<PAGE>
As filed with the Securities and Exchange Commission on March 1, 1996
Registration No. 2-73969
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 23
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
(Exact Name of Registrant as Specified in Charter)
140 Garden Street
Hartford, Connecticut 06154
(Address of Principal Office)(Zip Code)
Registrant's Telephone Number, including Area Code: (203) 987-5047
Ann F. Lomeli, Secretary
Connecticut Mutual Financial Services Series Fund I, Inc.
140 Garden Street
Hartford, Connecticut 06154
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/X/ on May 1, 1996 pursuant to paragraph (a), of Rule 485
Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to of Rule 24f-2 promulgated under the
Investment Company Act of 1940. The Company's Rule 24f-2 Notice for the
fiscal year ending December 31, 1995 was filed on or about February 29, 1996.
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of Information Required by
Items of the Registration Form
<TABLE>
<CAPTION>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
<S> <C> <C>
1. Cover Page....................... Cover Page.
2. Synopsis......................... About The Portfolios -- A Brief
Overview of the Portfolios.
3. Condensed Financial
Information.................... About The Funds -- Financial
Highlights.
4. General Description of
Registrant..................... Cover Page; About The Funds
-- How The Portfolios are Managed -
- Organization and History.
5. Management of the Fund........... About The Portfolios -- How the
Portfolios are Managed.
6. Capital Stock and Other
Securities..................... About The Portfolios --
Investment Objective and
Policies.
7. Purchase of Securities
Being Offered.................. About Your Account -- How to
Buy Shares.
8. Redemption or Repurchase......... About Your Account -- How to
Sell Shares.
9. Pending Legal Proceedings........ Not Applicable.
10. Cover Page....................... Cover Page.
11. Table of Contents................ Cover Page.
12. General Information and
History........................ Cover Page; How The Portfolios
are Managed -- Organization
and History.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form N-1A Item Number Location in Prospectus
--------------------- --------------------------
<S> <C> <C>
13. Investment Objectives and
Policy......................... About The Portfolios --
Investment Objectives and
Policies.
Location in Prospectus
Form N-1A Item Number or Statement of Additional
14. Management of the Fund........... About The Portfolios -- How
the Portfolios are Managed.
15. Control Persons and Principal
Holders of Securities.......... About The Portfolios -- How the
Portfolios are Managed.
16. Investment Advisory and
Other Services................. About The Portfolios -- How
the Portfolios are Managed; The
Manager, the Subadvisers and
Their Affiliates; The
Transfer Agent.
17. Brokerage Allocation and
Other Practices................ About the Portfolios --
Brokerage Policies of the
Portfolios.
18. Capital Stock and Other
Securities..................... About the Portfolios -- How
the Portfolios are Managed --
Organization and History.
19. Purchase, Redemption and Pricing
of Securities Being Offered.... About Your Accounts -- How
to Buy Shares; How to Sell
Shares.
20. Tax Status....................... About Your Account --
Dividends, Capital Gains and
Taxes.
21. Underwriters..................... About The Portfolios -- How
the Portfolios are Managed --
The Manager, the Subadvisers
and Their Affiliates; About
Your Account -- How To Buy
Shares.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Form N-1A Item Number Location in Prospectus
--------------------- --------------------------
<S> <C> <C>
22. Calculation of Performance
Data........................... About The Portfolios --
Performance of the Portfolios;
About Your Account --
Dividends, Capital Gains and
Taxes.
23. Financial Statements............. Financial Information About
the Portfolios -- Independent
Auditors' Report --
Financial Statements.
</TABLE>
- 3 -
<PAGE>
PANORAMA SERIES FUND I, INC
Prospectus dated May 1, 1996
PANORAMA SERIES FUND I, INC. (the "Company") is an open-end investment company
consisting of nine separate series (individually, a "Portfolio" and
collectively, the "Portfolios"):
MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and maintenance of liquidity by
investing in money market instruments. An INVESTMENT IN THE MONEY MARKET
PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. WHILE
THE MONEY MARKET PORTFOLIO SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO
DO SO.
INCOME PORTFOLIO seeks high current income consistent with prudent investment
risk and preservation of capital by investing primarily in corporate debt
securities with remaining maturities of five years or less or mortgage debt
securities with prepayment features which, in the judgment of the investment
advisor, will result in payment of interest and principal such that the
effective maturity of the securities is five years or less.
GOVERNMENT SECURITIES PORTFOLIO seeks a high level of current income with a
high degree of safety of principal by investing primarily in U.S. Government
securities and U.S. Government related securities.
TOTAL RETURN PORTFOLIO seeks to maximize total investment return (including
both capital appreciation and income) principally by allocating its assets
among stocks, corporate bonds, U.S. Government securities and money market
instruments according to changing market conditions.
GROWTH PORTFOLIO seeks long term growth of capital by investing primarily in
common stocks with low price-earnings ratios and better-than-anticipated
earnings. Realization of current income is a secondary consideration.
INTERNATIONAL EQUITY PORTFOLIO seeks long-term growth of capital by investing
primarily in equity securities of companies wherever located, the primary
stock market of which is outside the United States.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO ("Capital Appreciation Portfolio")
seeks long-term capital appreciation by investing in a strategically
allocated portfolio consisting primarily of stocks. Current income is not a
primary consideration.
LIFESPAN BALANCED PORTFOLIO ("Balanced Portfolio") seeks a blend of capital
appreciation and income by investing in a strategically allocated portfolio
of stocks and bonds with a slightly stronger emphasis on stocks.
LIFESPAN DIVERSIFIED INCOME PORTFOLIO ("Diversified Income Portfolio") seeks
high current income, with opportunities for capital appreciation by investing
in a strategically allocated portfolio consisting primarily of bond
instruments.
Please refer to "Investment Policies and Strategies" for more
information about the types of securities the Portfolios may invest in and
the risks of investing in the Portfolios.
<PAGE>
Shares of the Portfolios are sold only to provide benefits under
variable life insurance policies and variable annuity contracts (each, an
"Account" and collectively, the "Accounts"). The Accounts invest in shares
of one or more of the Portfolios in accordance with allocation instructions
received from Account owners. Such allocation rights are further described
in the accompanying Account Prospectus. Shares are redeemed to the extent
necessary to provide benefits under an Account.
This Prospectus explains concisely what you should know before investing
in the Portfolios. Please read this Prospectus carefully and keep it for
future reference. You can find more detailed information about each Portfolio
in the May 1, 1996 Statement of Additional Information. For a free copy,
call OppenheimerFunds Services, the Portfolios' Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(Oppenheimer funds logo)
SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY,
AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-2-
<PAGE>
Contents
A B O U T T H E P O R T F O L I O S
BRIEF OVERVIEW OF THE PORTFOLIOS.................. 4
FINANCIAL HIGHLIGHTS.............................. 6
INVESTMENT OBJECTIVES AND POLICIES................ 14
HOW THE PORTFOLIOS ARE MANAGED.................... 32
PERFORMANCE OF THE PORTFOLIOS..................... 38
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES................................. 39
HOW TO SELL SHARES................................ 39
DIVIDENDS, CAPITAL GAINS AND TAXES................ 39
APPENDIX A: DESCRIPTION OF RATINGS CATEGORIES
OF RATING SERVICES.................... 41
APPENDIX B: CREDIT QUALITY DISTRIBUTION.......... 43
-3-
<PAGE>
A B O U T T H E P O R T F O L I O S
A BRIEF OVERVIEW OF THE PORTFOLIOS
Some of the important facts about each Portfolio are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in a Portfolio. Keep the Prospectus
for reference after you invest.
/ / WHAT ARE THE PORTFOLIOS' INVESTMENT OBJECTIVES AND WHAT DO THE
PORTFOLIOS INVEST IN?
The MONEY MARKET PORTFOLIO seeks as high a level of current income as is
consistent with preservation of capital and maintenance of liquidity by
investing exclusively in money market instruments. There can be no assurance
that the Portfolio will maintain a stable net asset value per share. The
INCOME PORTFOLIO seeks high current income consistent with prudent investment
risk and preservation of capital. The Portfolio invests primarily in
corporate debt securities and securities issued by the U.S. Government, its
agencies and instrumentalities. The Portfolio anticipates maintaining an
average dollar weighted portfolio maturity of generally between eight and
twelve years. The Portfolio invests at least 75% of its total assets in U.S.
Government and U.S. Government-related securities, dollar-denominated foreign
government and corporate securities and short-term investments, all of which
are rated at least investment grade or, if unrated, judged to be of
equivalent quality by the Manager. The Portfolio may invest up to 25% of its
assets in lower quality debt securities (commonly referred to as junk bonds)
and preferred stocks. The GOVERNMENT SECURITIES PORTFOLIO seeks a high level
of current income with a high degree of safety of principal. The Portfolio
invests primarily in U.S. Government securities and U.S. Government-related
securities, including collateralized mortgage obligations. The remainder of
its assets may be invested in other investment grade debt obligations of
private issuers. The Portfolio may enter into mortgage dollar roll
transactions to enhance its yield. The TOTAL RETURN PORTFOLIO seeks to
maximize total investment return principally by allocating its assets among
stocks, bonds and money market instruments. The Portfolio's debt securities
are expected to have a portfolio maturity of six to twelve years. The
Portfolio may invest up to 25% of its total assets in the aggregate in debt
securities and preferred stocks rated below investment grade and unrated
securities determined by the manager to be of comparable credit quality.
Consistent with these policies the Portfolio may invest to a limited extent
in securities of foreign issuers. The GROWTH PORTFOLIO seeks long-term
growth of capital by investing primarily in common stocks with low price
earning ratios and better than anticipated earnings. Realization of current
income is a secondary consideration. In selecting investments for the Growth
Portfolio, the Manager uses a quantitative investment discipline in
combination with fundamental securities analysis. The Portfolio may invest
the remainder of its assets in corporate and U.S. Government debt obligations
including convertible bonds rated below investment grade. The INTERNATIONAL
EQUITY PORTFOLIO seeks long-term growth of capital by investing at least 90%
of its assets in equity securities of companies wherever located, the primary
stock market of which is outside the United States. The Portfolio seeks
growth of capital over the long-term as measured relative to its benchmark,
the Morgan Stanley Capital International (MSCI) Europe, Australia and Far
East ("EAFE") Index (the "Index"). The Portfolio pursues its objective by
investing in securities of non-U.S. companies which it believes to be either
fairly valued or undervalued based upon fundamental research--including
analysis of the relative attractiveness of the asset class; the individual
equity markets; industries across and within those markets; other common risk
factors within those markets; and individual international companies.
-4-
<PAGE>
THE LIFESPAN PORTFOLIOS: CAPITAL APPRECIATION PORTFOLIO seeks long-term
capital appreciation. Current income is not a primary consideration.
BALANCED PORTFOLIO seeks a blend of capital appreciation and income.
DIVERSIFIED INCOME PORTFOLIO seeks high current income, with opportunities
for capital appreciation. Capital Appreciation Portfolio, Balanced Portfolio
and Diversified Income Portfolio are referred to collectively as the
"LifeSpan Portfolios." The LifeSpan Portfolios are asset allocation funds
and seek to achieve their respective investment objectives by allocating
assets among two broad classes of investments -- stocks and bonds. The STOCK
CLASS includes equity securities of all types. The BOND CLASS includes all
varieties of fixed-income instruments. Each LifeSpan Portfolio's stock class
will be diversified by allocating the Portfolio's stock portfolio among four
STOCK COMPONENTS: international stocks, value/growth stocks, growth and
income stocks and small-capitalized growth stocks (small cap). Each stock
component is also permitted to invest a portion of its assets in bonds when
increased flexibility in portfolio management is required to enhance
appreciation or income. Each LifeSpan Portfolio's bond class will be
diversified by allocating a Portfolio's bond portfolio among three BOND
COMPONENTS: government and corporate bonds, high yield/high risk bonds (also
called "junk bonds") and short-term bonds. There is no requirement that a
LifeSpan Portfolio's assets be allocated among all stock or bond components
at all times. These stock and bond components have been selected based on
the belief that this additional level of asset diversification will provide
each LifeSpan Portfolio with the potential for higher returns with lower
overall volatility. Each LifeSpan Portfolio's normal allocation is shown in
the chart on page __ below.
Each Portfolio's investments are more fully explained in "Investment
Objectives and Policies," starting on page __.
/ / WHO MANAGES THE PORTFOLIOS? The Manager is OppenheimerFunds, Inc.,
which (including a subsidiary) advises investment company portfolios having
over $40 billion in assets at December 31, 1995. The Portfolios' Board of
Directors, elected by shareholders, oversees the investment advisor. The
Manager is paid an advisory fee by each Portfolio, based on its net assets.
The Manager has engaged three Sub-Advisers, Babson-Stewart Ivory
International ("Babson-Stewart"), BEA Associates ("BEA") and Pilgrim Baxter &
Assoc. Ltd. ("Pilgrim"), to manage the assets in the international stocks
component, the small cap stocks component and the high yield/high risk bonds
component of each LifeSpan Portfolio, respectively. The Manager will manage
the remaining components using its own investment management personnel.
Babson-Stewart also manages the assets of the International Equity Portfolio.
Please refer to "How the Portfolios are Managed," starting on page __
for more information about the Manager, the Sub-Advisers, the portfolio
managers and advisory fees.
HOW RISKY ARE THE FUNDS? While different types of investments have
risks that differ in type and magnitude, all investments carry risk to some
degree. Changes in overall market movements or interest rates, or factors
affecting a particular industry or issuer, can affect the value of the
Portfolios' investments and their price per share. Equity investments are
generally subject to a number of risks including the risk that values will
fluctuate as a result of changing expectations for the economy and individual
issuers. For both equity and income investments, foreign investments are
subject to the risk of adverse currency fluctuation and additional risks and
expenses in comparison to domestic investments. In comparing levels of risk
among the equity and equity-income funds, the International Equity Portfolio
is more risky than the Growth Portfolio and both of these Portfolios are more
risky than the LifeSpan Portfolios. Fixed-income investments are generally
subject to the risk that values will fluctuate with inflation, with
lower-rated fixed-income investments being subject to a greater risk that the
issuer will default in its interest or principal payment obligations. In
comparing levels of risk among the fixed-income funds, the Total Return
Portfolio is more risky than Income Portfolio and Government Securities
-5-
<PAGE>
Portfolio. Money Market Portfolio Fund is the most conservative of the nine
Portfolios because Money Market Portfolio intends to maintain a stable net
asset value, although there is no assurance that it will be able to do so.
/ / HOW CAN I BUY OR SELL SHARES? Shares of each Portfolio are offered
only for purchase by Accounts as an investment medium for variable life
insurance policies and variable annuity contracts. Account owners should
refer to the accompanying Account Prospectus for additional information on
how to buy or sell shares of the Portfolios.
/ / HOW HAVE THE PORTFOLIOS PERFORMED? Money Market Portfolio measures
its performance by quoting its yield and compounded effective yield, which
measure historical performance. Each of the other Portfolios measures its
performance by quoting a yield, dividend yield, average annual total return
and cumulative total return. Those returns can be compared to the yields or
total returns (over similar periods) of other funds. Of course, other funds
may have different objectives, investments, and levels of risk. Please
remember that past performance does not guarantee future results.
FINANCIAL HIGHLIGHTS
The following information for the fiscal period ended December 31, 1995
has been derived from audited financial statements together with the
auditors' report for the year ended December 31, 1995 which is included in
the Statement of Additional Information. The tables on the following pages
present selected financial information about the Portfolios, including per
share data and expense ratios and other data based on each Portfolio's
respective average net assets. The information for the LifeSpan Portfolios
for the period ended December 31, 1995 is unaudited. Additional information
about the performance of each Portfolio is contained in the Company's 1995
Annual Report which may be obtained without charge by calling or writing the
Company at the telephone or address on the back cover.
-6-
<PAGE>
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS* YEARS ENDED DECEMBER 31,
- ------------------------------ --------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
period
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .0541 .0379 .0265 .0332 .0560 .0769 .0859 .0704 .0620 .0621
Net realized and unrealized --- --- --- --- --- --- --- --- --- --
gain (loss) on investments
Total income (loss) from .0541 .0379 .0265 .0332 .0560 .0769 .0859 .0704 .0620 .0621
investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment (.0541) (.0379) (.0265) (.0332) (.0560) (.0769) (.0859) (.0704) (.0620) (.0621)
income
Distributions from net --- --- --- --- --- --- --- --- --- ---
realized gain on investments
Total dividends and (.0541) (.0379) (.0265) (.0332) (.0560) (.0769) (.0859) (.0704) (.0620) (.0621)
distributions to
shareholders
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET 5.55% 3.79% 2.69% 3.35% 5.73% 7.97% 8.96% 7.22% 6.33% 6.40%
VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in $70,693 $66,116 $52,527 $60,447 $76,559 $84,124 $65,417 $50,763 $39,514 $28,330
thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 5.41% 3.79% 2.65% 3.32% 5.60% 7.69% 8.59% 7.04% 6.20% 6.21%
Expenses .57% .58% .60% .61% .63% .68% .70% .70% .71% .70%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Portfolio during these periods.
-7-
<PAGE>
INCOME PORTFOLIO
<TABLE>
<CAPTION>
INCOME PORTFOLIO --
FINANCIAL HIGHLIGHTS* YEARS ENDED DECEMBER 31,
- -------------------- -----------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $ 1.11 $ 1.25 $ 1.21 $ 1.23 $ 1.12 $ 1.15 $ 1.10 $ 1.12 $ 1.24 $ 1.23
beginning of period
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .08 .09 .08 .09 .10 .10 .10 .10 .09 .11
(loss)
Net realized and .12 (.14) .07 -- .11 (.03) .05 (.01) (.06) .06
unrealized gain (loss)
on investments
Total income (loss) from .20 (.05) .15 .09 .21 .07 .15 .09 .03 .17
investment operations
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net (.08) (.09) (.08) (.09) (.10) (.10) (.10) (.11) (.09) (.11)
investment income
Distributions from net -- (.00) (.03) (.02) -- -- -- -- (.06) (.05)
realized gain on
investments
Total dividends and (.08) (.09) (.11) (.11) (.10) (.10) (.10) (.11) (.15) (.16)
distributions to
shareholders
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of $ 1.23 $ 1.11 $ 1.25 $ 1.21 $ 1.23 $ 1.12 $ 1.15 $ 1.10 $ 1.12 $ 1.24
period ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
- --------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net 18.18% (4.08)% 12.34% 7.13% 18.31% 5.91% 13.91% 7.88% 1.76% 13.79%
Asset Value(a)
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $114,677 $100,399 $107,333 $80,104 $62,018 $48,959 $44,171 $35,156 $32,222 $32,288
(in thousands)
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income 6.69% 7.07% 6.54% 7.31% 7.94% 8.42% 8.74% 8.77% 6.93% 8.59%
(loss)
Expenses .65% .68% .70% .77% .80% .85% .87% .85% .85% .86%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 46.55% 74.29% 124.33% 115.71% 51.15% 36.77% 172.89% 104.30% 161.24% 160.71%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Portfolio during these periods.
(a) Annual total returns are for the Portfolio without regard to the performance
of the Accounts.
-8-
<PAGE>
GOVERNMENT SECURITIES
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS* YEARS ENDED DECEMBER 31,
- --------------------- -----------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992(c)
- ------------------------------ -------- -------- -------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of $ .95 $ 1.06 $ 1.01 $ 1.00
period
- -------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .06 .06 .04 .02
Net realized and unrealized .12 (.11) .07 .04
gain (loss) on investments -------- -------- -------- --------
Total income (loss) from .18 (.05) .11 .06
investment operations
- -------------------------------------------------------------------------
Dividends and Distributions to
shareholders:
Dividends from net investment (.06) (.06) (.04) (.02)
income
Distributions from net -- (.00) (.02) (.03)
realized gain on investments
and foreign currency
transactions
- -------------------------------------------------------------------------
Total dividends and (.06) (.06) (.06) (.05)
distributions to
shareholders
- -------------------------------------------------------------------------
Net asset value, end of period 1.07 .95 1.06 1.01
- -------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET 18.91 (4.89) 10.98 6.61
VALUE(A)
- -------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in $24,309 $18,784 $15,687 $ 7,634
thousands)
- -------------------------------------------------------------------------
Ratios to average net asets:
Net investment income (loss) 6.08% 6.04% 5.13% 4.64%(b)
Expenses .71% .85% .93% 1.20%(b)
- -------------------------------------------------------------------------
Portfolio turnover rate 54.74% 102.31% 178.18% 458.62%(b)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Fund during these periods.
(a) Annual total returns are for the Portfolio without regard to the performance
of the Accounts.
(b) Annualized.
(c) For the period from May 13, 1992 (inception) to December 31, 1992.
-9-
<PAGE>
TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
FINANCIAL TOTAL RETURN PORTFOLIO
HIGHLIGHTS* YEARS ENDED DECEMBER 31,
- ------------- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
DATA: --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $ 1.51 $ 1.65 $ 1.56 $ 1.57 $ 1.33 $ 1.41 $ 1.27 $ 1.20 $ 1.42 $ 1.36
beginning of
period
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment
operations:
Net investment .07 .06 .06 .07 .07 .08 .09 .06 .06 .05
income (loss)
Net realized and .30 (.09) .20 .10 .32 (.07) .20 .08 .02 .12
unrealized gain --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(loss) on
investments
Total income (loss) .37 (.03) .26 .17 .39 .01 .29 .14 .08 .17
from investment
operations
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net (.07) (.06) (.06) (.07) (.07) (.08) (.09) (.07) (.06) (.05)
investment income
Distributions from (.06) (.05) (.11) (.11) (.08) (.01) (.06) -- (.24) (.06)
net realized gain
on investments
Total dividends and (.13) (.11) (.17) (.18) (.15) (.09) (.15) (.07) (.30) (.11)
distributions to
shareholders
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end $ 1.75 $ 1.51 $ 1.65 $ 1.56 $ 1.57 $ 1.33 $ 1.41 $ 1.27 $ 1.20 $ 1.42
of period --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net 24.66% (1.97)% 16.28% 10.21 28.79% 0.50% 22.98% 11.64% 4.26% 12.58%
Asset Value(a)
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of $993,926 $742,135 $610,416 $401,826 $304,365 $229,343 $220,941 $184,117 $167,861 $137,774
period (in
thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Net investment 4.48% 4.21% 3.90% 4.27% 4.44% 5.65% 6.20% 4.93% 3.53% 3.32%
income (loss)
Expenses .59% .56% .60% .68% .72% .78% .80% .79% .78% .82%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 62.31% 88.25% 161.55% 182.10% 128.78% 109.23% 150.98% 244.72% 198.88% 184.30%
rate
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Portfolio during these periods.
(a) Annual total returns are for the Portfolio without regard to the performance
of the Account.
-10-
<PAGE>
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS* YEARS ENDED DECEMBER 31,
- ------------------------- ------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $ 1.97 $ 2.08 $ 1.91 $ 1.87 $ 1.46 $ 1.65 $ 1.36 $ 1.22 $ 1.60 $ 1.56
beginning of period
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .04 .03 .04 .04 .04 .05 .07 .03 .04 .05
(loss)
Net realized and .71 (.04) .36 .19 .51 (.18) .42 .15 -- .14
unrealized gain (loss)
d on investments
Total income (loss) from .75 (.07) .40 .23 .55 (.13) .49 .18 .04 .19
investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net (.04) (.03) (.04) (.04) (.04) (.05) (.07) (.04) (.04) (.05)
investment income
Distributions from net (.15) (.07) (.19) (.15) (.10) (.01) (.13) -- (.38) (.10)
realized gain on
investments and
foreign currency
transactions
Total dividends and (.19) (.10) (.23) (.19) (.14) (.06) (.20) (.04) (.42) (.15)
distributions to
shareholders
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of $ 2.53 $ 1.97 $ 2.08 $ 1.91 $ 1.87 $ 1.46 $ 1.65 $ 1.36 $ 1.22 $ 1.60
period
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net 38.06% (0.51)% 21.22% 12.36% 37.53% (7.90)% 35.81% 14.46% 0.25% 11.58%
Asset Value(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $405,935 $230,195 $165,775 $101,215 $75,058 $50,998 $53,955 $41,434 $40,995 $38,605
(in thousands)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income 2.01% 1.87% 2.30% 2.19% 2.16% 3.04% 4.16% 2.24% 1.97% 2.61%
(loss)
Expenses .66% .67% .69% .76% .80% .84% .87% .88% .86% .90%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69.34% 97.25% 97.64% 136.11% 142.85% 146.78% 174.08% 246.36% 218.02% 175.49%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Portfolio during these periods.
(a) Annual total returns are for the Portfolio without regard to the performance
of the Accounts.
-11-
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS* YEARS ENDED DECEMBER 31,
- ------------------------------ -----------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of $ 1.09 $ 1.09 $ .92 $ 1.00
period
- -------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .03 (.01) .00 .01
Net realized and unrealized .08 .03 .20 (.06)
gain (loss) on investment, -------- -------- -------- --------
options written and foreign
currency transactions
Total income (loss) from .11 .02 .20 (.05)
investment operations
- -------------------------------------------------------------------------
Dividends and Distributions to
shareholders:
Dividends from net investment (.04) -- (.02) (.02)
income
Distributions from net (.01) (.02) (.01) (.01)
realized gain on investments -------- -------- -------- --------
and foreign currency
transactions
Total dividends and (.05) (.02) (.03) (.03)
distributions to
shareholders
- -------------------------------------------------------------------------
Net asset value, end of period 1.15 1.09 1.09 .92
- -------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET 10.30 1.44 21.80 (4.32)
VALUE(a)
- -------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in $45,775 $31,603 $18,315 $10,493
thousands)
- -------------------------------------------------------------------------
Ratios to average net asets:
Net investment income (loss) 1.61% (1.85)% (0.31)% 1.63%(b)
Expenses 1.26% 1.28% 1.50% 1.50%(b)
- -------------------------------------------------------------------------
Portfolio turnover rate 85.11% 76.54% 57.42% 206.69%(b)
- -------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Fund during these periods.
(a) Annual total returns are for the Portfolio without regard to the performance
of the Accounts.
(b) Annualized.
-12-
<PAGE>
THE LIFESPAN PORTFOLIOS
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1995*
----------------------------------------
CAPITAL DIVERSIFIED
APPRECIATION BALANCED INCOME
PER SHARE OPERATING DATA (A): PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ------------
<S> <C> <C> <C>
Net asset value, beginning of $ 1.00 $ 1.00 $ 1.00
period
- -------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) $ .01 $ .01 $ .02
Net realized and unrealized .06 .05 .04
gain (loss) on investments
and foreign currency
transactions
Total income (loss) from .07 .06 .06
investment operations
- -------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment $ (.01) $ (.01) $ .02)
income
Distributions from net -- -- --
realized gain on investments
and foreign currency
transactions
------------- ----------- ------------
Total dividends and (.01) (.01) (.02)
distributions to
shareholders
- -------------------------------------------------------------------------
Net asset value, end of period $ 1.06 $ 1.05 $ 1.04
- -------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET 6.65% 6.08% 5.69%
VALUE(b)
- -------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in $ 26,768 $ 35,467 $ 21,176
thousands)
- -------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.73% 3.08% 5.11%
Expenses 1.50% 1.50% 1.50%
- -------------------------------------------------------------------------
Portfolio turnover rate 38.73% 39.67% 41.21%
- -------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
* G.R. Phelps & Co. managed the Portfolios during this period.
(a) For the period from September 1, 1995 (Inception) to December 31, 1995
(b) Annualized
(c) Annual total returns are for the Portfolio without regard to the performance
of the Accounts
-13-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE AND POLICIES--MONEY MARKET PORTFOLIO. The Money
Market Portfolio seeks as high a level of current income as is consistent
with preservation of capital and maintenance of liquidity by investing in
money market instruments. Money market instruments are high quality,
short-term securities that present minimal credit risk. They consist of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, commercial paper of U.S. and non-U.S., issuers and
certificates of deposit, banker's acceptances, bank deposits of U.S. and
non-U.S. banks (including Eurodollar and Yankee dollar deposits) and
short-term corporate debt securities. These instruments are denominated in
U.S. dollars and may carry fixed or variable interest rates. These
instruments are described further under the caption "Other Investment
Techniques and Strategies."
The Portfolio seeks to maintain a constant net asset value of $1.00 per
share by investing in securities having an actual or effective maturity of
365 days or less and maintaining a dollar-weighted average portfolio maturity
of 90 days or less. There can be no assurance, however, that the Portfolio
will be able to maintain a stable price per share of $1.00.
The Portfolio may purchase only money market instruments that are within
the two highest rating categories of the major rating agencies (E.G., Moody's
Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings Group
("Standard & Poor's"). The Portfolio will not invest more than 5% of its
total assets in securities that, although of high quality, have not been
rated in the highest short-term rating category or, if unrated, have not been
judged by the Manager to be of equivalent quality. Within this 5%
limitation, the Portfolio will not invest more than 1% of its total assets,
or $1 million, whichever is greater, in securities (other than U.S.
Government securities) of any single issuer. Refer to Appendix A for a
description of these rating categories.
The Portfolio intends to hold its investments until maturity, but may sell
them prior to maturity for a number of reasons, including: to shorten or
lengthen the average maturity of the Portfolio's portfolio; to increase
yield; to maintain the quality of the portfolio; or to maintain a stable
share value.
Securities in which the Money Market Portfolio invests will generally not
yield as high a level of current income as lower quality and longer-term
securities. Such lower quality and longer-term securities, however, may have
less liquidity and greater credit and interest rate risk. AN INVESTMENT IN
THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
INVESTMENT OBJECTIVE AND POLICIES--INCOME PORTFOLIO. The Income Portfolio
seeks high current income consistent with prudent investment risk and
preservation of capital. The Portfolio seeks to achieve its objective by
investing primarily in corporate debt securities and securities issued by the
U.S. Government and its agencies and instrumentalities. The Portfolio
anticipates maintaining an average dollar-weighted portfolio maturity of
generally between eight and twelve years. By restricting the maturities of
the Portfolio's investments, the potential for dramatic changes in the value
of the Portfolio's investments should be reduced, and the value of the
Portfolio's shares should remain more stable than that of a longer-term bond
fund. Investors should be mindful, however, that the value of the
Portfolio's shares fluctuates based on changes in interest rates and in the
credit quality of the issuers represented in its portfolio.
The Portfolio invests at least 75% of its total assets in: U.S.
Government and U.S. Government-related securities (as defined below in
"Investment Objective and Policies--Government Securities Portfolio"),
dollar-denominated foreign government and corporate securities and short-term
investments. These investments must be rated at least
-14-
<PAGE>
investment grade by a major rating agency at the time of purchase, or, if
unrated, be judged by the Manager to be of comparable credit quality, except
that the Portfolio's investments in short-term investments must be rated, or
judged to be the equivalent of, "Prime." Some of these investments in the
lowest investment grade category may have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments than is the
case with higher grade securities. The Income Portfolio will not dispose of
a debt security merely because of a downward change in the credit rating of
that security assigned by a major credit agency.
The Portfolio may invest the remainder of its total assets (up to 25%
under normal circumstances) in debt securities and preferred stocks rated
below investment grade and unrated debt securities determined by the Manager
to be of comparable credit quality commonly called junk bonds. Unrated debt
securities will not exceed 10% of the Portfolio's total assets. Debt
securities having low credit quality involve greater price volatility and
risk of loss of principal and income than higher quality securities. To the
extent the Portfolio invests in lower quality debt securities, its net asset
value may be subject to greater fluctuation. For a description of these and
other risks associated with lower quality debt securities, see "Other
Investment Techniques and Strategies--Investing in Lower-Rated Securities."
Refer to Appendix A for a description of certain rating categories. In
addition, Appendix B provides a summary of ratings assigned to debt holdings
(not including money market instruments) of the Portfolio. These percentages
are historical and do not necessarily indicate the current or future debt
holdings of the Portfolio.
The Portfolio may invest up to 20% of its total assets in mortgage dollar
rolls. The Portfolio may also invest up to 5% of its total assets in inverse
floating rate instruments. See "Other Investment Techniques and
Strategies--Inverse Floating Rate Instruments and--Mortgage Dollar Rolls."
Consistent with the foregoing policies, the Portfolio may invest up to 5% of
its total assets in non-dollar denominated securities of foreign issuers,
including issuers in developing countries. These investments are subject to
special risks. See "Other Investment Techniques and Strategies--Foreign
Securities."
INVESTMENT OBJECTIVE AND POLICIES--GOVERNMENTAL SECURITIES PORTFOLIO. The
Government Securities Portfolio seeks a high level of current income with a
high degree of safety of principal by investing primarily (at least 65% of
its total assets under normal market conditions) in U.S. Government
securities and U.S. Government-related securities.
U.S. Government securities are high quality instruments issued, or
guaranteed as to principal and interest, by the U.S. Treasury or by an agency
or instrumentality of the U.S. Government. These may include bills, notes
and bonds of the U.S. Treasury, mortgage participation certificates
guaranteed by the Government National Mortgage Association (Ginnie Mae
Certificates), or obligations of the Federal Home Loan Mortgage Corporation
or the Federal National Mortgage Association. U.S. Government-related
securities are obligations that are fully collateralized or otherwise secured
by U.S. Government securities. U.S. Government securities and U.S.
Government-related securities may include pools of consumer loans or
mortgages, such as collateralized mortgage obligations (CMOs). The
Portfolio's investments in privately issued CMOs will be limited to those
rated within the two highest rating categories by a nationally recognized
rating agency. CMOs are derivative securities; for a discussion of
derivative securities, see "Other Investment Techniques and
Strategies--Derivative Investments." The U.S. Government and U.S.
Government-related securities in which the Portfolio will invest may have
fixed or floating rates of interest.
U.S. Government and U.S. Government-related securities do not generally
involve the credit risks associated with corporate debt securities. As a
result, the Portfolio's yield is generally lower than the yield of most
general purpose fixed-income funds, which assume certain credit
-15-
<PAGE>
risks in exchange for higher potential yield. Like corporate debt
securities, however, the value of U.S. Government and U.S. Government-related
securities, and thus the Portfolio's net asset value, generally fluctuates
inversely with changes in interest rates. The Manager may seek to take
advantage of market developments and yield disparities by shortening average
maturity in anticipation of rising interest rates and by lengthening average
maturity in anticipation of declining interest rates. The Portfolio may also
invest up to 20% of its total assets in mortgage dollar rolls. The Portfolio
may invest up to 5% of its total assets in inverse floating rate instruments.
Additional characteristics and risks associated with the securities in which
the Portfolio invests and the investment techniques it uses are described
under "Other Investment Techniques and Strategies--U.S. Government
Securities--Mortgage-Backed Securities and CMOs and--Mortgage Dollar Rolls."
Under normal circumstances, the Portfolio may invest the remainder of its
assets (up to 35%) in investment grade debt obligations of private issuers.
Although the Government Securities Portfolio invests primarily in U.S.
Government and U.S. Government related securities which generally have less
credit risk than other securities, an investment in the Government Securities
Portfolio is not insured or guaranteed.
INVESTMENT OBJECTIVE AND POLICIES--TOTAL RETURN PORTFOLIO. The Total
Return Portfolio seeks to maximize total investment return (including capital
appreciation and income) by allocating its assets among stocks, corporate
bonds, U.S. Government securities and money market instruments according to
changing market conditions. The Portfolio's allocation process utilizes
quantitative asset allocation tools, which measure the relationship among
these asset categories, in combination with the judgment of the Manager
concerning current market dynamics. Allocating assets among different types
of investments allows the Portfolio to take advantage of opportunities
wherever they occur, but also subjects the Portfolio to the risks of a given
investment type. The Portfolio's debt securities are expected to have a
portfolio maturity of six to twelve years. At least 25% of the Portfolio's
total assets will be invested in fixed income senior securities. The
Portfolio may invest up to 25% of its total assets in the aggregate in debt
securities and preferred stocks rated below investment grade (commonly called
junk bonds) and unrated securities determined by the Manager to be of
comparable credit quality. The Portfolio will not invest in lower rated
securities rated below B at the time of purchase. Unrated debt securities
will not exceed 10% of the Portfolio's total assets.
The Portfolio may invest up to 20% of its total assets in mortgage dollar
rolls. The Portfolio may also invest up to 5% of its total assets in inverse
floating rate instruments which are a type of derivative security.
Consistent with the foregoing policies, the Portfolio may invest to a limited
degree in securities of foreign issuers.
INVESTMENT OBJECTIVE AND POLICIES--GROWTH PORTFOLIO. The Growth Portfolio
seeks long term growth of capital by investing primarily in common stocks
with low price-earnings ratios and better-than-anticipated earnings.
Realization of current income is a secondary consideration. The Manager
chooses investments for the Portfolio using a quantitative investment
discipline in combination with fundamental securities analysis. A low
price-earnings ratio (below the price-earnings ratio of the S&P 500 Index)
often accompanies a stock which is out-of-favor in the market. Stocks with
low price-earnings ratios have performed better than the market averages in
most years of recent decades. When an out-of-favor company demonstrates
better earnings than what most analysts were expecting, referred to as a
favorable earnings surprise, an upward revaluation of both earnings
expectations and the price-earnings multiple often results, generally causing
the company's stock price to outperform the market averages. As stocks with
low price-earnings ratios and favorable earnings surprises are identified,
the Manager uses fundamental securities analysis to select individual stocks
for the Portfolio. When the
-16-
<PAGE>
price-earnings ratio of a stock held by the Portfolio moves significantly
above the multiple of the overall stock market, or the company reports a
meaningful earnings disappointment, the stock will normally be sold.
The Portfolio may invest the remainder of its assets (up to 10% under
normal circumstances) in corporate and U.S. Government debt obligations,
including convertible bonds which may be rated as low as B by Moody's or
Standard and Poor's. See Appendix A for a description of the various ratings
categories.
Consistent with the foregoing policies, the Portfolio may invest to a
limited degree in securities of foreign issuers, including issuers in
developing countries.
INVESTMENT OBJECTIVE AND POLICIES -- INTERNATIONAL EQUITY PORTFOLIO. The
International Equity Portfolio seeks to provide long-term growth of capital
by investing, under normal circumstances, at least 90% of its assets in
equity securities of companies wherever located, the primary stock market of
which is outside the United States. The Portfolio seeks growth of capital
over the long-term as measured relative to its benchmark, the Morgan Stanley
Capital International (MSCI) Europe, Australia and Far East ("EAFE") Index
(the "Index"). The Subadviser pursues the Portfolio's objective by investing
in securities of non-U.S. companies which it believes to be either fairly
valued or undervalued based upon fundamental research--including analysis of
the relative attractiveness of the asset class; the individual equity
markets; industries across and within those markets; other common risk
factors within those markets; and individual international companies. The
relative performance of foreign currencies is an important factor in the
Portfolio's performance. The Subadviser may alter the Portfolio's exposure
to various currencies to take advantage of different yield, risk and return
characteristics. The Subadviser's active management process is intended to
produce a positive deviation between actual portfolio performance and the
returns from the Index over a rolling five-year period. As a result, the
risk and return characteristics of the Portfolio will differ from the Index.
There is no assurance that the Portfolio will achieve its investment
objective.
The International Equity Portfolio's investment emphasis is on large to
intermediate capitalization stocks. Capitalization levels are measured
relative to specific markets; thus large and intermediate capitalization
ranges vary country by country. In general, investments within the Portfolio
do not include the lower 25% capitalization levels of any respective market's
publicly traded securities.
In selecting securities for the Portfolio, the Subadviser seeks to
identify companies whose securities prices appear to be either fairly valued
or undervalued. In analyzing companies for investment, the Subadviser
ordinarily looks for some or all of the following characteristics:
above-average earnings growth per share, high return on invested capital,
healthy balance sheet and overall financial strength, strong competitive
advantages, strength of management and general operating characteristics
which tend to enable the company to compete successfully in the marketplace.
However, the Portfolio may invest in securities of companies with
fundamentals or products of only average promise when the market price of
those securities appears to be undervalued.
The Portfolio may invest up to 25% of its total assets in securities of
companies based in emerging countries as defined by the International Bank
for Reconstruction and Development, the International Finance Committee, the
United Nations or its authorities or the MSCI Emerging Markets Index. The
Subadviser considers an issuer to be located in an emerging country if the
issuer is organized under the laws of an emerging country; the issuer's
principal securities trading market is in an emerging market; or at least 50%
of the issuer's noncurrent assets, capitalization,
-17-
<PAGE>
gross revenue or profit is derived (directly or indirectly through
subsidiaries) from assets or activities located in emerging markets. See the
Statement of Additional Information for additional disclosure about the risks
of investing in securities of issuers located in emerging countries.
When the Subadviser believes that it is appropriate to do so in order to
achieve the Portfolio's investment objective of long-term capital growth, the
Portfolio may invest up to 20% of its total assets in debt securities. Such
debt securities include debt securities of foreign governments, supranational
organizations and private issuers, including bonds denominated in the
European Currency Unit. Portfolio debt investments will be selected on the
basis of, among other things, yield, credit quality, and the fundamental
outlooks for currency and interest rate trends in different parts of the
globe. The Portfolio may purchase investment grade bonds, which are those
rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P and unrated
securities judged by the Subadviser to be of equivalent quality. The
Portfolio may also invest up to 15% of its total assets in debt securities
which are rated below investment grade. The Portfolio does not intend to
invest in securities rated below D. These lower quality securities (commonly
called junk bonds) in which the Portfolio may invest may include obligations
that are in default. Debt securities having low credit quality involve
greater price volatility and risk of loss of principal and income. For a
description of these and other risks associated with lower quality debt
securities, see "Risk Factors, Securities and Investment Techniques--Debt
Securities." Changes in interest rates will affect the market value of
certain investments made by the Portfolio. During periods of falling
interest rates, the values of outstanding fixed-income securities generally
rise. Conversely, during periods of rising interest rates, the values of
such securities generally decline. Changes by recognized rating agencies in
the ratings of a fixed-income issuer may also affect the value of its
securities.
The Portfolio may enter into forward foreign currency contracts to manage
the Portfolio's exposure to variations in foreign exchange rates. The
Portfolio may also buy or sell futures and options contracts relating to
foreign currencies or purchase securities indexed to foreign currencies. See
"Risk Factors, Securities and Investment Techniques--Foreign Currency
Transactions," and "--Futures Contracts and Options on Futures Contracts."
In appropriate circumstances, such as when a direct investment by the
Portfolio in the securities of a particular country cannot be made or when
the securities of an investment company are more liquid than the underlying
portfolio securities, the Portfolio may, consistent with the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act"), invest in
the securities of closed-end investment companies that invest in foreign
securities. Since the Portfolio's shareholders would be subject to
additional fees, including management fees, for any assets so invested, the
Subadviser will invest in such closed-end investment companies only where, in
its opinion, the potential returns justify incurring the additional expense.
International investing can help investors reduce their overall portfolio
risk through diversification. In addition, international investing enables
investors to benefit from foreign economies that may have more favorable
growth rates than the United States economy. However, international
investments, particularly investments in developing countries, are subject to
special risks. For a description of these risks, see "Risk Factors,
Securities and Investment Techniques--Foreign Securities."
INVESTMENT OBJECTIVES AND POLICIES--THE LIFESPAN PORTFOLIOS. CAPITAL
APPRECIATION PORTFOLIO seeks long-term capital appreciation. Current income
is not a primary consideration. BALANCED PORTFOLIO seeks a blend of capital
appreciation and income. INCOME PORTFOLIO seeks high current income, with
opportunities for capital appreciation. Each LifeSpan Portfolio is an asset
allocation fund and seeks to achieve its investment objective by allocating
its assets among
-18-
<PAGE>
two broad classes of investments -- stocks and bonds. The STOCK CLASS
includes equity securities of all types. The BOND CLASS includes all
varieties of fixed-income instruments. Allocating assets among different
types of investments allows each Portfolio to take advantage of opportunities
wherever they may occur, but also subjects the Portfolio to the risks of a
given investment type. Stock values fluctuate in response to the activities
of individual companies and general market economic conditions. The value of
bonds fluctuates based on changes in interest rates and in the credit quality
of the issuer.
The Manager has the ability to allocate a Portfolio's assets within
specified ranges. A Portfolio's NORMAL ALLOCATION indicates the benchmark
for its combination of investments in each asset class over time. As market
and economic conditions change, however, the Manager may adjust the asset mix
between the stock and bond classes within a normal asset allocation range as
long as the relative risk and return characteristics of the three Portfolios
remain distinct and each Portfolio's investment objective is preserved. The
Manager will review normal allocations between the stock and bond classes
quarterly and will rebalance, if necessary, at that time. Additional
adjustments may be made if an asset allocation shift of 5% or more is
warranted.
The Manager will diversify each Portfolio's stock class by allocating the
Portfolio's stock portfolio among four STOCK COMPONENTS: international
stocks, value/growth stocks, growth and income stocks and small-capitalized
growth stocks (small cap). Each stock component is also permitted to invest
a portion of its assets in bonds when the Manager or relevant Sub-Adviser
determines that increased flexibility in portfolio management is required to
enhance appreciation or income. The Manager will diversify a Portfolio's
bond class by allocating a Portfolio's bond portfolio among three BOND
COMPONENTS: government and corporate bonds, high yield/high risk bonds (also
called "junk bonds") and short-term bonds. There is no requirement that the
Manager allocate a Portfolio's assets among all stock or bond components at
all times. These stock and bond components have been selected because the
Manager believes that this additional level of asset diversification will
provide each Portfolio with the potential for higher returns with lower
overall volatility. Each Portfolio's normal allocation is shown in the chart
below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Capital Diversified
Appreciation Balanced Income
Portfolio Portfolio Portfolio
--------- --------- ---------
Normal Normal Normal
Asset Class Allocation Range Allocation Range Allocation Range
- ----------- ---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
STOCKS 80% 70-90% 60% 50-70% 25% 15-35%
COMPONENT
International 20% 15-25% 15% 5-20% 0% 0%
Value/Growth 20% 15-30% 15% 10-25% 0% 0%
Growth/Income 20% 15-30% 15% 10-25% 25% 15-35%
Small Cap 20% 15-25% 15% 5-20% 0% 0%
BONDS 20% 10-30% 40% 30-50% 75% 65-85%
COMPONENT
Government/Corporate 10% 5-15% 15% 10-25% 35% 30-34%
High Yield/High Risk
Bonds 10% 5-15% 15% 5-20% 15% 5-20%
Short Term Bonds 0% 0% 10% 5-20% 25% 15-30%
- -----------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
All percentage limitations are applied at the time of purchase. The
Manager may rebalance the asset allocations quarterly to realign them in
response to market conditions. Once the Manager has determined the weighting
of the general asset classes and the components of each LifeSpan Portfolio,
the Manager or the relevant Sub-Adviser will then select the individual
securities to be included in each component. Each Sub-Adviser will manage
the portion of a LifeSpan Portfolio's assets in the particular component
assigned to it by the Manager. As of the date of this Prospectus, the
Manager has assigned the management of the components as follows:
Sub-Adviser Component of Investments
----------- ------------------------
Babson-Stewart International Stocks
Pilgrim Small Cap Stocks
BEA High Yield/High Risk Bonds
The Manager will manage the remaining components using its own investment
management personnel. See "How the Portfolio is Managed--The Manager, the
Sub-Advisers and Their Affiliates and --Portfolio Managers" for additional
information.
/ / THE STOCK COMPONENT. Each LifeSpan Portfolio will invest those
assets which are allocated to the stock class among four components each of
which invests principally in equity securities but which differ with respect
to capitalization, country and investment style as described below:
/ / INTERNATIONAL COMPONENT. This component seeks long-term growth of
capital primarily through a diversified portfolio of marketable international
equity securities. The international component intends to allocate
investments among several countries (usually between 8-12), primarily those
included in the Morgan Stanley Capital International (MSCI) Europe, Australia
and Far East (EAFE) Index and Canada. In addition, the component may invest
up to 25% of its assets in stocks and bonds of companies based in emerging
countries. Stocks are purchased on the basis of fundamental and valuation
criteria. Global themes, identifying attractive economic sectors and
industries; country analysis, assessing opportunities through quantitative
and qualitative analysis; and unique situations, are used to identify
companies with exceptional growth opportunities. Issues are sold because of
changing fundamentals, overvaluation, performance issues, or better relative
opportunities. The component may also, consistent with the provisions of the
Investment Company Act, invest in the securities of closed-end investment
companies that invest in foreign securities. A portion of the international
component's investments may be held in corporate bonds and government
securities of foreign issuers and cash and short-term instruments.
/ / VALUE/GROWTH COMPONENT. This component seeks to achieve long-term
growth of capital by investing primarily in common stocks with low
price-earnings ratios and better than anticipated earnings. Realization of
current income is not a primary consideration. Stocks with low
price-earnings ratios and favorable earnings surprises are identified by the
Manager who uses fundamental securities analysis to select individual stocks
for purchase in this component. When the price earnings ratio of a stock
held by the value/growth component moves significantly above the multiple of
the overall stock market, or the company reports a meaningful earnings
disappointment, the stock becomes a candidate for sale. Up to 15% of the
component's assets may be invested in international stocks, whose issuers
generally have a substantial portion of their business in the United States,
and in ADRs. A portion of the component's assets may be held in cash and in
short-term investments.
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/ / GROWTH/INCOME COMPONENT. This component seeks to enhance each
Portfolio's total return through capital appreciation and dividend income by
investing primarily in common stocks with low price-earnings ratios,
better-than-anticipated earnings and better than market average dividend
yields. Stocks with low price-earnings ratios (below the price-earnings
ratio of the S&P 500 Index), favorable earnings surprises and above-average
yields are identified by the Manager who uses fundamental securities analysis
to select individual stocks for purchase in this component. When the
price-earnings ratio of a stock held by the component moves significantly
above the multiple of the overall stock market, or the company reports a
meaningful earnings disappointment, or when the yield drops significantly
below the market yield, stocks in this component will normally be sold. Up
to 15% of the component's assets may be invested in international stocks,
whose issuers generally have a substantial portion of their business in the
United States, and in ADRs. A portion of the component's investments may be
held in investment grade or below investment grade convertible securities,
corporate bonds and U.S. Government securities, cash and short-term
instruments.
/ / SMALL CAP COMPONENT. This component seeks long-term growth of
capital by investing primarily in stocks of companies with relatively small
market capitalizations, typically between $250 million to $1.5 billion.
Current income is a secondary consideration. When selecting individual
securities for the component's portfolio, the Sub-Adviser seeks companies
which have an outlook for strong growth in earnings and the potential for
significant capital appreciation, particularly in industry segments that are
experiencing rapid growth. Securities will be sold when the Sub-Adviser
believes that anticipated appreciation is no longer probable and that
alternative investments offer superior appreciation prospects, or the risk of
a decline in market price is too great. Historical results tend to confirm
the benefits of investing in companies with small capitalizations.
Capitalization is the aggregate value of a company's stock, or its price per
share times the number of shares outstanding. A portion of the component's
investments may also be held in cash and short-term instruments.
/ / THE BOND COMPONENTS. Each Portfolio will invest those assets which
are allocated to the bond class among three components, each of which invests
in an array of fixed-income securities as described below:
/ / GOVERNMENT/CORPORATE COMPONENT. This component seeks current income
and the potential for capital appreciation by investment primarily in
fixed-income debt securities, including investment grade corporate debt
obligations of foreign and U.S. issuers and securities issued by the U.S.
Government and its agencies and instrumentalities and by foreign governments.
Although the component may invest in securities with maturities across the
entire slope of the yield curve, including long bonds (10+ years),
intermediate notes (3 to 10 years) and short term notes (1 to 3 years), the
Manager expects to maintain characteristics of an intermediate average
maturity and duration. In assessing maturity, the Manager may take into
account prepayment features. The Manager's investment strategy includes the
purchase of bonds that are underpriced relative to other debt securities
having similar risk profiles. The Manager evaluates a broad array of
factors, including maturity, creditworthiness, cash flow certainty and
interest rate volatility, and examines yield relationships in relation to
trends in the economy, the financial and commodity markets and interest
rates. The component may also invest a portion of its assets in cash and
short-term instruments.
/ / HIGH YIELD/HIGH RISK BOND COMPONENT. This component seeks to earn as
high a level of current income as is consistent with the risks associated
with high yield investments. The component's assets are invested primarily
in bonds that are rated BB or lower by S&P or Ba or lower by Moody's or, if
not rated, that are deemed by the Sub-Adviser to be of comparable quality.
This component may invest in bonds that are in default. Bonds in default are
not making interest or principal payments on the date due. The Sub-Adviser
employs an active sector
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rotational style utilizing all sectors of the high yield market, with an
emphasis on diversification to control risk. The Sub-Adviser typically
favors higher quality companies in the non-investment grade market, senior
debt over junior debt, and secured over unsecured credits. The Sub-Adviser
will screen individual securities for such characteristics as minimum yield
and issue size, issue liquidity and financial and operational strength.
In-depth credit research will then be conducted to arrive at a core group of
securities within the high yield universe from which the component will be
constructed. Continuous credit monitoring and adherence to sell disciplines
associated with both price appreciation and depreciation will be utilized to
achieve the overall yield and price objectives of the component. The
component may also invest a portion of its assets in cash and short-term
instruments.
/ / SHORT-TERM BOND COMPONENT. This component seeks to obtain a high
level of current income consistent with prudent investment risk and
preservation of capital by investing primarily in debt obligations of foreign
and U.S. issuers and securities issued by the U.S. Government and its
agencies and instrumentalities and by foreign governments. This component
will invest primarily in fixed-income securities generally maturing within
five years of date of purchase, or with prepayment or similar features which,
in the view of the Manager, give the instrument an average life of five
years. It is anticipated that the average dollar weighted maturity of the
component will generally range between two and three years. The Manager's
investment management process incorporates analysis of an issuer's debt
service capability, financial flexibility and liquidity, as well as the
fundamental trends and the outlook for an issuer and its industry. Credit
risk management is also an important factor, particularly in the Manager's
internal fixed-income analysis. The Manager conducts intensive credit
research, and carefully selects individual issues and broadly diversifies
portfolio holdings by industry sector and issuer. The Manager believes that
determination of an issuer's attractiveness relative to alternative issues
and/or valuations within the marketplace are important considerations in its
investment decision-making. The component may also invest a portion of its
assets in cash and money market securities.
/ / CAN A PORTFOLIO'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? Each
Portfolio has an investment objective, described above, as well as investment
policies it follows to try to achieve its objective. Additionally, a
Portfolio uses certain investment techniques and strategies in carrying out
those investment policies. A Portfolio's investment policies and practices
are not "fundamental" unless this Prospectus or the Statement of Additional
Information says that a particular policy is "fundamental." A Portfolio's
investment objective is not a fundamental policy. Portfolio shareholders will
be given 30 days' advance written notice of a change to a Portfolio's
investment objective.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of a Portfolio's outstanding voting shares. The term
"majority" is defined in the Investment Company Act to be a particular
percentage of outstanding voting shares (and this term is explained in the
Statement of Additional Information). A Portfolio's Board of Directors may
change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
/ / PORTFOLIO TURNOVER. A change in the securities held by a Portfolio
is known as "portfolio turnover." Income Portfolio and Government Securities
Portfolio may take advantage of short-term differentials in yields when
short-term trading is consistent with their objectives of seeking income.
While short-term trading increases portfolio turnover, the Portfolios incur
little or no brokerage costs for U.S. Government securities. The portfolio
turnover rates of Income Portfolio and Government Securities Portfolio are
46.55% and 54.74%, respectively, for the fiscal year ended December 31, 1995.
The "Financial Highlights," above, show the Portfolios' (other than Money
Market Portfolio's) portfolio turnover rates during past fiscal years. High
portfolio
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turnover may affect the ability of a Portfolio to qualify as a "regulated
investment company" under the Internal Revenue Code and avoid being taxed on
amounts distributed as dividends and capital gains to shareholders. Each
Portfolio qualified as such in its fiscal period ended December 31, 1995 and
intends to do so in the future.
/ / INVESTMENT RISKS. Because changes in securities market prices can
occur at any time, there is no assurance that the Portfolios will achieve
their investment objectives, and when you redeem your shares, they may be
worth more or less than what you paid for them.
/ / STOCK INVESTMENT RISKS. At times, the stock markets can be volatile,
and stock prices can change substantially. This market risk will affect a
Portfolio's net asset values per share, which will fluctuate as the values of
the Portfolio's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the same
direction at the same time, and other factors can affect a particular stock's
prices (for example, poor earnings reports by an issuer, loss of major
customers, major litigation against an issuer, or changes in government
regulations affecting an industry). Not all of these factors can be
predicted. Each Portfolio attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of stock of any one
company and by not investing too great a percentage of a Portfolio's assets
in any one company.
