<PAGE>
As filed with the Securities and Exchange Commission on December 21, 1995.
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ____)
Filed by the registrant / X /
Check the appropriate box:
/ / Preliminary proxy statement
/ X / Definitive proxy statement
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
--------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / Fee paid previously with preliminary materials.
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Hartford, Connecticut
December 18, 1995
Dear Fellow Shareholders:
We are pleased to inform you that Connecticut Mutual Investment Accounts,
Inc. (the "Company") will shortly become part of the family of mutual funds
advised by Oppenheimer Management Corporation ("Oppenheimer"), an indirect
subsidiary of Massachusetts Mutual Life Insurance Company ("Massachusetts
Mutual"), subject to consummation of the merger of Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") with and into Massachusetts Mutual and
approval of the proposals described below. In view of the merger, we invite you
to attend a Special Meeting of Shareholders of all series of the Company known
as the Liquid Account, the Income Account, the Government Securities Account,
the Total Return Account, the Growth Account, the National Municipals Account,
the California Municipals Account, the Massachusetts Municipals Account, the New
York Municipals Account, the Ohio Municipals Account, the LifeSpan Capital
Appreciation Account, the LifeSpan Balanced Account and the LifeSpan Diversified
Income Account to be held at 2:00 p.m. Eastern Time on Monday, January 22, 1996
at Connecticut Mutual Life Insurance Company, 878 Main Street (10 State House
Square), Hartford, Connecticut.
You will be asked at this Meeting to consider and approve the following
proposals:
- New Investment Advisory Agreements between the Company, on
behalf of each Account (other than the Municipal Accounts),
and Oppenheimer.
- New Investment Subadvisory Agreements among: Oppenheimer and
Pilgrim, Baxter & Associates, Ltd. with respect to each of the
Capital Appreciation and Balanced Account; Oppenheimer and BEA
Associates with respect to each of the Capital Appreciation
Account, Balanced Account and Diversified Income Account; and
Oppenheimer and Babson-Stewart Ivory International with
respect to each of the Capital Appreciation Account and
Balanced Account.
- New Rule 12b-1 distribution plans for each Account (other than
the Liquid Account).
- The election of a new Board of Directors and the continuation
of Arthur Andersen LLP as auditors for the Company.
<PAGE>
WHAT DO THESE CHANGES MEAN TO YOU?
It is anticipated that immediately subsequent to the merger, Massachusetts
Mutual will become the nation's fifth largest mutual life insurance company.
Your Account's Board of Directors believes that Connecticut Mutual's
combination with Massachusetts Mutual will make the further substantial
resources of a respected mutual fund organization available to your Account. The
Board evaluated such factors as Oppenheimer's experience in providing various
financial services to investment companies, its experience in the investment
company business, its distribution and shareholder servicing capabilities and
its reputation, integrity, financial responsibility and stability. The Board
received assurances from Oppenheimer that it is adequately capitalized to enable
it to provide high quality investment management services. Oppenheimer's
commitment has made it a widely recognized name in the mutual fund industry and
its existing funds maintain a strong presence in the industry.
PROPOSALS HAVE BEEN APPROVED BY YOUR BOARD OF DIRECTORS
All of the proposals have been reviewed by the Company's Board of Directors,
who are charged with considering the best interests of the shareholders. YOUR
BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT YOU APPROVE,
EACH PROPOSAL.
YOUR VOTE IS IMPORTANT!
Please vote by completing, signing and returning the enclosed proxy ballot
card to us immediately. Your prompt response will help avoid the cost of
additional mailings. For your convenience, we have provided a postage-paid
envelope.
If you have questions, please call your Customer Service Representative at
1-800-461-3743, Monday through Friday between 8:00 a.m. and 5:00 p.m. Eastern
Time.
Sincerely,
DONALD H. POND, JR.
Chairman
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
140 GARDEN STREET
HARTFORD, CONNECTICUT 06154
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
IN LIEU OF AN ANNUAL MEETING
------------------------
CONNECTICUT MUTUAL LIQUID ACCOUNT
CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT
CONNECTICUT MUTUAL INCOME ACCOUNT
CONNECTICUT MUTUAL TOTAL RETURN ACCOUNT
CONNECTICUT MUTUAL GROWTH ACCOUNT
CMIA LIFESPAN CAPITAL APPRECIATION ACCOUNT
CMIA LIFESPAN BALANCED ACCOUNT
CMIA LIFESPAN DIVERSIFIED INCOME ACCOUNT
CMIA NATIONAL MUNICIPALS ACCOUNT
CMIA CALIFORNIA MUNICIPALS ACCOUNT
CMIA MASSACHUSETTS MUNICIPALS ACCOUNT
CMIA NEW YORK MUNICIPALS ACCOUNT
CMIA OHIO MUNICIPALS ACCOUNT
TO BE HELD JANUARY 22, 1996
A Special Meeting of Shareholders in lieu of an Annual Meeting of
Connecticut Mutual Investment Accounts, Inc. (the "Company") (telephone
1-800-461-3743), on behalf of the 13 series of the Company consisting of the
following five series -- Connecticut Mutual Liquid Account (the "Liquid
Account"), Connecticut Mutual Government Securities Account (the "Government
Securities Account"), Connecticut Mutual Income Account (the "Income Account"),
Connecticut Mutual Total Return Account ("Total Return Account"), and
Connecticut Mutual Growth Account ("Growth Account"); three "LifeSpan Accounts"
- -- CMIA LifeSpan Capital Appreciation Account ("Capital Appreciation Account"),
CMIA LifeSpan Balanced Account ("Balanced Account") and CMIA LifeSpan
Diversified Income Account ("Diversified Income Account"; and five "Municipal
Accounts" -- CMIA National Municipals Account ("National Account"), CMIA
California Municipals Account ("California Account"), CMIA Massachusetts
Municipals Account ("Massachusetts Account"), CMIA New York Municipals Account
("New York Account") and CMIA Ohio Municipals Account ("Ohio Account") (each, an
"Account" and together, the "Accounts"), will be held at Connecticut Mutual Life
Insurance
<PAGE>
Company, 878 Main Street (10 State House Square), Hartford, Connecticut, on
Monday, January 22, 1996 at 2:00 p.m. Eastern Time. The purpose of the Meeting
is to consider and act upon the following proposals:
<TABLE>
<S> <C>
(1) To approve the terms of new investment advisory agreements
between the Company, on behalf of each Account (other than
the Municipal Accounts), and Oppenheimer Management
Corporation ("Oppenheimer"), the proposed investment adviser
to the Accounts. FOR EACH ACCOUNT (OTHER THAN THE MUNICIPAL
ACCOUNTS) VOTING SEPARATELY AND, WHERE REQUIRED, FOR EACH
ACCOUNT'S CLASS A AND CLASS B SHAREHOLDERS VOTING
SEPARATELY.
(2) To approve the terms of new investment subadvisory
agreements between:
(a) Oppenheimer and Pilgrim, Baxter & Associates, Ltd. with
respect to each of the Capital Appreciation Account and
Balanced Account. FOR CAPITAL APPRECIATION ACCOUNT AND
BALANCED ACCOUNT VOTING SEPARATELY.
(b) Oppenheimer and BEA Associates with respect to each of the
Capital Appreciation Account, Balanced Account and
Diversified Income Account. FOR CAPITAL APPRECIATION
ACCOUNT, BALANCED ACCOUNT AND DIVERSIFIED INCOME ACCOUNT
VOTING SEPARATELY.
(c) Oppenheimer and Babson-Stewart Ivory International with
respect to each of the Capital Appreciation Account and
Balanced Account. FOR CAPITAL APPRECIATION ACCOUNT AND
BALANCED ACCOUNT VOTING SEPARATELY.
(3) To approve new distribution plans pursuant to Rule 12b-1
under the Investment Company Act of 1940 for each Account
(other than the Liquid Account), and, where an Account has
more than one Class of shares, for each Class of shares of
the Account. FOR EACH ACCOUNT (OTHER THAN LIQUID ACCOUNT)
VOTING SEPARATELY AND, WHERE REQUIRED, FOR EACH ACCOUNT'S
CLASS A AND CLASS B SHAREHOLDERS VOTING SEPARATELY.
(4) To elect twelve Directors to the Company's Board of
Directors. FOR ALL ACCOUNTS VOTING TOGETHER.
(5) To ratify the selection of Arthur Andersen LLP as the
Company's independent public accountants. FOR ALL ACCOUNTS
VOTING TOGETHER.
(6) To transact other business that may properly come before the
Meeting or any adjournment of the Meeting.
</TABLE>
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ALL PROPOSALS
<PAGE>
Shareholders of record as of the close of business on November 24, 1995 are
entitled to vote at the Meeting or any adjournment of the Meeting on each matter
relating to an Account of which they hold shares. The Proxy Statement and proxy
card are being mailed to shareholders on or about December 18, 1995.
ANN F. LOMELI
Secretary
Hartford, Connecticut
December 18, 1995
-------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING.
-------------------------------------------------------------------
<PAGE>
------------------------
PROXY STATEMENT
------------------------
GENERAL
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Connecticut Mutual Investment Accounts,
Inc. (the "Company") on behalf of the 13 series of the Company consisting of the
following five series -- Connecticut Mutual Liquid Account (the "Liquid
Account"), Connecticut Mutual Government Securities Account (the "Government
Securities Account"), Connecticut Mutual Income Account (the "Income Account"),
Connecticut Mutual Total Return Account ("Total Return Account"), Connecticut
Mutual Growth Account ("Growth Account"); three "LifeSpan Accounts" -- CMIA
LifeSpan Capital Appreciation Account ("Capital Appreciation Account"), CMIA
LifeSpan Balanced Account ("Balanced Account") and CMIA LifeSpan Diversified
Income Account ("Diversified Income Account"); and five "Municipal Accounts" --
CMIA National Municipals Account ("National Account"), CMIA California
Municipals Account ("California Account"), CMIA Massachusetts Municipals Account
("Massachusetts Account"), CMIA New York Municipals Account ("New York Account")
and CMIA Ohio Municipals Account ("Ohio Account") (each, an "Account" and
together, the "Accounts"). The proxies will be used at the Special Meeting of
the Accounts' shareholders to be held at Connecticut Mutual Life Insurance
Company, 878 Main Street (10 State House Square), Hartford, Connecticut, on
Monday, January 22, 1996 at 2:00 p.m. Eastern Time. The executive offices of the
Company are located at 140 Garden Street, Hartford, Connecticut, and the mailing
address of the Company and each of the Accounts is 140 Garden Street, Hartford,
Connecticut 06154. EACH ACCOUNT'S ANNUAL REPORT FOR ITS MOST RECENTLY COMPLETED
FISCAL YEAR, IF ANY, AND SUBSEQUENT SEMI-ANNUAL REPORT, IF ANY, MAY BE OBTAINED
FREE OF CHARGE BY WRITING THE COMPANY OR BY CALLING 1-800-461-3743.
This Proxy Statement and proxy card are being mailed to shareholders on or
about December 18, 1995.
RECORD DATE
The Board of Directors has fixed the close of business on November 24, 1995
as the record date ("Record Date") for determination of shareholders of
1
<PAGE>
each Account entitled to notice of and to vote at the Special Meeting.
Shareholders of record are entitled to one vote per share at the Special Meeting
or any adjournment of the Meeting relating to their Account. On the Record Date,
the following shares of common stock of each Account were outstanding:
<TABLE>
<S> <C>
Liquid Account..................................................... 72,393,411
Government Securities Account
Class A.......................................................... 4,667,953
Class B.......................................................... 2,073
Income Account
Class A.......................................................... 3,474,682
Class B.......................................................... 5,177
Total Return Account
Class A.......................................................... 13,642,687
Class B.......................................................... 32,136
Growth Account
Class A.......................................................... 6,200,316
Class B.......................................................... 18,190
Capital Appreciation Account
Class A.......................................................... 2,890,935
Class B.......................................................... 25,749
Balanced Account
Class A.......................................................... 3,634,857
Class B.......................................................... 29,104
Diversified Income Account
Class A.......................................................... 2,247,111
Class B.......................................................... 15,714
National Account................................................... 300,157
California Account................................................. 69,153
Massachusetts Account.............................................. 13,393
New York Account................................................... 35,415
Ohio Account....................................................... 35,614
-----------
Total.............................................................. 109,733,827
</TABLE>
SUMMARY OF VOTING ON PROPOSALS
Although each Account is participating separately in the Special Meeting,
proxies are being solicited through the use of this joint proxy statement.
Shareholders of each Account and, where required, each Class will vote
separately as to those Proposals affecting only their Account or Class or
affecting an Account or Class differently than other Accounts or Classes. Voting
by shareholders of
2
<PAGE>
one Account or Class will not affect voting by any other Account or Class on
these matters, except to the extent the separate vote of both Classes is
required to approve a proposal.
<TABLE>
<CAPTION>
PROPOSAL ACCOUNT(S) AND CLASS(ES) ENTITLED TO VOTE
- --------- ------------------------------------------------------------
<C> <S>
(1) Liquid Account will vote separately and Class A and Class B
shareholders of each other Account (except for the Municipal
Accounts) will vote separately.
(2)(a) Capital Appreciation Account and Balanced Account will vote
separately.
(b) Capital Appreciation Account, Balanced Account and
Diversified Income Account will vote separately.
(c) Capital Appreciation Account and Balanced Account will vote
separately.
(3) Class A and Class B shareholders of each Account (other than
Liquid Account) will vote separately.
(4) All Accounts will vote together.
(5) All Accounts will vote together.
</TABLE>
INTRODUCTION
The Meeting is being called to ask shareholders to consider, among other
things, proposals affecting their Accounts as a result of an Agreement and Plan
of Merger between Connecticut Mutual Life Insurance Company ("Connecticut
Mutual") and Massachusetts Mutual Life Insurance Company ("Massachusetts
Mutual"). Connecticut Mutual is the indirect parent company of G.R. Phelps &
Co., Inc. ("G.R. Phelps"), the current investment adviser to all Accounts except
the Municipal Accounts and the current administrator to the Municipal Accounts.
The Agreement and Plan of Merger provides for Connecticut Mutual to merge with
and into Massachusetts Mutual (the "Merger"). Upon the consummation of the
Merger, which is expected to occur during the first three months of 1996, the
separate existence of Connecticut Mutual will cease and Massachusetts Mutual
will be the surviving company and will continue its corporate existence under
the name "Massachusetts Mutual Life Insurance Company." It is anticipated that
immediately subsequent to the Merger, Massachusetts Mutual will become the
nation's fifth largest mutual life insurance company.
As a result of the Merger and a favorable vote on the proposals included in
this Proxy Statement:
- Oppenheimer Management Corporation ("Oppenheimer"), an indirect subsidiary
of Massachusetts Mutual, will immediately become the investment adviser to
all Accounts (except the Municipal Accounts) (Proposal 1).
3
<PAGE>
- Pilgrim, Baxter & Associates, Ltd. will continue to serve as a subadviser
to each of Capital Appreciation Account and Balanced Account (Proposal
2a); BEA Associates will continue to serve as a subadviser to each of
Capital Appreciation Account, Balanced Account and Diversified Income
Account (Proposal 2b); and Babson-Stewart Ivory International, an
affiliate of Oppenheimer and Massachusetts Mutual, will immediately become
a subadviser to each of Capital Appreciation Account and Balanced Account
(Proposal 2c).
- A subsidiary of Oppenheimer, Oppenheimer Funds Distributor, Inc. ("OFD"),
will become the Accounts' general distributor pursuant to an underwriting
agreement and will enter into service and/or distribution agreements with
the Accounts (except Liquid Account) pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act") (Proposal 3). (IF APPROVED
BY SHAREHOLDERS, THESE CHANGES WILL BECOME EFFECTIVE WITHIN 90 DAYS AFTER
THE CONSUMMATION OF THE MERGER.)
- The nominees selected by the Company's existing Board of Directors will
become the new Board of Directors of the Company contingent upon the
closing of the Merger (Proposal 4). (IF APPROVED BY SHAREHOLDERS, THE
NOMINEES WILL TAKE OFFICE ON THE 91ST DAY AFTER THE CONSUMMATION OF THE
MERGER.)
In order to provide for the Accounts' transition to the Oppenheimer family
of mutual funds, the Board of Directors has approved a 90 day transition period
(the "Transition Period") commencing on the date of the Merger. On the date of
the Merger, Oppenheimer will assume responsibility for the management of the
Accounts, and the Subadvisers will provide subadvisory services to the
respective LifeSpan Accounts. However, during the Transition Period, (1) G.R.
Phelps will continue to provide administrative services to the Accounts
including the Municipal Accounts, (2) Connecticut Mutual Financial Services,
L.L.C. ("CMFS") will continue to serve as the Accounts' distributor and (3)
National Financial Data Services will continue to serve as the transfer agent
and shareholder servicing agent. At the completion of the Transition Period,
Oppenheimer will assume responsibility for all administrative services to the
Accounts, other than the Municipal Accounts, OFD will have assumed all
responsibilities as the Accounts' distributor and Oppenheimer Shareholder
Services, a division of Oppenheimer, will become the transfer and shareholder
servicing agent for the Company's shareholders pursuant to an agreement approved
by the Board of Directors. The election of the new members of the Board of
Directors will be effective on the 91st day after the consummation of the
Merger. It is also contemplated that after the Merger, shareholders of the
Liquid Account, the Income Account and the Government Securities Account will be
asked to vote
4
<PAGE>
on the reorganization of those respective Accounts into comparable Oppenheimer
funds. For additional information about the Merger, see "The Merger" below at
page 43.
PROPOSAL 1
APPROVAL OF THE NEW INVESTMENT ADVISORY
AGREEMENTS BETWEEN THE COMPANY, ON BEHALF OF
EACH ACCOUNT, AND OPPENHEIMER
(FOR ACTION BY SHAREHOLDERS OF EACH ACCOUNT,
OTHER THAN THE MUNICIPAL ACCOUNTS,
VOTING SEPARATELY OR, WHERE AN ACCOUNT
HAS MORE THAN ONE CLASS OF SHARES,
BY EACH CLASS VOTING SEPARATELY)
AND
PROPOSALS 2(A), 2(B) AND 2(C)
APPROVAL OF THE NEW SUBADVISORY AGREEMENTS
(FOR ACTION BY SHAREHOLDERS OF CAPITAL APPRECIATION ACCOUNT,
BALANCED ACCOUNT AND DIVERSIFIED INCOME ACCOUNT VOTING SEPARATELY)
SUMMARY
THE INVESTMENT ADVISORY AGREEMENTS. G.R. Phelps currently serves as
investment adviser to each Account (other than the Municipal Accounts) pursuant
to an investment advisory agreement (the "Existing Advisory Agreement") between
the Company, on behalf of each Account, and G.R. Phelps. G.R. Phelps is a
wholly-owned subsidiary of DHC, Inc., a wholly-owned subsidiary of Connecticut
Mutual Life Insurance Company ("Connecticut Mutual"). DHC, Inc. is a holding
company for several Connecticut Mutual subsidiaries. The address of Connecticut
Mutual and DHC, Inc. is 140 Garden Street, Hartford, Connecticut 06154.
The Company is registered as an investment company under the 1940 Act. Under
the 1940 Act, an investment company's investment advisory agreement terminates
automatically upon its "assignment." Under the 1940 Act, a direct or indirect
transfer of a controlling block of the voting securities of any entity
controlling G.R. Phelps is deemed to be an "assignment." Therefore, the
participation of Connecticut Mutual in the proposed Merger will result in the
termination of its Existing Advisory Agreement. In order to assure continuity of
investment advisory services to the Accounts in the event the Merger is
consummated and the Existing Advisory Agreement with G.R. Phelps is terminated,
the Company's Board of Directors, including the Directors who are not
"interested persons" of the Company, Oppenheimer or any subadviser to the
Accounts (the "Non-interested Directors"), at a special meeting held on November
17, 1995, voted unanimously to recommend that the shareholders of each Account
(other
5
<PAGE>
than the Municipal Accounts) approve a new investment advisory agreement between
the Company, on behalf of each Account (other than the Municipal Accounts), and
Oppenheimer (each, a "New Advisory Agreement" and together, the "New Advisory
Agreements"). Under each New Advisory Agreement, Oppenheimer will provide
investment advisory services for the assets of each Account after the Merger.
