<PAGE>
As filed with the Securities and Exchange Commission on November 28, 1995.
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. _____)
Filed by the registrant / X /
Check the appropriate box:
/ X / Preliminary proxy statement
/__ / Definitive proxy statement
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
(Name of Registrant as Specified in Its Charter)
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / $125 per Rule 14a-6(h) and Item 22(a)(2) under the Securities
Exchange Act of 1934 (Previously transmitted by wire transfer)
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
Hartford, Connecticut
December 8, 1995
Dear Fellow Shareholders:
We are pleased to inform you that Connecticut Mutual Financial Services
Series Fund I, Inc. (the "Company") will shortly become part of the family of
mutual funds advised by Oppenheimer Management Corporation ("Oppenheimer"), an
indirect subsidiary of Massachusetts Mutual Life Insurance Company
("Massachusetts Mutual"), subject to consummation of the merger of Connecticut
Mutual Life Insurance Company ("Connecticut Mutual") with and into Massachusetts
Mutual and approval of the proposals described below. In view of the merger, we
invite you to attend a Special Meeting of Shareholders of all series of the
Company known as the Money Market Portfolio, the Income Portfolio, the
Government Securities Portfolio, the Total Return Portfolio, the Growth
Portfolio, the International Equity Portfolio, the Life-
Span Capital Appreciation Portfolio, the LifeSpan Balanced Portfolio and the
LifeSpan Diversified Income Portfolio to be held at 2:00 p.m. Eastern Time on
Monday, January 22, 1996 at Connecticut Mutual Life Insurance Company, 878 Main
Street (10 State House Square), Hartford, Connecticut.
You will be asked at this Meeting to consider and approve the following
proposals:
- New Investment Advisory Agreements between the Company, on
behalf of each Portfolio, and Oppenheimer.
- New Investment Subadvisory Agreements among: Oppenheimer and
Pilgrim, Baxter & Associates, Ltd. with respect to each of the
Capital Appreciation and Balanced Portfolio; Oppenheimer and
BEA Associates with respect to each of the Capital
Appreciation Portfolio, Balanced Portfolio and Diversified
Income Portfolio; and Oppenheimer and Babson-Stewart Ivory
International with respect to each of the Capital Appreciation
Portfolio, Balanced Portfolio and International Portfolio.
- The election of a new Board of Directors and the continuation
of Arthur Andersen, LLP as auditors for the Company.
<PAGE>
WHAT DO THESE CHANGES MEAN TO YOU?
It is anticipated that immediately subsequent to the merger, Massachusetts
Mutual will become the nation's fifth largest mutual life insurance company.
Your Portfolio's Board of Directors believes that Connecticut Mutual's
combination with Massachusetts Mutual will make the further substantial
resources of a respected mutual fund organization available to your Portfolio.
The Board evaluated such factors as Oppenheimer's experience in providing
various financial services to investment companies, its experience in the
investment company business, its distribution and shareholder servicing
capabilities and its reputation, integrity, financial responsibility and
stability. The Board received assurances from Oppenheimer that it is adequately
capitalized to enable it to provide high quality investment management services.
Oppenheimer's commitment has made it a widely recognized name in the mutual fund
industry and its existing funds maintain a strong presence in the industry.
PROPOSALS HAVE BEEN APPROVED BY YOUR BOARD OF DIRECTORS
All of the proposals have been reviewed by the Company's Board of Directors,
who are charged with considering the best interests of the shareholders. YOUR
BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT YOU APPROVE,
EACH PROPOSAL.
YOUR VOTE IS IMPORTANT!
Please vote by completing, signing and returning the enclosed proxy ballot
form to us immediately. Your prompt response will help avoid the cost of
additional mailings. For your convenience, we have provided a postage-paid
envelope.
If you have questions, please call your Customer Service Representative at
1-800-461-3743, Monday through Friday between 8:00 a.m. and 8:00 p.m. Eastern
Time.
Sincerely,
DONALD H. POND, JR.
Chairman
<PAGE>
PRELIMINARY PROXY MATERIALS
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
140 GARDEN STREET
HARTFORD, CONNECTICUT 06154
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
IN LIEU OF AN ANNUAL MEETING
------------------------
MONEY MARKET PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
INCOME PORTFOLIO
TOTAL RETURN PORTFOLIO
GROWTH PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
LIFESPAN BALANCED PORTFOLIO
LIFESPAN DIVERSIFIED INCOME PORTFOLIO
TO BE HELD JANUARY 22, 1996
A Special Meeting of shareholders in lieu of an Annual Meeting of
Connecticut Mutual Financial Services Series Fund I, Inc. (the "Company")
(telephone 1-800-461-3743), on behalf of the nine series of the Company
consisting of the following six series -- Money Market Portfolio, Government
Securities Portfolio, Income Portfolio, Total Return Portfolio, Growth Portfolio
and International Equity Portfolio; and three "LifeSpan Portfolios" -- LifeSpan
Capital Appreciation Portfolio ("Capital Appreciation Portfolio"), LifeSpan
Balanced Portfolio ("Balanced Portfolio") and LifeSpan Diversified Income
Portfolio ("Diversified Income Portfolio") (each, a "Portfolio" and together,
the "Portfolios"), will be held at Connecticut Mutual Life Insurance Company,
878 Main Street (10 State House Square), Hartford, Connecticut, on Monday,
January 22, 1996 at 2:00 p.m. Eastern Time. The purpose of the Meeting is to
consider and act upon the following proposals:
<TABLE>
<S> <C>
(1) To approve the terms of new investment advisory agreements
between the Company, on behalf of each Portfolio, and
Oppenheimer Management Corporation ("Oppenheimer"), the
proposed investment adviser to the Portfolios. FOR EACH
PORTFOLIO VOTING SEPARATELY.
(2) To approve the terms of new investment subadvisory agreements
between:
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(a) Oppenheimer and Pilgrim, Baxter & Associates, Ltd. with
respect to each of the Capital Appreciation Portfolio and
Balanced Portfolio. FOR CAPITAL APPRECIATION PORTFOLIO AND
BALANCED PORTFOLIO VOTING SEPARATELY.
(b) Oppenheimer and BEA Associates with respect to each of the
Capital Appreciation Portfolio, Balanced Portfolio and
Diversified Income Portfolio. FOR CAPITAL APPRECIATION
PORTFOLIO, BALANCED PORTFOLIO AND DIVERSIFIED INCOME
PORTFOLIO VOTING SEPARATELY.
(c) Oppenheimer and Babson-Stewart Ivory International with
respect to each of the Capital Appreciation Portfolio,
Balanced Portfolio and International Equity Portfolio. FOR
CAPITAL APPRECIATION PORTFOLIO, BALANCED PORTFOLIO AND
INTERNATIONAL EQUITY PORTFOLIO VOTING SEPARATELY.
(3) To elect eight Directors to the Company's Board of Directors.
FOR ALL PORTFOLIOS VOTING TOGETHER.
(4) To ratify the selection of Arthur Andersen, LLP as the
Company's independent public accountants. FOR ALL PORTFOLIOS
VOTING TOGETHER.
(5) To transact other business that may properly come before the
Meeting or any adjournment of the Meeting.
</TABLE>
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ALL PROPOSALS
Shareholders of record as of the close of business on November 24, 1995 are
entitled to vote at the Meeting or any adjournment of the Meeting on each matter
relating to a Portfolio of which they hold shares. The Proxy Statement and proxy
card are being mailed to shareholders on or about December 8, 1995.
ANN F. LOMELI
Secretary
Hartford, Connecticut
December 8, 1995
-------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING.
-------------------------------------------------------------------
<PAGE>
PRELIMINARY PROXY MATERIALS
------------------------
PROXY STATEMENT
------------------------
GENERAL
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Connecticut Mutual Financial Services
Series Fund I, Inc. (the "Company") on behalf of the nine series of the Company
consisting of the following six series -- the Money Market Portfolio, Government
Securities Portfolio, Income Portfolio, Total Return Portfolio, Growth Portfolio
and International Equity Portfolio; and three "LifeSpan Portfolios" -- LifeSpan
Capital Appreciation Portfolio ("Capital Appreciation Portfolio"), LifeSpan
Balanced Portfolio ("Balanced Portfolio") and LifeSpan Diversified Income
Portfolio ("Diversified Income Portfolio") (each, a "Portfolio" and together,
the "Portfolios"). The proxies will be used at the Special Meeting of the
Portfolios' shareholders to be held at Connecticut Mutual Life Insurance
Company, 878 Main Street (10 State House Square), Hartford, Connecticut, on
Monday, January 22, 1996 at 2:00 p.m. Eastern Time. The executive offices of the
Company are located at 140 Garden Street, Hartford, Connecticut, and the mailing
address of the Company and each of the Portfolios is 140 Garden Street,
Hartford, Connecticut 06154. EACH PORTFOLIO'S ANNUAL REPORT FOR ITS MOST
RECENTLY COMPLETED FISCAL YEAR, IF ANY, AND SUBSEQUENT SEMI-ANNUAL REPORT, IF
ANY, MAY BE OBTAINED FREE OF CHARGE BY WRITING THE COMPANY OR BY CALLING
1-800-461-3743.
This Proxy Statement and proxy card are being mailed to shareholders on or
about December 8, 1995.
RECORD DATE
The Board of Directors has fixed the close of business on November 24, 1995
as the record date ("Record Date") for determination of shareholders of each
Portfolio entitled to notice of and to vote at the Special Meeting. Shareholders
of record are entitled to one vote per share at the Special Meeting or any
adjournment of the Meeting relating to their Portfolio. On the Record Date, the
following shares of common stock of each Portfolio were outstanding:
<TABLE>
<S> <C>
Money Market Portfolio................................. 70,563,238
Government Securities Portfolio........................ 20,988,521
Income Portfolio....................................... 86,691,307
Total Return Portfolio................................. 522,280,150
Growth Portfolio....................................... 145,274,360
International Equity Portfolio......................... 37,459,286
Capital Appreciation Portfolio......................... 25,000,000
Balanced Portfolio..................................... 33,400,000
Diversified Income Portfolio........................... 20,000,000
------------
Total.................................................. 961,656,862
------------
------------
</TABLE>
1
<PAGE>
SUMMARY OF VOTING ON PROPOSALS
Although each Portfolio is participating separately in the Special Meeting,
proxies are being solicited through the use of this joint proxy statement.
Shareholders of each Portfolio will vote separately as to those Proposals
affecting only their Portfolio or affecting a Portfolio differently than other
Portfolios. Voting by shareholders of one Portfolio will not affect voting by
any other Portfolio on these matters.
<TABLE>
<CAPTION>
PROPOSAL PORTFOLIO(S) ENTITLED TO VOTE
- --------- --------------------------------------------
<C> <S>
1 Each Portfolio voting separately.
(2)(a) Capital Appreciation Portfolio and
Balanced Portfolio voting separately.
(b) Capital Appreciation Portfolio,
Balanced Portfolio and Diversified
Income Portfolio voting separately.
(c) Capital Appreciation Portfolio,
Balanced Portfolio and International
Equity Portfolio voting separately.
(3) All Portfolios will vote together.
(4) All Portfolios will vote together.
</TABLE>
INTRODUCTION
The Meeting is being called to ask shareholders to consider, among other
things, proposals affecting their Portfolios as a result of an Agreement and
Plan of Merger between Connecticut Mutual Life Insurance Company ("Connecticut
Mutual") and Massachusetts Mutual Life Insurance Company ("Massachusetts
Mutual"). Connecticut Mutual is the indirect parent company of G.R. Phelps &
Co., Inc. ("G.R. Phelps"), the current investment adviser to all Portfolios. The
Agreement and Plan of Merger provides for Connecticut Mutual to merge with and
into Massachusetts Mutual (the "Merger"). Upon the consummation of the Merger,
which is expected to occur during the first three months of 1996, the separate
existence of Connecticut Mutual will cease and Massachusetts Mutual will be the
surviving company and will continue its corporate existence under the name
"Massachusetts Mutual Life Insurance Company." It is anticipated that
immediately subsequent to the Merger, Massachusetts Mutual will become the
nation's fifth largest mutual life insurance company.
As a result of the Merger and a favorable vote on the proposals included in
this Proxy Statement:
- Oppenheimer, an indirect subsidiary of Massachusetts Mutual,
will immediately become the investment adviser to all
Portfolios (Proposal 1).
2
<PAGE>
- Pilgrim, Baxter & Associates, Ltd. will continue to serve as
the subadviser to each of Capital Appreciation Portfolio and
Balanced Portfolio (Proposal 2a); BEA Associates will continue
to serve as the subadviser to each of Capital Appreciation
Portfolio, Balanced Portfolio and Diversified Income Portfolio
(Proposal 2b); and Babson-Stewart Ivory International, an
affiliate of Oppenheimer and Massachusetts Mutual, will
immediately become the subadviser to Capital Appreciation
Portfolio, Balanced Portfolio and International Equity
Portfolio (Proposal 2c).
- The nominees selected by the Company's existing Board of
Directors will take office contingent upon the closing of the
Merger (Proposal 3). (IF APPROVED BY SHAREHOLDERS, THIS CHANGE
WILL BECOME EFFECTIVE ON THE 91ST DAY AFTER THE CONSUMMATION
OF THE MERGER.)
In order to provide for the Portfolios' transition to the Oppenheimer family
of mutual funds, the Board of Directors has approved a 90 day transition period
(the "Transition Period") commencing on the date of the Merger. On the date of
the Merger, Oppenheimer will assume responsibility for the management of the
Portfolios and the Subadvisers will provide subadvisory services to the
respective Capital Appreciation Portfolio, Balanced Portfolio, Diversified
Income Portfolio and International Equity Portfolio. However, during the
Transition Period, G.R. Phelps will continue to provide administrative services
to the Portfolios and Connecticut Mutual Financial Services, L.L.C. will
continue to serve as the Portfolios' principal underwriter. At the completion of
the Transition Period, the Portfolios will distribute their own shares and will
not engage a principal underwriter. The election of the new members of the Board
of Directors will be effective on the 91st day after the consummation of the
Merger. For additional information about the Merger, see "The Merger" below at
page 28.
3
<PAGE>
PROPOSAL 1
APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENTS BETWEEN THE COMPANY,
ON BEHALF OF EACH PORTFOLIO, AND OPPENHEIMER
(FOR ACTION BY SHAREHOLDERS OF EACH PORTFOLIO VOTING SEPARATELY)
PROPOSALS 2(A), 2(B) AND 2(C)
APPROVAL OF THE NEW SUBADVISORY AGREEMENTS
(FOR ACTION BY SHAREHOLDERS OF CAPITAL APPRECIATION PORTFOLIO,
BALANCED PORTFOLIO, DIVERSIFIED INCOME PORTFOLIO
AND INTERNATIONAL EQUITY PORTFOLIO VOTING SEPARATELY)
SUMMARY
THE INVESTMENT ADVISORY AGREEMENTS. G.R. Phelps currently serves as
investment adviser to each Portfolio pursuant to an investment advisory
agreement (the "Existing Advisory Agreement") between the Company, on behalf of
each Portfolio and G.R. Phelps. G.R. Phelps is a wholly-owned subsidiary of DHC,
Inc., a wholly-owned subsidiary of Connecticut Mutual. DHC, Inc. is a holding
company for several Connecticut Mutual subsidiaries. The address of Connecticut
Mutual and DHC, Inc. is 140 Garden Street, Hartford, Connecticut 06154.
The Company is registered as an investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, an
investment company's investment advisory agreement terminates automatically upon
its "assignment." Under the 1940 Act, a direct or indirect transfer of a
controlling block of the voting securities of any entity controlling G.R. Phelps
is deemed to be an "assignment." Therefore, the participation of Connecticut
Mutual in the proposed Merger will result in the termination of its Existing
Advisory Agreement. In order to assure continuity of investment advisory
services to the Portfolios in the event the Merger is consummated and the
Existing Advisory Agreement with G.R. Phelps is terminated, the Company's Board
of Directors, including the Directors who are not "interested persons" of the
Company, Oppenheimer or any subadviser to the Portfolios (the "Non-interested
Directors"), at a special meeting held on November 17, 1995, voted unanimously
to recommend that the shareholders of each Portfolio approve new investment
advisory agreements between the Company, on behalf of each Portfolio and
Oppenheimer (each, a "New Advisory Agreement" and together, the "New Advisory
Agreements"). Under each New Advisory Agreement, Oppenheimer will provide
investment advisory services for the assets of each such Portfolio after the
Merger.
4
<PAGE>
It is anticipated that the current portfolio managers of the Growth
Portfolio and the Total Return Portfolio and certain other employees and
officers of the Company will become employees of Oppenheimer upon consummation
of the Merger and shareholder approval of this Proposal. The portfolio managers
of these Portfolios will continue to act in that capacity after the Merger.
It is anticipated that Connecticut Mutual will apply to the Securities and
Exchange Commission ("SEC") for a substitution order to permit the insurance
company separate accounts that invest in Money Market Portfolio, Government
Securities Portfolio and Income Portfolio to redeem their entire interest in
such Portfolios and to invest in comparable mutual funds managed by Oppenheimer.
Oppenheimer has informed the Board of Directors that, subject to the
approval by the shareholders of the New Advisory Agreements with the Money
Market Portfolio, the Government Securities Portfolio and the Income Portfolio,
it intends to appoint new portfolio managers to manage the portfolio of
investments for those respective Portfolios for the period between the Merger
and such time as these Portfolios are substituted by Massachusetts Mutual. See
further discussion under the caption "The Merger" below. For additional
information about the proposed portfolio managers for these Portfolios, see
APPENDIX A. In the event that the portfolio manager for one or more of the
Portfolios is changed, the Portfolio's Prospectus and/or Statement of Additional
Information will be revised or supplemented as appropriate. No immediate change
is currently expected to be made to the investment philosophies and practices of
the Portfolios as a result of Oppenheimer's becoming the investment adviser.
THE SUBADVISORY AGREEMENTS. To assist in the management of the assets of
several of the Portfolios (each, a "Subadvised Portfolio" and together, the
"Subadvised Portfolios"), G.R. Phelps engaged the services of the following
subadvisers (each, a "Subadviser" and together, the "Subadvisers"):
<TABLE>
<CAPTION>
SUBADVISER SUBADVISED PORTFOLIO
- ------------------------------------------------ ----------------------------------
<S> <C>
Pilgrim, Baxter & Associates, Ltd. Capital Appreciation Portfolio
("Pilgrim") Balanced Portfolio
BEA Associates Capital Appreciation Portfolio
("BEA") Balanced Portfolio
Diversified Income Portfolio
Scudder, Stevens & Clark, Inc. Capital Appreciation Portfolio
("Scudder") Balanced Portfolio
International Equity Portfolio
</TABLE>
Each Subadviser provides services with respect to that portion of the assets
of the respective Subadvised Portfolio allocated to such Subadviser by G.R.
Phelps pursuant to separate subadvisory agreements among G.R. Phelps, the
5
<PAGE>
Company, on behalf of the respective Subadvised Portfolio, and the Subadviser
(each, an "Existing Subadvisory Agreement" and together, the "Existing
Subadvisory Agreements"). If approved by shareholders, Babson-Stewart Ivory
International ("Babson-Stewart") will replace Scudder, the current subadviser to
the Capital Appreciation Portfolio, Balanced Portfolio and International Equity
Portfolio.
The participation by Connecticut Mutual in the proposed Merger will result
in the termination of the Existing Advisory Agreement with G.R. Phelps. A
provision in the Existing Advisory Agreement requires that each Existing
Subadvisory Agreement will terminate in the event the Existing Advisory
Agreement is terminated. In order to assure continuity of portfolio management
services to each Subadvised Portfolio, at the special meeting of the Board of
Directors of the Company held on November 17, 1995, the Board, including the
Non-interested Directors, voted unanimously to recommend that the shareholders
of each Subadvised Portfolio vote to approve a new subadvisory agreement between
Oppenheimer and the respective Subadviser (each, a "New Subadvisory Agreement"
and together, the "New Subadvisory Agreements").
