Exhibit (5a)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 28th day of December, 1992 between CIGNA
INVESTMENTS, INC., a corporation organized under the laws of the State of
Delaware and having its principal place of business in Bloomfield, Connecticut
(the "Adviser"), and CIGNA International Investment Advisors, Ltd., a
corporation organized under the laws of the State of Delaware having its
principal place of business in London, England (the "Sub-Adviser").
WHEREAS, CIGNA Institutional Funds Group is an open-end management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act") having a single series of shares known as CIGNA International Stock
Fund (the "Fund"); and
WHEREAS, the Adviser and the Sub-Adviser are each engaged in the
business of rendering investment management services and are registered under
the Investment Advisers Act of 1940;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed
between the parties hereto as follows:
1.(a) The Sub-Adviser is hereby appointed to provide investment
advisory services to the Trust on behalf of the Fund for the period and on the
terms herein set forth, in accordance with the terms of the Master Trust
Agreement of the Trust as in effect from time to time (the "Trust Agreement"),
the prospectus and statement of additional information relating to the Fund,
each as in effect from time to time (referred to collectively as the
"Prospectus"), and applicable law. A copy of the Prospectus dated the date
hereof is attached hereto as Schedule A. The Sub-Adviser hereby accepts such
appointment and agrees during such period, at its own expense, to render the
services and to assume the obligations herein set forth for the compensation
described in Schedule B hereto. Except as otherwise provided by applicable law,
the only restrictions on the amount of any one investment, or on proportion of
the Fund's portfolio which any one investment or any particular kinds of
investment may contribute, are set forth in this Agreement and the Prospectus.
(b) The Sub-Adviser is a member of Investment Management
Regulatory Organisation Limited ("IMRO"), a self-regulatory organization, and is
as such regulated by IMRO in the conduct of its investment business. The
Sub-Adviser will provide services hereunder on the basis that CII is a
"Non-private customer" under the rules of IMRO. The disclosures set forth in
Section 8 are made a part of this Agreement in accordance with IMRO
requirements.
2.(a) The Sub-Adviser shall have investment discretion with respect to
such portion of the Fund's assets as is specified from time-to-time by the
Adviser (the "Managed Assets"). The Sub- Adviser, at its expense, will furnish
continuously an investment program for the Fund with respect to the Managed
Assets, will determine, subject to the supervision of the Adviser and the Board
of Trustees of the Trust, what investments shall be purchased, held, sold or
exchanged by the Fund and what portion, if any, of the assets of the Fund shall
be held in cash, cash equivalents or other temporary investments and shall, on
behalf of the Fund, make changes in the Fund's investments. The Sub-Adviser will
advise the Fund's custodian and the Adviser on a prompt basis of each purchase
and sale of a portfolio security specifying the name of the issuer, the
description and amount or number of shares of the security purchased, the market
price, commission and gross or net price, trade date, settlement date and
identity of the effecting broker or dealer, together with such other information
as may be required by applicable law or regulation. From time to time as the
Trustees of the Trust or the Adviser may reasonably request, the Sub-Adviser
will furnish or cause to be furnished to the Trust's officers and to each of its
Trustees reports on portfolio transactions and reports on issues of securities
held in the portfolio, all at such times (but not less frequently than once
every twelve months or such shorter period as may from time to time be required
by applicable law) and in such detail as the Trustees or the Adviser may
reasonably request. For the purpose of such reports, the value of the securities
held in the Fund's portfolio will be calculated in accordance with the
procedures described in the then current prospectus and statement of additional
information of the Fund. Notwithstanding the foregoing, the Sub-Adviser shall
upon the request of the Trustees, the Adviser, or the officers of the Trust,
supply or cause to be supplied reports which compare the performance of the Fund
with that of other mutual funds possessing similar investment objectives and
policies. The Sub-Adviser will also inform the Trust's officers and Trustees on
a current basis of changes in investment strategy or tactics and may from time
to time contact those persons in order to discuss the investments of the Fund.
The Sub-Adviser will make its officers and employees available to meet with the
Trust's officers and Trustees on due notice to review the investments and
investment program of the Fund in the light of current and prospective economic
and market conditions.