It is anticipated that the current portfolio managers of the Growth Account
and the Total Return Account and certain other employees and officers of the
Company will become employees of Oppenheimer upon consummation of the Merger and
shareholder approval of this Proposal. If that occurs, the portfolio managers of
these Accounts will continue to act in that capacity after the Merger.
Following the Merger, it is anticipated that the shareholders of the Liquid
Account, the Government Securities Account and the Income Account will be asked
to approve the reorganizations of those respective Accounts into comparable
Oppenheimer funds. It is currently expected that those reorganizations will be
initiated during the Transition Period. Oppenheimer has informed the Board of
Directors that, subject to the approval by the shareholders of the New
Investment Advisory Agreements with the Liquid Account, the Government
Securities Account and the Income Account, it intends to appoint new portfolio
managers to manage the portfolio of investments for those respective Accounts
for the period between the Merger and such time as those Accounts may be
reorganized into comparable Oppenheimer funds. See further discussion under the
caption "The Merger" below. For additional information about the proposed
portfolio managers for these Accounts, see APPENDIX A. In the event that the
portfolio manager for one or more of the Accounts is changed, the Account's
Prospectus and/or Statement of Additional Information will be revised or
supplemented as appropriate. No immediate change is currently expected to be
made to the investment philosophies and practices of the Accounts as a result of
Oppenheimer's becoming the investment adviser.
6
<PAGE>
THE SUBADVISORY AGREEMENTS. To assist in the management of the assets of
several of the Accounts (each, a "Subadvised Account" and together, the
"Subadvised Accounts"), Oppenheimer proposes to engage the services of the
following subadvisers (each, a "Subadviser" and together, the "Subadvisers"):
<TABLE>
<CAPTION>
SUBADVISER SUBADVISED ACCOUNT
- ------------------------------------ ------------------------------------
<S> <C>
Pilgrim, Baxter & Associates, Ltd. Capital Appreciation Account
("Pilgrim") Balanced Account
BEA Associates ("BEA") Capital Appreciation Account
Balanced Account
Diversified Income Account
Babson-Stewart Ivory International Capital Appreciation Account
("Babson-Stewart") Balanced Account
</TABLE>
Pilgrim and BEA currently provide subadvisory services with respect to that
portion of the assets of the respective Subadvised Account allocated to such
Subadviser by G.R. Phelps pursuant to separate subadvisory agreements. If
approved by shareholders, Babson-Stewart will replace Scudder, Stevens & Clark,
Inc. ("Scudder"), which is one of the current subadvisers to the Capital
Appreciation Account and Balanced Account. The separate subadvisory agreements
among G.R. Phelps, the Company, on behalf of the respective Subadvised Account,
and Pilgrim, BEA and Scudder, as the case may be, are referred to individually
as an "Existing Subadvisory Agreement" and collectively as the "Existing
Subadvisory Agreements."
The participation by Connecticut Mutual in the proposed Merger will result
in the termination of the Existing Advisory Agreement with G.R. Phelps. A
provision in the Existing Advisory Agreement requires that each Existing
Subadvisory Agreement will terminate in the event the Existing Advisory
Agreement is terminated. In order to assure continuity of portfolio management
services to each Subadvised Account, at the special meeting of the Board of
Directors of the Company held on November 17, 1995, the Board, including the
Non-interested Directors, voted unanimously to recommend that the shareholders
of each Subadvised Account vote to approve a new subadvisory agreement between
Oppenheimer and the respective Subadviser (each, a "New Subadvisory Agreement"
and together, the "New Subadvisory Agreements").
INFORMATION ABOUT THE NEW INVESTMENT ADVISER AND THE SUBADVISERS
THE NEW INVESTMENT ADVISER. Oppenheimer and its subsidiaries are engaged
principally in the business of managing, distributing and servicing registered
investment companies. Oppenheimer is located at Two World Trade Center, New
York, New York 10048-0203. Oppenheimer owns all of the outstanding stock of OFD,
Shareholder Services, Inc. and Shareholder Financial
7
<PAGE>
Services, Inc. Oppenheimer is a wholly-owned subsidiary of Oppenheimer
Acquisition Corp. ("OAC"), which is controlled by Massachusetts Mutual, located
at 1295 State Street, Springfield, MA 01111. Massachusetts Mutual also advises
pension plans and investment companies. OAC acquired Oppenheimer on October 22,
1990. Oppenheimer is not related to Oppenheimer Capital nor its affiliate, the
brokerage firm Oppenheimer & Co., Inc. The common stock of OAC is owned by (i)
certain officers and/or directors of Oppenheimer, (ii) Massachusetts Mutual and
(iii) another investor. No institution or person holds 5% or more of OAC's
outstanding common stock except Massachusetts Mutual. Massachusetts Mutual has
been engaged in the life insurance business since 1851. It is the nation's
twelfth largest life insurance company by assets and has an A.M. Best Co. rating
of "A++". As of October 31, 1995, Oppenheimer (including a subsidiary) had more
than $38 billion in assets under management.
THE SUBADVISERS. Pilgrim currently serves as the subadviser with respect to
the portion of the assets of each of the Capital Appreciation Account and the
Balanced Account allocated to it by G.R. Phelps pursuant to separate Existing
Subadvisory Agreements and will continue in that capacity for each such Life-
Span Account subadvised by Pilgrim if the respective shareholders approve the
New Subadvisory Agreements. Pilgrim, a Delaware corporation and a wholly owned
subsidiary of United Asset Management Corporation, a publicly held Delaware
corporation, is a registered investment adviser and was established in 1982 to
provide specialized equity management for institutional investors. As of May 31,
1995, Pilgrim had over $4 billion in assets under management.
BEA currently serves as the subadviser with respect to the portion of the
assets of each of the Capital Appreciation Account, the Balanced Account and the
Diversified Income Account allocated to it by G.R. Phelps pursuant to separate
Existing Subadvisory Agreements and will continue in that capacity for each such
LifeSpan Account subadvised by BEA if the respective shareholders approve the
New Subadvisory Agreements. BEA, a general partnership between CS Capital and
Basic Appraisals, Inc., is a registered investment adviser and together with its
predecessor firms has been providing domestic and global fixed income and equity
investment management services for institutional clients and mutual funds for
more than 50 years. As of June 30, 1995, BEA had $28.9 billion in assets under
management.
Following the Merger and subject to shareholder approval it is anticipated
that Babson-Stewart will immediately begin to serve as the subadviser with
respect to the portion of the assets of each of the Capital Appreciation Account
and the Balanced Account allocated to it by Oppenheimer pursuant to the New
Subadvisory Agreements. Babson-Stewart is a Massachusetts general partnership
and a registered investment adviser and was originally established in 1987. The
general partners of Babson-Stewart are David L. Babson & Co., Inc., which is an
indirect subsidiary of Massachusetts Mutual, and Stewart Ivory & Co.
8
<PAGE>
(International), Ltd. As of September 30, 1995, Babson-Stewart had approximately
$917 million in assets under management. Scudder, located at 345 Park Avenue,
New York, New York 10154, has served as a subadviser with respect to a portion
of the assets of each of the Capital Appreciation Account and Balanced Account
since May 1, 1995 pursuant to the Existing Subadvisory Agreements for such
Accounts and will continue to serve in that capacity until the Merger, at which
time its Existing Subadvisory Agreements will terminate.
ADDITIONAL INFORMATION ABOUT THE INVESTMENT ADVISER AND THE SUBADVISERS
For additional information concerning the management, ownership structure
and certain other matters pertaining to Oppenheimer and the Subadvisers, see
APPENDIX A.
MATERIAL TERMS OF THE NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS. If approved by the shareholders of each
Account, the New Advisory Agreements will become effective upon the consummation
of the Merger, which is expected to occur during the first three months of 1996.
The following description of the material terms of the New Advisory Agreements
is qualified in its entirety by reference to the form of New Advisory Agreement
(such form is identical for each Account, except for the names of the Accounts
and their respective fee schedules) attached to this Proxy Statement as EXHIBIT
A.
INVESTMENT ADVISORY SERVICES. Under each New Advisory Agreement,
Oppenheimer will act as the investment adviser for each Account and will
supervise the investment program of each Account. The New Advisory Agreements
provide that Oppenheimer will provide or arrange for another entity to provide
administrative services for each Account including the completion and
maintenance of records, preparation and filing of reports required by the
Securities and Exchange Commission ("SEC"), reports to shareholders and
composition of proxy statements and registration statements required by Federal
and state securities laws. Oppenheimer will furnish each Account with office
space, facilities and equipment and arrange for its employees to be available to
serve, at the discretion of the Board of Directors, as officers of the Company.
The administrative services to be provided by Oppenheimer under each New
Advisory Agreement will be at its own expense. The Existing Advisory Agreement
contains a similar provision. During the Transition Period, G.R. Phelps will
continue to provide administrative services to each Account, including providing
accounting, administrative and clerical personnel and, together with
Oppenheimer, monitoring the activities of the transfer agent, custodian and
independent auditors of the Accounts.
EXPENSES. Expenses neither assumed by Oppenheimer under the New Advisory
Agreements nor paid by the Accounts' distributor will be paid by the Accounts.
Expenses paid by the Accounts include interest, taxes, brokerage
9
<PAGE>
commissions, insurance premiums, compensation, expenses and fees of Non-
interested Directors, legal and audit expenses, transfer agent and custodian
fees and expenses, registration fees, expenses of printing and mailing reports
and proxy statements to shareholders, expenses of shareholder meetings and non-
recurring expenses including litigation. The Existing Advisory Agreement
contains a similar provision.
MANAGEMENT FEES. The rate of the advisory fee applicable to each Account
under the New Advisory Agreements is the same as the rate applicable under the
Existing Advisory Agreement.
As compensation for its investment advisory services, each Account will pay
a monthly fee to Oppenheimer which is based on a stated percentage of the
Account's average daily net asset value as follows:
LIQUID ACCOUNT:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $200,000,000.......................................... 0.50%
Next $100,000,000........................................... 0.45%
Amount over $300,000,000.................................... 0.40%
</TABLE>
TOTAL RETURN ACCOUNT, GOVERNMENT SECURITIES ACCOUNT, INCOME ACCOUNT
AND GROWTH ACCOUNT:
<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>
CAPITAL APPRECIATION ACCOUNT AND BALANCED ACCOUNT:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $250,000,000.......................................... 0.85%
Amount over $250,000,000.................................... 0.75%
</TABLE>
DIVERSIFIED INCOME ACCOUNT:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $250,000,000.......................................... 0.75%
Amount over $250,000,000.................................... 0.65%
</TABLE>
As of the Record Date, the net assets of each Account were: Liquid Account
- -- $72,409,099; Government Securities Account -- $49,533,188; Income Account --
$33,154,723; Total Return Account -- $216,791,482; Growth Account --
$114,807,583; Capital Appreciation Account -- $32,466,740; Balanced Account --
$40,698,739; and Diversified Income Account -- $23,931,919.
10
<PAGE>
EXPENSE LIMITATIONS. The New Advisory Agreements contain no expense
limitation provisions. However, independent of the New Advisory Agreements,
Oppenheimer has voluntarily undertaken that it will reimburse each Account to
the extent that the total expenses of the Account in any fiscal year (including
the investment advisory fee but exclusive of taxes, interest, brokerage
commissions, distribution plan payments and any extraordinary non-recurring
expenses, including litigation) exceeds the most stringent expense limitation
applicable to an Account under state laws relating to the registration and sale
of the Accounts' shares. At present, the most restrictive limitation by a state
limits expenses (with specified exclusions) to 2.5% of the first $30 million of
average annual net assets, 2% of the next $70 million and 1.5% of average annual
net assets in excess of $100 million.
The Existing Advisory Agreement as it relates to the Liquid Account and to
the Class A shares of each other Account contains a provision requiring G.R.
Phelps to reimburse an Account if certain of the Account's expenses (including
advisory fees but excluding interest, taxes, brokerage commissions and
extraordinary expenses) exceed 1.5% (1.0% in the case of the Liquid Account) of
the value of the Account's average daily net assets in any given fiscal year.
The Existing Agreement as it relates to the Class B shares of each Account
(other than the Liquid Account) contains a provision which is similar to
Oppenheimer's voluntary undertaking to reimburse an Account if the Account's
annual expenses exceed the most stringent state regulatory limitation applicable
to the Account. Neither the Class A nor the Class B expense limitation
provisions are contained in the New Advisory Agreements.
EFFECT OF THE ELIMINATION OF THE CONTRACTUAL AND CERTAIN VOLUNTARY EXPENSE
LIMITATIONS.
INCOME ACCOUNT, GOVERNMENT SECURITIES ACCOUNT, TOTAL RETURN ACCOUNT AND
GROWTH ACCOUNT. Under the contractual expense limitation provisions of the
Existing Advisory Agreement, G.R. Phelps does not expect to be required to
reimburse any expenses for the Government Securities Account, the Income
Account, the Total Return Account and the Growth Account during such Accounts'
current fiscal year. Had the New Advisory Agreements been in effect for the
current fiscal year, Oppenheimer, under its voluntary expense limitation
undertaking, would have had no obligation to limit or reimburse the expenses of
the Government Securities Account, the Income Account, the Total Return Account
or the Growth Account.
Independent of the Existing Advisory Agreement, G.R. Phelps and the
distributor for each Account, CMFS, have voluntarily agreed for the current
fiscal year to limit the Income Account's Rule 12b-1 fees applicable to Class A
shares to 0.00%, and the Account's other expenses (not including management fees
and Rule 12b-1 fees or other class-related expenses) related to the Account's
Class A and Class B shares to 0.00% of the Account's average net assets,
11
<PAGE>
notwithstanding that the Existing Advisory Agreement does not require them to do
so. Without this agreement, the annualized total annual operating expenses of
the Income Account's Class A and Class B shares are estimated to be 1.19% and
1.94%, respectively, for the current fiscal year. As a result of this agreement,
the annualized total annual operating expenses for the current fiscal year for
the Class A and Class B shares are estimated to be .625% and 1.625%,
respectively. Oppenheimer has not proposed a similar voluntary undertaking for
the Income Account because of the intention to reorganize the Income Account
into a comparable Oppenheimer fund during the Transition Period, which
shareholders of the Income Account will be asked to vote upon at a separate
meeting of shareholders after the Merger.
LIQUID ACCOUNT. G.R. Phelps is required by the Existing Advisory Agreement
to limit or reimburse the Liquid Account's expenses for the current fiscal year
to 1.00% of the Account's average net assets. G.R. Phelps is effecting the
limitation, however, through CMFS' agreement not to impose the Rule 12b-1
distribution fee which the Liquid Account would otherwise be obligated to pay.
Had the New Advisory Agreement for Liquid Account been in effect for the current
fiscal year, Oppenheimer, unlike G.R. Phelps, would have had no contractual
obligation to limit or reimburse the Account's expenses. Adoption of the New
Advisory Agreement, however, will not change CMFS's contractual obligation not
to impose the Rule 12b-1 distribution fee which the Liquid Account would
otherwise be obligated to pay if the Liquid Account's expenses for the current
fiscal year exceed 1.00% of the Account's average net assets. However,
Oppenheimer has not proposed a similar undertaking for the Liquid Account
because of the intention to reorganize the Liquid Account into a comparable
Oppenheimer fund during the Transition Period, which shareholders of the Liquid
Account will be asked to vote on at a separate meeting of shareholders after the
Merger.
LIFESPAN ACCOUNTS. The LifeSpan Accounts were first offered to investors on
May 1, 1995. Pursuant to the contractual expense limitation provisions of the
Existing Advisory Agreement that limits Class A expenses and G.R. Phelps'
voluntary agreement to limit Class B expenses, G.R. Phelps has limited the
Capital Appreciation Account's and the Balanced Account's total annual operating
expenses for the current fiscal year to 1.50% and 2.30% of the Account's average
daily net assets attributable to the Class A and Class B shares, respectively,
and has limited the Diversified Income Account's total annual operating expenses
to 1.50% and 2.25% of the Account's average daily net assets attributable to the
Class A and Class B shares, respectively.
Had the New Advisory Agreements been in effect for such Accounts,
Oppenheimer, unlike G.R. Phelps, would have been under no contractual obligation
to limit the LifeSpan Account's Class A expenses or to limit Class B expenses
(other than its voluntary undertaking to limit expenses under state
12
<PAGE>
securities law expense limitation requirements). Under the New Advisory
Agreements, the annualized total operating expenses for the Class A and Class B
shares of each such Account during the current fiscal year are estimated to be:
Capital Appreciation Account -- 1.75% and 2.50%; Balanced Account -- 1.74% and
2.49%; and Diversified Income Account -- 1.71% and 2.46%, respectively.
For additional information about the Accounts' expenses under each
Agreement, see the "Comparative Fee Table" at page 38.
STANDARD OF CARE. The New Advisory Agreements provide that in the absence
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard for its obligations and duties under the New
Advisory Agreements, Oppenheimer will not be liable for any loss sustained by
reason of good faith errors or omissions in connection with any matters to which
the New Advisory Agreements relate. The Existing Advisory Agreement contains a
similar provision.
APPROVAL, TERMINATION AND AMENDMENT PROVISIONS. If Proposal 1 is approved
by the shareholders of each Account, each New Advisory Agreement will remain in
effect for an initial period of two years from the date of its execution and
from year to year thereafter provided that its continuance and the continuance
of Oppenheimer as investment adviser to the Account is approved at least
annually by the vote of a majority of the Non-interested Directors cast in
person at a meeting called for the purpose of voting on such approval and by a
vote of the Board of Directors or of a majority of the outstanding voting
securities of the Account. Each New Advisory Agreement may be terminated without
penalty on 60 days' written notice to the other party and will terminate in the
event of its assignment. The Existing Advisory Agreement contains a similar
provision except that the Agreement may be terminated with respect to an Account
without penalty on 60 days' written notice by the Company's Board of Directors,
by vote of holders of a majority of the outstanding shares of the respective
Account or, on 90 days' written notice, by G.R. Phelps. The New Advisory
Agreement may not be amended without the affirmative vote or written consent of
the holders of a majority of the outstanding voting securities of the Account
(as that term is defined in the 1940 Act). The Existing Advisory Agreement does
not contain a specific amendment provision.
PORTFOLIO TRANSACTIONS AND BROKERAGE. Each New Advisory Agreement contains
provisions relating to the selection of broker-dealers including affiliated
broker-dealers (as defined in the 1940 Act) ("brokers") for an Account's
portfolio transactions. Oppenheimer may use such brokers and may, in its best
judgment based on all relevant factors, implement the policy of each Account to
achieve best execution of portfolio transactions. While Oppenheimer need not
seek advance competitive bidding or base its selection on posted rates, it is
expected to be aware of the current rates of most eligible brokers and to
13
<PAGE>
minimize the commissions paid to the extent consistent with the interests and
policies of each Account as established by its Board of Directors and the
provisions of the New Advisory Agreements. The Existing Advisory Agreement
contains similar provisions except that it does not permit the use of affiliated
broker-dealers.