/ / RISKS OF DEBT SECURITIES. Debt securities are subject to changes in
their value due to changes in prevailing interest rates. When prevailing
interest rates fall, the values of already-issued debt securities generally
rise. When interest rates rise, the values of already-issued debt securities
generally decline. The magnitude of these fluctuations will often be greater
for longer-term debt securities than shorter-term debt securities. Changes
in the value of securities held by a Portfolio mean that the Portfolio's
share prices can go up or down when interest rates change, because of the
effect of the change on the value of the Portfolio's portfolio of debt
securities. Credit risk relates to the ability of the issuer of a debt
security to make interest or principal payments on the security as they
become due. Generally, higher-yielding, lower-rated bonds are subject to
greater credit risk than higher-rated bonds. See "Other Investment
Techniques and Strategies--Investing in Lower-Grade Securities."
/ / FOREIGN SECURITIES HAVE SPECIAL RISKS. There are special risks in
investing in foreign securities and in securities issued by companies and
governments located in emerging market countries. Because each Portfolio
(other than the Money Market Portfolio and Government Securities Portfolio)
may purchase securities denominated in foreign currencies or traded primarily
in foreign markets, a change in the value of a foreign currency against the
U.S. dollar will result in a change in the U.S. dollar value of those foreign
securities. Foreign issuers are not required to use generally-accepted
accounting principles that apply to U.S. issuers. If foreign securities are
not registered for sale in the U.S. under U.S. securities laws, the issuer
does not have to comply with the disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by other
factors, including exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental, economic or monetary policy in the
U.S. or abroad, or other political and economic factors.
In addition, it is generally more difficult to obtain court judgements
outside the U.S. if a Portfolio were to sue a foreign issuer or broker.
Additional costs may be incurred because foreign brokerage commissions are
generally higher than U.S. rates, and there are additional custodial costs
associated with holding securities abroad. More information about the risks
and potential rewards of investing in foreign securities, particularly those
of emerging countries, is contained in "Other Investment Techniques and
Strategies--Investing in Emerging Markets" and in the Statement of Additional
Information.
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Neither the Income Portfolio, the Growth Portfolio nor the Total Return
Portfolio may invest more than 10% of its total assets in foreign securities,
except the following securities, in which such Portfolios may invest up to
25% of their total assets: foreign equity and debt securities (i) issued,
assumed or guaranteed by foreign governments or their political subdivisions
or instrumentalities, (ii) assumed or guaranteed by domestic issuers,
including Eurodollar securities, and (iii) issued, assumed or guaranteed by
foreign issuers having a class of securities listed for trading on the New
York Stock Exchange.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES. The Portfolios may also use the
investment techniques and strategies described below, which involve certain
risks. The Statement of Additional Information contains more detailed
information about these practices, including limitations on their use that
may help to reduce some of the risks.
/ / INVESTING IN LOWER-RATED SECURITIES. (EACH PORTFOLIO EXCEPT MONEY
MARKET PORTFOLIO AND GOVERNMENT SECURITIES PORTFOLIO). Each Portfolio can
invest in high-yield, below grade debt securities (including both rated and
unrated securities). These "lower-grade" securities are commonly known as
"junk bonds." They generally offer higher income potential than investment
grade securities. "Lower-grade" securities have a rating below "BBB" by
Standard & Poor's or "Baa" by Moody's or similar ratings by other domestic or
foreign rating organizations, or they are not rated by a
nationally-recognized rating organization, but the Manager judges them to be
comparable to lower-rated securities. Income Portfolio, Total Return
Portfolio and Growth Portfolio may not invest in lower-rated securities rated
below B by Moody's or Standard & Poor's. Each LifeSpan Portfolio and the
International Equity Portfolio may invest in securities rated as low as D by
Standard & Poor's or C by Moody's. Each Portfolio may retain securities
whose ratings fall below B after purchase unless and until the manager
determines that disposing of such securities in the best interests of the
respective Portfolio. Appendix A to this Prospectus describes the rating
categories of Moody's and Standard & Poor's.
All corporate debt securities (whether foreign or domestic) are subject to
some degree of credit risk. High yield, lower-grade securities, whether
rated or unrated, often have speculative characteristics and have special
risks that make them riskier investments than investment grade securities.
They may be subject to greater market fluctuations and risk of loss of income
and principal than lower yielding, investment grade securities. There may be
less of a market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of interest due on
the bonds. The issuer's low creditworthiness may increase the potential for
its insolvency. For foreign lower-grade debt securities, these risks are in
addition to the risks of investing in foreign securities, described in
"Investment Risks," above. These risks mean that a Portfolio may not achieve
the expected income from lower-grade securities, and that a Portfolio's net
asset value per share may be affected by declines in value of these
securities.
/ / INVESTING IN EMERGING MARKET COUNTRIES. (EACH PORTFOLIO EXCEPT MONEY
MARKET PORTFOLIO AND GOVERNMENT SECURITIES PORTFOLIO). Emerging countries
include any country that is defined as an emerging or developing economy by
the International Bank for Reconstruction and Development, the International
Finance Committee, The United Nations or its authorities, or the MSCI
Emerging Markets Index. Investments in emerging market countries may involve
risks in addition to those identified above for investments in foreign
securities. Securities issued by emerging market countries and by companies
located in those countries may be subject to extended settlement periods,
whereby a Portfolio might not receive principal and/or income on a timely
basis and its net asset values could be affected. Emerging market countries
may have smaller, less well-developed markets and exchanges; there may be a
lack of liquidity for emerging
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market securities; interest rates and foreign currency exchange rates may be
more volatile; sovereign limitations on foreign investments may be more
likely to be imposed; there may be significant balance of payment deficits;
and their economies and markets may respond in a more volatile manner to
economic changes than those of developed countries.
/ / U.S. GOVERNMENT SECURITIES. (ALL PORTFOLIOS). Certain U.S.
Government Securities, including U.S. Treasury bills, notes and bonds, and
mortgage participation certificates guaranteed by the Government National
Mortgage Association ("Ginnie Mae") are supported by the full faith and
credit of the U.S. Government, which in general terms means that the U.S.
Treasury stands behind the obligation to pay principal and interest. Ginnie
Mae certificates are one type of mortgage-related U.S. Government Security a
Portfolio may invest in. Other mortgage-related U.S. Government Securities
the Portfolios invest in that are issued or guaranteed by federal agencies or
government-sponsored entities are not supported by the full faith and credit
of the U.S. Government. Those securities include obligations supported by
the right of the issuer to borrow from the U.S. Treasury, such as obligations
of Federal Home Loan Mortgage Corporation ("Freddie Mac"), obligations
supported only by the credit of the instrumentality, such as Federal National
Mortgage Association ("Fannie Mae") or the Student Loan Marketing Association
and obligations supported by the discretionary authority of the U.S.
Government to repurchase certain obligations of U.S. Government agencies or
instrumentalities such as the Federal Land Banks and the Federal Home Loan
Banks. Certain mortgage-backed securities, whether issued by the U.S.
Government or by private issuers, "pass-through" to investors the interest
and principal payments generated by a pool of mortgages assembled for sale by
government agencies. Pass-through mortgage-backed securities entail the risk
that principal may be repaid at any time because of prepayments on the
underlying mortgages. That may result in greater price and yield volatility
than traditional fixed-income securities that have a fixed maturity and
interest rate.
The value of U.S. Government Securities will fluctuate until they mature
depending on prevailing interest rates. Because the yields on U.S.
Government Securities are generally lower than on corporate debt securities,
when a Portfolio holds U.S. Government Securities it may attempt to increase
the income it can earn from them by writing covered call options against
them, when market conditions are appropriate. Writing covered calls is
explained below, under "Hedging."
/ / SHORT-TERM DEBT SECURITIES. (ALL PORTFOLIOS). Each Portfolio will
invest in high quality, short-term money market instruments such as U.S.
Treasury and agency obligations; commercial paper (short-term, unsecured,
negotiable promissory notes of a domestic or foreign company); short-term
debt obligations of corporate issuers; bank participation certificates; and
certificates of deposit and bankers' acceptances (time drafts drawn on
commercial banks usually in connection with international transactions) of
banks and savings loan associations. When the Manager believes it
appropriate, each Portfolio can hold cash or invest without limit in money
market instruments.
CMOS AND SMBS. (EACH PORTFOLIO EXCEPT MONEY MARKET PORTFOLIO, GROWTH
PORTFOLIO AND INTERNATIONAL EQUITY PORTFOLIO).
Each Portfolio may also invest in Collateralized Mortgage Obligations
("CMOs"), which generally are obligations fully collateralized by a portfolio
of mortgages or mortgage-related securities. Payment of the interest and
principal generated by the pool of mortgages relating to the CMOs are passed
through to the holders as the payments are received. CMOs are issued with a
variety of classes or series which have different maturities. Certain CMOs
may be more volatile and less liquid than other types of mortgage-related
securities, because of the possibility of the prepayment of principal due to
prepayments on the underlying mortgage loans.
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STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"). Each Portfolio may also
invest in CMOs that are "stripped." That means that the security is divided
into two parts, one of which receives some or all of the principal payments
(and is known as a "P/O") and the other which receives some or all of the
interest (and is known as an "I/O"). P/Os and I/Os are generally referred to
as "derivative investments," discussed further below. The yield to maturity
on the class that receives only interest is extremely sensitive to the rate
of payment of the principal on the underlying mortgages. Principal
prepayments increase that sensitivity. Stripped securities that pay
"interest only" are therefore subject to greater price volatility when
interest rates change, and they have the additional risk that if the
underlying mortgages are prepaid, a Portfolio will lose the anticipated cash
flow from the interest on the prepaid mortgages. That risk is increased when
general interest rates fall, and in times of rapidly falling interest rates,
a Portfolio might receive back less than its investment. The value of
"principal only" securities generally increases as interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and sold by
institutional investors through investment banking firms. At present,
established trading markets have not yet developed for these securities.
Therefore, most private-issuer stripped securities may be deemed "illiquid."
If a Portfolio holds illiquid stripped securities, the amount it can hold
will be subject to the Portfolio's investment policy limiting investments in
illiquid securities to 15% of the Portfolio's net assets.
/ / ASSET-BACKED SECURITIES. (ALL PORTFOLIOS EXCEPT MONEY MARKET
PORTFOLIO, GROWTH PORTFOLIO AND INTERNATIONAL EQUITY PORTFOLIO). A Portfolio
may invest in "asset-backed" securities. These represent interests in pools
of consumer loans and other trade receivables, similar to mortgage-backed
securities. They are issued by trusts and "special purpose corporations."
They are backed by a pool of assets, such as credit card or auto loan
receivables, which are the obligations of a number of different parties. The
income from the underlying pool is passed through to holders, such as one of
the Portfolios. These securities may be supported by a credit enhancement,
such as a letter of credit, a guarantee or a preference right. However, the
extent of the credit enhancement may be different for different securities
and generally applies to only a fraction of the security's value. These
securities present special risks. For example, in the case of credit card
receivables, the issuer of the security may have no security interest in the
related collateral.
/ / INVERSE FLOATING RATE INSTRUMENTS. (ALL PORTFOLIOS EXCEPT MONEY
MARKET PORTFOLIO, GROWTH PORTFOLIO AND INTERNATIONAL EQUITY PORTFOLIO). The
Portfolios may invest in inverse floating rate debt instruments ("inverse
floaters"), including leveraged inverse floaters and inverse floating rate
mortgage-backed securities, such as inverse floating rate "interest only"
SMBS. The interest rate on inverse floaters resets in the opposite direction
from the market rate of interest to which the inverse floater is indexed. An
inverse floater may be considered to be leveraged to the extent that its
interest rate varies by a magnitude that exceeds the magnitude of the change
in the index rate of interest. The higher degree of leverage inherent in
inverse floaters is associated with greater volatility in their market values.
/ / MORTGAGE DOLLAR ROLLS. (ALL PORTFOLIOS EXCEPT THE LIFESPAN
PORTFOLIOS). A Portfolio may invest up to 20% of its assets in mortgage
dollar rolls. In a mortgage dollar roll the Portfolio sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities
on a specified future date. During the roll period, the Portfolio foregoes
principal and interest paid on the mortgage-backed securities. The Portfolio
is compensated by the difference between the current sales price and the
lower forward price for the future purchase (often referred to as the "drop")
as well as by the interest earned on the cash proceeds of the initial sale.
A "covered roll" is a specific
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type of dollar roll for which there is an offsetting cash position or a cash
equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction. All rolls entered into by
the Portfolio will be covered rolls. Covered rolls are not treated as a
borrowing or other senior security and will be excluded from the calculation
of the Portfolio's borrowings and other senior securities. The Manager is
also permitted to purchase mortgage-backed securities and to sell such
securities without regard to the length of time held in separate transactions
that do not constitute dollar rolls. For financial reporting and tax
purposes, the Portfolio treats mortgage rolls as two separate transactions:
one involving the purchase of securities and a separate transaction involving
a sale. The Portfolio does not currently intend to enter into mortgage
dollar roll transactions that are accounted for as a financing.
/ / ADRS, EDRS AND GDRS. (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO
AND GOVERNMENT SECURITIES PORTFOLIO). Each Portfolio may invest in ADRs,
EDRs and GDRs. ADRs are receipts issued by a U.S. bank or trust company
which evidence ownership of underlying securities of foreign corporations.
ADRs are traded on domestic exchanges or in the U.S. over-the-counter market
and, generally, are in registered form. To the extent a Portfolio acquires
ADRs through banks which do not have a contractual relationship with the
foreign issuer of the security underlying the ADR to issue and service such
ADRs, there may be an increased possibility that the Portfolio would not
become aware of and be able to respond in a timely manner to corporate
actions such as stock splits or rights offerings involving the foreign
issuer. In addition, the lack of information may result in inefficiencies in
the valuation of such instruments. A Portfolio may also invest in EDRs and
GDRs, which are receipts evidencing an arrangement with a non-U.S. bank
similar to that for ADRs and are designed for use in non-U.S. securities
markets. EDRs and GDRs are not necessarily quoted in the same currency as
the underlying security.
/ / EURODOLLARS AND YANKEE DOLLARS. (ALL PORTFOLIOS EXCEPT GOVERNMENT
SECURITIES PORTFOLIO). The Portfolios may also invest in obligations of
foreign branches of U.S. banks referred to as Eurodollars obligations and
U.S. branches of foreign banks (Yankee dollars) as well as foreign branches
of foreign banks. These investments involve risks that are different from
investment in securities of U.S. banks.
/ / WARRANTS AND RIGHTS. (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO
AND GOVERNMENT SECURITIES PORTFOLIO). Warrants are options to purchase stock
at set prices that are valid for a limited period of time. Rights are
similar to warrants but normally have a short duration and are distributed
directly by the issuer to its shareholders. A Portfolio may invest up to 5%
of its total assets in warrants or rights. That 5% limitation does not apply
to warrants a Portfolio has acquired as part of units with other securities
or that are attached to other securities. No more than 2% of a Portfolio's
total assets may be invested in warrants that are not listed on either The
New York Stock Exchange or The American Stock Exchange. For further details,
see "Warrants and Rights" in the Statement of Additional Information.
/ / SMALL, UNSEASONED COMPANIES. (LIFESPAN PORTFOLIOS ONLY). Each
LifeSpan Portfolio may invest in securities of small, unseasoned companies.
[These are companies that have been in operation less than three years,
including the operations of any predecessors.] Securities of these companies
may have limited liquidity (which means that a Portfolio may have difficulty
selling them at an acceptable price when it wants to) and the price of these
securities may be volatile. See "Investing in Small, Unseasoned Companies"
in the Statement of Additional Information for a further discussion of the
risks involved in such investments.
/ / LOANS OF PORTFOLIO SECURITIES. (ALL PORTFOLIOS). To attempt to
increase its income or raise cash for liquidity purposes, each Portfolio may
lend its portfolio securities, in transactions other than repurchase
agreements, to brokers, dealers and other financial institutions. A Portfolio
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must receive collateral for a loan. As a matter of non-fundamental operating
policy, the Manager limits such loans to 10% of the Portfolio's total assets,
and such loans are subject to other conditions described in the Statement of
Additional Information. See "Loans of Portfolio Securities" in the Statement
of Additional Information.
/ / "WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS. (ALL PORTFOLIOS
EXCEPT MONEY MARKET PORTFOLIO). Each Portfolio may purchase securities on a
"when-issued" basis and may purchase or sell securities on a "delayed
delivery" basis. These terms refer to securities that have been created and
for which a market exists, but which are not available for immediate
delivery. There may be a risk of loss to a Portfolio if the value of the
security declines prior to the settlement date.
/ / REPURCHASE AGREEMENTS. (ALL PORTFOLIOS). Each Portfolio may enter
into repurchase agreements. In a repurchase transaction, a Portfolio buys a
security and simultaneously sells it to the vendor for delivery at a future
date. Repurchase agreements must be fully collateralized. However, if the
vendor fails to pay the resale price on the delivery date, a Portfolio may
experience costs in disposing of the collateral and may experience losses if
there is any delay in doing so.
/ / ILLIQUID AND RESTRICTED SECURITIES. (ALL PORTFOLIOS). Under the
policies established by the Portfolios' Board of Directors, the Manager
determines the liquidity of certain of the Portfolios' investments.
Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly at an
acceptable price. A restricted security is one that has a contractual
restriction on its resale or which cannot be sold publicly until it is
registered under the Securities Act of 1933. A Portfolio will not invest
more than 15% of its total assets in illiquid and restricted securities
except that Money Market Portfolio may not invest more than 10% of its total
assets in these securities (including repurchase agreements having a maturity
beyond 7 days, portfolio securities which do not have readily available
market quotations and time deposits maturing in more than 2 days).
/ / HEDGING. (ALL PORTFOLIOS EXCEPT MONEY MARKET). The Portfolios may
write (sell) and Government Securities Portfolio and International Equity
Portfolio may also purchase exchange traded covered call options on
securities, securities indices and foreign currencies, in each case as a
hedge against decreases in prices of existing portfolio securities or
increases in prices of anticipated portfolio securities. The International
Equity Portfolio and the international component of the LifeSpan Portfolios
may purchase options on currency in the over-the-counter ("OTC") markets.
The Portfolios may use covered call options for non-hedging purposes as
described below.
A Portfolio may, subject to its investment policies, sell or purchase
covered call options and buy and sell futures and forward contracts for a
number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary substitute for
purchasing individual securities. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as selling
futures and writing covered calls, hedge a Portfolio's portfolio against
price fluctuations.
Other hedging strategies, such as buying futures, tend to increase a
Portfolio's exposure to the securities market. Forward contracts are used to
try to manage foreign currency risks on a Portfolio's foreign investments.
Foreign currency options are used to try to protect against declines in the
dollar value of foreign securities a Portfolio owns, or to protect against an
increase
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<PAGE>
in the dollar cost of buying foreign securities. Writing covered call
options may also provide income to a Portfolio for liquidity purposes or may
be for defensive reasons, or to raise cash to distribute to shareholders.
/ / FUTURES. To hedge against changes in interest rates, securities
prices or currency exchange rates, each Portfolio (other than the Money
Market Portfolio) may, subject to its investment objectives and policies,
purchase and sell various kinds of futures contracts, International Equity
Portfolio may purchase and write call and put options and the LifeSpan
Portfolios may sell covered call options on any futures contracts. A
Portfolio may also enter into closing purchase and sale transactions with
respect to any of such contracts and options. Futures contracts may be based
on various securities (such as U.S. Government securities), securities
indices, foreign currencies and other financial instruments and indices. The
Growth Portfolio and Total Return Portfolio may purchase and sell futures
contracts on stock indices and sell options on such futures. The Income
Portfolio and Total Return Portfolio may purchase and sell interest rate
futures and sell options on such futures. In addition, each Portfolio that
may invest in securities that are denominated in foreign currency may
purchase and sell futures on currencies. The International Equity Portfolio
may purchase and sell, and the LifeSpan Portfolios may sell, options on such
futures. A Portfolio will engage in futures and related options transactions
only for bona fide hedging and non-hedging purposes as permitted in
regulations of the Commodity Futures Trading Commission. No Portfolio will
enter into futures contracts or options thereon for non-hedging purposes if,
immediately thereafter, the aggregate initial margin and premiums required to
establish non-hedging positions in futures contracts and options on futures
will exceed 5 percent of the net asset value of the Portfolio's portfolio,
after taking into account unrealized profits and losses on any such positions
and excluding the amount by which such options were in-the-money at the time
of purchase.
/ / COVERED CALL OPTIONS AND PUT OPTIONS ON FUTURES. A Portfolio may
write (that is, sell) call options on securities, indices and foreign
currencies for hedging or non-hedging purposes and write call options on
Futures for hedging purposes but only if they are "covered." This means a
Portfolio must own the investment on which the call was written or it must
own other securities that are acceptable for the escrow arrangements required
for calls while the call is outstanding or, in the case of calls on futures,
segregate appropriate liquid assets. Calls on Futures must be covered by
securities or other liquid assets a Portfolio owns and segregates to enable
it to satisfy its obligations if the call is exercised. When a Portfolio
writes a call, it receives cash (called a premium). The call gives the buyer
the ability to buy the investment on which the call was written from a
Portfolio at the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the call
price, it is likely that the call will lapse without being exercised, while
the Portfolio keeps the cash premium (and the investment). After the
Portfolio writes a call, not more than 20% of the value of its total assets
may be subject to calls.
A Portfolio may sell covered call options that are traded on U.S. or
foreign securities or commodity exchanges or which are used by the Options
Clearing Corporation. In the case of foreign currency options, they may be
quoted by major recognized dealers in those options. The International
Equity Portfolio and the international component of the respective LifeSpan
Portfolios may purchase options on currency in the over-the-counter (OTC)
markets.
/ / FORWARD CONTRACTS. (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO).
Forward Contracts are foreign currency exchange contracts. They are used to
buy or sell foreign currency for future delivery at a fixed price. A
Portfolio uses them to try to "lock in" the U.S. dollar price of a security
denominated in a foreign currency that the Portfolio has purchased or sold,
or to protect against possible losses from changes in the relative value of
the U.S. dollar and a foreign
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<PAGE>
currency. A Portfolio may also use "cross hedging," where the Portfolio
hedges against changes in currencies other than the currency in which a
security it holds is denominated. No Portfolio will speculate in foreign
exchange.
/ / INTEREST RATE SWAPS. (GOVERNMENT SECURITIES PORTFOLIO ONLY).
Government Securities Portfolio may enter into interest rate swaps both for
hedging and to seek to increase total return. In an interest rate swap, the
Portfolio and another party exchange their right to receive, or their
obligation to pay, interest on a security. For example, they may swap a
right to receive floating rate interest payments for fixed rate payments.
The Portfolio enters into swaps only on a net basis, which means the two
payment streams are netted out, with the Portfolio receiving or paying, as
the case may be, only the net amount of the two payments. The Portfolio will
segregate liquid assets (such as cash or U.S. Government securities) to cover
any amounts it could owe under swaps that exceed the amounts it is entitled
to receive, and it will adjust that amount daily, as needed.
/ / HEDGING INSTRUMENTS CAN BE VOLATILE INVESTMENTS AND MAY INVOLVE
SPECIAL RISKS. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is required
for normal portfolio management. If the Manager or a Sub-Adviser uses a
hedging instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce a Portfolio's return. A Portfolio could also
experience losses if the prices of its futures and options positions were not
correlated with its other investments or if it could not close out a position
because of an illiquid market for the future or option.
Options trading involves the payment of premiums, and options, futures and
forward contracts are subject to special tax rules that may affect the
amount, timing and character of a Portfolio's income and distributions.
There are also special risks in particular hedging strategies. For example,
if a covered call written by a Portfolio is exercised on an investment that
has increased in value, the Portfolio will be required to sell the investment
at the call price and will not be able to realize any profit if the
investment has increased in value above the call price. In writing puts,
there is a risk that a Portfolio may be required to buy the underlying
security at a disadvantageous price. The use of Forward Contracts may reduce
the gain that would otherwise result from a change in the relationship
between the U.S. dollar and a foreign currency. Interest rate swaps are
subject to the risk that the other party will fail to meet its obligations
(or that the underlying issuer will fail to pay on time), as well as interest
rate risks. A Portfolio could be obligated to pay more under its swap
agreements than it receives under them, as a result of interest rate changes.
These risks are described in greater detail in the Statement of Additional
Information.
/ / DERIVATIVE INVESTMENTS. A Portfolio may invest in different types of
derivatives. In general, a "derivative investment" is a specially designed
investment whose performance is linked to the performance of another
investment or security, such as an option, future, index, currency or
commodity. A Portfolio may not purchase or sell physical commodities;
however, a Portfolio may purchase and sell foreign currency in hedging
transactions. This shall not prevent a Portfolio from buying or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities.
Derivative investments used by a Portfolio are used in some cases for
hedging purposes and in other cases to seek income. In the broadest sense,
exchange-traded options and futures contracts (discussed in "Hedging," above)
may be considered "derivative investments."
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<PAGE>
"Index-linked" or "commodity-linked" notes are debt securities of
companies that call for interest payments and/or payment on the maturity of
the note in different terms than the typical note where the borrower agrees
to pay a fixed sum on the maturity of the note. Principal and/or interest
payments on an index-linked note depend on the performance of one or more
market indices, such as the S&P 500 Index or a weighted index of commodity
futures, such as crude oil, gasoline and natural gas. A Portfolio may invest
in "debt exchangeable for common stock" of an issuer or "equity-linked" debt
securities of an issuer. At maturity, the principal amount of the debt
security is exchanged for common stock of the issuer or is payable in an
amount based on the issuer's common stock price at the time of maturity. In
either case there is a risk that the amount payable at maturity will be less
than the expected principal amount of the debt.
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the maturity
of the instrument. Also, the underlying investment or security might not
perform the way the Manager or relevant Sub-Adviser expected it to perform.
Markets, underlying securities and indices may move in a direction not
anticipated by the Manager or relevant Sub-Adviser. Performance of
derivative investments may also be influenced by interest rate and stock
market changes in the U.S. and abroad. All of this can mean that a Portfolio
will realize less principal or income from the investment than expected.
Certain derivative investments held by a Portfolio may be illiquid. Please
refer to "Illiquid and Restricted Securities."
OTHER INVESTMENT RESTRICTIONS. The Portfolios have other investment
restrictions which are "fundamental" policies. A Portfolio cannot deviate
from its other fundamental policies described in "Investment Objectives and
Policies" and "Other Investment Techniques and Strategies" in the Statement
of Additional Information.
THE PORTFOLIOS, EXCEPT THE LIFESPAN PORTFOLIOS, MAY NOT:
/ / Borrow amounts in excess of 10% of the Portfolio's total assets,
taken at market value at the time of the borrowing, and then only from banks
as a temporary measure for extraordinary or emergency purposes, or make
investments in portfolio securities while such outstanding borrowings exceed
5% of the Portfolio's total assets.
/ / (a) Invest more than 5% of the Portfolio's total assets (taken at
market value at the time of each investment) in the securities (other than
U.S. Government agency securities) of any one issuer (including repurchase
agreements with any one bank); and (b) purchase more than either (i) 10% of
the principal amount of the outstanding debt securities of an issuer, or (ii)
10% of the outstanding voting securities of an issuer, except that such
restrictions shall not apply to securities issued or guaranteed by the U.S.
Government or its agencies, bank money instruments or bank repurchase
agreements. (This restriction does not apply to the Government Securities
Portfolio.)
/ / Invest more than 25% of its assets in securities of issuers in any
single industry, provided that this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For the purpose of this restriction, each utility that
provides a separate service (e.g., gas, gas transmission, electric or
telephone) shall be considered a separate industry. This test shall be
applied on a pro forma basis using the market value of all assets immediately
prior to making any investment. (This restriction does not apply to the
International Equity Portfolio or the Government Securities Portfolio).
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<PAGE>
THE LIFESPAN PORTFOLIOS MAY NOT:
/ / A LifeSpan Portfolio cannot borrow money, except from banks for
temporary purposes in amounts not in excess of 33 1/3% of the value of its
assets. Borrowings may also be made for liquidity purposes to satisfy
redemption requests when liquidation of portfolio securities is considered
inconvenient or disadvantageous. However, a Portfolio may enter into reverse
repurchase agreements, futures contracts, options on futures contracts,
securities or indices and when-issued and delayed delivery transactions.
/ / A LifeSpan Portfolio cannot purchase any securities (other than U.S.
Government Securities) that would cause more than 5% of a Portfolio's total
assets to be invested in securities of a single issuer, or purchase more than
10% of the outstanding voting securities of an issuer.
/ / Invest more than 25% of its assets in securities of issuers in any
single industry, provided that this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For the purpose of this restriction, each utility that
provides a separate service (e.g., gas, gas transmission, electric or
telephone) shall be considered a separate industry. This test shall be
applied on a pro forma basis using the market value of all assets immediately
prior to making any investment.
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time a Portfolio purchases a security, and a
Portfolio need not dispose of a security merely because the Portfolio's
assets have changed or the security has increased in value relative to the
size of the Portfolio. There are other fundamental policies discussed in the
Statement of Additional Information.
HOW THE PORTFOLIOS ARE MANAGED
ORGANIZATION AND HISTORY. The Company was organized in 1981 as a Maryland
corporation. The Company is an open-end management investment company.
Organized as a series fund, the Company presently has nine diversified series.
The Company is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors
meet periodically throughout the year to oversee each Portfolio's activities,
review its performance, and review the actions of the Manager. "Directors
and Officers of the Portfolio" in the Statement of Additional Information
names the Directors and officers of the Portfolios and provides more
information about them. Although the Portfolios are not required by law to
hold annual meetings, they may hold shareholder meetings from time to time on
important matters, and shareholders have the right to call a meeting to
remove a Director or to take other action described in the Company's Articles
of Incorporation.
The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Company into additional series. Shares are
freely transferrable. Please refer to "How the Portfolios are Managed" in
the Statement of Additional Information for further information on voting of
shares.
THE MANAGER, THE SUB-ADVISERS AND THEIR AFFILIATES. The Portfolios are
managed by the Manager, OppenheimerFunds, Inc., which supervises each
Portfolio's investment program and handles its day-to-day business. The
Manager carries out its duties, subject to the policies
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<PAGE>
established by the Board of Directors, under separate Investment Advisory
Agreements for each Portfolio which state the Manager's responsibilities.
The Agreements set forth the fees paid by a Portfolio to the Manager, and
describes the expenses that a Portfolio is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959. The Manager
and its affiliates currently manage investment companies, including other
Oppenheimer funds, with assets of more than $40 billion as of December 31,
1995, and with more than 2.8 million shareholder accounts. The Manager is
owned by Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by Massachusetts Mutual
Life Insurance Company.
The Manager has engaged three Sub-Advisers to provide day-to-day portfolio
management for certain components of the LifeSpan Portfolios. The Manager
has also engaged Babson-Stewart to provide day-to-day portfolio management
services to the International Equity Portfolio. Babson-Stewart, One Memorial
Drive, Cambridge, MA 02142, the Sub-Adviser to the international component
of the LifeSpan Portfolios and the International Equity Portfolio, was
originally established in 1987. As of ____________, 1995, Babson-Stewart had
approximately $___ billion in assets under management. BEA Associates,
Citicorp Center, 153 East 53rd Street, 57th Floor, New York, NY 10022, the
Sub-Adviser to the high yield/high risk bond component, has been providing
fixed-income and equity management services to institutional clients since
1984. As of ______________, 1995, BEA Associates, together with its global
affiliate, had $___ billion in assets under management. Pilgrim Baxter, 1255
Drummers Lane, Wayne, PA 19087, the Sub-Adviser to the small cap component,
was established in 1982 to provide specialized equity management for
institutional investors including other investment companies. As of _________,
1995, Pilgrim Baxter had over $___ billion in assets under management.
Each Sub-Adviser is responsible for choosing the investments of its
respective component for each Portfolio and its duties and responsibilities
are set forth in its respective contract with the Manager. Babson-Stewart is
responsible for choosing all investments for International Equity Portfolio.
The Manager, not the Portfolios, pays the Sub-Advisers.
/ / PORTFOLIO MANAGERS.
<TABLE>
<CAPTION>
Year became Business Experience
Portfolio Manager Portfolio Manager (last 5 years)
- ----------------- ----------------- -------------------
<S> <C> <C>
MONEY MARKET PORTFOLIO
Carol E. Wolf 1996 Officer, Centennial
Asset Management Corporation
(subsidiary of Manager)
GOVERNMENT SECURITIES PORTFOLIO
AND INCOME PORTFOLIO
David A. Rosenberg 1996 Vice President, the Manager (1994-
present); Officer and Portfolio
Manager, Delaware Investment
Advisors (19xx-1994)
TOTAL RETURN PORTFOLIO
Michael C. Strathearn, C.F.A. 1988 Portfolio Manager, Equities--CML
(1988-present)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Peter M. Antos, C.F.A. 1989 Vice President and Portfolio Manager,
the Manager (1996-present); Vice
President and Senior Portfolio
Manager, Equities--G.R. Phelps
(1989-present)
Stephen F. Libera, C.F.A. 1985 Vice President and Portfolio Manager,
the Manager (1996-present); Vice
President and Senior Portfolio
Manager, Fixed Income--G.R. Phelps,
(1985-1996)
Arthur Zimmer 1996
GROWTH PORTFOLIO
Kenneth B. White, C.F.A. 1992 Vice President and Portfolio Manager,
the Manager (1996-present); Portfolio
Manager, Equities--CML (1992-
1996); Senior Investment Officer,
Equities--CML (1987-1992)
(and Messrs. Antos, Strathearn and Zimmer)
/ / THE COMPONENTS OF THE LIFESPAN PORTFOLIOS
INTERNATIONAL
(Babson-Stewart)
James W. Burns 1996 Portfolio Manager, Continental
European Team, Stewart, Ivory & Co.,
Ltd. (since 1990)
VALUE/GROWTH
(the Manager)
Michael C. Strathearn, C.F.A. 1995 Portfolio Manager, Equities--CML
(1988-present)
Peter M. Antos, C.F.A. 1995 Vice President and Portfolio Manager,
the Manager (1996-present); Vice
President and Senior Portfolio
Manager, Equities--G.R. Phelps
(1989-present)
GROWTH/INCOME
(the Manager)
Peter M. Antos, C.F.A. 1995 Vice President and Portfolio Manager,
the Manager (1996-present); Vice
President and Senior Portfolio
Manager, Equities--G.R. Phelps
(1989-present)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
SMALL CAP
(Pilgrim Baxter)
Gary L. Pilgrim Director, Member of Executive
Committee, President and Chief
Investment Officer, Pilgrim Baxter
(1985-Present)
John F. Force Portfolio Manager/Analyst, Pilgrim
Baxter (since 1993); and Vice
President/Portfolio Manager,
Fiduciary Management Associates
(1989-1993)
James M. Smith Portfolio Manager/Analyst, Pilgrim
Baxter (since 1993); Senior Vice
President/Portfolio Manager, Selected
Financial Services (1992-1993); and
Vice President, Sears Investment
Management Company (prior to 1992)
Michael D. Jones Portfolio Manager/Analyst, Pilgrim
Baxter (since 1995); Vice
President/Portfolio Manager, Bank of
New York (1990-1995)
GOVERNMENT SECURITIES/
CORPORATE BONDS
(the Manager)
Stephen F. Libera, C.F.A. 1985 Vice President and Portfolio Manager,
the Manager (1996-present); Vice
President and Senior Portfolio
Manager, Fixed Income--G.R. Phelps,
(1985-1996)
HIGH YIELD BONDS
(BEA Associates)
Richard J. Lindquist Managing Director and High Yield
Portfolio Manager, BEA Associates
(1995); CS First Boston (1989-1995)
SHORT-TERM BOND
(the Manager)
Stephen F. Libera, C.F.A. 1985 Vice President and Portfolio Manager,
the Manager (1996-present); Vice
President and Senior Portfolio
Manager, Fixed Income--G.R. Phelps,
(1985-1996)
</TABLE>
/ / FEES AND EXPENSES. Under separate Investment Advisory Agreements with
each Portfolio, each Portfolio pays the Manager a monthly fee equal to a
percentage of the Portfolio's average daily net assets as follows:
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<PAGE>
MONEY MARKET PORTFOLIO
NET ASSET VALUE ANNUAL RATE
--------------- -----------
First $200,000,000................... 0.50%
Next $100,000,000.................... 0.45%
Amount over $300,000,000............. 0.40%
TOTAL RETURN PORTFOLIO
NET ASSET VALUE ANNUAL RATE
--------------- -----------
First $600,000,000................... 0.625%
Amount over $600,000,000............. 0.45%
INTERNATIONAL EQUITY PORTFOLIO
NET ASSET VALUE ANNUAL RATE
--------------- -----------
First $250,000,000................... 1.00%
Amount over $250,000,000............. 0.90%
GOVERNMENT SECURITIES PORTFOLIO, INCOME PORTFOLIO AND GROWTH PORTFOLIO.
INCOME GROWTH
GOVERNMENT SECURITIES PORTFOLIO PORTFOLIO
NET ASSET VALUE PORTFOLIO ANNUAL RATE ANNUAL RATE ANNUAL RATE
- --------------- --------------------- ----------- -----------
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%
Under separate Investment Advisory Agreements, Capital Appreciation
Portfolio, Balanced Portfolio and Diversified Income Portfolio pay the
Manager an annual fee equal to 0.85%, 0.85% and 0.75%, respectively, of the
Portfolio's average annual net asset value up to $250 million and 0.75%,
0.75% and 0.65%, respectively on such assets over $250 million.
Under its Investment Subadvisory Agreement with Babson-Stewart, the
Manager pays Babson-Stewart a monthly fee which declines as the average daily
net assets of the International Equity Portfolio and that portion of Capital
Appreciation Portfolio and Balanced Portfolio allocated to Babson-Stewart
grow: 0.75% of the first $10 million of average daily net assets allocated
to Babson-Stewart, 0.625% of the next $15 million, 0.50% of the next $25
million and 0.375% of such assets in excess of $50 million. The portion of
the net assets of all Portfolios allocated to Babson-Stewart will not be
aggregated in applying these breakpoints.
Under its Investment Subadvisory Agreement with BEA, the Manager pays BEA
a quarterly fee which declines as the combined average daily net assets of
each Portfolio allocated to BEA grow: 0.45% of the first $25 million of
combined average daily net assets allocated to BEA, 0.40% of the next $25
million, 0.35% of the next $50 million and 0.25% of the such assets in excess
of $100 million. Under its Investment Subadvisory Agreement with Pilgrim, the
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<PAGE>
Manager pays Pilgrim a monthly fee equal to 0.60% of the combined average
daily net assets of the Portfolios allocated to Pilgrim. For purposes of
calculating the fee payable to BEA and Pilgrim, the net asset values of that
portion of the assets of each Portfolio subadvised by BEA and Pilgrim are
aggregated with that portion of the net asset value of the assets of Panorama
Series Portfolio I, Inc. managed by BEA and Pilgrim, respectively.
During the fiscal year ended December 31, 1995, the management fee
(computed on an annualized basis as a percentage of the net assets of the
Portfolios as of the close of business each day) and the total operating
expenses as a percentage of average net assets of each Portfolio, were as
follows:
TOTAL
MANAGEMENT OPERATING
PORTFOLIO FEES EXPENSES(1)
- --------- ---------- -----------
Money Market .500% .57%
Government Securities .554% .71%
Income .590% .65%
Total Return .553% .59%
Growth .613% .66%
International Equity .980% 1.26%
Capital Application(2) .850% 1.50%
Balanced(2) .850% 1.50%
Diversified Income(2) .750% 1.50%
_______________________
(1) This table does not reflect expenses that apply at the separate account
level or to related insurance products.
(2) Because the LifeSpan Portfolios are new funds and have not completed a
full fiscal year, the expenses shown above are based on amounts estimated to
be payable in the current fiscal year.
Each Portfolio pays expenses related to its daily operations, such as
custodian fees, Directors' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of a Portfolio's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset value
of shares, and therefore are indirectly borne by shareholders through their
investment. More information about the Investment Advisory Agreements and
the other expenses paid by the Portfolios is contained in the Statement of
Additional Information.
There is also information about the Portfolios' brokerage policies and
practices in "Brokerage Policies of the Portfolios" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Portfolios' portfolio transactions. Because the Money
Market, Government Securities and Income Portfolios purchase most of their
portfolio securities directly from the sellers and not through brokers, these
Portfolios therefore incur relatively little expense for brokerage. From
time to time these Portfolios may use brokers when buying portfolio
securities. When deciding which brokers to use, the Manager is permitted by
the Investment Advisory Agreements to consider whether brokers have sold
shares of the Portfolios or any other funds for which the Manager serves as
investment adviser.
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<PAGE>
SHAREHOLDER INQUIRIES. Inquiries by policyowners for Account information
are to be directed to the insurance company issuing the Account at the
address or telephone number shown in the accompanying Account Prospectus.
PERFORMANCE OF THE PORTFOLIOS
EXPLANATION OF PERFORMANCE TERMINOLOGY. Each Portfolio uses the terms "total
return" and "yield" to illustrate its performance. These returns measure the
performance of a hypothetical account in a Portfolio over various periods,
and do not show the performance of each shareholder's account (which will
vary if dividends are received in cash, or shares are sold or purchased). A
Portfolio's performance data may help you see how well your investment has
done over time and to compare it to market indices, as we have done below.
It is important to understand that a Portfolio's yields and total returns
represent past performance and should not be considered to be predictions of
future returns or performance. This performance data is described below, but
more detailed information about how total returns and yields are calculated
is contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare a Portfolio's
performance. A Portfolio's investment performance will vary over time,
depending on market conditions, the composition of the portfolio and expenses.
/ / TOTAL RETURNS. There are different types of "total returns" used to
measure a Portfolio's performance. Total return is the change in value of a
hypothetical investment in a Portfolio over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return shows
the average rate of return for each year in a period that would produce the
cumulative total return over the entire period. However, average annual total
returns do not show a Portfolio's actual year-by-year performance.
/ / YIELD. Government Securities Portfolio, Income Portfolio, Total
Return Portfolio and the LifeSpan Portfolios calculate yield by dividing the
annualized net investment income per share on the portfolio during a 30-day
period by the maximum offering price on the last day of the period. The
yield data represents a hypothetical investment return on the portfolio, and
does not measure an investment return based on dividends actually paid to
shareholders. To show that return, a dividend yield may be calculated.
Dividend yield is calculated by dividing the dividends of a class derived
from net investment income during a stated period by the maximum offering
price on the last day of the period.
/ / YIELD FOR MONEY MARKET PORTFOLIO. The "yield" of Money Market
Portfolio is the income generated by an investment in the Portfolio over a
seven-day period, which is then "annualized." In annualizing, the amount of
income generated by the investment during that seven days is assumed to be
generated each week over a 52-week period, and is shown as a percentage of
the investment. The "compounded effective yield" is calculated similarly,
but the annualized income earned by an investment in Money Market Portfolio
is assumed to be reinvested in additional shares. The "compounded effective
yield" will be slightly higher than the yield because of the effect of the
assumed reinvestment.
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<PAGE>
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
Shares of each Portfolio are offered only for purchase by Accounts as an
investment medium for variable life insurance policies and variable annuity
contracts, as described in the accompanying Account Prospectus. The sale of
shares will be suspended during any period when the determination of net
asset value is suspended and may be suspended by the Board of Directors
whenever the Board judges it in that Portfolio's best interest to do so.
Shares of each Portfolio are offered at their respective offering price,
which (as used in this Prospectus and the Statement of Additional
Information) is net asset value (without sales charge).
All purchase orders are processed at the offering price next determined
after receipt by the Company of a purchase order in proper form. The
offering price (and net asset value) is determined as of the close of The New
York Stock Exchange, which is normally 4:00 P.M., New York time, but may be
earlier on some days. Net asset value per share of each Portfolio is
determined by dividing the value of that Portfolio's net assets by the number
of its shares outstanding. The Board of Directors has established procedures
for valuing each Portfolio's securities. In general, those valuations are
based on market value. Under Rule 2a-7, the amortized cost method is used to
value Money Market Portfolio's net asset value per share, which is expected
to remain fixed at $1.00 per share except under extraordinary circumstances.
There can be no assurance that Money Market Portfolio's net asset value will
not vary. Further details are in "About Your Account--How to Buy
Shares--Money Market Portfolio Net Asset Valuation" in the Statement of
Additional Information.
HOW TO SELL SHARES
Payment for shares tendered by an Account for redemption is made
ordinarily in cash and forwarded within seven days after receipt by the
Company's transfer agent, OppenheimerFunds Services (the "Transfer Agent"),
of redemption instructions in proper form, except under unusual circumstances
as determined by the Securities and Exchange Commission. The redemption
price will be the net asset value next determined after the receipt by the
Transfer Agent of a request in proper form. The market value of the
securities in the portfolio of the Portfolios is subject to daily
fluctuations and the net asset value of the Portfolios' shares (other than
shares of the Money Market Portfolio) will fluctuate accordingly. Therefore,
the redemption value may be more or less that the investor's cost.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS OF THE MONEY PORTFOLIO. The Company intends to declare Money
Market Portfolio's dividends from its net investment income on each day the
New York Stock Exchange is open for business. Such dividends will be payable
on shares held of record at the time of the previous determination of net
asset value. Daily dividends accrued since the prior dividend payment will
be paid to shareholders monthly as of a date selected by the Board of
Directors. Money Market Portfolio's net income for dividend purposes
consists of all interest income accrued on portfolio assets, less all
expenses of that Portfolio for such period. Accrued market discount is
included in interest income; amortized market premium is treated as an
expense. Although distributions from net realized gains on securities, if
any, will be paid at least once each year, and may be made more frequently,
Money Market Portfolio does not expect to realize long-term capital gains,
and therefore does not contemplate payment of any capital gains distribution.
Distributions from net realized gains will not be distributed unless Money
Market Portfolio's capital loss carry forwards, if any, have been used or
have expired. Money Portfolio seeks to maintain a net asset value of
-39-
<PAGE>
$1.00 per share for purchases and redemptions. To effect this policy, under
certain circumstances the Money Portfolio may withhold dividends or make
distributions from capital or capital gains (see "Dividends, Capital Gains
and Taxes" in the Statement of Additional Information).
Each Portfolio (except Money Market Portfolio) intends to pay out all of
its net investment income and net realized capital gains, if any, for each
year. The Portfolios distribute their dividends, if any, each year.
Normally, net realized capital gains, if any, are distributed each year for
the Portfolios. Such income and capital gains are reinvested in additional
shares of the Portfolios. Each Portfolio (except Money Market Portfolio)
makes dividend and capital gain distributions on a per-share basis. After
every distribution from each of these Portfolios, the Portfolio's share price
drops by the amount of the distribution. Since dividends and capital gain
distributions are reinvested, the total value of an account will not be
affected by such distributions because, although the shares will have a lower
price, there will be correspondingly more of them.
TAX TREATMENT TO THE ACCOUNT AS SHAREHOLDER. Dividends paid by each
Portfolio from its ordinary income and distributions of each Portfolio's net
realized short-term or long-term capital gains, if any, are treated as
taxable whether received in cash or reinvested. The portion of such
distributions attributable to the excess of a Portfolio's net long-term
capital gain over its net short-term capital gain. The tax treatment of such
dividends and distributions depends on the tax status of and the tax rules
applicable to that Account, concerning which Accounts should consult their
own tax advisers.
TAX STATUS OF THE PORTFOLIOS. If each Portfolio qualifies as a "regulated
investment company" under the Internal Revenue Code, that Portfolio will not
be liable for Federal income taxes on amounts paid as dividends and
distributions in accordance with the Code's requirements. The Portfolios did
qualify during their last fiscal year and the Company intends that they will
qualify in current and future years. Each Portfolio also intends to follow
certain portfolio diversification requirements so that Accounts investing in
the Portfolios may satisfy the tax diversification requirements to which they
are subject. The above discussion relates solely to Federal tax laws. This
discussion is not exhaustive and a qualified tax adviser should be consulted.
-40-
<PAGE>
APPENDIX A: DESCRIPTION OF RATINGS CATEGORIES OF RATING SERVICES
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, the changes that can be
expected are most unlikely to impair the fundamentally strong position of
such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as
"high-grade" bonds. They are rated lower than the best bonds because margins
of protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that is,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and have speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their
future cannot be considered well-assured. Often the protection of interest
and principal payments may be very moderate and not well safeguarded during
both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds rated "B" generally lack characteristics of desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or
there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a
high degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S BOND RATINGS
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the "A" category.
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<PAGE>
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "CC" the
highest degree. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
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<PAGE>
APPENDIX B
CREDIT QUALITY DISTRIBUTION
The average quality distribution of the portfolio of INCOME PORTFOLIO
during the year ended December 31, 1995 was as follows:
<TABLE>
<CAPTION>
QUALITY DISTRIBUTION % OF
AS ASSIGNED BY SERVICE AVERAGE VALUE PORTFOLIO
- ---------------------- ------------- ---------
<S> <C> <C>
Government Securities $46,424,399.69 43.80
Aaa 2,609,639.04 2.46
Aa 3,992,835.20 3.77
A 25,003,868.02 23.59
Baa 15,008,524.18 14.16
Ba 4,859,096.79 4.58
B 412,791.67 0.39
Unrated 3,919,640.51 3.70
Bonds 102,230,795.10 96.45
Short Term 3,762,339.95 3.55
- ---------------------------------------------------------------------
Total Portfolio $105,993,135.07 100.00%
</TABLE>
The average quality distribution of the portfolio of TOTAL RETURN PORTFOLIO
during the year ended December 31, 1995 was as follows:
<TABLE>
<CAPTION>
QUALITY DISTRIBUTION % OF
AS ASSIGNED BY SERVICE AVERAGE VALUE PORTFOLIO
- ---------------------- ------------- ---------
<S> <C> <C>
Government Securities $190,954,014.07 22.04
Aaa 2,943,019.95 0.34
Aa 6,193,060.79 0.71
A 67,033,591.23 7.74
Baa 45,574,560.91 5.26
Ba 17,634,969.18 2.04
B 1,319,513.44 0.15
Unrated 6,952,068.59 0.80
- ---------------------------------------------------------------------
Bonds 338,604,798.14 39.08
Stocks 343,768,338.42 39.67
Short-Term 184,172,794.00 21.25
Total Portfolio $866,545,930.56 100.00%
</TABLE>
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<PAGE>
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
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND
IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE PORTFOLIOS, OPPENHEIMERFUNDS, INC., OR
ANY AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN
ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH
STATE.
____________________ *PRINTED ON RECYCLED PAPER
-44-
<PAGE>
PANORAMA SERIES FUND I, INC.
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996
PANORAMA SERIES FUND I, INC. (the "Company") is an investment
company consisting of nine separate series (the "Portfolios"):
MONEY MARKET PORTFOLIO
INCOME PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
TOTAL RETURN PORTFOLIO
GROWTH PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
(COLLECTIVELY, THE PANORAMA PORTFOLIOS")
AND
LIFESPAN CAPITAL APPRECIATION PORTFOLIO ("CAPITAL APPRECIATION PORTFOLIO")
LIFESPAN BALANCED PORTFOLIO ("BALANCED PORTFOLIO")
LIFESPAN DIVERSIFIED INCOME PORTFOLIO ("DIVERSIFIED INCOME PORTFOLIO")
(COLLECTIVELY, THE "LIFESPAN PORTFOLIOS")
Shares of the Portfolios are sold only to provide benefits under variable
life insurance policies and variable annuity contracts (collectively, the
"Accounts"), as described in the Accounts' Prospectuses.
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Portfolios and supplements
information in the Portfolios' Prospectus dated May 1, 1996. It should be
read together with the Prospectus which may be obtained by writing to the
Portfolios' Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270,
Denver, Colorado 80217 or by calling the Transfer Agent at the toll-free
number shown above.
The Portfolios' investment adviser is OppenheimerFunds, Inc. (the
"Manager"). In the case of the LifeSpan Portfolios, the Manager has engaged
Babson-Stewart Ivory International ("Babson-Stewart"), BEA Associates and
Pilgrim, Baxter & Assoc. Ltd. ("Pilgrim") as subadvisers to assist in the
management of the LifeSpan Portfolios. Babson-Stewart also serves as
subadviser to the International Equity Portfolio. Babson-Stewart, BEA
Associates and Pilgrim are sometimes referred to herein individually as a
"Subadviser" and collectively as the "Subadvisers."
<PAGE>
CONTENTS PAGE
ABOUT THE PORTFOLIOS
Investment Objectives and Policies ................................. 3
Other Investment Techniques and Strategies ....................... 3
Other Investment Restrictions .................................... 26
How the Portfolios are Managed ..................................... 33
Organization and History ......................................... 33
Directors and Officers of the Portfolios .........................
The Manager and Its Affiliates ...................................
Brokerage Policies of the Portfolios ............................... 42
Performance of the Portfolios ...................................... 45
Distribution and Service Plans .....................................
ABOUT YOUR ACCOUNT
How to Buy Shares .................................................. 51
Dividends, Capital Gains and Taxes ................................. 54
Additional Information About the Portfolios ........................ 55
FINANCIAL INFORMATION ABOUT THE PORTFOLIOS
Independent Auditors' Report ....................................... 55
Financial Statements ............................................... 55
Appendix: Industry Classifications ................................. A-1
-2-
<PAGE>
ABOUT THE PORTFOLIOS
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES AND STRATEGIES. The investment objectives and policies
of each Portfolio are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities in
which the Portfolios may invest, as well as the strategies the Portfolios may
use to try to achieve their objective. Certain capitalized terms used in this
Statement of Additional Information have the same meaning as those terms have
in the Prospectus.
FOREIGN SECURITIES (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO AND
GOVERNMENT SECURITIES PORTFOLIO). Consistent with the limitations on foreign
investing set forth in the Prospectus, each Portfolio (other than Money
Market Portfolio and Government Securities Portfolio) and, in particular, the
International Equity Portfolio, may invest in foreign securities. Each
Portfolio (other than Money Market Portfolio and Government Securities
Portfolio) may also invest in debt and equity securities of corporate and
governmental issuers of countries with emerging economies or securities
markets. Each Portfolio, except the International Equity Portfolio, is
subject to restrictions on the amount of its assets that may be invested in
foreign securities. See "Other Investment Restrictions."
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers, such as the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business cycles
different from those of the U.S., or to reduce fluctuations in portfolio value
by taking advantage of foreign stock or bond markets that do not move in a
manner parallel to U.S. markets. If a Portfolio's portfolio securities are
held abroad, the countries in which such securities may be held and the
sub-custodians holding them must be approved by the Portfolio's Board of
Directors under applicable rules of the Securities and Exchange Commission
("SEC"). In buying foreign securities, a Portfolio may convert U.S. dollars
into foreign currency, but only to effect securities transactions on foreign
securities exchanges and not to hold such currency as an investment.
"Foreign securities" include equity and debt securities of companies
organized under the laws of countries other than the United States and debt
securities of foreign governments, that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American depository receipts, or that are
listed on a U.S. securities exchange, or are traded in the U.S.
-3-
<PAGE>
over-the-counter market are not considered "foreign securities" for purposes
of a Portfolio's investment allocations, because they are not subject to many
of the special considerations and risks (discussed below) that apply to
foreign securities traded and held abroad.
Investing in foreign securities, and in particular in securities in
emerging countries, involves special additional risks and considerations not
typically associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes; fluctuation in
value of foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges for
currency exchange; lack of public information about foreign issuers; lack of
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic issuers; less volume on foreign exchanges than
on U.S. exchanges; greater volatility and less liquidity in foreign markets
than in the U.S.; less regulation of foreign issuers, stock exchanges and
brokers than in the U.S.; greater difficulties in commencing lawsuits against
foreign issuers; higher brokerage commission rates than in the U.S.;
increased risks of delays in settlement of portfolio transactions or loss of
certificates for portfolio securities; possibilities in some countries, and
in particular emerging countries, of expropriation or nationalization of
assets, confiscatory taxation, political, financial or social instability or
adverse diplomatic developments; and unfavorable differences between the
U.S. economy and foreign economies. In the past, U.S. Government policies
have discouraged certain investments abroad by U.S. investors, through
taxation or other restrictions, and it is possible that such restrictions
could be re-imposed.
A Portfolio's investment income or, in some cases, capital gains from
foreign issuers may be subject to foreign withholding or other foreign taxes,
thereby reducing a Portfolio's net investment income and/or net realized
capital gains.
DEBT SECURITIES (ALL PORTFOLIOS). All debt securities are subject to two
types of risks: credit risk and interest rate risk (these are in addition to
other investment risks that may affect a particular security).
