EXHIBIT (5)
MASTER INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 26th day of April, 1988 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 VARIABLE PRODUCTS GROUP, a Massachusetts business trust having its
principal place of business in Springfield, Massachusetts (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Adviser is engaged in the business of rendering investment
management services and is so registered under the Investment Advisers Act of
1940; and
WHEREAS, the Trust operates as a "series company" as contemplated by Rule 18f-2
under the 1940 Act and is authorized to issue shares of beneficial interest
("Shares") in separate series with each such series representing interest in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust intends initially to offer Shares in four series, including
Companion Fund, CIGNA Common Stock Portfolio, CIGNA Fixed Income Portfolio and
CIGNA Money Market Portfolio, (such series (the "Initial Series") together with
all other series subsequently established by the Trust with respect to which the
Trust desires to retain the Adviser to render investment advisory services
hereunder and the Adviser is willing so to do being herein collectively referred
to as the "Series");
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties hereto
as follows:
1. The Trust hereby appoints the Adviser to act as manager and investment
adviser to each of the Initial Series for the period and on the terms herein set
forth, subject to the control of the Board of Trustees of the Trust. The
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 herein provided.
In the event that the Trust establishes one or more series of Shares
other than the Initial Series with respect to which it desires to retain the
Adviser to render management and investment advisory services hereunder, it
shall so notify the Adviser in writing, indicating the advisory fee which will
be payable with respect to the additional series of Shares. If the Adviser is
willing to render such services, it shall so notify the Trust in writing,
whereupon such series of Shares shall become a Series hereunder.
2. (a) The Adviser, at its expense, will furnish continuously an
investment program for each Series, will determine, subject to the control and
periodic review of the Board of Trustees of the Trust, what investments shall be
purchased, held, sold or exchanged by each Series and what portion, if any, of
the assets of each Series shall be held in cash, cash equivalents or other
temporary investments and shall, on behalf of each Series, make changes in that
Series' investments. Subject always to the provisions of the Declaration of
Trust of the Trust and its Bylaws, the 1940 Act, and the control of the Board of
Trustees, the Adviser will also manage, supervise and conduct the other affairs
and business of the Trust and each Series and matters incidental thereto.
(b) The Adviser, at its own expense, shall place orders for the
purchase and sale of portfolio securities for the account of each Series with
brokers or dealers selected by the Adviser. In executing portfolio transactions
for each Series ad selecting brokers or dealers, the Adviser will use its best
efforts to seek on behalf of the Series the best overall terms available. In
assessing the best overall terms available for any transaction, the 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 or 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 or
dealer to execute a particular transaction, the 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 Series and/or other
accounts over which the Adviser or an affiliate of the Adviser exercises
investment discretion. The Adviser is authorized to pay to a broker or dealer
who provides such brokerage and research services a commission for executing a
Series portfolio transaction 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 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 in terms of all of the accounts over which investment discretion
is so exercised.
3. In addition to performing at its own expense the obligations set forth
in paragraph 2 hereof, the Adviser shall furnish at its own expense or pay the
expense of the Trust for the following:
(a) office space in the offices of the Adviser or in such other place
as may be agreed upon from time to time, and all necessary office facilities and
equipment;
(b) necessary executive and other personnel for managing the affairs
of the Trust, including personnel to perform clerical, bookkeeping, accounting
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and other office functions (exclusive of those related to and to be performed
under contracts for custodian, transfer, paying and plan agency services by the
bank selected to perform such services); and
(c) all information and services, other than services of counsel,
required in connection with the preparation of registration statements and
prospectuses, including amendments and revisions thereof, all annual, semiannual
and periodic reports, and notices and proxy solicitation material furnished to
shareholders of the Trust, or to holders of variable annuity contracts funded by
shares of the Trust, as the case may be, or to regulatory authorities.
4. Nothing in paragraph 3 hereof shall require the Adviser to bear, or to
reimburse the Trust for:
(a) any of the costs of printing and mailing the items referred to in
subparagraph (c) of paragraph 3;
(b) the costs of printing and mailing of sales literature,
prospectuses and offering circulars required by regulatory authorities;
(c) compensation of Trustees of the Trust who are not directors,
officers or employees of the Adviser, CIGNA Corporation or any of its
affiliates;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) the charges and expenses of the Custodian appointed by the Trust
for custodial, paying agent, transfer agent and plan agent services;
(f) charges and expenses of independent accountants retained by the
Trust;
(g) charges and expenses of any transfer agents and registrars
appointed by the Trust;
(h) issue and transfer taxes, brokers' commissions and dealers'
concessions chargeable to the Trust in connection with securities transactions
to which the Trust is a party, including any portion of such commissions
attributable to research and brokerage services as defined by Section 28(e) of
the Securities Exchange Act of 1934, as amended from time to time;
(i) taxes and corporate fees payable by the Trust to federal, state or
other governmental agencies;
(j) the cost of share certificates (if any) representing shares of a
Series;
(k) legal fees and expenses in connection with the affairs of the
Trust, including registering and qualifying its shares with federal and state
regulatory authorities; and
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(l) expense of shareholders' and trustees' meetings.
5. Notwithstanding the provisions of Paragraph 3 and 4:
(a) The Trust shall reimburse the Adviser for its costs of maintaining
the Office of the Treasurer of the Trust and the Office of the Secretary of the
Trust, determined in such manner as may be approved by the Board of Trustees of
the Trust. Such reimbursement shall be made by the 15th of each month with
respect to such costs accrued during the previous month.
