Exhibit d(v)
INVESTMENT SUB-ADVISORY AGREEMENT
CIGNA FUNDS GROUP
SMALL COMPANY STOCK-GROWTH FUND
AGREEMENT made this 5th day of November, 1999, between CIGNA
Investments, Inc. (the "Adviser") and Fiduciary International, Inc., a New York
corporation (the "Sub-Adviser").
WHEREAS, CIGNA Funds Group, a Massachusetts business trust (the
"Trust") is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated April 30, 1996 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Company
Stock-Growth Fund (the "Fund"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Fund, and the Sub-Adviser is willing to
render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the
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Adviser and the Trust's Board of Trustees, the Sub-Adviser shall manage all of
the securities and other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets, in
accordance with the Fund's investment objectives, policies and restrictions as
stated in the Fund's prospectus and statement of additional information, as
currently in effect and as amended or supplemented from time to time (referred
to collectively as the "Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in its discretion and without
prior consultation with the Adviser, determine from
time to time what Assets will be purchased, retained
or sold by the Fund, and what portion of the Assets
will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under
this Agreement, the Sub-Adviser shall act in
conformity with the Trust's Prospectus and with the
instructions and directions of the Adviser and of the
Board of Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as
each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be
purchased or sold by the Fund as provided in
subparagraph (a) and will place orders with or through
such persons, brokers or dealers to carry out the
policy with respect to brokerage set forth in the
Prospectus or as the Board of Trustees or the Adviser
may direct from time to time, in conformity with
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federal securities laws. In executing Fund
transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on
behalf of the Fund the best execution. In assessing
the best execution availability for each transaction,
the Sub-Adviser shall consider all factors that it
deems relevant, including the breadth of the market in
the security, the price of the security, the financial
condition and execution and operational capability of
the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best
execution, and in selecting the broker-dealer to
execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services
provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent
with any guidelines established by the Board of
Trustees of the Trust, the Sub-Adviser is authorized
to pay to a broker or dealer who provides such
brokerage and research services a commission for
executing a portfolio transaction for the Fund which
is in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was
reasonable in relation to the value of the brokerage
and research services provided by such broker or
dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities
of the Sub-Adviser to the Fund and its other clients.
In no instance, however, will the Fund's Assets be
purchased from or sold to the Adviser, Sub-Adviser,
the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser, the Sub-Adviser
or the principal underwriter, acting as principal in
the transaction, except to the extent permitted by the
Securities and Exchange Commission ("SEC") and the
1940 Act.
(d) The Sub-Adviser shall maintain all books and records
with respect to transactions involving the Assets
required by subparagraphs (b)(5), (6), (7), (9), (10)
and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act, including, without limitation, the
information specified in Schedule A attached hereto
and made a part of this Agreement. The Sub-Adviser
shall provide to the Adviser or the Board of Trustees
such periodic and special reports, balance sheets or
financial information, and such other information with
regard to its affairs as the Adviser or Board of
Trustees may reasonably request.
The Sub-Adviser shall keep the books and records
relating to the Assets required to be maintained by
the Sub-Adviser under this Agreement and shall timely
furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by
the Adviser to keep the other books and records of the
Fund required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser shall also furnish to the Adviser any
other information relating to the Assets that is
required to be filed by the Adviser or the Trust with
the SEC or sent to shareholders under the 1940 Act
(including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the
Trust obtains from the SEC. The Sub-Adviser agrees
that all records that it maintains on behalf of the
Fund are property of the Fund and the Sub-Adviser will
surrender promptly to the Fund any of
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such records upon the Fund's request; provided,
however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the
period prescribed by Rule 31a-2 under the 1940 Act any
such records as are required to be maintained by it
pursuant to this Agreement, and shall transfer said
records to any successor sub-adviser upon the
termination of this Agreement (or, if there is no
successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on
each business day with information relating to all
transactions concerning the Fund's Assets in
accordance with the requirements set forth on Schedule
B attached hereto and made a part of this Agreement,
and such other information as may reasonably be
requested by Adviser.
(f) The investment management services provided by the
Sub-Adviser under this Agreement are not to be deemed
exclusive and the Sub-Adviser shall be free to render
similar services to others, as long as such services
do not impair the services rendered to the Adviser or
the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of
any financial condition that is likely to impair the
Sub-Adviser's ability to fulfill its commitment under
this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation
materials and be responsible for voting and handling
all proxies in relation to the securities held in the
Fund, provided Sub-Adviser receives such proxies in a
timely manner. The Adviser shall instruct the
custodian and other parties providing services to the
Fund to promptly forward misdirected proxies to the
Sub-Adviser.