CREDIT RISK. Credit risk relates to the ability of the issuer to meet
interest or principal payments or both as they become due. Generally, higher
yielding bonds are subject to credit risk to a greater extent than higher
quality bonds.
INTEREST RATE RISK. Interest rate risk refers to the fluctuations in value
of fixed-income securities resulting solely from the inverse relationship
between the market value of outstanding fixed-income securities and changes
in interest rates.
-4-
<PAGE>
An increase in interest rates will generally reduce the market value of
fixed-income investments, and a decline in interest rates will tend to
increase their value. In addition, debt securities with longer maturities,
which tend to produce higher yields, are subject to potentially greater
capital appreciation and depreciation than obligations with shorter
maturities. Fluctuations in the market value of fixed-income securities
subsequent to their acquisition will not affect the interest payable on those
securities, and thus the cash income from such securities, but will be
reflected in the valuations of those securities used to compute a Portfolio's
net asset values.
HIGH YIELD SECURITIES. Each Portfolio (other than Money Market Portfolio
and Government Securities Portfolio) may invest in high-yield/high risk
securities (commonly called junk bonds).
The Manager does not rely on credit ratings assigned by rating agencies
in assessing investment opportunities in debt securities. Ratings by credit
agencies assess safety of principal and interest payments and do not reflect
market risks. In addition, ratings by credit agencies may not be changed by
the agencies in a timely manner to reflect subsequent economic events. By
carefully selecting individual issues and diversifying portfolio holdings by
industry sector and issuer, the Manager believes that the risk of the
Portfolio holding defaulted lower grade securities can be reduced. Emphasis
on credit risk management involves the Manager's own internal analysis to
determine the debt service capability, financial flexibility and liquidity of
an issuer, as well as the fundamental trends and outlook for the issuer and
its industry. The Manager's rating helps it determine the attractiveness of
specific issues relative to the valuation by the market place of similarly
rated credits.
Risks of high yield securities include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility resulting
from changes in prevailing interest rates, (iii) subordination to the prior
claims of banks and other senior lenders, (iv) the operation of mandatory
sinking fund or call/redemption provisions during periods of declining
interest rates which may cause the Portfolio to invest premature redemption
proceeds in lower yielding portfolio securities, (v) the possibility that
earnings of the issuer may be insufficient to meet its debt service, and (vi)
the issuer's low creditworthiness and potential for insolvency during periods
of rising interest rates and economic downturn. As a result of the limited
liquidity of high yield securities, their prices have at times experienced
significant and rapid decline when a substantial number of holders decided to
sell. A decline is also likely in the high yield bond market during an
economic downturn. An economic downturn or an increase in interest rates could
severely disrupt the market for high yield bonds and adversely affect the
value of outstanding
-5-
<PAGE>
bonds and the ability of the issuers to repay principal and interest. In
addition, there have been several Congressional attempts to limit the use of
tax and other advantages of high yield bonds which, if enacted, could
adversely affect the value of these securities and the net asset value of a
Portfolio. For example, federally-insured savings and loan associations have
been required to divest their investments in high yield bonds.
U.S. GOVERNMENT SECURITIES (ALL PORTFOLIOS). U.S. Government Securities
are debt obligations issued or guaranteed by the U.S. Government or one of
its agencies or instrumentalities, and include "zero coupon" Treasury
securities.
U.S. TREASURY OBLIGATIONS. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which have
maturities generally greater than ten years when issued). U.S. Treasury
obligations are backed by the full faith and credit of the United States.
U.S. GOVERNMENT AND AGENCY. U.S. Government Securities are debt
obligations issued by or guaranteed by the United States government or any of
its agencies or instrumentalities. Some of these obligations, including U.S.
Treasury notes and bonds, and mortgage-backed securities (referred to as
"Ginnie Maes") guaranteed by the Government National Mortgage Association,
are supported by the full faith and credit of the United States, which means
that the government pledges to use its taxing power to repay the debt. Other
U.S. Government Securities issued or guaranteed by Federal agencies or
government-sponsored enterprises are not supported by the full faith and
credit of the United States. They may include obligations supported by the
ability of the issuer to borrow from the U.S. Treasury. However, the Treasury
is not under a legal obligation to make a loan. Examples of these are
obligations of Federal Home Loan Mortgage Corporation (those securities are
often called "Freddie Macs"). Other obligations are supported by the credit
of the instrumentality, such as Federal National Mortgage Association bonds
(these securities are often called "Fannie Maes").
GNMA CERTIFICATES. Certificates of Government National Mortgage Association
("GNMA") are mortgaged-backed securities of GNMA that evidence an undivided
interest in a pool or pools of mortgages ("GNMA Certificates"). The GNMA
Certificates that a Portfolio may purchase may be of the "modified
pass-through" type, which entitle the holder to receive timely payment of all
interest and principal payments due on the mortgage pool, net of fees paid to
the "issuer" and GNMA, regardless of whether the mortgagor actually makes the
payments.
-6-
<PAGE>
The National Housing Act authorizes GNMA to guarantee the timely payment
of principal and interest on securities backed by a pool of mortgages insured
by the Federal Housing Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full faith and
credit of the U.S. Government. GNMA is also empowered to borrow without
limitation from the U.S. Treasury if necessary to make any payments required
under its guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the principal investment long before the
maturity of the mortgages in the pool. Foreclosures impose no risk to
principal investment because of the GMNA guarantee, except to the extent that
a Portfolio has purchased the certificates at a premium in the secondary
market.
FNMA SECURITIES. The Federal National Mortgage Association ("FNMA") was
established to create a secondary market in mortgages insured by the FHA.
FNMA issues guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in that each
FNMA Certificate represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. FNMA guarantees timely payment
of interest and principal on FNMA Certificates. The FNMA guarantee is not
backed by the full faith and credit of the U.S. Government.
FHLMC SECURITIES. The Federal Home Loan Mortgage Corporation ("FHLMC") was
created to promote development of a nationwide secondary market for
conventional residential mortgages. FHLMC issues two types of mortgage
pass-through certificates ("FHLMC Certificates"): mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). PCs
resemble GNMA Certificates in that each PC represents a pro rata share of all
interest and principal payments made and owed on the underlying pool. FHLMC
guarantees timely monthly payment of interest on PCs and the ultimate payment
of principal. The FHLMC guarantee is not backed by the full faith and credit
of the U.S. Government.
GMCs also represent a pro rata interest in a pool of mortgages. However,
these instruments pay interest semi-annually and return principal once a year
in guaranteed minimum payments. The expected average life of these securities
is approximately ten years. The FHLMC guarantee is not backed by the full
faith and credit of the U.S. Government.
-7-
<PAGE>
MORTGAGE-BACKED SECURITY ROLLS. The Income Portfolio, Government
Securities Portfolio and Total Return Portfolio may enter into "forward roll"
transactions with respect to mortgage-backed securities issued by GNMA, FNMA
or FHLMC. In a forward roll transaction, which is considered to be a
borrowing by a Portfolio, a Portfolio will sell a mortgage security to a
bank or other permitted entity and simultaneously agree to repurchase a
similar security from the institution at a later date at an agreed upon
price. The mortgage securities that are repurchased will bear the same
interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different prepayment histories than those
sold. Risks of mortgage-backed security rolls include: (i) the risk of
prepayment prior to maturity, (ii) the possibility that the proceeds of the
sale may have to be invested in money market instruments (typically
repurchase agreements) maturing not later than the expiration of the roll,
and (iii) the possibility that the market value of the securities sold by a
Portfolio may decline below the price at which the Portfolio is obligated to
purchase the securities. Upon entering into a mortgage-backed security roll,
a Portfolio will be required to place cash, U.S. Government Securities or
other high-grade debt securities in a segregated account with its Custodian
in an amount equal to its obligation under the roll.
ZERO COUPON SECURITIES AND DEFERRED INTEREST BONDS. The Portfolio may
invest in zero coupon securities and deferred interest bonds issued by the
U.S. Treasury or by private issuers such as domestic or foreign corporations.
Zero coupon U.S. Treasury securities include: (1) U.S. Treasury bills
without interest coupons, (2) U.S. Treasury notes and bonds that have been
stripped of their unmatured interest coupons and (3) receipts or certificates
representing interest in such stripped debt obligations or coupons. Zero
coupon securities and deferred interest bonds usually trade at a deep
discount from their face or par value and will be subject to greater
fluctuations in market value in response to changing interest rates than debt
obligations of comparable maturities that make current payments of interest.
An additional risk of private-issuer zero coupon securities and deferred
interest bonds is the credit risk that the issuer will be unable to make
payment at maturity of the obligation.
While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds generally provide for a period of delay before the
regular payment of interest begins. Although this period of delay is
different for each deferred interest bond, a typical period is approximately
one-third of the bond's term to maturity. Such investments benefit the issuer
by mitigating its initial need for cash to meet debt service, but some also
provide a higher rate of return to attract investors who are willing to defer
receipt of such cash. With zero coupon securities, however, the lack of
periodic interest payments means
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that the interest rate is "licked in" and the investor avoids the risk of
having to reinvest periodic interest payments in securities having lower
rates.
Because a Portfolio accrues taxable income from zero coupon and deferred
interest securities without receiving cash, a Portfolio may be required to
sell portfolio securities in order to pay dividends or redemption proceeds for
its shares, which require the payment of cash. This will depend on several
factors: the proportion of shareholders who elect to receive dividends in
cash rather than reinvesting dividends in additional shares of a Portfolio,
and the amount of cash income a Portfolio receives from other investments and
the sale of shares. In either case, cash distributed or held by a Portfolio
that is not reinvested by investors in additional Portfolio shares will hinder
a Portfolio from seeking current income.
MORTGAGE-BACKED SECURITIES (ALL PORTFOLIOS). These securities represent
participation interests in pools of residential mortgage loans which are
guaranteed by agencies or instrumentalities of the U.S. Government. Such
securities differ from conventional debt securities which generally provide
for periodic payment of interest in fixed or determinable amounts (usually
semi-annually) with principal payments at maturity or specified call dates.
Some mortgage-backed securities in which the Portfolios may invest may be
backed by the full faith and credit of the U.S. Treasury (e.g., direct
pass-through certificates of Government National Mortgage Association); some
are supported by the right of the issuer to borrower from the U.S. Government
(e.g., obligations of Federal Home Loan Mortgage Corporation); and some are
backed by only the credit of the issuer itself. Those guarantees do not
extend to the value of or yield of the mortgage-backed securities themselves
or to the net asset value of a Portfolio's shares.
Mortgage-backed securities may also be issued by trusts or other entities
formed or sponsored by private originators of and institutional investors in
mortgage loans and other foreign or domestic non-governmental entities (or
represent custodial arrangements administered by such institutions). These
private originators and institutions include domestic and foreign savings and
loans associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. Privately
issued mortgage-backed securities are generally backed by pools of
conventional (i.e., non-government guaranteed or insured) mortgage loans.
Since such mortgage-backed securities are not guaranteed by an entity having
the credit standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to
receive a high quality rating, they normally are structured with one or more
types of "credit enhancement." such credit enhancements fall generally into
two categories; (1)
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liquidity protection and (2) protection against losses resulting after
default by a borrower and liquidation of the collateral. Liquidity protection
refers to the providing of cash advances to holders of mortgage-backed
securities when a borrower on an underlying mortgage fails to make its
monthly payment on time. Protection against losses resulting after default
and liquidation is designed to cover losses resulting when, for example, the
proceeds of a foreclosure sale are insufficient to cover the outstanding
amount on the mortgage. Such protection may be provided through guarantees,
insurance policies or letters of credit, though various means of structuring
the transaction or through a combination of such approaches.
The yield on mortgage-backed securities is based on the average expected
life of the underlying pool of mortgage loans. The actual life of
any particular pool will be shortened by any unscheduled or early payments of
principal and interest. Principal prepayments generally result from the sale
of the underlying property or the refinancing or foreclosure of underlying
mortgages. The occurrence of prepayments is affected by a wide range of
economic, demographic and social factors and, accordingly, it is not possible
to predict accurately the average life of a particular pool. Yield on such
pools is usually computed by using the historical record of prepayments for
that pool, or, in the case of newly issued mortgages, the prepayment history
of similar pools. The actual prepayment of experience of a pool of mortgage
loans may cause the yield realized by a Portfolio to differ from the yield
calculated on the basis of the expected average life of the pool.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates prepayments will most likely
decline. When prevailing interest rates rise, the value of a pass-through
security may decrease as do the values of other debt securities, but, when
prevailing interest rates decline, the value of a pass-through
security is not likely to rise to the extent that the value of other debt
securities rise, because of the prepayment feature of pass-through
securities. A Portfolio's reinvestment of scheduled principal payments and
unscheduled prepayments it receives may occur at times when available
investments offer higher or lower rates than the original investment, thus
affecting the yield of such Portfolio. Monthly interest payments received by a
Portfolio have a compounding effect which may increase the yield to the
Portfolio more than debt obligations that pay interest semi-annually. Because
of those factors, mortgage-backed securities may be less effective than
Treasury bonds of similar maturity at maintaining yields during periods of
declining interest rates. A Portfolio may purchase mortgage-backed securities
at par, at a premium or at a discount. Accelerated prepayments adversely
affect yields for pass-through securities purchased at a premium (i.e., at a
price
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in excess of their principal amount) and may involve additional risk of loss
of principal because the premium may not have been fully amortized at the
time the obligation is repaid. The opposite is true for pass-through
securities purchased at a discount.
Mortgage-backed securities may be less effective than debt obligations of
similar maturity at maintaining yields during periods of declining interest
rates. As new types of mortgage-related securities are developed and offered
to investors, the Manager will, subject to the direction of the Board of
Directors and consistent with a Portfolio's investment objective and
policies, consider making investments in such new types of mortgage-related
securities.
"STRIPPED" MORTGAGE-BACKED SECURITIES. The Government Securities
Portfolio, Income Portfolio, Total Return Portfolio and each LifeSpan
Portfolio may invest in "stripped" mortgage-backed securities, in which the
principal and interest portions of the security are separated and sold.
Stripped mortgage-backed securities usually have at least two classes each of
which receives different proportions of interest and principal distributions
on the underlying pool of mortgage assets. One common variety of stripped
mortgage-backed security has one class that receives some of the interest and
most of the principal, while the other class receives most of the interest
and remainder of the principal. In some cases, one class will receive all of
the interest (the ""interest-only" or "IO" class), while the other class will
receive all of the principal (the "principal-only" or "PO" class). Interest
only securities are extremely sensitive to interest rate changes, and
prepayments of principal on the underlying mortgage assets. An increase in
principal payments or prepayments will reduce the income available to the IO
security. In accordance with a requirement imposed by the staff of the SEC,
the Manager or the relevant Subadviser will consider privately-issued fixed
rate IOs and POs to be illiquid securities for purposes of a Portfolio's
limitation on investments in illiquid securities. Unless the Manager or the
relevant Subadviser, acting pursuant to guidelines and standards established
by the Board of Directors, determines that a particular government-issued
fixed rate IO or PO is liquid, management will also consider these IOs and
POs to be illiquid. In other types of CMOs, the underlying principal payments
may apply to various classes in a particular order, and therefore the value
of certain classes or "tranches" of such securities may be more volatile than
the value of the pool as a whole, and losses may be more severe that on other
classes.
CUSTODIAL RECEIPTS. Each of the Portfolios may acquire U.S. Government
Securities and their unmatured interest coupons that have been separated
(stripped) by their holder, typically a custodian bank or investment
brokerage firm. Having separated the
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interest coupons from the underlying principal of the U.S. Government
Securities, the holder will resell the stripped securities in custodial
receipt programs with a number of different names, including Treasury Income
Growth Receipts (TIGRs) and Certificate of Accrual on Treasury Securities
(CATS). The stripped coupons are sold separately from the underlying
principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The
underlying U.S. Treasury bonds and notes themselves are generally held in
book-entry form at a Federal Reserve Bank. Counsel to the underwriters of
these Certificates or other evidences of ownership of U.S. Treasury
securities have stated that, in their opinion, purchasers of the stripped
securities most likely will be deemed the beneficial holders of the
underlying U.S. Government Securities for federal tax and securities
purposes. In the case of CATS and TIGRs, the IRs has reached this conclusion
for the purpose of applying the tax diversification requirements applicable
to regulated investment companies such as the Portfolios. CATS and TIGRs are
not considered U.S. Government Securities by the Staff of the SEC, however.
Further, the IRS' conclusion is contained only in a general counsel
memorandum, which is an internal document of no precedential value or binding
effect, and a private letter ruling, which also may not be relied upon by the
Portfolios. The Company is not aware of any binding legislative, judicial or
administrative authority on this issue.
COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS ("CMOs"). Government Securities
Portfolio, Income Portfolio, Total Return Portfolio and each of the LifeSpan
Portfolios may invest in collateralized mortgage obligations ("CMOs"). CMOs
are fully-collateralized bonds that are the general obligations of the issuer
thereof, either the U.S. Government, a U.S. Government instrumentality, or a
private issuer, which may be a domestic or foreign corporation. Such bonds
generally are secured by an assignment to a trustee (under the indenture
pursuant to which the bonds are issued) of collateral consisting of a pool
of mortgages. Payments with respect to the underlying mortgage generally are
made to the trustee under the indenture. Payments or principal and interest
on the underlying mortgages are not passed through to the holders of the CMOs
as such (i.e., the character of payments of principal and interest is not
passed through, and therefore payments to holders of CMOs attributable to
interest paid and principal repaid on the underlying mortgages do not
necessarily constitute income and return of capital, respectively, to such
holders), but such payments are dedicated to payment of interest on and
repayment of principal of the CMOs. CMOs often are issued in two or more
classes with different characteristics such as varying maturities and stated
rates of interest. Because interest and principal payments on the underlying
mortgages are not passed
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through to holders of CMOs, CMOs of varying maturities may be secured by the
same pool of mortgages, the payments on which are used to pay interest on
each class and to retire successive maturities in sequence. Unlike other
mortgage-backed securities (discussed above), CMOs are designed to be retired
as the underlying mortgages are repaid. In the event of prepayment on such
mortgages, the class of CMO first to mature generally will be paid down.
Therefore, although in most cases the issuer of CMOs will not supply
additional collateral in the event of such prepayment, there will not be
sufficient collateral to secure CMOs that remain outstanding.
ASSET-BACKED SECURITIES. Income Portfolio, Government Securities
Portfolio, Total Return Portfolio and each Life Span Portfolio may purchase
asset-back securities. The value of an asset-backed security is affected by
changes in the market's perception of the asset backing the security, the
creditworthiness of the servicing agent for the loan pool, the originator of
the loans, or the financial institution providing any credit enhancement, and
is also affected if any credit enhancement has been exhausted. The risks of
investing in asset-backed securities are ultimately dependent upon payment of
consumer loans by the individual borrowers. As a purchaser of an asset-backed
security, a Portfolio would generally have no recourse to the entity that
originated the loans in the event of default by a borrower. The underlying
loans are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner as
described above for the prepayments of a pool of mortgage loans underlying
mortgage-backed securities.
COMMERCIAL PAPER (ALL PORTFOLIOS). Each Portfolio may purchase
commercial paper for temporary defensive purposes as described in the
Prospectus. In addition, a Portfolio may invest in variable amount master
demand notes and floating rate notes as follows:
VARIABLE AMOUNT MASTER DEMAND NOTES. Master demand notes are corporate
obligations which permit the investment of fluctuating amounts by a Portfolio
at varying rates of interest pursuant to direct arrangements between a
Portfolio, as lender, and the borrower. They permit daily changes in the
amounts borrowed. A Portfolio has the right to increase the amount under the
note at any time up to the full amount provided by the note agreement, or to
decrease the amount, and the borrower may prepay up to the full amount of the
note without penalty. These notes may or may not be backed by bank letters of
credit. Because these notes are direct lending arrangements between the
lender and borrower, it is not generally contemplated that they will be
traded. There is no secondary market for these notes, although they are
redeemable (and thus immediately repayable by the borrower) at principal
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amount, plus accrued interest, at any time. Accordingly, a Portfolio's right
to redeem such notes is dependent upon the ability of the borrower to pay
principal and interest on demand. A Portfolio has no limitations on the type
of issuer from whom these notes will be purchased; however, in connection
with such purchases and on an ongoing basis, the Manager will consider the
earning power, cash flow and other liquidity ratios of the issuer, and its
ability to pay principal and interest on demand, including a situation in
which all holders of such notes made demand simultaneously. Investments in
master demand notes are subject to the limitation on investments by a
Portfolio in illiquid securities, described in the Prospectus. The Manager
and relevant Subadviser will consider the earning power, cash flow and other
liquidity ratios of issuers of demand notes and continually will monitor
their financial ability to meet payment on demand.
FLOATING RATE/VARIABLE RATE NOTES. Some of the notes a Portfolio may
purchase may have variable or floating interest rates. Variable rates are
adjustable at stated periodic intervals; floating rates are automatically
adjusted according to a specified market rate for such investments, such as
the percentage of the prime rate of a bank, or the 91-day U.S. Treasury Bill
rate. Such obligations may be secured by bank letters of credit or other
support arrangements. Any bank providing such a bank letter, line of credit,
guarantee or loan commitment will meet a Portfolio's investment quality
standards relating to investments in bank obligations. A Portfolio will
invest in variable and floating rate instruments only when the Manager or
relevant Subadviser deems the investment to meet the investment guidelines
applicable to a Portfolio. The Manager or relevant Subadviser will also
continuously monitor the creditworthiness of issuers of such instruments to
determine whether a Portfolio should continue to hold the investments.
The absence of an active secondary market for certain variable and
floating rate notes could make it difficult to dispose of the instruments,
and a Portfolio could suffer a loss if the issuer defaults or during periods
in which the Portfolio is not entitled to exercise its demand rights.
Variable and floating rate instruments held by a Portfolio will be
subject to the Portfolio's limitation on investments in illiquid securities
when a reliable trading market for the instruments does not exist and the
Portfolio may not demand payment of the principal amount of such instruments
within seven days.
BANK OBLIGATIONS AND INSTRUMENTS SECURED THEREBY (ALL PORTFOLIOS). The
bank obligations a Portfolio may invest in include time deposits,
certificates of deposit, and bankers' acceptances if they are: (i)
obligations of a domestic bank with
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total assets of at least $1 billion or (ii) obligations of a foreign bank
with total assets of at least U.S. $1 billion. A Portfolio may also invest
in instruments secured by such obligations (e.g., debt which is guaranteed by
the bank). For purposes of this section, the term "bank" includes commercial
banks, savings banks, and savings and loan associations which may or may not
be members of the Federal Deposit Insurance Corporation.
Time deposits are non-negotiable deposits in a bank for a specified period
of time at a stated interest rate, whether or not subject to withdrawal
penalties. However, time deposits that are subject to withdrawal penalties,
other than those maturing in seven days or less, are subject to the
limitation on investments by a Portfolio in illiquid investments, set forth
in the Prospectus under "Illiquid and Restricted Securities."
Banker's acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.
EQUITY SECURITIES (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO).
Additional information about some of the types of equity securities a
Portfolio may invest in is provided below.
CONVERTIBLE SECURITIES. Each Portfolio (other than Money Market
Portfolio, Income Portfolio and Government Securities Portfolio) may invest
in convertible securities. While convertible securities are a form of debt
security in many cases, their conversions feature (allowing conversion into
equity securities) causes them to be regarded more as "equity equivalents."
As a result, any rating assigned to the security has less impact on the
Manager's or relevant Subadviser's investment decision with respect to
convertible securities than in the case of non-convertible debt securities.
To determine whether convertible securities should be regarded as "equity
equivalents," the Manager or relevant Subadviser examines the following
factors: (1) whether, at the option of the investor, the convertible security
can be exchanged for a fixed number of shares of common stock of the issuer,
(2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis (considering the
effect of converting the convertible securities), and (3) the extent to which
the convertible security may be a defensive "equity substitute," providing
the ability to participate in any appreciation in the price of the issuer's
common stock.
WARRANTS AND RIGHTS. Each Portfolio (other than Money Market Portfolio
and Government Securities Portfolio) may purchase warrants. Warrants are
options to purchase equity securities at
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set prices valid for a specified period of time. The prices of warrants do
not necessarily move in a manner parallel to the prices of the underlying
securities. The price a Portfolio pays for a warrant will be lost unless the
warrant is exercised prior to its expiration. Rights are similar to
warrants, but normally have a short duration and are distributed directly by
the issuer to its shareholders. Rights and warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
PREFERRED STOCK (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO AND
GOVERNMENT SECURITIES PORTFOLIO). Each of the Portfolios (other than the
Money Market Portfolio and the Government Securities Portfolio), subject to
its investment objective, may purchase preferred stock. Preferred stocks are
equity securities, but possess certain attributes of debt securities and are
generally considered fixed income securities. Holders of preferred stocks
normally have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, but do not participate in other
amounts available for distribution by the issuing corporation. Dividends on
the preferred stock may be cumulative, and all cumulative dividends usually
must be paid prior to dividend payments to common stockholders. Because of
this preference, preferred stocks generally entail less risk than common
stocks. Upon liquidation, preferred stocks are entitled to a specified
liquidation preference, which is generally the same as the par or stated
value, and are senior in right of payment to common stocks. However,
preferred stocks are equity securities in that they do not represent a
liability of the issuer and therefore do not offer as great a degree of
protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, preferred stocks are subordinated in
right of payment to all debt obligations and creditors of the issuer, and
convertible preferred stocks may be subordinated to other preferred stock of
the same issuer.
HEDGING (ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO). Consistent with
the limitations set forth in the Prospectus and below, each Portfolio may
employ one or more of the types of hedging instruments described below. In
the future, a Portfolio may employ hedging instruments and strategies that
are not presently contemplated but which may be developed, to the extent such
investment methods are consistent with the Portfolio's investment objective,
legally permissible and adequately disclosed.
OPTIONS ON SECURITIES, SECURITIES INDICES AND FOREIGN CURRENCIES. Each
Portfolio (other than the Money Market Portfolio) may write covered call
options. In addition, the Government securities Portfolio and the
International Equities
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Portfolio may purchase covered call options. Such options may relate to
particular U.S. or non-U.S. securities, to various U.S. or non-U.S. stock
indices or to U.S. or non-U.S. currencies. To the extent that a Portfolio
engages in options transactions, the Portfolio may purchase and write call
options which are issued by the Options Clearing Corporation (the "OCC") or
which are traded on U.S. and non-U.S. exchanges. The International Equity
Portfolio may purchase options on currency in the over-the-counter markets
("OTC Markets").
WRITING COVERED CALLS. When a Portfolio writes a call on a security, it
receives a premium and agrees to sell the callable investment to a purchaser
of a corresponding call on the same security during the call period (usually
not more than 9 months) at a fixed exercise price (which may differ from the
market price of the underlying security), regardless of market price changes
during the call period. A Portfolio retains the risk of loss should the price
of the underlying security decline during the call period, which may be
offset to some extent by the premium.
To terminate its obligation on a call it has written, a Portfolio may
purchase a corresponding call in a "closing purchase transaction." A profit
or loss will be realized, depending upon whether the net of the amount of the
option transaction costs and the premium received on the call written was
more or less than the price of the call subsequently purchased. A profit may
also be realized if the call expires unexercised, because a Portfolio retains
the underlying investment and the premium received. Any such profits are
considered short-term capital gains for Federal income tax purposes, and when
distributed by the Portfolio are taxable as ordinary income. If a Portfolio
could not effect a closing purchase transaction due to lack of a market, it
would have to hold the callable investments until the call lapsed or was
exercised.
PURCHASING COVERED CALLS. When a Portfolio purchases a call (other than
in a closing purchase transaction), it pays a premium and, except as to calls
on indices or futures, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the call period
at a fixed exercise price. When a Portfolio purchases a call on a securities
index or future, it pays a premium, but settlement is in cash rather than by
delivery of the underlying investment to the Portfolio. In purchasing a call,
a Portfolio benefits only if the call is sold at a profit or if, during the
call period, the market price of the underlying investment is above the sum
of the exercise price, transaction costs and the premium paid, and the call
is exercised. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Portfolio
will lose its premium payment and the right to purchase the underlying
investment.
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Calls on broadly-based indices or futures are similar to calls on
securities or futures contracts except that all settlements are in cash and
gain or loss depends on changes in the index in question (and thus on price
movements in the stock market generally) rather than on price movements in
individual securities or futures contracts. When a Portfolio buys a call on an
index or future, it pays a premium. During the call period, upon exercise of
a call by a Portfolio, a seller of a corresponding call on the same
investment will pay the Portfolio an amount of cash to settle the call if the
closing level of the index or future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to the
difference between the closing price of the index and the exercise price of
the call times a specified multiple (the "multiplier"), which determines the
total dollar value for each point of difference. That cash payment is
determined by the multiplier, in the same manner as described above as to
calls.
An option position may be closed only on a market which provides secondary
trading for options of the same series and there is no assurance that a
liquid secondary market will exist for any particular option. A Portfolio's
option activities may affect its turnover rate and brokerage commissions. A
Portfolio may pay a brokerage commission each time it buys a call, sells a
call, or buys or sells an underlying investment in connection with the
exercise of a call. Such commissions may be higher than those which would
apply to direct purchases or sales of such underlying investments. Premiums
paid for options are small in relation to the market value of the related
investments, and consequently, call options offer large amounts of leverage.
The leverage offered by trading in options could result in a Portfolio's net
asset value being more sensitive to changes in the value of the underlying
investments.
FUTURES CONTRACTS AND RELATED OPTIONS. To hedge against changes in
interest rates, securities prices or currency exchange rates, each Portfolio
(other than the Money Market Portfolio) may, subject to its investment
objectives and policies, purchase and sell various kinds of futures contracts
and write covered call options on such contracts. The International Equity
Portfolio and the Government Securities Portfolio may purchase and sell call
and put options on any of such futures contracts. A Portfolio may also enter
into closing purchase and sale transactions with respect to any of such
contracts and options. The Government Securities Portfolio, the Total Return
Portfolio, the International Equity Portfolio and the Growth Portfolio may
purchase and sell stock index futures contracts; and the Government
Securities Portfolio, the Income Portfolio, the Total Return Portfolio and
International Equity Portfolio may purchase and sell interest rate future
contracts. In addition, each Portfolio that may invest in securities that are
denominated in a
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foreign currency may purchase and sell futures on currencies and the
International Equity Portfolio may purchase and sell options on such futures.
A Portfolio will engage in futures and related options transactions only for
bona fide hedging purposes as defined in regulations promulgated by the CFTC.
All futures contracts entered into by the Portfolios are traded on U.S.
exchanges or boards of trade that are licensed and regulated by the CFTC or
on foreign exchanges approved by the CFTC.
A Portfolio may buy and sell futures contracts on interest rates
("Interest Rate Futures"). No price is paid or received upon the purchase or
sale of an Interest Rate Future. An Interest Rate Future obligates the seller
to deliver and the purchaser to take a specific type of debt security at a
specific future date for a fixed price. That obligation may be satisfied by
actual delivery of the debt security or by entering into an offsetting
contract.
The Portfolio may buy and sell futures contracts related to financial
indices (a "Financial Future"). A financial index assigns relative values to
the securities included in the index and fluctuates with the changes in the
market value of those securities. Financial indices cannot be purchased or
sold directly. The contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction or to enter into an
offsetting contract. No physical delivery of the securities underlying the
index is made on settling the futures obligation. No monetary amount is paid
or received by a Portfolio on the purchase or sale of a Financial Future.
Upon entering into a futures transaction, a Portfolio will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin will
be deposited with a Portfolio's Custodian in an account registered in the
futures broker's name; however the futures broker can gain access to that
account only under specified conditions. As the Future is marked to market to
reflect changes in its market value, subsequent margin payments, called
variation margin, will be made to or by the futures broker on a daily basis.
Prior to expiration of the Future, if a Portfolio elects to close out its
position by taking an opposite position, a final determination of variation
margin is made, additional cash is required to be paid by or released to the
Portfolio, and any loss or gain is realized for tax purposes. Although
Financial Futures and Interest Rate Futures by their terms call for
settlement by delivery cash or securities, respectively, in most cases the
obligation is fulfilled by entering into an offsetting position. All futures
transactions are effected through a clearinghouse associated with the
exchange on which the contracts are traded.
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OPTIONS ON FUTURES CONTRACTS. The writing of a call option on a futures
contract generates a premium which may partially offset a decline in the
value of a Portfolio's assets. By writing a call option, a Portfolio becomes
obligated, in exchange for the premium, to sell a futures contract (if the
option is exercised), which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities
that a Portfolio intends to purchase. However, a Portfolio becomes obligated
to purchase a futures contract (if the option is exercised) which may have a
value lower than the exercise price. Thus, the loss incurred by a Portfolio
in writing options on futures is potentially unlimited and may exceed the
amount of the premium received. The Portfolios will incur transaction costs
in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series.
There is not guarantee that such closing transactions can be effected. The
Portfolios' ability to establish and close out positions on such options will
be subject to the development and maintenance of a liquid market.
The Portfolios may use options on futures contracts solely for bona fide
hedging purposes as described below.
FORWARD CONTRACTS. Each Portfolio (other than the Money Market Portfolio
and the Government Securities Portfolio) may enter into foreign currency
exchange contracts ("Forward Contracts") for hedging and non-hedging
purposes. A forward currency exchange contract generally has no deposit
requirement, and no commissions are generally charged at any stage for
trades. A Forward Contract involves bilateral obligations of one party to
purchase, and another party to sell, a specific currency at a future date
(which may be any fixed number of days from the date of the contract agreed
upon by the parties), at a price set at the time the contract is entered
into. A Portfolio generally will not enter into a forward currency exchange
contract with a term of greater than one year. These contracts are traded in
the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers.
A Portfolio may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities a Portfolio
owns or intends to acquire, but it does fix a rate of exchange in advance. In
addition, although Forward Contracts limit the risk of loss due to a decline
in the value of the hedged currencies, at the same time they limit
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any potential gain that might result should the value of the currencies
increase.
A Portfolio may enter into Forward Contracts with respect to specific
transactions. For example, when a Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when it
anticipates receipt of dividend payments in a foreign currency, a Portfolio
may desire to "lock-in" the U.S. dollar price of the security or the U.S.
dollar equivalent of such payment by entering into a Forward Contract, for a
fixed amount of U.S. dollars per unit of foreign currency, for the purchase
or sale of the amount of foreign currency involved in the underlying
transaction ("transaction hedge"). A Portfolio will thereby be able to
protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are made
or received.
A Portfolio may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when a Portfolio believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of a Portfolio's portfolio securities denominated in
such foreign currency, or when it believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into a forward
purchase contract to buy that foreign currency for a fixed dollar amount. In
this situation a Portfolio may, in the alternative, enter into a Forward
Contract to sell a different foreign currency for a fixed U.S. dollar amount
where the Portfolio believes that the U.S. dollar value of the currency to be
sold pursuant to the Forward Contract will fall whenever there is a decline
in the U.S. dollar value of the currency in which portfolio securities of the
Portfolio is denominated ("cross hedge").
A Portfolio will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate a fund to deliver an amount of foreign currency in excess of the
value of the Portfolio's portfolio securities or other assets denominated in
that currency. A Portfolio, however, in order to avoid excess transactions and
transaction costs, may maintain a net exposure to Forward Contracts in excess
of the value of the Portfolio's portfolio securities or other assets
denominated in that currency provided the excess amount is "covered" by
liquid, high-grade debt securities, denominated in any currency, at least
equal at all times to the amount of such excess. As an alternative, a LifeSpan
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Portfolio may purchase a call option permitting the Portfolio to purchase the
amount of foreign currency being hedged by a forward sale contract at a price
no higher than the forward contract price or a LifeSpan Portfolio may
purchase a put option permitting the Portfolio to sell the amount of foreign
currency subject to a forward purchase contract at a price as high or higher
than the forward contract price. Unanticipated changes in currency prices may
result in poorer overall performance for a Portfolio than if it had not
entered into such contracts.
The precise matching of the Forward Contract amounts and the value of
the Securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a consequence
of market movements in the value of these securities between the date the
Forward Contract is entered into and the date it is sold. Accordingly, it may
be necessary for a Portfolio to purchase additional foreign
currency on the spot (i.e., cash) market (and bear the expense of such
purchase), if the market value of the security is less than the amount of
foreign currency a Portfolio is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency a Portfolio is obligated
to deliver. The projection of short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing a
Portfolio to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring a Portfolio to
sell a currency, a Portfolio, may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing a
second contract pursuant to which a Portfolio will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, a Portfolio may close out a Forward Contract requiring it
to purchase a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity date of the
first contract. A The Income Portfolio would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the currencies
involved moved between the execution dates of the first contract and
offsetting contract.
The cost to a Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of
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the contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no fees or
commissions are involved. Because such contracts are not traded on an
exchange, a Portfolio must evaluate the credit and performance risk of each
particular counterparty under a Forward Contract.
Although a Portfolio values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. A Portfolio may convert foreign currency from time
to time, and investors should be aware of the costs of currency conversion.
Foreign exchange dealers do not charge a fee for conversion, but they do seek
to realize a profit based on the difference between the prices at which they
buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to resell that currency to the dealer.
INTEREST RATE SWAP TRANSACTIONS. All Portfolios may enter into swap
transactions. Swap agreements entail both interest rate risk and credit risk.
There is a risk that, based on movements of interest rates in the future, the
payments made by a Portfolio under a swap agreement will have been greater
than those received by them. Credit risk arises from the possibility that the
counterparty will default. If the counterparty to an interest rate swap
defaults, a Portfolio's loss will consist of the net amount of contractual
interest payments that the Portfolio has not yet received. The Manager or
relevant Subadviser will monitor the creditworthiness of counterparties to
the Portfolio's interest rate swap transactions on an ongoing basis.
A Portfolio will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master netting
agreement provides that all swaps done between a Portfolio and that
counterparty under the master agreement shall be regarded as parts of an
integral agreement. If on any date amounts are payable in the same currency
in respect of one or more swap transactions, the net amount payable on that
date in that currency shall be paid. In addition, the master netting
agreement may provide that if one party defaults generally or on one swap,
the counterparty may terminate the swaps with that party. Under such
agreements, if there is a default resulting in a loss to one party, the
measure of that party's damages is calculated by reference to the average
cost of a replacement swap with respect to each swap (i.e., the
mark-to-market value at the time of the termination of each swap). The gains
and losses on all swaps are then netted, and the result is the counterparty's
gain or loss on termination. The termination of all swaps and the netting of
gains and losses on termination is generally referred to as "aggregation."
The swap market has grown substantially in recent
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years with a large number of banks and investment banking firms acting both
as principals and as agents utilizing standardized swap documentation. As a
result, the swap market has become relatively liquid in comparison with the
markets for other similar instruments which are traded in the interbank
market. However, the staff of the SEC takes the position that swaps, caps and
floors are illiquid investments that are subject to a limitation on such
investments.
ADDITIONAL INFORMATION ABOUT HEDGING INSTRUMENTS AND THEIR USES. A
Portfolio's Custodian, or a securities depository acting for the Custodian,
will act as a Portfolio's escrow agent, through the facilities of the
Options Clearing Corporation ("OCC"), as to the investments on which a
Portfolio has written options traded on exchanges or as to other acceptable
escrow securities, so that no margin will be required for such transactions.
OCC will release the securities covering a call on the expiration of the
option or upon a Portfolio entering into a closing purchase transaction. An
option position may be closed out only on a market which provides secondary
trading for options of the same series, and there is no assurance that a
liquid secondary market will exist for any particular option.
When International Equity Portfolio writes an over-the-counter ("OTC")
option, it will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which the
Portfolio would have the absolute right to repurchase that OTC option. That
formula price would generally be based on a multiple of the premium received
for the option, plus the amount by which the option is exercisable below the
market price of the underlying security (that is, the extent to which the
option "is in-the-money"). When International Equity Portfolio writes an OTC
option, it will treat as illiquid (for purposes of the limit on its assets
that may be invested in illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by them. The SEC is evaluating
whether OTC options should be considered liquid securities, and the
procedure described above could be affected by the outcome of that evaluation.
REGULATORY ASPECTS OF HEDGING INSTRUMENTS. The Portfolios are required
to operate within certain guidelines and restrictions with respect to their
use of futures and options thereon as established by the Commodities Futures
Trading Commission ("CFTC"). In particular, the Portfolios are excluded from
registration as a "commodity pool operator" if they comply with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Portfolios' assets that may be used for Futures margin and
related options premiums for a bona fide hedging position. However, under the
Rule a Portfolio must limit its aggregate initial futures margin and related
option premiums to no
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more than 5% of the Portfolios' net assets for hedging
strategies that are not considered bona fide hedging strategies under the
Rule.
Transactions in options by the Portfolios are subject to limitations
established by each of the exchanges governing the maximum number of options
which may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges through one or more or
brokers. Thus, the number of options which the Portfolios may write or hold
may be affected by options written or held by other entities, including other
investment companies having the same or an affiliated investment adviser.
Position limits also apply to Futures. An exchange may order the liquidation
of positions found to be in violation of those limits and may impose certain
other sanctions. Due to requirements under the Investment Company Act of 1940
(the "Investment Company Act"), when the Portfolios purchase a Future, the
Portfolios will maintain, in a segregated account or accounts with their
Custodian, cash or readily-marketable, short-term (maturing in one year or
less) debt instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit applicable to it.
TAX ASPECTS OF COVERED CALLS AND HEDGING INSTRUMENTS. Each Portfolio
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. That qualification enables a Portfolio to "pass through" its
income and realized capital gains to shareholders without the Portfolio
having to pay tax on them. This avoids a "double tax" on that income and
capital gains, since shareholders will be taxed on the dividends and capital
gains they receive from the Portfolio. One of the tests for a Portfolio's
qualification is that less than 30% of its gross income (irrespective of
losses) must be derived from gains realized on the sale of securities held
for less than three months. To comply with that 30% cap, a Portfolio will
limit the extent to which it engages in the following activities, but will
not be precluded from them: (i) selling investments, including Futures, held
for less than three months, whether or not they were purchased on the
exercise of a call held by the Portfolio; (ii) purchasing calls or puts which
expire in less than three months; (iii) effecting closing transactions
with respect to calls or puts written or purchased less than three months
previously; (iv) exercising puts or calls held by a Portfolio for less than
three months; or (v) writing calls on investments held for less than three
months.
RISKS OF HEDGING WITH OPTIONS AND FUTURES. In addition to the risks with
respect to hedging discussed in the Prospectus and above, there is a risk in
using short hedging by selling Futures to attempt to protect against a
decline in value of a Portfolio's
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portfolio securities (due to an increase in interest rates) that the prices
of such Futures will correlate imperfectly with the behavior of the cash
(i.e., market value) prices of a Portfolio's securities. The ordinary spreads
between prices in the cash and futures markets are subject to distortions due
to differences in the natures of those markets. First, all participants in
the futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close out futures contracts through offsetting transactions
which could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depends on participants
entering into offsetting transactions rather than making or taking delivery.
To the extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures markets may
cause temporary price distortions.
PORTFOLIO TURNOVER. Each Portfolio's particular portfolio securities
may be changed without regard to the holding period of these securities
(subject to certain tax restrictions), when the Manager or respective
Subadviser deems that this action will help achieve the Portfolio's
objective given a change in an issuer's operations or changes in general
market conditions. Short-term trading means the purchase and subsequent sale
of a security after it has been held for a relatively brief period of time.
The Portfolios do not generally intend to invest for the purpose of seeking
short-term profits. Variations in portfolio turnover rate from year to year
reflect the investment discipline applied to the particular Portfolio and do
not generally reflect trading for short-term profits.
OTHER INVESTMENT RESTRICTIONS
A. FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Portfolio has adopted the following fundamental investment
restrictions. Each Portfolio's most significant investment restrictions are
also set forth in the Prospectus. Fundamental policies cannot be changed
without the vote of a "majority" of a Portfolio's outstanding voting
securities. Under the Investment Company Act, such a "majority" vote is
defined as the vote of the holders of the lesser of (i) 67% or more of the
shares present or represented by proxy at a shareholder meeting, if the
holders of more than 50% of the outstanding shares are present, or (ii) more
than 50% of the outstanding shares.
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With respect to each Panorama Portfolio, the Company does not issue senior
securities; in addition, except as noted, each Panorama Portfolio may not:
1. (a) Invest more than 5% of its total assets (taken at market value at
the time of each investment) in the securities (other than U.S. Government
agency securities) of any one issuer (including repurchase agreements with
any one bank); and (b) purchase more than either (i) 10% of the principal
amount of the outstanding debt securities of an issuer, or (ii) 10% of the
outstanding voting securities of an issuer, except that such restrictions
shall not apply to securities issued or guaranteed by the U.S. Government or
its agencies, bank money instruments or bank repurchase agreements. (This
Restriction is not applicable to the Government Securities Portfolio.
2. Invest more than 25% of its total assets (taken at market value at the
time of each investment) in the securities of issuers primarily engaged in
the same industry. Utilities will be divided according to their services; for
example, gas, gas transmissions, electric and telephone each will be
considered a separate industry for purposes of this restriction; provided
that this limitation shall not apply to the purchase of obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities,
certificates of deposit issued by domestic banks and bankers' acceptances.
(This Restriction is not applicable to the International Equity Portfolio or
the Government Securities Portfolio).
3. Alone, or together with any other Portfolio or Portfolios, make
investments for the purpose of exercising control over, or management of, any
issuer.
4. Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, or by purchase
in the open market of securities of closed-end investment companies where no
underwriter or dealer's commission profit, other than customary broker's
commission, is involved, and only if immediately thereafter not more than 10%
of such Portfolio's total assets, taken at market value, would be invested in
such securities.
5. Purchase or sell interests in oil, gas or other mineral exploration or
development programs, commodities, commodity contracts or real estate, except
that the Government Securities Portfolio, the Income Portfolio, the Total
Return Portfolio, the International Equity Portfolio and the Growth Portfolio
each may: (1) purchase securities of issuers which invest or deal in any of
the above and (2) invest for hedging purposes in futures contracts on
securities, financial instruments and indices, and foreign currency, as are
approved for trading on a registered exchange.
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The International Equity Portfolio may also invest in options on foreign
futures contracts on securities, financial instruments and indices and
foreign currency.
6. Purchase any securities on margin (except that the Company may obtain
such short term credits as may be necessary for the clearance of purchases
and sales of portfolio securities) or make short sales of securities or
maintain a short position. The deposit or payment by a Portfolio of initial
or maintenance margin in connection with futures contracts or related options
translations is not considered the purchase of a security on margin.
7. Make loans, except that the Portfolio (1) may lend portfolio securities
in accordance with the Portfolio's investment policies up to 33 1/3% of the
Portfolio's total assets taken at market value, (2) enter into repurchase
agreements, and (3) purchase all or a portion of an issue of publicly
distributed debt securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original issuance of
the securities.
8. Borrow amounts in excess of 10% of its total assets, taken at market
value at the time of the borrowing, and then only from banks as a temporary
measure for extraordinary or emergency purposes; or make investments in
portfolio securities while its outstanding borrowings exceed 5% of its total
assets.
9. Mortgage, pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by such Portfolio except as may be
necessary in connection with borrowings mentioned in (8) above, and then such
mortgaging, pledging or hypothecating may not exceed 10% of such Portfolio's
total assets, taken at market value at the time thereof. In order to comply
with certain state statutes, such Portfolio will not, as a matter of
operating policy, mortgage, pledge or hypothecate its portfolio securities to
the extent that at any time the percentage of the value of
pledged securities plus the maximum sales charge will exceed 10% of the value
of such Portfolio's shares at the maximum offering price. The deposit of cash
as equivalents and liquid debt securities in a segregated account with the
custodian and/or with a broker in connection with futures contracts or
related options transactions and the purchase of securities on a
"when-issued" basis is not deemed to be a pledge.
10. Underwrite securities of other issuers except insofar as the Portfolio
may be deemed an underwriter under the 1933 Act in selling portfolio
securities.
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11. Write, purchase or sell puts, calls or combinations thereof, except that
the Total Return Portfolio, the Income Portfolio and the Growth Portfolio may
write covered call options and engage in closing purchase transactions. (This
restriction is not applicable to the Government Securities Portfolio or to
the International Equity Portfolio.)
12. Invest in securities of foreign issuers if at the time of acquisition
more than 10% of its total assets, taken at market value at the time of the
investment, would be invested in such securities. However, up to 25% of the
total assets of such Portfolio may be invested in securities (i) issued,
assumed or guaranteed by foreign governments, or political subdivisions or
instrumentalities thereof, (ii) assumed or guaranteed by domestic issuers,
including Eurodollar securities, or (iii) issued, assumed or guaranteed by
foreign issuers having a class of securities listed for trading on the New
York Stock Exchange (the "Exchange"). (This restriction is not applicable to
the International Equity Portfolio.)
The LifeSpan Portfolios each may not:
1. Issue senior securities, except as permitted by paragraphs 2, 3, 6 and 7
below. For purposes of this restriction, the issuance of shares of common
stock in multiple classes or series, the purchase or sale of options, futures
contracts and options on futures contracts, forward commitments and
repurchase agreements entered into in accordance with the Account's
investment policies, are not deemed to be senior securities.
2. Purchase any securities on margin (except that the Company may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities) or make short sales of securities or maintain
a short position. The deposit or payment by the Portfolio of initial or
maintenance margin in connection with futures contracts or related options
transactions is not considered the purchase of a security on margin.
3. Borrow money, except for emergency or extraordinary purposes including
(i) from banks for temporary or short-term purposes or for the clearance of
transactions in amounts not to exceed 33 1/3% of the value of the Portfolio's
total assets (including the amount borrowed) taken at market value, (ii) in
connection with the redemption of Portfolio shares or to finance failed
settlements of portfolio trades without immediately liquidating portfolio
securities or other assets; and (iii) in order to fulfill commitments or
plans to purchase additional securities pending the anticipated sale of other
portfolio securities or assets, but only if after each such borrowing there
is asset coverage of at least 300% as defined in the Investment Company Act.
For purposes of
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this investment restriction, reverse repurchase agreements, mortgage dollar
rolls, short sales, futures contracts, options on futures contracts,
securities or indices and forward commitment transactions shall not
constitute borrowing.
4. Act as an underwriter, except to the extent that in connection with the
disposition of portfolio securities, the Portfolio may be deemed to be an
underwriter for purposes of the 1933 Act.
5. Purchase or sell real estate except that the Portfolio may (i) acquire
or lease office space for its own use, (ii) invest in securities of issuers
that invest in real estate or interests therein, (iii) invest in securities
that are secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Portfolio as a result of the ownership of securities.
6. Invest in commodities, except the Portfolio may purchase and sell
options on securities, securities indices and currency, futures contracts on
securities, securities indices and currency and options on such futures,
forward foreign currency exchange contracts, forward commitments, securities
index put or call warrants and repurchase agreements entered into in
accordance with the Portfolio's investment policies.
7. Make loans, except that the Portfolio (1) may lend portfolio securities
in accordance with the Portfolio's investment policies up to 33 1/3% of the
Portfolio's total assets taken at market value, (2) enter into repurchase
agreements, and (3) purchase all or a portion of an issue of publicly
distributed bonds, debentures or other similar obligations.
8. Purchase the securities of issuers conducting their principal activity
in the same industry if, immediately after such purchase, the value of its
investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment. This limitation does not apply
to investments in obligations of the U.S. Government or any of its agencies,
instrumentalities or authorities.
9. With respect to 75% of total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or
authorities), if:
(a) such purchase would cause more than 5% of the Portfolio's total
assets taken at market value to be invested in the securities of
such issuer; or
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(b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the
Portfolio.
B. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following restrictions are designated as non-fundamental and may be
changed by the Board of Directors without the approval of shareholders.
The LifeSpan Portfolios each may not:
(1) Pledge, mortgage or hypothecate its assets, except to secure permitted
borrowings and then only if such pledging, mortgaging or hypothecating does
not exceed 33 1/3% of the Portfolio's total assets taken at market value.
Collateral arrangements with respect to margin, option and other risk
management and when-issued and forward commitment transactions are not deemed
to be pledges or other encumbrances for purposes of this restriction.
(2) Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of
the Manager or the relevant Subadvisers to save commissions or to average
prices among them is not deemed to result in a joint securities trading
account.
(3) Purchase or retain securities of an issuer if one or more of the
Directors or officers of the Company or directors or officers of the Manager
or any Subadviser or any investment management subsidiary of the Manager or
any Subadviser individually owns beneficially more than 0.5% and together own
beneficially more than 5% of the securities of such issuer.
(4) Purchase a security if, as a result, (i) more than 10% of the
Portfolio's assets would be invested in securities of other investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such investment company being held
by the Portfolio or (iii) more than 5% of the Portfolio's assets would be
invested in any one such investment company. The Portfolio will not purchase
the securities of any open-end investment company except when such purchase
is part of a plan of merger, consolidation, reorganization or purchase of
substantially all of the assets of any other investment company, or purchase
the securities of any closed-end investment company except in the open market
where no commission or profit to a sponsor or dealer results from the
purchase, other than customary brokerage fees. The Portfolio has no current
intention of investing in other investment companies.
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(5) Invest more than 15% of total assets in restricted securities, including
securities eligible for resale pursuant to Rule 144A under the Securities Act
of 1933.
(6) Invest more than 5% of total assets in securities of any issuer which,
together with its predecessors, has been in operation for less than three
years.
(7) Invest in securities which are illiquid if, as a result, more than 15%
of its net assets would consist of such securities, including repurchase
agreements maturing in more than seven days, securities that are not readily
marketable, certain restricted securities, purchased OTC options, certain
assets used to cover written OTC options, and privately issued stripped
mortgage-backed securities.
(8) Purchase securities while outstanding borrowings exceed 5% of the
Portfolio's total assets.
(9) Invest in real estate limited partnership interests.
(10) Purchase warrants of any issuer, if, as a result of such purchase, more
than 2% of the value of the Portfolio's total assets would be invested in
warrants which are not listed on an exchange or more than 5% of the value of
the total assets of the Portfolio would be invested in warrants generally,
whether or not so listed. For these purposes, warrants are to be valued at
the lesser of cost or market, but warrants acquired by the Portfolio in units
with or attached to debt securities shall be deemed to be without value.
(11) Purchase interests in oil, gas, or other mineral exploration programs or
mineral leases; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil,
gas, or other minerals.
(12) Write covered call or put options with respect to more than 25% of the
value of its total assets, invest more than 25% of its total assets in
protective put options or invest more than 5% of its total assets in puts,
calls, spreads or straddles, or any combination thereof, other than
protective put options. The aggregate value of premiums paid on all options,
other than protective put options, held by the Portfolio at any time will not
exceed 20% of the Portfolio's total assets.
(13) Invest for the purpose of exercising control over or management of any
company.
For purposes of a Portfolios' policy not to concentrate their assets,
described above in Restriction (2) for the Panorama Portfolios and
Restriction (8) for the LifeSpan Portfolios, the
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<PAGE>
Portfolios have adopted the industry classifications set forth in the
Appendix to this Statement of Additional Information. This is not a
fundamental policy.
The percentage restrictions described above and in the Prospectus are
applicable only at the time of investment and require no action by a
Portfolio as a result of subsequent changes in value of the investments or
the size of a Portfolio.
In order to permit the sale of shares of the Portfolios in certain
states, the Board of Directors may, in its sole discretion, adopt
restrictions on investment policy more restrictive than those described
above. Should the Board of Directors determine that any such more restrictive
policy is no longer in the best interest of a Portfolio and its shareholders,
the Portfolio may cease offering shares in the state involved and the Board
of Directors may revoke such restrictive policy. Moreover, if the states
involved shall no longer require any such restrictive policy, the Board of
Directors may, in its sole discretion, revoke such policy.
HOW THE PORTFOLIOS ARE MANAGED
ORGANIZATION AND HISTORY. The Company was incorporated in Maryland on August
17, 1981. Prior to May 1, 1996, the Company was named Connecticut Mutual
Financial Services Series Fund I, Inc.
As a Maryland corporation, the Portfolios are not required to hold, and
do not plan to hold, regular annual meetings of shareholders. The Portfolios
will hold meetings when required to do so by the Investment Company Act or
other applicable law, or when a shareholder meeting is called by the
Directors or upon proper request of the shareholders. The Directors will call
a meeting of shareholders to vote on the removal of a Director upon the
written request of the record holders of 10% of its outstanding shares. In
addition, if the Directors receive a request from at least 10 shareholders
(who have been shareholders for at least six months) holding shares of the
Company valued at $25,000 or more or holding at least 1% of the Company's
outstanding shares, whichever is less, stating that they wish to communicate
with other shareholders to request a meeting to remove a Director, the
Directors will then either make each Portfolio's shareholder list available
to the applicants or mail their communication to all other shareholders at
the applicants' expense, or the Directors may take such other action as set
forth under Section 16(c) of the Investment Company Act.