INFORMATION ABOUT THE NEW INVESTMENT ADVISER AND THE SUBADVISERS
THE NEW INVESTMENT ADVISER. Oppenheimer and its subsidiaries are engaged
principally in the business of managing, distributing and servicing registered
investment companies. Oppenheimer is located at Two World Trade Center, New
York, New York 10048-0203. Oppenheimer owns all of the outstanding stock of
Oppenheimer Funds Distributor, Inc., Shareholder Services, Inc. and Shareholder
Financial Services, Inc. Oppenheimer is a wholly-owned subsidiary of Oppenheimer
Acquisition Corp. ("OAC"), which is controlled by Massachusetts Mutual, located
at 1295 State Street, Springfield, MA 01111. Massachusetts Mutual advises
pension plans and investment companies. OAC acquired Oppenheimer on October 22,
1990. Oppenheimer is not related to Oppenheimer Capital nor its affiliate, the
brokerage firm Oppenheimer & Co., Inc. The common stock of OAC is owned by (i)
certain officers and/or directors of Oppenheimer, (ii) Massachusetts Mutual and
(iii) another investor. No institution or person holds 5% or more of OAC's
outstanding common stock except Massachusetts Mutual. Massachusetts Mutual has
been engaged in the life insurance business since 1851. It is the nation's
twelfth largest life insurance company by assets and has an A.M. Best Co. rating
of "A++". As of October 31, 1995, Oppenheimer (including a subsidiary) had $38
billion in assets under management.
THE SUBADVISERS. Pilgrim currently serves as Subadviser with respect to a
portion of the assets of each of the Capital Appreciation Portfolio and the
Balanced Portfolio allocated to it by G.R. Phelps pursuant to separate Existing
Subadvisory Agreements and will continue in that capacity for each such
Subadvised Porfolio if the respective shareholders approve the New
6
<PAGE>
Subadvisory Agreements. Pilgrim, a Delaware corporation and a wholly owned
subsidiary of United Asset Management Corporation, a publicly held Delaware
corporation, is a registered investment adviser and was established in 1982 to
provide specialized equity management for institutional investors. As of May 31,
1995, Pilgrim had over $4 billion in assets under management.
BEA currently serves as Subadviser with respect to a portion of the assets
of each of the Capital Appreciation Portfolio, the Balanced Portfolio and the
Diversified Income Portfolio allocated to it by G.R. Phelps pursuant to separate
Existing Subadvisory Agreements and will continue in that capacity for each such
Portfolio subadvised by BEA if the respective shareholders approve the New
Subadvisory Agreements. BEA, a general partnership between CS Capital and Basic
Appraisals, Inc., is a registered investment adviser and together with its
predecessor firms has been providing domestic and global fixed income and equity
investment management services for institutional clients and mutual funds for
more than 50 years. As of June 30, 1995, BEA had $28.9 billion in assets under
management.
Following the Merger and subject to shareholder approval it is anticipated
that Babson-Stewart will immediately begin to serve as Subadviser with respect
to a portion of the assets of each of the Capital Appreciation Portfolio and the
Balanced Portfolio allocated to it by Oppenheimer and to the entire assets of
the International Equity Portfolio pursuant to the New Subadvisory Agreements.
Babson-Stewart is a Massachusetts general partnership and a registered
investment adviser and was originally established in 1987. The general partners
of Babson-Stewart are David L. Babson & Co., Inc., which is an indirect
subsidiary of Massachusetts Mutual, and Stewart Ivory & Co. (International),
Ltd. As of , 1995, Babson-Stewart had over $ billion in assets
under management. Scudder, located at 345 Park Avenue, New York, New York 10154,
has served as Subadviser with respect to a portion of the assets of each of the
Capital Appreciation Portfolio and Balanced Portfolio since September 1, 1995
and for the entire assets of the International Equity Portfolio since January 1,
1995 pursuant to the Existing Subadvisory Agreements for such Subadvised
Portfolios and will continue to serve in that capacity until the Merger, at
which time its Subadvisory Agreements will terminate.
ADDITIONAL INFORMATION ABOUT THE INVESTMENT ADVISER AND THE SUBADVISERS
For additional information concerning the management, ownership structure
and certain other matters pertaining to Oppenheimer and the Subadvisers, see
APPENDIX A.
MATERIAL TERMS OF THE NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS. If approved by the shareholders of each
Portfolio, the New Advisory Agreements will become effective upon the
consummation of the Merger, which is expected to occur during the first three
7
<PAGE>
months of 1996. The following description of the material terms of the New
Advisory Agreements is qualified in its entirety by reference to the form of New
Advisory Agreement (such form is identical for each Portfolio, except for the
names of the Portfolios and the fee schedules) attached to this Proxy Statement
as EXHIBIT A.
INVESTMENT ADVISORY SERVICES. Under each New Advisory Agreement,
Oppenheimer will act as the investment adviser for each Portfolio and will
supervise the investment program of each Portfolio. The New Advisory Agreements
provide that Oppenheimer will provide or arrange for another entity to provide
administrative services for each Portfolio including the completion and
maintenance of records, preparation and filing of reports required by the SEC,
reports to shareholders and composition of proxy statements and registration
statements required by Federal and state securities laws. Oppenheimer will
furnish each Portfolio with office space, facilities and equipment and arrange
for its employees to be available to serve, at the discretion of the Board of
Directors, serve as officers of the Company. The administrative services to be
provided by Oppenheimer under each New Advisory Agreement will be at its own
expense. The Existing Advisory Agreement contains a similar provision. During
the Transition Period, G.R. Phelps will continue to provide administrative
services to each Portfolio, including providing accounting, administrative and
clerical personnel and, together with Oppenheimer, monitoring the activities of
the transfer agent, custodian and independent auditors of the Portfolios.
EXPENSES. Expenses neither assumed by Oppenheimer under the New Advisory
Agreements nor paid by the Portfolios' principal underwriter, if any, will be
paid by the Portfolios. Expenses paid by the Portfolios include interest, taxes,
brokerage commissions, insurance premiums, compensation, expenses and fees of
Non-interested Directors, legal and audit expenses, transfer agent and custodian
fees and expenses, registration fees, expenses of printing and mailing reports
and proxy statements to shareholders, expenses of shareholder meetings and
non-recurring expenses including litigation. The Existing Advisory Agreement
contains a similar provision.
MANAGEMENT FEES. The rate of the advisory fee applicable to each Portfolio
under the New Advisory Agreements is the same as the rate applicable under the
Existing Advisory Agreement.
8
<PAGE>
As compensation for its investment advisory services, each Portfolio will
pay a monthly fee to Oppenheimer which is based on a stated percentage of the
Portfolio's average daily net asset value as follows:
MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $200,000,000.......................................... 0.50%
Next $100,000,000........................................... 0.45%
Amount over $300,000,000.................................... 0.40%
</TABLE>
TOTAL RETURN PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $600,000,000.......................................... 0.625%
Amount over $600,000,000.................................... 0.45%
</TABLE>
INTERNATIONAL EQUITY PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $250,000,000.......................................... 1.00%
Amount over $250,000,000.................................... 0.90%
</TABLE>
GOVERNMENT SECURITIES PORTFOLIO, INCOME PORTFOLIO AND GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
ANNUAL ANNUAL ANNUAL
NET ASSET VALUE RATE RATE RATE
- --------------------------------------- ----------- --------- ---------
<S> <C> <C> <C>
First $300,000,000..................... 0.525% 0.575% 0.625%
Next $100,000,000...................... 0.500% 0.500% 0.500%
Amount over $400,000,000............... 0.450% 0.450% 0.450%
</TABLE>
CAPITAL APPRECIATION PORTFOLIO AND BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $250,000,000.......................................... 0.85%
Amount over $250,000,000.................................... 0.75%
</TABLE>
9
<PAGE>
DIVERSIFIED INCOME PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $250,000,000.......................................... 0.75%
Amount over $250,000,000.................................... 0.65%
</TABLE>
As of the Record Date, the net assets of each Portfolio were:
Money Market Portfolio -- $70,731,370; Government Securities Portfolio --
$23,185,326; Income Portfolio -- $111,227,686; Total Return Portfolio --
$958,829,612; Growth Portfolio -- $378,172,748; International Equity Portfolio
- -- $43,686,719; Capital Appreciation Portfolio -- $24,400,300; Balanced
Portfolio -- $32,719,950; and Diversified Income Portfolio -- $19,766,780.
EXPENSE LIMITATIONS. The New Advisory Agreements contain no expense
limitation provisions. However, independent of the New Advisory Agreements,
Oppenheimer has voluntarily undertaken that it will reimburse each Portfolio to
the extent that the total expenses of the Portfolio in any fiscal year
(including the investment advisory fee but exclusive of taxes, interest,
brokerage commissions, distribution plan payments and any extraordinary
non-recurring expenses, including litigation) exceeds the most stringent expense
limitation applicable to a Portfolio under state laws relating to the
registration and sale of the Portfolios' shares. At present, the most
restrictive limitation by a state limits expenses (with specified exclusions) to
2.5% of the first $30 million of average annual net assets, 2% of the next $70
million and 1.5% of average annual net assets in excess of $100 million.
The Existing Advisory Agreement contains a provision requiring G.R. Phelps
to reimburse a Portfolio if certain of the Portfolio's expenses (including
advisory fees but excluding interest, taxes, brokerage commissions and
extraordinary expenses) exceed 1.5% (1.0% in the case of the Money Market
Portfolio) of the value of the Portfolio's average daily net assets in any given
fiscal year. The New Advisory Agreements do not contain a similar expense
limitation provision. Under the contractual expense limitation provisions of the
Existing Advisory Agreement, G.R. Phelps is not expected to be required to
reimburse any expenses for the Portfolios during the Portfolios' current fiscal
year.
STANDARD OF CARE. The New Advisory Agreements provide that in the absence
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard for its obligations and duties under the New
Advisory Agreements, Oppenheimer will not be liable for any loss sustained by
reason of good faith errors or omissions in connection with any matters to which
the New Advisory Agreements relate. The Existing Advisory Agreement contains a
similar provision.
10
<PAGE>
APPROVAL, TERMINATION AND AMENDMENT PROVISIONS. If Proposal 1 is approved
by the shareholders of each Portfolio, each New Advisory Agreement will remain
in effect for an initial period of up to two years from the date of its
execution and from year to year thereafter provided that its continuance and the
continuance of Oppenheimer as investment adviser to the Portfolio is approved at
least annually by the vote of a majority of the Non-interested Directors cast in
person at a meeting called for the purpose of voting on such approval and by a
vote of the Board of Directors or of a majority of the outstanding voting
securities of the Portfolio. Each New Advisory Agreement may be terminated
without penalty on 60 days' written notice to the other party and will terminate
in the event of its assignment. The Existing Advisory Agreement contains a
similar provision except that the Agreement may be terminated with respect to a
Portfolio without penalty on 60 days' written notice by the Company's Board of
Directors, by vote of holders of a majority of the outstanding shares of the
respective Portfolio or, on 90 days' written notice, by G.R. Phelps. The New
Advisory Agreement may not be amended without the affirmative vote or written
consent of the holders of a majority of the outstanding voting securities of the
Portfolio (as that term is defined in the 1940 Act). The Existing Advisory
Agreement does not contain a specific amendment provision.
PORTFOLIO TRANSACTIONS AND BROKERAGE. Each New Advisory Agreement contains
provisions relating to the selection of broker-dealers including affiliated
broker-dealers (as defined in the 1940 Act) ("brokers") for a Portfolio's
portfolio transactions. Oppenheimer may use such brokers and may, in its best
judgment based on all relevant factors, implement the policy of each Portfolio
to achieve best execution of portfolio transactions. While Oppenheimer need not
seek advance competitive bidding or base its selection on posted rates, it is
expected to be aware of the current rates of most eligible brokers and to
minimize the commissions paid to the extent consistent with the interests and
policies of each Portfolio as established by its Board of Directors and the
provisions of the New Advisory Agreements. The Existing Advisory Agreement
contains similar provisions except that it does not permit the use of affiliated
broker-dealers.
Each New Advisory Agreement also provides that, consistent with obtaining
the best execution of a Portfolio's portfolio transactions, Oppenheimer, in the
interest of a Portfolio, may select brokers (other than affiliated brokers)
because they provide brokerage and/or research services to a Portfolio and/or
other accounts of Oppenheimer. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by Oppenheimer that the commissions are reasonable in
relation to the services provided, viewed either in terms of that transaction or
Oppenheimer's overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be used by
Oppenheimer for the benefit of a Portfolio or other of its advisory clients. To
11
<PAGE>
show that the determinations were made in good faith, Oppenheimer must be
prepared to show that the amount of such commissions paid over a representative
period selected by the Board of Directors was reasonable in relation to the
benefits to a Portfolio. Each New Advisory Agreement recognizes that an
affiliated broker-dealer may act as one of the regular brokers for a Portfolio
provided that any commissions paid to such broker are calculated in accordance
with procedures adopted by the Portfolio's Board of Directors under applicable
SEC rules. The Existing Advisory Agreement contains similar provisions except
that it does not permit the use of affiliated broker-dealers.
THE EXISTING ADVISORY AGREEMENT. G.R. Phelps provides investment advisory
services to the Portfolios pursuant to the Existing Advisory Agreement. The
Existing Advisory Agreement was last approved by: (i) shareholders of the Money
Market Portfolio, the Income Portfolio and the Growth Portfolio on August 19,
1985 (voting to approve an increase in the advisory fees paid by those
Portfolios); (ii) the initial shareholders of Government Securities Portfolio on
March 18, 1992 in connection with the commencement of that Portfolio's
operation; (iii) by shareholders of Total Return Portfolio and International
Equity Portfolio on April 12, 1995 (voting to approve an increase in the
advisory fee rate applicable to those Portfolios); and (iv) the initial
shareholders of Capital Appreciation Portfolio, Balanced Portfolio and
Diversified Income Portfolio on September 1, 1995 in connection with the
commencement of the Portfolios' operations. The Existing Advisory Agreement has
been approved annually by the Directors and was most recently approved on behalf
of each Portfolio by the Company's Board of Directors, including the
Non-interested Directors, at a meeting held on September 26, 1995, when the
Existing Agreement was renewed for the period ending October 30, 1996.
12
<PAGE>
During the Company's fiscal year ended December 31, 1994, each Portfolio
paid advisory fees to G.R. Phelps as follows:
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT OF ADVISORY FEE
- ------------------------------------ -------------------------------------------------
<S> <C> <C>
Money Market Portfolio $ 298,013 (0.50% of the Portfolio's average
daily net assets)
Income Portfolio $ 644,104 (0.625% of the Portfolio's average
daily net assets)*
Government Securities Portfolio $ 110,313 (0.625% of the Portfolio's average
daily net assets)*
Total Return Portfolio $ 3,672,463 (0.533% of the Portfolio's average
daily net assets)*
Growth Portfolio $ 1,249,284 (0.625% of the Portfolio's average
daily net assets)
International Equity Portfolio $ 269,195 (0.927% of the Portfolio's average
daily net assets)*
</TABLE>
- ------------------------
*Reflects a different management fee rate in effect for the Portfolio until May
1, 1995.
Shares of the LifeSpan Portfolios were first offered to the public on
September 1, 1995 and, accordingly, as of the date of this Proxy Statement the
LifeSpan Portfolios have made no advisory payments of a material nature.
MATERIAL TERMS OF THE NEW SUBADVISORY AGREEMENTS WITH PILGRIM AND BEA
THE NEW SUBADVISORY AGREEMENTS WITH PILGRIM AND BEA. The material terms of
the New Subadvisory Agreements with Pilgrim and BEA are identical to those of
the corresponding Existing Subadvisory Agreement, except for the fact that the
Company is not a party to the New Subadvisory Agreement, and except for the
identity of the investment adviser and the dates of execution and termination.
ACCORDINGLY, THE RATE OF THE SUBADVISORY FEE PAID BY OPPENHEIMER TO PILGRIM AND
BEA IS IDENTICAL TO THE RATE OF THE SUBADVISORY FEE WITH RESPECT TO EACH
SUBADVISED PORTFOLIO UNDER THE EXISTING SUBADVISORY AGREEMENTS. THESE SUBADVISED
ACCOUNTS ARE NOT RESPONSIBLE FOR PAYMENT OF THE SUBADVISORY FEES. THE ENTIRE
SUBADVISORY FEE IS PAID DIRECTLY TO THE RESPECTIVE SUBADVISER BY OPPENHEIMER.
The following description of the material terms of the New Subadvisory
Agreements for Pilgrim and BEA is qualified in its entirety by reference to the
forms of New Subadvisory Agreement for Pilgrim and BEA, respectively, such
13
<PAGE>
forms are identical for each such Subadviser, except for the names of the
Subadvised Portfolios and the fee schedules attached to this Proxy Statement as
EXHIBIT B.
INVESTMENT ADVISORY SERVICES. Subject to the oversight of Oppenheimer, each
Subadviser will provide the respective Subadvised Portfolio with advice
concerning the investment management of that portion of the Portfolio's assets
allocated to it by Oppenheimer. The Subadviser will determine what securities
will be purchased, held or sold on behalf of the respective Subadvised
Portfolio.
SUBADVISORY FEES. In the event the advisory fee payable to Oppenheimer is
required to be reduced by the laws or regulations of any jurisdiction where the
respective Portfolio's shares are offered for sale, the amount payable by
Oppenheimer to the Subadviser shall be reduced by a proportionate amount. As
compensation for its services, Oppenheimer will pay a quarterly fee to BEA and
Pilgrim which is based on a stated percentage of that portion of the respective
Subadvised Portfolio's average daily net assets allocated to that Subadviser as
follows:
NEW AND EXISTING SUBADVISORY AGREEMENTS WITH BEA (CAPITAL APPRECIATION
PORTFOLIO, BALANCED PORTFOLIO AND DIVERSIFIED INCOME PORTFOLIO):
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $25 million........................................... 0.45%
Next $25 million............................................ 0.40%
Next $50 million............................................ 0.35%
Over $100 million........................................... 0.25%
</TABLE>
For purposes of calculating the fee payable to BEA, the net asset values of
that portion of the assets of each of Capital Appreciation Portfolio, Balanced
Porfolio and Diversified Income Porfolio are aggregated with that portion of the
net asset value of the assets of the portion of the accounts of Connecticut
Mutual Investment Accounts, Inc. ("CMIA") managed by BEA. CMIA is an open-end
investment company currently managed by G.R. Phelps.
Shares of Capital Appreciation Portfolio, Balanced Portfolio and Diversified
Income Portfolio were first offered to the public on September 1, 1995 and,
accordingly, as of the date of this Proxy Statement, G.R. Phelps has paid no
subadvisory fees of a material nature to BEA for the LifeSpan Portfolios.
14
<PAGE>
NEW AND EXISTING SUBADVISORY AGREEMENTS WITH PILGRIM (CAPITAL APPRECIATION
PORTFOLIO AND BALANCED PORTFOLIO):
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
All assets.................................................. 0.60%
</TABLE>
For purposes of calculating the fee payable to Pilgrim, the net asset values
of that portion of the assets of each of Capital Appreciation Porfolio and
Balanced Portfolio are aggregated with that portion of the net asset value of
the assets of the portion of the accounts of CMIA managed by Pilgrim.
Shares of Capital Appreciation Porfolio and Balanced Portfolio were first
offered to the public on September 1, 1995 and, accordingly, as of the date of
this Proxy Statement, G.R. Phelps has paid no subadvisory fees of a material
nature to Pilgrim for these Portfolios.
EXPENSES. Each Subadviser bears its own costs of providing services under
the respective New Subadvisory Agreement and has no responsibility for paying
any expenses on behalf of the Subadvised Portfolio including brokerage and other
expenses incurred in placing orders for the purchase and sale of securities.
APPROVAL, TERMINATION AND AMENDMENT PROVISIONS. If Proposals 2(a) and 2(b)
are approved by the shareholders of the respective Subadvised Portfolios, each
New Subadvisory Agreement will remain in effect for up to two years from the
date it was executed and from year to year thereafter provided that its
continuance and the continuance of Oppenheimer as investment adviser to the
Portfolio is approved at least annually by the vote of a majority of the Non-
interested Directors cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Directors or of a majority
of the outstanding voting securities of the Portfolio. Each New Subadvisory
Agreement may be terminated without penalty on 60 days' written notice (i) by
the Company's Board of Directors, (ii) by vote of holders of a majority of the
outstanding shares of the respective Subadvised Portfolio, (iii) by Oppenheimer,
or, (iv) on 90 days' written notice, by Pilgrim or BEA, and will terminate in
the event of its assignment. The New Subadvisory Agreements may not be amended
without the affirmative vote of the holders of a majority of the outstanding
voting securities of the Portfolio (as that term is defined in the 1940 Act).
