<PAGE>
CIGNA INTERNATIONAL STOCK FUND
REPORT TO SHAREHOLDERS
JUNE 30, 1999
[HORIZONTAL GLOBE GRAPHIC APPEARS HERE]
<PAGE>
CIGNA INTERNATIONAL STOCK FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
VALUE VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS - 105.1%
(Cost - $104,865)
U.S. Treasury Bills,
4.59%, 9/23/99 $ 106,000 $ 104,867
-----------------
TOTAL INVESTMENTS IN SECURITIES - 105.1%
(Total Cost - $104,865) 104,867
Liabilities, Less Cash and Other Assets - (5.1%) (5,134)
-----------------
NET ASSETS - 100.0% $ 99,733
=================
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value (Cost - $104,865) $ 104,867
Foreign currency (Cost - $24,169) 24,453
Cash on deposit with custodian 5,979
Foreign Tax Receivable 1,441
Receivable from Adviser 2,057
Investment for Trustees' deferred compensation plan 25,323
-------------------
TOTAL ASSETS 164,120
-------------------
LIABILITIES:
Payable for Trustees' deferred compensation plan 25,323
Shareholder reports 11,194
Audit expense 8,150
Management fee 170
Other accrued expenses 19,550
-------------------
TOTAL LIABILITIES 64,387
-------------------
NET ASSETS (applicable to 9,227 shares of beneficial interest with par value
of $.001 per share issued and outstanding; unlimited number of shares
authorized) $ 99,733
===================
Shares outstanding 9,227
===================
Net asset value, offering price and redemption price per share $ 10.81
===================
COMPONENTS OF NET ASSETS:
Paid in capital $ 106,385
Overdistributed net investment income (16,581)
Net unrealized appreciation of investments and
foreign currencies 287
Accumulated net realized gain on investments 9,642
-------------------
NET ASSETS $ 99,733
===================
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
INCOME:
Dividends $ 102
Interest (net of foreign taxes withheld of $1,156) 59,860
------------------
59,962
EXPENSES:
Custodian fees and expenses 20,806
Investment advisory fees 10,737
Administrative services 9,517
Auditing and legal fees 7,847
Other 3,361
------------------
Total expenses 52,268
Less expenses waived by investment adviser (37,504)
------------------
Net expenses 14,764
------------------
NET INVESTMENT INCOME 45,198
------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCIES AND OTHER NET ASSETS:
Net realized loss from securities transactions (120)
Net realized loss on foreign currencies and forward
foreign exchange contracts (17,884)
Net unrealized appreciation of investments -
Net unrealized appreciation of foreign currencies and
other net assets 15,750
------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS,
FOREIGN CURRENCIES AND OTHER NET ASSETS (2,254)
------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 42,944
==================
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
1999 1998
---------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 45,198 $ 86,623
Net realized gain (loss) from securities transactions
and foreign currency transactions (18,004) 890,684
Net unrealized appreciation (depreciation) of investments,
foreign currencies and other net assets 15,750 (381,311)
---------------- ------------------
Net increase in net assets from operations 42,944 595,996
---------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (68,600) (63,048)
In excess of net investment income - -
From net realized capital gains (674,500) -
---------------- ------------------
Total distributions to shareholders (743,100) (63,048)
---------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Net asset value of shares liquidated to shareholders (8,295,000) -
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions 743,100 63,048
---------------- ------------------
Net increase (decrease) from capital share transactions (7,551,900) 63,048
---------------- ------------------
Net increase (decrease) in net assets (8,252,056) 595,996
NET ASSETS:
Beginning of period 8,351,789 7,755,793
---------------- ------------------
End of period (including (overdistributed) undistributed
net investment income of $(16,581) and
$8,340, respectively) $ 99,733 $ 8,351,789
================ ==================
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND Notes to Financial Statements (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES. CIGNA International Stock Fund (the "Fund")
was organized as the sole series of CIGNA Institutional Funds Group, a
Massachusetts business trust (the "Trust") on August 10, 1992 and is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's objective has been to provide
long-term growth of capital by investing primarily in common stocks, preferred
stocks and convertible debt of companies based outside the United States.
However during the fourth quarter of 1998, most of the Fund's investments were
liquidated in expectation of a substantial redemption by the Fund's sole
shareholder, and the Fund has suspended its previous investment objective until
further notice. The preparation of financial statements in accordance with
generally accepted accounting principles 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 United States or foreign securities exchange are valued at the last sale
price or, if there is no such price available, at the last bid price. Portfolio
securities that are traded on foreign securities exchanges are generally valued
at the preceding closing prices of such securities on their respective
exchanges. A security that is listed or traded on more than one exchange is
valued on the exchange determined to be the primary market for such security by
the Board of Trustees or its delegates. Other equity securities traded in the
over-the-counter market, including listed securities whose primary markets are
believed to be over-the-counter, are valued at the most recent bid price which
may be based on valuations furnished from a pricing service or from independent
securities dealers. Short-term investments with remaining maturities of up to
and including 60 days are valued at amortized cost, which 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-dividend date or when such information
becomes available, and interest income is recorded on the accrual basis.
Securities gains and losses are determined on the basis of identified cost.
C. FEDERAL TAXES - 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, if any,
to its shareholders.