Each New Advisory Agreement also provides that, consistent with obtaining
the best execution of an Account's portfolio transactions, Oppenheimer, in the
interest of an Account, may select brokers (other than affiliated brokers)
because they provide brokerage and/or research services to an Account and/or
other accounts of Oppenheimer. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by Oppenheimer that the commissions are reasonable in
relation to the services provided, viewed either in terms of that transaction or
Oppenheimer's overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be used by
Oppenheimer for the benefit of an Account or other of its advisory clients. To
show that the determinations were made in good faith, Oppenheimer must be
prepared to show that the amount of such commissions paid over a representative
period selected by the Board of Directors was reasonable in relation to the
benefits to an Account. Each New Advisory Agreement recognizes that an
affiliated broker-dealer may act as one of the regular brokers for an Account
provided that any commissions paid to such broker are calculated in accordance
with procedures adopted by the Account's Board of Directors under applicable SEC
rules. The Existing Advisory Agreement contains similar provisions except that
it does not permit the use of affiliated broker-dealers.
THE EXISTING ADVISORY AGREEMENT. G.R. Phelps provides investment advisory
services to the Accounts pursuant to the Existing Advisory Agreement. The
Existing Advisory Agreement was last approved by: (i) shareholders of the Liquid
Account on August 19, 1985 (voting to approve an increase in the advisory fees
paid by that Account); (ii) shareholders of the Government Securities Account,
Income Account, Total Return Account and Growth Account on March 13, 1986; and
(iii) the initial shareholders of the LifeSpan Accounts on May 1, 1995 in
connection with the commencement of those Accounts' operations. The Existing
Advisory Agreement has been approved annually by the Board of Directors and was
most recently approved on behalf of each Account by the Company's Board of
Directors, including the Non-interested Directors, at a meeting held on
September 26, 1995, when the Existing Advisory Agreement was renewed for the
period ending October 30, 1996.
14
<PAGE>
During the Company's fiscal year ended December 31, 1994, each Account paid
advisory fees to G.R. Phelps as follows:
<TABLE>
<CAPTION>
ACCOUNT AMOUNT OF ADVISORY FEE
- ------------------------------ ----------------------------------------------------
<S> <C> <C>
Liquid Account................ $ 385,774 (0.50% of the Account's average daily
net assets)
Income Account................ $ 304,391 (0.625% of the Account's average daily
net assets)
Government Securities
Account...................... $ 460,523 (0.625% of the Account's average daily
net assets)
Total Return Account.......... $ 1,173,401 (0.625% of the Account's average daily
net assets)
Growth Account................ $ 447,812 (0.625% of the Account's average daily
net assets)
</TABLE>
Shares of the LifeSpan Accounts were first offered to the public on May 1,
1995 and as of August 31, 1995 these Accounts paid advisory fees to G.R. Phelps
as follows:
<TABLE>
<CAPTION>
ACCOUNT AMOUNT OF ADVISORY FEE (ANNUALIZED)
- -------------------------------------- --------------------------------------------
<S> <C> <C>
Capital Appreciation Account.......... $ 75,904 (0.85% of the Account's average
daily net assets)
Balanced Account...................... $ 100,551 (0.85% of the Account's average
daily net assets)
Diversified Income Account............ $ 52,915 (0.75% of the Account's average
daily net assets)
</TABLE>
MATERIAL TERMS OF THE NEW SUBADVISORY AGREEMENTS WITH PILGRIM AND BEA
THE NEW SUBADVISORY AGREEMENTS WITH PILGRIM AND BEA. The material terms of
the New Subadvisory Agreements with Pilgrim and BEA are identical to those of
the corresponding Existing Subadvisory Agreement, except for the fact that the
Company is not a party to the New Subadvisory Agreements, and except for the
identity of the investment adviser and the dates of execution and termination.
THE RATE OF THE SUBADVISORY FEE TO BE PAID BY OPPENHEIMER TO PILGRIM AND BEA IS
IDENTICAL TO THE RATE OF THE SUBADVISORY FEE WITH RESPECT TO EACH SUBADVISED
ACCOUNT UNDER THE EXISTING SUBADVISORY AGREEMENTS. THESE SUBADVISED ACCOUNTS ARE
NOT RESPONSIBLE FOR PAYMENT OF THE SUBADVISORY FEES. THE ENTIRE SUBADVISORY FEE
IS PAID DIRECTLY TO THE RESPECTIVE SUBADVISER BY OPPENHEIMER.
The following description of the material terms of the New Subadvisory
Agreements for Pilgrim and BEA is qualified in its entirety by reference to the
forms of New Subadvisory Agreement for Pilgrim and BEA, respectively, attached
to this Proxy Statement as EXHIBIT B. Such forms are identical for
15
<PAGE>
each such Subadviser and the LifeSpan Accounts it subadvises, except for the
names of the Accounts, the fee schedules and the Standard of Care and
Miscellaneous Provisions described below.
INVESTMENT ADVISORY SERVICES. Subject to the oversight of Oppenheimer, each
Subadviser will provide the respective Subadvised Account with advice concerning
the investment management of that portion of the Account's assets allocated to
it by Oppenheimer. The Subadviser will determine what securities will be
purchased, held or sold on behalf of the respective Subadvised Account.
SUBADVISORY FEES. In the event the advisory fee payable to Oppenheimer is
required to be reduced by an applicable regulatory expense limitation of any
jurisdiction where the respective Account's shares are offered for sale, the
amount payable by Oppenheimer to Pilgrim and BEA shall be reduced by a
proportionate amount. As compensation for its services, Oppenheimer will pay a
quarterly fee to BEA and Pilgrim which is based on a stated percentage of that
portion of the respective Subadvised Account's average daily net assets
allocated to that Subadviser as follows:
NEW AND EXISTING SUBADVISORY AGREEMENTS WITH BEA (CAPITAL APPRECIATION
ACCOUNT, BALANCED ACCOUNT AND DIVERSIFIED INCOME ACCOUNT):
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $25 million........................................... 0.45%
Next $25 million............................................ 0.40%
Next $50 million............................................ 0.35%
Over $100 million........................................... 0.25%
</TABLE>
For purposes of calculating the fee payable to BEA, the net asset values of
that portion of the assets of each LifeSpan Account subadvised by BEA are
aggregated with that portion of the net asset value of the assets of the portion
of the portfolios of Connecticut Mutual Financial Services Series Fund I, Inc.
("Series Fund I") managed by BEA. Series Fund I is an open-end investment
company currently managed by G.R. Phelps.
Shares of the LifeSpan Accounts subadvised by BEA were first offered to the
public on May 1, 1995 and, as of August 31, 1995, G.R. Phelps paid total
subadvisory fees to BEA of $16,189 for Capital Appreciation Account, Balanced
Account and Diversified Income Account, representing 0.45% (annualized) of the
combined average daily net assets of the three Accounts.
NEW AND EXISTING SUBADVISORY AGREEMENTS WITH PILGRIM (CAPITAL APPRECIATION
ACCOUNT AND BALANCED ACCOUNT):
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
All assets.................................................. 0.60%
</TABLE>
16
<PAGE>
For purposes of calculating the fee payable to Pilgrim, the net asset values
of that portion of the assets of each LifeSpan Account subadvised by Pilgrim are
aggregated with that portion of the net asset value of the assets of the portion
of the portfolios of Series Fund I managed by Pilgrim.
Shares of the LifeSpan Accounts subadvised by Pilgrim were first offered to
the public on May 1, 1995 and, as of August 31, 1995, G.R. Phelps paid total
subadvisory fees to Pilgrim of $22,597 for Capital Appreciation Account and
Balanced Account, representing 0.60% (annualized) of the combined average daily
net assets of both Accounts.
EXPENSES. Each Subadviser bears its own costs of providing services under
the respective New Subadvisory Agreement and has no responsibility for paying
any expenses on behalf of a Subadvised Account including brokerage and other
expenses incurred in placing orders for the purchase and sale of securities.
APPROVAL, TERMINATION AND AMENDMENT PROVISIONS. If Proposals 2(a) and 2(b)
are approved by the shareholders of the respective Subadvised Accounts, each New
Subadvisory Agreement will remain in effect for two years from the date it was
executed and from year to year thereafter provided that its continuance and the
continuance of Oppenheimer as investment adviser to the Account is approved at
least annually by the vote of a majority of the Non-interested Directors cast in
person at a meeting called for the purpose of voting on such approval and by a
vote of the Board of Directors or of a majority of the outstanding voting
securities of the Account. Each New Subadvisory Agreement may be terminated
without penalty on 60 days' written notice (i) by the Company's Board of
Directors, (ii) by vote of the holders of a majority of the outstanding shares
of the respective Subadvised Account, (iii) by Oppenheimer, or, (iv) on 90 days'
written notice, by Pilgrim or BEA, and will terminate in the event of its
assignment. The New Subadvisory Agreements may not be amended without the
affirmative vote of the holders of a majority of the outstanding voting
securities of the respective Subadvised Account (as that term is defined in the
1940 Act).
STANDARD OF CARE. In the absence of willful misfeasance, bad faith,
negligence, or reckless disregard of the performance of its duties, Pilgrim is
not subject to liability to the LifeSpan Accounts subadvised by Pilgrim,
Oppenheimer, the Company, or to any shareholder of such Accounts 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.
Pilgrim has agreed to indemnify Oppenheimer and hold Oppenheimer harmless
from, against, for and in respect to losses, damages, costs and expenses
incurred by Oppenheimer, including attorneys' fees reasonably incurred, in the
17
<PAGE>
event of Pilgrim's willful misfeasance, bad faith or negligence in the
performance of its duties or obligation hereunder or by reason of its reckless
disregard of such duties or obligations; provided, however, that Oppenheimer
shall not be so indemnified for such losses, damages, costs and expenses,
including such attorneys' fees, to the extent they result from its willful
misfeasance, bad faith or negligence. Oppenheimer has agreed to indemnify and
hold harmless Pilgrim to the same extent and subject to the same limitations as
Pilgrim has agreed to indemnify and hold harmless Oppenheimer.
BEA will not be liable for losses as a result of its activities in
connection with the adoption of any investment policy or the purchase, sale or
retention of securities on behalf of the LifeSpan Accounts subadvised by BEA, if
such activities were made with due care and in good faith. Nothing in the New
Subadvisory Agreement, however, will protect BEA if it negligently causes the
LifeSpan Accounts subadvised by BEA, to be in violation of applicable statutes,
rules, regulations, documents governing the operation of such Accounts, or
requirements under the Internal Revenue Code. BEA will be liable for willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under the New
Subadvisory Agreement. BEA has agreed to indemnify Oppenheimer to the fullest
extent permitted by law against any and all loss, damage, judgment, fines,
amounts paid in settlement and attorneys' fees incurred by Oppenheimer resulting
in whole or in part from any activities by BEA described above.
MISCELLANEOUS PROVISIONS. The New Subadvisory Agreements with BEA also
specifically appoint BEA as agent for Oppenheimer and the LifeSpan Accounts
subadvised by BEA with respect to certain discretionary corporate actions
relating to securities of the LifeSpan Accounts subadvised by BEA and provide
that BEA will not be liable to Oppenheimer or the LifeSpan Accounts subadvised
by BEA for failure to exercise such discretion in the absence of willful
misfeasance, bad faith or negligence.
Each of the Existing Subadvisory Agreements with Pilgrim and BEA was
approved by the Company's Board of Directors on April 24, 1995 and by the
initial shareholder of each Subadvised Account on May 1, 1995.
MATERIAL TERMS OF THE NEW SUBADVISORY AGREEMENTS WITH BABSON-STEWART
THE NEW SUBADVISORY AGREEMENTS WITH BABSON-STEWART (CAPITAL APPRECIATION
ACCOUNT AND BALANCED ACCOUNT). The material terms of the New Subadvisory
Agreements with Babson-Stewart (the "Babson-Stewart Subadvisory Agreements") are
similar to those of the corresponding Existing Subadvisory Agreements with
Scudder. Material changes are highlighted below. NO LIFESPAN ACCOUNT SUBADVISED
BY BABSON-STEWART WILL BE RESPONSIBLE FOR PAYING THE SUBADVISORY FEE DIRECTLY TO
BABSON-STEWART. INSTEAD, OPPENHEIMER WILL BE RESPONSIBLE FOR PAYMENT OF SUCH
FEES.
18
<PAGE>
The following description of the material terms of the Babson-Stewart
Subadvisory Agreements is qualified in its entirety by reference to the form of
Babson-Stewart Subadvisory Agreement attached to this Proxy Statement as EXHIBIT
C.
INVESTMENT ADVISORY SERVICES. Subject to the oversight of Oppenheimer,
Babson-Stewart will provide each LifeSpan Account subadvised by Babson-Stewart
with advice concerning the investment management of the Account's assets
allocated to it by Oppenheimer. Babson-Stewart will determine what securities
will be purchased, held or sold on behalf of the respective Subadvised Account.
NEW SUBADVISORY FEES. As compensation for its services, Oppenheimer will
pay a monthly fee to Babson-Stewart which is based on a stated percentage of
that portion of each of Capital Appreciation Account's and Balanced Account's
average daily net assets allocated to Babson-Stewart as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ ------------
<S> <C>
First $10 million........................................... 0.75%
Next $15 million............................................ 0.625%
Next $25 million............................................ 0.50%
Over $50 million............................................ 0.375%
</TABLE>
The breakpoints in the subadvisory fee payable by Oppenheimer to
Babson-Stewart apply to the average daily net asset value of that portion of the
assets of each LifeSpan Account subadvised by Babson-Stewart separately. The
portion of the net assets of these Accounts allocated to Babson-Stewart will not
be aggregated in applying these breakpoints.
EXISTING SUBADVISORY FEES. As compensation for its services, G.R. Phelps
currently pays a quarterly fee to Scudder which is based on a stated percentage
of that portion of each of Capital Appreciation Account's and Balanced Account's
average daily net assets allocated to Scudder as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------------------------ -------------
<S> <C>
First $10 million........................................... 0.75%
Next $15 million............................................ 0.70%
Next $15 million............................................ 0.65%
Next $60 million............................................ 0.50%
Over $100 million........................................... 0.35%
</TABLE>
Although G.R Phelps pays a separate fee to Scudder with respect to each
LifeSpan Account, for purposes of applying the breakpoints in the subadvisory
fee currently payable to Scudder with respect to each such Account, the average
daily net assets of the portion of all of such Accounts managed by Scudder are
aggregated.
19
<PAGE>
Shares of the Capital Appreciation Account and Balanced Account were first
offered to the public on May 1, 1995 and, as of August 31, 1995, G.R. Phelps
paid total subadvisory fees to Scudder of $25,965 for Capital Appreciation
Account and Balanced Account, representing 0.75% (annualized) of the portion of
the combined average daily net assets of both Accounts managed by Scudder.
EXPENSES. Babson-Stewart bears its own costs of providing services under
the Babson-Stewart Subadvisory Agreements and has no responsibility for paying
any expenses on behalf of Capital Appreciation Account and Balanced Account.
Each Existing Subadvisory Agreement with Scudder contains a substantially
similar provision.
APPROVAL, TERMINATION AND AMENDMENT PROVISIONS. If Proposal 2(c) is
approved by the shareholders of Capital Appreciation Account and Balanced
Account, each Babson-Stewart Subadvisory Agreement will remain in effect for two
years from the date it was executed and from year to year thereafter provided
that its continuance and the continuance of Oppenheimer as investment adviser to
the Account is approved at least annually by the vote of a majority of the
Non-interested Directors cast in person at a meeting called for the purpose of
voting on such approval and by a vote of the Board of Directors or of a majority
of the outstanding voting securities of the Account. Each Babson-Stewart
Subadvisory Agreement may be terminated without penalty on 60 days' written
notice (i) by the Company's Board of Directors, (ii) by vote of holders of a
majority of the outstanding shares of the respective LifeSpan Account subadvised
by Pilgrim, (iii) by Oppenheimer, or (iv) on 90 days' written notice by
Babson-Stewart. Each Babson-Stewart Subadvisory Agreement will terminate in the
event of its assignment. The Babson-Stewart Subadvisory Agreements may not be
amended without the affirmative vote of the holders of a majority of the
outstanding voting securities of the respective Subadvised Account (as that term
is defined in the 1940 Act). The Existing Subadvisory Agreements with Scudder
contain substantially similar provisions.
STANDARD OF CARE. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard with respect to its obligations and duties
under the Babson-Stewart Subadvisory Agreements, Babson-Stewart will not be
subject to liability for any loss sustained by reason of its good faith errors
or omissions in connection with any matters to which the Babson-Stewart
Subadvisory Agreements relate.
20
<PAGE>
The Existing Subadvisory Agreements with Scudder contain provisions that are
similar to those of the Babson-Stewart Subadvisory Agreements. Specifically, the
Existing Subadvisory Agreements with Scudder provide that Scudder will not be
liable for losses as a result of its activities in connection with the adoption
of any investment policy or the purchase, sale or retention of securities on
behalf of a LifeSpan Account subadvised by Scudder, if such activities were made
with due care and in good faith. Nothing in the Existing Subadvisory Agreements,
however, will protect Scudder if it negligently causes a LifeSpan Account
subadvised by Scudder to be in violation of applicable statutes, rules,
regulations, documents governing the operation of such Accounts, or requirements
under the Internal Revenue Code. Scudder is liable for willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under the Existing Subadvisory
Agreements. Scudder has agreed to indemnify G.R. Phelps to the fullest extent
permitted by law against any and all loss, damage, judgment, fines, amounts paid
in settlement and attorneys' fees incurred by G.R. Phelps resulting in whole or
in part from any activities by Scudder described above.
MISCELLANEOUS PROVISIONS. The Babson-Stewart Subadvisory Agreements provide
that Babson-Stewart will provide officers to the Company as the Company's Board
of Directors may request and at Babson-Stewart's expense. There is no similar
provision in the Existing Subadvisory Agreements with Scudder.
Each of the Existing Subadvisory Agreements with Scudder was approved by the
Company's Board of Directors on behalf of the LifeSpan Account subadvised by
Scudder on April 24, 1995 and by the initial shareholder of each LifeSpan
Account subadvised by Scudder on May 1, 1995.
DIRECTORS' EVALUATION AND RECOMMENDATION
THE DIRECTORS OF THE COMPANY RECOMMEND UNANIMOUSLY THAT SHAREHOLDERS OF EACH
ACCOUNT (OTHER THAN THE MUNICIPAL ACCOUNTS) APPROVE THEIR RESPECTIVE NEW
ADVISORY AGREEMENT.
THE DIRECTORS OF THE COMPANY RECOMMEND UNANIMOUSLY THAT SHAREHOLDERS OF THE
CAPITAL APPRECIATION ACCOUNT, THE BALANCED ACCOUNT AND THE DIVERSIFIED INCOME
ACCOUNT APPROVE THEIR RESPECTIVE NEW SUBADVISORY AGREEMENTS.
EVALUATION BY THE BOARD OF DIRECTORS
The Board of Directors has determined unanimously that long-term continuity
and efficiency of management services after the Merger can best be assured by
approving New Advisory Agreements for each Account and New
21
<PAGE>
Subadvisory Agreements on behalf of the Subadvised Accounts. The Board believes
that the New Advisory and Subadvisory Agreements will enable the Accounts to
obtain services of high quality at costs which they deem appropriate and
reasonable and that approval of the Agreements is in the best interests of the
Accounts and their shareholders.
In evaluating the New Advisory Agreements and the Babson-Stewart Subadvisory
Agreements, the Board of Directors requested and reviewed, with the assistance
of its independent legal counsel, materials furnished by Oppenheimer and
Babson-Stewart. These materials included financial statements as well as other
written information regarding Oppenheimer and Babson-Stewart and their
personnel, operations, and financial condition. Consideration was given to
comparative information concerning the current fees and expenses of the Accounts
under the Existing Advisory Agreements and the amount of the fees and expenses
the Accounts would have paid if the New Advisory Agreements had been in effect
during the current fiscal year. See the "Comparative Fee Table" below.