STANDARD OF CARE. In the absence of willful misfeasance, bad faith,
negligence, or reckless disregard of the performance of its duties, Pilgrim is
not subject to liability to the Capital Appreciation Portfolio, the Balanced
Portfolio or the Income Portfolio, Oppenheimer, the Company, or to any
shareholder of such Portfolios for any error of judgment or mistake of law or
for any other
15
<PAGE>
action or omission in the course of, or connected with, rendering services or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
Pilgrim has agreed to indemnify Oppenheimer and hold Oppenheimer harmless
from, against, for and in respect to losses, damages, costs and expenses
incurred by Oppenheimer, including attorneys' fees reasonably incurred, in the
event of Pilgrim's willful misfeasance, bad faith or negligence in the
performance of its duties or obligation hereunder or by reason of its reckless
disregard of such duties or obligations; provided, however, that Oppenheimer
shall not be so indemnified for such losses, damages, costs and expenses,
including such attorneys' fees, to the extent they result from its willful
misfeasance, bad faith or negligence. Oppenheimer has agreed to indemnify and
hold harmless Pilgrim to the same extent and subject to the same limitations as
Pilgrim has agreed to indemnify and hold harmless Oppenheimer.
BEA will not be liable for losses as a result of its activities in
connection with the adoption of any investment policy or the purchase, sale or
retention of securities on behalf of the Capital Appreciation Portfolio,
Balanced Portfolio and Diversified Income Portfolio, if such activities were
made with due care and in good faith. Nothing in the New Subadvisory Agreement,
however, will protect BEA if it negligently causes the Capital Appreciation
Portfolio, Balanced Portfolio and Diversified Income Portfolio, to be in
violation of applicable statutes, rules, regulations, documents governing the
operation of such Portfolios, or requirements under the Internal Revenue Code.
BEA will be liable for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the New Subadvisory Agreement. BEA has agreed to
indemnify Oppenheimer to the fullest extent permitted by law against any and all
loss, damage, judgment, fines, amounts paid in settlement and attorneys' fees
incurred by Oppenheimer resulting in whole or in part from any activities by BEA
described above.
MISCELLANEOUS PROVISIONS. The New Subadvisory Agreements with BEA also
specifically appoint BEA as agent for Oppenheimer and the Capital Appreciation
Portfolio, Balanced Portfolio and Diversified Income Portfolio with respect to
certain discretionary corporate actions relating to the Capital Appreciation
Portfolio's, Balanced Portfolio's and Diversified Income Portfolio's securities
and provide that BEA will not be liable to Oppenheimer or such Subadvised
Portfolios for failure to exercise such discretion in the absence of willful
misfeasance, bad faith or negligence.
Each of the Existing Subadvisory Agreements was approved by the Company's
Board of Directors on behalf of Pilgrim and BEA on April 24, 1995 and by the
initial shareholder of each Subadvised Portfolio on September 1, 1995.
16
<PAGE>
MATERIAL TERMS OF THE NEW SUBADVISORY AGREEMENTS WITH BABSON-STEWART
THE NEW SUBADVISORY AGREEMENTS WITH BABSON-STEWART (CAPITAL APPRECIATION
PORTFOLIO, BALANCED PORTFOLIO AND INTERNATIONAL EQUITY PORTFOLIO). The material
terms of the New Subadvisory Agreements with Babson-Stewart (the "Babson-Stewart
Subadvisory Agreements") are similar to those of the corresponding Existing
Subadvisory Agreements with Scudder. Material changes are highlighted below. NO
SUBADVISED PORTFOLIO WILL BE RESPONSIBLE FOR PAYING THE SUBADVISORY FEE DIRECTLY
TO BABSON-STEWART. INSTEAD, OPPENHEIMER WILL BE RESPONSIBLE FOR PAYMENT OF SUCH
FEES.
The following description of the material terms of the Babson-Stewart
Subadvisory Agreements is qualified in its entirety by reference to the form of
Babson-Stewart Subadvisory Agreement attached to this Proxy Statement as EXHIBIT
C.
INVESTMENT ADVISORY SERVICES. Subject to the oversight of Oppenheimer,
Babson-Stewart will provide Capital Appreciation Portfolio and Balanced
Portfolio with advice concerning the investment management of the Portfolio's
assets allocated to it by Oppenheimer and will provide International Equity
Portfolio with advice concerning the investment management of the entire assets
of the Portfolio. Babson-Stewart will determine what securities will be
purchased, held or sold on behalf of the respective Subadvised Portfolio.
NEW SUBADVISORY FEES. As compensation for its services, Oppenheimer will
pay a monthly fee to Babson-Stewart which is based on a stated percentage of
that portion of each of Capital Appreciation Portfolio's and Balanced
Portfolio's average daily assets allocated to Babson-Stewart and of
International Equity Portfolio's entire average daily assets as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $10 million........................................... 0.75%
Next $15 million............................................ 0.625%
Next $25 million............................................ 0.50%
Over $50 million............................................ 0.375%
</TABLE>
The breakpoints in the subadvisory fee payable by Oppenheimer to
Babson-Stewart apply to the average daily net asset value of that portion of
assets of each of Capital Appreciation Portfolio, Balanced Portfolio and
International Equity Portfolio subadvised by Babson-Stewart separately. The
portion of the net assets of Capital Appreciation Portfolio, Balanced Portfolio
and International Equity Portfolio allocated to Babson-Stewart will not be
aggregated in applying these breakpoints.
17
<PAGE>
EXISTING SUBADVISORY FEES. As compensation for its services, G.R. Phelps
currently pays a quarterly fee to Scudder which is based on a stated percentage
of that portion of each of Capital Appreciation Portfolio, Balanced Portfolio
and International Equity Portfolio's average daily net assets allocated to
Scudder as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $10 million........................................... 0.75%
Next $15 million............................................ 0.70%
Next $15 million............................................ 0.65%
Next $60 million............................................ 0.50%
Over $100 million........................................... 0.35%
</TABLE>
Although G.R. Phelps pays a separate fee to Scudder with respect to each of
Capital Appreciation Portfolio, Balanced Portfolio and International Equity
Portfolio, for purposes of applying the breakpoints in the subadvisory fee
currently payable by G.R. Phelps to Scudder with respect to each such Subadvised
Portfolio, the average daily net assets of the portion of all of such Subadvised
Portfolios managed by Scudder are aggregated.
Shares of the Capital Appreciation Portfolio and Balanced Portfolio were
first offered to the public on September 1, 1995 and, accordingly, as of the
date of this Proxy Statement, G.R. Phelps has paid no subadvisory fees of a
material nature to Scudder for these Portfolios.
During its most recently completed fiscal year, International Equity
Portfolio's subadvisory fee of $182,237 was paid by G.R. Phelps to a prior
subadviser. For the period from January 1, 1995 to September 30, 1995, G.R.
Phelps paid subadvisory fees of $181,013 on behalf of International Equity
Portfolio, representing .66% of such Subadvised Portfolio's average daily net
assets.
EXPENSES. Babson-Stewart bears its own costs of providing services under
the Babson-Stewart Subadvisory Agreements and has no responsibility for paying
any expenses on behalf of the Capital Appreciation Portfolio, Balanced Portfolio
and International Equity Portfolio. Each Existing Subadvisory Agreement with
Scudder contains a substantially similar provision.
APPROVAL, TERMINATION AND AMENDMENT PROVISIONS. If Proposal 2(c) is
approved by the shareholders of the Capital Appreciation Portfolio, Balanced
Portfolio and International Equity Portfolio, each Babson-Stewart Subadvisory
Agreement will remain in effect for up to two years from the date it was
executed and from year to year thereafter provided that its continuance and the
continuance of Oppenheimer as investment adviser to the Portfolio is approved at
least annually by the vote of a majority of the Non-interested Directors cast in
18
<PAGE>
person at a meeting called for the purpose of voting on such approval and by a
vote of the Board of Directors or of a majority of the outstanding voting
securities of the Portfolio. Each Babson-Stewart Subadvisory Agreement may be
terminated without penalty on 60 days' written notice (i) by the Company's Board
of Directors, (ii) by vote of holders of a majority of the outstanding shares of
the respective Subadvised Portfolio, (iii) by Oppenheimer, or (iv) on 90 days'
written notice, by Babson-Stewart. Each Babson-Stewart Subadvisory Agreement
will terminate in the event of its assignment. The Babson-Stewart Subadvisory
Agreements may not be amended without the affirmative vote of the holders of a
majority of the outstanding voting securities of the Portfolio (as that term is
defined in the 1940 Act). The Existing Subadvisory Agreements with Scudder
contain provisions which are substantially similar.
STANDARD OF CARE. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard with respect to its obligations and duties
under the Babson-Stewart Subadvisory Agreements, Babson-Stewart will not be
subject to liability for any loss sustained by reason of its good faith errors
or omissions in connection with any matters to which the Babson-Stewart
Subadvisory Agreements relate.
The Existing Subadvisory Agreements with Scudder contain provisions that are
similar to those of the Babson-Stewart Subadvisory Agreements. Specifically, the
Existing Subadvisory Agreements with Scudder provide that Scudder will not be
liable for losses as a result of its activities in connection with the adoption
of any investment policy or the purchase, sale or retention of securities on
behalf of the Capital Appreciation Portfolio, Balanced Portfolio and
International Equity Portfolio subadvised by Scudder, if such activities were
made with due care and in good faith. Nothing in the Existing Subadvisory
Agreements, however, will protect Scudder if it negligently causes the Capital
Appreciation Portfolio, Balanced Portfolio and International Equity Portfolio
subadvised by Scudder to be in violation of applicable statutes, rules,
regulations, documents governing the operation of such Portfolios, or
requirements under the Internal Revenue Code. Scudder is liable for willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under the
Existing Subadvisory Agreements. Scudder has agreed to indemnify G.R. Phelps to
the fullest extent permitted by law against any and all loss, damage, judgment,
fines, amounts paid in settlement and attorneys' fees incurred by G.R. Phelps
resulting in whole or in part from any activities by Scudder described above.
MISCELLANEOUS PROVISIONS. The Babson-Stewart Subadvisory Agreements provide
that Babson-Stewart will provide officers to the Company as the Company's Board
of Directors may request and at Babson-Stewart's expense. There is no similar
provision in the Existing Subadvisory Agreements with Scudder.
19
<PAGE>
Each of the Existing Subadvisory Agreements with Scudder was approved by the
Company's Board of Directors on behalf of the Capital Appreciation Portfolio and
Balanced Portfolio on April 24, 1995 and by the initial shareholder of each such
Subadvised Portfolio on September 1, 1995. The Existing Subadvisory Agreement
with Scudder was approved by the Company's Board of Directors on behalf of the
International Equity Portfolio on January 20, 1995 and by the shareholders of
the International Equity Portfolio on April 12, 1995.
DIRECTORS' EVALUATION AND RECOMMENDATION
THE DIRECTORS OF THE COMPANY RECOMMEND UNANIMOUSLY THAT SHAREHOLDERS OF EACH
PORTFOLIO APPROVE THEIR RESPECTIVE NEW ADVISORY AGREEMENT.
THE DIRECTORS OF THE COMPANY RECOMMEND UNANIMOUSLY THAT SHAREHOLDERS OF THE
CAPITAL APPRECIATION PORTFOLIO, THE BALANCED PORTFOLIO, THE DIVERSIFIED INCOME
PORTFOLIO AND THE INTERNATIONAL EQUITY PORTFOLIO APPROVE THEIR RESPECTIVE NEW
SUBADVISORY AGREEMENTS.
EVALUATION BY THE BOARD OF DIRECTORS
The Board of Directors has determined unanimously that long-term continuity
and efficiency of management services after the Merger can best be assured by
approving New Advisory Agreements for each Portfolio and New Subadvisory
Agreements on behalf of the Subadvised Portfolios. The Board believes that the
New Advisory and Subadvisory Agreements will enable the Portfolios to obtain
services of high quality at costs which they deem appropriate and reasonable and
that approval of the Agreements is in the best interests of the Portfolios and
their shareholders.
In evaluating the New Advisory Agreements and the Babson-Stewart Subadvisory
Agreement, the Board of Directors requested and reviewed, with the assistance of
its independent legal counsel, materials furnished by Oppenheimer and
Babson-Stewart. These materials included financial statements as well as other
written information regarding Oppenheimer and Babson-Stewart and their
personnel, operations, and financial condition. Consideration was given to
comparative information concerning other mutual funds with similar investment
objectives including information derived from data prepared by Lipper Analytical
Services, Inc. Attached to this Proxy Statement as APPENDIX A is a list of other
funds managed by Oppenheimer that have similar investment objectives to those of
the Portfolios, their net assets and the rate of the advisory fee paid to
Oppenheimer. Similar information is provided in APPENDIX A for Babson-Stewart.
The Board of Directors also reviewed the terms and provisions of the New
Advisory Agreements and the Babson-Stewart Subadvisory Agreement and
20
<PAGE>
compared them to the existing management arrangements as well as the management
arrangements of other mutual funds, particularly with respect to the allocation
of various types of expenses, levels of fees and resulting expense ratios. The
Board evaluated the nature and extent of services provided by other investment
advisers to their respective funds and also considered the benefits Oppenheimer
would obtain from its relationship with the Portfolios and the economies of
scale over time in costs and expenses to Oppenheimer associated with its
providing such services.
The Board of Directors also considered the terms of the Merger and the
possible effects of the Merger upon Oppenheimer and its ability to provide
services to the Portfolios. The Board evaluated such factors as Oppenheimer's
experience in providing various financial services to investment companies, its
experience in the investment company business, its distribution and shareholder
servicing capabilities and its reputation, integrity, financial responsibility
and stability.
The Board also considered in determining to approve the New Advisory
Agreements that Oppenheimer's assumption of the investment management function
for the Portfolios would in all likelihood offer the Portfolios continued
effective advisory services and capabilities. The Board considered the
performance record of the mutual funds managed by Oppenheimer and the fact that
Oppenheimer has considerable staffing resources available to provide management
services to the Portfolios. The Board of Directors was advised by Oppenheimer
that currently it was not recommending changes in the Porfolio's investment
objectives and policies. The Board also noted the assurances it received from
Oppenheimer that it is adequately capitalized to enable it to provide high
quality investment management services.
The Board of Directors reviewed the terms and provisions of the New
Subadvisory Agreements with Pilgrim and BEA and considered the following factors
in determining to approve the New Subadvisory Agreements with Pilgrim and BEA:
(a) the identical material terms, including the subadvisory fee rate, under both
the New Subadvisory Agreements and the Existing Subadvisory Agreements; (b) the
identical nature and quality of services that will continue to be provided by
the respective Subadviser to the affected Portfolio; and (c) the retention by
each Subadviser of the services of all the investment management personnel and
employees currently providing investment subadvisory services to the affected
Portfolios.
Based upon its review, the Board of Directors concluded that the terms of
the New Advisory and Subadvisory Agreements are reasonable, fair and in the best
interests of the Portfolios and their shareholders, and that the fees provided
therein are fair and reasonable in light of the usual and customary charges made
by others for services of the same nature and quality. Accordingly, the Board
concluded that retaining Oppenheimer to serve as investment adviser to
21
<PAGE>
the Portfolios and Oppenheimer's contracting with Pilgrim, BEA and Babson-
Stewart to serve as the Subadvisers to the Subadvised Portfolios after the
Merger is desirable and in the best interests of the Portfolios and their
shareholders.
If the New Advisory Agreements are approved by the shareholders of each
Portfolio, Oppenheimer will serve as investment adviser to each Portfolio and
the New Advisory Agreements will take effect with respect to all Subadvised
Portfolios upon the consummation of the Merger which is expected to occur during
the first three months of 1996 after receipt by the parties to the Merger of the
required regulatory approvals. If the Merger is not consummated, the Board of
Directors has determined that the Existing Advisory Agreement will continue in
effect and G.R. Phelps will continue to serve as investment adviser to each
Portfolio, notwithstanding an affirmative vote by shareholders on this Proposal.
If the New Advisory Agreement is not approved by the shareholders of one or more
of the Portfolios and the Merger is consummated, the Existing Advisory Agreement
will terminate with respect to that Portfolio or Portfolios and no person will
then serve as investment adviser to that Portfolio or Portfolios. In such event,
the Board of Directors will determine what further action should be taken. Such
action may include the appointment of Oppenheimer or another advisory
organization to serve as investment adviser on an interim basis.
If the shareholders of one or more of the Subadvised Portfolios do not
approve the New Subadvisory Agreements with respect to a Portfolio or Portfolios
and the Merger is consummated, the Existing Subadvisory Agreements with respect
to such Portfolio or Portfolios will terminate and no person will serve as
subadviser to such Portfolio or Portfolios. In such event, the Board of
Directors will determine what action, if any, to take. Such action may include
the assumption by Oppenheimer of sole responsibility for portfolio management
for the affected Portfolio or Portfolios.
VOTE REQUIRED
Approval of Proposal 1 requires the affirmative vote of a majority of the
outstanding voting securities ("Majority Shareholder Vote") of each Portfolio
voting separately on the Proposal, as defined in the 1940 Act, which means the
lesser of (1) 67 percent or more of the shares of the Portfolio represented at a
shareholders' meeting if at least 50 percent of all outstanding shares of the
Portfolio are represented at such meeting or (2) 50 percent or more of the
outstanding shares of the Portfolio entitled to vote at the Meeting. Approval of
each of Proposals 2(a), 2(b) and 2(c) requires a Majority Shareholder Vote of
each Subadvised Portfolio voting separately on the Proposals affecting that
Portfolio.
22
<PAGE>
PROPOSAL 3
ELECTION OF DIRECTORS
(FOR ALL PORTFOLIOS VOTING TOGETHER)
IF PROPOSAL 1 IS APPROVED, PROXIES NOT INDICATING A CONTRARY INTENTION WILL
BE VOTED IN FAVOR OF THE ELECTION OF THE PERSONS NAMED BELOW AS DIRECTORS, TO
HOLD OFFICE FOR AN INDEFINITE PERIOD AND UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED.
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
In order to fill the vacancies created by the change in the structure of the
Board and to provide for a Board to take office upon the close of the Transition
Period in compliance with Section 15(f) of the 1940 Act, each as discussed
below, the Company's Board is recommending the election of a new Board of
Directors. All current members of the Board have chosen to resign as Directors
and will not serve the Company as Directors or in any other capacity after the
close of the Transition Period. Accordingly, the Company's Board of Directors,
following the recommendation of its Nominating Committee, is recommending to
shareholders the election of eight (8) Directors none of whom is currently a
Director of the Company and six of whom are not "interested persons" of
Oppenheimer, with the term of office to commence on the 91st day after the
Merger is consummated. Each nominee is currently a member of the Board of
Trustees or Directors of one or more funds for which Oppenheimer serves as
investment adviser. Each has consented to being named as a nominee in this Proxy
Statement. Should any nominee become unable or unwilling to serve, the persons
appointed as proxies shall vote for the election of such other person or persons
as the Board of Directors shall recommend. The Board has no reason to believe
that any person nominated will be unable or unwilling to serve if elected to
office.
SECTION 15(F) OF THE 1940 ACT
Connecticut Mutual and Massachusetts Mutual, on behalf of Oppenheimer, have
agreed to comply and use all reasonable efforts to cause compliance with the
provisions of Section 15(f) of the 1940 Act. Section 15(f) provides, in
pertinent part, that an investment adviser or an affiliated person of such
investment adviser may receive any amount or benefit in connection with a sale
of such investment adviser which results in an assignment of an investment
advisory contract if (1) for a period of three years after the time of such
event, 75% of the members of the board of trustees or directors of the
investment company which it advises are not "interested persons" (as defined in
the 1940 Act) of the new or old investment adviser, and (2) during the two-year
period after the date on which the transactions occurs, there is no "unfair
burden" imposed on the investment company as a result of the transaction. For
this purpose, "unfair burden" is defined to include any arrangement during the
two-
23
<PAGE>
year period after the transactions whereby the investment adviser or predecessor
or successor investment advisers, or any interested person of any such adviser,
receives or is entitled to receive any compensation directly or indirectly (i)
from any person in connection with the purchase or sale of securities or other
property to, from, or on behalf of the investment company other than bona fide
ordinary compensation as principal underwriter for such company, or (ii) from
the investment company or its security holders for other than bona fide
investment advisory or other services. No compensation arrangements of the types
described above are contemplated in the proposed transaction. The composition of
the Company's Board of Directors will be in compliance with the 75% requirement
if all the nominees named in Proposal 3 are elected.