DIRECTORS AND OFFICERS OF THE COMPANY. The Portfolios' Directors and
officers and their principal occupations and business affiliations during the
past five years are listed below. All of
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the Directors are also trustees, directors or managing general partners of
Oppenheimer Total Return Fund, Inc., Oppenheimer Equity Income Fund,
Oppenheimer High Yield Fund, Oppenheimer International Bond Fund, Oppenheimer
Cash Reserves, Oppenheimer Tax-Exempt Fund, The New York Tax-Exempt Income
Fund, Inc., Oppenheimer Champion Income Fund, Oppenheimer Main Street Funds,
Inc., Oppenheimer Strategic Funds Trust, Oppenheimer Integrity Funds,
Oppenheimer Strategic Income & Growth Fund, and Oppenheimer Variable Account
Funds; as well as the following "Centennial Funds": Daily Cash Accumulation
Fund, Inc., Centennial Money Market Trust, Centennial Government Trust,
Centennial New York Tax Exempt Trust, Centennial Tax Exempt Trust, Centennial
California Tax Exempt Trust and Centennial America Fund, L.P. (all of the
foregoing funds are collectively referred to as the "Denver-based Oppenheimer
funds") except for Mr. Fossel, who is a Trustee, Director or Managing General
Partner of all the Denver-based Oppenheimer funds except Oppenheimer Bond
Fund and Oppenheimer Strategic Funds Trust.
ROBERT G. AVIS, DIRECTOR*; AGE 64
One North Jefferson Avenue, St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment adviser
and trust company, respectively).
WILLIAM A. BAKER, DIRECTOR; AGE 81
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., DIRECTOR; AGE 65
19411 Marion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems Co.; formerly associated
with the National Aeronautics and Space Administration.
RAYMOND J. KALINOWSKI, DIRECTOR; AGE 66
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International Inc.; formerly Vice Chairman and
a director of A.G. Edwards, Inc., parent holding company of A.G. Edwards &
Sons, Inc. (a broker-dealer), of which he was a Senior Vice President.
- --------------------
* A Director who is an "interested person" of the Portfolios as defined in
the Investment Company Act.
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<PAGE>
C. HOWARD KAST, DIRECTOR; AGE 74
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm)
ROBERT M. KIRCHNER, DIRECTOR; 74
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
NED M. STEEL, DIRECTOR; AGE 80
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a director of Van
Gilder Insurance Corp. (insurance brokers).
JAMES C. SWAIN, CHAIRMAN AND DIRECTOR;* AGE 62
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a Director of the Manager; President and a Director of
Centennial Asset Management Corporation, an investment adviser subsidiary of
the Manager ("Centennial"); formerly Chairman of the Board of SSI.
BRIDGET A. MACASKILL, PRESIDENT; AGE: 47
President, Chief Executive Officer and a Director of the Manager; Chairman
and a Director of Shareholder Services, Inc.; Vice President and a Director
of Oppenheimer Acquisition Corp.; a Director of HarbourView Asset Management
Corporation, a subsidiary of the Manager, and of Oppenheimer Partnership
Holdings, Inc., a holding company subsidiary of the Manager; formerly an
Executive Vice President of the Manager.
ANDREW J. DONOHUE, VICE PRESIDENT; AGE 45
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); an officer of other
Oppenheimer funds; formerly Senior Vice President and Associate General
Counsel of the Manager and the Distributor; formerly a partner in Kraft &
McManimon (a law firm), prior to which he was an officer of First Investors
Corporation (a broker-dealer) and First Investors Management Company, Inc.
(broker-dealer and investment adviser); director and an officer of First
Investors Family of Funds and First Investors Life Insurance Company.
GEORGE C. BOWEN, VICE PRESIDENT, SECRETARY AND TREASURER; AGE 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice President,
Treasurer and Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
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<PAGE>
DAVID ROSENBERG, VICE PRESIDENT AND PORTFOLIO MANAGER; AGE 37
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly an officer and portfolio manager for Delaware Investment Advisors
and for one of its mutual funds.
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE 47
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager, Assistant
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
ROBERT BISHOP, ASSISTANT TREASURER; AGE 37
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the Manager, prior to
which he was an Accountant for Yale & Seffinger, P.C., an accounting firm,
and previously an Accountant and Commissions Supervisor for Stuart James
Company Inc., a broker-dealer.
SCOTT FARRAR, ASSISTANT TREASURER; AGE 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the Manager, prior to
which he was an International Mutual Fund Supervisor for Brown Brothers
Harriman & Co., a bank, (and previously a Senior Fund Accountant for State
Street Bank & Trust Company.)
REMUNERATION OF DIRECTORS. The officers of the Portfolios are affiliated
with the Manager; they and the Directors of the Portfolios who are affiliated
with the Manager receive no salary or fee from the Portfolios. The chart
below sets forth the fees paid by each Portfolio to its Directors and certain
other information for the fiscal year ended December 31, 1995**:
_____________________
** Effective May 31, 1996, each of the individuals listed in the table below
resigned their position as a Director of the Company.
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<PAGE>
<TABLE>
<CAPTION>
RICHARD M. DONALD E. A. RICHARD W. BEVERLY L. DONALD H. DAVID E.
AYERS CARSON GREENE HAMILTON POND, JR. SAMS, JR.
---------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
COMPENSATION RECEIVED FROM
EACH PORTFOLIO
- - MONEY MARKET PORTFOLIO $ 480 $ 500 $ 575 $ 490 $ -0- $ -0-
- - GOVERNMENT SECURITIES PORTFOLIO 334 344 398 340 -0- -0-
- - INCOME PORTFOLIO 638 673 769 655 -0- -0-
- - TOTAL RETURN PORTFOLIO 3,473 3,778 4,280 3,625 -0- -0-
- - GROWTH PORTFOLIO 1,418 1,533 1,743 1,475 -0- -0-
- - INTERNATIONAL EQUITY PORTFOLIO 407 422 485 415 -0- -0-
- - LIFESPAN INCOME PORTFOLIO -0- -0- -0- -0- -0- -0-
- - LIFESPAN BALANCED PORTFOLIO -0- -0- -0- -0- -0- -0-
- - LIFESPAN GROWTH PORTFOLIO -0- -0- -0- -0- -0- -0-
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
RICHARD M. DONALD E. A. RICHARD W. BEVERLY L. DONALD H. DAVID E.
AYERS CARSON GREENE HAMILTON POND, JR. SAMS, JR.
---------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PENSION OR RETIREMENT
BENEFITS ACCRUED AS A
PORTFOLIO EXPENSE
- - MONEY MARKET PORTFOLIO $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
- - GOVERNMENT SECURITIES PORTFOLIO -0- -0- -0- -0- -0- -0-
- - INCOME PORTFOLIO -0- -0- -0- -0- -0- -0-
- - TOTAL RETURN PORTFOLIO -0- -0- -0- -0- -0- -0-
- - GROWTH PORTFOLIO -0- -0- -0- -0- -0- -0-
- - LIFESPAN INCOME PORTFOLIO -0- -0- -0- -0- -0- -0-
- - LIFESPAN BALANCED PORTFOLIO -0- -0- -0- -0- -0- -0-
- - LIFESPAN GROWTH PORTFOLIO -0- -0- -0- -0- -0- -0-
TOTAL COMPENSATION FROM COMPANY AND
COMPLEX PAID TO THE DIRECTORS** 13,500 14,500 16,500 14,000 -0- -0-
</TABLE>
As of December 31, 1995, the Directors and officers of the Company as a
group owned of record or beneficially less than 1% of the outstanding shares
of the Company.
MAJOR SHAREHOLDERS. As of January 31, 1995, Connecticut Mutual Life
Insurance Company ("CML") and its affiliates (and not on behalf of any
separate account) owned shares of certain accounts as follows: Government
Securities Portfolio (6,252,755 shares) (12% of shares outstanding) and
International Equity Portfolio (5,700,930 shares) (14% of shares
outstanding). As of such date, CML owned 100% of the outstanding shares of each
LifeSpan Portfolio. CML is incorporated under the laws of the State of
Connecticut. CML and
_______________________________
** As of the calendar year ended December 31, 1995, there were 22
investment companies in the Complex (including the Portfolios).
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<PAGE>
its affiliates are deemed to be controlling persons of any Portfolio of the
Company of which they own more than 25% of the shares outstanding. As such,
the exercise by CML and its affiliates of their voting rights may diminish
the voting power of other shareholders. As of December 31, 1995, no other
shareholder of the Company owns of record or beneficially 5% or more of the
shares outstanding of any Portfolio. Effective March 1, 1996, Massachusetts
Mutual Life Insurance Company, a Massachusetts corporation, acquired CML's
interests in the Portfolios.
THE MANAGER, THE SUBADVISORS AND THEIR AFFILIATES. The Manager is
wholly-owned by Oppenheimer Acquisition Corporation ("OAC"), a holding
company controlled by Massachusetts Mutual Life Insurance Company. OAC is
also owned in part by certain of the Manager's directors and officers, some
of whom also serve as officers of the Portfolios, and two of whom (Mr. Jon S.
Fossel and Mr. James C. Swain) serve as Directors of the Portfolios.
The Manager and the Portfolios have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees, including
portfolio managers, that would compete with or take advantage of a
Portfolio's portfolio transactions. Compliance with the Code of Ethics is
carefully monitored and strictly enforced by the Manager.
THE INVESTMENT ADVISORY AGREEMENTS. Each Portfolio has entered into an
Investment Advisory Agreement with the Manager. The investment advisory
agreement between the Manager and each Portfolio requires the Manager, at its
expense, to provide each Portfolio with adequate office space, facilities and
equipment, and to provide and supervise the activities of all administrative
and clerical personnel required to provide effective corporate administration
for each Portfolio, including the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified reports,
and composition of proxy materials and registration statements for the
continuous public sale of shares of each Portfolio.
Expenses not expressly assumed by the Manager under an advisory agreement
or by the Distributor under a Distribution Agreement (defined below) are paid
by the relevant Portfolio. The advisory agreement lists examples of expenses
to be paid by a Portfolio, the major categories of which relate to interest,
taxes, brokerage commissions, fees to certain Directors, legal, and audit
expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses, including
litigation.
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<PAGE>
The advisory fees paid by the Portfolios to G.R. Phelps & Co., the
Portfolios' prior investment advisor, for the last three fiscal years were:
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Money Market Portfolio $ 274,197 $ 298,013 $ 337,460
Government Securities Portfolio $ 71,274 $ 110,313 $ 630,695
Income Portfolio $ 585,385 $ 644,104 $ 117,370
Total Return Portfolio $2,817,177 $3,672,463 $4,780,963
Growth Portfolio $ 821,666 $1,249,284 $1,890,963
International Equity Portfolio $ 12,881 $ 269,195 $ 347,740
LifeSpan Balanced Portfolio $ 0 $ 0 $ 96,385
Capital Appreciation Portfolio $ 0 $ 0 $ 72,333
Diversified Income Portfolio $ 0 $ 0 $ 51,050
Total All Portfolios $4,582,580 $6,243,372 $8,324,959
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Under each advisory agreement, the Manager has undertaken that if the
total expenses of a Portfolio in any fiscal year should exceed the most
stringent state regulatory requirements on expense limitations applicable to
a Portfolio, the Manager's compensation under the advisory agreement will be
reduced by the amount of such excess. For the purpose of such calculation,
there shall be excluded any expense born directly or indirectly by a
Portfolio which is permitted to be excluded from the computation of such
limitation by such statute or state regulatory authority. At present, that
limitation is imposed by California, and limits expenses (with specific
exclusions) to 2.5% of the first $30 million of average net assets, 2% of the
next $70 million of average net asset and 1.5% of average net assets in
excess of $100 million. Any assumption of a Portfolio's expenses under this
limitation would lower a Portfolio's overall expense ratio and increase its
total return during any period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the advisory
agreement, the Manager is not liable for any loss resulting from any good
faith errors or omissions in connection with any matters to which the
Agreement relates. Each advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and
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<PAGE>
to use the name "Oppenheimer" in connection with its other investment
activities. If the Manager shall no longer act as investment adviser to the
Portfolios, the right of the Portfolios to use the name "Oppenheimer" as part
of their corporate names may be withdrawn.
Babson-Stewart, One Memorial Drive, Cambridge, Massachusetts 02142, 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., which is an indirect subsidiary of Massachusetts Life
Insurance Company, and Stewart Ivory & Co. (International), Ltd. As of
September 30, 1995, Babson-Stewart had approximately $917 million in assets
under management. BEA Associates, Citicorp Center, 153 E. 53rd Street, 57th
Floor, New York, NY 10022, is a partnership between Credit Suisse Capital
Corporation and BEA Associate's employee shareholders. BEA Associates has
been providing domestic and global fixed income and equity investment
management services for institutional clients and mutual funds since 1984
and, together with its global affiliate, had $28.9 billion in assets under
management as of June 30, 1995. Pilgrim, 1255 Drummers Lane, Wayne,
Pennsylvania 19087, was established in 1982 to provide specialized equity
management for institutional investors. Pilgrim is a Delaware corporation and
a wholly owned subsidiary of United Asset Management Corporation. As of May
31, 1995, Pilgrim had over $4 billion in assets under management.
THE INVESTMENT SUBADVISORY AGREEMENTS. With respect to the International
Equity Portfolio and the international Component for Capital Appreciation
Portfolio and LifeSpan balanced Portfolio, the Manager has entered into
investment subadvisory agreements with Babson-Stewart. With respect to the
small cap Component of each LifeSpan Portfolio, the Manager has entered into
investment subadvisory agreements with Pilgrim. With respect to the high
yield/high risk bond Component for each LifeSpan Portfolio, the Manager has
entered into investment subadvisory agreements with BEA Associates. Under the
respective investment subadvisory agreement, the corresponding Subadviser,
subject to the review of the Board of Directors and the overall supervision
of the Manager, is responsible for managing the investment operations of the
corresponding LifeSpan Portfolio Component and the composition of the
Component's portfolio and furnishing the LifeSpan Portfolio with advice and
recommendations with respect to investments and the purchase and sale of
securities for the respective Component.
The investment subadvisory agreements with Babson-Stewart provide that
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard with respect to its obligations and duties under the agreements,
Babson-Stewart will not be subject to liability for any loss sustained by
reason of
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<PAGE>
its good faith errors of omissions in connection with any matters to which
the agreements relate.
The investment subadvisory agreements with Pilgrim provide that in the
absence of willful misfeasance, bad faith, negligence, or reckless disregard
of the performance of its duties under the agreements, Pilgrim is not subject
to liability for any error of judgment or mistake of law or for any other
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.
The investment subadvisory agreement with BEA Associates provides that
in the absence of willful misfeasance, bad faith, negligence, or reckless
disregard of the performance of its duties under the agreement, BEA
Associates is not subject to liability 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 LifeSpan
Portfolios subadvised by BEA Associates if such activities were made with due
care and in good faith.
THE TRANSFER AGENT. OppenheimerFunds Services, each Portfolio's
transfer agent, is responsible for maintaining each Portfolio's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
BROKERAGE POLICIES OF THE PORTFOLIOS
BROKERAGE PROVISIONS OF THE INVESTMENT ADVISORY AGREEMENTS. One of the duties
of the Manager under each advisory agreement is to arrange the portfolio
transactions for each Portfolio. Each advisory agreement contains provisions
relating to the employment of broker-dealers ("brokers") to effect a
Portfolio's portfolio transactions. In doing so, the Manager is authorized
by the advisory agreement to employ such broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company Act,
as may, in its best judgment based on all relevant factors, implement the
policy of a Portfolio to obtain, at reasonable expense, the "best execution"
(prompt and reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding, but
is expected to minimize the commissions paid to the extent consistent with
the interest and policies of a Portfolio as established by its Board of
Directors.
Under each advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for a Portfolio
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid
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<PAGE>
to such brokers may be higher than another qualified broker would have
charged, if a good faith determination is made by the Manager and the
commission is fair and reasonable in relation to the services provided.
Subject to the foregoing considerations, the Manager may also consider sales
of shares of a Portfolio and other investment companies managed by the
Manager or its affiliates as a factor in the selection of brokers for a
Portfolio's portfolio transactions.
DESCRIPTION OF BROKERAGE PRACTICES FOLLOWED BY THE MANAGER. Most purchases
made by the Portfolios are principal transactions at net prices, and the
Portfolios incur little or no brokerage costs. Subject to the provisions of
the advisory agreement, the procedures and rules described above, allocations
of brokerage are generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain instances,
portfolio managers may directly place trades and allocate brokerage, also
subject to the provisions of the advisory agreements and the procedures and
rules described above. In either case, brokerage is allocated under the
supervision of the Manager's executive officers. Transactions in securities
other than those for which an exchange is the primary market are generally
done with principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for certain
fixed income agency transactions in the secondary market and otherwise only
if it appears likely that a better price or execution can be obtained.
When the Portfolios engage in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any
transaction in the securities to which the option relates. When possible,
concurrent orders to purchase or sell the same security by more than one of
the accounts managed by the Manager and its affiliates are combined. The
transactions effected pursuant to such combined orders are averaged as to
price and allocated in accordance with the purchase or sale orders actually
placed for each account.
The research services provided by a particular broker may be useful only
to one or more of the advisory account of the Manager and its affiliates, and
investment research received for the commissions of those other accounts may
be useful both to the Portfolios and one or more of such other accounts. Such
research, which may be supplied by a third party at the instance of a broker,
includes information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt of market
quotations for portfolio evaluations, information systems, computer hardware
and similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that provides
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<PAGE>
assistance to the Manager in the investment decision-making process may be
paid in commission dollars. The Board of Directors has permitted the Manager
to use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also permitted
the Manager to use stated commissions on secondary fixed-income trades to
obtain research where the broker has represented to the Manager that (i) the
trade is not from the broker's own inventory, (ii) the trade was executed by
the broker on an agency basis at the stated commission, and (iii) the trade
is not a riskless principal transaction.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the Manager
to obtain market information for the valuation of securities held in a
Portfolio's portfolio or being considered for purchase. The Board of
Directors, including the "independent" Directors of the Portfolios (those
Directors of the Portfolios who are not "interested persons" as defined in
the Investment Company Act, annually reviews information furnished by the
Manager as to the commissions paid to brokers furnishing such services so
that the Board may ascertain whether the amount of such commissions was
reasonably related to the value or benefit of such services.
MONEY MARKET PORTFOLIO, INCOME PORTFOLIO AND GOVERNMENT SECURITIES PORTFOLIO.
As most purchases made by Money Market Portfolio, Income Portfolio and
Government Securities Portfolio are principal transactions at net prices,
these Portfolios incur little or no brokerage costs. Purchases of securities
from underwriters include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers include a spread between the bid
and asked price. No principal transactions and, except under unusual
circumstances, no agency transactions for these Portfolios will be handled by
any affiliated securities dealer. In the unusual circumstance when these
Portfolios pay brokerage commissions, the above-described brokerage practices
and policies are followed. Money Market Portfolio's policy of investing in
short-term debt securities with maturities of less than 397 days results in
high portfolio turnover. However, since brokerage commissions, if any, are
small, high portfolio turnover does not have an appreciable adverse effect
upon net asset value of the Portfolio.
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<PAGE>
During the Portfolios' fiscal years ended December 31, 1993, 1994 and
1995, total brokerage commissions paid by the portfolios listed below were:
<TABLE>
<CAPTION>
1993 1994 1995
Brokerage Brokerage Brokerage
Portfolio Commissions Commissions Commissions
--------- ----------- ----------- -----------
<S> <C> <C> <C>
Growth Portfolio $ 466,977 $ 727,310 $
Total Return Portfolio $1,058,612 $1,311,239 $
International Equity Portfolio $ 23,792 $ 56,589 $
</TABLE>
PERFORMANCE OF THE PORTFOLIOS
YIELD (MONEY MARKET PORTFOLIO ONLY). Money Market Portfolio's current yield
is determined in accordance with regulations adopted under the Investment
Company Act. Yield is calculated for a seven-day period of time as follows.
First, a base period return is calculated for the seven-day period by
determining the net change in the value of a hypothetical pre-existing
account having one share at the beginning of the seven-day period. The change
includes dividends declared on the original share and dividends declared on
any shares purchased with dividends on that share, but such dividends are
adjusted to exclude any realized or unrealized capital gains or losses
affecting the dividends declared. Next, the base period return is multiplied
by 365/7 to obtain the current yield to the nearest hundredth of one percent.
The compounded effective yield for a seven-day period is calculated by (a)
adding 1 to the base period return (obtained as described above), (b) raising
the sum to a power equal to 365 divided by 7, and (c) subtracting 1 from the
result. Money Market Portfolio's "current yield" for the seven days ended
December 31, 1995, was ____% and its "compounded effective yield" was ____%.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. Since the calculation of yield under
either procedure described above does not take into consideration any
realized or unrealized gains or losses on Money Market Portfolio's portfolio
securities which may affect dividends, the return on dividends declared
during a period may not be the same on an annualized basis as the yield for
that period.
YIELD AND TOTAL RETURN INFORMATION (ALL PORTFOLIOS OTHER THAN MONEY MARKET
PORTFOLIO). From time to time, as set forth in the Prospectus, the
"standardized yield," "dividend yield," "average annual total return," "total
return," or "total return at net asset value", as the case may be, of an
investment of a Portfolio may be advertised. An explanation of how yields and
total returns
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<PAGE>
are calculated for each class and the components of those calculations is set
forth below.
A Portfolio's advertisement of its performance must, under applicable
rules of the SEC, include the average annual total returns for each Portfolio
for the 1, 5 and 10-year periods (or the life of the class, if less) as of
the most recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare a Portfolio's performance
to the performance of the other funds for the same periods. However, a number
of factors should be considered before using such information as a basis for
comparison with other investments. An investment in a Portfolio is not
insured; its yields and total returns and share prices are not guaranteed and
normally will fluctuate on a daily basis. When redeemed, an investor's shares
may be worth more or less than their original cost. Yields and total returns
for any given past period are not a prediction or representation by a
Portfolio of future yields or rates of return on its shares. The yields and
total returns of a Portfolio are affected by portfolio quality, the type of
investments the Portfolio holds and its operation expenses.
STANDARDIZED YIELDS
YIELD. A Portfolio's "yields" (referred to as "standardized yield") for a
given 30-day period are calculated using the following formula set forth in
rules adopted by the SEC that apply to all funds that quote yields:
6
Standardized Yield = 2 [(a-b + 1) - 1]
---
(cd )
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of Portfolio shares outstanding during the
30-day period that were entitled to receive dividends.
d = the Portfolio's maximum offering price per share on the last day of the
period, using the current maximum sales charge rate adjusted for
undistributed net investment income.
The standardized yield of a Portfolio for a 30-day period may differ from
its yield for any other period. The SEC formula assumes that the standardized
yield for a 30-day period occurs at a constant rate for a six-month period
and is annualized at the end of the six-month period. This standardized yield
is not based on actual distributions paid by a Portfolio to shareholders in
the 30-day period, but is a hypothetical yield based upon the net
-46-
<PAGE>
investment income from a Portfolio's portfolio investments calculated for
that period. The standardized yield may differ from the "dividend yield" of
the Portfolio, described below.
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time a Portfolio may
quote a "dividend yield" or a "distribution return." Dividend yield is based
on a Portfolio's dividends derived from net investment income during a stated
period. Distribution return includes dividends derived from net investment
income and from realized capital gains declared during a stated period. Under
those calculations, a Portfolio's dividends and/or distributions declared
during a stated period of one year or less (for example, 30 days) are added
together, and the sum is divided by the Portfolio's maximum offering price)
on the last day of the period. When the result is annualized for a period of
less than one year, the "dividend yield" is calculated as follows:
Dividend Yield =
Dividends divided by Number of days (accrual period) X 365
- ----------------------
Max. Offering Price
(last day of period)
TOTAL RETURN INFORMATION
AVERAGE ANNUAL TOTAL RETURNS. A Portfolio's "average annual total return"
is an average annual compounded rate of return for each year in a specified
number of years. It is the rate of return based on the change in value of a
hypothetical initial investment of $1,000 ("P" in the formula below) held for
a number of years ("n") to achieve an Ending Redeemable Value ("ERV") of that
investment according to the following formula:
1/n
(ERV) - 1 = AVERAGE ANNUAL TOTAL RETURN
---
P
CUMULATIVE TOTAL RETURNS. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis. Cumulative total return is determined as follows:
ERV-P = TOTAL RETURN
-----
P
Total returns also assume that all dividends and capital gains distributions
during the period are reinvested to buy additional shares at net asset value
per share, and that the investment is redeemed at the end of the period.
Total returns also assume that all dividends and capital gains distributions
during the period
-47-
<PAGE>
are reinvested to buy additional shares at net asset value per share, and
that the investment is redeemed at the end of the period.
TOTAL RETURNS AT NET ASSET VALUE. From time to time a Portfolio may also
quote an "average annual total return at net asset value" or a cumulative
"total return at net asset value". Each is based on the difference in net
asset value per share at the beginning and the end of the period for a
hypothetical investment in shares of a Portfolio and takes into consideration
the reinvestment of dividends and capital gains distributions.
VALUE OF A $1,000 INVESTMENT IN THE GOVERNMENT SECURITIES PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
Life of Portfolio 5/13/92* 8.34%
to 12/31/95
1 Year Ended 12/31/94 18.91%
12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE INCOME PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
10 Years Ended 12/31/85 9.30%
to 12/31/95
5 Years Ended 12/31/90 10.05%
12/31/95
1 Year Ended 12/31/94 18.18%
12/31/95
</TABLE>
-48-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE TOTAL RETURN PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
10 Years Ended 12/31/95 12.57%
to 12/31/95
5 Years Ended 12/31/90 15.06%
12/31/95
1 Year Ended 12/31/94 24.66%
12/31/95
</TABLE>
VALUE OF A $1,000 INVESTMENT IN THE GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
10 Years Ended 12/31/95 15.21%
to 12/31/95
5 Years Ended 12/31/90 20.81%
12/31/95
1 Year Ended 12/31/94 38.06%
12/31/95
</TABLE>
VALUE OF A $1,000 INVESTMENT IN THE INTERNATIONAL EQUITY PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
Life of Portfolio 5/13/92* 7.57%
to 12/31/94
1 Year Ended 12/31/93 10.30%
12/31/94
</TABLE>
*Date of Inception
-49-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE LIFESPAN CAPITAL APPRECIATION
PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
Life of Portfolio 9/1/95* 6.75%
to 12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE LIFESPAN BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
Life of Portfolio 9/1/95* 6.08%
to 12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE LIFESPAN DIVERSIFIED INCOME PORTFOLIO:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT TOTAL RETURN
PERIOD DATE ANNUALIZED
<S> <C> <C>
Life of Portfolio 9/1/95* 5.69%
to 12/31/95
</TABLE>
*Date of Inception
OTHER PERFORMANCE COMPARISONS. From time to time a Portfolio may also
include in its advertisements and sales literature performance information
about a Portfolio or rankings of a Portfolio's performance cited in
newspapers or periodicals, such as The New York Times. These articles may
include quotations of performance from other sources, such as Lipper
Analytical Services, Inc. or Morningstar, Inc.
From time to time, a Portfolio's Manager may publish rankings or ratings
of the Manager (or the Transfer Agent), by independent third-parties, on the
investor services provided by them to shareholders of the Oppenheimer funds,
other than the performance rankings of the Oppenheimer funds themselves.
These ratings or
-50-
<PAGE>
rankings of shareholder/investor services by third parties may compare the
Oppenheimer funds services to those of other mutual fund families selected by
the rating or ranking services, and may be based upon the opinions of the
rating or ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others.
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
DETERMINATION OF NET ASSET VALUE PER SHARE. The sale of shares of the
Portfolios is currently limited to Accounts as explained on the cover page of
this Statement of Additional Information and the Prospectus. Such shares are
sold at their respective offering prices (net asset values without sales
charges) and redeemed at their respective net asset values as described in
the Prospectus.
The net asset values per share of each Portfolio are determined as of the
close of business of The New York Stock Exchange on each day the Exchange is
open by dividing the value of a Portfolio's net assets by the number of
shares outstanding. The Exchange normally closes at 4:00 P.M., New York time,
but may close earlier on some days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's most recent
annual holiday schedule (which is subject to change) states that it will
close New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day; it may close
on other days. Trading may occur at times when the Exchange is closed
(including weekends and holidays after 4:00 P.M.. on a regular business day).
Because the net asset values of a Portfolio will not be calculated at such
times, if securities held in a Portfolio's portfolio are traded at such
time, the net asset values per share of a Portfolio may be significantly
affected on such days when shareholders do not have the ability to purchase
or redeem shares.
The Portfolio's Board of Directors has established procedures for the
valuation of a Portfolio's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last sale
information is regularly reported are valued at the last reported sale
prices on their primary exchange or NASDAQ that day (or, in the absence of
sales that day, at values based on the last sales prices of the preceding
trading day, or closing bid and asked prices); (ii) securities actively
traded on a foreign securities exchange are valued at the last sales price
available to the pricing service approved by a Portfolio's Board of Directors
or to the Manager as reported by the principal exchange on which the security
is traded; (iii) unlisted foreign securities or listed foreign securities not
actively traded are valued as in (i) above, if available, or at the mean
between "bid"
-51-
<PAGE>
and "asked" prices obtained from active market makers in the security on the
basis of reasonable inquiry; (iv) long-term debt securities having a
remaining maturity in excess of 60 days are valued at the mean between the
"bid" and "asked" prices determined by a portfolio pricing service approved
by a Portfolio's Board of Directors or obtained from active market makers in
the security on the basis of reasonable inquiry; (v) debt instruments having
a maturity of more than one year when issued, and non-money market type
instruments having a maturity of one year or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean between "bid"
and "asked" prices determined by a pricing service approved by a Portfolio's
Board of Directors or obtained from active market makers in the security on
the basis of reasonable inquiry; (vi) money market-type debt securities having
a maturity of less than one year when issued that have a remaining maturity
of 60 days or less are valued at cost, adjusted for amortization of premiums
and accretion of discounts; and (vii) securities (including restricted
securities) not having readily-available market quotations are valued at fair
value under the Board's procedures.
In the case of U.S. Government Securities and mortgage-backed securities,
when last sale information is not generally available, such pricing
procedures may include "matrix" comparisons to the pricing for comparable
instruments on the basis of quality, yield, maturity, and other special
factors involved. A Portfolio's Board of Directors has authorized the Manager
to employ a pricing service to price U.S. Government Securities for which
last sale information is not generally available. The Directors will monitor
the accuracy of such pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and over-the-counter
markets is normally completed before the close of The New York Stock
Exchange. Events affecting the values of foreign securities traded in stock
markets the occur between the time their prices are determined and the close
of the Exchange will not be reflected in a Portfolio's calculation of net
asset value unless the Board of Directors or the Manager, under procedures
established by the Board of Directors, determines that the particular event
would materially affect a Portfolio's net asset value, in which case and
adjustment would be made. Foreign currency, including forward contracts, will
be valued at the closing price in the London foreign exchange market that day
as provided by a reliable bank, dealer or pricing service. The values of
securities denominated in a foreign currency will be converted to U.S.
dollars at the closing price in the London foreign exchange market that day
as provided by a reliable bank, dealer or pricing service.
-52-
<PAGE>
Calls, puts and Futures held by a Portfolio are valued at the last sale
prices on the principal exchanges on which they are traded, or on NASDAQ, as
applicable, or, if there are no sales that day, in accordance with (i) above.
When a Portfolio writes an option, an amount equal to the premium received by
the Portfolio is included in the Portfolio's Statement of Assets and
Liabilities as an asset, and an equivalent deferred credit is included in the
liability section. The deferred credit is "marked-to-market" to reflect the
current market value of the option. In determining a Portfolio's gain on
investments, if a call written by a Portfolio is exercised, the proceeds are
increased by the premium received. If a call written by a Portfolio expires,
the Portfolio has a gain in the amount of the premium; if the Portfolio
enters into a closing purchase transaction, it will have a gain or loss
depending on whether the premium was more or less than the cost of the
closing transaction.
AMORTIZED COST METHOD (MONEY MARKET PORTFOLIO ONLY). Money Market
Portfolio will seek to maintain a net asset value of $1.00 per share for
purchases and redemptions. There can be no assurance that it will do so.
Under Rule 2a-7, Money Market Portfolio may use the amortized cost method of
valuing its shares. Under the amortized cost method, a security is value
initially at its cost and its valuation assumes a constant amortization of any
premium or accretion of a discount, regardless of the impact of fluctuating
interest rates on the market value of the security. The method does not take
into account unrealized capital gains or losses.
Money Market Portfolio's Board of Directors has established procedures
intended to stabilize the Portfolio's net asset value at $1.00 per share. If
Money Market Portfolio's net asset value per share were to deviate from $1.00
by more 0.5%, Rule 2a-7 requires the Board promptly to consider what action,
if any, should be taken. If the Directors find that the extent of any such
deviation may result in material dilution or other unfair effects on
shareholders, the Board will take whatever steps it considers appropriate to
eliminate or reduce such dilution or unfair effects, including, without
limitation, selling portfolio securities prior to maturity, shortening the
average portfolio maturity, withholding or reducing dividends, reducing the
outstanding number of Portfolio shares without monetary consideration, or
calculating net asset value per share by using available market quotations.
As long as it uses Rule 2a-7, Money Market Portfolio must abide by certain
conditions described in the prospectus. Some of those conditions relate to
portfolio management and require Money Market Portfolio to : (i) maintain a
dollar-weighted average portfolio maturity not in excess of 90 days; (ii)
limit its investments, including repurchase agreements, to those instruments
-53-
<PAGE>
which are denominated in U.S. dollars, and which are rated in one of the two
highest short-term rating categories by at least two "nationally-recognized
statistical rating organizations" ("NRSROs"), as defined in Rule 2a-7, or by
only one NRSRO if only one NRSRO has rated the security; an instrument that
is not rated must be of comparable quality as determined by the Board; and
(iii) not purchase any instruments with a remaining maturity of more than 397
days. Under Rule 2a-7, the maturity of an instrument is generally considered
to be its stated maturity (or in the case of an instrument called for
redemption, the date on which the redemption payment must be made), with
special exceptions for certain variable rate demand and floating rate
instruments. Repurchase agreements and securities loan agreements are, in
general, treated as having a maturity equal to the period scheduled until
repurchase or return, or if subject to demand, equal to the notice period.
While the amortized cost method provides certainty in valuation, there may
be periods during which the value of an instrument as determined by the
amortized cost method is higher or lower than the price Money Market
Portfolio would receive if it sold the instrument. During periods of
declining interest rates, the daily yield on shares of Money Market Portfolio
may tend to be lower (and net investment income and daily dividends higher)
than a like computation made by a fund with identical investments utilizing a
method of valuation based upon market prices or estimates of market prices
for its portfolio. Thus, if the use of amortized cost by Money Market
Portfolio resulted in a lower aggregate portfolio value on a particular day,
a prospective investor in Money Market Portfolio would be able to obtain a
somewhat higher yield than would result from investment in a fund utilizing
only market values, and existing shareholders in Money Market Portfolio would
receive less investment income than if the Portfolio were priced at market
value. Conversely, during periods of rising interest rates, the daily yield
on Portfolio shares will tend to be higher and its aggregate value lower than
that of a portfolio priced at market value. A prospective investor would
receive a lower yield than from an investment in a portfolio priced at market
value, while existing investors in Money Market Portfolio would receive more
investment income than if the Portfolio were priced at market value.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Company intends for each Portfolio to
qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code. By so qualifying, the Portfolios will not be subject
to Federal income taxes on amounts paid by them as dividends and
distributions, as described in the Prospectus. Each Portfolio is treated as
a single entity for purposes of determining Federal tax treatment. The Company
will
-54-
<PAGE>
endeavor to ensure that each Portfolio's assets are so invested so that all
such requirements are satisfied, but there can be no assurance that it will
be successful in doing so.
The Internal Revenue Code requires that a holder (such as a Portfolio) of
a zero coupon security accrue a portion of the discount at which the security
was purchased as income each year even though that Portfolio receives no
interest payment in cash on the security during the year. As an investment
company, each Portfolio must pay out substantially all of its net investment
income each year. Accordingly, when a Portfolio holds zero coupon securities,
it may be required to pay out as an income distribution each year an amount
which is greater than the total amount of cash interest the Portfolio
actually received. Such distributions will be made from the cash assets of
that Portfolio or by liquidation of portfolio securities, if necessary. The
Portfolio may realize a gain or loss from such sales. In the event the
Portfolio realizes net capital gains from such transactions, its shareholders
may receive a larger capital gain distributions than they would have had in
the absence of such transactions.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
THE CUSTODIAN. State Street Bank and Trust Company is the Custodian of the
Portfolios' assets. The Custodian's responsibilities include safeguarding and
controlling the Portfolios' portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and from
the Portfolios.
INDEPENDENT AUDITORS. The independent auditors of the Portfolios audit the
Portfolios' financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager and
its affiliates.
FINANCIAL INFORMATION ABOUT THE PORTFOLIOS
INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS
The Portfolios' financial statements for the year ended December 31, 1995
are attached to and incorporated by reference from the Company's Annual
Report into this Statement of Additional Information. The financial
statements are so attached and incorporated in reliance upon the report of
Arthur Andersen LLP, independent public accountants, as experts in accounting
and auditing.
-55-
<PAGE>
APPENDIX A
INDUSTRY CLASSIFICATIONS
Aerospace/Defense Food
Air Transportation Gas Utilities*
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Insurance
Building Materials Leasing & Factoring
Cable Television Leisure
Chemicals Manufacturing
Commercial Finance Metals/Mining
Computer Hardware Nondurable Household Goods
Computer Software Oil - Integrated
Conglomerates Paper
Consumer Finance Publishing/Printing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Stores Specialty Retailing
Drug Wholesalers Steel
Durable Household Goods Supermarkets
Education Telecommunications - Technology
Electric Utilities Telephone - Utility
Electrical Equipment Textile/Apparel
Electronics Tobacco
Energy Services & Producers Toys
Entertainment/Film Trucking
Environmental
- ----------------------------
* For purposes of a Portfolio's investment policy not to concentrate in
securities of issuers in the same industry, utilities are divided into
"industries" according to their services (e.g., gas utilities, gas
transmission utilities, electric utilities and telephone utilities are each
considered a separate industry).
A-1
<PAGE>
PANORAMA SERIES FUND I, INC.
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
COMMON STOCKS(42.8% OF NET ASSETS)
Aerospace(2.2%)
General Dynamics Corp. 3,800 $ 201,624 $ 224,675
Lockheed Martin Corp. 2,400 146,568 189,600
Loral Corp. 3,800 105,583 134,425
McDonnell Douglas Corp. 1,100 87,802 101,200
Rockwell International Corp. 2,800 126,321 148,050
---------- ----------
667,898 797,950
---------- ----------
Airlines(.5%)
AMR Corp. 800 56,656 59,400
Delta Air Lines, Inc. 700 52,287 51,712
Northwest Airlines Corp. 1,500 54,188 76,500
---------- ----------
163,131 187,612
---------- ----------
Apparel & Textiles(.8%)
Nautica Enterprises, Inc. 2,000 66,749 87,500
St. John Knits, Inc. 1,400 63,485 74,375
Tommy Hilfiger Corp. 2,700 93,338 114,412
---------- ----------
223,572 276,287
---------- ----------
Auto & Auto Related(.2%)
Discount Auto Parts, Inc. 2,200 71,363 68,475
---------- ----------
Banking(3.1%)
Bank of Boston Corp. 4,600 207,502 212,750
Bankers Trust New York Corp. 2,800 192,002 186,200
Chase Manhattan Corp. 3,400 194,483 206,125
Morgan (J.P.) & Company, Inc. 2,800 204,596 224,700
PNC Bank Corp. 5,900 173,723 190,275
Wells Fargo & Co. 300 56,009 64,800
---------- ----------
1,028,315 1,084,850
---------- ----------
Building Materials & Construction(.2%)
USG Corp. 1,900 51,671 57,000
---------- ----------
Business Equipment & Services(.4%)
Medic Computer Systems, Inc. 900 45,860 54,450
New England Business Service, Inc. 4,200 81,669 91,875
---------- ----------
127,529 146,325
---------- ----------
Chemicals(2.0%)
Cabot Corp. 600 32,030 32,325
FMC Corp. 800 62,110 54,100
Goodrich (B.F.) Co. 2,200 131,054 149,875
Grace (W.R.) & Co. 1,400 95,298 82,775
IMC Global, Inc. 2,200 69,927 89,925
Monsanto Co. 1,600 152,512 196,000
Potash Corporation of Saskatchewan Inc. 1,200 68,484 85,050
---------- ----------
611,415 690,050
---------- ----------
Commercial Services(1.3%)
AccuStaff, Inc. 2,400 40,045 105,600
Alternative Resources Corp. 1,300 40,975 39,325
Cambridge Technology Partners, Inc. 1,700 68,675 97,750
Corrections Corporation of America 4,000 92,395 148,500
Quintiles Transnational Corp. 1,800 56,866 73,800
---------- ----------
298,956 464,975
---------- ----------
Computer Business Equipment & Services(3.5%)
Acxiom Corporation 2,500 67,850 68,437
ALANTEC Corp. 1,600 63,295 93,200
Cognex Corp. 4,000 100,245 139,000
Comverse Technology, Inc. 2,300 53,202 46,000
Davidson and Associates, Inc. 1,700 44,101 37,400
Epic Design Technology, Inc. 2,600 55,494 54,600
Global Village Communication 2,400 35,396 46,500
Hyperion Software Corp. 3,400 80,551 72,250
Inso Corp. 1,200 38,681 51,000
McAfee Associates, Inc. 2,350 79,456 103,106
Microcom, Inc. 1,600 41,413 41,600
National Data Corp. 1,400 36,392 34,650
NetManage, Inc. 2,000 56,868 46,500
Optical Data Systems, Inc. 1,000 39,033 25,250
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Project Software & Development, Inc. 2,000 60,555 69,750
Rational Software Corp. 2,300 43,741 51,463
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Remedy Corp. 900 $ 37,861 $ 53,325
Shiva Corp. 800 55,550 58,200
StorMedia, Inc. 1,700 75,996 62,050
Zebra Technologies Corp. 3,000 88,675 102,000
---------- ----------
1,154,355 1,256,281
---------- ----------
Conglomerates(.8%)
Hanson PLC 6,700 115,099 102,175
Jardine Matheson Holdings Ltd. 45 228 308
Textron, Inc. 1,500 103,043 101,250
Tyco International Ltd. 2,600 78,451 92,625
---------- ----------
296,821 296,358
---------- ----------
Drugs & Cosmetics(.9%)
American Home Products Corp. 1,800 138,276 174,600
Bristol-Myers Squibb Co. 1,500 102,855 128,812
Watson Pharmaceuticals, Inc. 500 20,705 24,500
---------- ----------
261,836 327,912
---------- ----------
Electric Utilities(3.1%)
Entergy Corp. 7,100 170,897 207,675
FPL Group, Inc. 4,900 190,831 227,237
Illinova Corp. 5,000 127,074 150,000
Kansas City Power & Light Co. 4,500 100,935 117,562
Texas Utilities Co. 1,200 48,267 49,350
Unicom Corp. 7,300 208,751 239,075
Western Resources, Inc. 3,500 106,869 116,812
---------- ----------
953,624 1,107,711
---------- ----------
Electrical & Electronic Equipment(1.7%)
Actel Corp. 3,400 53,885 36,550
Allen Group, Inc. 2,000 60,806 44,750
Burr-Brown Corp. 1,800 56,803 45,900
Cable Design Technologies 1,100 44,924 48,400
Cidco, Inc. 1,100 38,650 28,050
Credence Systems Corp. 1,700 56,086 38,887
GaSonics International 2,500 55,299 33,750
Input/Output, Inc. 1,200 46,881 69,300
Kemet Corp. 2,800 80,923 66,850
S3, Inc. 3,200 58,716 56,400
Sanmina Corp. 1,400 64,163 72,625
Ultratech Stepper, Inc. 2,100 85,530 54,075
---------- ----------
702,666 595,537
---------- ----------
Environmental Control(.4%)
Tetra Tech, Inc. 2,400 53,100 54,600
United Waste Systems, Inc. 2,700 109,367 100,575
---------- ----------
162,467 155,175
---------- ----------
Financial Services(.1%)
Amresco, Inc. 3,000 37,511 38,250
---------- ----------
Food & Beverages(.1%)
Dole Food Company, Inc. 1,500 45,589 52,500
---------- ----------
Health Services & Hospital Supplies(2.7%)
Baxter International Inc. 4,300 168,001 180,062
Columbia Healthcare Corp. 1,600 75,912 81,200
Express Scripts, Inc. 1,300 50,213 66,300
Gulf South Medical Supply, Inc. 2,400 57,612 72,600
Idexx Laboratories, Inc. 1,800 69,875 84,600
MedPartners, Inc. 1,600 44,314 52,800
Omnicare, Inc. 1,600 54,496 71,600
OrNda Healthcorp 2,700 49,527 62,775
PhyCor, Inc. 1,850 51,432 93,541
Physician Reliance Network, Inc. 1,500 45,638 59,625
Physician Sales & Service, Inc. 4,600 73,982 131,100
---------- ----------
741,002 956,203
---------- ----------
Insurance(3.0%)
Aetna Life & Casualty Co. 3,200 217,824 221,600
Allstate Corp. 2,300 78,074 94,587
CIGNA Corp. 1,600 164,564 165,200
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Compdent Corp. 1,600 43,391 66,400
Hartford Steam Boiler Inspection & Insurance Co. 2,500 116,712 125,000
St. Paul Companies Inc. 2,900 157,528 161,312
TIG Holdings, Inc. 2,000 51,390 57,000
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Travelers Group 2,500 $ 119,408 $ 157,187
---------- ----------
948,891 1,048,286
---------- ----------
Iron & Steel(.6%)
Carpenter Technology Corp. 2,800 107,548 115,150
UNR Industries Inc. 12,000 105,000 103,500
---------- ----------
212,548 218,650
---------- ----------
Leasing(.1%)
Oxford Resources Corp. 1,900 48,643 42,750
---------- ----------
Leisure & Entertainment(.7%)
Clear Channel Communications, Inc. 2,200 84,941 97,075
Mattel, Inc. 1,700 48,994 52,275
Regal Cinemas, Inc. 3,000 70,580 89,250
---------- ----------
204,515 238,600
---------- ----------
Lodging & Restaurants(.3%)
Boston Chicken, Inc. 2,300 57,431 73,887
Papa John's International, Inc. 1,000 41,535 41,187
---------- ----------
98,966 115,074
---------- ----------
Machinery & Equipment(.8%)
Case Corp. 2,000 76,113 91,500
Electroglas, Inc. 3,200 113,222 78,400
Harnischfeger Industries, Inc. 800 25,029 26,600
Mark IV Industries, Inc. 1,900 42,408 37,525
Parker-Hannifin Corp. 1,600 63,712 54,800
---------- ----------
320,484 288,825
---------- ----------
Manufacturing(1.0%)
AGCO Corp. 1,600 $ 77,163 $ 81,600
Black & Decker Corp. 1,500 48,855 52,875
Blyth Industries, Inc. 2,400 57,346 70,800
FSI International, Inc. 2,400 79,653 48,600
Helix Technology Corp. 1,400 61,299 55,300
Integrated Process Equipment Corp. 1,400 49,312 32,900
---------- ----------
373,628 342,075
---------- ----------
Miscellaneous(.3%)
Premark International, Inc. 1,800 93,911 91,125
---------- ----------
Office Equipment(.4%)
US Office Products Co. 2,400 42,941 54,600
Xerox Corp. 600 72,642 82,200
---------- ----------
115,583 136,800
---------- ----------
Oil & Gas(3.6%)
Amoco Corp. 1,900 121,733 136,562
Chevron Corp. 3,800 184,566 199,500
Exxon Corp. 1,400 102,298 112,175
Mobil Corp. 1,900 181,345 212,800
Panhandle Eastern Corp. 9,400 236,833 262,025
Repsol SA (ADR) 1,300 41,309 42,601
Royal Dutch Petroleum Co. 1,300 155,491 183,463
Ultramar Corp. 3,900 92,602 100,425
YPF Sociedad Anonima (ADR) 1,300 23,478 28,113
---------- ----------
1,139,655 1,277,664
---------- ----------
Paper & Forest Products(.3%)
Kimberly-Clark Corp. 1,092 65,310 90,363
---------- ----------
Printing & Publishing(.3%)
Gartner Group, Inc. 1,900 57,399 90,963
---------- ----------
Real Estate(.8%)
Camden Property Trust 4,300 94,363 102,663
Castle & Cooke Inc. 500 6,816 8,375
Health & Retirement Property Trust 5,700 88,966 92,625
Meditrust Corp. 2,800 93,296 97,650
---------- ----------
283,441 301,313
---------- ----------
Retail Trade(1.6%)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
CDW Computer Centers, Inc. 1,300 72,825 52,650
Corporate Express, Inc. 2,000 49,500 60,250
Eckerd Corp. 1,500 54,668 66,938
Kroger Co. 2,400 78,768 90,000
MSC Industrial Direct Co., Inc. 1,000 23,596 27,500
Sears, Roebuck & Co. 4,200 136,269 163,800
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Service Merchandise Co., Inc. 2,200 $ 15,829 $ 11,000
Sunglass Hut International, Inc. 2,400 51,900 57,000
Waban Inc. 2,200 41,679 41,250
---------- ----------
525,034 570,388
---------- ----------
Savings & Loan(.3%)
Ahmanson (H.F.) & Co. 4,300 104,548 113,950
---------- ----------
Technology(1.3%)
Compaq Computer Corp. 1,500 73,210 72,000
Conner Peripherals, Inc. 1,300 21,470 27,300
Electronics for Imaging, Inc. 3,000 85,615 131,250
Seagate Technology, Inc. 1,100 50,556 52,250
Storage Technology Corp. 1,800 49,626 42,975
Stratus Computer, Inc. 2,000 64,942 69,250
Sun Microsystems, Inc. 1,800 63,197 82,125
---------- ----------
408,616 477,150
---------- ----------
Telcommunications(.9%)
Aspect Telecommunications Corp. 2,700 67,236 90,450
Coherent Communication System Corp. 2,300 55,937 44,275
DSP Communications, Inc. 1,400 42,968 61,075
Ericsson LM Tel. Co.(ADR) 3,520 85,178 68,640
LCI International, Inc. 2,400 48,072 49,200
---------- ----------
299,391 313,640
---------- ----------
Telephone Utilities(2.0%)
Ameritech Corp. 3,800 194,066 224,200
GTE Corp. 4,700 172,467 206,800
NYNEX Corp. 4,000 180,280 216,000
VTEL Corp. 2,400 52,243 44,400
---------- ----------
599,056 691,400
---------- ----------
Transportation(.5%)
Atlas Air, Inc. 3,000 48,494 50,250
Fritz Companies, Inc. 2,000 72,275 83,000
Wisconsin Central Transportation 900 55,764 59,175
---------- ----------
176,533 192,425
---------- ----------
Total Common Stocks 13,675,873 15,200,892
---------- ----------
FOREIGN COMMON STOCKS(12.7% OF NET ASSETS)
Auto & Auto Related(.4%)
Autoliv AB (Sweden) 1,000 69,380 58,436
Bridgestone Corp. (Japan) 1,000 14,680 15,884
Michelin CGDE (France) 1,000 43,406 39,882
Valeo SA (France) 700 29,263 32,420
---------- ----------
156,729 146,622
---------- ----------
Banking(.8%)
Banco Popular Espanol (Spain) 400 63,015 73,768
Bangkok Bank Company Ltd. (Thailand) 4,000 44,822 48,591
HSBC Holdings PLC (Hong Kong) 2,000 28,104 30,262
Malayan Banking Berhad (Malaysia) 6,000 48,127 50,557
Societe Generale Paris (France) 215 26,120 26,562
Thai Farmers Bank Ltd. (Thailand) 4,600 41,227 46,383
---------- ----------
251,415 276,123
---------- ----------
Building Materials & Construction(.3%)
Autopistas Concesionaria Espanola SA (Spain) 4,000 43,742 45,507
Compagnie de Saint-Gobain (France) 250 31,121 27,262
PT Indocement Tunggal Prakar (Indonesia) 7,000 25,254 27,553
---------- ----------
100,117 100,322
---------- ----------
Chemicals(.3%)
Akzo Nobel (Netherlands) 200 23,088 23,132
Sekisui Chemical Co. (Japan) 5,000 64,190 73,608
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
87,278 96,740
---------- ----------
Computer Business Equipment & Services(.3%)
Fujitsu Ltd. (Japan) 8,000 94,452 89,104
Getronics NV (Netherlands) 600 25,816 28,043
---------- ----------
120,268 117,147
---------- ----------
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Conglomerates(.9%)
Canadian Pacific Ltd. (Canada) 2,100 $ 34,243 $ 38,255
First Pacific Co. (Hong Kong) 42,000 45,803 46,712
Hutchison Whampoa Ltd. (Hong Kong) 10,000 51,069 60,912
Mannesmann AG (Germany) 195 63,011 62,082
Renong Berhad (Malaysia) 22,000 42,209 32,571
Viag AG (Germany) 170 66,536 68,142
---------- ----------
302,871 308,674
---------- ----------
Drugs & Cosmetics(1.8%)
Astra AB (Sweden) 1,800 64,464 71,841
Ciba-Geigy AG (Switzerland) 100 76,437 87,993
PT Kalbe Farma (Indonesia) 6,000 24,548 20,337
Sandoz AG (Switzerland) 100 74,384 91,547
Schering AG (Germany) 1,000 73,596 66,246
SmithKline Beecham (United Kingdom) 8,000 77,593 88,212
SmithKline Bch/Bec Units (United Kingdom) 5,000 46,313 54,512
Takeda Chemical Industries (Japan) 5,000 69,169 82,325
Zeneca Group PLC (United Kingdom) 4,000 71,106 77,372
---------- ----------
577,610 640,385
---------- ----------
Electric Utilities(.3%)
Powergen PLC (United Kingdom) 3,542 32,827 29,265
VEBA AG (Germany) 2,000 78,130 84,908
---------- ----------
110,957 114,173
---------- ----------
Electrical & Electronic Equipment(1.4%)
BBC AG Brown Boveri & Cie. (Switzerland) 65 72,679 75,509
Hitachi Ltd. (Japan) 5,000 53,289 50,363
Keyence Corp. (Japan) 600 73,032 69,153
Kyocera Corp. (Japan) 1,000 82,761 74,286
Matsushita Electric Industrial Co., Ltd. (Japan) 4,000 59,800 65,085
Philips Electronics NV (Netherlands) 1,100 52,438 39,758
Toshiba Corp. (Japan) 14,000 104,630 109,695
---------- ----------
498,629 483,849
---------- ----------
Financial Services(.5%)
Compagnie Bancaire SA (France) 445 45,816 49,798
International Nederlanden Groep NV (Netherlands) 1,000 55,770 66,804
Nichiei Co., Ltd. (Japan) 1,000 62,438 74,576
---------- ----------
164,024 191,178
---------- ----------
Food & Beverages(.4%)
Heineken NV (Netherlands) 550 79,161 90,142
Nestle SA (Switzerland) 50 49,041 55,310
---------- ----------
128,202 145,452
---------- ----------
Insurance(.7%)
AEGON NV (Netherlands) 2,000 68,969 88,490
AXA (France) 900 51,543 60,649
Munich Reinsurance (Germany) 25 51,413 54,374
Skandia Foersaekrings AB (Sweden) 1,300 30,240 35,145
---------- ----------
202,165 238,658
---------- ----------
Iron & Steel(.4%)
Acerinox SA (Spain) 500 62,881 50,577
Outokumpu Oy (Finland) 1,200 21,951 19,037
Rio Tinto-Zinc Corp. PLC (United Kingdom) 4,000 57,197 58,146
---------- ----------
142,029 127,760
---------- ----------
Leisure & Entertainment(.3%)
Carlton Communications PLC (United Kingdom) 3,400 56,147 50,982
Television Broadcasts Ltd. (Hong Kong) 11,000 41,365 39,192
Thorn EMI PLC (United Kingdom) 1,000 23,344 23,552
---------- ----------
120,856 113,726
---------- ----------
Machinery & Equipment(.4%)
Mabuchi Motor Co. (Japan) 800 47,647 49,743
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Mitsubishi Heavy Industries Ltd. (Japan) 6,000 47,396 47,826
NSK Limited (Japan) 3,000 19,354 21,792
SMC Corp. (Japan) 100 6,496 7,235
THK Company Ltd. (Japan) 1,000 28,890 28,475
---------- ----------
149,783 155,071
---------- ----------
Metals & Mining(.1%)
Western Mining Corp. Holdings Ltd. (Australia) 2,000 13,549 12,844
---------- ----------
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Miscellaneous(.2%)
SGS Societe Generale de Surveillance
Holdings SA (Switzerland) 30 $ 52,307 $ 59,558
Siemens AG (Germany) 40 21,267 21,889
---------- ----------
73,574 81,447
---------- ----------
Office Equipment(.4%)
Canon Inc. (Japan) 6,000 107,453 108,668
Ricoh Corp., Ltd (Japan) 5,000 53,586 54,722
---------- ----------
161,039 163,390
---------- ----------
Oil & Gas(1.0%)
Ampolex Ltd. (Australia) 23,000 53,528 50,260
British Petroleum Co., Ltd. (United Kingdom) 6,000 46,594 50,085
Compagnie Francaise de Petroleum Total (France) 900 52,383 60,741
Hong Kong & China Gas Company Ltd. (Hong Kong) 13,000 20,922 20,931
Imperial Oil Ltd. (Canada) 1,100 40,605 39,573
Lasmo PLC (United Kingdom) 7,393 20,521 19,978
Saga Petroleum (Norway) 4,000 52,436 53,362
Societe Nationale Elf Aquitaine (France) 560 40,394 41,260
---------- ----------
327,383 336,190
---------- ----------
Paper & Forest Products(.1%)
Mo och Domsjo AB (Sweden) 800 52,051 34,098
---------- ----------
Printing & Publishing(.2%)
De la Rue PLC (United Kingdom) 1,600 22,730 16,176
Elsevier NV (Netherlands) 2,200 28,232 29,339
Wolters-Kluwer NV (Netherlands) 400 35,119 37,839
---------- ----------
86,081 83,354
---------- ----------
Retail Trade(.8%)
Adidas AG (Germany) 140 6,711 7,407
Argyll Group PLC (United Kingdom) 4,000 21,520 21,121
Carrefour Supermarche SA (France) 115 65,406 69,770
Ito-Yokado Ltd. (Japan) 1,000 54,316 61,598
JUSCO Co. (Japan) 1,000 25,023 26,053
LVMH Louis Vuitton Moet-Hennessy (France) 270 47,982 56,239
Next PLC (United Kingdom) 7,000 44,273 49,573
---------- ----------
265,231 291,761
---------- ----------
Telecommunications(.3%)
Nokia AB (Finland) 1,200 88,852 47,179
Telecom Italia S.p.A (Italy) 19,000 32,997 29,551
Telecom Italia Mobile S.p.A (Italy) 19,000 32,076 33,439
---------- ----------
153,925 110,169
---------- ----------
Telephone Utilities(.3%)
DDI Corporation (Japan) 7 52,548 54,237
Telefonica de Espana (Spain) 3,000 42,390 41,550
---------- ----------
94,938 95,787
---------- ----------
Tobacco(.1%)
PT HM Sampoerna (Indonesia) 4,000 37,930 41,636
---------- ----------
Total Foreign Common Stocks 4,378,634 4,506,556
---------- ----------
CONVERTIBLE PREFERRED STOCKS(.3% OF NET ASSETS)
Machinery & Equipment(.3%)
Case Corp. 1,100 105,325 105,050
---------- ----------
FOREIGN PREFERRED STOCKS(.8% OF NET ASSETS)
Computer Business Equipment & Services(.2%)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
SAP AG (Germany) 400 70,164 60,509
---------- ----------
Conglomerates(.1%)
RWE AG (Germany) 185 50,230 51,586
---------- ----------
Electric Utilities (.2%)
CEMIG (Brazil) 2,724,149 62,479 57,510
---------- ----------
Financial Services(.2%)
Banco Bradesco SA (Brazil) 6,140,292 61,113 52,700
---------- ----------
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Telecommunications(.1%)
Telecomunicacoes de Sao Paulo SA (Brazil) 350,000 $ 61,443 $ 51,492
---------- ----------
Total Foreign Preferred Stocks 305,429 273,797
---------- ----------
CORPORATE BONDS(17.9% OF NET ASSETS)
Aerospace(.1%)
British Aerospace Finance Inc.