Consideration was also given to comparative information concerning other mutual
funds with similar investment objectives including information derived from data
prepared by Lipper Analytical Services, Inc. Attached to this Proxy Statement is
APPENDIX A, containing among other things, a list of other funds managed by
Oppenheimer that have similar investment objectives to those of the Accounts,
their net assets and the rate of the advisory fee paid to Oppenheimer. Similar
information is provided in APPENDIX A for Babson-Stewart.
The Board of Directors also reviewed the terms and provisions of the New
Advisory Agreements and the Babson-Stewart Subadvisory Agreement and compared
them to the existing management arrangements as well as the management
arrangements of other mutual funds, particularly with respect to the allocation
of various types of expenses, levels of fees and resulting expense ratios. The
Board evaluated the nature and extent of services provided by other investment
advisers to their respective funds and also considered the benefits Oppenheimer
would obtain from its relationship with the Accounts and the anticipated
economies of scale over time in costs and expenses to Oppenheimer associated
with its providing such services.
The Board of Directors also considered the terms of the Merger and the
possible effects of the Merger upon Oppenheimer and its ability to provide
services to the Accounts. The Board evaluated such factors as Oppenheimer's
experience in providing various financial services to investment companies, its
experience in the investment company business, its distribution and shareholder
servicing capabilities and its reputation, integrity, financial responsibility
and stability.
The Board also considered in determining to approve the New Advisory
Agreements that shareholders of the Accounts would be able to exchange their
22
<PAGE>
shares after the Transition Period for a wider variety of portfolios within the
Oppenheimer funds' family than are currently available to shareholders of the
Accounts within the Connecticut Mutual family. The Board determined that
Oppenheimer's assumption of the investment management function for the Accounts
would in all likelihood offer the Accounts continued effective advisory services
and capabilities. The Board considered the performance record of the mutual
funds managed by Oppenheimer and the fact that Oppenheimer has considerable
staffing resources available to provide management services to the Accounts. The
Board of Directors was advised by Oppenheimer that currently it was not
recommending changes in the Accounts' investment objectives and policies. The
Board also noted the assurances it received from Oppenheimer that it is
adequately capitalized to enable it to provide high quality investment
management services.
The Board of Directors reviewed the terms and provisions of the New
Subadvisory Agreements with Pilgrim and BEA and considered the following factors
in determining to approve the New Subadvisory Agreements with Pilgrim and BEA:
(a) the identical material terms, including the subadvisory fee rate, under both
the New Subadvisory Agreements and the Existing Subadvisory Agreements; (b) the
identical nature and quality of services that will continue to be provided by
the respective Subadviser to the affected Account; and (c) the retention by each
Subadviser of the services of all the investment management personnel and
employees currently providing investment subadvisory services to the affected
Accounts.
Based upon its review, the Board of Directors concluded that the terms of
the New Advisory and Subadvisory Agreements are reasonable, fair and in the best
interests of the Accounts and their shareholders, and that the fees provided
therein are fair and reasonable in light of the usual and customary charges made
by others for services of the same nature and quality. Accordingly, the Board
concluded that retaining Oppenheimer to serve as investment adviser to the
Accounts and Oppenheimer's contracting with Pilgrim, BEA and Babson-Stewart to
serve as the Subadvisers to the Subadvised Accounts after the Merger is
desirable and in the best interests of the Accounts and their shareholders.
If the New Advisory Agreements are approved by the shareholders of each
Account and, where required, each Class, Oppenheimer will serve as investment
adviser to each Account and the New Advisory Agreements will take effect with
respect to all Subadvised Accounts upon the consummation of the Merger which is
expected to occur during the first three months of 1996 after receipt by the
parties to the Merger of the required regulatory approvals. If the Merger is not
consummated, the Board of Directors has determined that the Existing Advisory
Agreement will continue in effect and G.R. Phelps will continue to serve as
investment adviser to each Account, notwithstanding an affirmative vote by
shareholders on this Proposal. If the New Advisory Agreement is
23
<PAGE>
not approved by the shareholders of one or more of the Accounts or, where
required, by shareholders of a Class of such Account or Accounts, and the Merger
is consummated, the Existing Advisory Agreement will terminate with respect to
that Account or Accounts and no person will then serve as investment adviser to
that Account or Accounts. In such event, the Board of Directors will determine
what further action should be taken. Such action may include the appointment of
Oppenheimer or another advisory organization to serve as investment adviser on
an interim basis as permitted by the 1940 Act or current positions of the SEC
staff.
If the shareholders of one or more of the Subadvised Accounts do not approve
the New Subadvisory Agreements with respect to an Account or Accounts and the
Merger is consummated, the Existing Subadvisory Agreements with respect to such
Account or Accounts will terminate and no person will serve as subadviser to
such Account or Accounts. In such event, the Board of Directors will determine
what action, if any, to take. Such action may include the assumption by
Oppenheimer of sole responsibility for portfolio management for the affected
Account or Accounts.
The Board also considered the benefit to the Accounts of the Transition
Period which will permit the orderly assumption by OFD and Oppenheimer
Shareholder Services of their respective distribution and transfer agency
responsibilities.
VOTE REQUIRED
Approval of Proposal 1 requires the affirmative vote of a majority of the
outstanding voting securities ("Majority Shareholder Vote") of each Account and,
in the case of all of the Accounts other than Liquid Account, the Class A and
Class B shares of each such Account voting separately on the Proposal, as
defined in the 1940 Act, which means the lesser of (1) 67 percent or more of the
shares of the Account or Class represented at a shareholders' meeting if at
least 50 percent of all outstanding shares of the Account and, where required,
Class are represented at such meeting or (2) 50 percent or more of the
outstanding shares of the Account or Class entitled to vote at the Meeting.
Approval of each of Proposals 2(a), 2(b) and 2(c) requires a Majority
Shareholder Vote of each Subadvised Account voting separately on the Proposals
affecting that Account.
24
<PAGE>
PROPOSAL 3
APPROVAL OF NEW SERVICE PLANS FOR
CLASS A SHARES AND NEW NEW DISTRIBUTION AND
SERVICE PLANS FOR CLASS B SHARES OF EACH ACCOUNT
(OTHER THAN LIQUID ACCOUNT)
(FOR ACTION BY CLASS A AND CLASS B
SHAREHOLDERS OF EACH ACCOUNT)
GENERAL
IF PROPOSAL 1, REGARDING THE NEW ADVISORY AGREEMENTS, IS APPROVED, PROXIES
NOT INDICATING A CONTRARY INTENTION WILL BE VOTED IN FAVOR OF APPROVING A NEW
SERVICE PLAN FOR CLASS A SHARES AND A NEW DISTRIBUTION AND SERVICE PLAN FOR
CLASS B SHARES OF EACH ACCOUNT (OTHER THAN THE LIQUID ACCOUNT) (EACH, A "NEW
PLAN" AND TOGETHER, THE "NEW PLANS") WITH OFD PURSUANT TO RULE 12B-1 UNDER THE
1940 ACT. OFD is located at Two World Trade Center, New York, New York
10048-0203. The shareholders of the Liquid Account are not being asked to vote
on this Proposal 3. During the Transition Period, CMFS will continue to serve as
distributor to the Liquid Account pursuant to the terms of the existing Rule
12b-1 distribution plan for the Liquid Account.
The form of each New Plan for Class A shares1 (the "New Class A Plan") is
attached as EXHIBIT D. The form of each New Plan for Class B shares (the "New
Class B Plan") is attached as EXHIBIT E. The New Plans were approved unanimously
on November 17, 1995 by the Directors, including the Non-interested Directors,
subject to approval by shareholders. Shareholders of each Account will vote
separately by Class on the approval of the New Plan with respect to that Class.
The following summary is qualified in its entirety by the provisions of EXHIBITS
D and E.
The New Plans set forth the terms and conditions on which each Account will
pay certain fees to OFD in connection with the services that OFD will provide to
shareholders of the Accounts. If the New Plans are approved by shareholders, the
Plans will become effective at the closing of the Transition Period and the
corresponding current distribution plans (the "Current Plans") with CMFS will
terminate.
The Current Plans for Class A and Class B shares and the New Class A Plans
are "reimbursement type" plans under which the Accounts reimburse the
distributor for its actual expenditures in distributing shares and servicing
accounts. The New Class B Plans are "compensation type" plans under which the
Accounts compensate OFD for its services in distributing Class B shares and
- ------------------------
(1) The Municipal Accounts have a single class of shares and all references to
Class A shares and the New Class A Plan are intended to include that class.
25
<PAGE>
servicing accounts. Accordingly, the aggregate fees paid under the New Class B
Plans which represent a flat fee, may be higher than the fees that could be
incurred and reimbursed under the Current Plans for Class B shares. However, the
maximum fee rates are the same under both the New and Current Class B Plans.
Although the New Class A Plan is a service plan and is not a distribution
and service plan like the Current Plan, OFD will provide distribution services
at its own expense which are comparable to those provided for in the Current
Plan. In addition, OFD will provide the same level of shareholder accounting
services as are provided for in the Current Plan, including, among other things,
answering routine inquiries from shareholders, information and customer liaison
services and the maintenance of accounts. The distribution and accounting
services to be provided under the New Class B Plans are substantially similar to
those of the Current Plans.
RULE 12B-1 SERVICE AND DISTRIBUTION FEES
CLASS A SHARES. The fees payable by the Class A shares of each Account
under the New Class A Plans will be at the same maximum rate as is provided in
the Current Plans, although the services for which OFD may be reimbursed differ.
The fees under each New Class A Plan will consist of a service fee at the annual
rate of up to 0.25% of the average net assets of the Class A shares of the
Accounts, rather than a combined service and distribution fee at the annual rate
of up to 0.25% of the average net assets of the Class A shares under the Current
Plans. With respect to the Class A shares of the Government Securities Account,
Income Account and each Municipal Account, CMFS had temporarily agreed not to
impose any fees to which it would otherwise be entitled under the Current Plans
for the current fiscal year. CMFS's voluntary agreement has no binding effect on
Oppenheimer.
CLASS B SHARES. The fees payable by the Class B shares of each Account
(other than the Municipal Accounts) under the New Plans will be at the same
maximum rate as is provided in the Current Plan. However, the aggregate fees
paid under the New Class B Plans may be higher because the Current Plans permit
fees to be paid only to the extent of CMFS' actual distribution and service
expenditures, while the New Class B Plans permit fees to be paid at the annual
rate for OFD's services. The fees under each New Class B Plan will consist of a
service fee which will be at the annual rate of 0.25% of the average net assets
of the Class B shares and a distribution fee which will be at the annual rate of
0.75% of the average net assets of the Class B shares.
AUTHORIZED PAYMENTS
OFD will be authorized under the New Plans to pay broker-dealers, banks or
other entities (the "Recipients") that render assistance in the distribution of
26
<PAGE>
shares or provide administrative support with respect to shares held by
customers. The service fee payments made under the New Plans will compensate OFD
and the Recipients for providing administrative support with respect to
shareholder accounts. The distribution fee payments made under the New Class B
Plans will compensate OFD and the Recipients for providing distribution
assistance in connection with the sale of Class B shares. Affiliates of OFD are
eligible to qualify as Recipients and receive payments accordingly. The New
Plans provide that additional payments may be made by Oppenheimer or by OFD to
the Recipients from its own resources or from borrowings.
AMENDMENT AND TERMINATION PROVISIONS
Like the Current Plans, the New Plans may not be amended to increase
materially the amount of payments to be made without the approval of the
shareholders of the affected Class, and, where required, the relevant Class of
shareholders of an Account. Class B shareholders will be entitled to vote on an
amendment to a New Class A Plan into which Class B shares may convert at some
future date if the amendment would materially increase the fees paid under the
New Class A Plan.
If the New Plans are approved by a separate vote of the relevant Class, each
Plan will remain in effect only if its continuance is specifically approved at
least annually by the vote of both a majority of the Directors and a majority of
the Non-interested Directors who have no direct or indirect individual financial
interest in the operation of the New Plans or any agreements related thereto
(the "Qualified Directors"). The New Plans may be terminated at any time by vote
of a majority of the Qualified Directors or by a vote of a majority of the
shares of the relevant Class. In the event of such termination, the Board
including the Qualified Directors shall determine whether OFD is entitled to
payment by an Account of all or a portion of the service fee and/or the
distribution fee with respect to shares sold prior to the effective date of such
termination.
REGULATORY LIMITATIONS
The service fee and the distribution fee payable under the New Plans, like
the fees payable under the Current Plans, are subject to reduction or
elimination under the limits imposed by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. ("NASD Rules"). The Plans are
intended to comply with NASD Rules and Rule 12b-1 adopted under the 1940 Act.
Rule 12b-1 requires that the selection and nomination of Directors who are not
"interested persons" of the Company be committed to the discretion of the
Qualified Directors and that the Directors receive quarterly reports on the
payments made under the Plans and the purposes of those payments.
CURRENT AND PROPOSED SALES ARRANGEMENTS
Class A shares of the Accounts are sold with an initial sales load except
that purchases of Class A shares in the amount of $500,000 or more are sold
without
27
<PAGE>
an initial sales load but are subject to a contingent deferred sales charge
("CDSC") of 1% if the shares are redeemed within one year after the end of the
calendar month of their purchase. However, OFD and the Accounts will continue to
give effect to the $500,000/12 month provisions of the Class A CDSC arrangement
for those shareholders who purchased subject to that arrangement prior to the
Transition Period, as long as the investment remains in one of the Accounts. If
the shares are exchanged to one of the Oppenheimer funds, the sales and CDSC
arrangements in the prospectuses of those funds will apply instead. After the
Transition Period, Class A shares purchased in amounts of $1 million or more
($500,000 or more for Oppenheimer funds' 401(k) plans) will be sold without an
initial sales load but will be subject to a CDSC of up to 1% as to any shares
redeemed within 18 months of the end of the calendar month of their purchase.
After the Transition Period the maximum initial sales load applicable to
purchases of less than $25,000 of Class A shares of the Growth Account, the
Total Return Account, the Capital Appreciation Account, the Balanced Account and
the Diversified Income Account will be 5.75%. The maximum initial sales load
applicable to purchases of less than $50,000 of Class A shares of the other
Accounts (except Liquid Account) will be 4.75%. No additional sales loads will
be imposed on Class A shares owned on the date of the Merger. See the
"Comparative Fee Table" at page 38.
Class B shares of the Accounts are sold without an initial sales load but
are subject to a maximum CDSC of 5.00% if redeemed within one year after the end
of the calendar month of purchase. The CDSC declines to 0 after the shares have
been held for 6 years. Class B shares automatically convert to Class A shares of
the same Account eight years after the end of the calendar month in which the
shares were purchased. Class A shares of the Accounts may be exchanged for Class
A shares of any other Account or for shares of the Liquid Account and Class B
shares of the Accounts may be exchanged for Class B shares of any other Account
or shares of the Liquid Account. See the "Comparative Fee Table" at page 38.
The CDSC applicable to Class B shares of the Accounts before and after the
Merger is as follows:
<TABLE>
<CAPTION>
CDSC AFTER THE
REDEMPTION DURING CURRENT CDSC MERGER
- ------------------------------------------------------------- ------- -----------------
<S> <C> <C>
1st Year Since Purchase...................................... 5% 5%
2nd Year Since Purchase...................................... 5% 4%
3rd Year Since Purchase...................................... 4% 3%
4th Year Since Purchase...................................... 4% 3%
5th Year Since Purchase...................................... 2% 2%
6th Year Since Purchase...................................... 1% 1%
Thereafter................................................... 0% 0%
</TABLE>
28
<PAGE>
In addition, effective after the end of the Transition Period, the Class B
shares will convert to Class A shares automatically 6 years after purchase
instead of the 8 years under current arrangements. In certain cases the Class B
CDSC of the Accounts is waived for specified redemptions as described in the
Accounts' current prospectuses. After the Transition Period, those shares will
continue to be able to take advantage of those waivers, upon request to OFD at
the time of redemption as long as they remain invested in any of the Accounts.
If Class B shares are exchanged for one of the other Oppenheimer funds, the
Class B CDSC waiver provisions of those funds will apply instead. After the
close of the Transition Period, Class A shares of the Accounts may be exchanged
for Class A shares of any Oppenheimer fund and Class B shares of the Accounts
may be exchanged for Class B shares of any Oppenheimer fund. After the close of
the Transition Period, shareholders in the Accounts who are entitled to purchase
Class A shares at net asset value in accordance with the provisions of each
Accounts' prospectus prior to the Transition Period will retain the right to
purchase additional Class A shares of the Accounts at net asset value as soon as
the Prospectus for each applicable Account is revised to include those purchase
provisions. For the Accounts reorganizing with similar Oppenheimer funds, the
prospectuses of those Oppenheimer funds will be revised to contain the same
privilege for current shareholders of the Accounts who become shareholders of
the Oppenheimer funds.
OTHER INFORMATION ABOUT THE CURRENT PLANS
Each Current Plan was reviewed most recently by the Board of Directors on
June 24, 1994. At that meeting the Directors evaluated all information deemed
reasonably necessary to make an informed determination that, in the exercise of
their reasonable business judgment and in view of their fiduciary duties, there
was a reasonable likelihood that continuation of each Current Plan would benefit
the applicable Account, or, where an Account has more than one Class of shares,
the applicable Class of shares of the Account and its shareholders. The Current
Plans for the Municipal Accounts were adopted on October 1, 1994; the Current
Plans for Class A shares of the Income Account, Government Securities Account,
Total Return Account and Growth Account were adopted on January 1, 1995; the
Current Plans for the Class A shares of the LifeSpan Accounts were adopted on
May 1, 1995; and the Current Plans for the Class B shares of the Income Account,
Government Securities Account, Total Return Account, Growth Account and the
LifeSpan Accounts were adopted on October 1, 1995. No amounts were paid by the
Accounts pursuant to the Current Plans during such Accounts' most recently
completed fiscal year.
29
<PAGE>
DIRECTORS' EVALUATION AND RECOMMENDATION
THE DIRECTORS OF THE COMPANY, INCLUDING THE QUALIFIED DIRECTORS, RECOMMEND
UNANIMOUSLY THAT THE NEW PLANS BE APPROVED BY SHAREHOLDERS OF EACH RESPECTIVE
ACCOUNT, AND, WHERE AN ACCOUNT HAS MORE THAN ONE CLASS OF SHARES, BY EACH CLASS
OF SUCH ACCOUNT.
The Directors, including the Qualified Directors, believe the adoption of a
service and/or distribution plan under Rule 12b-1 is essential to and a part of
the purpose of each Account in selling its shares to those persons who wish to
avail themselves of the services of a broker-dealer. In their deliberations, the
Directors considered many pertinent factors such as the levels of fees
prescribed by the Current Plans and the New Plans. The Board also considered the
potential benefit to each Account of the proposed method of distribution through
OFD; the potential conflicts of interest inherent in the use of Account assets
to pay for distribution expenses; the relationship of the fees under the New
Plans to the overall cost structure of each Account; and the potential benefits
to existing shareholders of continued asset growth, including the potential to
benefit from economies of scale.
If the New Plans are approved by the shareholders of each Account and, where
an Account has more than one Class of shares, by each Class of shares of the
Account, OFD will serve as distributor to each such Account or Class of shares
and the New Plans will take effect with respect to all such Accounts and Classes
upon the close of the Transition Period. If the Merger is not consummated, the
Board of Directors has determined that the Current Plans will continue in effect
and CMFS will continue to serve as distributor to each such Account or Class of
shares, notwithstanding an affirmative vote by the shareholders on Proposal 3.
If the Merger is consummated but one or more of the Accounts or Classes does not
approve this Proposal, OFD will serve as distributor to each such Account or
Class of shares pursuant to the terms of the Current Plans.