The following table shows the nominees who are standing for election and
their principal occupation which, unless specific dates are shown, are for the
past five years, although the titles held may not have been the same throughout.
Each nominee is standing for election for the first time at this Meeting.
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- -------------------------------- ----------------------------------------------------
<S> <C>
Robert G. Avis* Vice Chairman of A.G. Edwards & Sons, Inc. (a
Age: 64 broker-dealer) and A.G. Edwards, Inc. (its parent
One North Jefferson Avenue holding company); Chairman of A.G.E. Asset
St. Louis, MO 63103 management and A.G. Edwards Trust Company (its
affiliated investment adviser and trust company,
respectively.)
William A. Baker Management Consultant.
Age: 80
197 Desert Lakes Drive
Palm Springs, CA 92264
Charles Conrad, Jr. Vice President of McDonnell Douglas Space Systems
Age: 65 Co.; formerly associated with the National
19411 Merion Circle Aeronautics and Space Administration.
Huntington Beach, CA 92648
Raymond J. Kalinowski Director of International Inc.; formerly Vice
Age: 66 Chairman and a Director of A.G. Edwards, Inc.,
44 Portland Drive parent holding company of A.G. Edwards & Sons, Inc.
St. Louis, MO 63131 (a broker-dealer), of which he was a Senior Vice
President.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- -------------------------------- ----------------------------------------------------
<S> <C>
C. Howard Kast Formerly Managing Partner of Deloitte, Haskins &
Age: 73 Sells (an accounting firm).
2552 East Alameda
Denver, CO 80209
Robert M. Kirchner President of The Kirchner Company (management
Age: 73 consultants).
7500 E. Arapahoe Road
Englewood, CO 80110
Ned M. Steel Chartered Property and Casualty Underwriter;
Age: 80 Director of Visiting Nurse Corporation of Colorado;
3416 South Race Street formerly Senior Vice President and a Director of
Englewood, CO 80110 Van Gilder Insurance Corp. (insurance brokers).
James C. Swain* Vice Chairman and a director of Oppenheimer;
Age: 61 President and a Director of Centennial Asset
3410 South Galena Street Management Corporation ("Centennial"), an
Denver, CO 80231 investment adviser subsidiary of Oppenheimer;
formerly Chairman of the Board of SSI.
<FN>
- ------------------------
* A Nominee who will be an "interested person" of the Company as defined in the
1940 Act.
</TABLE>
As of the Record Date, no nominee for Director held shares of the
Portfolios.
During the Company's fiscal year ended December 31, 1994, the Board of
Directors held six meetings. The Company's Board of Directors currently consists
of the following members: Donald Pond, Chairman; David E. Sams, Jr.; Richard H.
Ayers; David E.A. Carson; Richard W. Greene; and Beverly L. Hamilton. The Board
of Directors' audit committee, which consists of Messrs. Ayers, Carson and
Greene and Ms. Hamilton (all Directors who are not "interested persons"), held
two meetings during the Company's last fiscal year. That committee reviews
audits, audit procedures, financial statements and other financial and
operational matters of the Company. The Board of Directors has a nominating
committee, consisting of all Non-interested Directors, which reviews and selects
candidates for nomination as Non-interested Directors of the Company. That
committee did not meet during the fiscal year ended December 31, 1994. Each
Director attended at least 75% of the meetings of the Board of Directors and the
meetings held by the committee of the Board on which such Director served during
the Company's last fiscal years.
25
<PAGE>
REMUNERATION OF DIRECTORS
The following table sets forth the remuneration paid to the current members
of the Company's Board of Directors for the Portfolios' fiscal year ended
December 31, 1994.
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
AGGREGATE BENEFITS ANNUAL FROM COMPANY
COMPENSATION ACCRUED AS BENEFIT AND
FROM THE PART OF FUND UPON COMPANY
NAME OF PERSON COMPANY* EXPENSES RETIREMENT COMPLEX**
- --------------------------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Richard H. Ayers........... $ 4,250 None None $ 8,500
David E.A. Carson.......... 4,250 None None 8,500
Richard W. Greene.......... 4,750 None None 9,500
Beverly L. Hamilton........ 4,250 None None 8,500
Donald H. Pond, Jr......... None None None None
David E. Sams, Jr.......... None None None None
* As of December 31, 1994.
** For the twelve months ended December 31, 1994; includes 14 series of two
investment companies.
</TABLE>
The following table sets forth information about the current officers of the
Company who are not Directors. No officer of the Company is remunerated by the
Company.
<TABLE>
<CAPTION>
NAME, AGE AND TITLE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ---------------------------- ------------------------------------------------------
<S> <C>
Linda M. Napoli Assistant Vice President, Connecticut Mutual
Age: 38 (1993-present); Associate Director, Connecticut
Treasurer and Controller Mutual (1988-1993).
Ann F. Lomeli Corporate Secretary, Connecticut Mutual
Age: 39 (1988-present).
Secretary
</TABLE>
After the close of the Transition Period, it is anticipated that the
foregoing officers of the Company will resign and that Oppenheimer will propose
to the Directors that be elected Chairman of the Board, that
be elected President, that Robert C. Doll, Jr. and Leonard Darling be elected as
Senior Vice Presidents, that George Bowen be elected Treasurer and that Andrew
J. Donohue be elected Secretary. Information about Mr. , who is a
nominee for Director, is provided in the table on nominees. The address of all
such proposed officers is Oppenheimer Management Corporation, 2 World Trade
Center, NY, NY 10048 except for Mr. Bowen, whose
26
<PAGE>
address is Oppenheimer Management Corporation, 3410 S. Galena Street, Denver,
Colorado 80231. The following table provides information about the other
proposed officers:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ----------------------- -------------------------------------------------------------
<S> <C>
George C. Bowen Senior Vice President and Treasurer of Oppenheimer; Vice
Age: 59 President and Treasurer of OFD, and HarbourView Asset
Management Corporation; President, Treasurer and Director of
Centennial Capital Corporation; Senior Vice President,
Treasurer and Secretary of Shareholder Services, Inc.; Vice
President, Treasurer and Secretary of Shareholder Financial
Services, Inc. and an officer of various Oppenheimer Funds.
Robert C. Doll, Jr Executive Vice President and Director of Equity Investments
Age: 41 of Oppenheimer; officer of various Oppenheimer Funds.
O. Leonard Darling Executive Vice President and Director of Fixed Income
Age: [xx] Investments of Oppenheimer; formerly .
Andrew J. Donohue Executive Vice President and General Counsel of Oppenheimer
Age: 45 and OFD; officer of various Oppenheimer Funds.
</TABLE>
As of the Record Date, the current Directors and Officers of the Company as
a group owned shares of the Company as set forth below:
VOTE REQUIRED
A plurality of all the votes cast at the Meeting, if a quorum is present at
the Meeting, is sufficient to elect the nominees. If Proposal 1 is not approved
by the shareholders, no election of Directors will be held and the slate of
officers first named above will continue in office.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY THAT SHAREHOLDERS VOTE TO
ELECT EACH OF THE NOMINEES.
27
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC
ACCOUNTANTS
(FOR ALL PORTFOLIOS VOTING TOGETHER)
The firm of Arthur Andersen, LLP has served as the Company's independent
public accountants since the Company's inception. Audit services to the
Portfolios during such Portfolios' fiscal year ended December 31, 1994 consisted
of examinations of the Portfolios' financial statements for the period and
reviews of the Portfolios' filings with the Commission.
The Board of Directors, including the Non-interested Directors, has selected
Arthur Andersen, LLP as the Portfolios' independent public accountants for the
fiscal year ending December 31, 1995, subject to shareholder ratification at the
Special Meeting. A representative of Arthur Andersen, LLP is expected to be
available at the Special Meeting to make a statement and to respond to
appropriate questions. After the Transition Period, the Company's newly elected
Board of Directors may consider other firms to serve as independent public
accountants to the Company.
DIRECTOR'S EVALUATION AND RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY THAT THE SHAREHOLDERS VOTE IN
FAVOR OF THE RATIFICATION OF ARTHUR ANDERSEN, LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS.
REQUIRED VOTE
Approval of this proposal requires the affirmative vote of a majority of the
Company's outstanding shares present and voting at the Meeting if a quorum is
present.
THE MERGER
The following information about Massachusetts Mutual is provided to assist
you in understanding the culmination of the events that will bring about the
termination of the Existing Advisory Agreement and the Existing Subadvisory
Agreements and the other Proposals in this Proxy Statement. This Proxy Statement
does not relate to the transactions involved in the consummation of the Merger
and you are not being asked to vote on the Merger. None of the votes cast for or
against the Proposals described in this Proxy Statement will affect the
consummation of the Merger.
The Boards of Directors of Connecticut Mutual and Massachusetts Mutual,
respectively, have approved an agreement setting forth the terms of the
28
<PAGE>
Merger which was signed by both parties on September 13, 1995. Upon consummation
of the Merger, the separate existence of Connecticut Mutual will cease and
Massachusetts Mutual will be the surviving company. The consummation of the
Merger is intended to occur immediately subsequent to regulatory approvals which
are currently anticipated to be delivered in the first three months of 1996.
Massachusetts Mutual is a mutual life insurance company organized as a
Massachusetts corporation and was originally chartered in 1851. Massachusetts
Mutual provides, directly and through its subsidiaries, a wide range of annuity
and disability products, traditional and managed care group health products,
pension and pension-related products and services, as well as investment
advisory services to individuals, corporations and other institutions in all 50
states and the District of Columbia. Massachusetts Mutual is also licensed to
transact business in Puerto Rico and six provinces in Canada.
Massachusetts Mutual provides investment advisory services to various
entities including its general investment account, its separate investment
accounts and certain closed-end and open-end investment companies (such open-end
investment companies, the "Massachusetts Mutual funds"). These investment
advisory services are provided by the staff employed by Massachusetts Mutual and
also by Harbourview Asset Management Corp. (a wholly-owned subsidiary of
Oppenheimer) and Concert Capital Management, Inc., a registered investment
adviser which is also indirectly owned by Massachusetts Mutual. MML Investors
Services, Inc., an indirect wholly-owned subsidiary of Massachusetts Mutual,
provides distribution services for the Massachusetts Mutual proprietary
products. Oppenheimer also provides investment advisory services to a group of
investment management companies that it sponsors (the "Oppenheimer funds").
Oppenheimer Funds Distributor, Inc. acts as distributor to the Oppenheimer
funds.
On November 17, 1995, the Company's Board of Directors was informed that
Connecticut Mutual and C.M. Life Insurance Company ("C.M. Life"), its
wholly-owned subsidiary, intended to apply to the SEC for an order approving the
substitution of shares of mutual funds managed by Oppenheimer for the shares of
the Money Market Portfolio, Government Securities Portfolio and Income Portfolio
currently held in certain separate accounts of Connecticut Mutual and C.M. Life.
In each case, the Oppenheimer mutual fund would have investment objectives
comparable to the Portfolio that it replaces. The effect of the substitution of
shares would be to replace the Money Market Portfolio, Government Securities
Portfolio and Income Portfolio as investment options under various variable
annuity contracts and variable life insurance contracts with comparable mutual
funds managed by Oppenheimer. If the SEC's approval is obtained, then the
substitutions will be carried out after the Merger by
29
<PAGE>
C.M. Life and Massachusetts Mutual redeeming the shares of the Money Market
Portfolio, Government Securities Portfolio and Income Portfolio held in their
respective separate accounts and reinvesting currently the proceeds in shares
issued by the Oppenheimer mutual funds. The substitutions may also require the
approval of the insurance regulators in certain states. This Proxy Statement
does NOT relate to those substitutions and you are NOT being asked to vote on
them.
No formal plans for any substitutions relating to the Total Return
Portfolio, Growth Portfolio, Capital Appreciation Portfolio, Balanced Portfolio,
Income Portfolio or International Equity Portfolio have been made at this time,
but there can be no assurance given that any substitutions involving these
Portfolios will not be proposed in the future.
Upon consummation of the Merger, the Board of Directors has approved a
change in the Company's name as follows -- "Panorama Series Fund I, Inc."
INFORMATION ABOUT SHARE OWNERSHIP
The Company is not aware that any person owns annuity contracts issued by
Connecticut Mutual or C.M. Life, a wholly-owned subsidiary of Connecticut
Mutual, entitling that person to give voting instructions regarding 5% or more
of the total outstanding shares of any Portfolio. As of the Record Date, the
Company has been advised by Connecticut Mutual that it owns shares of the
following Portfolios for its own accounts:
<TABLE>
<CAPTION>
CONNECTICUT MUTUAL
SHARES OWNED
PORTFOLIO (% OF OUTSTANDING)
- ------------------------------------------------------ -------------------
<S> <C>
Government Securities Portfolio....................... 28%
International Equity Portfolio........................ 15%
Capital Appreciation Portfolio........................ 100%
Balanced Portfolio.................................... 100%
Diversified Income Portfolio.......................... 100%
</TABLE>
The Company has been advised that Connecticut Mutual intends to vote all of
such shares in favor of all of the Proposals affecting the above-referenced
Portfolios. C.M. Life does not own any shares of the Portfolios for its own
account.
As of the Record Date, no one other than Connecticut Mutual owned of record
or beneficially 5% or more of the shares of the Portfolios.
30
<PAGE>
OTHER MATTERS
The Company's management knows of no business to be brought before the
Special Meeting except as described above. However, if any other matters
properly come before the Meeting, the persons named in the enclosed proxy card
intend to vote on such matters in accordance with their best judgment. If
shareholders desire additional information about the matters proposed for
action, the Company's management will be glad to hear from them and to provide
further information.
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Company. In addition, although mere
attendance at the meeting will not revoke a proxy, a shareholder present at the
meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in this Proxy Statement and will use their best
judgment in connection with the transaction of such other business as may
properly come before the Special Meeting or any adjournment thereof.
In the event that, at the time any session of the Special Meeting is called
to order, a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the Special
Meeting to a later date. In the event that a quorum is present but sufficient
votes in favor of any of Proposals 1, 2(a), 2(b), 2(c), 4 and in favor of the
nominees named in Proposal 3 have not been received, the persons named as
proxies will vote those proxies which they are entitled to vote in favor of the
relevant Proposal for such an adjournment and will vote those proxies required
to be voted against the Proposal against any such adjournment. A shareholder
vote may be taken on one or more of the Proposals in the Proxy Statement prior
to such adjournment if sufficient votes for its approval have been received and
it is otherwise appropriate.
Shares of common stock of the Company represented in person or by proxy
(including shares which abstain or do not vote with respect to one or more of
the Proposals presented for shareholder approval) will be counted for purposes
of determining whether a quorum is present at the Special Meeting. Adoption by
the shareholders of the affected Portfolio of Proposals 1, 2(a), 2(b), and 2(c)
requires the affirmative vote of the lesser of (i) 67 percent or more of the
affected Portfolios outstanding voting securities present at the Special
Meeting, if the holders of more than 50 percent of the affected Portfolio's
shares of common stock are present or represented by proxy or (ii) 50 percent or
more of
31
<PAGE>
the affected Portfolio's outstanding shares of common stock. Approval by the
shareholders of the nominees set forth in Proposal 3 requires a plurality of all
the votes cast at the Meeting, if a quorum is present. Adoption by the
shareholders of the Company of Proposal 4 requires the affirmative vote of a
majority of the shares of all Portfolios voting together at the meeting, if a
quorum is present.
The Company serves as a vehicle for funding variable annuity and variable
life contracts issued by Connecticut Mutual and C.M. Life through four unit
investment trusts, each of which is registered under the 1940 Act: the Panorama
Separate Account, the Panorama Plus Separate Account, the Connecticut Mutual
Variable Life Separate Account I and the C.M. Life Variable Life Separate
Account I (collectively, the "Separate Accounts"). Currently, Connecticut Mutual
and C.M. Life through the Separate Accounts are the only shareholders of the
Portfolios. Consistent with current interpretations of the 1940 Act, however,
each owner of record of an annuity contract at the close of business on the
Record Date will have the right to instruct Connecticut Life or C.M. Life as to
the manner in which the Portfolio shares attributable to his or her annuity
contract should be voted. The number of shares of each Portfolio deemed
attributable to an annuity contract will be determined on the basis of the value
of the annuity contract on the Record Date. Connecticut Mutual and C.M. Life
will vote Portfolio shares held by the Separate Accounts in accordance with
instructions received from owners of the underlying annuity contracts having
values allocated to the Portfolios. Fractional shares also will be voted in
accordance with instructions received. Portfolio shares for which no
instructions are received (including abstentions and proxies from
representatives of beneficial owners that indicate that such representatives
have not received instructions from the beneficial owners or other persons
entitled to vote shares regarding a particular matter with respect to which the
representatives do not have discretionary power) will be voted in the same
proportion as shares as to which instructions are received by Connecticut Mutual
and C.M. Life with respect to annuity contracts participating in the same
Portfolio.
The 1940 Act provides exemptions from the pass through voting requirement.
More specifically, Connecticut Mutual would be allowed to disregard voting
instructions of contractholders if the contractholders initiate any change in
the underlying investment company's investment policies, principal underwriter,
or any investment adviser. In addition, Connecticut Mutual and C.M. Life would
be allowed to disregard voting instructions of contractholders with respect to
the investments of an underlying fund, or any contract between a fund and its
investment adviser, when required to do so by an insurance regulatory authority.
Connecticut Mutual's or C.M. Life's disregard of such voting instructions of
contractholders would be required to be reasonable and based on specific good
faith determinations.
32
<PAGE>
On August 31, 1994, the Company was granted an exemption from certain
sections of the 1940 Act to facilitate the sale of the Company's shares as the
underlying investment medium for both variable annuity and variable life
insurance company separate accounts ("mixed funding") as well as the underlying
investment medium for separate accounts of unaffiliated insurance companies
("shared funding"). As a condition of granting this request, the Company
represented to the Securities and Exchange Commission that the Board of
Directors would monitor the Company for the existence of any material
irreconcilable conflict between the interests of the contractholders of all
Separate Accounts investing in the Company such as a difference in voting
instructions given by variable annuity contractholders and variable life
insurance contractholders or a decision by an insurer to disregard the voting
instructions of contractholders. If it is determined by a majority of the Board
of Directors or a majority of the Non-interested Directors of the Board, that a
material irreconcilable conflict exists, then the relevant insurance companies,
at their expense and to the extent reasonably practicable, shall take whatever
steps are necessary to remedy or eliminate the conflict. Such steps could
include an insurer's withdrawal of its Separate Account's investment in the
Company where the insurer disregarded the contractholder's voting instructions.
In addition to the solicitation of proxies by mail or in person, the Company
may also arrange to have votes recorded by telephone by officers and employees
of the Company, personnel of G.R. Phelps or agents hired by G.R. Phelps for such
purpose. The telephone voting procedure is designed to authenticate a
shareholder's identity, to allow a shareholder to authorize the voting of shares
in accordance with the shareholder's instructions and to confirm that the voting
instructions have been properly recorded. If these procedures were subject to a
successful legal challenge, such votes would not be counted at the Meeting. The
Company has not sought to obtain an opinion of counsel on this matter and is
unaware of any such challenge at this time. A shareholder would be called on a
recorded line at the telephone number the Company has in its records for the
account and would be asked the shareholder's Social Security number or other
identifying information. The shareholder would then be given an opportunity to
authorize proxies to vote his shares at the Meeting in accordance with the
shareholder's instructions. To ensure that the shareholder's instructions have
been recorded correctly, the shareholder will also receive a confirmation of the
voting instructions in the mail. A special toll-free number will be available in
case the voting information contained in the confirmation is incorrect. If the
shareholder decides after voting by telephone to attend the Meeting, the
shareholder can revoke the proxy at that time and vote the shares at the
Meeting.