(i) Services to be furnished by the Sub-Adviser under this
Agreement may be furnished through the medium of any
of the Sub-Adviser's partners, officers, or employees.
(j) The sub-adviser shall not, on behalf of the Fund,
purchase securities of CIGNA Corporation or of any
other entity identified by Adviser to Sub-Adviser in
writing.
(k) Sub-Adviser will adopt a written code of ethics
complying with the requirements of Rule 17j-1 under
the 1940 Act, will provide to the Fund a copy of the
code of ethics and evidence of its adoption, and will
make such reports to the Fund as required by Rule
17j-1 under the Act.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have
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responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Sub-Adviser's performance of
its duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the Sub-
Adviser of responsibility for compliance with the Prospectus, the instructions
and directions of the Adviser and the Board of Trustees of the Trust, the
requirements of the 1940 Act, the Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as each is amended from time
to time.
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3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
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Prospectus(es) of the Fund. The Adviser will promptly furnish to the Sub-Adviser
any and all amendments or other changes to the Prospectus, and the Sub-Adviser
shall not be charged with complying with any such amendment not so delivered to
the Sub-Adviser.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by
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the Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor,
a sub-advisory fee at the rate and in the manner specified in Schedule C which
is attached hereto and made part of this Agreement. Except as may otherwise be
prohibited by law or regulation (including any then current SEC staff
interpretation), the Sub-Adviser may, in its discretion and from time to time,
waive a portion of its fee.
5. LIMIT OF LIABILITY; INDEMNIFICATION. Unless otherwise required by the
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1940 Act or other applicable law, (a) in the absence of willful misfeasance, bad
faith, gross negligence, reckless disregard of its obligations or duties
hereunder or a material breach of this Agreement ("Disabling Conduct") on the
part of Sub-Adviser (and its officers, managers, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with
Sub-Adviser), Sub-Adviser shall not be subject to liability to the Adviser or
the Fund for any act or omission in the course of, or connected with, rendering
services hereunder, including, without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection with the
matters to which this agreement relates. Except for such Disabling Conduct, the
Adviser shall indemnify and hold harmless Sub-Adviser (and its officers,
directors, agents, employees, controlling persons, and any other person or
entity affiliated with Sub-Adviser) (collectively, the "Indemnified Parties")
from and against all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) arising from Sub-Adviser's
conduct under this Agreement.
(b) Sub-Adviser agrees to indemnify and hold harmless Fund and
its shareholders and the Adviser (and their officers, managers, agents,
employees, controlling persons, and any other person or entity affiliated with
the Fund or the Adviser) against any and all losses, claims damages, liabilities
or litigation (including reasonable legal and other expenses), to which the
Fund, the Adviser or their affiliates or such officers, directors, agents,
employees, controlling persons or shareholders may become subject under the 1940
Act, under any state or federal securities laws, at common law or otherwise,
which may be based upon such Disabling Conduct by Sub-Adviser; provided,
however, that in no case is Sub-Adviser's indemnity in favor of any person
deemed to protect or apply to such person against any liability to which such
person would otherwise be subject by reasons of willful misfeasance, bad faith,
or gross negligence in the performance of his, or her or its duties or by reason
of his, her or its reckless disregard of such person's obligations and duties
under this Agreement.
(c) Sub-Adviser shall not be liable to the Adviser or the Fund
for acts of Sub-Adviser which result from acts or omissions of the Adviser or
Fund, including, but not limited to, a failure by the Adviser to provide
accurate and current information with respect to any records maintained by the
Adviser or Fund, which records are not also maintained by Sub-Adviser, and the
Adviser shall indemnify and hold harmless the Indemnified Parties from and
against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) arising from such acts or
omissions.
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6. DURATION AND TERMINATION. This Agreement shall become effective
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upon its approval by the Trust's Board of Trustees and by the vote of a majority
of the outstanding voting securities of the Fund. This Agreement shall continue
in effect for a period of more than two years from the date hereof only so long
as continuance is specifically approved at least annually in conformance with
the 1940 Act; provided, however, that this Agreement may be terminated with
respect to the Fund (a) by the Fund at any time, without the payment of any
penalty, by the vote of a majority of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, (b) by the Adviser at
any time, without the payment of any penalty, on not more than 60 days' nor less
than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-Adviser at
any time, without the payment of any penalty, on 90 days' written notice to the
Adviser. This Agreement shall terminate automatically and immediately in the
event of its assignment, or in the event of a termination of the Adviser's
agreement with the Trust. As used in this Section 6, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to such exceptions as may be granted by the SEC under the
1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal
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laws of the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid
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by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE. Any notice, advice or report to be given pursuant to
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this Agreement shall be deemed sufficient if delivered or mailed by certified or
overnight mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party:
To the Adviser at: c/o CIGNA Corporation
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
S-115
Attention: Global Client Relations
Department
To the Sub-Adviser at: Fiduciary International, Inc.