(b) Except for printing expenses (including design, layout, and
coordination) and except as provided in paragraph 5(a) above, the Adviser shall
indemnify the Trust against any expense of personnel of the Adviser, or any
affiliate of the Adviser, which might otherwise have been charged to the Trust
under any provision of this Agreement or of the Distribution Agreement between
the trust and its principal underwriter.
6. The 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 Adviser. This Paragraph 6 is in addition to, and not
by way of limitation of, any other rights of indemnification which the Trust may
have hereunder or otherwise.
7. The services of the Adviser to the Trust hereunder are not to be
deemed exclusive and the Adviser shall be free to render similar service to
others so long as its services hereunder are not impaired or interfered with
thereby.
8. The Trust shall pay the Adviser as full compensation for all services
rendered and all facilities hereunder as to a Series a management fee for that
Series determined in accordance with the appropriate portion of Schedule A
attached hereto.
9. It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Adviser as directors, officers,
shareholders or otherwise, that directors, officers, agents and shareholders of
the Adviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise, that the 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 Declaration of Trust of the Trust and the Certificate
of Incorporation of the Adviser, respectively, or by specific provision of
applicable law.
10. (a) This Agreement will take effect as of April 26, 1988. This
Agreement shall thereafter continued in full force and effect from year to year
as to a Series, if its continuance is specifically approved before May 1, 1989
and before May 1 of each subsequent year by vote of a majority of the
outstanding shares (as defined in the 0000 Xxx) of the Series of the Trust in
question 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 the Agreement or
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interested persons (within the meaning of the 0000 Xxx) of the Trust or the
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 as to any Series
without the payment of any penalty on 60 days' written notice to the Adviser
either by vote of the Board of Trustees of the Trust or by vote of a majority of
the outstanding voting securities of a Series.
(c) This Agreement shall immediately terminate in event of its
assignment (as that term is defined in the 1940 Act).
(d) This Agreement may be terminated by the Adviser in its entirety or
with respect to one or more than one of the Series on 90 days' written notice to
the Trust.
11. 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. Until further notice
to the other party, it is agreed for this purpose that the address of the
Adviser shall be 000 Xxxxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000 and that
the address of the Trust shall be 0000 Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx
00000.
12. Copies of the Master Trust Agreement, as amended, establishing CIGNA
Annuity Funds Group (the "Trust") are on file with the Secretary of the
Commonwealth of Massachusetts, and notice is hereby given that this Master
Investment Advisory Agreement is executed on behalf of the Trust by officers of
the Trust as officers and not individually and that the obligations of or
arising out of this Master Investment Advisory Agreement are not binding upon
any of the Trustees, officers, shareholders, employees or agents of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate as of the day and year first above written.
CIGNA VARIABLE PRODUCTS GROUP CIGNA INVESTMENTS, INC.
By: /s/ Xxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxxx
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Chairman President
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Compensation Schedule for the following Series Schedule A-1
Companion Fund
The Trust shall pay the Adviser as full compensation for all services
rendered and all facilities furnished hereunder, a management fee for the Series
by applying the annual rate of 0.35% to the average daily net asset value of
each Series for the calendar year, computed in the manner used for the
determination of the offering price of Shares of the Series. The fee accrued as
of the end of each month shall be paid no later than the 15th of the following
month.
If in any calendar year the total of all ordinary business expense of the
Series (including investment advisory fees but excluding interest, taxes and
transaction costs incurred in acquiring and disposing of portfolio securities)
exceed one percent (1%) of the average daily net asset value of the Series
computed in the manner above described, the Adviser shall pay any such excess.
The above expense limitations shall be equitably prorated for any applicable
period which is less than a calendar year.
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Compensation Schedule for the following Series Schedule A-2
CIGNA Common Stock Portfolio
CIGNA Fixed Income Portfolio
CIGNA Money Market Portfolio
The Trust shall pay the Adviser as full compensation for all services
rendered and all facilities furnished hereunder, a management fee for each
Series by applying the annual rate of 0.50% of the average daily net asset value
of each Series for the calendar year, computed in the manner used for the
determination of the offering price of Shares of the Series. The fee accrued as
of the end of each month shall be paid no later than the 15th of the following
month.
The fee as described in the preceding paragraph shall be reduced by, or the
Adviser will reimburse the applicable Series for any amount necessary to prevent
the total expenses of the Series (including the Adviser's fee but excluding
interest, taxes, amortized organizational expenses, transaction costs in
acquiring and disposing of portfolio securities and extraordinary expenses) in
any fiscal year from exceeding 1.5% of the Fund's average daily net assets of
the Series. Reductions shall be made at the end of each quarter of the Trust's
fiscal year on an estimated basis, if appropriate, and an adjustment to reflect
the reduction on an annual basis shall be made, if necessary, in the fee payable
with respect to the last month in any fiscal year of the Trust. The Adviser
shall promptly refund any amount paid in excess of the fee determined to be due
for such year.
In the event that expenses of any Series for any fiscal year should exceed
the expense limitation on investment company expenses imposed by any statute or
regulatory authority of any state, whether or not shares of the Series are
qualified for offer and sale in any state, the compensation due the Adviser for
such fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof, and, if necessary, the Adviser shall assume expenses of the
Series to the extent required by any such expense limitation, provided, that the
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Board of Trustees of the Trust may waive any specific expense limitation which,
in the judgment of the Board, is more stringent than is imposed by states
generally.
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