33
<PAGE>
SHAREHOLDERS' PROPOSALS
The Company is not required, and does not intend, to hold meetings of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting of shareholders of the Company must submit such proposal in
writing so that it is received by the Company at 140 Garden Street, Hartford,
Connecticut 06154 within a reasonable time before any such meeting.
EXPENSES AND METHOD OF SOLICITATION
The cost of preparing and mailing this Proxy Statement and the accompanying
notice and proxy card will be borne by G.R. Phelps. Proxies will be solicited by
mail and may also be solicited in person or by telephone by employees, officers
and/or directors of Connecticut Mutual, its wholly-owned subsidiary C.M. Life,
its affiliated company, G.R. Phelps and a professional solicitation
organization. The cost of the solicitation by such organization, including
out-of-pocket expenses, is expected to be approximately $ and will be borne
by G.R. Phelps.
DECEMBER 8, 1995 CONNECTICUT MUTUAL FINANCIAL
SERVICES SERIES FUND I, INC.
34
<PAGE>
APPENDIX A
ADDITIONAL INFORMATION ABOUT OPPENHEIMER
DIRECTORS. The following table provides information with respect to the
senior officers and directors of Oppenheimer. The address for each is Two World
Trade Center, New York, NY except for Messrs. Swain, Bowen and Eich who are
located at 3410 S. Galena Street, Denver, Colorado 80231:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------ ----------------------------------------------------------
<S> <C>
Jon S. Fossel Chairman of the Board and Director
Bridget A. Macaskill President, Chief Executive Officer (effective September
30, 1995) and Director
Donald W. Spiro Chairman Emeritus and Director
Robert G. Galli Vice Chairman
James C. Swain Vice Chairman and Director
Robert C. Doll Executive Vice President
O. Leonard Darling Executive Vice President
James Ruff Executive Vice President
Tilghman G. Pitts, III Executive Vice President and Director
Andrew J. Donohue Executive Vice President and General Counsel
Kenneth C. Eich Executive Vice President and Chief Financial Officer
George C. Bowen Senior Vice President and Treasurer
Victor Babin Senior Vice President
Robert A. Densen Senior Vice President
Loretta McCarthy Senior Vice President
Robert Patterson Senior Vice President
Richard Rubinstein Senior Vice President
Nancy Sperte Senior Vice President
Arthur Steinmetz Senior Vice President
Ralph Stellmacher Senior Vice President
William L. Wilby Senior Vice President
Robert G. Zack Senior Vice President
</TABLE>
OAC. Oppenheimer is a wholly-owned subsidiary of OAC. The common stock of
OAC is divided into three classes. At August 31, 1995, Massachusetts Mutual held
(i) all of the 2,160,000 shares of Class A voting stock; (ii) 470,021 shares of
Class B voting stock; and (iii) 940,067 shares of Class C non-voting stock. This
collectively represented 81.3% of the outstanding common stock and 87.3% of the
voting power of OAC as of that date. Certain officers and/or directors of
Oppenheimer held (i) 654,788 shares of the Class B voting stock, representing
14.9% of the outstanding common stock and 10.2% of the voting power, and (ii)
options acquired without cash payment which, when they become exercisable, allow
the holders to purchase up to 810,771 shares of Class C
<PAGE>
non-voting stock. That group includes persons who are expected to serve as
officers of the Accounts and three of whom (Mr. Robert G. Galli, Mr. Donald W.
Spiro and Ms. Bridget Macaskill) are nominated for election as Directors of the
Company. Holders of OAC Class B and Class C common stock may put (sell) their
shares and vested options to OAC or Massachusetts Mutual at a formula price
(based on earnings of Oppenheimer). Massachusetts Mutual may exercise call
(purchase) options on all outstanding shares of both such classes of common
stock and vested options at the same formula price, according to a schedule that
commenced on September 30, 1995.
Since January 1, 1994, the only transaction by persons who are expected to
serve as Directors of the Account, in excess of 1% of the outstanding shares of
common stock or options of OAC were as follows: Ms. Macaskill surrendered to OAC
20,000 stock appreciation rights issued in tandem with the Class B OAC options,
for cash payments aggregating $1,375,800, Mr. Galli, who sold 10,000 shares of
Class C OAC common stock to Massachusetts Mutual and surrendered to OAC 45,445
stock appreciation rights issued in tandem with the Class B OAC options for an
aggregate of $3,473,882, and Mr. Spiro, who sold 50,000 shares of Class C OAC
common stock to Massachusetts Mutual for an aggregate of $3,548,500, for cash
payments by OAC of Massachusetts Mutual (subject to adjustment of the formula
price) by OAC or Massachusetts Mutual to be made as follows: one-third of the
amount due (i) within 30 days of the transaction; (ii) by the first anniversary
following the transaction (with interest); and (iii) by the second anniversary
of the transaction (with interest).
PORTFOLIO MANAGEMENT. The following provides information with respect to
the portfolio managers Oppenheimer proposes to appoint if Proposal 1 is approved
by shareholders and the Merger is consummated for the Portfolios listed below.
Upon consummation of the Merger, Oppenheimer does not propose to change the
portfolio management for Growth Portfolio and Total Return Portfolio. The
Subadvised Portfolios will be managed by the Subadvisers under the supervision
of Oppenheimer.
Money Market Portfolio. If proposal 1 is approved and the Merger is
consummated, it is expected that Carol Wolf will manage the Money Market
Portfolio. Ms. Wolf currently manages Oppenheimer Money Market Fund. In
addition, she co-manages the $3.5 billion Daily Cash Accumulation Fund, Inc. the
$5 billion Centennial Money Market Trust, the $900 million Centennial Government
Trust and Centennial America Fund L.P. She is responsible for Oppenheimer's
money market group credit analysis of foreign and domestic industrial companies,
letters of credit and new investment ideas. She joined Oppenheimer in 1987 as
senior investment analyst for the taxable money market group. Ms. Wolf has
twelve years of investment experience. Prior to joining Oppenheimer, she managed
and traded over $1.2 billion in money market
ii
<PAGE>
mutual funds for Prudential Insurance Company and pension monies for Prudential
Fixed Income Advisors. In addition to her previous fixed income experience, she
was an equity analyst in the Prudential Asset Management Group. Ms. Wolf holds a
B.A. in Economics from Rutgers University and studied finance on the graduate
level at New York University. She has completed Level 1 of the Chartered
Financial Analyst program.
Government Securities Portfolio and Income Portfolio. If Proposal 1 is
approved and the Merger is consummated, it is expected that David Rosenberg will
manage the Government Securities Portfolio and the Income Portfolio. Mr.
Rosenberg currently leads Oppenheimer's government bond management team. He
manages Oppenheimer U.S. Government Trust and Oppenheimer Limited-Term
Government Fund and oversees the management of the government bond sectors in a
number of other fixed-income mutual funds and closed-end funds. Mr. Rosenberg
joined Oppenheimer in 1994 from Delaware Investment Advisors where he was a
senior portfolio manger of Delaware Group's Treasury Reserve Intermediate Fund.
Prior to 1986, he held positions with Paine Webber, Nomura Securities and
Bloomberg Financial Markets. Mr. Rosenberg holds a B.A. in economics from the
State University of New York at Binghampton and an M.B.A. with distinction from
the Wharton School.
OTHER MUTUAL FUNDS MANAGED BY OPPENHEIMER. Oppenheimer is the investment
adviser to the open-end investment companies set forth below, each of which have
investment objectives substantially similar to those of the Portfolios.
<TABLE>
<CAPTION>
APPROXIMATE
ASSET SIZE*
NAME OF FUND (MILLIONS) ADVISORY FEE RATE
- ------------------------- ------------ ------------------------------------------
<S> <C> <C>
Oppenheimer Money Market $ 857.1 .47% of the first $500 million of
Fund, Inc. aggregate net assets, .425% of the next
$500 million, .40% of the next $500
million, and .375% of net assets in
excess of $1.5 billion.
Oppenheimer Cash Reserves $ 141.4 .50% of the first $250 million of net
assets, .475% of the next $250 million,
.45% of the next $250 million, and .425%
of the next $250 million; and .40% of the
net assets over $1 billion.
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE
ASSET SIZE*
NAME OF FUND (MILLIONS) ADVISORY FEE RATE
- ------------------------- ------------ ------------------------------------------
<S> <C> <C>
Oppenheimer U.S. $ 420.2 .65% of the first $200 million of
Government Trust aggregate net assets, .60% of the next
$100 million, .57% of the next $100
million, and .55% of the next $400
million and .50% of aggregate net assets
over $800 million.
Oppenheimer Integrity $ 149.7 .75% of the first $200 million of average
Funds/Oppenheimer Bond annual net assets, .72% Bond Fund of the
Fund next $200 million, .69% of the next $200
million, .66% of the next $200 million,
.60% of the next $200 million and .50% of
net assets in excess of $1 billion.
Oppenheimer Tax-Free Bond $ 615.0 .60% of the first $200 million of average
Fund annual net assets, .55% of the next $100
million, .50% of the next $200 million,
.45% of the next $250 million, .40% of
the next $250 million, and .35% of net
assets in excess of $1 billion.
Oppenheimer Discovery $ 883.7 .75% of the first $200 million of
Fund aggregate net assets; .72% of the next
$200 million; .69% of the next $200
million; .66% of the next $200 million;
and .60% of aggregate net assets in
excess of $800 million.
Oppenheimer Enterprise $ .75% of the first $200 million of
Fund aggregate net assets; .72% of the next
$200 million; .69% of the next $200
million; .66% of the next $200 million;
and .60% of aggregate net assets in
excess of $800 million.
Oppenheimer Variable $ 287.8 .75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer Capital million; .69% of the next $200 million;
Appreciation Fund .66% of the next $200 million; and .60%
of average annual net assets in excess of
$800 million.
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE
ASSET SIZE*
NAME OF FUND (MILLIONS) ADVISORY FEE RATE
- ------------------------- ------------ ------------------------------------------
<S> <C> <C>
Oppenheimer Main Street $ 3,616.5 .65% of the first $200 million of net
Funds, Inc./ Oppenheimer assets; .60% of the next $150 million;
Income & Growth Fund .55% of the next $150 million and .45% of
net assets in excess of $500 million.
Oppenheimer Total Return $ 2,049.1 .75% of the first $100 million of net
Fund, Inc. assets; .70% of the next $100 million;
.65% of the next $100 million; .60% of
the next $100 million; .55% of the next
$100 million; and .50% of net assets in
excess of $500 million.
Oppenheimer Equity Income $ 2,194.4 .75% of the first $100 million of net
Fund assets; .70% of the next $100 million;
.65% of the next $100 million; .60% of
the next $100 million; .55% of the next
$100 million; and .50% of net assets in
excess of $500 million.
Oppenheimer Asset $ 264.7 .75% of the first $200 million of
Allocation Fund aggregate net assets; .72% of the next
$200 million; .69% of the next $200
million; .66% of the next $200 million;
and .60% of aggregate net assets over
$800 million.
Oppenheimer Variable $ 370.1 .75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer Multiple million; .69% of the next $200 million;
Strategies Fund .66% of the next $200 million; and .60%
of average annual net assets in excess of
$800 million.
Oppenheimer Variable $ 113 75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer Growth & million; .69% of the next $200 million;
Income Fund .66% of the next $200 million; and .60%
of the average annual net assets in
excess of $800 million.
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE
ASSET SIZE*
NAME OF FUND (MILLIONS) ADVISORY FEE RATE
- ------------------------- ------------ ------------------------------------------
<S> <C> <C>
Oppenheimer Fund $ 271.7 .75% of the first $200 million of
aggregate net assets; .72% of the next
$200 million; .69% of the next $200
million; .66% of the next $200 million;
and .60% of aggregate net assets over
$800 million.
Oppenheimer Target Fund $ 739.9 .75% of the first $200 million of
aggregate net assets; .72% of next $200
million; .69% of next $200 million; .66%
of next $200 million; and .60% of
aggregate net assets over $800 million.
Oppenheimer Growth Fund $ 1,022.3 .75% of first $200 million of aggregate
net assets; .72% of the next $200
million; .69% of the next $200 million;
.66% of the next $200 million; and .60%
of aggregate net assets over $800
million.
Oppenheimer Value Stock $ 148.0 .75% of the first $100 million of average
Fund annual net assets; .72% of the next $200
million; .69% of the next $200 million;
and .66% of average annual net assets in
excess of $500 million.
Oppenheimer Variable $ 104.4 .75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer Growth Fund million; .69% of the next $200 million;
.66% of the next $200 million; and .60%
of average annual net assets in excess of
$800 million.
<FN>
- ------------------------
* As of 9/30/95 in millions.
</TABLE>
vi
<PAGE>
INFORMATION ABOUT THE SUBADVISERS
BABSON-STEWART. Babson-Stewart is located at One Memorial Drive, Cambridge,
Massachusetts 02142.
DIRECTORS. Babson-Stewart is a general partnership organized under the laws
of The Commonwealth of Massachusetts. David L. Babson & Co., Inc. is a 50%
partner and Stewart Ivory & Company (International) Ltd. is a 50% partner. David
L. Babson & Co., Inc. is a direct wholly owned subsidiary of DLB Acquisition
Corporation, an indirect subsidiary of Massachusetts Mutual Life Insurance
Company. Stewart Ivory & Company (International) Ltd. is a direct wholly owned
subsidiary of Stewart Ivory (Holdings), Ltd. The name, address and principal
occupation of the principal executive officers and directors of Babson-Stewart
are set forth in the table below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- --------------------------- -------------------------------------------------------
<S> <C>
Peter C. Thompson Managing Director, Babson- Stewart; President and
One Memorial Drive Director of David L. Babson & Co. Inc.
Cambridge, MA 02142
Ronald E. Gwozdz Managing Director, Babson-Stewart; Senior Vice
One Memorial Drive President of David L. Babson & Co. Inc.
Cambridge, MA 02142
John G.L. Wright Managing Director, Babson-Stewart; Director, Stewart
45 Charlotte Square Ivorynb & Co. Ltd.
Edinburgh, Scotland
EH2 4HW
James W. Burns Managing Director, Babson-Stewart; Director, Stewart
45 Charlotte Square Ivory & Co. Ltd.
Edinburgh, Scotland
EH2 4HW
</TABLE>
OTHER MUTUAL FUNDS MANAGED BY BABSON-STEWART. Babson-Stewart provides
subadvisory services to other open-end investment companies with investment
objectives similar to those of Capital Appreciation Portfolio and Balanced
Portfolio:
<TABLE>
<CAPTION>
ADVISORY FEE
NAME OF FUND ASSET SIZE* RATE
- -------------------------------------------------- ------------- ----------------
<S> <C> <C>
The Babson-Stewart Ivory International Fund, Inc. $ 67,873,436 0.475%
DLB Global Small Capitalization Fund $ 6,030,264 0.50%
</TABLE>
- ------------------------
* As of 9/30/95.
vii
<PAGE>
BEA. BEA is located at Citicorp Center, 153 E. 53rd Street, New York, NY
10022.
DIRECTORS. BEA is a general partnership organized under the laws of the
State of New York and, together with its predecessor firms, has been engaged in
the investment advisory business for over 50 years. CS Capital is an 80% partner
and Basic Appraisals, Inc., which is owned by members of BEA management, is a
20% partner in BEA. CS Capital is a wholly-owned subsidiary of Credit Suisse
Investment Corporation, which is a wholly-owned subsidiary of Credit Suisse. No
one person or entity possesses a controlling interest in Basic Appraisals, Inc.
The name and principal occupation of the principal executive officers and the
directors of BEA are set forth in the table below. The address of each is
Citicorp Center, 153 E. 53rd Street, New York, NY 10022.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------ ----------------------------------------------------------
<S> <C>
Manfred Adami Chairman of the Board of Directors; and Member of the
Executive Board of Credit Suisse.
Dr. Hans Geiger Director; and Member of the Executive Board of Credit
Suisse.
Dr. Hermann Maurer Director; and Member of Senior Management and Head of
Asset Management of Credit Suisse.
Michael F. Orr Director and Executive Committee Member; and Consulting
Partner, Milbank, Tweed, Hadley & McCoy (active Partner
prior to July 1, 1990).
William W. Priest, Jr. Director, Co-Chairman -- Executive Committee, Chief
Executive Officer and Executive Director; and Director of
The Indonesia Fund, Inc.
Albert L. Zesiger Honorary Chairman -- Executive Committee and Executive
Director.
Emilio Bassini Member of the Executive Committee, Chief Financial Officer
and Executive Director; President and Secretary of The
Indonesia Fund, Inc.; Director, Chairman of the Board,
President, and Chief Investment Officer of The Chile
Fund, Inc., The Portugal Fund, Inc., The First Israel
Fund, Inc., The Emerging Markets Infrastructure Fund,
Inc., The Emerging Markets Telecommunications Fund, Inc.,
The Latin America Equity Fund, Inc., and The Latin
America Investment Fund, Inc.; and Director, Chairman of
the Board, President and Investment Officer of The
Brazilian Equity Fund, Inc.
</TABLE>
viii
<PAGE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------ ----------------------------------------------------------
<S> <C>
Jeffrey A. Geller Member of the Executive Committee and Executive Director.
Daniel H. Sigg Member of the Executive Committee and Executive Director,
Director and Senior Vice President of The Indonesia Fund,
Inc.; The Chile Fund, Inc., The First Israel Fund, Inc.,
The Portugal Fund, Inc., The Brazilian Equity Fund, Inc.,
The Latin America Equity Fund, Inc., The Latin America
Investment Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc., and The Emerging Markets
Telecommunications Fund, Inc.; and Chairman and Chief
Executive Officer of BEA Strategic Income Fund, Inc., and
BEA Income Fund, Inc.
Robert Moore Executive Director, Fixed Income Portfolio Manager;
President and Chief Investment Officer of BEA Strategic
Income Fund, Inc., and BEA Income Fund, Inc.
Timothy T. Taussig Executive Director, Director of Client Development.
</TABLE>
OTHER MUTUAL FUNDS MANAGED BY BEA. BEA provides subadvisory services to a
portion of the assets of three portfolios of Connecticut Mutual Investment
Accounts, Inc. ("CMIA") with investment objectives identical to those of Capital
Appreciation Portfolio, Balanced Portfolio and Diversified Income Portfolio:
<TABLE>
<CAPTION>
NAME OF FUND ASSET SIZE* ADVISORY FEE RATE
- --------------------------- ------------ -----------------------------------------
<S> <C> <C>
CMIA LifeSpan Capital $ 3,006,688 Same as Capital Appreciation Portfolio
Appreciation Account
CMIA LifeSpan $ 5,773,308 Same as Balanced Portfolio
Balanced Account
CMIA LifeSpan $ 3,337,078 Same as Diversified Income Portfolio
Diversified Income Account
- ------------------------
* As of 9/30/95. The CMIA LifeSpan Accounts commenced operations on May 1, 1995;
BEA manages only that portion of the assets (as shown above) of each Account
allocated to it by G.R. Phelps.
</TABLE>
ix
<PAGE>
PILGRIM. Pilgrim is located at 1255 Drummers Lane, Wayne, Pennsylvania
19087.
DIRECTORS. The names and principal occupations of the Directors and
officers of Pilgrim are described below. The address of each is 1255 Drummers
Lane, Wayne, Pennsylvania 19087.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------- --------------------------------------------------------------
<S> <C>
Harold J. Baxter Director (since 1985), CEO (since 1985) and Chairman (since
1994).
Gary L. Pilgrim Director (since 1985), CIO (since 1985) and President (since
1994).
Brian F. Bereznak Chief Operating Officer (since 1993).
</TABLE>
OTHER MUTUAL FUNDS ADVISED BY PILGRIM. Pilgrim provides subadvisory
services to a portion of the assets of two portfolios of CMIA with investment
objectives identical to those of Capital Appreciation Portfolio and Balanced
Portfolio and to another mutual fund not otherwise affiliated with the Company:
<TABLE>
<CAPTION>
NAME OF FUND ASSET SIZE* ADVISORY FEE RATE
- --------------------------- -------------- ---------------------------------------
<S> <C> <C>
CMIA LifeSpan Capital $ 6,030,328 Same as Capital Appreciation Portfolio
Appreciation Account*
CMIA LifeSpan $ 7,781,416 Same as Balanced Portfolio
Balanced Account*
CG Capital Markets $ 195,000,000 0.30% of average daily net assets.