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
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and understanding between the parties hereto, and supersedes all prior
agreements and understanding relating to this Agreement's subject matter. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together constitute only
one instrument.
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A copy of the Declaration of Trust is on file with the
Secretary of State of the Commonwealth of Massachusetts, and notice is hereby
given that the obligations of this instrument are not binding upon any of the
Trustees, officers or shareholders of the Fund or the Trust.
Where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers.
CIGNA INVESTMENTS, INC. FIDUCIARY INTERNATIONAL, INC.
/s/ Xxxxxxx X. Xxxxx /s/ Xxxx X. Xxxxxxx
By:______________________________ By:________________________________
Xxxxxxx X. Xxxxx Xxxx X. Xxxxxxx
Name:____________________________ Name:______________________________
Senior Managing Director President & CEO
Title:___________________________ Title:_____________________________
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Schedule A
Records To Be Maintained By Sub-Adviser
*1. A record of each brokerage order, and all other Fund purchases and
sales, given by Sub-Adviser or on behalf of the Fund for, or in
connection with, the purchase or sale of securities, whether executed
or unexecuted. Such records shall include:
A. The name of the broker,
B. The terms and conditions of the order, and of any modification or
cancellation thereof,
C. The time of entry of cancellation,
D. The price at which executed,
E. The time of receipt of report of execution, and
F. The name of the person who placed the order on behalf of the Fund
(1940 Act Rule, 31a-1(b) (5) and (6)).
*2. A record for each fiscal quarter, completed within ten (10) days after
the end of the quarter, showing specifically the basis or bases upon
which the allocation of orders for the purchase and sale of Fund
securities to brokers or dealers, and the division of brokerage
commissions or other compensation on such purchase and sale orders were
made. The record:
A. Shall include the consideration given to:
(i) the sale of shares of the Fund
(ii) the supplying of services or benefits by brokers or dealers
to: (a) the Fund, (b) Adviser, (c) Sub-Adviser, and (d) any
person other than the foregoing
(iii) Any other considerations other than the technical
qualifications of the brokers and dealers as such
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The identities of the persons responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation (1940 Act, Rule 31a-1(b) (9)).
*3. A record in the form of an appropriate memorandum identifying the
person or persons, committees, or groups authorizing the purchase or
sale of Fund securities. Where an authorization is made by a committee
or group, a record shall be kept of the names of its members who
participate in the authorization. There shall be retained as part of
this record any memorandum, recommendation, or instruction supporting
or authorizing the purchase or sale of Fund securities and such other
information as is appropriate to support the authorization.** (1940
Act, Rule 31a-1(b) (10))
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*4. Such accounts, books and other documents as are required to be
maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record Sub-Adviser's
transactions with the Fund. (1940 Act, Rule 31a-1(f)).
* Maintained as property of the Fund pursuant to 1940 Act Rule 31a-3(a).
** Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms
(including their recommendations, i.e., buy, sell, hold), and any internal
reports or Fund manager reviews.
SCHEDULE B
Communications With Custodian
A Sub-Adviser should abide by certain rules and procedures in order to minimize
operational problems. Sub-Adviser will be required to have various records and
files (as required by regulatory agencies) at their offices. Sub-Adviser will
have to maintain a certain flow of information to State Street Bank & Trust
Company ("SSB"), the custodial bank for the Fund. Sub-Adviser will be required
to furnish SSB with daily information as to executed trades. SSB should receive
this data no later than the morning following the day of the trade. The
necessary information should be transmitted to SSB (1) via facsimile machine
(the direct line to the facsimile machine is 617-537-5375) or (2) via an
electronic communication system ("System") approved by SSB that meets the
following criteria:
o The System must provide a method by which State Street can reasonably
ensure that each communication received by it though the System actually
originated from the Sub-Adviser.
o Only persons properly authorized by Sub-Adviser's senior operations office
shall be authorized to access the System and enter information, and
Sub-Adviser must employ reasonably procedures to permit only authorized
persons to have access to the System.
o Sub-Adviser will create separate System files containing the daily executed
securities trade information with respect to the Fund it manages, or
Sub-Adviser will transmit separately the trades for such Fund.
o SSB, through System or otherwise, will provide to Sub-Adviser prompt
certification or acknowledgment of SSB's receipt of each transmission by
Sub-Adviser of executed trade information.
o If the System malfunctions, Sub-Adviser will transmit all trade information
via facsimile transmission.