8.00%, 1997 $40,000 40,987 41,175
---------- ----------
Banking(.7%)
Barnett Banks, Inc.
8.50%, 1999 35,000 37,251 37,812
Chemical Banking Corp.
6.625%, 1998 35,000 35,309 35,675
Citicorp
9.46%, 1996 35,000 35,749 35,402
First Fidelity Bancorporation
8.50%, 1998 35,000 36,815 36,926
First Union Corp.
6.75%, 1998 35,000 35,403 35,657
Mellon Financial Co.
6.50%, 1997 35,000 35,234 35,562
Security Pacific Corp.
7.75%, 1996 35,000 35,679 35,657
---------- ----------
251,440 252,691
---------- ----------
Chemicals(2.0%)
G-I Holdings
0.00%, 1998 150,000 112,448 116,250
IMC Global, Inc.
6.25%, 2001 90,000 98,025 113,400
Lyondell Petrochemical Co.
8.25%, 1997 70,000 71,917 71,806
NL Industries, Inc.
0.00%, 2005 175,000 135,972 134,312
Rexene Corp.
11.75%, 2004 125,000 135,312 130,937
Synthetic Industries, Inc.
12.75%, 2002 125,000 123,125 122,500
---------- ----------
676,799 689,205
---------- ----------
Drugs & Cosmetics(.4%)
Revlon Worldwide Corp.
0.00%, 1998 175,000 132,833 129,938
---------- ----------
Financial Services(.6%)
American General Finance Corp.
8.50%, 1998 40,000 42,290 42,761
Associates Corp. of North America
7.40%, 1999 40,000 41,220 42,153
Countrywide Funding Corp.
6.57%, 1997 40,000 40,137 40,569
Merrill Lynch & Co., Inc.
8.25%, 1996 55,000 56,242 56,000
Norwest Financial, Inc.
6.50%, 1997 35,000 35,263 35,568
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
215,152 217,051
---------- ----------
Food & Beverages(.7%)
Grand Metropolitan Investment Corp.
8.125%, 1996 35,000 35,670 35,496
Nabisco Brands Inc.
8.00%, 2000 35,000 36,828 37,202
Seagram Company Ltd.
9.75%, 2000 40,000 40,971 40,556
Van De Kamps, Inc.
12.00%, 2005 125,000 125,000 129,375
---------- ----------
238,469 242,629
---------- ----------
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT COST VALUE
-------- --------- ---- ------
<S> <C> <C> <C>
Health Services & Hospital Supplies(.4%)
Regency Health Services, Inc.
9.875%, 2002 $125,000 $ 125,000 $ 123,750
c
Leasing(.4%)
GPA Delaware, Inc.
8.75%, 1998 125,000 114,327 117,500
Penske Truck Leasing Co.
7.75%, 1999 35,000 36,232 36,553
---------- ----------
150,559 154,053
---------- ----------
Leisure & Entertainment (5.7%)
Bally Park Place Funding
9.25%, 2004 $125,000 121,184 127,188
Bally's Grand, Inc.
10.375%, 2003 75,000 75,188 76,500
Casino America, Inc.
11.50%, 2001 125,000 125,312 115,625
Century Communications Corp.
9.75%, 2002 100,000 102,750 104,500
Comcast Corp.
9.125%, 2006 125,000 123,738 130,312
Comcast UK Cable Partners Ltd
0.00%, 2007 125,000 73,529 73,125
Continental Cablevision, Inc.
9.50%, 2013 125,000 130,312 134,375
Galaxy Telecom L.P.
12.375%, 2005 125,000 124,375 124,688
Graphic Controls Corp.
12.00%, 2005 125,000 125,000 130,000
Hollywood Casino Corp.
12.75%, 2003 125,000 119,101 114,375
Mohegan Tribal Gaming
13.50%, 2002 125,000 125,000 135,000
New World Communications Corp.
0.00%, 1999 250,000 172,646 172,500
Paxson Communications Corp.
11.625%, 2002 125,000 123,538 126,875
Resorts International, Inc.
11.00%, 2003 125,000 115,684 116,250
Rio Hotel & Casino, Inc.
10.625%, 2005 125,000 121,875 126,992
Trump Castle Funding, Inc.
11.75%, 2003 125,000 100,645 107,656
Trump Taj Mahal
0.00%, 1999 125,000 107,054 120,312
---------- ----------
1,986,931 2,036,273
---------- ----------
Manufacturing(1.0%)
Figgie International, Inc.
9.875%, 1999 125,000 125,312 125,000
Jordan Industries, Inc.
10.375%, 2003 125,000 114,625 111,250
Portola Packaging, Inc.
10.75%, 2005 125,000 125,000 129,375
---------- ----------
364,937 365,625
---------- ----------
Oil & Gas(.4%)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Coastal Corp.
8.75%, 1999 35,000 37,310 37,766
Mesa Capital CP
12.75%, 1998 125,000 119,349 110,625
---------- ----------
156,659 148,391
---------- ----------
Paper & Forest Products(1.2%)
Fort Howard Corp.
9.00%, 2006 125,000 116,994 122,500
Gaylord Container Corp.
0.00%, 2005 125,000 125,330 123,125
Georgia-Pacific Corp.
9.85%, 1997 40,000 42,251 42,172
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT COST VALUE
-------- --------- ---- ------
<S> <C> <C> <C>
Stone Container Corp.
9.875%, 2001 $125,000 $ 124,844 $ 121,562
---------- ----------
409,419 409,359
---------- ----------
Printing & Publishing(.4%)
Marvel III Holdings Inc.
9.125%, 1998 125,000 118,122 115,000
Reed Publishing USA Inc.
7.24%, 1997 35,000 35,556 35,645
---------- ----------
153,678 150,645
---------- ----------
Retail Trade(.7%)
Pathmark Stores, Inc.
0.00%, 2003 250,000 173,264 153,125
Sears, Roebuck & Co.
9.44%, 1996 40,000 40,738 40,338
8.39%, 1999 40,000 42,340 43,062
---------- ----------
256,342 236,525
---------- ----------
Savings & Loan(.1%)
Golden West Financial Corp.
8.625%, 1998 35,000 37,110 37,368
---------- ----------
Technology(.2%)
Storage Technology Corp.
7.00%, 2008 70,000 86,198 78,050
---------- ----------
Telecommunications(2.1%)
A+ Network, Inc.
11.875%, 2005 125,000 124,093 126,250
In-Flight Phone Corp.
0.00%, 2002 125,000 51,250 41,562
Metrocall, Inc.
10.375%, 2007 125,000 125,000 132,500
MFS Communications Company, Inc.
0.00%, 2004 175,000 134,448 141,312
PriCellular Corp.
0.00%, 2003 175,000 126,991 136,500
Tele-Communications, Inc.
5.28%, 1996 60,000 59,630 59,761
TeleWest PLC
9.625%, 2006 75,000 75,000 76,313
0.00%, 2007 75,000 45,118 45,281
---------- ----------
741,530 759,479
---------- ----------
Telephone Utilities(.2%)
GTE Corp.
8.85%, 1998 40,000 42,197 42,646
MCI Communications Corp.
7.625, 1996 40,000 40,654 40,637
---------- ----------
82,851 83,283
---------- ----------
Tobacco(.2%)
B.A.T. Capital Corp.
6.66%, 2000 40,000 40,045 40,924
Philip Morris Companies Inc.
8.75%, 1996 40,000 41,186 41,100
---------- ----------
81,231 82,024
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Wholesale Trade(.4%)
Hines Horticulture, Inc.
11.75%, 2005 125,000 125,000 131,250
---------- ----------
Total Corporate Bonds 6,313,125 6,368,764
---------- ----------
</TABLE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT COST VALUE
-------- --------- ---- ------
<S> <C> <C> <C>
U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (20.4% OF NET ASSETS)
U.S. Treasury Bond
8.125%, 2019 $ 830,000 $ 960,725 $1,043,592
U.S. Treasury Notes
7.625%, 1996 440,000 445,431 443,300
7.375%, 1997 695,000 715,959 721,278
5.125%, 1998 2,505,000 2,457,523 2,499,139
6.75%, 1999 945,000 967,148 988,111
7.50%, 2001 755,000 805,845 831,565
7.25%, 2004 645,000 684,506 717,259
---------- ----------
Total U.S. Government & Agency Long-Term Obligations 7,037,137 7,244,244
---------- ----------
FOREIGN CURRENCY (.1% OF NET ASSETS)
Australian Dollar 75 54 53
British Pound Sterling 1,373 2,121 2,133
Canadian Dollar 160 117 117
Deutsche Mark 6,272 4,341 4,372
French Franc 1,296 260 265
Hong Kong Dollar 6,461 836 836
Japanese Yen 237,194 2,313 2,297
Malaysian Ringgit 462 182 182
Netherlands Guilder 1,310 822 816
Spanish Peseta 105,303 854 868
Total Foreign Currency 11,900 11,939
---------- ----------
REPURCHASE AGREEMENTS(4.4% OF NET ASSETS)
State Street Bank & Trust Co.
4.75%, due 1/2/96 1,549,000 1,549,000 1,549,000
----------- -----------
TOTAL INVESTMENTS $33,376,423 $35,260,242
----------- -----------
----------- -----------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN DIVERSIFIED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SECURITY SHARES COST VALUE
-------- ------ ---- -----
<S> <C> <C> <C>
COMMON STOCKS(22.0% OF NET ASSETS)
Aerospace(1.5%)
General Dynamics Corp. 2,500 $132,647 $147,812
Lockheed Martin Corp. 1,100 67,177 86,900
Rockwell International Corp. 1,700 76,882 89,888
---------- ----------
276,706 324,600
---------- ----------
Banking(2.7%)
Bank of Boston Corp. 2,300 101,648 106,375
Bankers Trust New York Corp. 2,000 137,224 133,000
Chase Manhattan Corp. 1,700 96,382 103,063
Morgan (J.P.) & Company, Inc. 1,400 102,298 112,350
PNC Bank Corp. 3,700 105,709 119,325
---------- ----------
543,261 574,113
---------- ----------
Business Equipment & Services(.4%)
New England Business Service, Inc. 4,200 81,669 91,875
---------- ----------
Chemicals(1.0%)
Goodrich (B.F.) Co. 1,400 83,398 95,375
Monsanto Co. 900 85,788 110,250
---------- ----------
169,186 205,625
---------- ----------
Conglomerates(.5%)
Hanson PLC 6,700 115,099 102,175
---------- ----------
Drugs & Cosmetics(1.2%)
American Home Products Corp. 1,300 99,866 126,100
Bristol-Myers Squibb Co. 1,500 102,855 128,812
---------- ----------
202,721 254,912
---------- ----------
Electric Utilities(3.6%)
Entergy Corp. 4,200 101,094 122,850
FPL Group, Inc. 3,100 120,730 143,763
Illinova Corp. 3,400 86,477 102,000
Kansas City Power & Light Co. 4,500 100,935 117,563
Texas Utilities Co. 600 24,133 24,675
Unicom Corp. 4,300 121,621 140,825
Western Resources, Inc. 3,500 106,869 116,812
---------- ----------
661,859 768,488
---------- ----------
Health Services & Hospital Supplies(.4%)
Baxter International Inc. 2,000 78,140 83,750
---------- ----------
Insurance(2.1%)
Aetna Life & Casualty Co. 2,000 136,140 138,500
CIGNA Corp. 800 82,282 82,600
Hartford Steam Boiler Inspection & Insurance Co. 2,500 116,713 125,000
St. Paul Companies Inc. 1,800 97,776 100,125
---------- ----------
432,911 446,225
---------- ----------
Iron & Steel(1.0%)
Carpenter Technology Corp. 2,800 107,548 115,150
UNR Industries Inc. 12,000 105,000 103,500
---------- ----------
212,548 218,650
---------- ----------
Oil & Gas(3.9%)
Amoco Corp. 1,200 76,884 86,250
Chevron Corp. 2,200 106,854 115,500
Exxon Corp. 1,400 102,298 112,175
Mobil Corp. 1,100 104,989 123,200
Panhandle Eastern Corp. 5,600 141,092 156,100
Royal Dutch Petroleum Co. 900 107,763 127,012
Ultramar Corp. 3,900 92,602 100,425
---------- ----------
732,482 820,662
---------- ----------
Real Estate(1.4%)
Camden Property Trust 4,300 94,364 102,663
Health & Retirement Property Trust 5,700 88,966 92,625
Meditrust Corp. 2,800 93,296 97,650
---------- ----------
276,626 292,938
---------- ----------
Retail Trade(.3%)
Sears, Roebuck & Co. 1,600 51,912 62,400
---------- ----------
Savings & Loan(.3%)
Ahmanson (H.F.) & Co. 2,500 59,975 66,250
---------- ----------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN DIVERSIFIED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SECURITY SHARES COST VALUE
-------- ------ ---- -----
<S> <C> <C> <C>
Telephone Utilities(1.7%)
Ameritech Corp. 2,000 $102,140 $118,000
GTE Corp. 2,500 91,737 110,000
NYNEX Corp. 2,300 103,661 124,200
---------- ----------
297,538 352,200
---------- ----------
Total Common Stocks 4,192,633 4,664,863
---------- ----------
CONVERTIBLE PREFERRED STOCKS(.5% OF NET ASSETS)
Machinery & Equipment(.5%)
Case Corp. 1,100 105,325 105,050
---------- ----------
PRINCIPAL
CORPORATE BONDS(23.1% OF NET ASSETS) AMOUNT
---------
Aerospace(.3%)
British Aerospace Finance Inc.
8.00%,1997 $55,000 56,357 56,616
---------- ----------
Banking(1.7%)
Barnett Banks, Inc.
8.50%, 1999 55,000 58,537 59,419
Chemical Banking Corp.
6.625%, 1998 50,000 50,441 50,964
Citicorp
9.46%, 1996 50,000 51,071 50,574
First Fidelity Bancorporation
8.50%, 1998 50,000 52,593 52,751
First Union Corp.
6.75%, 1998 50,000 50,575 50,939
Mellon Financial Co.
6.50%, 1997 50,000 50,334 50,803
Security Pacific Corp.
7.75%, 1996 50,000 50,970 50,938
---------- ----------
364,521 366,388
---------- ----------
Chemicals(2.0%)
G-I Holdings
0.00%, 1998 100,000 74,966 77,500
IMC Global, Inc.
6.25%, 2001 90,000 98,025 113,400
Lyondell Petrochemical Co.
8.25%, 1997 100,000 102,738 102,580
NL Industries, Inc.
0.00%, 2005 100,000 77,698 76,750
Rexene Corp.
11.75%, 2004 75,000 81,187 78,562
Synthetic Industries, Inc.
12.75%, 2002 75,000 73,875 73,500
---------- ----------
508,489 522,292
---------- ----------
Drugs & Cosmetics(.3%)
Revlon Worldwide Corp.
0.00%, 1998 100,000 75,905 74,250
---------- ----------
Financial Services(1.4%)
American General Finance Corp.
8.50%, 1998 55,000 58,149 58,796
Associates Corp. of North America
7.40%, 1999 55,000 56,678 57,961
Countrywide Funding Corp.
6.57%, 1997 55,000 55,188 55,783
Merrill Lynch & Co., Inc.
8.25%, 1996 80,000 81,807 81,455
Norwest Financial, Inc.
6.50%, 1997 50,000 50,375 50,811
---------- ----------
302,197 304,806
---------- ----------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN DIVERSIFIED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY AMOUNT COST VALUE
-------- --------- ---- -----
<S> <C> <C> <C>
Food & Beverages(1.1%)
Grand Metropolitan Investment Corp.
8.125%, 1996 $50,000 $50,957 $ 50,708
Nabisco Brands Inc.
8.00%, 2000 50,000 52,612 53,145
Seagram Company Ltd.
9.75%, 2000 55,000 56,335 55,764
Van De Kamps, Inc.
12.00%, 2005 75,000 75,000 77,625
---------- ----------
234,904 237,242
---------- ----------
Health Services & Hospital Supplies(.4%)
Regency Health Services, Inc.
9.875%, 2002 75,000 75,000 74,250
---------- ----------
Leasing(.6%)
GPA Delaware, Inc.
8.75%, 1998 75,000 68,596 70,500
Penske Truck Leasing Co.
7.75%, 1999 50,000 51,759 52,218
---------- ----------
120,355 122,718
---------- ----------
Leisure & Entertainment (6.0%)
Argyle Television Inc.
9.75%, 2005 75,000 74,906 74,625
Bally Park Place Funding
9.25%, 2004 75,000 72,711 76,313
Bally's Grand, Inc.
10.375%, 2003 50,000 50,125 51,000
Casino America, Inc.
11.50%, 2001 75,000 75,188 69,375
Comcast Corp.
9.125%, 2006 75,000 74,243 78,188
Comcast UK Cable Partners Ltd.
0.00%, 2007 75,000 44,117 43,875
Continenal Cablevision, Inc.
9.50%, 2013 75,000 78,188 80,625
Galaxy Telecom L.P.
12.375%, 2005 75,000 74,625 74,812
Graphic Controls Corp.
12.00%, 2005 75,000 75,000 78,000
Hollywood Casino Corp.
12.75%, 2003 75,000 71,461 68,625
Mohegan Tribal Gaming
13.50%, 2002 75,000 75,000 81,000
New World Communications Corp.
0.00%, 1999 150,000 103,587 103,500
Paxson Communications Corp.
11.625%, 2002 75,000 74,122 76,125
Resorts International, Inc.
11.00%, 2003 75,000 69,411 69,750
Rio Hotel & Casino, Inc.
10.625%, 2005 75,000 73,125 76,195
Trump Castle Funding, Inc.
11.75%, 2003 75,000 60,387 64,594
Trump Taj Mahal
0.00%, 1999 75,000 63,469 72,188
United International Holdings, Inc.
0.00%, 1999 50,000 29,626 29,375
---------- ----------
1,239,291 1,268,165
---------- ----------
Manufacturing(1.5%)
Figgie International
9.875%, 1999 75,000 75,187 75,000
Jordan Industries, Inc.
10.375%, 2003 75,000 68,775 66,750
Portola Packaging, Inc.
10.75%, 2005 75,000 75,000 77,625
---------- ----------
218,962 219,375
---------- ----------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN DIVERSIFIED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY AMOUNT COST VALUE
-------- --------- ---- -----
<S> <C> <C> <C>
Oil & Gas(.6%)
Coastal Corp.
8.75%, 1999 $50,000 $53,299 $ 53,951
Mesa Capital CP
12.75%, 1998 75,000 71,531 66,375
---------- ----------
124,830 120,326
---------- ----------
Paper & Forest Products(1.3%)
Fort Howard Corp.
9.00%, 2006 75,000 70,196 73,500
Gaylord Container Corp.
0.00%, 2005 75,000 75,198 73,875
Georgia-Pacific Corp.
9.85%, 1997 55,000 58,095 57,987
Stone Container Corp.
9.875%, 2001 75,000 74,906 72,938
---------- ----------
278,395 278,300
---------- ----------
Printing & Publishing(.6%)
Marvel III Holdings Inc.
9.125%, 1998 75,000 70,873 69,000
Reed Publishing USA Inc.
7.24%, 1997 50,000 50,794 50,921
---------- ----------
121,667 119,921
---------- ----------
Retail Trade(1.0%)
Pathmark Stores, Inc.
0.00%, 2003 150,000 103,959 91,875
Sears, Roebuck & Co.
9.44%, 1996 55,000 56,014 55,464
8.39%, 1999 55,000 58,217 59,210
---------- ----------
218,190 206,549
---------- ----------
Savings & Loan(.3%)
Golden West Financial Corp.
8.625%, 1998 50,000 53,014 53,382
---------- ----------
Technology(.4%)
Storage Technology Corp.
7.00%, 2008 70,000 86,198 78,050
---------- ----------
Telecommunications(2.4%)
A+ Network, Inc.
11.875%, 2005 75,000 74,455 75,750
In-Flight Phone Corp.
0.00%, 2002 75,000 30,750 24,938
Metrocall, Inc.
10.375%, 2007 75,000 75,000 79,500
MFS Communications Company, Inc.
0.00%, 2004 100,000 76,827 80,750
PriCellular Corp.
0.00%, 200+A323 100,000 71,832 78,000
Tele-Communications, Inc.
5.28%, 1996 80,000 79,507 79,681
TeleWest PLC
9.625%, 2006 50,000 50,000 50,875
0.00%, 2007 50,000 30,079 30,188
---------- ----------
488,450 499,682
---------- ----------
Telephone Utilities(.5%)
GTE Corp.
8.85%, 1998 55,000 58,021 58,638
MCI Communications Corp.
7.625, 1996 55,000 55,900 55,876
---------- ----------
113,921 114,514
---------- ----------
Tobacco(.5%)
B.A.T Capital Corp.
6.66%, 2000 55,000 55,062 56,270
Philip Morris Companies Inc.
8.75%, 1996 55,000 56,632 56,512
---------- ----------
111,694 112,782
---------- ----------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN DIVERSIFIED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY AMOUNT COST VALUE
-------- --------- ---- -----
<S> <C> <C> <C>
Wholesale Trade(.2%)
Hines Horticulture, Inc.
11.75%, 2005 $50,000 $50,000 $ 52,500
---------- ----------
Total Corporate Bonds 4,842,340 4,882,108
---------- ----------
U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS(48.9% OF NET ASSETS)
U.S. Treasury Bond
8.125%, 2019 1,160,000 1,342,700 1,458,514
U.S. Treasury Notes
7.625%, 1996 695,000 703,579 700,213
7.375%, 1997 1,025,000 1,055,910 1,063,755
5.125%, 1998 3,610,000 3,541,186 3,601,458
6.75%, 1999 1,320,000 1,350,937 1,380,219
7.50%, 2001 1,055,000 1,126,048 1,161,988
7.25%, 2004 895,000 949,819 995,267
---------- ----------
Total U.S. Government & Agency Long-Term Obligations 10,070,179 10,361,414
---------- ----------
REPURCHASE AGREEMENTS(4.2% OF NET ASSETS)
State Street Bank & Trust Co.
4.75%, due 1/2/96 886,000 886,000 886,000
----------- -----------
TOTAL INVESTMENTS $20,096,477 $20,899,435
----------- -----------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
COMMON STOCKS(61.6% OF NET ASSETS)
Aerospace(3.0%)
General Dynamics Corp. 3,800 $201,624 $224,675
Lockheed Martin Corp. 2,400 146,568 189,600
Loral Corp. 3,800 105,583 134,425
McDonnell Douglas Corp. 1,100 87,802 101,200
Rockwell International Corp. 2,800 126,321 148,050
---------- ---------
667,898 797,950
---------- ---------
Airlines(.7%)
AMR Corp. 800 56,656 59,400
Delta Air Lines, Inc. 700 52,287 51,713
Northwest Airlines Corp. 1,500 54,188 76,500
---------- ---------
163,131 187,613
---------- ---------
Apparel & Textiles(1.3%)
Nautica Enterprises, Inc. 2,500 83,213 109,375
St. John Knits, Inc. 1,800 82,545 95,625
Tommy Hilfiger Corp. 3,400 117,275 144,075
---------- ---------
283,033 349,075
---------- ---------
Auto & Auto Related (.3%)
Discount Auto Parts, Inc. 2,700 87,338 84,037
---------- ---------
Banking(4.1%)
Bank of Boston Corp. 4,600 207,502 212,750
Bankers Trust New York Corp. 2,800 192,002 186,200
Chase Manhattan Corp. 3,400 194,483 206,125
Morgan (J.P.) & Company, Inc. 2,800 204,596 224,700
PNC Bank Corp. 5,900 173,723 190,275
Wells Fargo & Co. 300 56,009 64,800
---------- ---------
1,028,315 1,084,850
---------- ---------
Building Materials & Construction(.2%)
USG Corp. 1,900 51,671 57,000
---------- ---------
Business Equipment & Services(.6%)
Medic Computer Systems, Inc. 900 45,860 54,450
New England Business Service, Inc. 4,200 81,669 91,875
---------- ---------
127,529 146,325
---------- ---------
Chemicals(2.6%)
Cabot Corp. 600 32,030 32,325
FMC Corp. 800 62,110 54,100
Goodrich (B.F.) Co. 2,200 131,054 149,875
Grace (W.R.) & Co. 1,400 95,298 82,775
IMC Global, Inc. 2,200 69,927 89,925
Monsanto Co. 1,600 152,512 196,000
Potash Corporation of Saskatchewan Inc. 1,200 68,484 85,050
---------- ---------
611,415 690,050
---------- ---------
Commercial Services(2.2%)
AccuStaff, Inc. 3,000 53,163 132,000
Alternative Resources Corp. 1,600 50,350 48,400
Cambridge Technology Partners, Inc. 2,200 89,275 126,500
Corrections Corporation of America 5,000 115,600 185,625
Quintiles Transnational Corp. 2,400 75,425 98,400
---------- ---------
383,813 590,925
---------- ---------
Computer Business Equipment & Services(5.9%)
Acxiom Corporation 3,200 86,825 87,600
ALANTEC Corp. 2,000 78,901 116,500
Cognex Corp. 5,000 125,074 173,750
Comverse Technology, Inc. 2,800 64,601 56,000
Davidson and Associates, Inc. 2,200 57,665 48,400
Epic Design Technology, Inc. 3,200 68,131 67,200
Global Village Communication 3,000 43,294 58,125
Hyperion Software Corp. 4,200 99,476 89,250
Inso Corp. 1,500 48,699 63,750
McAfee Associates, Inc. 2,950 98,310 129,431
Microcom, Inc. 2,000 51,758 52,000
National Data Corp. 1,800 46,674 44,550
NetManage, Inc. 2,500 72,705 58,125
Optical Data Systems, Inc. 1,300 50,743 32,825
Project Software & Development, Inc. 2,500 74,147 87,188
Rational Software Corp. 2,900 55,103 64,888
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Remedy Corp. 1,100 $46,275 $65,175
Shiva Corp. 1,000 69,600 72,750
StorMedia, Inc. 2,100 93,618 76,650
Zebra Technologies Corp. 3,600 107,625 122,400
---------- ---------
1,439,224 1,566,557
---------- ---------
Conglomerates(1.1%)
Hanson PLC 6,700 115,099 102,175
Jardine Matheson Holdings Ltd. 45 228 308
Textron, Inc. 1,500 103,043 101,250
Tyco International Ltd. 2,600 78,451 92,625
---------- ---------
296,821 296,358
---------- ---------
Drugs & Cosmetics(1.2%)
American Home Products Corp. 1,800 138,276 174,600
Bristol-Myers Squibb Co. 1,500 102,855 128,813
Watson Pharmaceuticals, Inc. 600 24,846 29,400
---------- ---------
265,977 332,813
---------- ---------
Electric Utilities(4.1%)
Entergy Corp. 7,100 170,897 207,675
FPL Group, Inc. 4,900 190,831 227,238
Illinova Corp. 5,000 127,074 150,000
Kansas City Power & Light Co. 4,500 100,935 117,563
Texas Utilities Co. 1,200 48,267 49,350
Unicom Corp. 7,300 208,751 239,075
Western Resources, Inc. 3,500 106,869 116,813
---------- ---------
953,624 1,107,714
---------- ---------
Electrical & Electronic Equipment(2.8%)
Actel Corp. 4,300 67,995 46,225
Allen Group, Inc. 2,500 75,806 55,937
Burr-Brown Corp. 2,200 71,520 56,100
Cable Design Technologies 1,300 53,354 57,200
Cidco, Inc. 1,400 49,200 35,700
Conner Peripherals, Inc. 1,300 21,470 27,300
Credence Systems Corp. 2,100 69,474 48,038
GaSonics International 3,050 67,335 41,175
Input/Output, Inc. 1,400 53,836 80,850
Kemet Corp. 3,500 102,165 83,562
S3, Inc. 4,000 73,417 70,500
Sanmina Corp. 1,700 77,963 88,188
Ultratech Stepper, Inc. 2,700 110,880 69,525
---------- ---------
894,415 760,300
---------- ---------
Environmental Control(.7%)
Tetra Tech, Inc. 3,000 66,375 68,250
United Waste Systems, Inc. 3,400 137,947 126,650
---------- ---------
204,322 194,900
---------- ---------
Financial Services(.2%)
Amresco, Inc. 3,700 45,029 47,175
---------- ---------
Food & Beverages(.2%)
Dole Food Company, Inc. 1,500 45,589 52,500
---------- ---------
Health Services & Hospital Supplies(4.2%)
Baxter International Inc. 4,300 168,001 180,062
Columbia Healthcare Corp. 1,600 75,912 81,200
Express Scripts, Inc. 1,700 66,188 86,700
Gulf South Medical Supply, Inc. 2,900 69,436 87,725
Idexx Laboratories, Inc. 2,300 89,042 108,100
MedPartners. Inc. 2,000 55,430 66,000
Omnicare, Inc. 2,100 71,526 93,975
OrNda Healthcorp 2,700 49,527 62,775
PhyCor, Inc. 2,250 62,432 113,766
Physician Reliance Network, Inc. 1,900 58,063 75,525
Physician Sales & Service, Inc. 5,800 93,344 165,300
---------- ---------
858,901 1,121,128
---------- ---------
Insurance(4.0%)
Aetna Life & Casualty Co. 3,200 217,824 221,600
Allstate Corp. 2,300 78,074 94,587
CIGNA Corp. 1,600 164,564 165,200
Compdent Corp. 2,000 54,005 83,000
Hartford Steam Boiler Inspection & Insurance Co. 2,500 116,713 125,000
St. Paul Companies Inc. 2,900 157,528 161,312
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
TIG Holdings, Inc. 2,000 $51,390 $57,000
Travelers Group 2,500 119,408 157,187
---------- ---------
959,506 1,064,886
---------- ---------
Iron & Steel(.8%)
Carpenter Technology Corp. 2,800 107,548 115,150
UNR Industries Inc. 12,000 105,000 103,500
---------- ---------
212,548 218,650
---------- ---------
Leasing(.2%)
Oxford Resources Corp. 2,400 61,435 54,000
---------- ---------
Leisure & Entertainment(1.0%)
Clear Channel Communications, Inc. 2,400 93,097 105,900
Mattel, Inc. 1,700 48,994 52,275
Regal Cinemas, Inc. 3,750 88,612 111,562
---------- ---------
230,703 269,737
---------- ---------
Lodging & Restaurants(.5%)
Boston Chicken, Inc. 2,800 69,556 89,950
Papa John's International, Inc. 1,300 53,996 53,544
---------- ---------
123,552 143,494
---------- ---------
Machinery & Equipment(1.2%)
Case Corp. 2,000 76,114 91,500
Electroglas, Inc. 4,000 142,745 98,000
Harnischfeger Industries, Inc. 800 25,029 26,600
Mark IV Industries, Inc. 1,900 42,408 37,525
Parker-Hannifin Corp. 1,600 63,712 54,800
---------- ---------
350,008 308,425
---------- ---------
Manufacturing(1.5%)
AGCO Corp. 1,600 77,163 81,600
Black & Decker Corp. 1,500 48,855 52,875
Blyth Industries, Inc. 3,000 70,890 88,500
FSI International, Inc. 3,000 99,510 60,750
Helix Technology Corp. 1,700 75,581 67,150
Integrated Process Equipment Corp. 1,800 63,312 42,300
---------- ---------
435,311 393,175
---------- ---------
Miscellaneous(.3%)
Premark International, Inc. 1,800 93,911 91,125
---------- ---------
Office Equipment(.6%)
US Office Products Co. 3,000 53,829 68,250
Xerox Corp. 600 72,642 82,200
---------- ---------
126,471 150,450
---------- ---------
Oil & Gas(4.8%)
Amoco Corp. 1,900 121,733 136,562
Chevron Corp. 3,800 184,566 199,500
Exxon Corp. 1,400 102,298 112,175
Mobil Corp. 1,900 181,345 212,800
Panhandle Eastern Corp. 9,400 236,833 262,025
Repsol SA (ADR) 1,300 41,309 42,601
Royal Dutch Petroleum Co. 1,300 155,491 183,462
Ultramar Corp. 3,900 92,602 100,425
YPF Sociedad Anonima (ADR) 1,300 23,478 28,112
---------- ---------
1,139,655 1,277,662
---------- ---------
Paper & Forest Products(.3%)
Kimberly-Clark Corp. 1,092 65,310 90,363
---------- ---------
Printing & Publishing(.4%)
Gartner Group, Inc. 2,300 69,670 110,112
---------- ---------
Real Estate(1.1%)
Camden Property Trust 4,300 94,363 102,662
Castle & Cooke Inc. 500 6,816 8,375
Health & Retirement Property Trust 5,700 88,966 92,625
Meditrust Corp. 2,800 93,296 97,650
---------- ---------
283,441 301,312
---------- ---------
Retail Trade(2.3%)
CDW Computer Centers, Inc. 1,700 94,368 68,850
Corporate Express, Inc. 2,500 61,875 75,312
Eckerd Corp. 1,500 54,667 66,937
Kroger Co. 2,400 78,768 90,000
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
MSC Industrial Direct Co., Inc. 1,300 $29,958 $35,750
Sears, Roebuck & Co. 4,200 136,269 163,800
Service Merchandise Co., Inc. 2,200 15,829 11,000
Sunglass Hut International, Inc. 3,000 64,875 71,250
Waban Inc. 2,200 41,679 41,250
---------- ---------
578,288 624,149
---------- ---------
Savings & Loan (.4%)
Ahmanson (H.F.) & Co. 4,300 104,548 113,950
---------- ---------
Technology(1.8%)
Compaq Computer Corp. 1,500 73,210 72,000
Electronics for Imaging, Inc. 3,800 108,304 166,250
Seagate Technology, Inc. 1,100 50,556 52,250
Storage Technology Corp. 1,800 49,626 42,975
Stratus Computer, Inc. 2,000 64,942 69,250
Sun Microsystems, Inc. 1,800 63,197 82,125
---------- ---------
409,835 484,850
---------- ---------
Telcommunications(1.5%)
Aspect Telecommunications Corp. 3,500 87,680 117,250
Coherent Communications Systems Corp. 3,000 71,687 57,750
DSP Communications, Inc. 2,000 64,137 87,250
Ericsson LM Tel. Co.(ADR) 3,520 85,178 68,640
LCI International, Inc. 3,000 60,090 61,500
---------- ---------
368,772 392,390
---------- ---------
Telephone Utilities(2.6%)
Ameritech Corp. 3,800 194,066 224,200
GTE Corp. 4,700 172,466 206,800
NYNEX Corp. 4,000 180,280 216,000
VTEL Corp. 3,000 65,307 55,500
---------- ---------
612,119 702,500
---------- ---------
Transportation(.9%)
Atlas Air, Inc. 3,700 59,648 61,975
Fritz Companies, Inc. 2,600 93,975 107,900
Wisconsin Central Transportation 1,100 68,164 72,325
---------- ---------
221,787 242,200
---------- ---------
Total Common Stocks 14,854,915 16,500,700
---------- ----------
FOREIGN COMMON STOCKS(16.8% OF NET ASSETS)
Auto & Auto Related(.5%)
Autoliv AB (Sweden) 1,000 69,380 58,436
Bridgestone Corp. (Japan) 1,000 14,680 15,884
Michelin CGDE (France) 1,000 43,406 39,882
Valeo SA (France) 700 29,263 32,420
---------- ---------
156,729 146,622
---------- ---------
Banking(1.0%)
Banco Popular Espanol (Spain) 400 63,015 73,768
Bangkok Bank Company Ltd. (Thailand) 4,000 44,822 48,591
HSBC Holdings PLC (Hong Kong) 2,000 28,104 30,262
Malayan Banking Berhad (Malaysia) 6,000 48,127 50,557
Societe Generale Paris (France) 215 26,120 26,562
Thai Farmers Bank Ltd. (Thailand) 4,600 41,227 46,383
---------- ---------
251,415 276,123
---------- ---------
Building Materials & Construction(.4%)
Autopistas Concesionaria Espanola SA (Spain) 4,000 43,742 45,507
Compagnie de Saint-Gobain (France) 250 31,121 27,262
PT Indocement Tunggal Prakar (Indonesia) 7,000 25,254 27,553
---------- ---------
100,117 100,322
---------- ---------
Chemicals(.4%)
Akzo Nobel (Netherlands) 200 23,088 23,132
Sekisui Chemical Co. (Japan) 5,000 64,190 73,608
---------- ---------
87,278 96,740
---------- ---------
Computer Business Equipment & Services(.4%)
Fujitsu Ltd. (Japan) 8,000 94,452 89,104
Getronics NV (Netherlands) 600 25,816 28,043
---------- ---------
120,268 117,147
---------- ---------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Conglomerates(1.1%)
Canadian Pacific Ltd. (Canada) 2,100 $34,243 $38,255
First Pacific Co. (Hong Kong) 42,000 45,803 46,712
Hutchison Whampoa Ltd. (Hong Kong) 10,000 51,069 60,912
Mannesmann AG (Germany) 195 63,011 62,082
Renong Berhad (Malaysia) 22,000 42,209 32,571
Viag AG (Germany) 170 66,536 68,142
---------- ---------
302,871 308,674
---------- ---------
Drugs & Cosmetics(2.4%)
Astra AB (Sweden) 1,800 64,464 71,841
Ciba-Geigy AG (Switzerland) 100 76,437 87,993
PT Kalbe Farma (Indonesia) 6,000 24,548 20,337
Sandoz AG (Switzerland) 100 74,384 91,547
Schering AG (Germany) 1,000 73,596 66,246
SmithKline Beecham (United Kingdom) 8,000 77,593 88,212
SmithKline Bch/Bec Units (United Kingdom) 5,000 46,313 54,512
Takeda Chemical Industries (Japan) 5,000 69,169 82,324
Zeneca Group PLC (United Kingdom) 4,000 71,106 77,372
---------- ---------
577,610 640,384
---------- ---------
Electric Utilities(.4%)
Powergen PLC (United Kingdom) 3,542 32,827 29,265
VEBA AG (Germany) 2,000 78,130 84,908
---------- ---------
110,957 114,173
---------- ---------
Electrical & Electronic Equipment(1.8%)
BBC AG Brown Boveri & Cie. (Switzerland) 65 72,679 75,509
Hitachi Ltd. (Japan) 5,000 53,289 50,363
Keyence Corp. (Japan) 600 73,032 69,153
Kyocera Corp. (Japan) 1,000 82,761 74,286
Matsushita Electric Industrial Co., Ltd. (Japan) 4,000 59,800 65,085
Philips Electronics NV (Netherlands) 1,100 52,438 39,758
Toshiba Corp. (Japan) 14,000 104,630 109,695
---------- ---------
498,629 483,849
---------- ---------
Financial Services(.7%)
Compagnie Bancaire SA (France) 445 45,816 49,798
International Nederlanden Groep NV (Netherlands) 1,000 55,770 66,804
Nichiei Co., Ltd. (Japan) 1,000 62,438 74,576
---------- ---------
164,024 191,178
---------- ---------
Food & Beverages(.5%)
Heineken NV (Netherlands) 550 79,161 90,141
Nestle SA (Switzerland) 50 49,041 55,310
---------- ---------
128,202 145,451
---------- ---------
Insurance(.9%)
AEGON NV (Netherlands) 2,000 68,969 88,490
AXA (France) 900 51,543 60,649
Munich Reinsurance (Germany) 25 51,413 54,374
Skandia Foersaekrings AB (Sweden) 1,300 30,240 35,145
---------- ---------
202,165 238,658
---------- ---------
Iron &Steel(.5%)
Acerinox SA (Spain) 500 62,881 50,577
Outokumpu Oy (Finland) 1,200 21,951 19,037
Rio Tinto-Zinc Corp. PLC (United Kingdom) 4,000 57,197 58,146
---------- ---------
142,029 127,760
---------- ---------
Leisure & Entertainment(.4%)
Carlton Communications PLC (United Kingdom) 3,400 56,147 50,982
Television Broadcasts Ltd. (Hong Kong) 11,000 41,365 39,192
Thorn EMI PLC (United Kingdom) 1,000 23,344 23,552
---------- ---------
120,856 113,726
---------- ---------
Machinery & Equipment(.6%)
Mabuchi Motor Co. (Japan) 800 47,647 49,743
Mitsubishi Heavy Industries Ltd. (Japan) 6,000 47,396 47,826
NSK Limited (Japan) 3,000 19,354 21,792
SMC Corp. (Japan) 100 6,496 7,235
THK Company Ltd. (Japan) 1,000 28,890 28,475
---------- ---------
149,783 155,071
---------- ---------
Manufacturing(.1%)
Western Mining Corp. Holdings Ltd. (Australia) 2,000 13,549 12,844
---------- ---------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Miscellaneous(.3%)
SGS Societe Generale de Surveillance
Holdings SA (Switzerland) 30 $52,307 $59,558
Siemens AG (Germany) 40 21,267 21,889
---------- ---------
73,574 81,447
---------- ---------
Office Equipment(.6%)
Canon Inc. (Japan) 6,000 107,453 108,668
Ricoh Corp., Ltd (Japan) 5,000 53,586 54,722
---------- ---------
161,039 163,390
---------- ---------
Oil & Gas(1.3%)
Ampolex Ltd. (Australia) 23,000 53,528 50,260
British Petroleum Co., Ltd. (United Kingdom) 6,000 46,594 50,085
Compagnie Francaise de Petroleum Total (France) 900 52,383 60,741
Hong Kong & China Gas Company Ltd. (Hong Kong) 13,000 20,922 20,931
Imperial Oil Ltd. (Canada) 1,100 40,605 39,573
Lasmo PLC (United Kingdom) 7,393 20,521 19,978
Saga Petroleum (Norway) 4,000 52,436 53,362
Societe Nationale Elf Aquitaine (France) 560 40,394 41,260
---------- ---------
327,383 336,190
---------- ---------
Paper & Forest Products(.1%)
Mo och Domsjo AB (Sweden) 800 52,051 34,098
---------- ---------
Printing & Publishing(.3%)
De la Rue PLC (United Kingdom) 1,600 22,730 16,176
Elsevier NV (Netherlands) 2,200 28,232 29,339
Wolters-Kluwer NV (Netherlands) 400 35,119 37,839
---------- ---------
86,081 83,354
---------- ---------
Retail Trade(1.1%)
Adidas AG (Germany) 140 6,711 7,407
Argyll Group PLC (United Kingdom) 4,000 21,520 21,121
Carrefour Supermarche SA (France) 115 65,406 69,770
Ito-Yokado Ltd. (Japan) 1,000 54,316 61,598
JUSCO Co. (Japan) 1,000 25,023 26,053
LVMH Louis Vuitton Moet-Hennessy (France) 270 47,982 56,239
Next PLC (United Kingdom) 7,000 44,273 49,573
---------- ---------
265,231 291,761
---------- ---------
Telecommunications(.4%)
Nokia AB (Finland) 1,200 88,852 47,179
Telecom Italia S.p.A (Italy) 19,000 32,997 29,551
Telecom Italia Mobile S.p.A (Italy) 19,000 32,076 33,439
---------- ---------
153,925 110,169
---------- ---------
Telephone Utilities(.4%)
DDI Corporation(Japan) 7 52,547 54,237
Telefonica de Espana (Spain) 3,000 42,389 41,550
---------- ---------
94,936 95,787
---------- ---------
Tobacco(.2%)
PT HM Sampoerna (Indonesia) 4,000 37,930 41,636
---------- ---------
Total Foreign Common Stocks 4,378,632 4,506,554
---------- ---------
CONVERTIBLE PREFERRED STOCKS(.4% OF NET ASSETS)
Machinery & Equipment(.4%)
Case Corp. 1,100 105,325 105,050
---------- ---------
FOREIGN PREFERRED STOCKS(1.0% OF NET ASSETS)
Computer Business Equipment & Services(.2%)
SAP AG (Germany) 400 70,164 60,509
---------- ---------
Conglomerates(.2%)
RWE AG (Germany) 185 50,230 51,586
---------- ---------
CEMIG (Brazil) 2,600,000 62,478 57,510
---------- ---------
Financial Services(.2%)
Banco Bradesco SA (Brazil) 6,140,292 61,113 52,700
---------- ---------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
MARKET
SECURITY SHARES COST VALUE
-------- ------ ---- ------
<S> <C> <C> <C>
Telecommunications(.2%)
Telecomunicacoes de Sao Paulo SA (Brazil) 350,000 $61,443 $ 51,492
---------- ---------
Total Foreign Preferred Stocks 305,428 273,797
---------- ---------
PRINCIPAL
CORPORATE BONDS(10.0% OF NET ASSETS) AMOUNT
--------
Chemicals(1.2%)
G-I Holdings
0.00%, 1998 $ 75,000 56,224 58,125
IMC Global, Inc.
6.25%, 2001 90,000 98,025 113,400
NL Industries, Inc.
0.00%, 2005 75,000 58,274 57,563
Rexene Corp.
11.75%, 2004 50,000 54,125 52,375
Synthetic Industries, Inc.
12.75%, 2002 50,000 49,250 49,000
---------- ---------
315,898 330,463
---------- ---------
Drugs & Cosmetics(.2%)
Revlon Worldwide Corp.
0.00%, 1998 75,000 56,928 55,688
---------- ---------
Food & Beverages(.2%)
Van De Kamps, Inc.
12.00%, 2005 50,000 50,000 51,750
---------- ---------
Health Services & Hospital Supplies(.2%)
Regency Health Services, Inc.
9.875%, 2002 50,000 50,000 49,500
---------- ---------
Leasing(.2%)
GPA Delaware, Inc.
8.75%, 1998 50,000 45,731 47,000
---------- ---------
Leisure & Entertainment (4.1%)
Argyle Television, Inc.
9.75%, 2005 50,000 49,937 49,750
Bally Park Place Funding
9.25%, 2004 50,000 48,474 50,875
Bally's Casino Holdings, Inc.
0.00%, 1998 100,000 79,089 80,500
Bally's Grand, Inc.
10.375%, 2003 50,000 50,125 51,000
Casino America, Inc.
11.50%, 2001 50,000 50,125 46,250
Century Communications, Inc.
9.75%, 2002 50,000 51,375 52,250
Comcast Corp.
9.125%, 2006 50,000 49,495 52,125
Comcast UK Cable Partners Ltd.
0.00%, 2007 50,000 29,411 29,250
Continental Cablevision, Inc.
9.50%, 2013 50,000 52,125 53,750
Galaxy Telecom L.P.
12.375%, 2005 50,000 49,750 49,875
Graphic Controls Corp.
12.00%, 2005 50,000 50,000 52,000
Hollywood Casino Corp.
12.75%, 2003 50,000 47,641 45,750
Lenfest Communications, Inc.
8.375%, 2005 50,000 49,853 50,187
Mohegan Tribal Gaming
13.50%, 2002 50,000 50,000 54,000
New World Communications Corp.
0.00%, 1999 100,000 69,058 69,000
Paxson Communications Corp.
11.625%, 2002 50,000 49,415 50,750
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT COST VALUE
-------- -------- ---- ------
<S> <C> <C> <C>
Resorts International, Inc.
11.00%, 2003 $ 50,000 $ 46,274 $ 46,500
Rio Hotel & Casino, Inc.
10.625%, 2005 50,000 48,750 50,797
Trump Castle Funding, Inc.
11.75%, 2003 50,000 40,258 43,063
Trump Taj Mahal
0.00%, 1999 50,000 42,822 48,125
United International Holdings, Inc.
0.00%, 1999 100,000 59,252 58,750
---------- ---------
1,063,229 1,084,547
---------- ---------
Manufacturing(.5%)
Figgie International, Inc.
9.875%, 1999 50,000 50,125 50,000
Jordan Industries, Inc.
10.375%, 2003 50,000 45,850 44,500
Portola Packaging, Inc.
10.75%, 2005 50,000 50,000 51,750
---------- ---------
145,975 146,250
---------- ---------
Oil & Gas(.2%)
Mesa Capital CP
12.75%, 1998 50,000 47,740 44,250
---------- ---------
Paper & Forest Products(.7%)
Doman Industries Ltd.
8.75%, 2004 50,000 48,646 47,375
Fort Howard Corp.
9.00%, 2006 50,000 46,798 49,000
Gaylord Container Corp.
0.00%, 2005 50,000 50,132 49,250
Stone Container Corp.
9.875%, 2001 50,000 49,937 48,625
---------- ---------
195,513 194,250
---------- ---------
Printing & Publishing(.2%)
Marvel III Holdings Inc.
9.125%, 1998 50,000 47,249 46,000
---------- ---------
Retail Trade(.2%)
Pathmark Stores, Inc.
0.00%, 2003 100,000 69,306 61,250
---------- ---------
Technology(.3%)
Storage Technology Corp.
7.00%, 2008 70,000 86,198 78,050
---------- ---------
Telecommunications(1.6%)
A+ Network, Inc.
11.875%, 2005 50,000 49,637 50,500
American Communication Services, Inc.
0.00%, 2005 100,000 54,424 55,250
In-Flight Phone Corp.
0.00%, 2002 50,000 21,171 16,625
Metrocall, Inc.
10.375%, 2007 50,000 50,000 53,000
MFS Communications Company, Inc.
0.00%, 2004 75,000 57,620 60,562
MobleMedia Corp.
9.375%, 2007 50,000 50,000 51,500
Paging Network Inc.
10.125%, 2007 50,000 53,437 54,125
PriCellular Corp.
0.00%, 2003 75,000 54,425 58,500
TeleWest PLC
9.625%, 2006 25,000 25,000 25,437
---------- ---------
0.00%, 2007 25,000 15,039 15,094
---------- ---------
430,753 440,593
---------- ---------
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
LIFESPAN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Cont'd)
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
SECURITY AMOUNT COST VALUE
-------- -------- ---- ------
<S> <C> <C> <C>
Wholesale Trade(.2%)
Hines Horticulture, Inc.
11.75%, 2005 $ 50,000 $50,000 $52,500
---------- ---------
Total Corporate Bonds 2,654,520 2,682,091
---------- ---------
U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (4.8% OF NET ASSETS)
U.S. Treasury Bond
8.125%, 2019 210,000 243,075 264,041
U.S. Treasury Notes
5.125%, 1998 375,000 368,853 374,355
6.75%, 1999 235,000 240,508 245,721
7.50%, 2001 190,000 202,795 209,268
7.25%, 2004 160,000 169,800 177,925
---------- ---------
Total U.S. Government & Agency Long-Term Obligations 1,225,031 1,271,310
---------- ---------
FOREIGN CURRENCY (.1% OF NET ASSETS)
Australian Dollar 70 55 52
Canadian Dollar 160 117 117
Deutsche Mark 6,272 4,341 4,372
French Franc 1,392 279 284
Hong Kong Dollar 6,461 836 836
Japanese Yen 237,057 2,095 2,077
Malaysian Ringgit 462 182 182
Netherlands Guilder 1,310 822 816
Spanish Peseta 105,733 857 872
---------- ---------
Total Foreign Currency 9,584 9,608
---------- ---------
REPURCHASE AGREEMENTS(5.1% OF NET ASSETS)
State Street Bank & Trust Co.