Small Cap.**
- ------------------------
* As of 9/30/95. The CMIA LifeSpan Accounts commenced operations on May 1,
1995; Pilgrim manages only that portion of the assets (as set forth above) of
each Account allocated to it by G.R. Phelps.
** As of 9/15/95.
</TABLE>
x
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- -----------
<S> <C> <C>
Exhibit A - Form of the New Advisory Agreements
Exhibit B - Forms of the New Subadvisory Agreements with Pilgrim and BEA
Exhibit C - Form of the New Subadvisory Agreement with Babson-Stewart
</TABLE>
<PAGE>
EXHIBIT A
The Form of Investment Advisory Agreement is identical for each Portfolio,
except for the names and fee schedules of the Portfolios.
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of ______________, 1996, by and between
________________________ (the "Fund"), and OPPENHEIMER MANAGEMENT CORPORATION
("OMC").
WHEREAS, the Fund is a series of Connecticut Mutual Financial Services
Series Fund I, Inc. (the "Company"), an open-end, diversified management
investment company registered as such with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of 1940
(the "Investment Company Act"), and OMC is a registered investment adviser;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISION.
The Fund hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Fund and to perform for the Fund such other duties and
functions as are hereinafter set forth. OMC shall, in all matters, give to the
Fund and its Board of Directors the benefit of its best judgment, effort, advice
and recommendations and shall, at all times conform to, and use its best efforts
to enable the Fund to conform to (i) the provisions of the Investment Company
Act and any rules or regulations thereunder; (ii) any other applicable
provisions of state or federal law; (iii) the provisions of the Company's
Articles of Incorporation and By-Laws as amended from time to time; (iv)
policies and determinations of the Board of Directors of the Company; (v) the
fundamental policies and investment restrictions of the Fund as reflected in its
registration statement under the Investment Company Act or as such policies may,
from time to time, be amended by the Fund's shareholders; and (vi) the
Prospectus and Statement of Additional Information of the Fund in effect from
time to time. The appropriate officers and employees of OMC shall be available
upon reasonable notice for consultation with any of the Directors and officers
of the Company with respect to any matters dealing with the business and affairs
of the Fund including the valuation of any of the Fund's portfolio securities
which are either not registered for public sale or not being traded on any
securities market.
2. INVESTMENT MANAGEMENT.
(a) OMC shall, subject to the direction and control by the Company's Board
of Directors, (i) regularly provide, alone or in consultation with any
subadvisor or subadvisors appointed pursuant to this Agreement and subject to
<PAGE>
the provisions of any investment subadvisory agreement respecting the
responsibilities of such subadvisor or subadvisors, investment advice and
recommendations to the Fund with respect to its investments, investment policies
and the purchase and sale of securities; (ii) supervise continuously the
investment program of the Fund and the composition of its portfolio and
determine what securities shall be purchased or sold by the Fund; and (iii)
arrange, subject to the provisions of paragraph "7" hereof, for the purchase of
securities and other investments for the Fund and the sale of securities and
other investments held in the portfolio of the Fund.
(b) Provided that the Fund shall not be required to pay any compensation
other than as provided by the terms of this Agreement and subject to the
provisions of paragraph "7" hereof, OMC may obtain investment information,
research or assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect OMC from willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the Agreement, OMC shall
not be liable for any loss sustained by reason of good faith errors or omissions
in connection with any matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any officer thereof from
acting as investment adviser for any other person, firm or corporation and shall
not in any way limit or restrict OMC or any of its directors, officers or
employees from buying, selling or trading any securities for its own account or
for the account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by OMC
of its duties and obligations under this Agreement and under the Investment
Advisers Act of 1940.
3. OTHER DUTIES OF OMC.
OMC shall, at its own expense, provide and supervise the activities of all
administrative and clerical personnel as shall be required to provide effective
corporate administration for the Fund, including the compilation and maintenance
of such records with respect to its operations as may reasonably be required;
the preparation and filing of such reports with respect thereto as shall be
required by the Commission; composition of periodic reports with respect to its
operations for the shareholders of the Fund; composition of proxy materials for
meetings of the Fund's shareholders and the composition of such registration
statements as may be required by federal securities laws for continuous public
sale of shares of the Fund. OMC shall, at its own cost and expense, also provide
the Fund with adequate office space, facilities and equipment.
A-2
<PAGE>
4. ALLOCATION OF EXPENSES.
All other costs and expenses not expressly assumed by OMC under this
Agreement, or to be paid by the principal distributor, if any, of the shares of
the Fund, shall be paid by the Fund, including, but not limited to (i) interest
and taxes; (ii) brokerage commissions; (iii) premiums for fidelity and other
insurance coverage requisite to its operations; (iv) the fees and expenses of
its Directors; (v) legal and audit expenses; (vi) custodian and transfer agent
fees and expenses; (vii) expenses incident to the redemption of its shares;
(viii) expenses incident to the issuance of its shares against payment therefor
by or on behalf of the subscribers thereto; (ix) fees and expenses, other than
as hereinabove provided, incident to the registration under federal securities
laws of shares of the Fund for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Fund; (xi) except as
noted above, all other expenses incidental to holding meetings of the Fund's
shareholders; and (xii) such extraordinary non-recurring expenses as may arise,
including litigation affecting the Fund and any obligation which the Fund may
have to indemnify its officers and Directors with respect thereto. Any officers
or employees of OMC or any entity controlling, controlled by or under common
control with OMC, who may also serve as officers, Directors or employees of the
Fund shall not receive any compensation from the Fund for their services.
5. COMPENSATION OF OMC.
The Fund agrees to pay OMC and OMC agrees to accept as full compensation for
the performance of all functions and duties on its part to be performed pursuant
to the provisions hereof, a fee computed on the aggregate net assets of the Fund
as of the close of each business day and payable monthly at the annual rates set
forth in Appendix A.
6. USE OF NAME "OPPENHEIMER."
OMC hereby grants to the Fund a royalty-free, non-exclusive license to use
the name "Oppenheimer" in the name of the Fund for the duration of this
Agreement and any extensions or renewals thereof. Such license may, upon
termination of this Agreement, be terminated by OMC, in which event the Fund
shall promptly take whatever action may be necessary to change its name and
discontinue any further use of the name "Oppenheimer" in the name of the Fund or
otherwise. The name "Oppenheimer" may be used or licensed by OMC in connection
with any of its activities or licensed by OMC to any other party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) OMC is authorized, in arranging the Fund's portfolio transactions, to
employ or deal with such members of securities or commodities exchanges, brokers
or dealers, including "affiliated" broker dealers (as that term is defined in
the Investment Company Act) (hereinafter "broker-dealers"), as may, in its
A-3
<PAGE>
best judgment, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the most
favorable security price obtainable) of the Fund's portfolio transactions as
well as to obtain, consistent with the provisions of subparagraph "(c)" of this
paragraph "7," the benefit of such investment information or research as may be
of significant assistance to the performance by OMC of its investment management
functions.
(b) OMC shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio transaction(s)
will be judged by OMC on the basis of all relevant factors and considerations
including, insofar as feasible, the execution capabilities required by the
transaction or transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein for its
own account; the importance to the Fund of speed, efficiency or confidentiality;
the broker-dealer's apparent familiarity with sources from or to whom particular
securities might be purchased or sold; as well as any other matters relevant to
the selection of a broker-dealer for particular and related transactions of the
Fund.
(c) OMC shall have discretion, in the interests of the Fund, to allocate
brokerage on the Fund's portfolio transactions to broker-dealers (other than
affiliated broker-dealers) qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the
Fund and/or other accounts for which OMC and its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of the Securities
Exchange Act of 1934) and to cause the Fund to pay such broker-dealers a
commission for effecting a portfolio transaction for the Fund that is in excess
of the amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if OMC
determines, in good faith, that such commission is reasonable in relation to the
value of the brokerage and/or research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of OMC and its investment advisory affiliates with respect to
the accounts as to which they exercise investment discretion. In reaching such
determination, OMC will not be required to place or attempt to place a specific
dollar value on the brokerage and/or research services provided or being
provided by such broker-dealer. In demonstrating that such determinations were
made in good faith, OMC shall be prepared to show that all commissions were
allocated for the purposes contemplated by this Agreement and that the total
commissions paid by the Fund over a representative period selected by the Fund's
Directors were reasonable in relation to the benefits to the Fund.
A-4
<PAGE>
(d) OMC shall have no duty or obligation to seek advance competitive bidding
for the most favorable commission rate applicable to any particular portfolio
transactions or to select any broker-dealer on the basis of its purported or
"posted" commission rate but will, to the best of its ability, endeavor to be
aware of the current level of the charges of eligible broker-dealers and to
minimize the expense incurred by the Fund for effecting its portfolio
transactions to the extent consistent with the interests and policies of the
Fund as established by the determinations of its Board of Directors and the
provisions of this paragraph "7."
(e) The Fund recognizes that an affiliated broker-dealer (i) may act as one
of the Fund's regular brokers so long as it is lawful for it so to act; (ii) may
be a major recipient of brokerage commissions paid by the Fund; and (iii) may
effect portfolio transactions for the Fund only if the commissions, fees or
other remuneration received or to be received by it are determined in accordance
with procedures contemplated by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
(f) Subject to the foregoing provisions of this paragraph "7", OMC may also
consider sales of Fund shares and shares of other investment companies managed
by OMC or its affiliates as a factor in the selection of broker-dealers for the
Fund's portfolio transactions.
8. DURATION.
This Agreement will take effect on the date first set forth above and will
continue in effect until , 1998, and thereafter, from year to year, so
long as such continuance shall be approved at least annually in the manner
contemplated by Section 15 of the Investment Company Act.
9. TERMINATION.
This Agreement may be terminated (i) by OMC at any time without penalty upon
giving the Fund sixty days' written notice (which notice may be waived by the
Fund); or (ii) by the Fund at any time without penalty upon sixty days' written
notice to OMC (which notice may be waived by OMC) provided that such termination
by the Fund shall be directed or approved by the vote of a majority of all of
the Directors of the Fund then in office or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding voting
securities of the Fund.
10. ASSIGNMENT OR AMENDMENT.
This Agreement may not be amended without the affirmative vote or written
consent of the holders of a "majority" of the outstanding voting securities of
the Fund, and shall automatically and immediately terminate in the event of its
"assignment," as defined in the Investment Company Act.
A-5
<PAGE>
11. DISCLAIMER OF SHAREHOLDER LIABILITY.
OMC understands that the obligations of the Fund under this Agreement are
not binding upon any Director or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. OMC represents that it has notice of the
provisions of the Company's Articles of Incorporation of the Company disclaiming
shareholder liability for acts or obligations of the Fund.
12. DEFINITIONS.
The terms and provisions of this Agreement shall be interpreted and defined
in a manner consistent with the provisions and definitions of the Investment
Company Act.
CONNECTICUT MUTUAL FINANCIAL
SERVICES SERIES FUND I, INC.
By:
---------------------------------------------------------
President
OPPENHEIMER MANAGEMENT CORPORATION
By:
---------------------------------------------------------
Senior Vice President
A-6
<PAGE>
APPENDIX A
The Fund agrees to pay OMC and OMC agrees to accept as full compensation for
the performance of all functions and duties on its part to be performed pursuant
to the provisions hereof, a fee computed on the aggregate net assets of the Fund
as of the close of each business day payable monthly at the following annual
rates:
MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $200,000,000.......................................... 0.50%
Next $100,000,000........................................... 0.45%
Amount over $300,000,000.................................... 0.40%
</TABLE>
GOVERNMENT SECURITIES PORTFOLIO, INCOME PORTFOLIO AND GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
NET ASSET VALUE ANNUAL RATE ANNUAL RATE ANNUAL RATE
- -------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
First $300,000,000.............. 0.525% 0.575% 0.625%
Next $100,000,000............... 0.500% 0.500% 0.500%
Amount over $400,000,000........ 0.450% 0.450% 0.450%
</TABLE>
TOTAL RETURN PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $600,000,000.......................................... 0.625%
Amount over $600,000,000.................................... 0.45 %
</TABLE>
INTERNATIONAL EQUITY PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $250,000,000.......................................... 1.00%
Amount Over $250,000,000.................................... 0.90%
</TABLE>
CAPITAL APPRECIATION PORTFOLIO AND BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $250,000,000.......................................... 0.85%
Amount over $250,000,000.................................... 0.75%
</TABLE>
DIVERSIFIED INCOME PORTFOLIO:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $250,000,000.......................................... 0.75%
Amount over $250,000,000.................................... 0.65%
</TABLE>
A-7
<PAGE>
EXHIBIT B
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES
FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
FORM OF
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
AGREEMENT made as of the day of , 1996 by and among Oppenheimer
Management Corporation (the "Investment Adviser") and Pilgrim Baxter &
Associates, Ltd., (the "Subadviser").
Connecticut Mutual Financial Services Series Fund I, Inc., a Maryland
corporation (the "Company"), is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The LifeSpan Balanced Portfolio (the "Portfolio") is a series of the
Company. The Investment Adviser and the Subadviser are investment advisers
registered under the Investment Advisers Act of 1940 (the "Advisers Act").
Pursuant to authority granted the Investment Adviser by the Company's Board
of Directors and pursuant to the provisions of the Investment Advisory Agreement
dated , 1996 between the Investment Adviser and Company, on behalf of
the Portfolio, the Investment Adviser has selected the Subadviser to act as an
investment subadviser of the Portfolio and to provide certain other services, as
more fully set forth below, and the Subadviser is willing to act as such
sub-investment adviser and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Investment Adviser and the
Company, on behalf of the Portfolio agree with the Subadviser as follows:
1. The Subadviser will regularly provide the Portfolio with advice
concerning the investment management of the Small Capitalization US Equity
portfolio of the Portfolio (the "Sub-Portfolio"), designated by the Investment
Adviser. Such advice shall be consistent with the investment objectives and
policies of the Portfolio as set forth in the Portfolio's Prospectus and
Statement of Additional Information, and any investment guidelines or other
instructions received in writing from the Investment Adviser. The Subadviser
will determine what securities shall be purchased for the Sub-Portfolio, and
what securities shall be held or sold by the Portfolio, subject always to the
provisions of Section 9 hereof.
The Investment Adviser shall oversee the management of the Sub-Portfolio by
the Subadviser. The Investment Adviser shall manage directly, or by engaging
other subadvisers, and the Subadviser shall not be responsible for the
management of any portion of the Account not designated as part of the Sub-
B-1
<PAGE>
Portfolio. The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Portfolio, except as
otherwise provided herein, as required by the Advisers Act as may be necessary
for the Subadviser to supply to the Investment Adviser, the Company or the
Company's Board of Directors the information required to be supplied under this
Agreement. Any records required to be maintained shall be the property of the
Company and shall be surrendered promptly to the Company upon request.
In the performance of the Subadviser's duties hereunder, the Subadviser is
and shall be an independent contractor and unless otherwise expressly provided
herein or otherwise authorized in writing, shall have no authority to act for or
represent the Company, Portfolio or the Investment Adviser in any way or
otherwise be deemed to be an agent of the Company, Portfolio or the Investment
Adviser. The Subadviser will make its officers and employees available to meet
with the Company's officers and Board of Directors at least quarterly on due
notice to review the investments and investment program of the Portfolio in the
light of current and prospective economic and market conditions.
2. The Subadviser will bear its own costs of providing services hereunder.
Other than as herein specifically indicated, the Subadviser shall not be
responsible for the Portfolio's expenses, including brokerage and other expenses
incurred in placing orders for the purchase and sale of securities.
Specifically, the Subadviser will not be responsible for expenses of the
Portfolio including, but not limited to, the following: legal expenses; auditing
and accounting expenses; expenses of maintenance of the Portfolio's books and
records relating to the Portfolio, including computation of the Portfolio's
daily net asset value per share and dividends; interest, taxes, governmental
fees and membership dues; fees of custodians, transfer agents, registrars or
other agents; expenses of preparing share certificates; expenses relating to the
redemption or repurchase of the Portfolio's shares; expenses of registering and
qualifying Portfolio shares for sale under applicable federal and state law;
expenses of preparing, setting in print, printing and distributing prospectuses,
reports, notices and dividends to Portfolio shareholders; cost of stationery;
costs of shareholders and other meetings of the Portfolio; traveling expenses of
officers, Directors and employees of the Company or Portfolio, if any; fees of
the Company's Directors and salaries of any officers or employees of the Company
or Portfolio; and the Portfolio's pro rata portion of premiums on any fidelity
bond and other insurance covering the Company, the Portfolio and their officers
and Directors.
The Portfolio shall reimburse the Subadviser for any such expenses or other
expenses of the Portfolio, as may be reasonably incurred by such Subadviser on
the Portfolio's behalf. The Subadviser shall keep and supply to the Portfolio
and the Investment Adviser adequate records of all such expenses.
3. For all investment management services to be rendered hereunder, the
Investment Adviser will pay the Subadviser an annual fee, payable quarterly, as
B-2
<PAGE>
described in SCHEDULE A hereto. For any period less than a full fiscal quarter
during which this Agreement is in effect, the fee shall be prorated according to
the proportion which such period bears to a full fiscal quarter. The Portfolio
shall have no responsibility for any fee payable to the Subadviser.
In the event that the advisory fee payable by the Portfolio to the
Investment Adviser shall be reduced as required by the securities laws or
regulations of any jurisdiction in which the Portfolio's shares are offered for
sale, the amount payable by the Adviser to the Subadviser shall be likewise
reduced by a proportionate amount.
4. In connection with purchases or sales of securities for the Portfolio,
neither the Subadviser nor any of its partners, directors, officers or employees
will act as a principal or agent or receive directly or indirectly any
compensation in connection with the purchase or sale of investment securities by
the Sub-Portfolio, other than as provided in this Agreement. The Subadviser, or
its agent, shall arrange for the placing of all orders for the purchase and sale
of securities for the Sub-Portfolio with brokers or dealers selected by the
Subadviser, provided that the Subadviser shall not be responsible for payment of
brokerage commissions. In the selection of such brokers or dealers and the
placing of such orders, the Subadviser is directed at all times to seek for the
Portfolio the best execution available. Neither the Subadviser nor any affiliate
of the Subadviser will act as principal or receive directly or indirectly any
compensation in connection with the purchase or sale of investment securities by
the Portfolio, other than compensation provided for in this Agreement or in the
Investment Advisory Agreement of the Portfolio and such brokerage commissions as
are permitted by the 1940 Act. If and to the extent authorized to act as broker
in the relevant jurisdiction, the Subadviser or any of its affiliates may act as
broker for the Portfolio in the purchase and sale of. The Subadviser agrees that
all transactions effected through the Subadviser or brokers affiliated with the
Subadviser shall be effected in compliance with Section 17(e) of the 1940 Act
and written procedures established from time to time by the Board of Directors
of the Company pursuant to Rule 17e-1 under the 1940 Act, as amended, copies of
which shall be provided to the Subadviser by the Investment Adviser.
5. It is also understood that it is desirable for the Portfolio that the
Subadviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at higher commissions to the Portfolio than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Subadviser is authorized
to place orders for the purchase and sale of securities for the Portfolio with
such certain brokers, subject to review by the Company's Board of Directors from
time to time with respect to the extent and continuation of this practice. It is
B-3
<PAGE>
understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients. If any occasion
should arise in which the Subadviser gives any advice to its clients concerning
the shares of the Portfolio, the Subadviser will act solely as investment
counsel for such clients and not in any way on behalf of the Portfolio. The
Subadviser's services to the Portfolio pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that the Subadviser may render
investment advice, management and other services to others.
Provided the investment objectives of the Portfolio are adhered to, and such
aggregation is in the best interests of the Portfolio, the Subadviser may
aggregate sales and purchase orders of securities held for the Portfolio with
similar orders being made simultaneously for other accounts managed by the
Subadviser, if in the Subadviser's reasonable judgment, such aggregation is
equitable and consistent with the Subadviser's fiduciary obligation to the
Portfolio and shall result in an overall economic benefit to the Portfolio,
taking into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. In accounting for such aggregated order price,
commission and other expenses shall be averaged on a per bond or share basis
daily.
