATION SET FORTH BELOW APPEARS AS A BAR CHART GRAPHIC]

S&P 500 INDEX FUND - ANNUAL TOTAL RETURNS

29.22% -3.99% 37.46% 3.59% 2.97% 0.67% 36.82% 22.48% 33.35% 28.6%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

S&P 500 INDEX FUND
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 1998

Past 1 year Past 5 years Past 10 years*

S&P 500 Index Fund 28.60% 23.67% 18.06%

S&P 500 Index 28.57% 24.06% 19.21%

*Prior to November 1993 the S&P 500 Index Fund was actively managed.

<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.

Money S&P 500
Market Index
Fund Fund
------ ------
<S> <C> <C>

SHAREHOLDER FEES
(fees paid directly from your investments)

Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) None None
Maximum deferred sales charge (load)
(as a percentage of offering price) None None
Redemption fee (as a percentage
of amount redeemed) None None
Exchange fee None None

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

Management fees 0.35% 0.25%
Distribution (12b-1) fees None None
Other Expenses (before waivers) 0.38% 0.19%
------ ------
Total Annual Fund Operating Expenses (before waivers) 0.73% 0.44%
Waiver of Fund Expenses (1) (0.23%) (0.19%)
------- -------
Total Actual Fund Operating Expenses (after waivers) (1) 0.50% 0.25%

</TABLE>

(1) CIGNA Investments has contractually agreed, until April 30, 2000, to waive
management fees and reimburse the funds if and to the extent total annual
fund operating expenses exceed 0.50% of average daily net assets for the
Money Market Fund and 0.25% for the S&P 500 Index Fund. CIGNA Investments
may agree to continue to waive management fees and reimburse expenses after
April 30, 2000.

<PAGE>

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE FUNDS
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

MONEY MARKET FUND
1 year 3 years 5 years 10 years
$51 $211 $385 $894

S&P 500 INDEX FUND
1 year 3 years 5 years 10 years
$26 $122 $228 $541

INVESTMENT INFORMATION

MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES

DESCRIPTION OF MONEY MARKET INSTRUMENTS

This is a description of the primary types of money market instruments the fund
will own:

U.S. GOVERNMENT DIRECT OBLIGATIONS - Obligations issued by the U.S. Treasury.

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.

<PAGE>

OPERATIONAL POLICIES

The fund may change these operational policies to reflect changes in the laws
and regulations without the approval of shareholders.

S&P 500 INDEX FUND
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

<PAGE>

TEMPORARY, DEFENSIVE POSITIONS. The S&P 500 Index Fund may, from time to time,
take temporary defensive positions that are inconsistent with its 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.

CHANGES IN POLICIES. The funds' Trustees may change the funds' goals, investment
strategies and other policies without shareholder approval, except as otherwise
indicated.

<PAGE>

MANAGEMENT OF THE FUNDS

Pursuant to a Master Investment Advisory Agreement, CIGNA Investments manages
the investment and reinvestment of the assets of the funds.

Money Market Fund - 0.35%
S&P 500 Index Fund - 0.25%

YEAR 2000 ISSUES

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 fund by dividing the number of outstanding shares of the
fund into the net assets of the fund. Net assets are the excess of a fund's
assets over its liabilities. Net asset value is determined as of the close of
regular trading (normally, 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange ("NYSE") is open for trading.

The S&P 500 Index Fund values its investments for which market quotations are
readily available at market value. It values short-term investments that will
mature within 60 days at amortized cost, which approximates market value. It
values all other investments and assets at their fair value. The fund translates
prices for 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 the fund's NAV. Because foreign markets
may be open at different times than the New York Stock Exchange, the value of
the fund's shares may change on days when shareholders are not able to buy or
sell them. If events materially affecting the values of the 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 may be valued at their
fair value.

8
<PAGE>

PURCHASE AND REDEMPTION OF SHARES

DISTRIBUTIONS AND FEDERAL INCOME TAX CONSIDERATIONS

<PAGE>

federal income tax consequences to owners of Variable Contracts and Qualified
Plan participants, including the failure of a fund to meet the diversification
requirements discussed above, see the Prospectus for the Variable Contract or
your Qualified Plan documents.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the funds'
financial performance for the past 5 years. Certain information reflects
financial results for a single fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in a fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose reports, along with the funds'
financial statements, are included in the annual reports which are available
upon request.