(b) The Sub-Adviser, at its-own expense, shall place orders for the
purchase and sale of portfolio securities for the account of the Fund with
broker/dealers selected by the Sub-Adviser. The Sub- Adviser is authorized to
submit any such order collectively with orders on behalf of other accounts under
its management, provided that the Sub-Adviser shall have determined that such
action is in the best interest of the Fund and is in accordance with applicable
law, including, without limitation, Rule 17d-1 under the 1940 Act. In executing
portfolio transactions for the Fund and selecting broker/dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Fund the best
overall terms available.
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In assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors it deems relevant, including the breadth
of the market in the security, the price of the security, the financial
condition and execution capability of the broker/dealer, and the reasonableness
of the commission, if any (for the specific transaction and on a continuing
basis). In evaluating the best overall terms available, and in selecting the
broker/dealer to execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund
and/or other accounts over which the Sub- Adviser or an affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized to
pay to a broker/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/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/dealer viewed in terms
of that particular transaction or in terms of all of the accounts over which
investment discretion is so exercised. In the event that the Sub-Adviser wishes
to enter into an arrangement with any person pursuant to which it undertakes to
place business with such person or any of its associates or any other person at
such person's discretion in return for brokerage or research services provided
by such person to the Sub-Adviser, or enters into any other Soft Commission
Arrangement as defined by IMRO Rules as in effect from time to time, the Sub-
Adviser will identify to the Trust in writing each such broker/dealer, or other
person and the nature of such services and will obtain the consent of the Trust
to the placing of business with such broker/dealer. The Sub-Adviser will not,
without the Fund's prior consent, invest on behalf of the Fund in securities of
which an issue or offer for sale was underwritten, managed or arranged by the
Sub-Adviser or an associate of the Sub-Adviser during the preceding twelve
months.
3. The Sub-Adviser agrees to hold the Trust harmless with respect to
any and all damages the Trust may sustain resulting from any dishonest act of
any employee or agent of the Sub-Adviser. This Paragraph 3 is in addition to,
and not by way of limitation of, any other rights of indemnification which the
Trust may have hereunder or otherwise.
(a) The Sub-Adviser may from time to time, to the extent permitted
by the Trust Agreement, the Prospectus, this paragraph 3, and applicable law,
buy and sell, options, futures contracts (including index futures contracts),
and options on futures contracts (including options on index futures contracts)
on behalf of the Fund. The Sub-Adviser will only effect transactions in such
instruments for the purpose of protecting against possible adverse fluctuations
in the values of investments or cash held by the Fund or which the Fund
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intends to purchase. The Adviser and the Trust recognize that the purchase and
sale of options, futures contracts (including index futures contracts) and
options on futures contracts (including options on index futures contracts)
involve, among other things, the risks described in the Prospectus. Subject to
the terms of the Prospectus, the Sub-Adviser has the power to effect and close
out transactions for the Fund in options, futures contracts, and options on
futures contracts (whether involving contingent liability for the Trust or the
Fund and whether of a type traded on, or effected under the rules of an
investment exchange recognized or designated for the purposes of the Financial
Services Act or otherwise) provided, however, that; the Sub-Adviser may not, on
behalf of the Fund, purchase or sell futures contracts or purchase related
options if, immediately thereafter, the sum of the amount of margin deposits and
premiums on open positions with respect to futures contracts and related options
would exceed 5% of the market value of the Fund's total assets.
(b) The services provided by the Sub-Adviser may relate to
investments or assets denominated in various currencies. The Adviser and the
Trust recognize that movements of currency exchange rates may have an effect,
favourable or unfavourable, on the gain or loss otherwise experienced with
respect to the investments or assets of the Fund.
(c) In accordance with the provisions of the Investment Company
Act of 1940, the Sub-Adviser may from time to time cause the Fund's assets to be
held in bank accounts outside the U.S. and the U.K. However, the Sub-Adviser
will not itself hold money or assets on behalf of the Fund.
(d) The Sub-Adviser may not commit the Fund or the Adviser to a
contract the performance of which may require either of them to supplement the
assets of the Fund, nor may the Sub-Adviser commit the Fund or the Adviser to
supplement the assets of the Fund by borrowing on their behalf.
(e) The Sub-Adviser may not commit the Fund to act as a securities
underwriter except to the extent that the Fund may, after prior consultation
with the Treasurer of the Trust, invest up to 15% of its assets in illiquid
securities (including repurchase agreements maturing in more than seven days)
and, except to the extent that in connection with the disposition of such
securities the Fund may be deemed to be an underwriter under the Securities Act
of 1933.