The Subadviser will advise the Portfolio's custodian and the Investment
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 purchases, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required. From time to
time as the Board of Directors of the Company or the Investment Adviser may
reasonably request, the Subadviser will furnish to the Company's officers and to
each of its Directors, at the Subadviser's expense, reports on portfolio
transactions and reports on issues of securities held in the portfolio, all in
such detail as the Portfolio or the Investment Adviser may reasonably request.
6. In the absence of willful misfeasance, bad faith, negligence, or reckless
disregard of the performance of duties of the Subadviser to the Portfolio, the
Subadviser shall not be subject to liabilities to the Portfolio, the Adviser,
the Company, or to any shareholder of the Portfolio for any error of judgement
or mistake of law or for any other action or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
Notwithstanding the above, the Subadviser will indemnify and hold harmless
the Investment Adviser from, against, for and in respect to losses, damages,
costs and expenses incurred by the Investment Adviser, including attorneys' fees
reasonably incurred, in the event of the Subadviser's willful misfeasance, bad
faith or negligence in the performance of its duties or obligations hereunder or
B-4
<PAGE>
by reason if its reckless disregard of such duties or obligations; provided,
however, that the Investment Adviser shall not be so indemnified for such
losses, damages, costs and expenses, including such attorneys' fees, to the
extent they result from the Investment Adviser's willful misfeasance, bad faith
or negligence. The Investment Adviser shall indemnify and hold harmless the
Subadviser to the same extent and subject to the same limitations as the
Subadviser shall indemnify the Investment Adviser pursuant to the previous
sentence.
7. This Agreement shall remain in force until , 1998, and from
year to year thereafter, but only so long as such continuance, and the
continuance of the Investment Adviser as investment adviser of the Portfolio, is
specifically approved at least annually by the vote of a majority of the
Directors who are not interested persons of the Subadviser, the Investment
Adviser or the Portfolio, cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Directors or of a majority
of the outstanding voting securities of the Portfolio. The aforesaid requirement
that continuance of this Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the 1940 Act and the rules,
regulations and interpretations thereunder. This Agreement may be terminated at
any time without the payment of any penalty, (a) by the Company, by the Board of
Directors, or by vote of a majority of the outstanding voting securities of the
Portfolio, upon 60 days' written notice to the Adviser and Subadviser, (b) by
the Investment Adviser, upon 60 days' written notice to the Portfolio and the
Subadviser, or (c) by the Subadviser, upon 90 days' written notice to the
Portfolio and Investment Adviser. This Agreement shall automatically terminate
in the event of its assignment. In interpreting the provisions of this
Agreement, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person," "assignment" and "majority
of the outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
8. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio and by the Board of Directors, including a majority of the Directors
who are not interested persons of the Investment Adviser, the Subadviser or the
Portfolio, cast in person at a meeting called for the purpose of voting on such
approval.
It shall be the responsibility of the Subadviser to furnish to the Board of
Directors of the Company such information as may reasonably be necessary in
B-5
<PAGE>
order for such Directors to evaluate this Agreement or any proposed amendments
thereto for the purposes of casting a vote pursuant to paragraphs 7 or 8 hereof.
9. The Subadviser will conform its conduct in accordance with and will
ensure that the Sub-Portfolio conforms with the Company's Articles of
Incorporation and By-laws, each as amended from time to time, and the 1940 Act,
as amended, other applicable laws, and to the investment objectives, policies
and restrictions of the Portfolio as each of the same shall be from time to time
in effect as set forth in the Portfolio's Prospectus and Statement of Additional
Information, or any investment guidelines or other instructions received in
writing from the Investment Adviser, and subject, further, to such policies and
instructions as the Board of Directors or the Investment Adviser may from time
to time establish and deliver to the Subadviser.
In addition, the Subadviser, taking into account only income and gains
realized with respect to the Sub-Portfolio, will cause the Sub-Portfolio to
comply with the requirements of: (a) Section 851(b)(2) of the Code regarding
derivation of income from specified investment activities; (b) Section 851(b)(3)
of the Code limiting gains from the disposition of securities and certain other
investments held less than three months, in each case as if the Sub-Portfolio
were a "regulated investment company" as defined in Section 851(a) of the Code;
and Section 817(h) of the Code and the regulations pertaining thereto. The
Subadviser shall not without the prior express written consent of the Adviser:
(a) invest Sub-Portfolio assets having a value exceeding five percent of the
Portfolio's total (gross) assets in securities of one issuer; or (b) cause the
Sub-Portfolio to acquire more than ten percent of the outstanding voting
securities of any one issuer; or (c) invest Sub-Portfolio assets in investments
that are not cash, cash items (including receivables), Government securities,
securities of other regulated investment companies, or other securities within
the meaning of Section 851(b)(4) of the Code. For purposes of clauses (a) and
(b) of the foregoing sentence the term "securities" shall exclude "Government
securities" and "securities of other regulated investment companies" as each
such term is used in Section 851(b)(4) of the Code.
10. The Subadviser represents that it has reviewed the Registration
Statement of the Company as filed with the Securities and Exchange Commission
and represents and warrants that with respect to disclosure about the Subadviser
or information relating directly or indirectly to the Subadviser, such
Registration Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. The Subadviser further represents and warrants that it
is an investment adviser registered under the Advisers Act.
B-6
<PAGE>
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Any notice given to the Subadviser by the Investment Adviser pursuant to
the terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
or mailed, postpaid, to: Pilgrim Baxter & Associates, Ltd., 1255 Drummers Lane,
Suite 300, Wayne, PA 19087-1549, Attn: Mr. Brian Bereznak. Any notice given to
the Investment Adviser by the Subadviser, pursuant to the terms of this
Agreement shall be deemed to have been given if provided in writing (including
by telecopy or similar hard copy reproduction) and delivered to Oppenheimer
Management Corporation, Two World Trade Center, New York, NY 10048.
14. It is understood and expressly stipulated that the Subadviser must look
solely to the property of the Portfolio for the enforcement of any claims
against the Portfolio and shall not look to or have recourse to the assets of
the Company generally or any other series of the Company.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above, and effective as of
, 1996.
OPPENHEIMER MANAGEMENT CORPORATION
By:
--------------------------------------------------------------
Its:
--------------------------------------------------------------
PILGRIM BAXTER & ASSOCIATES, LTD.
By:
--------------------------------------------------------------
Its:
--------------------------------------------------------------
B-7
<PAGE>
PILGRIM BAXTER & ASSOCIATES, LTD.
SCHEDULE A
TO
SUBADVISORY AGREEMENT
The fee payable by the Investment Adviser to the Subadviser shall be at an
annual rate equal to a percentage of the average daily Net Assets Under
Management (as defined below) as follows:
ANNUAL RATE
.60% of the total net assets under management
For purposes of this Schedule A, Net Assets Under Management shall consist
of the aggregated net assets of each Sub-Portfolio as follows:
(a) the Aggressive Growth Sub-Account of the CMIA LifeSpan Capital
Appreciation Account; (b) the Aggressive Growth Sub-Portfolio of the Series Fund
I Capital Appreciation Portfolio; (c) the Aggressive Growth Sub-Account of the
CMIA LifeSpan Balanced Account; and (d) the Aggressive Growth Sub-Portfolio of
the Series Fund I LifeSpan Balanced Portfolio, in each case to the extent and
for so long as the Subadviser also manages such assets.
For purposes hereof, the value of the net assets of the foregoing Sub-
Portfolios shall be computed in the manner specified in the applicable
Prospectuses and Statements of Additional Information for the computation of the
value of the net assets in connection with the determination of net asset value
of their shares. On any day that the net asset determination is suspended as
specified in the Prospectuses, the net asset value for purposes of calculating
the Subadvisory fee with respect to each of the aforementioned shall be
calculated as of the date last determined.
B-8
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES
FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
FORM OF
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
AGREEMENT made as of the day of , 1996 by and among Oppenheimer
Management Corporation (the "Investment Adviser") and BEA Associates (the
"Subadviser").
Connecticut Mutual Financial Services Series Fund I, Inc., a Maryland
corporation (the "Company"), is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The LifeSpan Balanced Portfolio (the "Portfolio") is a series of the
Company. The Investment Adviser and the Subadviser are investment advisers
registered under the Investment Advisers Act of 1940 (the "Advisers Act").
Pursuant to authority granted the Investment Adviser by the Company's Board
of Directors and pursuant to the provisions of the Investment Advisory Agreement
dated , 1996 between the Investment Adviser and Company, on behalf of
the Portfolio, the Investment Adviser has selected the Subadviser to act as an
investment subadviser of the Portfolio and to provide certain other services, as
more fully set forth below, and the Subadviser is willing to act as such
investment subadviser and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Investment Adviser and the
Company, on behalf of the Portfolio agree with the Subadviser as follows:
1. The Subadviser will regularly provide the Portfolio with advice
concerning the investment management of the High Yield Fixed Income portion of
the Portfolio (the "Sub-Portfolio") designated by the Investment Adviser. Such
advice shall be consistent with the investment objectives and policies of the
Portfolio as set forth in the Portfolio's Prospectus and Statement of Additional
Information, and any investment guidelines or other instructions received in
writing from the Investment Adviser. The Subadviser will determine what
securities shall be purchased for the Sub-Portfolio, and what securities shall
be held or sold by the Sub-Portfolio, subject always to the provisions of
Section 9 hereof.
The Investment Adviser shall oversee the management of the Sub-Portfolio by
the Subadviser. The Investment Adviser shall manage directly, or by engaging
other subadvisers, and the Subadviser shall not be responsible for the
management of any portion of the Portfolio not designated as part of the Sub-
Portfolio. The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Portfolio, except as
otherwise provided herein, as required by the Advisers Act as may be necessary
for the
B-9
<PAGE>
Subadviser to supply to the Investment Adviser, the Company or the Company's
Board of Directors the information required to be supplied under this Agreement.
Any records required to be maintained shall be the property of the Company and
shall be surrendered promptly to the Company upon request.
In the performance of the Subadviser's duties hereunder, the Subadviser is
and shall be an independent contractor and unless otherwise expressly provided
herein or otherwise authorized in writing, shall have no authority to act for or
represent the Company, Portfolio or the Investment Adviser in any way or
otherwise be deemed to be an agent of the Company, Portfolio or the Investment
Adviser. The Subadviser will make its officers and employees available to meet
with the Company's officers and Board of Directors at least quarterly on due
notice to review the investments and investment program of the Sub-Portfolio in
the light of current and prospective economic and market conditions.
2. The Subadviser will bear its own costs of providing services hereunder.
Other than as herein specifically indicated, the Subadviser shall not be
responsible for the Portfolio's expenses, including brokerage and other expenses
incurred in placing orders for the purchase and sale of securities.
Specifically, the Subadviser will not be responsible for expenses of the
Portfolio including, but not limited to, the following: legal expenses; auditing
and accounting expenses; expenses of maintenance of the Portfolio's books and
records relating to the Portfolio, including computation of the Portfolio's
daily net asset value per share and dividends; interest, taxes, governmental
fees and membership dues; fees of custodians, transfer agents, registrars or
other agents; expenses of preparing share certificates; expenses relating to the
redemption or repurchase of the Portfolio's shares; expenses of registering and
qualifying Portfolio shares for sale under applicable federal and state law;
expenses of preparing, setting in print, printing and distributing prospectuses,
reports, notices and dividends to Portfolio shareholders; cost of stationery;
costs of shareholders and other meetings of the Portfolio; traveling expenses of
officers, Directors and employees of the Company or Portfolio, if any; fees of
the Company's Directors and salaries of any officers or employees of the Company
or Portfolio; and the Portfolio's pro rata portion of premiums on any fidelity
bond and other insurance covering the Company, the Portfolio and their officers
and Directors.
The Portfolio shall reimburse the Subadviser for any such expenses or other
expenses of the Portfolio, as may be reasonably incurred by such Subadviser on
the Portfolio's behalf. The Subadviser shall keep and supply to the Portfolio
and the Investment Adviser adequate records of all such expenses.
3. For all investment management services to be rendered hereunder, the
Investment Adviser will pay the Subadviser an annual fee, payable quarterly, as
described in SCHEDULE A hereto. For any period less than a full fiscal quarter
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during which this Agreement is in effect, the fee shall be prorated according to
the proportion which such period bears to a full fiscal quarter. The Portfolio
shall have no responsibility for any fee payable to the Subadviser.
In the event that the advisory fee payable by the Portfolio to the
Investment Adviser shall be reduced as required by the securities laws or
regulations of any jurisdiction in which the Portfolio's shares are offered for
sale, the amount payable by the Adviser to the Subadviser shall be likewise
reduced by a proportionate amount.
4. In connection with purchases or sales of securities on behalf of the
Portfolio, neither the Subadviser nor any of its partners, directors, officers
or employees will act as a principal or agent or receive directly or indirectly
any compensation in connection with the purchase or sale of investment
securities by the Portfolio, other than as provided in this Agreement. The
Subadviser, or its agent, shall arrange for the placing of all orders for the
purchase and sale of securities for the Sub-Portfolio with brokers or dealers
selected by the Subadviser, provided that the Subadviser shall not be
responsible for payment of brokerage commissions. In the selection of such
brokers or dealers and the placing of such orders, the Subadviser is directed at
all times to seek for the Portfolio the best execution available. Neither the
Subadviser nor any affiliate of the Subadviser will act as principal or receive
directly or indirectly any compensation in connection with the purchase or sale
of investment securities by the Sub-Portfolio, other than compensation provided
for in this Agreement or in the Investment Advisory Agreement of the Portfolio
and such brokerage commissions as are permitted by the 1940 Act. If and to the
extent authorized to act as broker in the relevant jurisdiction, the Subadviser
or any of its affiliates may act as broker for the Sub-Portfolio in the purchase
and sale of securities. The Subadviser agrees that all transactions effected
through the Subadviser or brokers affiliated with the Subadviser shall be
effected in compliance with Section 17(e) of the 1940 Act and written procedures
established from time to time by the Board of Directors of the Company pursuant
to Rule 17e-1 under the 1940 Act, as amended, copies of which shall be provided
to the Subadviser by the Investment Adviser.
5. It is also understood that it is desirable for the Portfolio that the
Subadviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at higher commissions to the Portfolio than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Subadviser is authorized
to place orders for the purchase and sale of securities for the Sub-Portfolio
with such certain brokers, subject to review by the Company's Board of Directors
from time to time with respect to the extent and continuation of this practice.
It
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is understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients. If any occasion
should arise in which the Subadviser gives any advice to its clients concerning
the shares of the Sub-Portfolio, the Subadviser will act solely as investment
counsel for such clients and not in any way on behalf of the Portfolio. The
Subadviser's services to the Portfolio pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that the Subadviser may render
investment advice, management and other services to others.
Provided the investment objectives of the Portfolio are adhered to, and such
aggregation is in the best interests of the Portfolio, the Subadviser may
aggregate sales and purchase orders of securities held for the Portfolio with
similar orders being made simultaneously for other funds managed by the
Subadviser, if in the Subadviser's reasonable judgment, such aggregation is
equitable and consistent with the Subadviser's fiduciary obligation to the
Portfolio and shall result in an overall economic benefit to the Portfolio,
taking into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. In accounting for such aggregated order price,
commission and other expenses shall be averaged on a per bond or share basis
daily.
The Subadviser will advise the Portfolio's custodian and the Investment
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 purchases, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required. From time to
time as the Board of Directors of the Company or the Investment Adviser may
reasonably request, the Subadviser will furnish to the Company's officers and to
each of its Directors, at the Subadviser's expense, reports on portfolio
transactions and reports on issues of securities held in the Sub-Portfolio, all
in such detail as the Portfolio or the Investment Adviser may reasonably
request.
Subject to any other written instructions of the Investment Adviser, the
Subadviser is hereby appointed the Investment Adviser's agent and attorney-in-
fact on behalf of the Sub-Portfolio in its discretion to vote, tender or convert
any securities in the Sub-Portfolio; to execute proxies, waivers, consents,
account documentation, agreements, contracts and other instruments with respect
to such securities and the assets of the Sub-Portfolio; to endorse, transfer or
deliver such securities and to participate in or consent to any class action,
plan of reorganization, merger, combination, consolidation, liquidation or
similar plan with reference to such securities; and the Subadviser shall not
incur any liability to the Investment Adviser or the Sub-Portfolio by reason of
any exercise of, or failure to exercise, any such discretion in the absence of
willful misfeasance, bad faith, or gross negligence.
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6. The Subadviser will not be liable for any loss sustained by reason of the
adoption of any investment policy or the purchase, sale, or retention of any
security on the recommendation of the Subadviser whether or not such
recommendation shall have been based upon its own investigation and research or
upon investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been made and such other
individual, firm, or corporation shall have been selected, with due care and in
good faith; but nothing herein contained will be construed to protect the
Subadviser against any liability to the Investment Adviser, the Company, the
Portfolio or its shareholders by reason of: (a) the Subadviser negligently
causing the Sub-Portfolio to be in violation of any federal or state law, rule
or regulation or any investment policy or restriction set forth in the
Portfolio's prospectus or Statement of Additional Information or any written
guidelines or instruction provided in writing by the Company's Board of
Directors or the Investment Adviser; (b) the Subadviser negligently causing the
Sub-Portfolio to fail to satisfy the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") due to the Subadviser's
failure to comply with the requirements set forth in the second paragraph of
Section 9; or (c) the Subadviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement; provided that,
with respect to (a) and (b) above, Subadviser shall be deemed not to have been
negligent if it acts in reliance upon written reports provided by Investment
Advisor, the Company, the Portfolio, or any of their respective authorized
agents.
The Subadviser will indemnify the Adviser to the fullest extent permitted by
law against any and all loss, damage, judgment, fines, amounts paid in
settlement and attorneys fees incurred by the Investment Adviser to the extent
resulting, in whole or in part, from any of the Subadviser's acts or omissions
specified in (a), (b) or (c) above or otherwise from the Subadviser's willful
misfeasance, bad faith, or gross negligence, provided, however, that nothing
herein contained will provide indemnity to the Investment Adviser for liability
resulting from its own willful misfeasance, bad faith, or gross negligence in
the performance of its duties or reckless disregard of such duties.
7. This Agreement shall remain in force until , 1998, and from
year to year thereafter, but only so long as such continuance, and the
continuance of the Investment Adviser as investment adviser of the Portfolio, is
specifically approved at least annually by the vote of a majority of the
Directors who are not interested persons of the Subadviser, the Investment
Adviser or the Portfolio, cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Directors or of a majority
of the outstanding voting securities of the Portfolio. The aforesaid requirement
that continuance of this Agreement be "specifically approved at least annually"
shall
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be construed in a manner consistent with the 1940 Act and the rules, regulations
and interpretations thereunder. This Agreement may be terminated at any time
without the payment of any penalty, (a) by the Company, by the Board of
Directors, or by vote of a majority of the outstanding voting securities of the
Portfolio, upon 60 days' written notice to the Adviser and Subadviser, (b) by
the Investment Adviser, upon 60 days' written notice to the Portfolio and the
Subadviser, or (c) by the Subadviser, upon 90 days' written notice to the
Portfolio and Investment Adviser. This Agreement shall automatically terminate
in the event of its assignment. In interpreting the provisions of this
Agreement, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person," "assignment" and "majority
of the outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
8. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio and by the Board of Directors, including a majority of the Directors
who are not interested persons of the Investment Adviser, the Subadviser or the
Portfolio, cast in person at a meeting called for the purpose of voting on such
approval.
It shall be the responsibility of the Subadviser to furnish to the Board of
Directors of the Company such information as may reasonably be necessary in
order for such Directors to evaluate this Agreement or any proposed amendments
thereto for the purposes of casting a vote pursuant to paragraphs 7 or 8 hereof.
9. The Subadviser will conform its conduct in accordance with and will
ensure that the Sub-Portfolio conforms with the Company's Articles of
Incorporation and By-laws, each as amended from time to time, and the 1940 Act,
as amended, other applicable laws, and to the investment objectives, policies
and restrictions of the Portfolio as each of the same shall be from time to time
in effect as set forth in the Portfolio's Prospectus and Statement of Additional
Information, or any investment guidelines or other instructions received in
writing from the Investment Adviser, and subject, further, to such policies and
instructions as the Board of Directors or the Investment Adviser may from time
to time establish and deliver to the Subadviser.