Therefore, no Federal income or excise taxes on realized income have been
accrued.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions are
recorded by the Fund on the ex-dividend date. The timing and characterization of
certain income and capital gain 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.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND Notes to Financial Statements (Unaudited)
(Continued)
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
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 CIGNA Investments, Inc. ("CII"), certain
officers and directors of which are affiliated with the Fund. Such advisory fees
are based on an annual rate of 0.80% applied to the average daily net assets of
the Fund. CII has voluntarily agreed to reimburse such portion of its fee and
absorb other expenses as is necessary to cause the total annual operating
expenses of the Fund not to exceed 1.10% of the Fund's average daily net assets.
The Fund reimburses CII for a portion of the compensation and related expenses
of the Fund's Treasurer and Secretary and certain persons who assist in carrying
out the responsibilities of those offices. For the six months ended June 30,
1999, the Fund paid or accrued $9,517.
CII is an indirect, wholly-owned subsidiary 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 receipt of all or a portion of their fees which are
invested in mutual fund shares in accordance with a deferred compensation plan.
4. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities,
excluding short-term obligations, aggregated $0 and $703, respectively, for the
six months ended June 30, 1999. As of June 30, 1999 the cost of securities for
Federal income tax purposes was $0. At June 30, 1999, unrealized appreciation
for Federal income tax purposes aggregated $0 of which $0 related to appreciated
securities and $0 related to depreciated securities.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND Notes to Financial Statements (Unaudited)
(Continued)
5. CAPITAL STOCK. The Fund offers an unlimited number of shares of beneficial
interest with a par value of $.001 per share. All of the shares outstanding at
June 30, 1999 were owned by the Century Indemnity Company, an indirect
wholly-owned subsidiary of Ace, Limited. The only transactions in capital stock
for the six months ended June 30, 1999 and the year ended December 31, 1998 were
the reinvestment of dividends and distributions in the amount of $743,100 and
$63,048, respectively, resulting in 70,149 and 5,561 additional shares,
respectively, and the redemption of $8,295,000 and $0, respectively, resulting
in 783,286 and 0 fewer shares, respectively.
6. POST OCTOBER LOSSES. Under current tax law, certain net long-term capital
losses realized after October 31 may be deferred and treated as occurring on the
first day of the following year.
<PAGE>
CIGNA INTERNATIONAL STOCK FUND Notes to Financial Statements (Unaudited)
(Continued)
7. FINANCIAL HIGHLIGHTS. The following selected per share data is computed on
the basis of a share outstanding throughout each period.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
For the Six
Months Ended Year Ended December 31,
June 30, 1999 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.56 $ 10.82 $ 11.48 $ 11.27 $ 11.77 $ 13.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income * 0 .06 0.12 0.05 0.08 0.15 0.04
Net realized and unrealized gains (losses) on
securities transactions, foreign currencies
and forward foreign exchange contracts 0.21 0.71 (0.48) 0.62 0.23 0.33
----- ----- ------ ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.27 0.83 (0.43) 0.70 0.38 0.37
----- ----- ------ ----- ----- -----
LESS DISTRIBUTIONS:
Distributions from net investment income (0.09) (0.09) (0.05) (0.08) (0.15) (0.04)
Distributions in excess of net investment income - - (0.09) (0.12) (0.12) -
Distributions from realized capital gains (0.93) - (0.09) (0.29) (0.61) (1.77)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.02) (0.09) (0.23) (0.49) (0.88) (1.81)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 10.81 $ 11.56 $ 10.82 $ 11.48 $ 11.27 $ 11.77
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN 1 2.60% 7.67% (3.84)% 6.36% 3.40% 2.77%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 100 $ 8,352 $ 7,756 $ 8,069 $ 7,581 $ 7,335
Ratio of operating expenses to average net
assets 2 1.10% + 1.10% 1.10% 1.12% 1.14% 1.25%
Ratio of net investment income to average net
assets 3 3.43% + 1.02% 0.42% 0.63% 0.37% 0.32%
Portfolio turnover 0% 140% 82% 60% 63% 63%
</TABLE>
1. Total return would have been lower if certain expenses had not been
reimbursed by the Adviser. Total investment return based on per share
net asset value reflects the effects of changes in net asset value on
the performance of the Fund during each period, and assumes
distributions were reinvested at net asset value.
2. Ratios of expenses to average net assets prior to expense
reimbursements were 3.95%(annualized), 2.40%, 2.48%, 2.61%, 2.59% and
2.35%, respectively, for the six months ended June 30, 1999 and for
the years ended December 31, 1998, 1997, 1996, 1995 and 1994. Per
share expenses prior to reduction were $5.66, $0.29, $0.29, $0.29,
$0.28 and $0.29, respectively.
3. Ratios of net investment income (loss) to average net assets prior to
expense reimbursements were 0.58% (annualized), (0.27)%, (0.96)%,
(0.85)%, (1.08)% and (0.78)%, respectively, for the six months ended
June 30, 1999 and for the years ended December 31, 1998, 1997, 1996,
1995 and 1994. Per share net investment gain (loss) amounts prior to
reduction were $0.83, $(0.04), $(0.11), $(0.10), $(0.12) and $(0.10),
respectively.
* Net investment income per share has been calculated in accordance
with SEC requirements, with the exception that end of year
accumulated/(overdistributed) net investment income has not been
adjusted to reflect current year permanent differences between
financial and tax accounting.
+ Annualized.