4.75%, due 1/2/96 1,366,000 1,366,000 1,366,000
----------- -----------
TOTAL INVESTMENTS $24,899,435 $26,715,110
----------- -----------
</TABLE>
Notes to Schedule of Investments
December 31, 1995
1. Aggregate gross unrealized appreciation (depreciation) as of December 31,
1995, based on cost for Federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
ACCOUNTS
--------
DIVERSIFIED CAPITAL
INCOME BALANCED APPRECIATION
---------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation $882,347 2,623,927 $2,604,878
Aggregate gross unrealized depreciation (79,389) (740,107) (789,204)
-------- ---------- ----------
Net unrealized appreciation $802,958 $1,883,820 $1,815,674
-------- ---------- ----------
2. The aggregate cost of investments for
Federal income tax purposes was: $20,096,477 $33,376,422 $24,899,436
----------- ----------- -----------
3. Purchases and sales of securities
(excluding short-term securities) for
the period from September 1, 1995 (Inception) to
December 31, 1995 are summarized as follows:
Purchases $21,845,083 $36,260,259 $26,837,979
Sales $2,691,649 $4,298,440 $3,112,005
</TABLE>
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
STATEMENT OF NET ASSETS
December 31, 1995
<TABLE>
<CAPTION>
LIFESPAN
PORTFOLIOS
------------------------------------------------
DIVERSIFIED CAPITAL
INCOME BALANCED APPRECIATION
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
Bonds, at market value
(Cost $14,912,519, $13,350,262, $3,879,551) $15,243,522 $13,613,008 $3,953,401
Common stocks, at market value
(Cost $4,192,633, $18,054,507, $19,233,547) 4,664,863 19,707,448 21,007,254
Preferred stocks, at market value
(Cost $105,325, $410,753, $410,754) 105,050 378,847 378,847
Foreign currency, at market value
(Cost $11,900, $9,584) -- 11,939 9,608
Short-term securities 886,000 1,549,000 1,366,000
------------------------------------------------
20,899,435 35,260,242 26,715,110
Cash 48,812 88,615 79,731
Investment income receivable 281,130 278,434 104,796
Receivable from securities sold -- 12,775 15,099
Receivable from Fund shares sold -- -- --
Foreign currency market receivable -- 20,883 20,915
Foreign tax receivable -- 1,535 1,094
------------------------------------------------
Total Assets 21,229,377 35,662,484 26,936,745
------------------------------------------------
LIABILITIES
Accrued expenses payable 53,462 74,249 50,668
Payable for securities purchased -- 121,006 117,593
Payable for Fund shares redeemed -- -- --
------------------------------------------------
Total Liabilities 53,462 195,255 168,261
------------------------------------------------
NET ASSETS $21,175,915 $35,467,229 $26,768,484
------------------------------------------------
------------------------------------------------
OUTSTANDING SHARES 20,324,034 33,743,194 25,154,663
------------------------------------------------
------------------------------------------------
NET ASSET VALUE PER SHARE $1.04 $1.05 $1.06
------------------------------------------------
------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) $20,337,106 $33,759,324 $25,163,733
Undistributed net investment income 10,436 (9,802) (16,720)
Accumulated undistributed net realized gain 25,415 (186,996) (215,118)
Net unrealized appreciation 802,958 1,904,703 1,836,589
------------------------------------------------
NET ASSETS $21,175,915 $35,467,229 $26,768,484
------------------------------------------------
------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
STATEMENT OF OPERATIONS
For the period from September 1, 1995 (Inception) to December 31, 1995
<TABLE>
<CAPTION>
LIFESPAN
PORTFOLIOS
------------------------------------------------
DIVERSIFIED CAPITAL
INCOME BALANCED APPRECIATION
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $377,031 $409,667 $167,824
Dividends 72,611 109,946 106,835
------------------------------------------------
Total Income 449,642 519,613 274,659
------------------------------------------------
Expenses:
Investment advisory fees 51,050 96,385 72,333
Distribution fees -- -- --
Custodian Fees -- -- --
Registration Fees -- -- --
Other 51,050 73,706 55,314
------------------------------------------------
Total Expenses 102,100 170,091 127,647
------------------------------------------------
NET INVESTMENT INCOME 347,542 349,522 147,012
------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain on investments 25,415 (200,333) (231,094)
Net realized loss on foreign currency -- 13,337 15,976
Net unrealized appreciation on investments 802,958 1,883,820 1,815,674
Net unrealized appreciation on foreign currency -- 20,883 20,916
------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 828,373 1,717,707 1,621,472
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,175,915 $2,067,229 $1,768,484
------------------------------------------------
------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the period from September 1, 1995 (Inception) to December 31, 1995
<TABLE>
LIFESPAN
PORTFOLIOS
------------------------------------------------
DIVERSIFIED CAPITAL
INCOME BALANCED APPRECIATION
------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income $347,542 $349,522 $147,012
Net realized gain/loss on investments 25,415 (200,333) (231,094)
Net realized loss on foreign currency -- 13,337 15,976
Net unrealized appreciation 802,958 1,904,703 1,836,590
------------------------------------------------
Net increase in net assets
resulting from operations 1,175,915 2,067,229 1,768,484
------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (337,106) (359,324) (163,733)
Net realized gain on investments -- -- --
------------------------------------------------
(337,106) (359,324) (163,733)
------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 20,000,000 33,400,000 25,000,000
Net asset value of shares issued to
shareholders from reinvestment of dividends 337,106 359,324 163,733
Cost of shares reacquired -- -- --
------------------------------------------------
Increase in net assets derived from
capital share transactions 20,337,106 33,759,324 25,163,733
------------------------------------------------
NET INCREASE IN NET ASSETS 21,175,915 35,467,229 26,768,484
NET ASSETS - BEGINNING OF PERIOD -- -- --
------------------------------------------------
NET ASSETS - END OF PERIOD $21,175,915 $35,467,229 $26,768,484
------------------------------------------------
------------------------------------------------
Undistributed net investment income included in
net assets at end of period $10,436 ($9,802) ($16,721)
------------------------------------------------
------------------------------------------------
Undistributed net realized gain on investments
and foreign currency included in net assets
at end of period $25,415 ($186,996) ($215,118)
------------------------------------------------
------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
PART C - OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements.
(1) Included in Part A:
Financial Highlights for LifeSpan Diversified
Income Portfolio, LifeSpan Balanced Portfolio and
LifeSpan Capital Appreciation Portfolio, each for
the period ended December 31, 1995 (unaudited).
To be filed by post-effective amendment:
Financial Highlights for Money Market Portfolio,
Government Securities Portfolio, Income Portfolio,
Growth Portfolio, Total Return Portfolio,
International Equity Portfolio, LifeSpan
Diversified Income Portfolio, LifeSpan Balanced
Portfolio and LifeSpan Capital Appreciation
Portfolio, each for the period ended December 31,
1995 (audited).
(2) Included in Part B:
Financial Statements for each of LifeSpan
Diversified Income Portfolio, LifeSpan Balanced
Portfolio and LifeSpan Capital Appreciation
Portfolio (unaudited):
Statement of Net Assets for the period ended
December 31, 1995
Statement of Operations for the period ended
December 31, 1995
Statement of Changes in Net Assets for the period
ended December 31, 1995
Financial Highlights for the period ended
December 31, 1995
Notes to Financial Statements as of
December 31, 1995
To be Filed by post-effective amendment:
To be included in Part A:
Financial Highlights for Money Market Portfolio,
Government Securities Portfolio, Income Portfolio,
Growth Portfolio, Total Return Portfolio,
International Equity Portfolio, LifeSpan
Diversified Income Portfolio, LifeSpan Balanced
<PAGE>
Portfolio and LifeSpan Capital Appreciation
Portfolio (audited)
To be included in Part B:
Financial Statements for each of Money Market
Portfolio, Government Securities Portfolio, Income
Portfolio, Growth Portfolio, Total Return
Portfolio, International Equity Portfolio, LifeSpan
Diversified Income Portfolio, LifeSpan Balanced
Portfolio and LifeSpan Capital Appreciation
Portfolio (audited):
Statement of Net Assets for the period ended
December 31, 1995
Statement of Operations for the period ended
December 31, 1995
Statement of Changes in Net Assets for the periods
ended December 31, 1994 and December 31, 1995
Financial Highlights for the period ended
December 31, 1995
Notes to Financial Statements as of
December 31, 1995
Auditors' Report
(b) Exhibits
1. Amended and Restated Articles of Incorporation
dated May, 1995
2. By-Laws
3. Not Applicable
4. Not Applicable
5. Form of Investment Advisory Agreement between the
Registrant, on behalf of Total Return Portfolio,
and OppenheimerFunds, Inc. and schedule of
omitted substantially similar documents+
5.1 Form of Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Pilgrim,Baxter &
Associates, Ltd. (for LifeSpan Balanced
Portfolio) and schedule of omitted substantially
similar documents+
5.2 Form of Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and BEA Associates (for
LifeSpan Capital Appreciation Portfolio) and
schedule of omitted substantially similar
documents+
C-2
<PAGE>
5.3 Form of Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Babson-Stewart Ivory
International (for LifeSpan Balanced Portfolio)
and schedule of omitted substantially similar
documents+
6. Not applicable
7. Not Applicable
8. Custodian Agreement+
8.1 Amendment to Custodian Agreement+
9. Form of Service Contract between Registrant and
OppenheimerFunds Services+
10. Opinion and Consent of Counsel*
11. Not applicable
12. Not Applicable
13. Not Applicable
14. Not Applicable
15. Not Applicable
16. Not Applicable
17. Financial Data Schedule+
18. Not Applicable
_____________
+ Filed herewith.
* Filed with Registrant's Rule 24f-2 opinion.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
(1) CML and its affiliates own 100% of the shares of each
Portfolio then existing.
The chart that follows indicates those entities owned
directly or indirectly by Connecticut Mutual Life Insurance
Company at December 31, 1995:
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
SUBSIDIARIES
AS OF 12/31/95
C-3
<PAGE>
CM ADVANTAGE, INC.: This is a Connecticut corporation incorporated February
27, 1984. Its business is acting as general partner in real estate limited
partnerships. DHC, Inc. owns all the outstanding stock.
CM ASSURANCE COMPANY: This is a Connecticut corporation incorporated July
23, 1986 (CM Insurance Company) and renamed December 15, 1987. Type of
business - life insurance, endowments, annuities, accident, disability and
health insurance. Connecticut Mutual owns all the stock.
CM BENEFIT INSURANCE COMPANY: This is a Connecticut corporation incorporated
April 22, 1986 as CM Pension Insurance Company and renamed CM Benefit
Insurance Company on December 15, 1987. Type of business - life insurance,
endowments, annuities, accident, disability and health insurance.
Connecticut Mutual owns all the stock.
CM INSURANCE SERVICES, INC.: A Connecticut corporation incorporated July 20,
1981 as DIVERSIFIED INSURANCE SERVICES OF AMERICA, INC. and renamed as CM
Insurance Services, Inc. on June 23, 1992. Type of business - the sale of,
solicitation for, or procurement or making of insurance or annuity contracts
and any other type of contract sold by insurance companies. DHC, Inc. owns
all the issued and outstanding stock.
CM INSURANCE SERVICES, INC. (ARKANSAS): An Arkansas corporation incorporated
January 11, 1982 as Diversified Insurance Services Agency of America and
renamed CM Insurance Services, Inc. on October 19, 1992. Type of business -
the sale of, solicitation for, or procurement or making of insurance or
annuity contracts and any other type of contract sold by insurance companies.
CM Insurance Services, Inc. owns all of the issued and outstanding common
stock.
CM INSURANCE SERVICES, INC. (TEXAS): A Texas corporation incorporated April
16, 1982 and renamed CM Insurance Services, Inc. Type of business - the sale
of, solicitation for, or procurement or making of insurance or annuity
contracts and any other type of contract sold by insurance companies. CM
Insurance Services, Inc. controls 100 shares (100%) of the issued and
outstanding common stock through a voting trust.
CM INTERNATIONAL, INC.: A Delaware corporation incorporated July 25, 1985.
Type of business - holding a mortgage pool and issuance of collateralized
mortgage obligations. DHC, Inc. owns all the outstanding stock.
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.: This is a Maryland corporation
incorporated December 9, 1981 as Connecticut Mutual Liquid Account, Inc. It
is a diversified open-end management investment company. As of 3/31/94,
Connecticut Mutual and its various subsidiaries owned approximately 30% of
its shares.
C-4
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.: This is a
Maryland corporation organized August 17, 1981. It is a diversified open-end
management investment company. Shares of the fund are sold only to
Connecticut Mutual and its affiliates, primarily CML's Panorama separate
account.
CONNECTICUT MUTUAL FINANCIAL SERVICES, LLC: A Connecticut limited liability
corporation formed November 10, 1994. It is a registered broker-dealer.
Connecticut Mutual has a 99% ownership interest and CM Strategic Ventures,
Inc. has a 1% ownership interest.
CM LIFE INSURANCE COMPANY: A Connecticut corporation incorporated April 25,
1980. Its business is the sale of life insurance, endowments, annuities,
accident, disability and accident and health insurance. Connecticut Mutual
owns all the common stock.
CM PROPERTY MANAGEMENT, INC.: A Connecticut corporation incorporated
December 27, 1976 as URBCO, Inc., and renamed CM Property Management, Inc. on
October 7, 1991. Type of business -Real estate holding company. DHC, Inc.
owns all the stock.
CM STRATEGIC VENTURES, INC.: A Connecticut corporation incorporated October
26, 1987. It acts as general partner in limited partnerships. All
outstanding stock is held by G.R. Phelps & Co., Inc.
CM TRANSNATIONAL S.A.: A Luxembourg corporation incorporated July 8, 1987.
Type of business - life insurance endowments and annuity contracts.
Connecticut Mutual owns 99.7% and DHC, Inc. owns the remaining 0.3% of
outstanding stock.
CML INVESTMENTS I CORP.: A Delaware corporation incorporated December 26,
1991. This Company is organized to authorize, co-issue, sell and deliver
jointly with CML Investments I L.P. bonds, notes or other obligations secured
by primarily non-investment grade corporate debt obligations and other
collateral. CML Investments I L.P. owns all of the outstanding stock (State
House I Corp. is the General Partner of CML Investments I L.P.).
DHC, INC.: A Connecticut corporation incorporated December 27, 1976. Type
of business - holding company. Connecticut Mutual owns all the stock.
DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA OHIO): An Ohio
corporation incorporated March 18, 1982. Type of business - the sale of,
solicitation for, or procurement or making of insurance or annuity contracts
and any other type of contract sold by insurance companies. CM Insurance
Services, Inc. holds 100 shares (100%) of the issued and outstanding Class B
(non-voting) common. In addition, it controls 1 share (100%) of the issued
and outstanding Class A (voting) common through a voting trust.
C-5
<PAGE>
DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA MASSACHUSETTS A
Massachusetts corporation incorporated March 18, 1982. Type of business -
the sale of, solicitation for, or procurement or making of insurance or
annuity contracts and any other type of contract sold by insurance companies.
CM Insurance Services, Inc. owns all of the issued and outstanding stock.
DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA ALABAMA): An
Alabama corporation incorporated January 21, 1982. Type of business - the
sale of, solicitation for, or procurement or making of insurance or annuity
contracts and any other type of contract sold by insurance companies. CM
Insurance Services, Inc. owns all of the issued and outstanding stock.
DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA NEW YORK): A
New York corporation incorporated January 20, 1982. Type of business - the
sale of, solicitation for, or procurement or making of insurance or annuity
contracts and any other type of contract sold by insurance companies. CM
Insurance Services, Inc. owns all of the issued and outstanding common stock.
DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA HAWAII): A
Hawaii corporation incorporated January 13, 1982. Type of business - the sale
of, solicitation for, or procurement or making of insurance or annuity
contracts and any other type of contract sold by insurance companies. CM
Insurance Services, Inc. owns all of the issued and outstanding common stock.
G.R. PHELPS & CO., INC.: A Connecticut corporation incorporated December 27,
1976 as AGCO, Inc., renamed Connecticut Mutual Financial Services, Inc. on
February 10, 1981, renamed again to G.R. Phelps & Co. on May 31, 1989. Type
of business - broker/ dealer and investment adviser. DHC, Inc. owns all the
outstanding stock.
STATE HOUSE I CORPORATION: A Delaware corporation incorporated December 26,
1991. This Company is organized to (a) act as a general partner of CML
Investments I L.P. which will authorize, issue, sell and deliver, both by
itself and jointly with CML Investments I Corp. bonds, notes or other
obligations secured by primarily non-investment grade corporate debt
obligations; (b) to act as general partner of State House I L.P. which will
hold a limited partnership interest in CML Investments I L.P. DHC, Inc. owns
all of the outstanding stock.
SUNRIVER PROPERTIES, INC. - SHELL CORPORATION: This is an Oregon corporation
incorporated February 8, 1965. It is not actively engaged in any business.
However, its name is a valuable asset which is associated with a development
project in which CML has a substantial interest. Connecticut Mutual owns all
the outstanding stock.
C-6
<PAGE>
URBAN PROPERTIES INC.: A Delaware corporation incorporated March 30, 1970.
Type of business - general partner in limited partnerships, real estate
holding and development company. DHC, Inc. owns all the outstanding stock.
(2) Upon effectiveness of this Post-Effective Amendment to
the Registration Statement ("PEA No. 23"), the Registrant will not
be controlled by or under common control with any entity.
ITEM 26. Number of Holders of Securities.
As of February 29, 1996, all outstanding shares of the Portfolios then
existing were owned by CML or its affiliates.
ITEM 27. Indemnification.
Reference is made to Article VI of By-laws filed with Post-Effective
Amendment Number 13.
ITEM 28. Business and Other Connections of Investment Adviser.
(a) All of the information required by this item is set forth in the
Forms ADV, as amended, of the Registrant's investment adviser until February
29, 1996, G.R. Phelps & Co., Inc. (File No. 16182), and subadvisers,
Babson-Stewart Ivory International, Pilgrim, Baxter & Assoc. Ltd. and BEA
Associates. The following sections of each such Form ADV are incorporated
herein by reference: (a) Items 1 and 2 of Part 2; and (b) Section IV,
Business Background, of each Schedule D.
(b) Upon effectiveness of PEA No. 23, the business and other
connections of Oppenheimer Funds, Inc., the investment adviser as of March 1,
1996, are as follows:
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts A and
B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in which
each officer and director of OppenheimerFunds, Inc. is, or at any time during
the past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
NAME & CURRENT POSITION OTHER BUSINESS AND CONNECTIONS
WITH OPPENHEIMERFUNDS, INC. DURING THE PAST TWO YEARS
- --------------------------- -------------------------
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
C-7
<PAGE>
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer Funds
(listed below); previously a Fund
Controller for OppenheimerFunds,
Inc. (the "Manager").
Bruce Bartlett,
Vice President Vice President and Portfolio Manager
of Oppenheimer Total Return Fund,
Inc., Oppenheimer Main Street Funds,
Inc. and Oppenheimer Variable
Account Funds; formerly a Vice
President and Senior Portfolio
Manager at First of America
Investment Corp.
George Bowen,
Senior Vice President
& Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Secretary and Treasurer of the
Denver-based Oppenheimer Funds. Vice
President and Treasurer of
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of the
Manager; Vice President, Treasurer
and Secretary of Shareholder
Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent
subsidiaries of the Manager;
President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main
Street Advisers.
Michael A. Carbuto,
Vice President Vice President and Portfolio Manager
of Centennial California Tax Exempt
Trust, Centennial New York Tax
Exempt Trust and Centennial Tax
Exempt Trust; Vice President of
Centennial.
C-8
<PAGE>
William Colbourne,
Assistant Vice President Formerly, Director of Alternative
Staffing Resources, and Vice
President of Human Resources,
American Cancer Society.
Lynn Coluccy,
Vice President Formerly Vice President / Director
of Internal Audit of the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income
for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio Manager
of Oppenheimer Growth Fund,
Oppenheimer Variable Account Funds;
Senior Vice President and Portfolio
Manager of Oppenheimer Strategic
Income & Growth Fund; Vice President
of Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Officers
Value Fund, Oppen-heimer Quest For
Value Funds and Oppenheimer Quest
Global Value Fund, Inc.
John Doney,
Vice President Vice President and Portfolio Manager
of Oppenheimer Equity Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-based
Oppenheimer Funds; Vice President of
the Denver-based Oppenheimer Funds;
Executive Vice President, Director
and General Counsel of the
Distributor; President and a
director of Centennial; formerly
Senior Vice President and Associate
General Counsel of the Manager and
the Distributor.
Kenneth C. Eich,
Executive Vice President /
Chief Financial Officer Treasurer of Oppenheimer Acquisition
Corporation ("OAC").
C-9
<PAGE>
George Evans,
Vice President Vice President and Portfolio Manager
of Oppenheimer Global Emerging
Growth Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the
Oppenheimer Funds; previously a Fund
Controller for the Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView, Main
Street Advisers, Inc. and
Centennial; Secretary, Vice
President and Director of Centennial
Capital Corp.
Ronald H. Fielding,
Senior Vice President Chairman of the Board and Director
of Rochester Fund Distributors, Inc.
("RFD"); President and Director of
Fielding Management Company, Inc.
("FMC"); President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); President and Director of
Rochester Fund Services, Inc.
("RFS"); President and Director of
Rochester Tax Managed Fund, Inc.;
Vice President and Portfolio Manager
of Rochester Fund Municipals and
Rochester Portfolio Series - Limited
Term New York Municipal Fund.
Jon S. Fossel,
Chairman of the Board
and Director Director of OAC (the Manager's
parent holding company); President,
CEO and a director of HarbourView; a
director of SSI and SFSI; Director,
Trustee, and Managing General
Partner of the Denver-based
Oppenheimer Funds; President and
Chairman of the Board of Main Street
Advisers, Inc.; formerly Chief
Executive Officer of the Manager.
C-10
<PAGE>
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he held
the following positions: a director
of the Distributor, Vice President
and a director of HarbourView and
Centennial, a director of SFSI and
SSI, an officer of other Oppenheimer
Funds and Executive Vice President
& General Counsel of the Manager and
the Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez,
Vice President Formerly 1st Vice President /
Director of Creative Services for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht,
Vice President Vice President and Portfolio Manager
of Oppenheimer Insured Tax-Exempt
Fund and Oppenheimer Intermediate
Tax Exempt Fund; an officer of other
Oppenheimer Funds; formerly Vice
President of Fixed Income Portfolio
Management at Bankers Trust.
Barbara Hennigar,
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the
Manager President and Director of SFSI.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
C-11
<PAGE>
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus &
Company, an advertising agency.
Frank Jennings,
Vice President Portfolio Manager of Oppenheimer
Global Growth & Income Fund.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe,
Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of Oppenheimer
Variable Account Funds and
Oppenheimer Variable Account Funds;
Associate Portfolio Manager of
Oppenheimer Discovery Fund. Formerly
a Securities Analyst for Columbus
Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Senior Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer and Director President, Director and Trustee of
the Oppenheimer Funds; President and
a Director of OAC and HarbourView;
Director of Main Street Advisers,
Inc.; Chairman and a Director of
SSI.
Sally Marzouk,
Vice President None.
C-12
<PAGE>
Marilyn Miller,
Vice President Formerly a Director of marketing for
TransAmerica Fund Management
Company.
Robert J. Milnamow,
Vice President Vice President and Portfolio Manager
of Oppenheimer Main Street Funds,
Inc. Formerly a Portfolio Manager
with Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President Vice President and Portfolio Manager
of Oppenheimer Variable Account
Funds, Oppenheimer Asset Allocation
Fund, Oppenheimer Strategic Income
Fund, Oppenheimer Strategic Income &
Growth Fund; an officer of other
Oppenheimer Funds.
Barbara Niederbrach,
Assistant Vice President None.
Stuart Novek,
Vice President Formerly a Director Account
Supervisor for J. Walter Thompson.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio Manager
of Oppenheimer Main Street Funds,
Inc., Oppenheimer Multi-State Tax-
Exempt Trust, Oppenheimer Tax-Exempt
Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer New York
Tax-Exempt Fund and Oppenheimer Tax-
Free Bond Fund; Vice President of
The New York Tax-Exempt Income Fund,
Inc.; Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
C-13
<PAGE>
Jane Putnam,
Vice President Associate Portfolio Manager of
Oppenheimer Growth Fund; Vice
President and Portfolio Manager of
Oppenheimer Target Fund and
Oppenheimer Variable Account Funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Formerly an International Finance
Consultant for Dow Chemical.
Thomas Reedy,
Vice President Vice President of Oppenheimer Multi-
Sector Income Trust and Oppenheimer
Multi-Government Trust; an officer
of other Oppenheimer Funds; formerly
a Securities Analyst for the
Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Assistant Vice President Formerly a Product Manager for
Metropolitan Life Insurance Company.
Michael S. Rosen
Vice President Vice President of RFS; President and
Director of RFD; Vice President and
Director of FMC; Vice President and
director of RCAI; General Partner of
RCA; Vice President and Director of
Rochester Tax Managed Fund Inc.;
Vice President and Portfolio Manager
of Rochester Fund Series - The Bond
Fund For Growth.
David Rosenberg,
Vice President Vice President and Portfolio Manager
of Oppenheimer Limited-Term
Government Fund, Oppenheimer U.S.
Government Trust and Oppenheimer
Integrity Funds. Formerly Vice
President and Senior Portfolio
Manager for Delaware Investment
Advisors.
Rhonda Rosenberg,
Vice President Formerly a Vice President and
Manager of municipal portfolio
strategy for Lehman Brothers.
C-14
<PAGE>
Richard H. Rubinstein,
Vice President Vice President and Portfolio Manager
of Oppenheimer Asset Allocation
Fund, Oppenheimer Fund and
Oppenheimer Variable Account Funds;
an officer of other Oppenheimer
Funds; formerly Vice President and
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin,
Vice President Vice President and Portfolio Manager
of Oppenheimer Gold & Special
Minerals Fund, Oppenheimer Total
Return Fund, Inc. Oppenheimer Main
Street Funds, Inc. and Oppenheimer
Variable Account Funds; formerly a
Vice President and Senior Portfolio
Manager for Dean Witter
InterCapital, Inc.
Nancy Sperte,
Senior Vice President None.
Donald W. Spiro,
Chairman Emeritus
and Director Trustee of the New York-based
Oppenheimer Funds; formerly
Chairman of the Manager and the
Distributor.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio Manager
of Oppenheimer Strategic Income
Fund, Oppenheimer Strategic Income &
Growth Fund; an officer of other
Oppenheimer Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio Manager
of Oppenheimer Champion Income Fund
and Oppenheimer High Yield Fund; an
officer of other Oppenheimer Funds.
C-15
<PAGE>
John Stoma,
Vice President Formerly Vice President of Pension
Marketing with Manulife Financial.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director of Centennial;
formerly President and Director of
OAMC, and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director of
Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant
Treasurer Assistant Treasurer of the
Distributor and SFSI.
Jeffrey Van Giesen,
Vice President Formerly employed by Kidder Peabody
Asset Management.
Ashwin Vasan,
Vice President Vice President and Portfolio Manager
of Oppenheimer Multi-Sector Income
Trust, Oppenheimer Multi-Government
Trust and Oppenheimer International
Bond Fund; an officer of other
Oppenheimer Funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President Vice President and Portfolio Manager
of Daily Cash Accumulation Fund,
Inc., Oppenheimer Cash Reserves,
Centennial America Fund, L.P.,
Centennial Government Trust and
Centennial Money Market Trust; Vice
President of Centennial.
C-16
<PAGE>
Christine Wells,
Vice President None.
William L. Wilby,
Senior Vice President Vice President and Portfolio Manager
of Oppenheimer Variable Account
Funds, Oppenheimer Global Fund and
Oppenheimer Global Growth & Income
Fund; Vice President of HarbourView;
an officer of other Oppenheimer
Funds.
Susan Wilson-Perez,
Vice President None.
Carol Wolf,
Vice President Vice President and Portfolio Manager
of Oppenheimer Money Market Fund,
Inc., Centennial America Fund, L.P.,
Centennial Government Trust,
Centennial Money Market Trust and
Daily Cash Accumulation Fund, Inc.;
Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President
of Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
Arthur J. Zimmer,
Vice President Vice President and Portfolio Manager
of Oppenheimer Variable Account
Funds, Centennial America Fund,
L.P., Centennial Government Trust,
Centennial Money Market Trust and
Daily Cash Accumulation Fund, Inc.;
Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President
of Centennial; an officer of other
Oppenheimer Funds.
The Oppenheimer Funds include the New York-based Oppenheimer Funds and the
Denver-based Oppenheimer Funds set forth below:
C-17
<PAGE>
NEW YORK-BASED OPPENHEIMER FUNDS
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
DENVER-BASED OPPENHEIMER FUNDS
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
ROCHESTER-BASED FUNDS
Rochester Fund Municipals
Rochester Fund Series - The Bond Fund For
Growth
C-18
<PAGE>
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
OppenheimerFunds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and Main
Street Advisers, Inc. is 3410 South Galena Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester,
New York 14625-2807.
ITEM 29. Principal Underwriters.
Not Applicable
ITEM 30. Location of Portfolios and Records.
(1) Books or other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are maintained by the Registrant's custodian,
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110.
Registrant's financial ledgers and other corporate records are maintained at
its offices at 140 Garden Street, Hartford, CT 06154.
(2) Upon the effectiveness of PEA No. 23, the accounts, books and other
documents required to be maintained by Registrant pursuant to Section 31(a)
of the Investment Company Act of 1940 and rules promulgated thereunder are in
the possession of OppenheimerFunds, Inc. at its offices at 3410 South Galena
Street, Denver, Colorado 80231.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
C-19
<PAGE>
(c) The Company will furnish each person to whom a
prospectus is delivered with a copy of the Company's
latest annual report to shareholders, upon request and
without charge.
C-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 23 to the Registration Statement ("PEA No. 23")
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Hartford, State of Connecticut, on the 28th day of February, 1996.
CONNECTICUT MUTUAL FINANCIAL
SERVICES SERIES FUND I, INC.
By: *Donald H. Pond, Jr.
------------------------------
Donald H. Pond, Jr.
President
Pursuant to the requirements of the Securites Act of 1933, this
PEA No. 23 has been signed below by the following persons in the capacities
and on the date indicated.
Signature Title Date
--------- ----- ----
*Donald H. Pond, Jr. President and Director
- --------------------------- (Principal Executive
Donald H. Pond, Jr. Officer)
*Richard Hixon Ayers Director
- ---------------------------
Richard Hixon Ayers
*David Ellis Adams Carson Director
- ----------------------------
David Ellis Adams Carson
*Richard Warren Greene Director
- ----------------------------
Richard Warren Greene
*Beverly Lannquist Hamilton Director
- ----------------------------
Beverly Lannquist Hamilton
*David E. Sams, Jr. Director
- ----------------------------
David E. Sams, Jr.
*Linda M. Napoli Treasurer
- ---------------------------- (Principal Financial
Linda M. Napoli and Portfolioing Officer)
*By: /s/ Ann F. Lomeli Attorney-in-fact February 28, 1996
-----------------------
Ann F. Lomeli
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
1. Amended and Restated Articles of Incorporation
dated May, 1995
2. By-Laws
5. Form of Investment Advisory Agreement between the Registrant, on behalf
of Total Return Portfolio, and OppenheimerFunds, Inc. and schedule of
omitted substantially similar documents
5.1 Form of Investment Subadvisory Agreement between OppenheimerFunds, Inc.
and Pilgrim, Baxter & Associates, Ltd. (for LifeSpan Balanced Portfolio)
and schedule of omitted substantially similar documents
5.2 Form of Investment Subadvisory Agreement between OppenheimerFunds, Inc.
and BEA Associates (for LifeSpan Capital Appreciation Portfolio) and
schedule of omitted substantially similar documents
5.3 Form of Investment Subadvisory Agreement between OppenheimerFunds, Inc.
and Babson-Stewart Ivory International (for LifeSpan Balanced Portfolio)
and schedule of omitted substantially similar documents
8. Custodian Agreement
8.1 Amendment to Custodian Agreement
9. Form of Service Contract between Registrant and OppenheimerFunds
Services
17. Financial Data Schedule
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
Connecticut Mutual Financial Services Fund I, Inc., a
Maryland corporation having its principal place of business in
Maryland in Baltimore City, Maryland (which is hereinafter called
the "Corporation") hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended
by:
Changing and reclassifying each of the shares of Common Stock
(par value $0.10 per share) of the Corporation which is issued and
outstanding as of the close of business on the effective date of
this amendment into one share of Common Stock (par value $0.001
per share) and by transferring from the account designated "common
stock" to the account designated "capital surplus" $0.99 for each
share of common stock outstanding immediately after the change and
reclassification.
SECOND: The Charter of the Corporation is hereby further
amended and completely restated so that the same shall read as
follows:
ARTICLE I
NAME
The name of the corporation (which is hereinafter called the
"Corporation") is.
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
ARTICLE II
PURPOSES AND POWERS
(a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
(1) To engage generally in the business of investing,
reinvesting, owning, holding or trading in securities, as defined
in the Investment Company Act of 1940, as from time to time
amended (hereinafter referred to as the "Investment Company Act"),
as an investment company classified under the Investment Company
Act as a management company.
(2) To engage in any one or more businesses or
transactions, or to acquire all or any portion of any entity
engaged in any one or more businesses or transactions, which the
<PAGE>
Board of Directors may from time to time authorize or approve,
whether or not related to the business described elsewhere in this
Article or to any other business at the time or theretofore
engaged in by the Corporation.
(3) To hold, invest and reinvest its assets in
securities, including securities of other investment companies and
other instruments and obligations, and in connection therewith, to
hold part or all of its assets in cash.
(4) To subscribe for, invest in, purchase or otherwise
acquire, own, hold, sell, exchange, pledge or otherwise dispose
of, securities of every nature and kind, including, without
limitation, all types of stocks, bonds, debentures, notes, other
securities or obligations or evidences of indebtedness or
ownership issued or created by any and all persons, associations,
agencies, trusts or corporations, public or private, whether
created, established or organized under the laws of the United
States, any of the States, or any territory or district or colony
or possession thereof, or under the laws of any foreign country,
and also foreign and domestic government and municipal
obligations, bank acceptances and commercial paper, to pay for the
same in cash or by the issue of stock, bonds, or notes of this
Corporation or otherwise; and while owning and holding any such
securities, to exercise all the rights, powers and privileges of a
stockholder or owner, including, and without limitation, the right
to delete and assign to one or more persons, firms, associations,
or corporations the power to exercise any of said rights, powers
and privileges in respect of any such securities; to borrow money
or otherwise obtain credit and, if required, to secure the same by
mortgaging, pledging or otherwise encumbering as security the
assets of this Corporation.
(5) To issue and sell shares of its own capital stock
in such amounts and on such terms and conditions, for such
purposes and for such amount or kind of consideration now or
hereafter permitted by the Maryland General Corporation Law and by
this charter, as its Board of Directors may determine, provided,
however, that the value of the consideration per share to be
received by the Corporation upon the sale or other disposition of
any shares of its capital stock shall be not less than the par
value per share of such capital stock outstanding at the time of
such event.
(6) To redeem, purchase or otherwise acquire, hold,
dispose of, resell, transfer, reissue or cancel (all without the
vote or consent of the stockholders of the Corporation) shares of
its capital stock, in any manner and to the extent now or
hereafter permitted by the General Corporation Law of the State of
Maryland and by the Corporation's charter.
-2-
<PAGE>
(7) To do any and all such further acts or things and
to exercise any and all such further powers or rights as may be
necessary, incidental, relative, conducive, appropriate or
desirable for the accomplishment, carrying out or attainment of
any of the foregoing purposes or objects.
(b) The foregoing enumerated purposes and objects shall be
in no way limited or restricted by reference to, or inference
from, the terms of any other clause of this or any other Article
of the charter of the Corporation, and each shall be regarded as
independent; and they are intended to be and shall be construed as
powers as well as purposes and objects of the Corporation and
shall be in addition to and not in limitation of the general
powers of corporations under the General Laws of the State of
Maryland.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The present address of the principal office of the
Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. The
name and address of the resident agent of the Corporation in this
State are The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. Said resident agent is a Maryland
corporation.
ARTICLE IV
CAPITAL STOCK
(a) The total number of shares of stock of all series which
the Corporation initially has authority to issue is Three Billion
(3,000,000,000) shares of capital stock (par value $0.001 per
share), amounting in aggregate par value to $3,000,000. All of
such shares are initially classified as "Common Stock". The Board
of Directors may classify or reclassify any unissued shares of
capital stock (whether or not such shares have been previously
classified or reclassified) from time to time by setting or
changing in any one or more respects the preferences, conversion
or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of
such shares of stock.
(b) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end company under the
Investment Company Act, the Board of Directors shall have the
power and authority, without the approval of the holders of any
outstanding shares, to increase or decrease the number of shares
-3-
<PAGE>
of capital stock or the number of shares of capital stock of any
series that the Corporation has authority to issue.
(c) The authorized shares of Common Stock shall be
classified into the following series of Common Stock, each series
comprising the number of shares indicated, subject to the
authority of the Board of Directors to classify or reclassify any
unissued shares of capital stock and to the authority of the Board
of Directors to increase or decrease the number of shares of
capital stock or the number of shares of capital stock of any
series that the Corporation has the authority to issue:
SERIES NUMBER OF SHARES IN SERIES
------ --------------------------
Money Market Portfolio Common Stock 250,000,000
Government Securities Portfolio 150,000,000
Common Stock
Income Portfolio Common Stock 150,000,000
Total Return Portfolio Common Stock 650,000,000
Growth Portfolio Common Stock 150,000,000
International Equity Portfolio 150,000,000
Common Stock
Any series of Common Stock shall be referred to herein
individually as a "Series" and collectively, together with any
further series from time to time established, as the "Series".
(d) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption of the shares of Common Stock classified
into the Series listed above and any additional Series of Common
Stock of the Corporation (unless provided otherwise by the Board
of Directors with respect to any such additional Series at the
time it is established and designated):
(1) ASSETS BELONGING TO SERIES. All consideration
received by the Corporation from the issue or sale of shares of a
particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or
payments derived from any investment or reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account
of the Corporation. Such consideration, assets, income, earnings,
profits and proceeds, together with any General Items (as defined
below) allocated to that Series as provided in the following
-4-
<PAGE>
sentence, are herein referred to collectively as "assets belong
to" that Series. In the event that there are any assets, income,
earnings, profits or proceeds which are not readily identifiable
as belonging to any particular Series (collectively, "General
Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to and among any one or more
of the Series established and designated from time to time in such
manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series.
Each such allocation by the Board of Directors shall be conclusive
and binding for all purposes.
(2) LIABILITIES OF SERIES. The assets belonging to
each particular Series shall be charged with the liabilities of
the Corporation in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as pertaining to
any particular Series, shall be allocated and charged by or under
the supervision of the Board of Directors to and among any one or
more of the Series established and designated from time to time in
such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so charged to
a Series are herein referred to collectively as "liabilities of"
that Series. Each allocation of liabilities, expenses, costs,
charges and reserves by or under the supervision of the Board of
Directors shall be conclusive and binding for all purposes.
(3) DIVIDENDS AND DISTRIBUTIONS. Dividends and capital
gains distributions on shares of a particular Series may be paid
with such frequency, in such form and in such amount as the Board
of Directors may determine by resolution adopted from time to
time, or pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Board of Directors may
determine, after providing for actual and accrued liabilities of
that Series. All dividends on shares of a particular Series shall
be paid only out of the income belonging to that Series and all
capital gains distributions on shares of a particular Series shall
be paid only out of the capital gains belonging to that Series.
All dividends and distributions on shares of a particular Series
shall be distributed pro rata to the holders of that Series in
proportion to the number of shares of that Series held by such
holders at the date and time of record established for the payment
of such dividends or distributions, except that in connection with
any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be
payable on shares as to which the stockholder's purchase order
and/or payment have not been received by the time or times
-5-
<PAGE>
established by the Board of Directors under such program or
procedure.
Dividends and distributions may be paid in cash, property or
additional shares of the same or another Series, or a combination
thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the
time for the election by stockholders of the form in which
dividends or distributions are to be paid. Any such dividend or
distribution paid in shares shall be paid at the current net asset
value thereof.
(4) VOTING. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one vote
for each share standing in his name on the books of the
Corporation, irrespective of the Series thereof, and all shares of
all Series shall vote as a single class ("Single Class Voting");
provided, however, that (i) as to any matter with respect to which
a separate vote of any Series is required by the Investment
Company Act or by the Maryland General Corporation Law, such
requirement as to a separate vote by that Series shall apply in
lieu of Single Class Voting, (ii) in the event that the separate
vote requirement referred to in clause (i) above applies with
respect to one or more Series, then, subject to clause (iii)
below, the shares of all other Series shall vote as a single
class; and (iii) as to any matter which does not affect the
interest of a particular Series, including liquidation of another
Series as described in subsection (7) below, only the holders of
shares of the one or more affected Series will be entitled to
vote.
(5) REDEMPTION BY STOCKHOLDERS. Each holder of shares
of a particular Series shall have the right at such times as may
be permitted by the Corporation to require the Corporation to
redeem all or any part of his shares of that Series, at a
redemption price per share equal to the net asset value per share
of that Series next determined after the shares are properly
tendered for redemption, less such redemption fee or sales
charges, if any, as may be established by the Board of Directors
in its sole discretion in accordance with any applicable
provisions of the Investment Company Act. Payment of the
redemption price shall be in cash; provided, however, that if the
Board of Directors determines, which determination shall be
conclusive, that conditions exist which make payment wholly in
cash unwise or undesirable, the Corporation may, to the extent and
in the manner permitted by the Investment Company Act, make
payment wholly or partly in securities or other assets belonging
to the Series of which the shares being redeemed are a part, at
-6-
<PAGE>
the value of such securities or assets used in such determination
of net asset value.
Notwithstanding the foregoing, the Corporation may postpone
payment of the redemption price and may suspend the right of the
holders of shares of any Series to require the Corporation to
redeem shares of that Series during any period or at any time when
and to the extent permissible under the Investment Company Act.
(6) LIQUIDATION. In the event of the liquidation of a
particular Series, the stockholders of the Series that is being
liquidated shall be entitled to receive, as a class, when and as
declared by the Board of Directors, the excess of the assets
belonging to that Series over the liabilities of that Series. The
holders of shares of any particular Series shall not be entitled
thereby to any distribution upon liquidation of any other Series.
The assets so distributable to the stockholders of any particular
Series shall be distributed among such stockholders in proportion
to the number of shares of that Series held by them and recorded
on the books of the Corporation. The liquidation of any
particular Series in which there are shares then outstanding may
be authorized by vote of a majority of the Board of Directors then
in office, and, if required under Maryland or other applicable
law, subject to the approval of a majority of the outstanding
voting securities of that Series, as defined in the Investment
Company Act, and without the vote of the holders of shares of any
other Series. The liquidation of a particular Series may be
accomplished, in whole or in part, by the transfer of assets of
such Series to another Series or by the exchange of shares of such
Series for the shares of another Series.
(7) NET ASSET VALUE PER SHARE. The net asset value per
share of any Series shall be the quotient obtained by dividing the
value of the net assets of that Series (being the value of the
assets belonging to that Series less the liabilities of that
Series) by the total number of shares of that Series outstanding,
all as determined by or under the direction of the Board of
Directors in accordance with generally accepted accounting
principles and the Investment Company Act. Subject to the
applicable provisions of the Investment Company Act, the Board of
Directors, in its sole discretion, may prescribe and shall set
forth in the By-Laws of the Corporation or in a duly adopted
resolution of the Board of Directors such bases and times for
determining the value of the assets belonging to, and the net
asset value per share of outstanding shares of, each Series, or
the net income attributable to such shares, as the Board of
Directors deems necessary or desirable. The Board of Directors
shall have full discretion, to the extent not inconsistent with
the Maryland General Corporation Law and the Investment Company
Act, to determine which items shall be treated as income and which
-7-
<PAGE>
items as capital and whether any item of expense shall be charged
to income or capital. Each such determination and allocation
shall be conclusive and binding for all purposes.
The Board of Directors may determine to maintain the net
asset value per share of any Series at a designated constant
dollar amount and in connection therewith may adopt procedures not
inconsistent with the Investment Company Act for the continuing
declaration of income attributable to that Series as dividends and
for the handling of any losses attributable to that Series. Such
procedures may provide that in the event of any loss, each
stockholder shall be deemed to have contributed to the capital of
the Corporation attributable to that Series his pro rata portion
of the total number of shares required to be canceled in order to
permit the net asset value per share of that Series to be
maintained, after reflecting such loss, at the designated constant
dollar amount. Each stockholder of the Corporation shall be
deemed to have agreed, by his investment in any Series with
respect to which the Board of Directors shall have adopted any
such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(8) CONVERSION OF EXCHANGE RIGHTS. Subject to
compliance with the requirements of the Investment Company Act,
the Board of Directors shall have the authority to provide that
holders of shares of any Series shall have the right to convert or
exchange said shares into shares of one or more other Series of
shares in accordance with such requirements and procedures as may
be established by the Board of Directors.
(e) All shares of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation
and have identical voting, dividend, liquidation, and other rights
with any other shares of Common Stock of that Series.
(f) The Corporation may issue and sell fractions of shares
of capital stock having pro rata all the rights of full shares,
including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in
the charter or By-Laws of the Corporation, they shall be deemed to
include fractions of shares where the context does not clearly
indicate that only full shares are intended.
(g) The Corporation shall not be obligated to issue
certificates representing shares of any Series of capital stock.
At the time of issue or transfer of shares without certificates,
the Corporation shall provide the stockholder with such
information as may be required under the Maryland General
Corporation Law.
-8-
<PAGE>
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(a) The number of directors of the Corporation may be
increased or decreased pursuant to the By-Laws of the Corporation,
but shall never be less than the minimum number permitted by the
General Laws of the State of Maryland now or hereafter in force.
(b) The Board of Directors is hereby empowered to authorize
the issuance from time to time of shares of its stock of any
series, whether now or hereafter authorized, or securities
convertible into shares of its stock of any series, whether now or
hereafter authorized, for such consideration as may be deemed
advisable by the Board of Directors and without any action by the
stockholders.
(c) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any
other securities of the Corporation other than such, if any, as
the Board of Directors, in its sole discretion, may determine and
at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other
securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion
shall determine, be offered to the holders of any series or type
of stock or other securities at the time outstanding to the
exclusion of the holders of any or all other series or types of
stock or other securities at the time outstanding.
(d) The Board of Directors of the Corporation shall,
consistent with applicable law, power in its sole discretion to
determine from time to time in accordance with sound accounting
practice or other reasonable valuation methods what constitutes
annual or other net profits, earnings, surplus, or net assets in
excess of capital; to determine that retained earnings or surplus
shall remain in the hands of the Corporation; to set apart out of
any funds of the Corporation such reserve or reserves in such
amount or amounts and for such proper purpose or purposes as it
shall determine and to abolish any such reserve or any part
thereof; to distribute and pay distributions or dividends in
stock, cash or other securities or property, out of surplus or any
other funds or amounts legally available therefor, at such times
and to the stockholders of record on such dates as it may, from
time to time, determine; and to determine whether and to what
extent and at what times and places and under what conditions and
regulations the books, accounts and documents of the Corporation,
or any of them, shall be open to the inspection of stockholders,
-9-
<PAGE>
except as otherwise provided by statute or by the ByLaws, and,
except as so provided, no stockholder shall have any right to
inspect any book, account or document of the Corporation unless
authorized so to do by resolution of the Board of Directors.
(e) Notwithstanding any provision of Maryland law requiring
the authorization of any action by a greater proportion than a
majority of the total number of shares of all series of capital
stock or of the total number of shares of any series of capital
stock entitled to vote as a separate class, such action shall be
valid and effective if authorized by the affirmative vote of the
holders of a majority of the total number of shares of all series
outstanding and entitled to vote thereon, or of the series
entitled to vote thereon as a separate class, as the case may be,
except as otherwise provided in the charter of the Corporation.
(f) The Corporation shall indemnify (i) its directors and
officers, whether serving the Corporation or at its request any
other entity, to the full extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures and to the
full extent permitted by law, and (ii) other employees and agents
to such extent as shall be authorized by the Board of Directors or
the By-Laws and as permitted by law. Nothing contained herein
shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
The foregoing rights of indemnification shall not be exclusive of
any other rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action as is
necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time
such by-laws, resolutions or contracts implementing such
provisions or such further indemnification arrangements as may be
permitted by law. No amendment of the charter of the Corporation
or repeal of any of its provisions shall limit or eliminate the
right of indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal.
(g) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment
Company Act, no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders for money
damages; provided, however, that nothing herein shall be construed
to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
-10-
<PAGE>
involved in the conduct of his office. No amendment of the
charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal.
(h) The Corporation reserves the right from time to time to
make any amendments of its charter which may now or hereafter be
authorized by law, including any amendments changing the terms or
contract rights, as expressly set forth in its charter, of any of
its outstanding stock by classification, reclassification or
otherwise.
(i) The enumeration and definition of particular powers of
the Board of Directors included in the foregoing shall in no way
be limited or restricted by reference to or inference from the
terms of any other clause of this or any other Article of the
charter of the Corporation, or construed as or deemed by inference
or otherwise in any manner to exclude or limit any powers
conferred upon the Board of Directors under the General Laws of
the State of Maryland now or hereafter in force.
ARTICLE VI
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
THIRD: The provisions hereinabove set forth are all the
provisions of the Charter of the Corporation currently in effect.
FOURTH: The amendment does not increase the authorized stock
of the Corporation.
FIFTH: In accordance with the provisions of Section 2-607
of the Maryland General Corporation Law, the foregoing amendment
was advised by the Board of Directors and approved by the
stockholders of the Corporation.
SIXTH: The current address of the principal office of the
Corporation in Maryland and the name and address of the
Corporation's current resident agent are as set forth in the
amended and restated Charter of the Corporation. There are six
directors currently in office, whose names are as follows:
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<PAGE>
Donald H. Pond
David E. Sams, Jr.
Richard H. Ayers
David E. A. Carson
Richard W. Greene
Beverly L. Hamilton
IN WITNESS WHEREOF, the Corporation has caused these presents
to be signed in its name and on its behalf by its President on
this 8th day of May, 1995
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
/s/ Donald H. Pond, Jr.
--------------------------
Name: Donald H. Pond, Jr.
Title: President
ATTEST:
/s/ Anne F. Lomeli
--------------------------
Name:
THE UNDERSIGNED, the President of Connecticut Mutual
Financial Services Series Fund I, Inc. who executed on behalf of
the Corporation the foregoing Articles of Amendment and
Restatement of which this certificate is made a part, hereby
acknowledges in the name and on behalf of the Corporation the
foregoing Articles of Amendment and Restatement to be the
corporate act of the Corporation and hereby certifies to the best
of her knowledge, information and belief the matters and facts set
forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of
perjury.
/s/ Donald H. Pond, Jr.
--------------------------
Name: Donald H. Pond, Jr.
Title: President
-12-
<PAGE>
BYLAWS
OF
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
AS AMENDED BY RESOLUTIONS
OF THE BOARD OF DIRECTORS
AND BY THE ACTION OF SHAREHOLDERS
THROUGH APRIL 30, 1993
AS FURTHER AMENDED
JANUARY 29, 1996
<PAGE>
CERTIFIED COPY
BYLAWS
OF
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
ARTICLE I Offices............................................1
Section 1. Principal Executive Office.........................1
Section 2. Other Offices......................................1
ARTICLE II Meetings of Stockholders...........................1
Section 1. Meetings...........................................1
Section 2. Place of Meetings..................................2
Section 3. Notice of Meetings; Waiver of Notice...............2
Section 4. Quorum.............................................2
Section 5. Organization.......................................3
Section 6. Order of Business..................................4
Section 7. Voting.............................................4
Section 8. Fixing of Record Date..............................5
Section 9. Inspectors.........................................5
Section 10. Consent of Stockholders in Lieu of Meeting.........6
ARTICLE III Board of Directors.................................6
Section 1. General Powers.....................................6
Section 2. Number of Directors................................7
Section 3. Election and Term of Directors.....................7
Section 4. Resignation........................................8
Section 5. Removal of Directors...............................8
Section 6. Vacancies..........................................8
Section 7. Place of Meetings..................................9
Section 8. Manner of Acting...................................9
Section 9. Regular Meetings...................................9
Section 10. Special Meetings...................................9
Section 11. Annual Meeting.....................................9
Section 12. Notice of Special Meetings........................10
Section 13. Waiver of Notice of Meetings......................10
Section 14. Quorum and Voting.................................10
Section 15. Organization......................................11
Section 16. Written Consent of Directors in Lieu of Meeting...11
Section 17. Compensation......................................12
Section 18. Investment Policies...............................12
ARTICLE IV Committees........................................13
Section 1. Executive Committee...............................13
<PAGE>
Section 2. Other Committees of the Board.....................14
Section 3. General...........................................14
ARTICLE V Officers, Agents, and Employees...................15
Section 1. Number and Qualifications.........................15
Section 2. Resignations......................................15
Section 3. Removal of Officer, Agent, or Employee............16
Section 4. Vacancies.........................................16
Section 5. Compensation......................................16
Section 6. Bonds or other Security...........................16
Section 7. President.........................................16
Section 8. Vice President....................................17
Section 9. Treasurer.........................................17
Section 10. Secretary.........................................18
Section 11. Delegation of Duties..............................18
ARTICLE VI Indemnification...................................18
Section 1. Right of Indemnification..........................18
Section 2. Disabling Conduct.................................19
Section 3. Directors' Standards of Conduct...................20
Section 4. Expenses Prior to Determination...................20
Section 5. Provisions Not Exclusive..........................21
Section 6. General...........................................21
ARTICLE VII Capital Stock.....................................21
Section 1. Stock Certificates................................21
Section 2. Books of Account and Record of Stockholders.......22
Section 3. Transfers of Shares...............................22
Section 4. Rules and regulations.............................23
Section 5. Lost, Destroyed, or Mutilated Certificates........23
Section 6. Fixing of a Record Date for Dividends
and Distributions.................................24
Section 7. Registered Owner of Shares........................24
Section 8. Information to Stockholders and Others............24
Section 9. Involuntary Redemption of Shares..................24
ARTICLE VIII Seal..............................................25
ARTICLE IX Fiscal Year.......................................25
ARTICLE X Depositories and Custodians.......................25
Section 1. Depositories......................................25
Section 2. Custodians........................................25
ARTICLE XI Execution of Instruments..........................26
Section 1. Checks, Notes, Drafts, etc........................26
<PAGE>
Section 2. Sale or Transfer of Securities....................26
Section 3. Loans.............................................26
Section 4. Voting as Securityholder..........................26
Section 5. Expenses..........................................27
ARTICLE XII Independent Public Accountants (deleted)..........27
ARTICLE XIII Annual Statement..................................27
ARTICLE XIV Amendments........................................28
<PAGE>
BYLAWS
OF
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
ARTICLE
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
the Corporation shall be at 140 Garden Street, City of Hartford, State of
Connecticut.
Section 2. OTHER OFFICES. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. MEETINGS. Meetings of the stockholders of the Corporation
for the election of directors and for the transaction of such other business
as may be brought before the meeting may, but are not required to be held
annually; specifically, the Corporation shall not be required to hold a
meeting in any year in which none of the following is required to be acted on
by stockholders under the Investment Company Act of 1940: (1) the election of
directors; (2) the approval of the Corporation's investment advisory
agreement; (3) ratification of the selection of independent public
accountants; and (4) approval of the Corporation's distribution agreement.
Any business of the Corporation may be transacted at the meeting without
being specifically designated in the notice, except such business as is
specifically required by
<PAGE>
statute to be stated in the notice.
Meetings of the stockholders, unless otherwise provided by law or by the
Articles of Incorporation, may be called for any purpose or purposes by a
majority of the Board of Directors, by the President, or upon the written
request of the holder of at least 25% of the outstanding capital stock of the
Corporation entitled to vote at such meeting.
Section 2. PLACE OF MEETINGS. Meetings of the stockholders shall be
held at such place within the United States as the Board of Directors may
from time to time determine.
Section 3. NOTICE OF MEETINGS WAIVER OF NOTICE. Notice of the place,
date, and time of the holding of each meeting of the stockholders and the
purpose or purposes of each meeting shall be given personally or by mail, not
less than ten nor more than ninety days before the date of such meeting, to
each stockholder entitled to vote at such meeting and to each other
stockholder entitled to notice of the meet meeting. Notice by mail shall be
deemed to be duly given when deposited in the United State mail addressed to
the stockholder at his address as it appears on the records of the
Corporation with postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who
shall, either before or after the meeting, submit a signed waiver of notice
that is filed with the records of the meeting. When a meeting is adjourned
to another time and place, unless the Board of Directors, after the
adjournment, shall fix a new record date for an adjourned meeting, or unless
the adjournment is for more than thirty days, notice of such adjourned
meeting need not be given if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the adjournment is taken.
<PAGE>
Section 4. QUORUM. At all meetings of the stockholders, the holders of
a majority of the shares of stock of the Corporation entitled to vote at the
meeting, or a majority of the holders of any class of stock with respect to
matters on which holders of Such class of stock are entitled to vote
separately, who are present in person or by proxy shall constitute a quorum
for the transaction of any business, except as otherwise provided by statute
or by the Articles of Incorporation or these Bylaws. In the absence of quorum
no business may be transacted, except that the holders of a majority of the
shares of stock who are present in person or by proxy and who are entitled to
vote may adjourn the meeting from time to time without notice other than
announcement thereat except as otherwise required by these Bylaws, until the
holders of the requisite amount of shares of stock shall be so present. At
any such adjourned meeting at which a quorum may be present, any business may
have been transacted that might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy, of
holders of the number of shares of stock of the Corporation in excess of a
majority thereof that may be required by the laws of the State of Maryland,
the Investment Company Act of 1940, as amended, or other applicable statute,
the Articles of Incorporation, or these Bylaws for action upon any given
matter shall not prevent action at such meeting upon any other matter or
matters that may properly come before the meeting, if there shall be present
thereat, in person or by proxy, holders of the number of shares of stock of
the Corporation required for Action in respect of such other matter or
matters.