VOTE REQUIRED
Approval of each New Plan for each Account or, where an Account has more
than one Class of shares, for each Class of shares of an Account will require a
Majority Shareholder Vote of the affected Account or Class of shares as the case
may be.
30
<PAGE>
PROPOSAL 4
ELECTION OF DIRECTORS
(FOR ALL ACCOUNTS VOTING TOGETHER)
IF PROPOSAL 1 IS APPROVED, PROXIES NOT INDICATING A CONTRARY INTENTION WILL
BE VOTED IN FAVOR OF THE ELECTION OF THE PERSONS NAMED BELOW AS DIRECTORS, TO
HOLD OFFICE FOR AN INDEFINITE PERIOD AND UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED.
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
In order to fill the vacancies created by the change in the structure of the
Board and to provide for a Board to take office upon the close of the Transition
Period in compliance with Section 15(f) of the 1940 Act, each as discussed
below, the Company's Board is recommending the election of a new Board of
Directors. All current members of the Board have chosen to resign as Directors
and will not serve the Company as Directors or in any other capacity after the
close of the Transition Period. Accordingly, the Company's Board of Directors,
following the recommendation of its Nominating Committee, is recommending to
shareholders the election of 12 (twelve) Directors none of whom is currently a
Director of the Company and ten of whom are not "interested persons" of
Oppenheimer or OFD, with the term of office to commence on the 91st day after
the Merger is consummated. Each nominee is currently a member of the Board of
Trustees or Directors of one or more funds for which Oppenheimer serves as
investment adviser. Each has consented to being named as a nominee in this Proxy
Statement. Should any nominee become unable or unwilling to serve, the persons
appointed as proxies shall vote for the election of such other person or persons
as the Board of Directors shall recommend. The Board has no reason to believe
that any person nominated will be unable or unwilling to serve if elected to
office.
SECTION 15(F) OF THE 1940 ACT
Connecticut Mutual and Massachusetts Mutual, on behalf of Oppenheimer and
OFD, have agreed to comply and use all reasonable efforts to cause compliance
with the provisions of Section 15(f) of the 1940 Act. Section 15(f) provides, in
pertinent part, that an investment adviser or an affiliated person of such
investment adviser may receive any amount or benefit in connection with a sale
of such investment adviser which results in an assignment of an investment
advisory contract if (1) for a period of three years after the time of such
event, 75% of the members of the board of trustees or directors of the
investment company which it advises are not "interested persons" (as defined in
the 1940 Act) of the new or old investment adviser, and (2) during the two-year
period after the date on which the transactions occurs, there is no "unfair
burden" imposed on the investment company as a result of the transaction. For
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<PAGE>
this purpose, "unfair burden" is defined to include any arrangement during the
two-year period after the transactions whereby the investment adviser or
predecessor or successor investment advisers, or any interested person of any
such adviser, receives or is entitled to receive any compensation directly or
indirectly (i) from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
other than bona fide ordinary compensation as principal underwriter for such
company, or (ii) from the investment company or its security holders for other
than bona fide investment advisory or other services. No compensation
arrangements of the types described above are contemplated in the proposed
transaction. The composition of the Company's Board of Directors will be in
compliance with the 75% requirement if all the nominees named in Proposal 4 are
elected.
The following table shows the nominees who are standing for election and
their principal occupations which, unless specific dates are shown, are for the
past five years, although the titles held may not have been the same throughout.
Each nominee is standing for election for the first time at this Meeting.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ----------------------------------- -----------------------------------------------
<S> <C>
Leon Levy General Partner of Odyssey Partners, L.P.
Age: 70 (investment partnership) and Chairman of
Avatar Holdings, Inc. (real estate
development).
Robert G. Galli* Vice Chairman of Oppenheimer and Vice President
Age: 62 and Counsel of Oppenheimer Acquisition Corp.,
Oppenheimer's parent holding company; formerly
he held the following positions: a director of
Oppenheimer and OFD, Vice President and a
director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial
Asset Management Corporation ("Centennial"),
investment advisory subsidiaries of
Oppenheimer, a director of Shareholder
Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer
agent subsidiaries of Oppenheimer, an officer
of other Oppenheimer funds and Executive Vice
President and General Counsel of Oppenheimer
and OFD.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ----------------------------------- -----------------------------------------------
<S> <C>
Benjamin Lipstein Professor Emeritus of Marketing, Stern Graduate
Age: 72 School of Business Administration, New York
University; a director of Sussex Publishers,
Inc. (Publishers of Psychology Today and
Mother Earth News) and Spy Magazine, L.P.
Bridget A. Macaskill* President, CEO and a director of Oppenheimer;
Age: 47 Chairman and a director of SSI, President and
a director of OAC, a director of HarbourView
and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of Oppenheimer;
formerly Executive Vice President of
Oppenheimer.
Elizabeth B. Moynihan Author and architectural historian; a trustee
Age: 66 of the Freer Gallery of Art (Smithsonian
Institution), the Institute of Fine Arts (New
York University), and the National Building
Museum; a member of the Directors Council,
Preservation League of New York State and the
Indo-U.S. Sub-Commission on Education and
Culture.
Kenneth A. Randall Director of Dominion Resources, Inc. (electric
Age: 68 utility holding company), Dominion Energy,
Inc. (electric power and oil and gas
producer), Enron-Dominion Cogen Corp.
(cogeneration company), Kemper Corporation
(insurance and financial services company) and
Fidelity Life Association (mutual life
insurance company); formerly Chairman of the
Board of ICL, Inc. (information systems), and
President and Chief Executive Officer of The
Conference Board, Inc. (international economic
and business research).
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ----------------------------------- -----------------------------------------------
<S> <C>
Edward V. Regan Chairman of Municipal Assistance Corporation
Age: 65 for the City of New York; President of Jerome
Levy Economics Institute; a member of the U.S.
Competitiveness Policy Counsel; a director of
GranCare, Inc. (healthcare provider); formerly
New York State Comptroller and a trustee, New
York State and Local Retirement Fund.
Russell S. Reynolds, Jr. Founder Chairman of Russell Reynolds
Age: 63 Associates, Inc. (executive recruiting);
Chairman of Directors Publication, Inc.
(consulting and publishing); a trustee of
Mystic Seaport Museum, International House,
Greenwich Hospital and the Greenwich
Historical Society.
Sidney M. Robbins Chase Manhattan Professor Emeritus of Financial
Age: 83 Institutions, Graduate School of Business,
Columbia University; Visiting Professor of
Finance, University of Hawaii, a director of
The Korea Fund, Inc. (a closed-end investment
company); a member of the Board of Advisors,
Olympus Private Placement Fund, L.P.;
Professor Emeritus of Finance, Adelphi
University.
Donald W. Spiro* Chairman Emeritus and a director of
Age: 70 Oppenheimer; formerly Chairman of Oppenheimer
and OFD.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ----------------------------------- -----------------------------------------------
<S> <C>
Pauline Trigere Chairman and Chief Executive Officer of
Age: 83 Trigere, Inc. (design and sale of women's
fashions).
Clayton K. Yeutter Of Counsel to Hogan & Hartson (a law firm); a
Age: 64 director of B.A.T. Industries, Ltd. (tobacco
and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and
agricultural products), Farmers Insurance
Company (insurance), FMC Corp. (chemicals and
machinery), Lindsay Manufacturing Co.
(irrigation equipment), Texas Instruments,
Inc. (electronics) and The Vigoro Corporation
(fertilizer manufacturer); formerly (in
descending chronological order) Counsellor to
the President (Bush) for Domestic Policy,
Chairman of the Republican National Committee,
Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative.
</TABLE>
- ------------------------
* A Nominee who will be an "interested person" of the Company as defined in the
1940 Act.
As of the Record Date, no nominee for Director held shares of the Accounts.
During the Company's fiscal year ended December 31, 1994, the Board of
Directors held six meetings. The Company's Board of Directors currently consists
of the following members: Donald Pond, Chairman; David E. Sams, Jr.; Richard H.
Ayers; David E.A. Carson; Richard W. Greene; and Beverly L. Hamilton. The Board
of Directors' audit committee, which consists of Messrs. Ayers, Carson and
Greene and Ms. Hamilton (all Directors who are not "interested persons"), held
two meetings during the Company's last fiscal year. That committee reviews
audits, audit procedures, financial statements and other financial and
operational matters of the Company. The Board of Directors has a nominating
committee, consisting of all Non-interested Directors, which reviews and selects
candidates for nomination as Non-interested Directors of the Company. That
committee did not meet during the fiscal year ended December 31, 1994. Each
Director attended at least 75% of the meetings of the Board of Directors and the
meetings held by the committee of the Board on which such Director served during
the Company's last fiscal years.
35
<PAGE>
REMUNERATION OF DIRECTORS
The following table sets forth the remuneration paid to the current members
of the Company's Board of Directors for the Accounts' current fiscal year ends.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
AGGREGATE BENEFITS ANNUAL COMPENSATION
COMPENSATION ACCRUED AS BENEFIT FROM COMPANY
FROM THE PART OF FUND UPON AND COMPANY
NAME OF PERSON COMPANY* EXPENSES RETIREMENT COMPLEX**
- ---------------------------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Richard H. Ayers............ $ 4,250 None None $ 8,500
David E.A. Carson........... 4,250 None None 8,500
Richard W. Greene........... 4,750 None None 9,500
Beverly L. Hamilton......... 4,250 None None 8,500
Donald H. Pond, Jr.......... None None None None
David E. Sams, Jr........... None None None None
</TABLE>
- ------------------------
* As of September 30, 1995 for all Municipal Accounts and as of December 31,
1994 for all Accounts except the Municipals Accounts and the LifeSpan
Accounts.
** For the twelve months ended, December 31, 1994; includes 16 series of two
investment companies.
The following table sets forth information about the current officers of the
Company who are not Directors. No officer of the Company is remunerated by the
Company.
<TABLE>
<CAPTION>
NAME, AGE AND TITLE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ------------------------------ ----------------------------------------------------
<S> <C>
Linda M. Napoli Assistant Vice President, Connecticut Mutual
Age: 38 (1993-present); Associate Director, Connecticut
Treasurer and Controller Mutual (1988-1993).
Ann F. Lomeli Corporate Secretary, Connecticut Mutual
Age: 39 (1988-present).
Secretary
</TABLE>
As of the Record Date, the current Directors and Officers of the Company as
a group owned 15,136 shares of the Company, representing less than 1% of the
Company's shares, as set forth below:
<TABLE>
<CAPTION>
DIRECTOR/OFFICER ACCOUNT SHARES OWNED
- ---------------------------------------------------- -------------- -------------
<S> <C> <C>
Beverly Hamilton.................................... Total Return 12,729
Richard Greene...................................... Total Return 182
David E. A. Carson.................................. Growth 1,032
Donald Pond......................................... Growth 1,193
</TABLE>
After the close of the Transition Period, it is anticipated that the
foregoing officers of the Company will resign and that Oppenheimer will propose
to the Directors that Leon Levy be elected Chairman of the Board, that Donald
Spiro
36
<PAGE>
be elected President, that Robert C. Doll, Jr. and O. Leonard Darling be elected
as Senior Vice Presidents, that George Bowen be elected Treasurer, and that
Andrew J. Donohue be elected Secretary.
Information about Mr. Levy, who is a nominee for Director, is provided in
the table on nominees. The address of all such proposed officers is Oppenheimer
Management Corporation, 2 World Trade Center, NY, NY 10048 except for Mr. Bowen,
whose address is Oppenheimer Management Corporation, 3410 S. Galena Street,
Denver, Colorado 80231. The following table provides information about the other
proposed officers:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ------------------------- ---------------------------------------------------------
<S> <C>
George C. Bowen Senior Vice President and Treasurer of Oppenheimer; Vice
Age: 59 President and Treasurer of OFD, and HarbourView Asset
Management Corporation; President, Treasurer and a
director of Centennial Capital Corporation; Senior Vice
President, Treasurer and Secretary of Shareholder
Services, Inc.; Vice President, Treasurer and Secretary
of Shareholder Financial Services, Inc. and an officer
of various Oppenheimer funds.
Robert C. Doll, Jr. Executive Vice President and Director of Equity
Age: 41 Investments of Oppenheimer; a Vice President and
director of OAC; officer of various Oppenheimer funds.
O. Leonard Darling Executive Vice President and Director of Fixed Income
Age: 53 Investments of Oppenheimer, formerly a co-manager of the
fixed income department of State Street Research &
Management Company, prior to which he was Chief
Executive Officer of Baring America Asset Management.
Andrew J. Donohue Executive Vice President and General Counsel of
Age: 45 Oppenheimer and OFD; officer of various Oppenheimer
Funds.
</TABLE>
VOTE REQUIRED
A plurality of all the votes cast at the Meeting, if a quorum is present at
the Meeting, is sufficient to elect the nominees. If Proposal 1 is not approved
by the shareholders, no election of Directors will be held and the current
Directors and officers first named above will continue in office.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY THAT SHAREHOLDERS VOTE TO
ELECT EACH OF THE NOMINEES.
37
<PAGE>
PROPOSAL 5
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
(FOR ALL ACCOUNTS VOTING TOGETHER)
The firm of Arthur Andersen LLP has served as the Company's independent
public accountants since the Company's inception. Audit services to the Accounts
(except the Municipal Accounts) during such Accounts' fiscal year ended December
31, 1994 and to the Municipal Accounts during such Accounts' fiscal year ended
September 30, 1995 consisted of examinations of the Accounts' financial
statements for the respective periods and reviews of the Accounts' filings with
the Commission.
The Board of Directors, including the Non-interested Directors, has selected
Arthur Andersen LLP as the Accounts' (except the Municipal Accounts) independent
public accountants for the fiscal year ending December 31, 1995, and as the
Municipal Accounts' independent public accountants for the fiscal year ending
September 30, 1996, subject to shareholder ratification at the Special Meeting.
A representative of Arthur Andersen LLP is expected to be available at the
Special Meeting to make a statement and to respond to appropriate questions.
After the Transition Period, the Company's newly elected Board of Directors may
consider designating another firm that serves as independent public accountants
for certain of the Oppenheimer funds to serve as independent public accountants
to the Company.
DIRECTOR'S EVALUATION AND RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY THAT THE SHAREHOLDERS VOTE IN
FAVOR OF THE RATIFICATION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS.
REQUIRED VOTE
Approval of this proposal requires the affirmative vote of a majority of the
Company's outstanding shares present and voting at the meeting if a quorum is
present.
COMPARATIVE FEE TABLE
Set forth below is a comparative fee table showing the amount of fees and
expenses paid by the Accounts during the current fiscal year and the amount of
fees and expenses the Accounts would have paid if the Proposals in this Proxy
Statement had been approved by shareholders and had been in effect during the
current fiscal year.
38
<PAGE>
CURRENT
The following table sets forth the Shareholder Transaction Expenses and
estimated Annual Operating Expenses for each Account for the current fiscal
year.
<TABLE>
<CAPTION>
GOVERNMENT
INCOME SECURITIES TOTAL RETURN GROWTH
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------------- --------------- --------------- ---------------
LIQUID CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
ACCOUNT A B A B A B A B
------- ------- ------- ------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).............. None 4.00% None 4.00% None 5.00% None 5.00% None
Deferred Sales Load (as a
percentage of original
purchase price or redemption
proceeds, as applicable)..... None(1) None(2) 5.00% None(2) 5.00% None(2) 5.00% None(2) 5.00%
Exchange Fee (3).............. None None None None None None None None None
ANNUAL OPERATING EXPENSES OF
EACH ACCOUNT
(as a percentage of average
net assets)
Management Fees............... .50% .625% .625% .625% .625% .625% .625% .625% .625%
12b-1 Fees (net of expense
limits, if any).............. .00(4) .00(5) 1.00 .00(5) 1.00 .25(5) 1.00 .25(5) 1.00
Other Expenses (net of expense
limits, if any).............. .43 .00(6) .00(6) .285 .285 .335 .335 .395 .395
------- ------- ------- ------- ----- ------- ----- ------- -----
TOTAL ANNUAL OPERATING
EXPENSES OF EACH ACCOUNT..... .93% .625% 1.625% .91% 1.91% 1.21% 1.96% 1.27% 2.02%
------- ------- ------- ------- ----- ------- ----- ------- -----
------- ------- ------- ------- ----- ------- ----- ------- -----
<CAPTION>
CAPITAL DIVERSIFIED
APPRECIATION BALANCED INCOME
ACCOUNT ACCOUNT ACCOUNT
----------------- ----------------- -----------------
CLASS CLASS CLASS CLASS CLASS CLASS
A B A B A B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).............. 5.00% None 5.00% None 5.00% None
Deferred Sales Load (as a
percentage of original
purchase price or redemption
proceeds, as applicable)..... None(2) 5.00% None(2) 5.00% None(2) 5.00%
Exchange Fee (3).............. None None None None None None
ANNUAL OPERATING EXPENSES OF
EACH ACCOUNT
(as a percentage of average
net assets)
Management Fees............... .85% .85% .85% .85% .75% .75%
12b-1 Fees (net of expense
limits, if any).............. .25 1.00 .25 1.00 .25 1.00
Other Expenses (net of expense
limits, if any).............. .45(6) .45(6) .45(6) .45(6) .50(6) .50(6)
------- ------- ------- ------- ------- -------
TOTAL ANNUAL OPERATING
EXPENSES OF EACH ACCOUNT..... 1.55% 2.30% 1.55% 2.30% 1.50% 2.25%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
- ----------------------------------------
(1) Shares of the Liquid Account acquired by exchange from Class A or Class B
shares of any other Account which are subject to a CDSC will be subject to a
CDSC if redeemed. The CDSC will be at a rate equal to the CDSC rate on the
original shares when exchanged.
(2) Purchases of $500,000 or more are not subject to an initial sales charge but
may be subject to a contingent deferred sales charge of 1% if the shares are
redeemed within 12 months after the calendar month of purchase.
(3) All exchanges in excess of 12 exchanges in a 12-month period are subject to
an exchange fee of .75% of the net asset value of the shares redeemed.
(4) During the fiscal year ended December 31, 1994, the Account's distributor
agreed not to impose any reimbursement to which it would otherwise have been
entitled pursuant to Liquid Account's Rule 12b-1 distribution plan. Absent
such an agreement, the Liquid Account would have incurred distribution
expenses pursuant to its Rule 12b-1 Plan of .10% of the average daily net
assets of the Account and total annual operating expenses would have been
1.03% of such assets. The Liquid Account may pay, in 1995, a portion of the
maximum amount payable annually under the Rule 12b-1 plan, which is .10% of
the average daily net assets of the Account.
(5) Each Account (other than Liquid Account) adopted a Class A Rule 12b-1 plan,
effective January 1, 1995, pursuant to which each such Account may pay CMFS
up to .25% annually of such Account's Class A related average net assets in
reimbursement for distribution and shareholder services. CMFS has
temporarily agreed not to impose any fees to which it would otherwise be
entitled under the Class A Rule 12b-1 plans for Income Account and
Government Securities Account for the current fiscal year. In the absence of
such agreements by CMFS, the Class A Rule 12b-1 fees of each such Account
would have been .25% of the average daily net assets of the Account
attributable to its Class A shares and the total annual operating expenses
of Class A shares of Income Account and Government Securities Account would
have been .875% and 1.16%, respectively. The Rule 12b-1 fees with respect to
Class A shares for Total Return Account and Growth Account have been
restated to reflect the imposition of the full .25% Class A Rule 12b-1 fee
for each such Account as of May 1, 1995.