In addition, the Subadviser, taking into account only income and gains
realized with respect to the Sub-Portfolio, will cause the Sub-Portfolio to
comply with the requirements of: (a) Section 851(b)(2) of the Code regarding
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derivation of income from specified investment activities; and (b) Section
851(b)(3) of the Code limiting gains from the disposition of securities and
certain other investments held less than three months, in each case as if the
Sub-Portfolio were a "regulated investment company" as defined in Section 851(a)
of the Code; and Section 817(h) of the Code and the regulations pertaining
thereto. The Subadviser shall not without the prior express written consent of
the Adviser: (a) invest Sub-Portfolio assets having a value exceeding five
percent of the Portfolio's total (gross) assets in securities of one issuer; or
(b) cause the Sub-Portfolio to acquire more than ten percent of the outstanding
voting securities of any one issuer; or (c) invest Sub-Portfolio assets in
investments that are not cash, cash items (including receivables), Government
securi-ties, securities of other regulated investment companies, or other
securities within the meaning of Section 851(b)(4) of the Code. For purposes of
clauses (a) and (b) of the foregoing sentence the term "securities" shall
exclude "Government securities" and "securities of other regulated investment
companies" as each such term is used in Section 851(b)(4) of the Code.
10. The Subadviser represents that it has reviewed the Registration
Statement of the Company as filed with the Securities and Exchange Commission
and represents and warrants that with respect to disclosure about the Subadviser
or information relating directly or indirectly to the Subadviser, such
Registration Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. The Subadviser further represents and warrants that it
is an investment adviser registered under the Advisers Act.
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Any notice given to the Subadviser by the Investment Adviser pursuant to
the terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
or mailed, postpaid, to: BEA Associates, One Citicorp Center, New York, NY
10048.
Any notice given to the Investment Adviser by the Subadviser pursuant to the
terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
to Oppenheimer Management Corporation, Two World Trade Center, New York, NY
10048.
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14. It is understood and expressly stipulated that the Subadviser must look
solely to the property of the Portfolio for the enforcement of any claims
against the Portfolio and shall not look to or have recourse to the assets of
the Company generally or any other series of the Company.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above, and effective as of
, 1996.
OPPENHEIMER MANAGEMENT CORPORATION
By:
--------------------------------------------------------------
Its:
--------------------------------------------------------------
BEA ASSOCIATES
By:
--------------------------------------------------------------
Its:
--------------------------------------------------------------
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BEA ASSOCIATES
SCHEDULE A
TO
SUBADVISORY AGREEMENT
The fee payable by the Investment Adviser to the Subadviser shall be at an
annual rate equal to a percentage of the average daily Net Assets Under
Management (as defined below) as follows:
ANNUAL RATE
.45% of the first $25 Million of such assets
.40% of the next $25 Million of such assets
.35% of the next $50 Million of such assets
.25% of such assets over $100 Million.
For purposes of this Schedule A, Net Assets Under Management shall consist
of the net aggregated assets of each Sub-Portfolio as follows:
(a) the High Yield Sub-Account of the CMIA LifeSpan Diversified Income
Account; (b) the High Yield Sub-Portfolio of the Series Fund I LifeSpan
Diversified Income Portfolio; (c) the High Yield Sub-Account of the CMIA
LifeSpan Balanced Account; (d) the High Yield Sub-Portfolio of the Series Fund I
LifeSpan Balanced Portfolio; (e) the High Yield Sub-Account of the CMIA LifeSpan
Capital Appreciation Account; and (f) the High Yield Sub-Portfolio of the Series
Fund I LifeSpan Capital Appreciation Portfolio, in each case to the extent and
for so long as the Subadviser also manages such assets.
For purposes hereof, the value of net assets of the foregoing Accounts and
Portfolios shall be computed in the manner specified in the applicable
Prospectuses and Statements of Additional Information for the computation of the
value of the net assets in connection with the determination of net asset value
of their shares. On any day that the net asset determination is suspended as
specified in the Prospectuses, the net asset value for purposes of calculating
the subadvisory fee with respect to each of the aforementioned shall be
calculated as of the date last determined.
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EXHIBIT C
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is by and between Babson-Stewart
Ivory International, a partnership organized under the laws of the Commonwealth
of Massachusetts (the "Sub-Adviser"), and Oppenheimer Management Corporation, a
Colorado corporation ("OMC"), effective , 199 .
WHEREAS, (the "Fund") is a series of
(the "Company"), a Maryland corporation which is
an open-end diversified management investment company registered as such with
the Securities and Exchange Commission (the "Commission") pursuant to the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Company has
appointed OMC as the investment adviser for the Fund, pursuant to the terms of
an Investment Advisory Agreement (the "Advisory Agreement");
WHEREAS, the Advisory Agreement provides that OMC may, at its option,
subject to approval by the Board of Directors of the Company, and, to the extent
necessary, shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of OMC under the Advisory Agreement;
WHEREAS, OMC and the Sub-Adviser are investment advisers registered as such
with the Commission, and OMC desires to appoint the Sub-Adviser as a sub-adviser
for the Fund and the Sub-Adviser is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, OMC and the Sub-Adviser, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. GENERAL PROVISION.
OMC hereby employs the Sub-Adviser and the Sub-Adviser hereby undertakes to
act as the investment sub-adviser of the international portion of the
portfolio of the Fund designated by OMC (the "Sub-Account") and to provide
investment advice and to perform for the Fund such other duties and
functions as are hereinafter set forth. The Sub-Adviser shall, in all
matters, give to the Fund and the Company's Board of Directors, directly or
through OMC, the benefit of the Sub-Adviser's best judgment, effort, advice
and recommendations and shall, at all times conform to, and use its best
efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations thereunder;
(b) the provisions of Subchapter M of the Internal Revenue Code, as it may
be amended from time to time;
<PAGE>
(c) any other applicable provisions of state or federal law;
(d) the provisions of the Articles of Incorporation and By-Laws of the
Company as amended from time to time;
(e) policies and determinations of the Board of Directors of the Company and
OMC;
(f) the fundamental policies and investment restrictions of the Fund as
reflected in the Company's registration statement under the 1940 Act or
as such fundamental policies and investment restrictions may, from time
to time, be amended by the Fund's shareholders;
(g) the Prospectus and Statement of Additional Information of the Fund in
effect from time to time; and
(h) any investment guidelines or other instructions received in writing from
OMC.
The appropriate officers and employees of the Sub-Adviser shall be available
upon reasonable notice for consultation with any of the Directors and
officers of the Company and OMC with respect to any matters dealing with the
business and affairs of the Fund including without limitation the valuation
of portfolio securities of the Sub-Account that are either not registered
for public sale or not traded on any securities market.
In the performance of its duties hereunder, the Sub-Adviser is and shall be
an independent contractor and unless otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or
represent the Company, the Fund or OMC in any way or otherwise be deemed to
be an agent of the Company, the Fund or OMC.
2. DUTIES OF THE SUB-ADVISER.
(a) The Sub-Adviser shall, subject to the direction and control by the
Company's Board of Directors or OMC, to the extent OMC's direction is
not inconsistent with that of the Board of Directors, (i) regularly
provide investment advice and recommendations to the Fund, directly or
through OMC, with respect to the Sub-Account's investments, investment
policies and the purchase and sale of securities; (ii) supervise and
monitor continuously the investment program of the Fund with respect to
the Sub-Account and the portfolio composition of the Sub-Account and
determine what securities shall be purchased or sold for the Sub-Account
of the Fund; (iii) arrange, subject to the provisions of paragraph 5
hereof, for the purchase of securities and other investments for the
Sub-Account of the Fund and
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the sale of securities and other portfolio investments held in the Sub-
Account of the Fund; and (iv) provide reports on the foregoing to the
Board of Directors at each Board meeting.
(b) Provided that neither OMC nor the Fund or the Company shall be required
to pay any compensation other than as provided by the terms of this
Agreement and subject to the provisions of paragraph 5 hereof, the
Sub-Adviser may obtain investment information, research or assistance
from any other person, firm or corporation to supplement, update or
otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Sub-Adviser
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, the Sub-Adviser shall not be liable for any
loss sustained by reason of good faith errors or omissions in connection
with any matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or the Sub-Adviser or any
officer thereof from acting as investment adviser or sub-adviser for any
other person, firm or corporation and shall not in any way limit or
restrict OMC or the Sub-Adviser or any of their respective directors,
officers, stockholders, partners or employees from buying, selling or
trading any securities for its or their own account or for the account
of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance
by any party of its duties and obligations under this Agreement.
(e) The Sub-Adviser shall cooperate with OMC by providing OMC with any
information in the Sub-Adviser's possession necessary for supervising
the activities of all administrative and clerical personnel as shall be
required to provide effective corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. Any records required to
be maintained shall be the property of the Company and shall be
surrendered promptly to the Company on request. The Sub-Adviser shall,
at its own expense, provide such officers for the Company as its Board
may request.
3. DUTIES OF OMC.
OMC shall provide (or cause to be provided to) the Sub-Adviser the following
information about the Sub-Account:
(a) cash flow estimates on request;
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(b) notice of the Sub-Account's "investable funds" by 11:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in subparagraphs (d), (e), (f), (g)
and (h) of paragraph 1 above.
4. COMPENSATION OF THE SUB-ADVISER.
The Sub-Adviser will bear its own costs of providing services hereunder. The
Sub-Adviser shall not be responsible for the Fund's expenses. OMC agrees to
pay the Sub-Adviser and the Sub-Adviser agrees to accept as full
compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee computed on the net
asset value of the Sub-Account of the Fund as of the close of each business
day and payable monthly by the tenth business day of the following month, at
the following annual rates:
- .75% of the first $10 million of average net assets in the
Sub-Account;
- .625% of the next $15 million of average net assets in the
Sub-Account;
- .50% of the next $25 million of average net assets in the
Sub-Account; and
- .375% of the average net assets in excess of $50 million in
the Sub-Account.
For any period less than a full month during which this Agreement is in
effect, the fee shall be pro-rated according to the proportion which such
period bears to a full month (a month being the calendar month of which such
period is part). The Fund shall have no responsibility for any fee payable
to the Sub-Adviser.
5. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) In connection with purchases or sales of portfolio securities on behalf
of the Fund, neither the Sub-Adviser nor any of its partners, directors,
officers or employees will act as a principal or agent or receive
directly or indirectly any compensation in connection with the purchase
or sale of securities by the Fund, other than as provided herein. The
Sub-Adviser is authorized, in arranging the purchase and sale of the
Sub-Account's portfolio securities, to employ or deal with such members
of securities exchanges, brokers or dealers (hereinafter
"broker-dealers"), including broker-dealers that are "affiliated"
broker-dealers (as that term is defined in the 1940 Act), as may, in the
Sub-Adviser's best
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judgment, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the most
favorable security price obtainable) of the Fund's portfolio
transactions. All transactions effected through any affiliated brokers
shall be effected in compliance with Section 17(e) of the 1940 Act and
any written procedures established from time to time by the Board of
Directors of the Company pursuant to Rule 17e-1 under the 1940 Act, as
it may be amended from time to time, copies of which procedures shall be
provided to the Sub-Adviser by OMC.
(b) The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to
effect said transactions, and may enter into a contract in which the
broker acts either as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the Sub-Account's
portfolio transactions on the basis of its estimate of their ability to
obtain best execution of particular and related portfolio transactions.
The abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Sub-Adviser on the basis
of all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Sub-Account's portfolio transactions by participating
therein for its own account; the importance to the Fund of speed,
efficiency or confidentiality; the broker-dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
(d) The Sub-Adviser shall not be responsible for payment of brokerage
commissions.
(e) Provided that such aggregation is in the best interests of the Fund, the
Sub-Adviser may aggregate orders for the purchase and sale of securities
for the Sub-Account with similar orders being made simultaneously for
other funds managed by the Sub-Adviser, if, in the Sub-Adviser's
reasonable judgment, such aggregation is equitable and consistent with
the Sub-Adviser's fiduciary obligation to the Fund and shall result in
an overall economic benefit to the Fund, taking into consideration the
advantageous sale or purchase price, brokerage commissions or other
expenses.
(f) The Sub-Adviser will advise OMC and the Fund's Custodian promptly of
each purchase and sale of a portfolio security, specifying the name
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of the issuer, the description and amount or number of shares of the
security purchased or sold, the market price, commissions and gross or
net price, trade date, settlement date and identity of the effecting
broker or dealer, and such other information as may be reasonably
required. From time to time as the Board of Directors of the Company or
OMC may reasonably request, the Sub-Adviser will furnish to the
Company's officers and to its Directors, at the Sub-Adviser's expense,
reports on portfolio transactions and reports on issuers of securities
held in the Sub-Account, all in such detail as the Fund or OMC shall
reasonably request.
6. DURATION.
This Agreement will take effect on , 199 , and unless earlier
terminated pursuant to paragraph 7 shall remain in effect until December 31,
199 . Thereafter it shall continue in effect from year to year, so long as
such continuance and the continuance of OMC as Adviser to the Fund shall be
approved at least annually by the Company's Board of Directors, including
the vote of the majority of the Directors of the Company who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of
any such party cast in person at a meeting called for the purpose of voting
on such approval, or by the holders of a "majority" (as defined in the 1940
Act) of the outstanding voting securities of the Fund and by such a vote of
the Company's Board of Directors.
7. TERMINATION.
This Agreement shall terminate automatically upon its assignment or in the
event of the Company's termination of the Advisory Agreement; it may also be
terminated: (i) by-the Sub-Adviser at any time without penalty upon ninety
days' written notice to OMC and the Company; or (ii) by the Company at any
time without penalty upon sixty days' written notice to OMC and the
Sub-Adviser provided that such termination by the Company shall be directed
or approved by a vote of a majority of all of the Directors of the Company
then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the 1940 Act); or
(iii) by OMC, upon 60 days' written notice to the Fund and the Sub-Adviser.
8. NOTICE.
Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party, with a copy to the Company,
at the addresses below or such other address as such other party may
designate for the receipt of such notice.
C-6
<PAGE>
If to OMC:
Oppenheimer Management Corporation
Two World Trade Center, 34th Floor
New York, NY 10048-0203
Attention: Andrew J. Donohue, Esq.
If to the Sub-Adviser:
Babson-Stewart Ivory International
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Attention:
---------------------------
If to either party, copy to:
----------------------------- Fund
--------------------------------------------
--------------------------------------------
Attention:
---------------------------, Chairman
9. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until its
approval by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board of Directors of the Company,
including a majority of the Directors who are not interested persons of OMC,
the Sub-Adviser or the Fund, cast in person at a meeting called for the
purpose of voting on such approval.
10. The Sub-Adviser represents that it has reviewed the Registration Statement
of the Company, including any amendments or supplements thereto, and any
Proxy Statement relating to the approval of this Agreement, as filed with
the Securities and Exchange Commission and represents and warrants that with
respect to disclosure about the Sub-Adviser or information relating directly
or indirectly to the Sub-Adviser, such Registration Statement or Proxy
Statement contains, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. The Sub-Adviser further represents and warrants that
it is an investment adviser registered under the Investment Advisers Act of
1940, as amended, and under the laws of all jurisdictions in which the
conduct of its business hereunder requires such registration.
C-7
<PAGE>
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
12. It is expressly understood and stipulated that the Sub-Adviser must look
solely to the property of the Fund for the enforcement of any claims against
the Fund and shall not look to or have recourse to the assets of the Company
generally or any other series of the Company.
13. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, OMC and the Sub-Adviser have caused this Agreement to be
executed on the day and year first above written.
OPPENHEIMER MANAGEMENT CORPORATION
By:
---------------------------------------------------------
(Name) (Title)
BABSON-STEWART IVORY INTERNATIONAL, a
Partnership
By:
-----------------------------------------------------------
(Name) (Title)
C-8
<PAGE>
VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing.
- -------------------------------------------------------------------------------
[PORTFOLIO NAME] [EACH CARD A DIFFERENT COLOR]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY PROXY
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
140 GARDEN STREET
HARTFORD, CONNECTICUT 06154
SPECIAL MEETING OF SHAREHOLDERS
JANUARY 22, 1996
The undersigned hereby appoints David E. Sams, Jr., Donald H. Pond, Jr.,
Ann F. Lomeli and Michael A. Chong, and each of them, the proxies of the
undersigned with full power of substitution to each of them, to vote all
shares of [PORTFOLIO NAME] (the "Portfolio") which the undersigned is
entitled to vote at a Special Meeting of Shareholders of Connecticut Mutual
Financial Services Series Fund I, Inc. (the "Company") to be held at the
offices of Connecticut Mutual Life Insurance Company located at 878 Main
Street (10 State House Square), Hartford, Connecticut, on Monday, January 22,
1996 at 2:00 p.m. Eastern time and any adjournments thereof.
By signing and dating this proxy form, you authorize the above proxies
to vote your shares of the Portfolio only with respect to the following
proposals set forth on the reverse side of this card (which are numbered to
correspond to the numbering of proposals contained in the Proxy Statement):
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY
Date: ___________________________
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR
HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Signature(s) of Shareholder(s):
_________________________________________________
_________________________________________________
<PAGE>
(1) To approve the terms of new investment advisory agreements between
the Company, on behalf of each Portfolio, and Oppenheimer Management
Corporation ("Oppenheimer"), the proposed investment adviser to the
Portfolios. FOR EACH PORTFOLIO VOTING SEPARATELY.
________ ________ ________
FOR ________ AGAINST ________ ABSTAIN ________
(2)(a) To approve the terms of new investment subadvisory agreements between
Oppenheimer and Pilgrim, Baxter & Associates, Ltd. with respect to
each of the LifeSpan Capital Appreciation Portfolio and LifeSpan
Balanced Portfolio. FOR LIFESPAN CAPITAL APPRECIATION PORTFOLIO AND
LIFESPAN BALANCED PORTFOLIO VOTING SEPARATELY.
________ ________ ________
FOR ________ AGAINST ________ ABSTAIN ________
(2)(b) To approve the terms of new investment subadvisory agreements between
Oppenheimer and BEA Associates with respect to each of the LifeSpan
Capital Appreciation Portfolio, LifeSpan Balanced Portfolio and
LifeSpan Diversified Income Portfolio. FOR LIFESPAN CAPITAL
APPRECIATION PORTFOLIO, LIFESPAN BALANCED PORTFOLIO AND LIFESPAN
DIVERSIFIED INCOME PORTFOLIO VOTING SEPARATELY.
________ ________ ________
FOR ________ AGAINST ________ ABSTAIN ________
(2)(c) To approve the terms of new investment subadvisory agreements between
Oppenheimer and Babson-Stewart Ivory International Limited with
respect to each of the LifeSpan Capital Appreciation Portfolio,
LifeSpan Balanced Portfolio and International Equity Portfolio. FOR
LIFESPAN CAPITAL APPRECIATION PORTFOLIO, LIFESPAN BALANCED PORTFOLIO
AND INTERNATIONAL EQUITY PORTFOLIO VOTING SEPARATELY.
________ ________ ________
FOR ________ AGAINST ________ ABSTAIN ________
(3) To elect eight (8) Directors to the Company's Board of Directors to
serve until their successors have been duly elected and qualified.
The nominees are Robert G. Avis, William A. Baker, Charles
Conrad, Jr., Raymond J. Kalinowski, C. Howard Kast, Robert M.
Kirchner, Ned M. Steel and James C. Swain. FOR ALL PORTFOLIOS VOTING
TOGETHER.
-2-
<PAGE>
________
FOR all of the nominees named above ________
FOR all of the nominees named above,
except those whose name(s) I have ________
written below ________
VOTE WITHHELD for all of the nominees ________
named above ________
(4) To ratify the selection of Arthur Andersen, LLP as the Company's
independent public accountants. FOR ALL PORTFOLIOS VOTING TOGETHER.
________ ________ ________
FOR ________ AGAINST ________ ABSTAIN ________
In ther discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER INSTRUCTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO INSTRUCTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2(a), 2(b), 2(c) AND 4 AND FOR THE
NOMINEES IN PROPOSAL 3.
-3-