Section 5. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board, if one has been designated by the Board, or in his
absence or inability to act, the President, or in the absence or inability to
<PAGE>
act of both the Chairman of the Board and the President, a Vice-President,
shall act as chairman of the meeting. The Secretary, or in his absence or
inability to act, any person appointed by the chairman of the meeting, shall
act as secretary of the meeting and keep the minutes thereof.
Section 6. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be determined by the chairman of the meeting.
Section 7. VOTING. Except as otherwise provided by statute or the
Articles of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for each full share, and a fractional vote for each
fractional share, standing in his name on the record of stockholders of the
Corporation as of the record date determined pursuant to Section 8 of this
Article II or, if such record date shall not have been so fixed, then at the
later of (i) the close of business on the day on which notice of the meeting
is mailed or (ii) the thirtieth day before the meeting; provided that
stockholders of each class shall not be entitled to vote on matters that do
not affect that class and that only affect another class or classes.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases where such proxy states that
it is irrevocable and where an irrevocable proxy is permitted by law.
Except as otherwise provided by statute, the Articles of
Incorporation, or these Bylaws, any corporate action to be taken by vote of
the stockholders
<PAGE>
shall be authorized by a majority of the total votes cast at a meeting of
stockholders by the holders of shares present in person or represented by
proxy and entitled to vote on such action; provided that, to the extent
required by the Investment Company Act of 1940, as now in existence or
hereinafter amended, if any action is required to be taken by the vote of a
majority of the outstanding shares of all the stock or of any class of stock,
then such action shall be taken if approved by the lesser of (i) 67 percent
or more of the shares present at a meeting in person or represented by proxy,
at which more than 50 percent of the outstanding shares are represented or
(ii) more than 50 percent of the outstanding shares.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute
or these Bylaws, or determined by the chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, such
ballot shall be signed by the stockholder voting, or by his proxy, if there
be such proxy, and shall state the number of shares voted.
Section 8. FIXING OF RECORD DATE. The Board of Directors may fix, in
advance, a record date not more than ninety nor less than ten days before the
date then fixed for the holding of any meeting of the stockholders. All
persons who were holders of record of shares at such time, and no others,
shall be entitled to vote at such meeting and any adjournment thereof.
Section 9. INSPECTORS. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
<PAGE>
request of any stockholder entitled to vote thereat shall, appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at
such meeting with strict impartiality and according to the best of his
ability. The inspectors shall determine the number of shares outstanding and
entitled to vote; the number of shares represented at the meeting; the
existence of a quorum; the validity and effect of proxies; and shall receive
votes, ballots, or consents; hear and determine all challenges and questions
rising in connection with the right to vote; count and tabulate all votes,
ballots or consents; determine the result; and do such acts as are proper to
conduct the election or vote in fairness to all stockholders. On request of
the chairman of the meeting or of any stockholder entitled to vote thereat,
the inspectors shall make a report in writing of any challenge, request, or
matter determined by them and shall execute a certificate of any fact found
by them. No director or candidate for the office of director shall act as
inspector of an election of director. Inspectors need not be stockholders.
Section 10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by statute or the Articles of Incorporation, any action
required to be taken at any meeting of stockholders, or any action that may
be taken at any meeting of such stockholders, may be taken without a meeting,
without prior notice, and without a vote, if the following are filed with the
records of stockholders' meetings: (i) a unanimous written consent that sets
forth the action and is signed by each stockholder entitled to vote on the
matter and (ii) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote
thereat.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. Except as otherwise provided in the Articles
of Incorporation, the business and affairs of the Corporation shall be
managed by the Board of Directors. The Board may exercise all the powers of
the Corporation and do all such lawful acts and things as are not by statute
or the Article of Incorporation directed or required to be exercised or done
by the stockholders.
Section 2. NUMBER OF DIRECTORS. The number of directors may be changed
from time to time by resolution of the Board of Directors adopted by a
majority of the directors then in office; provided, however, that the number
of directors shall in no event be less than three (3). Any vacancy created by
an increase in directors may be filled in accordance with Section 6 of this
Article III. No reduction in the number of directors shall have the effect of
removing any director from office before the expiration of his term unless
such director is specifically removed pursuant to Section 5 of this Article III
at the time of such reduction. Directors need not be stockholders.
Section 3. ELECTION AND TERM OF DIRECTORS. Each director shall serve
indefinitely and until his successor is duly elected and qualified (or, if
earlier, the death, resignation, or removal of such director as hereinafter
provided in these Bylaws or as otherwise provided by statute or the Articles
of Incorporation, except that the Board of Directors may determine a shorter
tenure of office for any of its members so long as such shorter period is
stated in the notice for the meeting of stockholders at which such election
takes place. Elections of directors shall be by written ballot at a
<PAGE>
stockholders' meeting held for that purpose.
Section 4. RESIGNATION. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board, to the
Chairman of the Board, to the President, or to the Secretary. Any such
resignation shall take effect at: the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its
receipt and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. REMOVAL OF DIRECTORS. A director of the Corporation may be
removed by the stockholders by a vote of a majority of the votes entitled to
be cast on the matter at any meeting of stockholders, duly called, and at
which a quorum is present.
Section 6. VACANCIES. Any vacancies in the Board, whether arising from
death, resignation, removal, an increase in the number of directors, or from
any other cause, shall be filled by a vote of the majority of the Board of
Directors then in office even if such majority is less than a quorum,
provided that no vacancies shall be filled by action of the remaining
directors, if after the filling of said vacancy or vacancies, less than
two-thirds of the directors then holding office shall have been elected by
the stockholders of the Corporation. In the event that at any time less than
a majority of the directors shall have been elected by the stockholders, a
meeting of the stockholders shall be held as promptly as possible and, in any
event within sixty days, for the purpose of electing additional directors.
Any directors elected or appointed to fill a vacancy shall hold office
indefinitely and until a successor shall have been chosen and shall have
qualified (unless elected for a definite term) or, if earlier, until the
death, resignation, or removal. as
<PAGE>
hereinafter provided in these Bylaws, or as otherwise provided by statute or
the Articles of Incorporation of such director.
Section 7. PLACE OF MEETINGS. Meetings of the Board may be held at such
place as the Board may from time to time determine or as shall be specified
in the notice of such a meeting.
Section 8. MANNER OF ACTING. Any member of the Board of Directors or of
any committee designated by the Board, may participate in a meeting of the
Board, or any such committee, as the case may be, by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting
by these means constitutes presence in person at the meeting. This paragraph
shall not be applicable to meetings held for the purpose of voting in respect
of approval of (1) contracts or agreements whereby a person undertakes to
serve or act as investment adviser for or principal underwriter for the
Corporation or (2) a plan for the distribution of the Corporation's
securities pursuant to Rule 12b-1 of the Investment Company Act of 1940.
Section 9. REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.
Section 10. SPECIAL MEETINGS. Special meetings of the Board may be
called by two or more directors of the Corporation, by the Chairman of the
Board, or by the President.
Section 11. ANNUAL MEETING. The annual meeting of each newly elected
Board of Directors may be held as soon as practicable after the meeting of
stockholders at which the directors were elected. No notice of such annual
<PAGE>
meeting shall be necessary if held immediately after the adjournment, and at
the site, of the meeting of stockholders and only if at least a majority of
the Board of Directors were elected or re-elected at such meeting. If not so
held. notice shall be given as hereinafter provided for special meetings of
the Board of Directors.
Section 12. NOTICE OF SPECIAL MEETINGS. Notice of each special meeting
of the Board shall be given by the Secretary as hereinafter provided, which
notice shall state the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by
telephone, cable, or wireless, at least twenty-four hours before the time at
which such meeting is to be held, or by first-class mail, postage prepaid,
addressed to him at his residence or usual place of business, at least three
days before the day on which such meeting is to be held.
Section 13. WAIVER OF NOTICE OF MEETING. Notice of any special meeting
need not be given to any director who shall, either before or after the
meeting, sign a written waiver of notice or who shall attend such meeting.
Except as otherwise specifically required by these Bylaws, a notice or waiver
of notice of any meeting need not state the purpose of such meeting.
Section 14. QUORUM AND VOTING. One-third, but not less than two, of the
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and, except as otherwise expressly required by the Articles of
Incorporation, these Bylaws, the Investment Company Act of 1940, as amended,
or other applicable statute, the act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board;
provided,
<PAGE>
however, that the approval of any contract with an investment adviser or
principal underwriter, as such terms are defined in the Investment Company
Act of 1940, as amended, that the Corporation enters into or any renewal or
amendment thereof, the approval of the fidelity bond required by the
Investment Company Act of 1940, as amended, and the selection of the
Corporation's independent public accountant shall each require the
affirmative vote of a majority of the directors who are not parties to any
such contract or "interested persons" of any such party, as defined in the
Investment Company Act of 1940 and the Rules thereunder), so long as the
Corporation is subject to such Act and such Act so requires. In the absence
of a quorum at any meeting of the Board, a majority of the directors present
thereat may adjourn such meeting to another time and place until a quorum
shall be present thereat. Notice of the time and place of any such adjourned
meeting shall be given to the directors who were not present at the time of
the adjournment and, unless such time and place were announced at the meeting
at which the adjournment was taken, to the other directors. Any such notice
shall be given as provided for in Section 12 hereof. At any adjourned meeting
which a quorum is present, any business may be transacted which might have
been transacted at the meeting as originally called.
Section 15. ORGANIZATION. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President, or, in his
absence or inability to act, another director chosen by a majority of the
directors present, shall act as chairman of the meeting and preside thereat.
The Secretary (or, in his absence or inability to act, any person appointed by
<PAGE>
the chairman) shall act as secretary of the meeting and keep the minutes
thereof.
Section 16. WRITTEN CONSENT OF DIRECTORS IN LIEU OF A MEETING. Except as
otherwise required by the Investment Company Act of 1940, any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board
or of the committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the
Board or committee.
Section 17. COMPENSATION. Directors may receive compensation for
services to the Corporation in their capacities as director or otherwise in
such manner and in such amount as may be fixed from time to time by the Board.
Section 18. INVESTMENT POLICIES. It shall be the duty of the Board of
Directors to ensure that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Corporation
are at all times consistent with the investment policies and restrictions
with respect to securities investment and otherwise of the Corporation (or if
the stock is issued in classes or series, the policies and restrictions
applicable to such class or series) as recited in these Bylaws and the
current Registration Statement of the Corporation filed from time to time
with the Securities and Exchange Commission and as required by the Investment
Company Act of 1940, as amended. The Board, however, may delegate the duty of
management of the assets and the administration of its day-to-day operations
to an individual or corporate management company and/or investment adviser
pursuant to written contract or contracts which have obtained the requisite
<PAGE>
approval, including the requisite approval of renewals thereof, of the Board
of Directors and/or the stockholders of the Corporation in accordance with
the provisions of the Investment Company Act of 1940, as amended.
ARTICLE IV
Committees
Section 1. EXECUTIVE COMMITTEE. The Board may, by resolution adopted by
a majority of the entire Board, designate an Executive Committee consisting
of two or more of the directors of the Corporation, which committee shall
have and may exercise all the powers and authority of the Board with respect
to all matters other than:
(a) the submission to stockholders of any action requiring authorization
of stockholders pursuant to regulation or statute or the Articles of
Incorporation;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving on the Board
or on any committee of the Board, including the Executive Committee;
(d) the approval or termination of any contract with an investment
adviser or principal underwriter, as such terms are defined in the investment
Company Act of 1940, as amended, or the taking of any other action required
to be taken by the Board of Directors or a portion thereof by the Investment
Company Act of 1940, as amended;
(e) the amendment or repeal of these Bylaws or the adoption of new
Bylaws;
(f) the amendment or repeal of any resolution of the Board that by its
terms may be amended or repealed only by the Board; and
(g) the declaration of dividends and the issuance of capital stock of
<PAGE>
the Corporation.
The Executive Committee shall keep written minutes of its proceedings
and shall report such minutes to the Board. All such proceedings shall be
subject to revision or alteration by the Board; provided, however, that third
parties shall not be prejudiced by such revision or alteration.
Section 2. OTHER COMMITTEES OF THE BOARD. The Board of Directors may
from time to time, by resolution adopted by a majority of the whole Board,
designate one or more other committees of the Board, each such committee to
consist of such number of directors and to have such powers and duties as the
Board of Directors may, by resolution, prescribe.
Section 3. GENERAL. One-third, but not less than two, of the members of
any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting
and the act of a majority present shall be the act of such committee. The
Board may designate a chairman of any committee and such chairman or any two
members of any committee may fix the time and place of its meeting unless the
Board shall otherwise provide. In the absence or disqualification of any
member of any committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
The Board shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace
any absent or disqualified member, or to dissolve any such committee. Nothing
herein shall be deemed to prevent the Board from appointing one or more
<PAGE>
committees consisting wholly or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall have or may
exercise any authority or power of the Board in the management of the
business or affairs of the Corporation.
ARTICLE V
Officers, Agents, and Employees
Section 1. NUMBER AND QUALIFICATIONS. Three officers of the Corporation
shall be a President, who shall be a director of the Corporation, a
Secretary, and a Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint one or more Vice
Presidents and may also appoint such other officers, agents and employees as
it may deem necessary or proper. Any two or more offices may be held by the
same person, except the offices of President and Vice President, but no
officer shall execute, acknowledge, or verify any instrument in more than one
capacity. Such officers shall be elected annually by the Board of Directors
for a one year term, each to hold office until his successor shall have been
duly elected and shall have qualified or, if earlier, until the death,
resignation, or removal of such officer, as hereinafter provided in these
Bylaws or as otherwise provided by statute or the Article of Incorporation.
The Board may from time to time elect, or delegate to the President the power
to appoint, such officers (including one or more Assistant Vice Presidents,
one or more Assistant Treasurers, and one or more Assistant Secretaries) and
such agents as may be necessary or desirable for the business of the
Corporation. Such other officers and agents shall have such duties and shall
hold their offices for such terms as may be prescribed by the Board or by the
appointing authority.
<PAGE>
Section 2. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board, the
Chairman of the Board, the President, or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective is not specified therein, immediately upon its receipt, and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 3. REMOVAL OF OFFICER, AGENT, OR EMPLOYEE. Any officer, agent,
or employee of the Corporation may be removed by the Board of Directors with
or without cause at anytime, and the Board may delegate such power of removal
as to agents and employees not elected or appointed by the Board of
Directors. Such removal shall be without prejudice to such person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.
Section 4. VACANCIES. A vacancy in any office, whether arising from
death, resignation, removal, or from any other cause, may be filled for the
unexpired portion of the term of the office which shall be vacant, in the
manner prescribed in these Bylaws for the regular election or appointment to
such office.
Section 5. COMPENSATION. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.
Section 6. BONDS OR OTHER SECURITY. If required by the Board, any
officer, agent, or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
<PAGE>
such surety or sureties as the Board may require.
Section 7. PRESIDENT. The President shall be the chief executive
officer of the Corporation. Only members of the Board of Directors are
eligible to be president. In the absence of the Chairman of the Board (or if
there be none), he shall preside at all meetings of the stockholders and of
the Board of Directors. He shall have, subject to the control of the Board of
Directors, general charge of the business and affairs of the Corporation. He
may employ and discharge employees and agents of the Corporation, except such
as shall be appointed by the Board, and he may delegate these powers.
Section 8. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as the Board of Directors or the President may from
time to time prescribe.
Section 9. TREASURER. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation, except those that the Corporation has
placed in the custody of a bank or trust company or member of a national
securities exchange (as that term is defined in the Securities Exchange Act
of 1934) pursuant to written agreement designating such bank or trust company
or member of a national securities exchange as custodian of the property of
the Corporation;
(b) keep full and accurate account of receipts and disbursements in
books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the credit
of the Corporation:
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source;
<PAGE>
(e) disburse the funds of the Corporation and supervise the investment
of its funds as ordered or authorized by the Board, taking proper vouchers
therefor; and
(f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
by the Board or the President.
SECRETARY. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, of the committees of the
Board, and of the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation
(unless the seal of the Corporation on such certificates shall be a facsimile
as hereinafter provided) and affix and attest the seal to all other documents
to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept
and filed; and,
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Board of the President.
Section 11. DELEGATION OF DUTIES. In case of the absence of any officer
of the Corporation, or for any other reason that the Board may seem
<PAGE>
sufficient, the Board may confer for the time being the powers or duties, or
any of them, of such officer upon any other officer or upon any director,
ARTICLE VI
Indemnification
Section 1. RIGHT OF INDEMNIFICATION. Every person who is or was an
officer, director, employee, or agent of the Corporation shall have a right
to be indemnified by the Corporation to the fullest extent permitted by
applicable law against all liability, judgments, fines, penalties,
settlements and reasonable expenses incurred by him in connection with or
resulting from any threatened or actual claim, action, suit or proceeding,
whether criminal, civil, or administrative, in which he may become involved
as a party or otherwise by reason of his being or having been a director,
officer or employee, except as provided in Sections 2 and 3 of these Bylaws.
Section 2. DISABLING CONDUCT. No such person shall be indemnified for
any liabilities or expenses arising by means of "disabling conduct," whether
or not there is an adjudication of liability. "Disabling conduct" means
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of office.
Whether any such liability arose out of disabling conduct shall be
determined: (a) by a final decision the merits (including, but not limited
to, a dismissal for insufficient evidence of any disabling conduct) by a
court or other body before which the proceeding was brought that the person
seeking indemnification ("indemnitee") was not liable by reason of such
disabling conduct; or (b) in the absence of such a decision, by a reasonable
determination, based upon the review of the facts that such person was not
<PAGE>
liable by reason of disabling conduct, (i) by the vote of a majority of a
quorum of directors who are neither "interested persons" of the Corporation
(as defined in the Investment Company Act of 1940) nor parties to the action,
suit or proceeding in question ("disinterested, non-party directors"), or
(ii) by independent legal counsel in a written opinion if a quorum of
disinterested, non-party directors so directs or if such quorum is not
obtainable; or (iii) by a majority vote of the shareholders or (iv) by any
other reasonable and fair means not inconsistent with any of the above.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that any liability or expense
arose by reason of disabling conduct.
Section 3. DIRECTORS' STANDARDS OF CONDUCT. No person who is or was a
director shall be indemnified under this Article VI for any liabilities or
expenses incurred by reason of advice in that capacity if it is proved that
(1) the act of omission of the person was material to the cause of action
adjudicated in the proceeding, and (a) was committed in bad faith or (b) was
the result of active and deliberate dishonesty; or (2) the person actually
received any improper personal benefit in money, property, or services; or
(3) in the case of any criminal proceeding, the director had reasonable cause
to believe that the act or omission was unlawful.
Section 4. EXPENSES PRIOR TO DETERMINATION. Any liabilities or expenses
of the type described in Section 1 may be paid by the Corporation in advance
of the final disposition of the claim, action, suit or proceeding, as
authorized by the directors in a specific case, (a) upon receipt of a written
undertaking by or on behalf of the indemnitee to repay the advance, unless it
<PAGE>
shall be ultimately determined that such person is entitled to
indemnification; and (b) provided that (i) the indemnitee shall provide
security for that undertaking, or (ii) the Corporation shall be insured
against losses arising by reason of any lawful advance, or (iii) a majority
of a quorum of disinterested, non-party directors, or independent legal
counsel in a written option, shall determine, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe the indemnitee ultimately will be found entitled to
indemnification.
A determination pursuant to subparagraph (c)(iii) of this Section 4
shall not prevent the recovery from any indemnitee of any amount advanced to
such person as indemnification if such person is subsequently determined not
to be entitled to indemnification; nor shall a determination pursuant to said
paragraph prevent the payment of indemnification if such person is
subsequently found to be entitled to indemnification.
Section 5. PROVISIONS NOT EXCLUSIVE. The indemnification provided by
this Article VI shall not be deemed exclusive of any rights to which those
seeking indemnification may be entitled under any law, agreement, vote of
shareholders, or otherwise.
Section 6. GENERAL. No indemnification provided by this Article shall
be inconsistent with the Investment Company Act of 1940, the Securities Act
of 1933 or the Maryland Corporations and Associations Code.
Any indemnification provided by this Article shall continue as to a
person who has ceased to be a director, officer, or employee, and shall inure
to the benefit of the heirs, executors and administrators of such person.
ARTICLE VII
<PAGE>
Capital Stock
Section 1. STOCK CERTIFICATES. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him; provided, however, that certificates
for fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed
with the seal of the Corporation. Any or all of the signatures or the seal
on the certificate may be a facsimile. In case any officer, transfer agent,
or registrar who has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate shall be issued, it may be issued by the
Corporation with the same effect as if such officer, transfer agent, or
registrar were still in office at the date of issue.
Section 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. There shall be
kept at the principal executive office of the Corporation correct and
complete books and records of account of all the business and transactions of
the Corporation. There shall be made available upon request of any
stockholder, in accordance with Maryland law, a record containing the number
of shares of stock issued during a specified period not more than twelve
months before the date of the request and the consideration received by the
Corporation for each such share.
Section 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
<PAGE>
registered holder thereof, or by his attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary or with a transfer
agent or transfer clerk, and on surrender of the certificate or certificates,
if issued, for such shares properly endorsed or accompanied by a duly
executed stock transfer power and on the payment of all taxes thereon. Except
as otherwise provided by law, the Corporation shall be entitled to recognize
the exclusive right of a person in whose name any share or shares stand on
the record of stockholders as the owner of such share or shares for all
purpose including, without limitation, the right to receive dividends or
other distributions and to vote as such owner and the Corporation shall not
be bound to recognize any equitable or legal claim to or interest in any such
share or shares on the part of any other person.
Section 4. RULES AND REGULATIONS. The Board may make such additional
rules and regulations, not inconsistent with these Bylaws, as it may deem
expedient concerning the issue, transfer, and registration of certificates
for shares of stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all certificates
for shares of stock to bear the signature or signatures of any of them.
Section 5. LOST, DESTROYED, OR MUTILATED CERTIFICATES. Upon
notification by the holder of any certificate representing shares of stock of
the Corporation of any loss, destruction, or mutilation of any such
certificate, the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it that the owner thereof
shall allege to have been lost or destroyed or which shall have been
mutilated, and the
<PAGE>
Board may, in its discretion, require such owner or his legal representative
to give to the Corporation bond in such sum as the Board may determine to be
sufficient, and in such form and with such surety or sureties, as the Board
in its absolute discretion shall determine, to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss
or destruction of any such certificate, or issuance of a new certificate.
Anything herein to the contrary notwithstanding, the Board, in its absolute
discretion, may refuse to issue any such new certificate, except pursuant to
legal proceedings under the laws of the State of Maryland.
Section 6. FIXING OF A RECORD DATE FOR DIVIDENDS AND DISTRIBUTIONS. The
Board may fix, in advance, a date not more than sixty days preceding the date
fixed for the payment of any dividend or the making of any distribution or
the allotment of rights to subscribe for securities of the Corporation, or
for the delivery of evidence of rights or evidences of interests arising out
of any change, conversion, or exchange of common stock or other securities,
as the record date for the determination of the stockholders entitled to
receive any such dividend, distribution, allotment, rights, or interests, and
in such case only the stockholders on record at the time so fixed shall be
entitled to receive such dividend, distribution, allotment, rights, or
interests.
Section 7. REGISTERED OWNER OF SHARES. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
to hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
<PAGE>
otherwise provided by the laws of Maryland.
Section 8. INFORMATION TO STOCKHOLDERS AND OTHERS. Any stockholder of
the Corporation or his agent may inspect and copy during usual business hours
the Corporation's Bylaws, minutes of the proceedings of its stockholders,
annual statements of its affairs, and voting trust agreements on file at its
principal office.
Section 9. INVOLUNTARY REDEMPTION OF SHARES. Subject to policies
established by the Board of Directors, the Corporation shall have the right
to involuntarily redeem shares of its common stock if at any time the value
of a stockholder's investment in the Corporation is less than $500.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors,
the name of the Corporation, the year of its incorporation and the words
"Corporate Seal" and "Maryland." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner
reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of December each year.
ARTICLE X
Depositories and Custodians
Section 1. DEPOSITORIES. The funds of the Corporation shall be
<PAGE>
deposited with such banks or other depositories as the Board of Directors of
the Corporation may from time to time determine.
Section 2. CUSTODIANS. All securities and other investments shall be
deposited in the safekeeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every
arrangement entered into with any bank or other company for the safekeeping
of the securities and investments of the Corporation shall contain provisions
complying with the Investment Company Act of 1940, as amended, and the
general rules and regulations thereunder.
Article XI
Execution of Instruments
Section 1. CHECKS, NOTES, DRAFTS, ETC. Checks, notes, drafts,
acceptances, bills of exchange, and other orders or obligations for the
payment of money shall be signed by such officer or officers or person or
persons as the Board of Directors by resolution shall from time to time
designate.
Section 2. SALE OR TRANSFER OF SECURITIES. Stock certificates, bonds,
or other securities at any time owned by the Corporation may be held on
behalf of the Corporation sold, transferred, or otherwise disposed of
pursuant to authorization by the Board and, when so authorized to be held on
behalf of the Corporation or sold, transferred or otherwise disposed of, may
be transferred from the name of the Corporation by the signature of the
President, a Vice President, the Treasurer, the Assistant Treasurer, the
Secretary, or the Assistant Secretary.
Section 3. LOANS. No loan or advance shall be contracted on behalf of
the Corporation, and no note, bond or other evidence of indebtedness shall be
executed or delivered in its name, except as may be authorized by the Board of
<PAGE>
Directors. Any such authorization may be general or limited to specific
loans or advances, or notes, bonds or other evidences of indebtedness. Any
officer or agent of the Corporation so authorized may effect loans and
advances on behalf of the Corporation and in return for any such loans or
advances may execute and deliver notes, bonds or other evidences of
indebtedness of the Corporation.
Section 4. VOTING AS SECURITYHOLDER. The President and such other
person or persons as the Board of Directors may from time to time authorize,
shall each have full power and authority on behalf of the Corporation, to
attend any meeting of securityholders of any corporation in which the
Corporation may hold securities, and to act, vote (or execute proxies to
vote) and exercise in person or by proxy all other rights, powers and
privileges incident to the ownership of such securities, and to execute any
instrument expressing consent to or dissent from any action of any such
corporation without a meeting, subject to such restrictions or limitations as
the Board of Directors may from time to time impose.
Section 5. EXPENSES. Each class of shares of the corporation shall be
charged with all the expenses, costs, charges, reserves or other liabilities
directly attributable to that class and with that proportion of the other
expenses of the corporation, including general administrative expenses and
fees of the investment advisor, accountants and attorneys, which the total
net assets of each class of shares bears to the total net assets of all
classes of shares. The foregoing charges when determined in the manner
prescribed by the Board of Directors shall be conclusive and binding for all
purposes.
ARTICLE XII
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
(deleted)
ARTICLE XIII
ANNUAL STATEMENT
The books of account of the Corporation shall be examined by a firm of
independent public accountants at the close of each annual period of the
Corporation and at such other times as may be directed by the Board. (The
firm of independent public accountants that shall sign or certify the
financial statements of the Corporation that are filed with the Securities
and Exchange Commission shall be selected annually by the Board of Directors
in accordance with the provisions of the Investment Company Act of 1940, as
amended. A report to the stockholders based upon each such examination shall
be mailed to each stockholder of the Corporation of record on such date with
respect to each report as may be determined by the Board, at his address as
the same appears on the books of the Corporation. Such annual statement shall
also be available at the annual meeting of stockholders and be placed on file
at the Corporation's principal office in the State of Maryland. Each such
report shall show the assets and liabilities of the Corporation as of the
close of the annual or quarterly period covered by the report and the
securities in which the funds of the Corporation were then invested. Such
report shall also show the Corporation's income and expenses for the period
from the end of the Corporation's preceding fiscal year to the close of the
annual or quarterly period covered by the report and any other information
required by the investment Company Act of 1940, as amended, and shall set
forth such other matters as the Board or such firm of independent public
accountants shall
<PAGE>
determine.
ARTICLE XIV
Amendments
These Bylaws or any of them may be amended, altered, or repealed at any
regular meeting of the stockholders or at any special meeting of the
stockholders at which a quorum is present or represented, provided that
notice of the proposed amendment, alteration, or repeal be contained in the
notice of such special meeting. These Bylaws, or any of them, may also be
amended, altered, or repealed by the affirmative vote of a majority of the
Board of Directors at any regular or special meeting of the Board of
Directors. A certified copy of these Bylaws, as they may be amended from time
to time, shall be kept at the principal office of the Corporation.
<PAGE>
AMENDMENT TO THE BY-LAWS OF
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
Article II, Section 7 of the By-Laws is amended by adding the
following provision to the second paragraph:
"A proxy with respect to shares held in the name of two or
more persons shall be valid if executed by or on behalf of
any one of them unless at or prior to exercise of the proxy
the Corporation receives a specific written notice to the
contrary from any one of them. A proxy purporting to be
executed by or on behalf of a stockholder shall be deemed
valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
The placing of a stockholder's name on a proxy pursuant to
telephonic or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify
that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such stockholder."
Authorized by vote of the Board of Directors on January 29, 1996
<PAGE>
EXHIBIT 5
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of _________, 1996, by and
between Connecticut Mutual Financial Services Series Fund I, Inc. on behalf of
its Total Return Portfolio (the "Fund"), and OppenheimerFunds, Inc. ("OFI").
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 OFI 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 OFI and OFI 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. OFI 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 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 OFI 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 busines 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) OFI 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 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.
<PAGE>
(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, OFI 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 OFI
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, OFI 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 OFI 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 OFI 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 OFI
of its duties and obligations under this Agreement and under
the Investment Advisers Act of 1940.
3. OTHER DUTIES OF OFI.
OFI shall, at its own expense, employ, and supervise the
activities of, all administrative and clerical personnel or other
firms, agents or contractors, 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 (other than those the
Fund's custodian or transfer agent is contractually obligated to
compile and maintain); 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. OFI shall, at its own cost and expense, also provide
the Fund with adequate office space, facilities and equipment.
4. ALLOCATION OF EXPENSES.
All other costs and expenses not expressly assumed by OFI under
this Agreement, or to be paid by the principal distributor 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
<PAGE>
the Fund may have to indemnify its officers and Directors with
respect thereto. Any officers or employees of OFI or any entity
controlling, controlled by or under common control with OFI, 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 OFI.
The Fund agrees to pay OFI and OFI 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 value of the Fund as of the
close of each business day and payable monthly at the annual
rates set for the in Appendix A.
6. USE OF NAME "OPPENHEIMER."
OFI 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. To the extent necessary to protect OFI's rights to the
name "Oppenheimer" under applicable law, such license shall allow
OFI to inspect, and subject to control by the Fund's Board of
Directors, control the name and quality of services offered by
the Fund under such name. Such license may, upon termination of
this Agreement, be terminated by OFI, 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 OFI in connection with any of its activities, or
licensed by OFI to any other party.
7. PORTFOLIO TRANSACTIONS and BROKERAGE.
(a) OFI 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 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 rovisions of subparagraph "(c)" of this paragraph
"7," the enefit of such investment information or research as may be
of significant assistance to the performance by OFI of its investment
management functions.
(b) OFI 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 OFI on the basis of all
relevant factors and considerations including, insofar as feasible,
the execution capabilities required by the transaction or ransactions;
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
<PAGE>
relevant to the selection of a broker-dealer for particular and
related transactions of the Fund.
(c) OFI shall have discretion, in the interests of the Fund, to allocate
brokerage on the Funds 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 OFI 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 OFI 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 OFI and its investment advisory affiliates with
respect to the accounts as to which they exercise investment
discretion. In reaching such determination, OFI 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, OFI 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.
(d) OFI 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 the
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," OFI
may also consider sales of Fund shares and shares of the other
investment companies managed by OFI or its affiliates as a factor
in the selection of broker-dealers for the Fund's portfolio
transactions.
<PAGE>
8. DURATION.
This Agreement will take effect on the date first set forth above and will
continue in effect until December 31, 1997, 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 OFI 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 OFI (which notice may be waived by OFI) 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 the "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.
11. DISCLAIMER OF SHAREHOLDER LIABILITY.
OFI understands that the obligations of the Fund under this Agreement are
to binding upon any Director or shareholder of the Fund personally, but
bind only the Fund and the Fund's property. OFI represents that it has
notice of the provisions of the Company's Articles of Incorporation
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.
on behalf of Total Return Portfolio
By:
--------------------------------------
OppenheimerFunds, Inc.
By:
--------------------------------------
<PAGE>
APPENDIX A
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $600,000,000 0.625%
Amount over $600,000,000 0.0450%
</TABLE>
<PAGE>
SCHEDULE OF OMITTED INVESTMENT ADVISORY AGREEMENTS
Due to the substantial similarity of the investment
agreements among OppenheimerFunds, Inc. ("OFI") and the
Registrant, on behalf of the respective series of the Registrant,
the following form of investment advisory agreement on behalf of
Total Return Portfolio and this schedule of omitted documents is
filed in accordance with the requirements of Rule 8b-31 under the
Investment Company Act of 1940.
1. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Money Market Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<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>
2. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Income Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $300,000,000 0.575%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
</TABLE>
3. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Government Securities Portfolio.
<PAGE>
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $300,000,000 0.525%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
</TABLE>
4. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Growth Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $300,000,000 0.625%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
</TABLE>
5. Investment Advisory Agreement among OFI and the
Registrant, on behalf of LifeSpan Balanced Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $250,000,000 0.85%
Amount over $250,000,000 0.75%
</TABLE>
-2-
<PAGE>
6. Investment Advisory Agreement among OFI and the
Registrant, on behalf of LifeSpan Capital Appreciation
Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $250,000,000 0.85%
Amount over $250,000,000 0.75%
</TABLE>
7. Investment Advisory Agreement among OFI and the
Registrant, on behalf of LifeSpan Diversified Income Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $250,000,000 0.75%
Amount over $250,000,000 0.65%
</TABLE>
8. Investment Advisory Agreement among OFI and the
Registrant, on behalf of International Portfolio.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI 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:
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
--------------- -----------
<S> <C>
First $250,000,000 1.00%
Amount over $250,000,000 0.90%
</TABLE>
-3-
<PAGE>
EXHIBIT 5.1
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
FORM OF
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
AGREEMENT made as of the ____ day of _______________, 1996, by and among
OppenheimerFunds, Inc. (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 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 Subadviser agree as follows:
1. The Subadviser will regularly provide the Portfolio with
advice concerning the investment management of the Small Capitalization
U.S. 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
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 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, the Portfolio or the Investment Adviser
in any way or otherwise be deemed to be an agent of the Company, the
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
<PAGE>
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 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 Investment 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
anycompensation 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
<PAGE>
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 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
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 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 purchased, 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 the duties of the Subadviser to the
Portfolio, the Subadviser shall not be subject toliabilities to the
Portfolio, the Investment Adviser, the Company, or to any shareholder of the
Portfolio for any error of judgment 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
<PAGE>
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 by
reason of 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 December 31, 1997, 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 of the Company 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 Investment 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
<PAGE>
Directors or the Investment Adviser may from time to time establish
and deliver to the Subadviser.
In addition, the Subadviser, taking into Portfolio 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 Internal
Revenue Code (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
Investment 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.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
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 orsimilar hard copy reproduction)
and delivered or mailed, postpaid, to: Pilgrim Baxter & Associates, Ltd.,
1255 Drummers Lane, Suite 300, Wayne, PS 29087-1549, 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 OppenheimerFunds, Inc., Two World Trade Center, New York, NY
10048, attention: General Counsel.
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.
<PAGE>
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.
OppenheimerFunds, Inc.
By: ________________________________
Its: ________________________________
PILGRIM BAXTER & ASSOCIATES, LTD.
By: ________________________________
Its: ________________________________
<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-Account or Sub-Portfolio as
follows:
(a) the Small Capitalization U.S. equity Sub-Account of the CMIA
LifeSpan Capital Appreciation Account; (b) the Small Capitalization U.S.
equity Sub-Portfolio of the Series Fund I Life Span Capital Appreciation
Portfolio; (c) the Small Capitalization U.S. equity Sub-Account of the CMIA
LifeSpan Balanced Account; and (d) the Small Capitalization U.S. equity
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-Accounts and 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.
<PAGE>
SCHEDULE OF OMITTED INVESTMENT SUBADVISORY AGREEMENT
Due to the substantial similarity of the investment
subadvisory agreements among OppenheimerFunds, Inc. ("OFI") and
Pilgrim, Baxter & Associates, Ltd. ("Pilgrim") for the respective
series of the Registrant, the following form of investment
subadvisory agreement for LifeSpan Balanced Portfolio and this
schedule of omitted documents is filed in accordance with the
requirements of Rule 8b-31 under the Investment Company Act of
1940.
1. Investment Subadvisory Agreement among OFI and
Pilgrim for LifeSpan Capital Appreciation Portfolio.
<PAGE>
EXHIBIT 5.2
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
FORM OF
SUBADVISORY AGREEMENT
AGREEMENT made as of the _____ day of _______________, 1996 by and among
OppenheimerFunds, Inc., a Colorado corporation, (the "Investment
Adviser"), and BEA Associates, a New York General Partnership (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 Capital Appreciation 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 the 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 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
<PAGE>
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 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 the purchases or sales of portfolio 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
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<PAGE>
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 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
Sub-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 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
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<PAGE>
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
wilful misfeasance, bad faith, or gross negligence.
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, the Subadviser shall be
deemed not to have been negligent if it acts in reliance upon written reports
provided by the Investment Adviser, the Company, the Portfolio, or any of
their respective authorized agents.
The Subadviser will indemnify the Investment 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 of the Company 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
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<PAGE>
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
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 Investment 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
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<PAGE>
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 New York.
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, 153 East 53rd Street, 57th Floor, New York, NY 10022.
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 OppenheimerFunds, Inc., Two World Trade Center, New York, NY
10048-0203, Attention: General Counsel.
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.
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<PAGE>
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.
OPPENHEIMERFUNDS, INC.
By: __________________________
Its: _________________________
BEA ASSOCIATES, A General Partnership
By: __________________________
Its: _________________________
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<PAGE>
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 Millon of such assets,
.35% of the next $50 Million of such assets, and
.25% of such assets over $100 Million.
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 High Yield Sub-Portfolio of the CMIA LifeSpan Diversified Income
Portfolio; (b) the High Yield Sub-Portfolio of the Series Fund I LifeSpan
Diversified Income Portfolio; (c) the High Yield Sub-Portfolio of the CMIA
LifeSpan Balanced Portfolio; (d) the High Yield Sub-Portfolio of the Series
Fund I LifeSpan Balanced Portfolio; (e) the High Yield Sub-Portfolio of the
CMIA LifeSpan Capital Appreciation Portfolio; 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
Sub-Portfolios 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 value 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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<PAGE>
SCHEDULE OF OMITTED INVESTMENT SUBADVISORY AGREEMENTS
Due to the substantial similarity of the investment
subadvisory agreements among OppenheimerFunds, Inc. ("OFI") and
BEA Associates ("BEA") for the respective series of the
Registrant, the following form of investment subadvisory agreement
for LifeSpan Balanced Portfolio and this schedule of omitted
documents is filed in accordance with the requirements of Rule 8b-31
under the Investment Company Act of 1940.
1. Investment Subadvisory Agreement among OFI and BEA
for LifeSpan Capital Appreciation Portfolio.
2. Investment Subadvisory Agreement among OFI and BEA
for LifeSpan Diversified Income Portfolio.
<PAGE>
EXHIBIT 5.3
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
OppenheimerFunds, Inc., a Colorado corporation ("OFI"), effective
____________, 1996.
WHEREAS, LifeSpan Balanced Portfolio (the "Fund") is a series of
Connecticut Mutual Financial Services Series Fund I, Inc. (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 OFI 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 OFI 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 OFI under the Advisory Agreement;
WHEREAS, OFI and the Sub-Adviser are investment advisers registered as
such with the Commission, and OFI 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, OFI and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GENERAL PROVISION.
OFI 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 OFI (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 OFI, 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;
(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 OFI;
(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;
<PAGE>
(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 OFI.
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 OFI 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 OFI in any
way or otherwise be deemed to be an agent of the Company, the Fund or
OFI.
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 OFI, to the extent OFI'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 OFI, 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
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 OFI 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 inconnection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OFI 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 OFI 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.
<PAGE>
(e) The Sub-Adviser shall cooperate with OFI by providing OFI 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 OFI.
OFI shall provide (or cause to be provided to) the Sub-Adviser the
following information about the Sub-Account:
(a) cash flow estimates on request;
(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. OFI 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 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
<PAGE>
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 OFI.
(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 equitableand
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 OFI and the Fund's Custodian promptly
of each purchase and sale of a portfolio security, specifying the
name of the issuer, the description and amount or number of shares
of the security purchased 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 OFI 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 OFI shall reasonably request.
6. DURATION.
This Agreement will take effect on __________________, 1996, and
unless earlier terminated pursuant to paragraph 7 shall remain in effect
until December 31, 1998. Thereafter it shall continue in effect from year
to year, so long as such continuance and the continuance of OFI 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
<PAGE>
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 OFI and the Company; or (ii) by the
Company at any time without penalty upon sixty days' written notice to
OFI 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 OFI, 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.
If to OFI:
OppenheimerFunds, Inc.
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:
LifeSpan Balanced Portfolio
3410 South Galena Street
Denver, Colorado 80231-5099
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 OFI, the Sub-Adviser or the Fund, cast in person at
a meeting called for the purpose of voting on such approval.
<PAGE>
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.
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, OFI and the Sub-Adviser have caused this Agreement to
be executed on the day and year first above written.
OppenheimerFunds, Inc.
By: __________________________________
(Name) (Title)
BABSON-STEWART IVORY INTERNATIONAL, a
Partnership
By: __________________________________
(Name) (Title)
<PAGE>
SCHEDULE OF OMITTED INVESTMENT SUBADVISORY AGREEMENT
Due to the substantial similarity of the investment
subadvisory agreements among OppenheimerFunds, Inc. ("OFI") and
Babson-Stewart Ivory International ("Babson") for the respective
series of the Registrant, the following form of investment
subadvisory agreement for LifeSpan Balanced Portfolio and this
schedule of omitted documents is filed in accordance with the
requirements of Rule 8b-31 under the Investment Company Act of
1940.
1. Investment Subadvisory Agreement among OFI and
Babson for LifeSpan Capital Appreciation Portfolio.
2. Investment Subadvisory Agreement among OFI and
Babson for International Portfolio.
<PAGE>
CUSTODIAN CONTRACT
This Contract between Connecticut Mutual Financial Services
Series Fund I, Inc., a corporation organized and existing under
the laws of Maryland, having its principal place of business at
140 Garden Street, Hartford, Connecticut 06154 hereinafter called
the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110,
hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in six
series, the Government Securities Portfolio, Growth Portfolio,
Income Portfolio, International Equity Portfolio, Money Market
Portfolio and Total Return Portfolio (such series together with
all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 17, being
herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as
follows:
<PAGE>
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of
the assets of the Portfolios of the Fund, including securities
which the Fund, on behalf of the applicable Portfolio desires to
be held in places within the United States ("domestic securities")
and securities it desires to be held outside the United States
("foreign securities") pursuant to the provisions of the Articles
of Incorporation. The Fund on behalf of the Portfolio(s) agrees
to deliver to the Custodian all securities and cash of the
Portfolios, and all payments of income, payments of principal or
capital distributions received by it with respect to all
securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares
of capital stock of the Fund representing interests in the
Portfolios, ("Shares") as may be issued or sold from time to time.
The Custodian shall not be responsible for any property of a
Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable
Portfolio(s) from time to time employ one or more sub-custodians,
located in the United States but only in accordance with an
applicable vote by the Board of Directors of the Fund on behalf of
the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on
-2-
<PAGE>
account of any actions or omissions of any sub-custodian so
employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign
securities on behalf of the applicable Portfolio(s) the foreign
banking institutions and foreign securities depositories
designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD BY THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash
property, to be held by it in the United States including
all domestic securities owned by such Portfolio, other than
(a) securities which are maintained pursuant to Section 2.10
in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S.
Department of the Treasury, ollectively referred to herein
as "Securities System" and (b) commercial paper of an issuer
for which State Street Bank and Trust Company acts as
issuing and paying agent ("Direct Paper") which is deposited
and/or maintained in the Direct Paper System of the
Custodian pursuant to Section 2.1OA.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the
-3-
<PAGE>
Custodian or in a Securities System account of the Custodian
or in the Custodian's Direct Paper book entry system account
("Direct Paper System Account") only upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account
of the Portfolio and receipt of payment
therefor;
2) Upon the receipt of payment in connection with
any repurchase agreement related to such
securities entered into by the Portfolio;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.10 hereof;
4) To the depository agent in connection with
tender or other similar offers for securities
of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in
any such case, the cash or other consideration
is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for
transfer into the name of the Portfolio or
-4-
<PAGE>
into the name of any nominee or nominees of
the Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.9
or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1;
or for exchange for a different number of
bonds, certificates or other evidence
representing the same aggregate face amount or
number of units; PROVIDED that, in any such
case, the new securities are to be delivered
to the Custodian;
' 7) Upon the sale of such securities for the
account of the Portfolio, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such securities
except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
-5-
<PAGE>
readjustment of the securities of the issuer
of such securities, or pursuant to provisions
for conversion contained in such securities,
or pursuant to any deposit agreement; provided
that, in any such case, the new securities and
cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, BUT ONLY
against receipt of adequate collateral as
agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which
may be in the form of cash or obligations
issued by the United States government, its
agencies or instrumentalities, except that in
connection with any loans for which collateral
is to be credited to the Custodian's account
-6-
<PAGE>
in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian
will not be held liable or responsible for the
delivery of securities owned by the Portfolio
prior to the receipt of such collateral;
11) For delivery as security in connection with
any borrowings by the Fund on behalf of the
Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions
of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a
broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and
a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options
Clearing Corporation and of any registered
national securities exchange, or of any
similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Portfolio
of the Fund;
-7-
<PAGE>
13) For delivery in accordance with the provisions
of any agreement among the Fund on behalf of
the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the
Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures
Trading Commission and/or any Contract Market,
or any similar organization or organizations,
regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for the Fund, for
delivery to such Transfer Agent or to the
holders of shares in connection with
distributions in kind, as may be described
from time to time in the currently effective
prospectus and statement of additional
information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase
or redemption; and
-8-
<PAGE>
15) For any other proper corporate purpose, BUT
ONLY upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of the
Executive Committee signed by an officer of
the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities
of the Portfolio to be delivered, setting
forth the purpose for which such delivery is
to be made, declaring such purpose to be a
proper corporate purpose, and naming the
person or persons to whom delivery of such
securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held
by the Custodian (other than bearer securities) shall
be registered in the name of the Portfolio or in the
name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which
nominee shall be assigned exclusively to the
Portfolio, UNLESS the Fund has authorized in writing
the appointment of a nominee to be used in common
with other registered investment companies having the
same investment adviser as the Portfolio, or in the
name or nominee name of any agent appointed pursuant
-9-
<PAGE>
to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the
Portfolio under the terms of this Contract shall be
in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall
utilize its best efforts only to timely collect
income due the Fund on such securities and to notify
the Fund on a best efforts basis only of relevant
corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange
offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain
a separate bank account or accounts in the United
States in the name of each Portfolio of the Fund,
subject only to draft or order by the Custodian
acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to
the provisions hereof, all cash received by it from
or for the account of the Portfolio, other than cash
maintained by the Portfolio in a bank account
established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held
by the Custodian for a Portfolio may be deposited by
-10-
<PAGE>
it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or
trust companies as it may in its discretion deem
necessary or desirable; PROVIDED, however, that every
such bank or trust company shall be qualified to act
as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio
be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited
by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that
capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund on behalf of each applicable
Portfolio and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions from the Fund
on behalf of a Portfolio, make federal funds
available to such Portfolio as of specified times
agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment
for Shares of such Portfolio which are deposited into
the Portfolio's account.
-11-
<PAGE>
2.6 COLLECTION OF INCOME. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely
basis all income and other payments with respect to
registered domestic securities held hereunder to
which each Portfolio shall be entitled either by law
or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other
payments with respect to bearer domestic securities
if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent
thereof and shall credit such income, as collected,
to such Portfolio's custodian account. Without
limiting the generality of the foregoing, the
Custodian shall detach and present for payment all
coupons and other income items requiring presentation
as and when they become due and shall collect
interest when due on securities held hereunder.
Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection
therewith, other than to provide the Fund with such
information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the
-12-
<PAGE>
Custodian of the income to which the Portfolio is
properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of a Portfolio in
the following cases only:
1) Upon the purchase of domestic
securities, options, futures contracts
or options on futures contracts for the
account of the Portfolio but only
(a) against the delivery of such
securities or evidence of title to such
options, futures contracts or options on
futures contracts to the Custodian (or
any bank, banking firm or trust company
doing business in the United States or
abroad which is qualified under the
Investment Company Act of 1940, as
amended, to act as a custodian and has
been designated by the Custodian as its
agent for this purpose) registered in
the name of the Portfolio or in the name
of a nominee of the Custodian referred
-13-
<PAGE>
to in Section 2.3 hereof or in proper
form for transfer; (b) in the case of a
purchase effected through a Securities
System, in accordance with the
conditions set forth in Section 2.10
hereof; (c) in the case of a purchase
involving the Direct Paper System, in
accordance with the conditions set forth
in Section 2.10A; (d) in the case of
repurchase agreements entered into
between the Fund on behalf of the
Portfolio and the Custodian, or another
bank, or a broker-dealer which is a
member of NASD, (i) against delivery of
the securities either in certificate
form or through an entry crediting the
Custodian's account at the Federal
Reserve Bank with such securities or
(ii) against delivery of the receipt
evidencing purchase by the Portfolio of
securities owned by the Custodian along
with written evidence of the agreement
by the Custodian to repurchase such
securities from the Portfolio or (e) for
transfer to a time deposit account of
-14-
<PAGE>
the Fund in any bank, whether domestic
or foreign; such transfer may be
effected prior to receipt of a
confirmation from a broker and/or the
applicable bank pursuant to Proper
Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange
or surrender of securities owned by the
Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of
Shares issued by the Portfolio as set
forth in Article 4 hereof;
4) For the payment of any expense or
liability incurred by the Portfolio,
including but not limited to the
following payments for the account of
the Portfolio: interest, taxes,
management, accounting, transfer agent
and legal fees, and operating expenses
of the Fund whether or not such expenses
are to be in whole or part capitalized
or treated as deferred expenses;
-15-
<PAGE>
5) For the payment of any dividends on
Shares of the Portfolio declared
pursuant to the governing documents of
the Fund;
6) For payment of the amount of dividends
received in respect of securities sold
short;
7) For any other proper purpose, BUT ONLY
upon receipt of, in addition to Proper
Instructions from the Fund on behalf of
the Portfolio, a certified copy of a
resolution of the Board of Directors or
of the Executive Committee of the Fund
signed by an officer of the Fund and
certified by its Secretary or an
Assistant Secretary, specifying the
amount of such payment, setting forth
the purpose for which such payment is to
be made, declaring such purpose to be a
proper purpose, and naming the person or
persons to whom such payment is to be
made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. Except as specifically stated
otherwise in this Contract, in any and every case
-16-
<PAGE>
where payment for purchase of domestic securities for
the account of a Portfolio is made by the Custodian
in advance of receipt of the securities purchased in
the absence of specific written instructions from the
Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if
the securities had been received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time
or times in its discretion appoint (and may at any
time remove) any other bank or trust company which is
itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent
to carry out such of the provisions of this Article 2
as the Custodian may from time to time direct;
PROVIDED, however, that the appointment of any agent
shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities
owned by a Portfolio in a clearing agency registered
with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department
-17-
<PAGE>
of the Treasury and certain federal agencies,
collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules
and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the
Portfolio in a Securities System
provided that such securities are
represented in an account ("Account") of
the Custodian in the Securities System
which shall not include any assets of
the Custodian other than assets held as
a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with
respect to securities of the Portfolio
which are maintained in a Securities
System shall identify by book-entry
those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities
purchased for the account of the
Portfolio upon (i) receipt of advice
from the Securities System that such
-18-
<PAGE>
securities have been transferred to the
Account, and (ii) the making of an entry
on the records of the Custodian to
reflect such payment and transfer for
the account of the Portfolio. The
Custodian shall transfer securities sold
for the account of the Portfolio upon
(i) receipt of advice from the
Securities System that payment for such
securities has been transferred to the
Account, and (ii) the making of an entry
on the records of the Custodian to
reflect such transfer and payment for
the account of the Portfolio. Copies of
all advices from the Securities System
of transfers of securities for the
account of the Portfolio shall identify
the Portfolio, be maintained for the
Portfolio by the Custodian and be
provided to the Fund at its request.
Upon request, the Custodian shall
furnish the Fund on behalf of the
Portfolio confirmation of each transfer
to or from the account of the Portfolio
in the form of a written advice or
-19-
<PAGE>
notice and shall furnish to the Fund on
behalf of the Portfolio copies of daily
transaction sheets reflecting each day's
transactions in the Securities System
for the account of the Portfolio.
4) The Custodian shall provide the Fund for
the Portfolio with any report obtained
by the Custodian on the Securities
System's accounting system, internal
accounting control and procedures for
safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received from
the Fund on behalf of the Portfolio the
initial or annual certificate, as the
case may be, required by Article 14
hereof;
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6) Anything to the contrary in this
Contract notwithstanding, the Custodian
shall be liable to the Fund for the
benefit of the Portfolio for any loss or
damage to the Portfolio resulting from
use of the Securities System by reason
of any negligence, misfeasance or
misconduct of the Custodian or any of
its agents or of any of its or their
employees or from failure of the
Custodian or any such agent to enforce
effectively such rights as it may have
against the Securities System; at the
election of the Fund, it shall be
entitled to be subrogated to the rights
of the Custodian with respect to any
claim against the Securities System or
any other person which the Custodian may
have as a consequence of any such loss
or damage if and to the extent that the
Portfolio has not been made whole for
any such loss or damage.
2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER
SYSTEM. The Custodian may deposit and/or maintain
securities owned by a Portfolio in the Direct Paper
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System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in
the Direct Paper System will be effected
in the absence of Proper Instructions
from the Fund on behalf of the
Portfolio;
2) The Custodian may keep securities of
the Portfolio in the Direct Paper
System only if such securities are
represented in an account
("Account") of the Custodian in the
Direct Paper System which shall not
include any assets of the Custodian
other than assets held as a
fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with
respect to securities of the
Portfolio which are maintained in
the Direct Paper System shall
identify by book-entry those
securities belonging to the
Portfolio;
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4) The Custodian shall pay for
securities purchased for the account
of the Portfolio upon the making of
an entry on the records of the
Custodian to reflect such payment
and transfer of securities to the
account of the Portfolio. The
Custodian shall transfer securities
sold for the account of the
Portfolio upon the making of an
entry on the records of the
Custodian to reflect such transfer
and receipt of payment for the
account of the Portfolio;
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5) The Custodian shall furnish the Fund
on behalf of the Portfolio
confirmation of each transfer to or
from the account of the Portfolio,
in the form of a written advice or
notice, of Direct Paper on the next
business day following such transfer
and shall furnish to the Fund on
behalf of the Portfolio copies of
daily transaction sheets reflecting
each day's transaction in the
Securities System for the account of
the Portfolio;
6) The Custodian shall provide the Fund
on behalf of the Portfolio with any
report on its system of internal
accounting control as the Fund may
reasonably request from time to
time.
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt
of Proper Instructions from the Fund on behalf of
each applicable Portfolio establish and maintain a
segregated account or accounts for and on behalf of
each such Portfolio, into which account or accounts
may be transferred cash and/or securities, including
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securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance
with the provisions of any agreement among the Fund
on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission
merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered
national securities exchange (or the Commodity
Futures Trading Commission or any registered contract
market), or of any similar organization or
organizations, regarding escrow or other arrangements
in connection with transactions by the Portfolio,
(ii) for purposes of segregating cash or government
securities in connection with options purchased, sold
or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the
Portfolio, (iii) for the purposes of compliance by
the Portfolio with the procedures required by
investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment
companies and (iv) for other proper corporate
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purposes, BUT ONLY, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions from
the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or
an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The
Custodian shall execute ownership and other
certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or
other payments with respect to domestic securities of
each Portfolio held by it and in connection with
transfers of securities.
2.13 PROXIES. The Custodian shall, with respect to the
domestic securities held hereunder, cause to be
promptly executed by the registered holder of such
securities, if the securities are registered
otherwise than in the name of the Portfolio or a
nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Portfolio
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such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.