(6) Until December 31, 1995, CMFS has temporarily agreed to limit the other
expenses (not including Rule 12b-1 fees and other class-specific expenses)
related to the Income Account, Capital Appreciation Account, Balanced
Account and Diversified Income Account. In the absence of such an agreement,
the estimated expenses related to Class A shares and Class B shares would be
Income Account -- .315% and .315%; Capital Appreciation Account -- 1.40% and
1.40%; Balanced Account -- .64% and .64%; and Diversified Income Account --
.71% and .71%, respectively; and estimated total annual operating expenses
of the Account related to Class A shares and Class B shares for the current
fiscal year would be Income Account -- 1.19% and 1.94%; Capital Appreciation
Account -- 2.50% and 3.25%; Balanced Account -- 1.74% and 2.49%; and
Diversified Income Account -- 1.71% and 2.46%, respectively.
39
<PAGE>
EXAMPLE: Assuming that an Account's annual return is 5% and that its operating
expenses are exactly as described above, if you closed your account after the
number of years indicated below, for every $1,000 invested, your investment
would bear the following amounts in total expenses:
<TABLE>
<CAPTION>
GOVERNMENT TOTAL CAPITAL DIVERSIFIED
INCOME SECURITIES RETURN GROWTH APPRECIATION BALANCED INCOME
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------- ---------- ------- ------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
After 1 year...... $ 46 $ 49 $ 62 $ 62 $65 $65 $65
After 3 years..... 71 73 86 88 96 96 95
After 5 years..... 98 99 113 116 N/A N/A N/A
After 10 years.... 174 173 189 195 N/A N/A N/A
CLASS B SHARES
ASSUMING COMPLETE REDEMPTION AT END OF
PERIOD
After 1 year...... $ 67 $ 69 $ 70 $ 71 $73 $73 $72
After 3 years..... 98 100 102 103 112 112 110
After 5 years..... 122 123 126 129 N/A N/A N/A
After 10 years.... 204 204 209 216 N/A N/A N/A
ASSUMING NO
REDEMPTION
After 1 year...... $ 17 $ 69 $ 20 $ 21 $23 $23 $23
After 3 years..... 58 100 62 63 72 72 70
After 5 years..... 102 123 106 109 N/A N/A N/A
After 10 years.... 204 204 209 216 N/A N/A N/A
WITH RESPECT TO THE LIQUID ACCOUNT:
<CAPTION>
LIQUID
ACCOUNT
--------
<S> <C> <C> <C> <C> <C> <C> <C>
After 1 year...... $ 9
After 3 years..... 30
After 5 years..... 51
After 10 years.... 114
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
40
<PAGE>
PRO FORMA
The following table sets forth the Shareholder Transaction Expenses and
estimated Annual Operating Expenses for each Account for the current fiscal year
as if the Proposals in this Proxy Statement had been approved by shareholders
and had been in effect upon consummation of the Merger.
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES TOTAL RETURN
INCOME ACCOUNT ACCOUNT ACCOUNT GROWTH ACCOUNT
--------------- --------------- --------------- ---------------
LIQUID CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
ACCOUNT A B A B A B A B
------- ------- ----- ------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).............. None 4.75% None 4.75% None 5.75% None 5.75% None
Deferred Sales Load (as a
percentage of original
purchase price or redemption
proceeds, as applicable)..... None(1) None(2) 5.00% None(2) 5.00% None(2) 5.00% None(2) 5.00%
Exchange Fee.................. None None None None None None None None None
ANNUAL OPERATING EXPENSES OF
EACH ACCOUNT
(as a percentage of average
net assets)
Management Fees............... .50% .625% .625% .625% .625% .625% .625% .625% .625%
12b-1 Fees.................... .10 .25 1.00 .25 1.00 .25 1.00 .25 1.00
Other Expenses................ .43 .315 .315 .285 .285 .335 .335 .395 .395
------- ------- ----- ------- ----- ------- ----- ------- -----
TOTAL ANNUAL OPERATING
EXPENSES OF EACH ACCOUNT..... 1.03% 1.19% 1.94% 1.16% 1.91% 1.21% 1.96% 1.27% 2.02%
------- ------- ----- ------- ----- ------- ----- ------- -----
------- ------- ----- ------- ----- ------- ----- ------- -----
<CAPTION>
CAPITAL DIVERSIFIED
APPRECIATION BALANCED
ACCOUNT* ACCOUNT* INCOME ACCOUNT*
--------------- --------------- ---------------
CLASS CLASS CLASS CLASS CLASS CLASS
A B A B A B
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).............. 5.75% None 5.75% None 5.75% None
Deferred Sales Load (as a
percentage of original
purchase price or redemption
proceeds, as applicable)..... None(2) 5.00% None(2) 5.00% None(2) 5.00%
Exchange Fee.................. None None None None None None
ANNUAL OPERATING EXPENSES OF
EACH ACCOUNT
(as a percentage of average
net assets)
Management Fees............... .85% .85% .85% .85% .75% .75%
12b-1 Fees.................... .25 1.00 .25 1.00 .25 1.00
Other Expenses................ .65(3) .65(3) .64 .64 .71 .71
------- ----- ------- ----- ------- -----
TOTAL ANNUAL OPERATING
EXPENSES OF EACH ACCOUNT..... 1.75% 2.50% 1.74% 2.49% 1.71% 2.46%
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----
</TABLE>
- ----------------------------------
(1) Shares of the Liquid Account acquired by exchange from Class A or Class B
shares of any other Account which are subject to a CDSC will be subject to a
CDSC if redeemed. The CDSC will be at a rate equal to the CDSC rate on the
original shares when exchanged.
(2) Upon consummation of the Merger, purchases of $1,000,000 or more will not be
subject to an initial sales charge but may be subject to a contingent
deferred sales charge of 1% if the shares are redeemed within 18 months
after the calendar month of purchase. There will be no change in the sales
charges imposed on shareholders of the Account who purchased shares prior to
the Merger.
(3) Oppenheimer has voluntarily undertaken to reimburse Capital Appreciation
Account to the extent that the total expenses of the Account exceeds the
most stringent state expense limitations. In the absence of such an
undertaking, the estimated expenses related to Class A shares and Class B
shares of the Account would be 1.40% and 1.40%, respectively; and estimated
annual operating expenses of the Account related to Class A shares and Class
B shares would be 2.50% and 3.25%, respectively.
* The Other Expenses of each LifeSpan Account may be higher than the expenses of
funds with similar investment objectives and policies due in large part to the
higher transfer agency fees, legal fees, custody fees and accounting fees
associated with the start-up expenses of a newly organized fund. Other
Expenses may decline as assets under management grow.
41
<PAGE>
EXAMPLE: Assuming that an Account's (other than the Liquid Account's)
annual return is 5% and that its operating expenses are exactly as described
above under pro forma expenses, if you closed your account after the number of
years indicated below, for every $1,000 invested, your investment would bear the
following amounts in total expenses:
<TABLE>
<CAPTION>
GOVERNMENT TOTAL CAPITAL DIVERSIFIED
INCOME SECURITIES RETURN GROWTH APPRECIATION BALANCED INCOME
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------- ---------- ------- ------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
After 1 year.................................. $ 59 $ 59 $ 69 $ 70 $74 $74 $74
After 3 years................................. 83 83 94 95 109 109 108
After 5 years................................. 110 108 120 123 N/A N/A N/A
After 10 years................................ 185 182 196 202 N/A N/A N/A
CLASS B SHARES
ASSUMING COMPLETE REDEMPTION AT END OF PERIOD
After 1 year.................................. $ 70 $ 69 $ 70 $ 71 $75 $75 $75
After 3 years................................. 101 100 102 103 118 118 117
After 5 years................................. 125 123 126 129 N/A N/A N/A
After 10 years................................ 207 204 209 216 N/A N/A N/A
ASSUMING NO REDEMPTION
After 1 year.................................. $ 20 $ 19 $ 20 $ 21 $25 $25 $25
After 3 years................................. 61 60 62 63 118 78 77
After 5 years................................. 105 103 106 109 N/A N/A N/A
After 10 years................................ 207 204 209 216 N/A N/A N/A
WITH RESPECT TO THE LIQUID ACCOUNT:
</TABLE>
<TABLE>
<CAPTION>
LIQUID
ACCOUNT
--------
<S> <C> <C> <C> <C>
After 1 year................................ 11
After 3 years............................... 33
After 5 years............................... 57
After 10 years.............................. 126
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
42
<PAGE>
THE MERGER
The following information about Massachusetts Mutual is provided to assist
you in understanding the culmination of the events that will bring about the
termination of the Existing Advisory Agreement and the Existing Subadvisory
Agreements and the other Proposals in this Proxy Statement. This Proxy Statement
does not relate to the transactions involved in the consummation of the Merger
and you are not being asked to vote on the Merger. None of the votes cast for or
against the Proposals described in this Proxy Statement will affect the
consummation of the Merger.
The Boards of Directors of Connecticut Mutual and Massachusetts Mutual,
respectively, have approved an agreement setting forth the terms of the Merger
which was signed by both parties on September 13, 1995. Upon consummation of the
Merger, the separate existence of Connecticut Mutual will cease and
Massachusetts Mutual will be the surviving company. The consummation of the
Merger is intended to occur immediately subsequent to regulatory approvals which
are currently anticipated to be delivered in the first three months of 1996.
Massachusetts Mutual is a mutual life insurance company organized as a
Massachusetts corporation and was originally chartered in 1851. Massachusetts
Mutual provides, directly and through its subsidiaries, a wide range of annuity
and disability products, traditional and managed care group health products,
pension and pension-related products and services, as well as investment
advisory services to individuals, corporations and other institutions in all 50
states and the District of Columbia. Massachusetts Mutual is also licensed to
transact business in Puerto Rico and six provinces in Canada.
Massachusetts Mutual provides investment advisory services to various
entities including its general investment account, its separate investment
accounts and certain closed-end and open-end investment companies. These
investment advisory services are provided by the staff employed by Massachusetts
Mutual and also by HarbourView Asset Management Corp. (a wholly-
owned subsidiary of Oppenheimer) and Concert Capital Management, Inc., a
registered investment adviser which is also indirectly owned by Massachusetts
Mutual. MML Investors Services, Inc., an indirect wholly-owned subsidiary of
Massachusetts Mutual, provides distribution services for the Massachusetts
Mutual proprietary products. Oppenheimer also provides investment advisory
services to a group of investment management companies that it sponsors (the
"Oppenheimer funds"). OFD acts as distributor for the Oppenheimer funds.
On November 17, 1995, the Company's Board of Directors voted unanimously to
recommend to the shareholders of the Liquid Account, Government Securities
Account and Income Account (the "Merging Accounts") that the Merging Accounts
enter into reorganizations with existing Oppenheimer funds.
43
<PAGE>
Such reorganizations are recommended on the basis that the investment objectives
and policies of those existing Oppenheimer funds are similar to those of the
Merging Accounts and that the reorganizations are expected to result in cost
savings or other benefits to the shareholders of the Merging Accounts. This
Proxy Statement does not relate to these reorganizations and you are not being
asked to vote on these reorganizations at this time. It is expected that
shareholders of the Merging Accounts will be given an opportunity to approve the
currently proposed reorganizations at a later date pursuant to a separate proxy
solicitation. No assurance can be given that such reorganizations will be
consummated. No reorganization plans relating to the Total Return Account,
Growth Account, Capital Appreciation Account, Balanced Account, Diversified
Income Account or any Municipal Account have been made at this time. While it is
presently contemplated that they will continue to be managed and offered as
separate mutual funds by Oppenheimer, no assurance can be given that such
Accounts will not be reorganized with Oppenheimer funds in the future.
Shareholders will be notified in the event of any such proposed reorganizations.
At the meeting of the Company's Board of Directors on November 17, 1995, the
Board, based on a review of relevant factors, determined that it would be in the
best interests of the Municipal Accounts and their shareholders to suspend the
public offering of the Municipal Accounts' shares. Shares will continue to be
offered only to shareholders of the Municipal Accounts with existing shareholder
accounts and for dividend reinvestment.
44
<PAGE>
INFORMATION ABOUT SHARE OWNERSHIP
As of the Record Date, the Company has been advised by Connecticut Mutual
that it owns shares of the following Accounts for its own accounts:
<TABLE>
<CAPTION>
CONNECTICUT MUTUAL
SHARES OWNED
ACCOUNT (% OF OUTSTANDING)
- ---------------------------------------------------- ------------------
<S> <C>
Liquid Account...................................... 40%
Government Securities Account
Class A........................................... 14%
Class B........................................... 0%
Growth Account
Class A........................................... 30%
Class B........................................... 0%
Capital Appreciation Account
Class A........................................... 86%
Class B........................................... 0%
Balanced Account
Class A........................................... 92%
Class B........................................... 0%
Diversified Income Account
Class A........................................... 91%
Class B........................................... 0%
California Account.................................. 2%
Massachusetts Account............................... 8%
New York Account.................................... 3%
Ohio Account........................................ 3%
</TABLE>
The Company has been advised that Connecticut Mutual intends to vote all of
such shares in favor of all of the Proposals affecting the above-referenced
Accounts.
As of the Record Date, no one other than Connecticut Mutual owned of record
or beneficially 5% or more of the shares of the Accounts. As of the Record Date
the officers and Directors of the Company owned in the aggregate less than 1% of
the shares of any one or more of the Accounts.
OTHER MATTERS
The Company's management knows of no business to be brought before the
Special Meeting except as described above. However, if any other matters
properly come before the Meeting, the persons named in the enclosed proxy card
intend to vote on such matters in accordance with their best judgment. If
shareholders desire additional information about the matters proposed for
action, the Company's management will be glad to hear from them and to provide
further information.
45
<PAGE>
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Company. In addition, although mere
attendance at the meeting will not revoke a proxy, a shareholder present at the
meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in this Proxy Statement and will use their best
judgment in connection with the transaction of such other business as may
properly come before the Special Meeting or any adjournment thereof.
In the event that, at the time any session of the Special Meeting is called
to order, a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the Special
Meeting to a later date. In the event that a quorum is present but sufficient
votes in favor of any of Proposals 1, 2(a), 2(b), 2(c), 3, 5 and in favor of the
nominees named in Proposal 4 have not been received, the persons named as
proxies will vote those proxies which they are entitled to vote in favor of the
relevant Proposal for such an adjournment and will vote those proxies required
to be voted against the Proposal against any such adjournment. A shareholder
vote may be taken on one or more of the Proposals in the Proxy Statement prior
to such adjournment if sufficient votes for its approval have been received and
it is otherwise appropriate.
Shares of common stock of the Company represented in person or by proxy
(including shares which abstain or do not vote with respect to one or more of
the Proposals presented for shareholder approval) will be counted for purposes
of determining whether a quorum is present at the Special Meeting. Adoption by
the shareholders of the affected Account of Proposals 1, 2(a), 2(b), 2(c) and 3
requires the affirmative vote of the lesser of (i) 67 percent or more of the
affected Accounts outstanding voting securities present at the Special Meeting,
if the holders of more than 50 percent of the affected Account's shares of
common stock are present or represented by proxy or (ii) 50 percent or more of
the affected Account's outstanding shares of common stock. Approval by the
shareholders of the nominees set forth in Proposal 4 requires a plurality of all
the votes cast at the Meeting, if a quorum is present. Adoption by the
shareholders of the Company of Proposal 5 requires the affirmative vote of a
majority of the shares of all Accounts voting together at the meeting, if a
quorum is present. If a broker or nominee holding shares in "street name"
indicates on the proxy that it does not have discretionary authority to vote as
to a particular Proposal, those shares will not be considered as present and
entitled to vote with respect to such Proposal and are likewise not considered
to be votes cast. Accordingly, a
46
<PAGE>
"broker non-vote" has no effect on the voting in determining whether Proposals
1, 2(a), 2(b), 2(c) and 3 have been adopted pursuant to item (i) above. However,
with respect to determining whether Proposals 1, 2(a), 2(b), 2(c) and 3 have
been adopted pursuant to item (ii) above and whether Proposal 5 has been
adopted, because shares represented by a "broker non-vote" are considered
outstanding shares, a "broker non-vote" has the same effect as a vote against
the Proposal. Abstentions and broker non-votes have no effect on the plurality
vote for the election of Directors.
In addition to the solicitation of proxies by mail or in person, the Company
may also arrange to have votes recorded by telephone by officers and employees
of the Company, personnel of G.R. Phelps or agents hired by G.R. Phelps for such
purpose. The telephone voting procedure is designed to authenticate a
shareholder's identity, to allow a shareholder to authorize the voting of shares
in accordance with the shareholder's instructions and to confirm that the voting
instructions have been properly recorded. If these procedures were subject to a
successful legal challenge, such votes would not be counted at the Meeting. The
Company has not sought to obtain an opinion of counsel on this matter and is
unaware of any such challenge at this time. A shareholder would be called on a
recorded line at the telephone number the Company has in its records for the
account and could be asked the shareholder's Social Security number or other
identifying information. The shareholder would then be given an opportunity to
authorize proxies to vote his shares at the Meeting in accordance with the
shareholder's instructions. To ensure that the shareholder's instructions have
been recorded correctly, the shareholder will also receive a confirmation of the
voting instructions in the mail. A special number will be available in case the
voting information contained in the confirmation is incorrect. If the
shareholder decides after voting by telephone to attend the Meeting, the
shareholder can revoke the proxy at that time and vote the shares at the
Meeting.
SHAREHOLDERS' PROPOSALS
The Company is not required, and does not intend, to hold meetings of
shareholders each year. Instead, meetings will be held only when and if
required. Any shareholders desiring to present a proposal for consideration at
the next meeting of shareholders of the Company must submit such proposal in
writing so that it is received by the Company at 140 Garden Street, Hartford,
Connecticut 06154 within a reasonable time before any such meeting.
EXPENSES AND METHOD OF SOLICITATION
The cost of preparing and mailing this Proxy Statement and the accompanying
notice and proxy card will be borne by G.R. Phelps. Proxies will be
47
<PAGE>
solicited by mail and may also be solicited in person or by telephone by
employees, officers and/or directors of Connecticut Mutual, its wholly-owned
subsidiary C.M. Life, its affiliated company, G.R. Phelps and a professional
solicitation organization. The cost of the solicitation by such organization,
including out-of-pocket expenses, is expected to be approximately $130,846 and
will be borne by G.R. Phelps.
DECEMBER 18, 1995 CONNECTICUT MUTUAL INVESTMENT
ACCOUNTS, INC.
48
<PAGE>
APPENDIX A
ADDITIONAL INFORMATION ABOUT OPPENHEIMER
DIRECTORS. The following table provides information with respect to the
senior officers and directors of Oppenheimer. The address for each is Two World
Trade Center, New York, NY except for Messrs. Swain, Bowen and Eich who are
located at 3410 S. Galena Street, Denver, Colorado 80231:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------ ----------------------------------------------------------
<S> <C>
Jon S. Fossel Chairman of the Board and Director
Bridget A. Macaskill President, Chief Executive Officer (effective September
30, 1995) and Director
Donald W. Spiro Chairman Emeritus and Director
Robert G. Galli Vice Chairman
James C. Swain Vice Chairman and Director
Robert C. Doll Executive Vice President
O. Leonard Darling Executive Vice President
James Ruff Executive Vice President
Tilghman G. Pitts, III Executive Vice President and Director
Andrew J. Donohue Executive Vice President and General Counsel
Kenneth C. Eich Executive Vice President and Chief Financial Officer
George C. Bowen Senior Vice President and Treasurer
Victor Babin Senior Vice President
Robert A. Densen Senior Vice President
Loretta McCarthy Senior Vice President
Robert Patterson Senior Vice President
Richard Rubinstein Senior Vice President
Nancy Sperte Senior Vice President
Arthur Steinmetz Senior Vice President
Ralph Stellmacher Senior Vice President
William L. Wilby Senior Vice President
Robert G. Zack Senior Vice President
</TABLE>
OAC. Oppenheimer is a wholly-owned subsidiary of OAC. The common stock of
OAC is divided into three classes. At September 30, 1995, Massachusetts Mutual
held (i) all of the 2,160,000 shares of Class A voting stock; (ii) 470,021
shares of Class B voting stock; and (iii) 940,067 shares of Class C
<PAGE>
non-voting stock. This collectively represented 81.3% of the outstanding common
stock and 87.3% of the voting power of OAC as of that date. Certain officers
and/or directors of Oppenheimer held (i) 654,788 shares of the Class B voting
stock, representing 14.9% of the outstanding common stock and 10.2% of the
voting power, and (ii) options acquired without cash payment which, when they
become exercisable, allow the holders to purchase up to 796,914 shares of Class
C non-voting stock at that date. That group includes Mr. George Bowen, Mr.