(f) The Sub-Adviser may not, without the Fund's prior consent,
purchase or sell units in collective investment schemes on behalf of the Fund.
4. The services of the Sub-Adviser to the Fund hereunder are not to be
deemed exclusive and the Sub-Adviser shall be free to render similar service to
others so long as its services hereunder are not impaired or interfered with
thereby.
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5.(a) It is understood that trustees, officers, agents and shareholders
of the Trust are or may be interested in the Sub- Adviser as directors,
officers, shareholders or otherwise, that directors, officers, agents and
shareholders of the Sub-Adviser are or may be interested in the Trust as
trustees, officers, shareholders or otherwise, that the Sub-Adviser may be
interested in the Trust as a shareholder or otherwise, and that the existence of
any such dual interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided in the Trust Agreement and
the Certificate of Incorporation of the Sub-Adviser, respectively, or by
specific provision of applicable law.
(b) The Sub-Adviser may not, without prior reference to the Fund,
effect transactions with or for the Fund in which the Sub- Adviser or an
affiliate of the Sub-Adviser has directly or indirectly a material interest
(including, without limitation, transactions in which the Sub-Adviser acts as
principal) or which may involve a conflict with the Sub-Adviser's duties
hereunder.
6.(a) This Agreement will take effect upon the date hereof following
execution by the Sub-Adviser and shall thereafter continue in full force and
effect from year to year, if its continuance is specifically approved at least
annually by vote of a majority of the outstanding shares (as defined in the 0000
Xxx) of the Fund or by the Board of Trustees of the Trust, and in either event
by a majority of the Trustees of the Trust who are not parties to this Agreement
or interested persons (within the meaning of the 0000 Xxx) of the Trust, the
Adviser or the Sub-Adviser, such Trustees voting in person at a meeting called
for such purpose; provided, however, that:
(b) This Agreement may at any time be terminated without the
payment of any penalty on 60 days' written notice to the Sub- Adviser either (i)
by the Adviser, (ii) by the Trust, (A) by vote of the Board of Trustees of the
Trust or (B) by vote of a majority of the outstanding voting securities of the
Fund.
(c) This Agreement shall immediately terminate in event of its
assignment (as that term is defined in the 0000 Xxx) or upon expiration of the
Master Investment Advisory Agreement now or hereinafter in effect between the
Adviser and the Trust with respect to the Fund.
(d) This Agreement may be terminated by the Sub-Adviser on 90
days' written notice to the Adviser and the Trust.
(e) Any termination of this Agreement will be without prejudice to
the completion of transactions already initiated by the Sub-Adviser on behalf of
the Trust at the time of such termination. The Sub-Adviser shall take all steps
reasonably necessary after such termination to complete any such transaction.
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7. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices.
8. As a member of IMRO the Sub-Adviser is regulated by IMR0 in the
conduct of its investment business and the following information is given in
accordance with the IMRO Rules:
The Sub-Adviser's complaint procedure is that
complaints may be addressed to Vice President-Senior Equity Strategist at the
Sub-Adviser's office at Xxxx Xxxxx, 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx XX0 0XX.
If not resolved, any complaint may then be made in writing to the Managing
Director, and such officer will investigate. CII may also complain directly to
IMRO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
CIGNA INVESTMENTS, INC.
By /s/ Xxxxxx X. Xxxxx, III
----------------------------
Xxxxxx X. Xxxxx III
President
CIGNA INTERNATIONAL
INVESTMENTS ADVISORS, LTD.
By /s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
President
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SCHEDULE A
Schedule A is incorporated by reference to the Prospectus.
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SCHEDULE B
TO
SUB-ADVISORY AGREEMENT
The Adviser will pay the Sub-Adviser a fee calculated on a
cost-reimbursement basis for services rendered during the first twelve months of
the Fund's operation (the "Sub-Advisory Fee"). The fee will be paid quarterly in
arrears. The Sub-Advisory Fee for subsequent years will be that amount as agreed
to by the parties from time to time as evidenced by amendment to this
Sub-Advisory Agreement. The Sub-Adviser will not be receiving any remuneration
from any party other than CII for rendering services pursuant to this Agreement.
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