Subject to the provisions of Section 2.3, the
Custodian shall transmit promptly to the Fund for
each Portfolio all written information (including,
without limitation, pendency of calls and maturities
of domestic securities and expirations of rights in
connection therewith and notices of exercise of call
and put options written by the Fund on behalf of the
Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the
Custodian from issuers of the securities being held
for the Portfolio. With respect to tender or
exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information
received by the Custodian from issuers of the
securities whose tender or exchange is sought and
from the party (or his agents) making the tender or
exchange offer. If the Portfolio desires to take
action with respect to any tender offer, exchange
offer or any other similar transaction, the Portfolio
shall notify the Custodian at least three business
days prior to the date on which the Custodian is to
take such action.
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3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS
The Fund hereby authorizes and instructs the
Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained
outside the United States the foreign banking
institutions and foreign securities depositories
designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper
Instructions," as defined in Section 5 of this
Contract, together with a certified resolution of the
Fund's Board of Directors, the Custodian and the Fund
may agree to amend Schedule A hereto from time to
time to designate additional foreign banking
institutions and foreign securities depositories to
act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to
cease the employment of any one or more such
sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the
securities and other assets maintained in the custody
of the foreign sub-custodians to: (a) "foreign
securities," as defined in paragraph (c)(l) of
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Rule 17f-5 under the Investment Company Act of 1940,
and (b) cash and cash equivalents in such amounts as
the Custodian or the Fund may determine to be
reasonably necessary to effect the Portfolio's
foreign securities transactions.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may
otherwise be agreed upon in writing by the Custodian
and the Fund, assets of the Portfolios shall be
maintained in foreign securities depositories only
through arrangements implemented by the foreign
banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5
hereof.
3.4 SEGREGATION OF SECURITIES. The Custodian shall
identify on its books as belonging to each applicable
Portfolio of the Fund, the foreign securities of such
Portfolios held by each foreign sub-custodian. Each
agreement pursuant to which the Custodian employs a
foreign banking institution shall require that such
institution establish a custody account for the
Custodian on behalf of the Fund for each applicable
Portfolio of the Fund and physically segregate in
each account, securities and other assets of the
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Portfolios, and, in the event that such institution
deposits the securities of one or more of the
Portfolios in a foreign securities depository, that
it shall identify on its books as belonging to the
Custodian, as agent for each applicable Portfolio,
the securities so deposited.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each
agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit 1
hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right,
charge, security interest, lien or claim of any kind
in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial
ownership for the assets of each Portfolio will be
freely transferable without the payment of money or
value other than for custody or administration;
(c) adequate records will be maintained identifying
the assets as belonging to each applicable Portfolio;
(d) officers of or auditors employed by, or other
representatives of the Custodian, including to the
extent permitted under applicable law the independent
public accountants for the Fund, will be given access
to the books and records of the foreign banking
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institution relating to its actions under its
agreement with the Custodian; and (e) assets of the
Portfolios held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or
its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon
request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of
the Fund to be afforded access to the books and
records of any foreign banking institution employed
as a foreign sub-custodian insofar as such books and
records relate to the performance of such foreign
banking institution under its agreement with the
Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to
the Fund from time to time, as mutually agreed upon,
statements in respect of the securities and other
assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an
identification of entities having possession of the
Portfolio(s) securities and other assets and advices
or notifications of any transfers of securities to or
from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of
each applicable Portfolio indicating, as to
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securities acquired for a Portfolio, the identity of
the entity having physical possession of such
securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT
(a) Except as otherwise provided in paragraph (b) of
this Section 3.8, the provision of Sections 2.2 and
2.7 of this Contract shall apply, MUTATIS MUTANDIS to
the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to
the contrary, settlement and payment for securities
received for the account of each applicable Portfolio
and delivery of securities maintained for the account
of each applicable Portfolio may be effected in
accordance with the customary established securities
trading or securities processing practices and
procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to
a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of
receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such
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entity's nominee to the same extent as set forth in
Section 2.3 of this Contract, and the Fund agrees to
hold any such nominee harmless from any liability as
a holder of record of such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement
pursuant to which the Custodian employs a foreign
banking institution as a foreign sub-custodian shall
require the institution to exercise reasonable care
in the performance of its duties and to indemnify,
and hold harmless, the Custodian and each Fund from
and against any loss, damage, cost, expense,
liability or claim arising out of or in connection
with the institution's performance of such
obligations. At the election of the Fund, it shall
be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a
foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim
if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense,
liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be
liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with
respect to sub-custodians generally in this Contract
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and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S.
bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage,
cost, expense, liability or claim resulting from
nationalization, expropriation, currency
restrictions, or acts of war or terrorism or any loss
where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating
custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility
to the Fund for any loss due to such delegation,
except such loss as may result from
(a) political-risk (including, but not limited to,
exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts
of God, nuclear incident or other losses under
circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
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3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the
Custodian to advance cash or securities for any
purpose for the benefit of a Portfolio including the
purchase or sale of foreign exchange or of contracts
for foreign exchange, or in the event that the
Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of
this Contract, except such as may arise from its or
its nominee's own negligent action, negligent failure
to act or willful misconduct, any property at any
time held for the account of the applicable Portfolio
shall be security therefor and should the Fund fail
to repay the Custodian promptly, the Custodian shall
be entitled to utilize available cash and to dispose
of such Portfolio's assets to the extent necessary to
obtain reimbursement.
3.12 MONITORING RESPONSIBILITIES. The Custodian shall
furnish annually to the Fund, during the month of
June, information concerning the foreign
sub-custodians employed by the Custodian. Such
information shall be similar in kind and scope to
that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event
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that the Custodian learns of a material adverse
change in the financial condition of a foreign
sub-custodian or any material loss of the assets of
the Fund or in the case of any foreign sub-custodian
not the subject of an exemptive order from the
Securities and Exchange Commission is notified by
such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity
has declined below $200 million (in each case
computed in accordance with generally accepted U.S.
accounting principles).
3.13 BRANCHES OF U.S. BANKS
(a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the
custody of the Portfolio's assets are maintained in a
foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the
qualification set forth in Section 26(a) of said Act.
The appointment of any such branch as a sub-custodian
shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the
United Kingdom shall be maintained in an interest
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bearing account established for the Fund with the
Custodian's London branch, which account shall be
subject to the direction of the Custodian, State
Street London Ltd. or both.
3.14 TAX LAW
The Custodian shall have no responsibility or
liability for any obligations now or hereafter
imposed on the Fund or the Custodian as custodian of
the Fund by the tax law of the United States of
America or any state or political subdivision
thereof. It shall be the responsibility of the Fund
to notify the Custodian of the obligations imposed on
the Fund or the Custodian as custodian of the Fund by
the tax law of jurisdictions other than those
mentioned in the above sentence, including
responsibility for withholding and other taxes,
assessments or other governmental charges,
certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such
tax law shall be to use reasonable efforts to assist
the Fund with respect to any claim for exemption or
refund under the tax law of jurisdictions for which
the Fund has provided such information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
OF THE FUND.
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The Custodian shall receive from the distributor for the
Shares or from the Transfer Agent of the Fund and deposit into the
account of the appropriate Portfolio such payments as are received
for Shares of that Portfolio issued or sold from time to time by
the Fund. The Custodian will provide timely notification to the
Fund on behalf of each such Portfolio and the Transfer Agent of
any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but
subject to the limitations of the Articles of Incorporation and
any applicable votes of the Board of Directors of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares of the
Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to
the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually
agreed upon from time to time between the Fund and the Custodian.
5. PROPER INSTRUCTIONS.
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Proper Instructions as used throughout this Contract means a
writing signed or initialled by one or more person or persons as
the Board of Directors shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type
of transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give
such instructions with respect to the transaction involved. The
Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved
by the Board of Directors, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors and the
Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolio's assets. For purposes of this
Section, Proper Instructions shall include instructions received
by the Custodian pursuant to any three-party agreement which
requires a segregated asset account in accordance with Section
2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express
authority from the Fund on behalf of each applicable Portfolio:
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1) make payments to itself or others for minor expenses
of handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments shall
be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Portfolio except as otherwise directed by the Board of
Directors of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority
of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors pursuant
to the Articles of Incorporation as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
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8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME.
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Directors of the Fund to keep the books of account of each
Portfolio and/or compute the net asset value per share of the
outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep
such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily
the net income of the Portfolio as described in the Fund's
currently effective prospectus related to such Portfolio and shall
advise the Fund and the Transfer Agent daily of the total amounts
of such net income and, if instructed in writing by an officer of
the Fund to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components. The
calculations of the net asset value per share and the daily income
of each Portfolio shall be made at the time or times described
from time to time in the Fund's currently effective prospectus
related to such Portfolio.
9. RECORDS.
The Custodian shall with respect to each Portfolio create
and maintain all records relating to its activities and
obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940,
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with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder. All such records shall be the property of
the Fund and shall at all times during the regular business hours
of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Fund and employees and agents
of the Securities and Exchange Commission. The Custodian shall,
at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT.
The Custodian shall take all reasonable action, as the Fund
on behalf of each applicable Portfolio may from time to time
request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and
Exchange Commission and with respect to any other requirements of
such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS.
The Custodian shall provide the Fund, on behalf of each of
the Portfolios at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for
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safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of sufficient
scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
12. COMPENSATION OF CUSTODIAN.
12.1 The Custodian shall be entitled to reasonable
compensation for its services and expenses as
Custodian. Specific fees and charges are contained
in the Fee Schedule attached hereto.
12.2 The fees and charges stated in the Fee Schedule shall
be fixed for a period of five years from the date of
this Agreement. Thereafter the fees and charges
shall be renegotiated each year, but will not exceed
the previous year's fees and charges adjusted for
increases in the Consumer Price Index of the previous
year in the Greater Boston Area as published by the
Federal Reserve Bank of Boston, or such other index
as the parties may agree.
12.3 In no event shall State Street charge fees and
charges stated herein that exceed the fees and
charges charged other mutual funds that have the same
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or less amount of Fund Net Assets maintained by State
Street. In no event shall this provision allow the
Fund to review the fees and charges of State Street's
other customers or the books and records of State
Street.
12.4 State Street shall dedicate a full time project
manager for the process of the conversion of the
Funds and shall waive all costs associated with the
conversion of the Funds to State Street.
12.5 The fees and charges shall be subject to a
performance standard as set out in the Performance
Standard Schedule attached hereto.
13. RESPONSIBILITY OF CUSTODIAN.
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to
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the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a
foreign banking institution appointed pursuant to the provisions
of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States
(except as specifically provided in Article 3.10) and, regardless
of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch
of a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from, or caused by, the direction of
or authorization by the Fund to maintain custody of any securities
or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism.
If the Fund on behalf of a Portfolio requires the Custodian
to take any action with respect to securities, which action
involves the payment of money or which action may, in the opinion
of the Custodian, result in the Custodian or its nominee assigned
to the Fund or the Portfolio being liable for the payment of money
or incurring liability of some other form, the Fund on behalf of
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the Portfolio, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates,
subsidiaries or agents to advance cash or securities for any
purpose (including but not limited to securities settlements,
foreign exchange contracts and assumed settlement) for the benefit
of a Portfolio including the purchase or sale of foreign exchange
or of contracts for foreign exchange or in the event that the
Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at
any time held for the account of the applicable Portfolio shall be
security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available
cash and to dispose of such Portfolio's assets to the extent
necessary to obtain reimbursement.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
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<PAGE>
prepaid to the other party, such termination to take effect not
sooner than one hundred twenty (120) days after the date of such
delivery or mailing by the Custodian and sixty (60) days after the
date of such delivery or mailing by the Fund; PROVIDED, however
that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Directors of the Fund has approved the initial use of a
particular Securities System by such Portfolio and the receipt of
an annual certificate of the Secretary or an Assistant Secretary
that the Board of Directors has reviewed the use by such Portfolio
of such Securities System, as required in each case by Rule 17f-4
under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under Section
2.10A hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of
Directors has approved the initial use of the Direct Paper System
by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors
has reviewed the use by such Portfolio of the Direct Paper System;
PROVIDED FURTHER, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal
or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of
one or more of the Portfolios may at any time by action of its
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<PAGE>
Board of Directors (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the
event of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the happening
of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation
as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and
disbursements.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Directors of the
Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed
and in the form for transfer, all securities of each applicable
Portfolio then held by it hereunder and shall transfer to an
account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors of the Fund, deliver at the
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<PAGE>
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Directors
shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian
shall have the right to deliver to a bank or trust company, which
is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000,
all securities, funds and other properties held by the Custodian
on behalf of each applicable Portfolio and all instruments held by
the Custodian relative thereto and all other property held by it
under this Contract on behalf of each applicable Portfolio and to
transfer to an account of such successor custodian all of the
securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of
the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period
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<PAGE>
as the Custodian retains possession of such securities, funds and
other properties and the provisions of this Contract relating to
the duties and obligations of the Custodian shall remain in full
force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Contract, the
Custodian and the Fund on behalf of each of the Portfolios, may
from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract.
Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto,
PROVIDED that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any
provision of the Articles of Incorporation of the Fund. No
interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Contract.
17. ADDITIONAL FUNDS.
In the event that the Fund establishes one or more series of
Shares in addition to the Government Securities Portfolio, Growth
Portfolio, Income Portfolio, International Equity Portfolio, Money
Market Portfolio and Total Return Portfolio with respect to which
it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in
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<PAGE>
writing, and if the Custodian agrees in writing to provide such
services, such series of Shares shall become a Portfolio
hereunder.
18. MASSACHUSETTS LAW TO APPLY.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth
of Massachusetts.
19. PRIOR CONTRACTS.
This Contract Supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of each of
the Portfolios and the Custodian relating to the custody of the
Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the 28th day of January, 1993.
ATTEST CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
/s/ Everett Clark By /s/ Linda Napoli
---------------------- ----------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
J. Curran By /s/ illegible signature
---------------------- ----------------------------
Assistant Secretary Executive Vice President
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<PAGE>
STATE STREET BANK AND TRUST COMPANY
CONSOLIDATED CUSTODIAN FEE SCHEDULE
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
I. ADMINISTRATION
The following schedule represents the consolidated fee
schedule for all assets in:
Connecticut Mutual Investment Accounts, Inc.
Connecticut Mutual Financial Services Series Fund I, Inc.
Separate Accounts
A. CUSTODY
INCLUDES: Maintaining custody of fund assets. Settling
portfolio purchases and sales. Reporting buy and sell
fails. Determining and collecting portfolio incomes.
Making cash disbursements and reporting cash
transactions. Monitoring corporate actions.
Withholding foreign taxes. Filing foreign tax reclaims.
FUND NET ASSETS ANNUAL FEE
First $1 Billion .005 of 1%
Excess of $1 Billion .0025 of 1%
B. PORTFOLIO AND FUND ACCOUNTING
INCLUDES: Maintaining investment ledgers, providing
selected portfolio transactions, position and income
reports. Maintaining general ledger and capital stock
accounts. Preparing daily trial balance. Calculating
net asset value daily, calculating fund 7-day yield.
Providing selected general ledger reports. Securities
yield or market value quotations will be provided to
State Street by the fund or via State Street's pricing
services.
THERE WILL BE AN ANNUAL CHARGE OF $15,000 PER DOMESTIC
PORTFOLIO
<PAGE>
II. GLOBAL CUSTODY
INCLUDES: Maintaining custody of fund assets. Settling
portfolio purchases and sales. Reporting buy and sell
fails. Determining and collecting portfolio income.
Making cash disbursements and reporting cash
transactions. Monitoring corporate actions.
Withholding foreign taxes. Filing foreign tax reclaims.
*GROUP I *GROUP II *GROUP III *GROUP IV *GROUP V
Euroclear Australia Austria Finland Argentina
Germany Canada Belgium Philippines Brazil
Japan Denmark Italy Korea Chile
France Norway Mexico Taiwan
Ireland Hong Kong Portugal Venezuela
Netherlands Indonesia Singapore
New Spain
Zealand Thailand
Sweden Turkey
Switzerland Malaysia
U.K.
A. HOLDING FEES (BASIS POINTS PER PORTFOLIO PER ANNUM):
GROUP I GROUP II GROUP III GROUP IV GROUP V
First $ 50 Million 5.0 11.0 15.0 22.0 35.0
Next $ 50 Million 4.0 10.0 14.0 20.0 30.0
Over $100 Million 3.0 8.0 3.0 18.0 25.0
B. TRADING FEES (PER TRADE):
GROUP I GROUP II GROUP III GROUP IV GROUP V
Trades $25 $40 $55 $60 $100
III. PORTFOLIO TRADES
FOR EACH LINE ITEM PROCESSED:
State Street Bank Repos $ 7.00
Boston commercial paper $16.00
DTC or Fed Book Entry $12.00
Physical Settlements/foreign Trade/PT $25.00
Maturity Collections $ 8.00
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<PAGE>
IV. OPTIONS
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
V. LENDING OF SECURITIES
Deliver loaned securities versus cash collateral $20.00
Deliver Loaned securities versus securities
collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of
loaned securities $15.00
Delivery securities collateral versus receipt
of loaned securities $25.00
Loan administration mark to market per
day, per loan $ 3.00
VI. INTEREST RATE FUTURES
Transactions no security movement $ 8.00
VII. DIVIDEND CHARGES
(For items held at the Request of Traders over
record date in street form) $50.00
VIII. SPECIAL SERVICES
Fees for activities of a nonrecurring nature such as fund
consolidations or reorganizations, extraordinary security
shipments and the preparation of special reports will be
subject to negotiation.
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<PAGE>
IX. OUT-OF-POCKET EXPENSES
This charge will be levied on foreign account assets only.
A billing for the recovery of applicable out-of-pocket
expenses will be made as of the end of each month. Out-of-
pocket expenses include, but are not limited to the
following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer $8.00 Each
Transfer Fees
Subcustodian charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return check items over $2,500
$4.25
GNMA transfer $15 each
CONNECTICUT MUTUAL FINANCIAL STATE STREET BANK AND TRUST CO.
SERVICES SERIES FUND I, INC.
By: Linda M. Napoli By: DONALD E. DOHERTY, JR.
------------------------------ -------------------------------
Title: Treasurer Title: Vice President
--------------------------- ----------------------------
Date: 1/28/93 Date: 1/26/93
---------------------------- -----------------------------
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<PAGE>
PERFORMANCE STANDARDS
CONNECTICUT MUTUAL - SERIES FUND I
PERFORMANCE OBJECTIVE STANDARD
Accurate computation of the NAV per share and
Submission to Variable Annuity Service Centers 99.5%
The collection and crediting of interest and dividends 99.95%
FED Credited same day as receipt
PTC Credited same day as receipt
DTC Credited same day as receipt
Physical Credited same day as receipt
Defaulted Security Payments Upon receipt
Timely settlement of trades 99.5%
Timely and accurate receipt of reports by agreed
upon delivery date 95%
Delivery of Cash Availability by 10:00 AM 99.5%
This assumes capital stock activity is received by 9:30 AM
PERFORMANCE FEE ADJUSTMENT
If standards are not met then a 1% fee reduction will be applied to
the fund complex. The standards will be measured on an annual
basis and the adjustment will occur as a reduction in following
year's fees.
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<PAGE>
EXHIBIT 8.1
February 8, 1995
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This letter is to advise you that Connecticut Mutual Financial
Services Series Fund I, Inc. (the "Fund") intends to register,
qualify, and offer additional shares in the following new
Portfolios to the general public: LifeSpan Capital Appreciation
Portfolio, LifeSpan Balanced Portfolio, and LifeSpan Diversified
Income Portfolio (collectively, the "New Portfolios").
In accordance with the Additional Funds provision in Section 17 of
the Custodian Contract dated January 28, 1993 between the Fund and
State Street Bank and Trust Company, the Fund hereby requests that
you act as Custodian for the new Portfolios under the terms of the
respective contract.
Please indicate your acceptance of the foregoing by executing two
copies of this letter Agreement, returning one to the Fund and
retaining one copy for your records.
By: /s/ Ann F. Lomelli
----------------------------------------
Ann F. Lomelli, Secretary
Agreed to this 8th day of February, 1995
STATE STREET BANK AND TRUST COMPANY
By: /s/State Street Bank and Trust Company
----------------------------------------
Vice President
<PAGE>
SERVICE CONTRACT
THIS AGREEMENT is made effective the __th day of _______,
1996, between CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I,
INC. (hereinafter referred to as the "Company"), a Maryland
corporation, having its principal place of business at 3410 South
Galena Street, Denver, Colorado 80231 on behalf of each series of
the Company designated by the Company to OFS on Exhibit 1 to this
Agreement (each series is hereinafter referred to as a "Fund") as
such Exhibit may be amended from time to time to add additional
series of the Company, and OPPENHEIMERFUNDS SERVICES, a division
of OPPENHEIMERFUNDS, INC., a Colorado corporation ("hereinafter
referred to as "OFS") having its principal place of business at
3410 South Galena Street, Denver, Colorado 80231.
WITNESSETH:
WHEREAS, the Company desires that OFS perform certain
registrar and transfer agency services for the Fund, as more
specifically set forth in Schedule A to this Agreement.
THEREFORE, the parties hereto agree as follows:
1. SERVICES TO BE PERFORMED BY OFS.
The services to be performed for the Funds by OFS are
set forth in Schedule A to this Agreement, which Schedule is
incorporated as part of this Agreement. OFS shall perform such
services as registrar, transfer agent, dividend and distribution
<PAGE>
disbursing agent, redemption agent, clearing agent and exchange
agent or as service agent for the Funds. OFS hereby represents to
the Company that it is, and during the term of this Agreement and
any renewals hereof will continue to be, an owner or authorized
licensee for the computer data processing systems used by OFS in
the rendition of services hereunder.
2. ADDITIONAL SERVICES.
OFS also agrees to perform such additional services
within its data processing and shareholder services capacities as
may be requested from time to time by a Fund, provided that such
services are the subject of an amendment to Schedule A hereof
executed by the parties hereto in the manner provided herein for
amendments to this Agreement.
3. FEES.
A. METHOD OF CALCULATING FEES PAID BY THE FUND. OFS
will render the services it agrees hereunder to provide to each
Fund on a cost basis to be determined as hereinafter provided.
Each Fund will pay OFS an amount (the "Fund's Share") of OFS's
"Reimbursable Expenses" as defined in subparagraph B of this
section, as frequently as requested by OFS, such amounts to be
paid by the Fund when billed by OFS for expenses incurred, or to
be prepaid based on estimates by OFS if such prepayment
arrangement is approved by the Board of Directors of the Company.
Any such estimates upon which prepayments are made shall be
verified and adjusted monthly thereafter in accordance with OFS's
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<PAGE>
allocated costs, as described in subparagraph E below. All
servicing and transaction fees or charges, required by a Fund's
then-current prospectus to be paid by an investor in the Fund's
shares, will be collected by OFS and credited against the Fund's
Share of Reimbursable Expenses. Any credit for fees payable for
an investor's purchase of, or exchange for, the shares of any
other investment company for which OFS, or any subsidiary or
affiliate of OFS acts as a general distributor, will be shared
equally between applicable Fund and such other investment company.
B. DESCRIPTION OF "REIMBURSABLE EXPENSES." For the
purposes of this Agreement, the "Reimbursable Expenses" of OFS
shall include, in addition to the expenses described in
subparagraphs (1) and (2) of this subparagraph B, any operating
and overhead expenses as may be paid or incurred by OFS to provide
such personnel, equipment, telephone lines, consulting services,
account collection services, supplies, space and facilities,
including without limitation compute tape transmission facilities
and services and computer time, as shall in the good faith
judgment of OFS be necessary or desirable for the effective
performance of shareholder account servicing, redemption, receipt
and processing of the purchase of a Fund's shares, dividend or
distribution disbursing and transfer agency services for (a) all
investment companies (including each Fund) with which OFS or a
subsidiary has entered into a Service Contract and for which OFS,
or a subsidiary or affiliate of OFS, acts in the capacity of
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<PAGE>
investment adviser, (b) the related unit investment trusts, if
any, of the foregoing investment companies, other than unit
investment trusts which operate as a separate account of an
insurance company, and (c) the principal underwriters of any such
investment companies or unit investment trust (hereinafter the
entities described in (a), (b), and (c) are jointly and severally
referred to as "Participants") as well as for the performance of
such data processing and administrative functions or services as
may be required by OFS or any subsidiary to perform the services
required hereunder. Reimbursable Expenses of OFS shall also
include without limitation:
(1) The cost, including without limitation the
personnel costs, of any computer modifications, amendments,
testing or monitoring of the computer data processing system used
by OFS for the performance of services for the Participants which
may be deemed by OFS to be necessary or desirable for the
maintenance or improvement of such data processing system; and
(2) Such general executive, internal audit and
administrative expenses of OFS as are properly apportioned, on a
basis capable of reasonable substantiation, to the functions set
forth above in this subparagraph B to be performed by OFS. Such
costs are costs of OFS which are allocated in accordance with
subparagraph C below.
C. DETERMINATION OF FUND'S SHARE OF REIMBURSABLE
EXPENSES. Each Fund's Share of the Reimbursable Expenses of OFS
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<PAGE>
for all participants will be determined by the use of allocation
formulae set forth in subparagraph D below, which allocation
formulae shall be:
(1) No more or less advantageous to a Fund than to
any of the other of such Participants;
(2) Consistent with and governed by the provisions
of the Distributor's Agreement in effect, from time to time,
between a Fund and its general distributor relating to the
allocation of costs between that Fund and its general distributor;
(3) With the full cooperation of OFS, reviewed at
least annually by the auditors of the Company to determine the
appropriateness of the Reimbursable Expenses of OFS and the
allocation formulae used to determine each Fund's Share of such
Reimbursable Expenses; and
(4) In no event shall a Fund's Share include any
expense for services in connection with the distribution of that
Fund's shares which are or may hereafter be provided by broker-
dealers or financial institutions with respect to accounts for
their customers owning shares of any investment company.
D. COST ALLOCATION. Subject to the foregoing, each
Fund's Share of the Reimbursable Expenses of OFS shall be computed
in accordance with the allocation formulae and procedures set
forth in OFS's "Cost Accounting Manual and Job Procedures,"
compiled and maintained by OFS, as such document may be amended
from time to time by OFS, provided that OFS shall notify that Fund
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<PAGE>
of any material changes which shall change the method of
allocation of the Fund's Share of Reimbursable Expenses, and such
changes shall be approved by the Board of the Company. Such
Manual shall be reviewed periodically by the Company's auditors in
connection with the annual review described in subparagraph
3(C)(3) above.
E. EXPENSE REPORTS. OFS shall submit to each Fund a
monthly report setting forth in reasonable detail the Reimbursable
Expenses that OFS has paid or incurred during such month (and on a
year-to-date basis) together with a statement of the Fund's Share
of such Reimbursable Expenses.
4. REIMBURSEMENT OF OTHER EXPENSES.
In addition to paying its Share of Reimbursable
Expenses, each Fund also will promptly reimburse OFS or prepay OFS
based on estimates by OFS if such prepayment arrangement is
approved by the Company's Board (such estimates to be verified and
adjusted monthly thereafter in accordance with actual allocated
costs), for the following:
(a) Out-of-pocket expenses, including without
limitation expenses for postage, the procurement and/or printing
of share certificates; shareholder statements; envelopes; labels;
dividend, distribution or redemption checks; notices; reports; tax
forms; letters; and all other forms or printed material which may
be required for the performance by OFS of the functions and
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<PAGE>
services for each Fund pursuant to the provisions of this
Agreement.
(b) All direct telephone, telegraph, telecopier or
other communications expenses necessarily incurred by OFS in
connection with OFS's communications with each Fund's custodian,
investment adviser, shareholders or others which may be required
for the performance by OFS of the functions and services for that
Fund pursuant to the provisions of this Agreement;
(c) Delivery and bonding charges incurred by OFS in the
transmission of materials to and from a Fund and in delivering
certificates to shareholders;
(d) Premiums for insurance coverage as may be required
by Section 11 of this Agreement and for other coverage as may be
required to be maintained by OFS or OppenheimerFunds, Inc. for the
benefit of itself and each Fund with respect to services
performed, or the equipment or facilities utilized by OFS in
fulfilling its obligations under this Agreement; and
(e) The fees and costs of retaining auditors and legal
counsel for OFS in connection with its performance of transfer
agency functions.
5. EFFECTIVE DATE AND TERM.
This Agreement shall become effective on the date set
forth in the heading paragraph of this Agreement, shall supersede
any prior agreements among the parties hereto relating to the
subject matter hereof, and shall continue in full force and effect
-7-
<PAGE>
until terminated by any party upon six months' prior written
notice of termination addressed to all other parties.
6. STANDARD OF CARE.
OFS will make every reasonable effort and take all
reasonable available measures to assure the adequacy of its
personnel and facilities as well as the accurate performance of
all services to be performed by it hereunder within, at a minimum,
the time requirements of any statute, rule or regulation
pertaining to investment companies and any time requirements set
forth in the then-current prospectus of each Fund. OFS shall
promptly correct any error or omission made by it in the
performance of its duties hereunder provided that it shall have
received notice in writing of such error or omission and any
necessary substantiating data. In effecting any such corrections,
OFS shall take all reasonable steps necessary to trace and to
correct any related errors or omissions, including, without
limitation, those which might cause an over-issue of a Fund's
shares and/or the excess payment of dividends or distributions.
The allocable costs of corrections shall be charged to the
applicable Fund and the liability of OFS under this Section shall
be subject to the limitations provided in Section 12 hereof.
7. RECORDS RETENTION AND CONFIDENTIALITY.
OFS shall keep and maintain on behalf of each Fund all
records which that Fund or its transfer agent is, or may be
required, to keep and maintain pursuant to any applicable
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<PAGE>
statutes, rules and regulations relating to the maintenance of
records in connection with the services to be performed hereunder.
OFS also shall maintain, for a period of at least 6 years, all
records and documents which may be needed or required to support
or document the actions taken by OFS in its performance of
services hereunder. OFS recognizes and agrees that all such
records and documents (but not the computer data processing
programs and any related documentation used or prepared by, or on
behalf of, OFS for the performance of its services hereunder) are
the property of the applicable Fund, shall be open to audit or
inspection by the Fund or its agents during OFS's normal business
hours, shall be maintained in such fashion as to preserve the
confidentiality thereof and to comply with applicable federal and/
or state laws and regulations, and shall, in whole or any
specified part, be surrendered and turned over to the Fund or its
duly authorized agents at any time upon OFS's receipt of an
appropriate written request.
8. CLEARING ACCOUNTS.
Each Fund shall open and/or maintain such bank account
or accounts as shall reasonably be required by OFS for controlling
payments, the disbursement of dividends, capital gains
distributions and share redemption payments pursuant to the
provisions hereof, and any other accounts deemed necessary by OFS
or a Fund to carry out the provisions of this Agreement, with a
bank or banks selected by OFS with the prior approval of the
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<PAGE>
Company's Board. Such account may be an omnibus account used for
all funds for which OFS or one of its subsidiaries acts as
transfer agent. The Company shall authorize offices or employees
of the Company to act as authorized signatories to disburse funds
held in such accounts. OFS shall be accountable to the Company
and the applicable Fund for the management of such accounts by OFS
(and the funds at any time on deposit therein).
9. REPORTS.
OFS will furnish to each Fund, at the Fund's cost, and
to such other person or parties as are designated herein or shall
be designated in writing by an authorized officer of the Fund,
such reports at such times as are required for the performance of
the services referred to in Schedule A.
10. INDEMNIFICATION.
The Company shall indemnify OFS and OppenheimerFunds,
Inc. and hold OFS and OppenheimerFunds, their officers, directors,
employees and agents harmless from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and
from and against all judgments, liabilities, losses, damages,
costs, charges, counsel fees and other expenses arising from or
relating to any action taken or omitted to be taken by OFS in good
faith or as a result of ordinary negligence in reliance upon:
(A) The authenticity of any letter or any other
instrument or communication reasonably believed by it to be
genuine and to have been properly made or signed by an authorized
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<PAGE>
officer or agent of a Fund or the Company or by a shareholder or
the authorized agent of a shareholder, as the case may be and
which complies with the terms of this Agreement which pertain
thereto;
(B) The accuracy of any records or information provided
to it by a Fund or the Company except to the extent the same may
contain patently obvious errors or omissions;
(C) Any certificate by an authorized officer of a Fund
or the Company or any other person authorized by the Company's
Board as conclusive proof of any fact or matter required to be
ascertained by OFS hereunder;
(D) Instructions at any time given by an authorized
officer of a Fund or the Company with respect to OFS's duties and
responsibilities hereunder, including, as to legal matters
pertaining to the performance of its duties hereunder, such advice
or instructions as may be given to OFS by a Fund's or the
Company's general counsel or any legal counsel appointed by such
counsel or by any authorized officer of the Fund or the Company;
(E) Instructions regarding redemptions, exchanges or
other treatment of the shares of a Fund, together with all
dividends and capital gain distributions thereon and any
reinvestment thereof, held or shown to the credit of any
shareholder account, if such instructions satisfy the requirements
of the Fund as contained in its then current prospectus, or the
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<PAGE>
Fund's policies or as communicated in writing to OFS by the Fund;
or
(F) The advice or opinion of legal counsel furnished to
OFS pursuant to Section 13 hereof.
11. INSURANCE.
Unless otherwise obtained by the Fund, OFS or
OppenheimerFunds, Inc. shall use its best efforts to obtain and
keep in effect pursuant to binders with underwriters authorized to
do business in the State of Colorado or New York, or approved by
the Company's Board, certificates or policies naming itself and
the Company and each Fund as assureds and providing for
cancellation or termination only upon 30 days' prior written
notice to the Company and each Fund, as follows:
(i) A broad form of fidelity bond coverage in the
minimum amount of $1,000,000 covering theft, embezzlement, forgery
and other specified acts of malfeasance and misfeasance by OFS,
its agents and employees, with aggregate coverage for counterfeit
or stolen securities and forged signatures in the minimum amount
of $1 million and at least $300,000 for each loss;
(ii) A lost instrument bond permitting the replacement
of a share certificate which has been lost, stolen or destroyed
for a stated percentage of the then-current net asset value
thereof to be paid by the shareholder or party seeking replacement
thereof;
-12-
<PAGE>
(iii) Coverage of up to $5 million against loss of
securities transmitted by first class, certified or registered
mail and express or air express throughout the United States and
of up to $1 million against loss of securities transmitted by
registered mail or registered air mail, and express or air express
mail anywhere in the world; and
(iv) Data Processors' Professional Liability Insurance
against errors and omissions having aggregate coverage of at least
$1 million and a limitation of liability for each claim of not
less than $500,000.
The Board of the Company, from time to time may change
the amounts of any of the foregoing coverage or prescribe
additional coverage. In the event that OFS shall be unable to
obtain or keep in effect any of the insurance coverage herein
referred to, it shall promptly notify the Company in writing of
such inability and shall use its best efforts to obtain and keep
in effect such other insurance coverage as the Company shall
reasonably require in lieu of the coverage described above.
12 LIMITATIONS OF LIABILITY.
In addition to the limitations on OFS's and
OppenheimerFunds, Inc.'s liability stated in Sections 10 and 13
hereof, OFS and OppenheimerFunds, Inc. assume no liability
hereunder and shall not be liable hereunder for any damage, loss
of data, delay or other loss caused by circumstances or events
beyond its control which it could not reasonably have anticipated.
-13-
<PAGE>
OFS and OppenheimerFunds, Inc. shall not have any liability beyond
the insurance coverage referred to in Section 11 hereof for loss
or damage arising from its own errors or omissions except to the
extent such errors or omissions are attributable to gross
negligence or purposeful fault on the part of OFS, its officers,
directors, agents and/or employees, and in no event will OFS and
OppenheimerFunds, Inc. be liable to the Company or a Fund for
punitive damages. The Company and each Fund shall indemnify and
hold OFS and OppenheimerFunds, Inc. harmless from and against any
liabilities and defense expenses arising by reason of claims of
third parties, based on errors or omissions of OFS, which are
greater in amount than the limitations of liability described
above, except to the extent such errors or omissions are
attributable to gross negligence or purposeful fault on the part
of OFS, its officers, directors, agents and/or employees.
13. LEGAL ADVICE AND INSTRUCTIONS.
OFS at any time may request instructions from any
authorized officer of the Company or a Fund with respect to the
performance of its duties and responsibilities hereunder and may
consult with counsel for the Company or a Fund relative to any
such matter and shall not be liable hereunder for any action taken
or omitted by it in good faith in accordance with such
instructions or with an opinion of such counsel or of counsel
appointed by an authorized officer of the Company or a Fund to
deal with inquiries or requests for instructions by OFS.
-14-
<PAGE>
14. DOCUMENTS AND INFORMATION.
As soon as feasible prior to the effective date of the
Agreement, and if not heretofore provided, the Company will supply
to OFS a statement, certified by the treasurer of the Company,
stating the number of shares of each Fund authorized, issued, held
in treasury, outstanding and reserved as of such date, together
with copies of specimen signatures of the Company's or the Fund's
officers and such other documents and information, including
without limitation the then-current prospectus of the Fund, which
OFS may determine in its reasonable discretion to be necessary or
appropriate to enable it to perform the services to be performed
hereunder, and the Company or the Fund thereafter will supply all
amendments or supplemental documents with respect thereto as soon
as the same shall be effective or available for distribution. The
Company and each Fund assumes full responsibility for the
preparation, accuracy, content and clearance of its prospectus
under federal and/or state securities laws and any rules or
regulations thereunder. If a Fund shall make any change in its
prospectus affecting the services and functions to be performed by
OFS hereunder, such additional services and functions shall be
deemed to be incorporated in Schedule A.
15. TERMINATION.
This Agreement may be terminated by any party only upon
written notice as provided in Section 5 hereof, except that the
Company may terminate this Agreement without prior notice to
-15-
<PAGE>
preserve the integrity of its shareholder records from material
and continuing errors and omissions on the part of OFS. In the
event of any termination, OFS will provide full cooperation,
assistance and documentation within its capabilities as shall be
necessary or desirable, in the reasonable judgment of the Company,
to ensure that any transfer of the duties and responsibilities of
OFS is accomplished with maximum efficiency and with minimum cost
and disruption to the Company's activities. Such cooperation will
include the delivery of all files, documents and records used,
kept or maintained by OFS in the performance of its services
hereunder (except records or documents destroyed when consistent
with the provisions hereof or with the approval of a Fund or the
Company or which relate solely to the documentation of the
computer data processing programs of OFS) together with, in
machine-readable form, such of a Fund's records as may be
maintained by OFS in a form other than written form, as well as
such summary and/or control data relating thereto used by or
available to OFS as may be requested by the Fund. The cost of all
such termination services on the part of OFS shall be paid by the
applicable Fund without prejudice, however, to the rights of the
Fund to recover any amounts so paid in the event that OFS shall be
liable to the Fund under Section 12 hereof. In the course of its
performance of the services set forth in Schedule A hereto, as
such services may from time to time be modified or amended, OFS
will enter into leases for equipment. If this Agreement is
-16-
<PAGE>
terminated by the Company, and if, as a result of such
termination, such equipment specifically leased by OFS to perform
such services can no longer be utilized economically by OFS in its
performance of services for any other entities with which OFS has
continuing transfer agency or other service contracts, OFS may in
its discretion cancel such leases. However, the Company shall not
have any responsibility for termination penalties, if any, which
may be payable under the terms of such equipment leases, unless
otherwise agreed by the Company prior to the time such lease is
entered into.
16. AVAILABILITY OF CONTINUED USE OF DATA PROCESSING SYSTEM.
In the event that the Company ceases to employ OFS
hereunder or after termination of this Agreement, the Company
shall have the right to use the computer data processing systems,
operating systems, computer programs, software and supporting
documentation then used by OFS for providing the services to the
Company contemplated hereby.
17. NOTICES.
Any notice hereunder shall be sufficiently given when
sent by registered or certified mail, return receipt requested to
any party hereto at the address of such party set forth above or
at such other address as such party may from time to time specify
in writing to the other parties.
-17-
<PAGE>
18. CONSTRUCTION GOVERNING LAW.
The headings used in this Agreement are for convenience
only and shall not be deemed to constitute a part hereof. This
Agreement, and the rights and obligations of the parties
hereunder, shall be governed by and construed and interpreted
under and in accordance with the laws of the State of Colorado
applicable to contracts made and to be performed in that state.
19. ASSIGNMENT; DELEGATION.
This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, their successors and assigns,
including without limitation, any successor to any party resulting
by reason of corporate merger or consolidation; provided, however,
that this Agreement and the rights and duties hereunder shall not
be assigned by any of the parties hereto except upon the specific
prior written consent of all parties hereto.
With the prior written consent of the Company, OFS may
delegate to others all or any portion of the services to be
rendered under this Agreement.
20. INTERPRETIVE PROVISIONS.
OFS and a Fund or the Company may agree from time to
time in writing on provisions interpretative of, or supplemental
to, the provisions of this Agreement.
-18-
<PAGE>
21. OTHER AGREEMENTS.
This Agreement shall not preclude the Fund from entering
into transfer agency agreements or sub-transfer agency agreements
with others.
22. SEVERABILITY.
If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present
or future laws effective during the term of this Agreement, then
such clause or provision shall be considered severed herefrom, and
the remainder of this Agreement shall continue in full force and
effect.
23. ENTIRE AGREEMENT.
Except as otherwise provided herein, this Agreement,
including Schedule A annexed hereto, constitutes the entire and
complete Agreement between the parties hereto relating to the
subject matter hereof, supersedes and merges all prior contracts
and discussions between the parties hereto, and may not be
modified or amended except by written document signed by all
parties hereto against whom such modification or amendment is to
be enforced.
-19-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written
above.
OPPENHEIMERFUNDS SERVICES, a
division of OppenheimerFunds, Inc.
ATTEST:
___________________________ By:___________________________
Barbara Hennigar, President
CONNECTICUT MUTUAL FINANCIAL
SERVICES SERIES FUND I, INC. on
behalf of its designated Series
ATTEST:
By:___________________________
Name:_________________________
___________________________
Title:________________________
-20-
<PAGE>
Exhibit 1
LIST OF CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC. PORTFOLIOS FOR WHICH OFS
IS DESIGNATED TO ACT AS TRANSFER AGENT
Money Market Portfolio
Government Securities Portfolio
Income Portfolio
Total Return Portfolio
Growth Portfolio
International Equity Portfolio
Life Span Capital Appreciation Portfolio
Life Span Balanced Portfolio
Life Span Diversified Income Portfolio
-21-
<PAGE>
SCHEDULE A
SERVICE CONTRACT
SCHEDULE OF SERVICES
To the extent that a Fund's then-current Prospectus requires
the following services, and to the extent that such services are
not, or may not hereafter be, provided by broker-dealers or other
financial institutions with respect to accounts for which such
broker-dealer or financial institution provides services in
connection with the distribution of that Fund's shares,
OppenheimerFunds Services, ("OFS") shall do the following:
I. REGISTRAR OF FUND SHARES
1. Register and control the issuance of full and/or fractional
shares of each Class of Shares of the Fund either for payment of
applicable net asset value or upon surrender of an equivalent
number of shares for transfer, or for reinvestment of dividends or
capital gains distributions and, in connection therewith, maintain
appropriate records (which may include the shareholder accounts
referred to below) recording the issuance, transfer and redemption
of all outstanding shares of each Class of Shares of the Fund,
showing all shares of each Class of Shares of the Fund issued and
represented by outstanding certificates, and showing issuance of
all uncertificated shares of the Fund; but shall have no
obligation, when recording the issuance of shares, to monitor the
issuance of such shares or to take cognizance of any laws relating
to the issuance or sale of such shares, which factors shall be the
sole responsibility of the Fund; prepare entries to transfer
redeemed or repurchased shares to the Fund's treasury share
account or, if applicable, cancel such shares for retirement;
retain records of issuance of new certificates for lost or stolen
certificates or for cancellation of lost or stolen certificates,
and the indemnity bonds furnished by shareholders in connection
therewith.
2. Maintain daily balance controls for the issuance and
redemption of shares as well as all cash receipts and
disbursements handled on behalf of the Fund.
3. Furnish to the Fund such information as it may request for
preparation of filings with federal and state authorities.
-22-
<PAGE>
II. SHAREHOLDER ACCOUNTS
1. Open new accounts and maintain current records for all new
and existing categories of shareholder accounts described in the
then-current Prospectus of the Fund, showing as to each registered
owner (to the extent such information is available or obtainable):
a. Name(s) and address(es) with zip code;
b. Category of account and taxpayer identification
number;
c. Dealer and/or any representative affiliated with
the account;
d. Number and shares and fractional shares currently
registered;
e. Account transaction history, including records of
initial and additional purchases, transfers and
redemptions, surrender of certificates, dividends
and other distributions, and related tax
information;
f. Identification of any certificate(s) issued and the
number of shares evidenced by each such
certificate;
g. Shares held in escrow against performance of any
obligation; and
h. Identification of account using the broker's
identification.
2. Maintain files containing account applications, requests or
other correspondence from or on behalf of shareholders, as well as
copies of all responses thereto.
3. Process all changes or corrections to a shareholder's
registration and address records authorized orally or in writing
by or on behalf of the shareholder.
4. Process such reinvestments of the proceeds of a redemption of
Fund shares as may properly have been elected by a shareholder
pursuant to a privilege described in the then-current Prospectus
of the Fund.
5. Process investments in shares of the Fund at its then-current
net asset value as may properly be requested by a shareholder of
any of the other investment companies having such privilege as
-23-
<PAGE>
described in the then-current Prospectus of the Fund or
information supplied by OFS by the Fund.
6. Prepare and transmit by mail to the affected shareholder a
statement/confirmation of all transactions affecting the account
of such shareholder including initial and additional purchases,
reinvestments of dividends and distributions, adjustments,
exchanges, transfer to and from the account and redemptions of all
kinds.
7. Maintain records of special account instructions such as wire
redemption authorizations.
8. Retain records and amounts of payment items (including
dividends, distributions and redemption proceeds) that are
returned undelivered and undeliverable from investors' addresses
and maintain such records in accordance with applicable
regulations; and invest such amounts, in accordance with the terms
of the Fund's then-current Prospectus, for the benefit of the
shareholder(s) of record.
9. Reconcile account data for account information transmitted by
magnetic tape by broker-dealers or other financial institutions
maintaining shareholder accounts in nominee name and perform other
services enumerated hereunder to the extent required for such
accounts.
10. Process new and additional payments made by shareholders for
investment at their current offering price.
11. Maintain records required under Rule 17Ad-10(e) under the
Securities Exchange Act of 1934.
III. REDEMPTIONS
1. Adjust a shareholder's account to reflect the number of
shares redeemed.
2. Requisition from the Fund's custodian and remit the
properly-computed amount of the proceeds of each redemption to, or
as directed by, shareholders pursuant to appropriately-executed
written instructions or appropriately-submitted redemption request
by wire.
IV. PAYMENT OF DIVIDENDS AND DISTRIBUTIONS
1. Upon receipt of properly-executed instructions from the Fund
upon declaration of any dividend and/or distribution, compute and
credit the accounts of all shareholders with the proper number of
whole and fractional shares, computed as of the reinvestment date
-24-
<PAGE>
and price specified by the relevant resolution of the Fund's
directors for such dividend or distribution.
2. Adjust the amount of dividend or distribution payments for
accounts having unsettled investments or repurchases as of the
record date with appropriate accounting adjustments to the Fund's
distribution accounts and remittances to its custodian.
3. Reconcile dividends and distributions with the Fund.
V. ISSUING AND ACCOUNTING FOR CERTIFICATES
1. Safekeep and account for blank certificate forms.
2. Prepare, issue and mail certificates for full shares on
request or according to permanent account instructions as provided
in the Fund's then-current Prospectus, provided that sufficient
deposit shares are available in the shareholder's account and
proper authorization is received.
3. Receive certificates properly endorsed for transfer which are
returned for deposit to a shareholder's account and, provided
there is no stop-transfer or cancellation order pending relative
to the specific certificate, make appropriate adjustments to the
shareholder's account.
4. Physically cancel and otherwise account for certificates
returned and deposited.
5. Keep and maintain certificate transcript records reflecting
the issuance and holder of all outstanding certificates as well as
all stop-transfers, cancellations and deposits of certificates.
6. Handle the replacement of lost certificates upon applications
meeting the requirements of the Fund's then-current insurance
coverage or, in the event such insurance is not obtainable, the
instructions of the officers of the Fund or its counsel.
7. Receive and deal with stop-transfer instructions in accord
with the generally-accepted practices of transfer agents.
VI. RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative share split, recapitalization or
other capital adjustment requiring a change in the form of share
certificates of any class, OFS will, in the case of accounts
represented by uncertificated shares, cause the account records to
be adjusted, as necessary, to reflect the number of shares held
for the account of each such shareholder as a result of such
change, or, in the case of shares represented by certificates,
-25-
<PAGE>
will issue share certificates in the new form in exchange for, or
upon transfer of, outstanding share certificates in the old form,
in either case upon receiving:
a. A Certificate authorizing the issuance of share
certificates in the new form;
b. A certified copy of any amendment to the Company's
Articles of Incorporation with respect to the change;
c. Specimen share certificates for each class of shares in
the new form approved by the Board of the Company, with
a Certificate signed by the Secretary of the Company as
to such approval; and
d. An opinion of counsel for the Company or the Fund with
respect to such shares.
2. The Fund shall furnish OFS with a sufficient supply of blank
share certificates in the new form, and from time to time will
replenish such supply upon the request of OFS. Such blank share
certificates shall be properly signed by Officers of the Fund
authorized by law or the By-Laws to sign share certificates and,
if required, shall bear the Company's seal or facsimile thereof.
VI. TRANSFERS
1. Respond to or process transfer instructions received by or on
behalf of the registered owners of shares in accordance with the
generally-accepted practices of transfer agents and any
requirements set forth in the Fund's then-current Prospectus.
2. Pass upon the adequacy of documents submitted, prepare any
documents required, and effect the transfer of shares to a
shareholder account for the transferee, including the
establishment of the new account.
IX. EXCHANGES
1. Receive and process exchanges in accordance with
duly-executed or telephonic exchange authorizations which comply
with the provisions of the Fund's then-current Prospectus.
2. Establish, if necessary, a shareholder's account and register
the new shares in accordance with duly executed or telephonic
exchange instructions.
-26-
<PAGE>
X. SHAREHOLDER COMMUNICATIONS
1. Maintain appropriate logs and other controls of all
shareholder communications reflecting the promptness with which
they are handled and the number of unresolved questions, inquiries
and complaints outstanding at any time.
2. Receive and answer promptly all correspondence, telephone
calls, or other inquiries from or on behalf of shareholders
concerning the administration of their accounts. In the case of
individual inquiries with respect to shares held in broker
"street-name" accounts for the broker's customer, refer such
inquiry to the appropriate broker for response, providing such
information to such broker as OFS may reasonably ascertain from
its records with respect thereto.
3. Refer to the Company's investment adviser or Distributor
questions or matters related to their functions.
4. Prepare such reports and summaries of shareholder
communications as may be requested by the Fund's officers for the
preparation of reports to the Company's Board and appropriate
regulatory authorities.
5. Attempt to collect or engage other agents or attorneys to
collect on behalf of the Fund the amount of any over-payment or
erroneous payment to a shareholder or other person by the Fund.
XI. HANDLING OF PROXIES
1. In accordance with instructions by an officer of the Fund,
prepare proxy cards for each shareholder of record as of the date
specified by a resolution of the Company's Board providing for a
meeting of its shareholders.
2. Mail to each shareholder of record, at the address shown in
the shareholder records of the Fund kept pursuant hereto (or as
directed by the respective broker as to broker transmission
accounts), a completed proxy card together with such other written
material, including notices of the meeting and proxy statements,
as may be supplied for that purpose by the Fund.
3. Furnish to the Fund a list of shareholders eligible to vote
at the meeting, showing address of record and shares held together
with an affidavit or other appropriate certificate of the mailing
referred to above.
4. Receive and tabulate proxies, furnishing the Fund with a
properly-certified report of such tabulation.
-27-
<PAGE>
XII. ANNUAL AND OTHER REPORTS
1. Process the mailing of such prospectuses and annual, semi-
annual, or quarterly reports as shall be received from the Fund
for that purpose and coordinate such mailings to appropriate
categories of shareholders.
2. Prepare and mail to shareholders appropriate periodic
statements of their accounts as contemplated by this Agreement.
3. Insert such other material with regular shareholder mailings
as may be requested and furnished by the Fund.
4. Prepare and forward to the Fund such daily periodic or
special reports concerning shareholder records and any other
functions performed pursuant to this schedule of services as may
be requested by an officer of the Company.
XIII. TAX MATTERS
1. Prepare and file with the I.R.S. such Federal information
returns with respect to Fund shareholders as may be specified by
the I.R.S. from time to time and mail copies thereof to
shareholders.
2. Prepare and file appropriate Federal information returns and
pay Federal income taxes withheld from distributions made to non-
resident aliens.
3. Prepare magnetic tapes for brokers, dealers and other
financial institutions to determine accruals as to transmission
accounts to enable brokers, dealers and other financial
institutions to prepare appropriate information returns.
4. Pay Federal income taxes withheld from dividends,
distributions and redemptions made to shareholders; process and
retain records of withholding exemption certificates filed by
shareholders.
5. Comply with backup withholding and taxpayer identification
requirements issued by the I.R.S. which are applicable to transfer
agents.
-28-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> LIFESPAN DIVERSIFIED INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 20,096,477
<INVESTMENTS-AT-VALUE> 20,899,435
<RECEIVABLES> 281,130
<ASSETS-OTHER> 48,812
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,229,377
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 53,462
<TOTAL-LIABILITIES> 53,462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,337,106
<SHARES-COMMON-STOCK> 20,324,034
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10,436
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,415
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 802,958
<NET-ASSETS> 21,175,915
<DIVIDEND-INCOME> 72,611
<INTEREST-INCOME> 377,031
<OTHER-INCOME> 0
<EXPENSES-NET> 102,100
<NET-INVESTMENT-INCOME> 347,542
<REALIZED-GAINS-CURRENT> 25,415
<APPREC-INCREASE-CURRENT> 802,958
<NET-CHANGE-FROM-OPS> 1,175,915
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (337,106)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 324,034
<NET-CHANGE-IN-ASSETS> 21,175,915
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 51,050
<INTEREST-EXPENSE> 51,050
<GROSS-EXPENSE> 102,100
<AVERAGE-NET-ASSETS> 20,532,475
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .04
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.04
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> LIFESPAN BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 33,376,422
<INVESTMENTS-AT-VALUE> 35,260,242
<RECEIVABLES> 313,627
<ASSETS-OTHER> 88,615
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,662,484
<PAYABLE-FOR-SECURITIES> 121,006
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 74,249
<TOTAL-LIABILITIES> 195,255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,759,324
<SHARES-COMMON-STOCK> 33,743,194
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (9,802)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (186,996)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,904,703
<NET-ASSETS> 35,467,229
<DIVIDEND-INCOME> 109,946
<INTEREST-INCOME> 406,667
<OTHER-INCOME> 0
<EXPENSES-NET> 170,091
<NET-INVESTMENT-INCOME> 349,522
<REALIZED-GAINS-CURRENT> (186,996)
<APPREC-INCREASE-CURRENT> 1,904,703
<NET-CHANGE-FROM-OPS> 2,067,229
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (359,324)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,400,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 343,194
<NET-CHANGE-IN-ASSETS> 35,467,229
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 96,385
<INTEREST-EXPENSE> 73,706
<GROSS-EXPENSE> 170,091
<AVERAGE-NET-ASSETS> 34,205,798
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .05
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.05
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> LIFESPAN CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 24,899,436
<INVESTMENTS-AT-VALUE> 26,715,110
<RECEIVABLES> 141,904
<ASSETS-OTHER> 79,731
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,936,745
<PAYABLE-FOR-SECURITIES> 117,593
<SENIOR-LONG-TERM-DEBT> 50,668
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 168,261
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,163,733
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<ACCUMULATED-NII-CURRENT> (16,770)
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<EXPENSES-NET> 127,647
<NET-INVESTMENT-INCOME> 147,012
<REALIZED-GAINS-CURRENT> (215,118)
<APPREC-INCREASE-CURRENT> 1,836,590
<NET-CHANGE-FROM-OPS> 1,768,484
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (163,733)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 154,663
<NET-CHANGE-IN-ASSETS> 26,768,484
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 127,647
<AVERAGE-NET-ASSETS> 25,670,086
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .06
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.06
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