Upon receipt of brokers' confirmations, Sub-Adviser or SSB will be required to
notify the other party if any differences exist. The reporting of trades by the
Sub-Adviser to SSB must include the following:
o Purchase or Sale
o Security name
o Number of Shares or principal amount
o Price per share or bond
o Commission rate per share or bond, or if a net trade
o Executing broker
o Trade date
o Settlement date
o If security is not eligible for DTC
o This information can be reported using your forms, if applicable
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When opening accounts with brokers for the Fund, the account should be a cash
account. No margin accounts are to be maintained. The broker should be advised
to use SSB IDC's ID system number (N. 20997) to facilitate the receipt of
information by SSB. If this procedure is followed, DK problems will be held down
to a minimum and additional costs of security trades will not become an
important factor in doing business. Delivery and receipt instructions are
attached as Schedule 1. Sub-Adviser will be required to submit to SSB a daily
trade authorization report, either through a System or, if a facsimile
transmission is used, on a form signed by two authorized individuals prior to
settlement date and a list of authorized persons with specimen signatures must
have previously been sent to SSB (see Schedule 2). The daily trade authorization
report will contain information on which SSB can rely to either accept delivery
or deliver out of the account, securities as per Sub-Adviser trades. If
facsimile transmission is used, Sub-Adviser will use a form acceptable to SSB.
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Schedule 1
Mailing Instructions and Delivery Instructions:
Confirmation Instructions (copy of Broker Advice):
State Street Bank and Trust Company
Mutual Fund Services
0000 Xxxxxxxx Xxxxx (X0X)
Xxxxx Xxxxxx, XX 00000
Attn: Fund Name/Fund Number
For the account of CIGNA Funds Group - SMALL COMPANY STOCK-
GROWTH FUND
Delivery Instructions:
All DTC Eligible Securities:
Depository Trust Company (DTC) #997 Custodian Services
#20997 Agent Bank
All Ineligible DTC Securities (i.e., Commercial Paper)
State Street Bank and Trust Company
State Street Boston-Securities Corp.
00 Xxxxxxxx
Xxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
"VS Payment" (Federal Funds on Commercial Paper Only) For the
account of CIGNA Funds Group - SMALL COMPANY STOCK-GROWTH FUND
(FUND NAME)
All Government Issues:
Delivered through Book Entry of Federal Reserve
Bank to: State St Bos/Spec/Fund Name/Fund #
(VS Payment Federal Funds)
Foreign Holdings:
Please confer with Xxxx Xxxxx, State Street Bank,
(Phone: 000-000-0000) to obtain delivery instructions
of the State Street Global Custody Network
Schedule 2
Example of Authorized Signature Letter
(To Be Typed on Your Letterhead)
[DATE]
State Street Bank and Trust
Mutual Fund Services
0000 Xxxxxxxx Xxxxx (X0X)
Xxxxx Xxxxxx, XX 00000
Attention: CIGNA Charter Mutual Funds
RE: Persons Authorized To Execute Trades For CIGNA Funds Group - SMALL COMPANY
STOCK-GROWTH FUND
The following list of individuals are authorized to execute and report trade
instructions on behalf of the Fund. Should there be any changes to the
authorized persons listed below, we will notify you immediately of those
changes.
NAME SIGNATURE
Sincerely yours,
Schedule C
Fees for Sub-Adviser Services
SUB-ADVISER: FIDUCIARY INTERNATIONAL, INC.
FUND: SMALL COMPANY STOCK-GROWTH FUND
For investment management services provided to the Fund under this
Agreement, Adviser, as a fiduciary for the Fund, shall pay the
Sub-Adviser a fee determined by multiplying the Average Total Net
Assets by the annual rate specified below. All fees shall be calculated
and paid quarterly in arrears. Fees for partial periods shall be
prorated for the portion of the period for which services were
rendered.
90 basis points First $50 million
50 basis points Next $50 million
45 basis points Next $150 million
40 basis points All amounts thereafter
For purposes of this Schedule, "Average Total Net Assets" for any
quarter shall mean the average of the Assets as reported by the
custodian for the last business day of each month ended in the calendar
quarter.