Leonard Darling, Mr. Robert Doll and Mr. Andrew J. Donohue, who are expected to
serve as officers of the Accounts, and Mr. Robert G. Galli, Mr. Donald W. Spiro
and Ms. Bridget Macaskill, who are nominated for election as Directors of the
Company. Holders of OAC Class B and Class C common stock may put (sell) their
shares and vested options to OAC or Massachusetts Mutual at a formula price
(based on earnings of Oppenheimer). Massachusetts Mutual may exercise call
(purchase) options on all outstanding shares of both such classes of common
stock and vested options at the same formula price, according to a schedule that
commenced on September 30, 1995.
The only transactions during the period from January 1, 1994 to September
30, 1995 by persons who are expected to serve as Directors of the Account, in
excess of 1% of the outstanding shares of common stock or options of OAC were as
follows: Ms. Macaskill surrendered to OAC 20,000 stock appreciation rights
issued in tandem with the Class B OAC options, for cash payments aggregating
$1,421,800, Mr. Galli, who sold 10,000 shares of Class C OAC common stock to
Massachusetts Mutual and surrendered to OAC 45,445 stock appreciation rights
issued in tandem with the Class B OAC options for an aggregate of $3,496,882,
and Mr. Spiro, who sold 50,000 shares of Class C OAC common stock to
Massachusetts Mutual for an aggregate of $3,548,500, for cash payments by OAC or
Massachusetts Mutual (subject to adjustment of the formula price) by OAC or
Massachusetts Mutual to be made as follows: one-third of the amount due (i)
within 30 days of the transaction; (ii) by the first anniversary following the
transaction (with interest); and (iii) by the second anniversary of the
transaction (with interest).
PORTFOLIO MANAGEMENT. The following provides information with respect to
the portfolio managers Oppenheimer proposes to appoint if Proposal 1 is approved
by shareholders and the Merger is consummated for the Accounts listed below.
Upon consummation of the Merger, Oppenheimer does not propose to change the
portfolio management for Growth Account and Total Return Account. Each Municipal
Account will continue to invest substantially all of its assets in a
corresponding Portfolio managed by Eaton Vance Management. The Subadvised
Accounts will be managed by the Subadvisers under the supervision of
Oppenheimer.
LIQUID ACCOUNT. If proposal 1 is approved and the Merger is consummated, it
is expected that Carol Wolf will manage the Liquid Account until such
ii
<PAGE>
time as that Account is merged into an Oppenheimer fund, if shareholders so
approve. Ms. Wolf currently manages Oppenheimer Money Market Fund, Inc. In
addition, she co-manages the $3.5 billion Daily Cash Accumulation Fund, Inc.,
the $5 billion Centennial Money Market Trust, the $900 million Centennial
Government Trust and Centennial America Fund, L.P. She is responsible for
Oppenheimer's money market group credit analysis of foreign and domestic
industrial companies, letters of credit and new investment ideas. She joined
Oppenheimer in 1987 as senior investment analyst for the taxable money market
group. Ms. Wolf has twelve years of investment experience. Prior to joining
Oppenheimer, she managed and traded over $1.2 billion in money market mutual
funds for Prudential Insurance Company and pension monies for Prudential Fixed
Income Advisors. In addition to her previous fixed income experience, she was an
equity analyst in the Prudential Asset Management Group. Ms. Wolf holds a B.A.
in Economics from Rutgers University and studied finance on the graduate level
at New York University. She has completed Level 1 of the Chartered Financial
Analyst program.
GOVERNMENT SECURITIES ACCOUNT AND INCOME ACCOUNT. If Proposal 1 is approved
and the Merger is consummated, it is expected that David Rosenberg will manage
the Government Securities Account and the Income Account until such time as
those respective Accounts are merged into comparable Oppenheimer funds, if
shareholders so approve. Mr. Rosenberg currently leads Oppenheimer's government
bond management team. He manages Oppenheimer U.S. Government Trust and
Oppenheimer Limited-Term Government Fund and oversees the management of the
government bond sectors in a number of other fixed-income mutual funds and
closed-end funds. Mr. Rosenberg joined Oppenheimer in 1994 from Delaware
Investment Advisors where he was a senior portfolio manger of Delaware Group's
Treasury Reserve Intermediate Fund. Prior to 1986, he held positions with Paine
Webber, Nomura Securities and Bloomberg Financial Markets.
OTHER MUTUAL FUNDS MANAGED BY OPPENHEIMER. Oppenheimer is the investment
adviser to the open-end investment companies set forth below, each of
iii
<PAGE>
which have investment objectives substantially similar to those of the Accounts.
In addition, Oppenheimer is the investment adviser to other open-end and
closed-end investment companies that are not listed below.
<TABLE>
<CAPTION>
APPROXIMATE
ASSET SIZE*
NAME OF FUND (MILLIONS) ADVISORY FEE RATE
- -------------------- ------------- -----------------------------------------------
<S> <C> <C>
Oppenheimer Money $ 857.1 .45% of the first $500 million of aggregate net
Market Fund, Inc. assets, .425% of the next $500 million, .40% of
the next $500 million, and .375% of net assets
in excess of $1.5 billion.
Oppenheimer Cash $ 141.4 .50% of the first $250 million of net assets;
Reserves .475% of the next $250 million; .45% of the
next $250 million; .425% of the next $250
million; and .40% of net assets over $1
billion.
Oppenheimer U.S. $ 420.2 .65% of the first $200 million of aggregate net
Government Trust assets, .60% of the next $100 million, .57% of
the next $100 million, .55% of the next $400
million and .50% of aggregate net assets over
$800 million.
Oppenheimer Bond $ 149.7 .75% of the first $200 million of average
Fund annual net assets, .72% of the next $200
million, .69% of the next $200 million, .66% of
the next $200 million, .60% of the next $200
million and .50% of net assets in excess of $1
billion.
Oppenheimer Tax-Free $ 615.0 .60% of the first $200 million of average
Bond Fund annual net assets, .55% of the next $100
million, .50% of the next $200 million, .45% of
the next $250 million, .40% of the next $250
million, and .35% of net assets in excess of $1
billion.
Oppenheimer $ 883.7 .75% of the first $200 million of aggregate net
Discovery Fund assets; .72% of the next $200 million; .69% of
the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets in
excess of $800 million.
Oppenheimer $ 7.5** .75% of the first $200 million of aggregate net
Enterprise Fund assets; .72% of the next $200 million; .69% of
the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets in
excess of $800 million.
Oppenheimer Variable $ 287.8 .75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer Capital million; .69% of the next $200 million; .66% of
Appreciation Fund the next $200 million; and .60% of average
annual net assets in excess of $800 million.
Oppenheimer Main $ 3,616.5 .65% of the first $200 million of net assets;
Street Income & .60% of the next $150 million; .55% of the next
Growth Fund $150 million and .45% of net assets in excess
of $500 million.
Oppenheimer Total $ 2,049.1 .75% of the first $100 million of net assets;
Return Fund, Inc. .70% of the next $100 million; .65% of the next
$100 million; .60% of the next $100 million;
.55% of the next $100 million; and .50% of net
assets in excess of $500 million.
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE
ASSET SIZE*
NAME OF FUND (MILLIONS) ADVISORY FEE RATE
- -------------------- ------------- -----------------------------------------------
<S> <C> <C>
Oppenheimer Equity $ 2,194.4 .75% of the first $100 million of net assets;
Income Fund .70% of the next $100 million; .65% of the next
$100 million; .60% of the next $100 million;
.55% of the next $100 million; and .50% of net
assets in excess of $500 million.
Oppenheimer Asset $ 264.7 .75% of the first $200 million of aggregate net
Allocation Fund assets; .72% of the next $200 million; .69% of
the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets over
$800 million.
Oppenheimer Variable $ 370.1 .75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer million; .69% of the next $200 million; .66% of
Multiple Strategies the next $200 million; and .60% of average
Fund annual net assets in excess of $800 million.
Oppenheimer Variable $ 1.3 75% of the first $200 million of average annual
Account Funds/ net assets; .72% of the next $200 million; .69%
Oppenheimer Growth of the next $200 million; .66% of the next $200
& Income Fund million; and .60% of the average annual net
assets in excess of $800 million.
Oppenheimer Fund $ 271.7 .75% of the first $200 million of aggregate net
assets; .72% of the next $200 million; .69% of
the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets over
$800 million.
Oppenheimer Target $ 739.9 .75% of the first $200 million of aggregate net
Fund assets; .72% of next $200 million; .69% of next
$200 million; .66% of next $200 million; and
.60% of aggregate net assets over $800 million.
Oppenheimer Growth $ 1,022.3 .75% of first $200 million of aggregate net
Fund assets; .72% of the next $200 million; .69% of
the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets over
$800 million.
Oppenheimer Value $ 148.0 .75% of the first $100 million of average
Stock Fund annual net assets; .72% of the next $200
million; .69% of the next $200 million; and
.66% of average annual net assets in excess of
$500 million.
Oppenheimer Variable $ 104.4 .75% of the first $200 million of average
Account Funds/ annual net assets; .72% of the next $200
Oppenheimer Growth million; .69% of the next $200 million; .66% of
Fund the next $200 million; and .60% of average
annual net assets in excess of $800 million.
</TABLE>
- ------------------------
*As of 9/30/95 in millions.
**As of 11/30/95 (Fund's inception was 11/7/95).
INFORMATION ABOUT THE SUBADVISERS
BABSON-STEWART. Babson-Stewart is located at One Memorial Drive, Cambridge,
Massachusetts 02142.
v
<PAGE>
DIRECTORS. Babson-Stewart is a general partnership organized under the laws
of The Commonwealth of Massachusetts. David L. Babson & Co., Inc. is a 50%
partner and Stewart Ivory & Company (International) Ltd. is a 50% partner. David
L. Babson & Co., Inc. is a direct wholly owned subsidiary of DLB Acquisition
Corporation, an indirect subsidiary of Massachusetts Mutual Life Insurance
Company. Stewart Ivory & Company (International) Ltd. is a direct wholly owned
subsidiary of Stewart Ivory (Holdings), Ltd. The name, address and principal
occupation of the principal executive officers and directors of Babson-Stewart
are set forth in the table below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ------------------------- ---------------------------------------------------------
<S> <C>
Peter C. Thompson Managing Director, Babson-Stewart; President and Director
One Memorial Drive of David L. Babson & Co. Inc.
Cambridge, MA 02142
Ronald E. Gwozdz Managing Director, Babson-Stewart; Senior Vice President
One Memorial Drive of David L. Babson & Co. Inc.
Cambridge, MA 02142
John G.L. Wright Managing Director, Babson-Stewart; Director, Stewart
45 Charlotte Square Ivory & Co. Ltd.
Edinburgh, Scotland
EH2 4HW
James W. Burns Managing Director, Babson-Stewart; Director, Stewart
45 Charlotte Square Ivory & Co. Ltd.
Edinburgh, Scotland
EH2 4HW
</TABLE>
OTHER MUTUAL FUNDS MANAGED BY BABSON-STEWART. Babson-Stewart provides
subadvisory services to other open-end investment companies with investment
objectives similar to those of Capital Appreciation Account and Balanced
Account:
<TABLE>
<CAPTION>
ASSET
NAME OF FUND SIZE* ADVISORY FEE RATE
-------------------- ---------- -----------------
<S> <C> <C>
The Babson-Stewart $67,873,436 0.475%
Ivory International
Fund, Inc.
DLB Global Small Capitalization Fund $6,030,264 0.50%
</TABLE>
- ------------------------
*As of 9/30/95.
BEA. BEA is located at Citicorp Center, 153 E. 53rd Street, New York, NY
10022.
DIRECTORS. BEA is a general partnership organized under the laws of the
State of New York and, together with its predecessor firms, has been engaged in
the investment advisory business for over 50 years. CS Capital is an 80% partner
vi
<PAGE>
and Basic Appraisals, Inc., which is owned by members of BEA management, is a
20% partner in BEA. CS Capital is a wholly-owned subsidiary of Credit Suisse
Investment Corporation, which is a wholly-owned subsidiary of Credit Suisse. No
one person or entity possesses a controlling interest in Basic Appraisals, Inc.
The name and principal occupation of the principal executive officers and the
directors of BEA are set forth in the table below. The address of each is
Citicorp Center, 153 E. 53rd Street, New York, NY 10022.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------ ----------------------------------------------------------
<S> <C>
Manfred Adami Chairman of the Board of Directors; and Member of the
Executive Board of Credit Suisse.
Dr. Hans Geiger Director; and Member of the Executive Board of Credit
Suisse.
Dr. Hermann Maurer Director; and Member of Senior Management and Head of
Asset Management of Credit Suisse.
Michael F. Orr Director and Executive Committee Member; and Consulting
Partner, Milbank, Tweed, Hadley & McCoy (active Partner
prior to July 1, 1990).
William W. Priest, Jr. Director, Co-Chairman -- Executive Committee, Chief
Executive Officer and Executive Director; and Director of
The Indonesia Fund, Inc.
Albert L. Zesiger Honorary Chairman -- Executive Committee and Executive
Director.
Emilio Bassini Member of the Executive Committee, Chief Financial Officer
and Executive Director; President and Secretary of The
Indonesia Fund, Inc.; Director, Chairman of the Board,
President, and Chief Investment Officer of The Chile
Fund, Inc., The Portugal Fund, Inc., The First Israel
Fund, Inc., The Emerging Markets Infrastructure Fund,
Inc., The Emerging Markets Telecommunications Fund, Inc.,
The Latin America Equity Fund, Inc., and The Latin
America Investment Fund, Inc.; and Director, Chairman of
the Board, President and Investment Officer of The
Brazilian Equity Fund, Inc.
Jeffrey A. Geller Member of the Executive Committee and Executive Director.
</TABLE>
vii
<PAGE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------ ----------------------------------------------------------
<S> <C>
Daniel H. Sigg Member of the Executive Committee and Executive Director,
Director and Senior Vice President of The Indonesia Fund,
Inc., The Chile Fund, Inc., The First Israel Fund, Inc.,
The Portugal Fund, Inc., The Brazilian Equity Fund, Inc.,
The Latin America Equity Fund, Inc., The Latin America
Investment Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc., and The Emerging Markets
Telecommunications Fund, Inc.; and Chairman and Chief
Executive Officer of BEA Strategic Income Fund, Inc., and
BEA Income Fund, Inc.
Robert Moore Executive Director, Fixed Income Portfolio Manager;
President and Chief Investment Officer of BEA Strategic
Income Fund, Inc., and BEA Income Fund, Inc.
Timothy T. Taussig Executive Director, Director of Client Development.
</TABLE>
OTHER MUTUAL FUNDS MANAGED BY BEA. BEA provides subadvisory services to a
portion of the assets of three portfolios of Connecticut Mutual Financial
Services Series Fund I, Inc. ("Series Fund I") with investment objectives
identical to those of Capital Appreciation Account, Balanced Account and
Diversified Income Account:
<TABLE>
<CAPTION>
NAME OF FUND ASSET SIZE* ADVISORY FEE RATE
- -------------------------- ------------ ------------------------------------------
<S> <C> <C>
LifeSpan Capital $ 2,506,370 Same as Capital Appreciation Account
Appreciation Portfolio
LifeSpan Balanced $ 5,011,208 Same as Balanced Account
Portfolio
LifeSpan Diversified $ 3,007,642 Same as Diversified Income Account
Income Portfolio
</TABLE>
- ------------------------
*As of 9/30/95. The Series Fund I LifeSpan Portfolios commenced operations on
September 1, 1995; BEA manages only that portion of the assets (as shown above)
of each Portfolio allocated to it by G.R. Phelps.
PILGRIM. Pilgrim is located at 1255 Drummers Lane, Wayne, Pennsylvania
19087.
viii
<PAGE>
DIRECTORS. The names and principal occupations of the Directors and
officers of Pilgrim are described below. The address of each is 1255 Drummers
Lane, Wayne, Pennsylvania 19087.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- -------------------- --------------------------------------------------------------
<S> <C>
Harold J. Baxter Director (since 1985), CEO (since 1985) and Chairman (since
1994).
Gary L. Pilgrim Director (since 1985), CIO (since 1985) and President (since
1994).
Brian F. Bereznak Chief Operating Officer (since 1993).
</TABLE>
OTHER MUTUAL FUNDS ADVISED BY PILGRIM. Pilgrim provides subadvisory
services to a portion of the assets of two portfolios of Series Fund I with
investment objectives identical to those of Capital Appreciation Account and
Balanced Account and to another mutual fund not otherwise affiliated with the
Company:
<TABLE>
<CAPTION>
NAME OF FUND ASSET SIZE ADVISORY FEE RATE
- --------------------------- -------------- --------------------------------------
<S> <C> <C>
LifeSpan Capital $ 6,350,368 Same as Capital Appreciation Account
Appreciation Portfolio*
LifeSpan Balanced $ 5,083,406 Same as Balanced Account
Portfolio*
CG Capital Markets Small $ 195,000,000 0.30% of average daily net assets.
Cap.**
</TABLE>
- ------------------------
*As of 9/30/95. The Series Fund I LifeSpan Portfolios commenced operations as
of September 1, 1995; Pilgrim manages only that portion of the assets (as set
forth above) of each Portfolio allocated to it by G.R. Phelps.
**As of 9/15/95.
ix
<PAGE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A -- Form of the New Advisory Agreements
Exhibit B -- Forms of the New Subadvisory Agreements with Pilgrim
and BEA
Exhibit C -- Form of the New Subadvisory Agreement with
Babson-Stewart
Exhibit D -- Form of New Class A Plan
Exhibit E -- Form of New Class B Plan
</TABLE>
<PAGE>
EXHIBIT A
The Form of Investment Advisory Agreement is identical for each Account, except
for the names and fee schedules of the Accounts.
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the day of , 1996, by and between
(the "Fund"), and OPPENHEIMER MANAGEMENT CORPORATION ("OMC").
WHEREAS, the Fund is a series of Connecticut Mutual Investment Accounts,
Inc. (the "Company"), an open-end, diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OMC is a registered investment adviser;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISION. The Fund hereby employs OMC and OMC hereby
undertakes to act as the investment adviser of the Fund and to perform for the
Fund such other duties and functions as are hereinafter set forth. OMC shall, in
all matters, give to the Fund and its Board of Directors the benefit of its best
judgment, effort, advice and recommendations and shall, at all times conform to,
and use its best efforts to enable the Fund to conform to (i) the provisions of
the Investment Company Act and any rules or regulations thereunder; (ii) any
other applicable provisions of state or federal law; (iii) the provisions of the
Company's Articles of Incorporation and By-Laws as amended from time to time;
(iv) policies and determinations of the Board of Directors of the Company; (v)
the fundamental policies and investment restrictions of the Fund as reflected in
its registration statement under the Investment Company Act or as such policies
may, from time to time, be amended by the Fund's shareholders; and (vi) the
Prospectus and Statement of Additional Information of the Fund in effect from
time to time. The appropriate officers and employees of OMC shall be available
upon reasonable notice for consultation with any of the Directors and officers
of the Company with respect to any matters dealing with the business and affairs
of the Fund including the valuation of any of the Fund's portfolio securities
which are either not registered for public sale or not being traded on any
securities market.
2. INVESTMENT MANAGEMENT.
(a) OMC shall, subject to the direction and control by the Company's Board
of Directors, (i) regularly provide, alone or in consultation with any
subadvisor or subadvisors appointed pursuant to this Agreement and subject to
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
<PAGE>
purchase and sale of securities; (ii) supervise continuously the investment
program of the Fund and the composition of its portfolio and determine what
securities shall be purchased or sold by the Fund; and (iii) arrange, subject to
the provisions of paragraph "7" hereof, for the purchase of securities and other
investments for the Fund and the sale of securities and other investments held
in the portfolio of the Fund.
(b) Provided that the Fund shall not be required to pay any compensation
other than as provided by the terms of this Agreement and subject to the
provisions of paragraph "7" hereof, OMC may obtain investment information,
research or assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect OMC from willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the Agreement, OMC shall
not be liable for any loss sustained by reason of good faith errors or omissions
in connection with any matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any officer thereof from
acting as investment adviser for any other person, firm or corporation and shall
not in any way limit or restrict OMC or any of its directors, officers or
employees from buying, selling or trading any securities for its own account or
for the account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by OMC
of its duties and obligations under this Agreement and under the Investment
Advisers Act of 1940.
3. OTHER DUTIES OF OMC. OMC shall, at its own expense, 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. OMC shall, at
its own cost and expense, also provide the Fund with adequate office space,
facilities and equipment.
A-2
<PAGE>
4. ALLOCATION OF EXPENSES. All other costs and expenses not expressly
assumed by OMC under this Agreement, or to be paid by the principal distributor
of the shares of the Fund, shall be paid by the Fund, including, but not limited
to (i) interest and taxes; (ii) brokerage commissions; (iii) premiums for
fidelity and other insurance coverage requisite to its operations; (iv) the fees
and expenses of its Directors; (v) legal and audit expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the redemption of
its shares; (viii) expenses incident to the issuance of its shares against
payment therefor by or on behalf of the subscribers thereto; (ix) fees and
expenses, other than as hereinabove provided, incident to the registration under
federal securities laws of shares of the Fund for public sale; (x) expenses of
printing and mailing reports, notices and proxy materials to shareholders of the
Fund; (xi) except as noted above, all other expenses incidental to holding
meetings of the Fund's shareholders; and (xii) such extraordinary non-recurring
expenses as may arise, including litigation affecting the Fund and any
obligation which the Fund may have to indemnify its officers and Directors with
respect thereto. Any officers or employees of OMC or any entity controlling,
controlled by or under common control with OMC, who may also serve as officers,
Directors or employees of the Fund shall not receive any compensation from the
Fund for their services.
5. COMPENSATION OF OMC. The Fund agrees to pay OMC and OMC agrees to
accept as full compensation for the performance of all functions and duties on
its part to be performed pursuant to the provisions hereof, a fee computed on
the aggregate net assets of the Fund as of the close of each business day and
payable monthly at the annual rates set forth in Appendix A.
6. USE OF NAME "OPPENHEIMER." OMC hereby grants to the Fund a
royalty-free, non-exclusive license to use the name "Oppenheimer" in the name of
the Fund for the duration of this Agreement and any extensions or renewals
thereof. To the extent necessary to protect OMC's rights to the name
"Oppenheimer," under applicable law, such license shall allow OMC 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 OMC, in which event the Fund
shall promptly take whatever action may be necessary to change its name and
discontinue any further use of the name "Oppenheimer" in the name of the Fund or
otherwise. The name "Oppenheimer" may be used or licensed by OMC in connection
with any of its activities or licensed by OMC to any other party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) OMC is authorized, in arranging the Fund's portfolio transactions, to
employ or deal with such members of securities or commodities exchanges, brokers
or dealers, including "affiliated" broker dealers (as that term is defined
A-3
<PAGE>
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 provisions of subparagraph "(c)" of this
paragraph "7," the benefit of such investment information or research as may be
of significant assistance to the performance by OMC of its investment management
functions.
(b) OMC shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio transaction(s)
will be judged by OMC on the basis of all relevant factors and considerations
including, insofar as feasible, the execution capabilities required by the
transaction or transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein for its
own account; the importance to the Fund of speed, efficiency or confidentiality;
the broker-dealer's apparent familiarity with sources from or to whom particular
securities might be purchased or sold; as well as any other matters relevant to
the selection of a broker-dealer for particular and related transactions of the
Fund.
(c) OMC shall have discretion, in the interests of the Fund, to allocate
brokerage on the Fund's portfolio transactions to broker-dealers (other than
affiliated broker-dealers) qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the
Fund and/or other accounts for which OMC and its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of the Securities
Exchange Act of 1934) and to cause the Fund to pay such broker-dealers a
commission for effecting a portfolio transaction for the Fund that is in excess
of the amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if OMC
determines, in good faith, that such commission is reasonable in relation to the
value of the brokerage and/or research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of OMC and its investment advisory affiliates with respect to
the accounts as to which they exercise investment discretion. In reaching such
determination, OMC will not be required to place or attempt to place a specific
dollar value on the brokerage and/or research services provided or being
provided by such broker-dealer. In demonstrating that such determinations were
made in good faith, OMC shall be prepared to show that all commissions were
allocated for the
A-4
<PAGE>
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) OMC shall have no duty or obligation to seek advance competitive bidding
for the most favorable commission rate applicable to any particular portfolio
transactions or to select any broker-dealer on the basis of its purported or
"posted" commission rate but will, to the best of its ability, endeavor to be
aware of the current level of the charges of eligible broker-dealers and to
minimize the expense incurred by the Fund for effecting its portfolio
transactions to the extent consistent with the interests and policies of the
Fund as established by the determinations of its Board of Directors and the
provisions of this paragraph "7."
(e) The Fund recognizes that an affiliated broker-dealer (i) may act as one
of the Fund's regular brokers so long as it is lawful for it so to act; (ii) may
be a major recipient of brokerage commissions paid by the Fund; and (iii) may
effect portfolio transactions for the Fund only if the commissions, fees or
other remuneration received or to be received by it are determined in accordance
with procedures contemplated by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
(f) Subject to the foregoing provisions of this paragraph "7", OMC may also
consider sales of Fund shares and shares of other investment companies managed
by OMC or its affiliates as a factor in the selection of broker-dealers for the
Fund's portfolio transactions.
8. DURATION. This Agreement will take effect on the date first set forth
above and will continue in effect until , 1998, and thereafter, from
year to year, so long as such continuance shall be approved at least annually in
the manner contemplated by Section 15 of the Investment Company Act.
9. TERMINATION. This Agreement may be terminated (i) by OMC at any time
without penalty upon giving the Fund sixty days' written notice (which notice
may be waived by the Fund); or (ii) by the Fund at any time without penalty upon
sixty days' written notice to OMC (which notice may be waived by OMC) provided
that such termination by the Fund shall be directed or approved by the vote of a
majority of all of the Directors of the Fund then in office or by the vote of
the holders of a "majority" (as defined in the Investment Company Act) of the
outstanding voting securities of the Fund.
10. ASSIGNMENT OR AMENDMENT. This Agreement may not be amended without the
affirmative vote or written consent of the holders of a "majority" of
A-5
<PAGE>
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. OMC understands that the
obligations of the Fund under this Agreement are not binding upon any Director
or shareholder of the Fund personally, but bind only the Fund and the Fund's
property. OMC represents that it has notice of the provisions of the Company's
Articles of Incorporation of the Company disclaiming shareholder liability for
acts or obligations of the Fund.
12. DEFINITIONS. The terms and provisions of this Agreement shall be
interpreted and defined in a manner consistent with the provisions and
definitions of the Investment Company Act.
CONNECTICUT MUTUAL INVESTMENT
ACCOUNTS, INC.
By:
--------------------------------------------------------------
President
OPPENHEIMER MANAGEMENT CORPORATION
By:
--------------------------------------------------------------
Senior Vice President
A-6
<PAGE>
APPENDIX A
The Fund agrees to pay OMC and OMC agrees to accept as full compensation for
the performance of all functions and duties on its part to be performed pursuant
to the provisions hereof, a fee computed on the aggregate net assets of the Fund
as of the close of each business day payable monthly at the following annual
rates:
LIQUID ACCOUNT:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ---------------------------------------------------------------------- -------------
<S> <C>
First $200,000,000.................................................... 0.50%
Next $100,000,000..................................................... 0.45%
Amount over $300,000,000.............................................. 0.40%
</TABLE>
TOTAL RETURN ACCOUNT, GOVERNMENT SECURITIES ACCOUNT, INCOME ACCOUNT AND GROWTH
ACCOUNT:
<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>
CAPITAL APPRECIATION ACCOUNT AND BALANCED ACCOUNT:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ---------------------------------------------------------------------- -------------
<S> <C>
First $250,000,000.................................................... 0.85%
Amount over $250,000,000.............................................. 0.75%
</TABLE>
DIVERSIFIED INCOME ACCOUNT:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ---------------------------------------------------------------------- -------------
<S> <C>
First $250,000,000.................................................... 0.75%
Amount over $250,000,000.............................................. 0.65%
</TABLE>
A-7
<PAGE>
EXHIBIT B
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
LIFESPAN BALANCED ACCOUNT
FORM OF
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
AGREEMENT made as of the day of , 1996 by and between Oppenheimer
Management Corporation (the "Investment Adviser") and Pilgrim Baxter &
Associates, Ltd., (the "Subadviser").
Connecticut Mutual Investment Accounts, 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 Account (the "Account") is a series of the Company. The Investment
Adviser and the Subadviser are investment advisers registered under the
Investment Advisers Act of 1940 (the "Advisers Act").
Pursuant to authority granted the Investment Adviser by the Company's Board
of Directors and pursuant to the provisions of the Investment Advisory Agreement
dated , 1996 between the Investment Adviser and Company, on behalf of
the Account, the Investment Adviser has selected the Subadviser to act as an
investment subadviser of the Account 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 agrees
with the Subadviser as follows:
1. The Subadviser will regularly provide the Account with advice concerning
the investment management of the Small Capitalization US Equity portfolio of the
Account (the "Sub-Account"), designated by the Investment Adviser. Such advice
shall be consistent with the investment objectives and policies of the Account
as set forth in the Account'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-Account, and what securities shall be
held or sold by the Account, subject always to the provisions of Section 9
hereof.
The Investment Adviser shall oversee the management of the Sub-Account by
the Subadviser. The Investment Adviser shall manage directly, or by engaging
other subadvisers, and the Subadviser shall not be responsible for the
management of, any portion of the Account not designated as part of the Sub-
Account. The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Account, 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
<PAGE>
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, Account or the Investment Adviser in any way or otherwise
be deemed to be an agent of the Company, Account or the Investment Adviser. The
Subadviser will make its officers and employees available to meet with the
Company's officers and Board of Directors at least quarterly on due notice to
review the investments and investment program of the Account 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 Account'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 Account
including, but not limited to, the following: legal expenses; auditing and
accounting expenses; expenses of maintenance of the Account's books and records
relating to the Account, including computation of the Account'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 Account's shares; expenses of registering and qualifying
Account shares for sale under applicable federal and state law; expenses of
preparing, setting in print, printing and distributing prospectuses, reports,
notices and dividends to Account shareholders; cost of stationery; costs of
shareholders and other meetings of the Account; traveling expenses of officers,
Directors and employees of the Company or Account, if any; fees of the Company's
Directors and salaries of any officers or employees of the Company or Account;
and the Account's pro rata portion of premiums on any fidelity bond and other
insurance covering the Company, the Account and their officers and Directors.
The Account shall reimburse the Subadviser for any such expenses or other
expenses of the Account, as may be reasonably incurred by such Subadviser on the
Account's behalf. The Subadviser shall keep and supply to the Account 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
B-2
<PAGE>
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 Account
shall have no responsibility for any fee payable to the Subadviser.
In the event that the advisory fee payable by the Account to the Investment
Adviser shall be reduced as required by the securities laws or regulations of
any jurisdiction in which the Account's shares are offered for sale, the amount
payable by the Adviser to the Subadviser shall be likewise reduced by a
proportionate amount.
4. In connection with purchases or sales of securities for the Account,
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-Account, 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-Account 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
Account 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 Account, other than compensation provided for in this Agreement or in the
Investment Advisory Agreement of the Account 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 Account in the purchase and sale of. The Subadviser agrees that
all transactions effected through the Subadviser or brokers affiliated with the
Subadviser shall be effected in compliance with Section 17(e) of the 1940 Act
and written procedures established from time to time by the Board of Directors
of the Company pursuant to Rule 17e-1 under the 1940 Act, as amended, copies of
which shall be provided to the Subadviser by the Investment Adviser.
5. It is also understood that it is desirable for the Account 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 Account 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 Account with such certain
brokers, subject to review by the Company's Board of Directors from time to time
with respect to the extent and continuation of this practice. It is
B-3
<PAGE>
understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients. If any occasion
should arise in which the Subadviser gives any advice to its clients concerning
the shares of the Account, the Subadviser will act solely as investment counsel
for such clients and not in any way on behalf of the Account. The Subadviser's
services to the Account 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 Account are adhered to, and such
aggregation is in the best interests of the Account, the Subadviser may
aggregate sales and purchase orders of securities held for the Account 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
Account and shall result in an overall economic benefit to the Account, 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 Account's custodian and the Investment
Adviser on a prompt basis of each purchase and sale of a portfolio security,
specifying the name of the issuer, the description and amount or number of
shares of the security purchases, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required. From time to
time as the Board of Directors of the Company or the Investment Adviser may
reasonably request, the Subadviser will furnish to the Company's officers and to
each of its Directors, at the Subadviser's expense, reports on portfolio
transactions and reports on issues of securities held in the portfolio, all in
such detail as the Account or the Investment Adviser may reasonably request.
6. In the absence of willful misfeasance, bad faith, negligence, or
reckless disregard of the performance of duties of the Subadviser to the
Account, the Subadviser shall not be subject to liabilities to the Account, the
Adviser, the Company, or to any shareholder of the Account for any error of
judgement or mistake of law or for any other action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.
Notwithstanding the above, the Subadviser will indemnify and hold harmless
the Investment Adviser from, against, for and in respect to losses, damages,
costs and expenses incurred by the Investment Adviser, including attorneys' fees
reasonably incurred, in the event of the Subadviser's willful misfeasance, bad
faith or negligence in the performance of its duties or obligations hereunder or
B-4
<PAGE>
by reason if its reckless disregard of such duties or obligations; provided,
however, that the Investment Adviser shall not be so indemnified for such
losses, damages, costs and expenses, including such attorneys' fees, to the
extent they result from the Investment Adviser's willful misfeasance, bad faith
or negligence. The Investment Adviser shall indemnify and hold harmless the
Subadviser to the same extent and subject to the same limitations as the
Subadviser shall indemnify the Investment Adviser pursuant to the previous
sentence.
7. This Agreement shall remain in force until , 1998, and from
year to year thereafter, but only so long as such continuance, and the
continuance of the Investment Adviser as investment adviser of the Account, is
specifically approved at least annually by the vote of a majority of the
Directors who are not interested persons of the Subadviser, the Investment
Adviser or the Account, 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 Account. 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
Account, upon 60 days' written notice to the Adviser and Subadviser, (b) by the
Investment Adviser, upon 60 days' written notice to the Account and the
Subadviser, or (c) by the Subadviser, upon 90 days' written notice to the
Account 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
Account 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
Account, cast in person at a meeting called for the purpose of voting on such
approval.
B-5
<PAGE>
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-Account 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 Account as each of the same shall be from time to time
in effect as set forth in the Account'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-Account, will cause the Sub-Account 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-Account were a "regulated investment company"
as defined in Section 851(a) of the Code; and the regulations pertaining
thereto. The Subadviser shall not without the prior express written consent of
the Adviser: (a) invest Sub-Account assets having a value exceeding five percent
of the Account's total (gross) assets in securities of one issuer; or (b) cause
the Sub-Account to acquire more than ten percent of the outstanding voting
securities of any one issuer; or (c) invest Sub-Account 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
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required to be stated therein or necessary to make the statements contained
therein not misleading. The Subadviser further represents and warrants that it
is an investment adviser registered under the Advisers Act.
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Any notice given to the Subadviser by the Investment Adviser pursuant to
the terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
or mailed, postpaid, to: Pilgrim Baxter & Associates, Ltd., 1255 Drummers Lane,
Suite 300, Wayne, PA 19087-1549, Attn: Mr. Brian Bereznak. Any notice given to
the Investment Adviser by the Subadviser, pursuant to the terms of this
Agreement shall be deemed to have been given if provided in writing (including
by telecopy or similar hard copy reproduction) and delivered to Oppenheimer
Management Corporation, Two World Trade Center, New York, NY 10048, Attention:
General Counsel.
14. It is understood and expressly stipulated that the Subadviser must look
solely to the property of the Account for the enforcement of any claims against
the Account and shall not look to or have recourse to the assets of the Company
generally or any other series of the Company.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above, and effective as of
, 1996.
OPPENHEIMER MANAGEMENT CORPORATION
By:
-------------------------------------------------------------
Its:
-------------------------------------------------------------
PILGRIM BAXTER & ASSOCIATES, LTD.
By:
-------------------------------------------------------------
Its:
-------------------------------------------------------------
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<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 as follows:
(a) the Aggressive Growth Sub-Account of the CMIA LifeSpan Capital
Appreciation Account; (b) the Aggressive Growth Sub-Account of the Series Fund I
Life Span Capital Appreciation Portfolio; (c) the Aggressive Growth Sub-Account
of the CMIA LifeSpan Balanced Account; and (d) the Aggressive Growth Sub-Account
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 shall be computed in the manner specified in the applicable
Prospectuses and Statements of Additional Information for the computation of the
value of the net assets in connection with the determination of net asset value
of their shares. On any day that the net asset determination is suspended as
specified in the Prospectuses, the net asset value for purposes of calculating
the Subadvisory fee with respect to each of the aforementioned shall be
calculated as of the date last determined.
B-8
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
LIFESPAN BALANCED ACCOUNT
FORM OF
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
AGREEMENT made as of the day of , 1996 by and between Oppenheimer
Management Corporation (the "Investment Adviser") and BEA Associates (the
"Subadviser").
Connecticut Mutual Investment Accounts, 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 Account (the "Account") is a series of the Company. The Investment
Adviser and the Subadviser are investment advisers registered under the
Investment Advisers Act of 1940 (the "Advisers Act").
Pursuant to authority granted the Investment Adviser by the Company's Board
of Directors and pursuant to the provisions of the Investment Advisory Agreement
dated , 1996 between the Investment Adviser and Company, on behalf of
the Account, the Investment Adviser has selected the Subadviser to act as an
investment subadviser of the Account 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 agrees
with the Subadviser as follows:
1. The Subadviser will regularly provide the Account with advice concerning
the investment management of the High Yield Fixed Income portion of the Account
(the "Sub-Account") designated by the Investment Adviser. Such advice shall be
consistent with the investment objectives and policies of the Account as set
forth in the Account'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-Account, and what securities shall be held or sold by the
Sub-Account, subject always to the provisions of Section 9 hereof.
The Investment Adviser shall oversee the management of the Sub-Account by
the Subadviser. The Investment Adviser shall manage directly, or by engaging
other subadvisers, and the Subadviser shall not be responsible for the
management of, any portion of the Account not designated as part of the Sub-
Account. The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Account, 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
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<PAGE>
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, Account or the Investment Adviser in any way or otherwise
be deemed to be an agent of the Company, Account or the Investment Adviser. The
Subadviser will make its officers and employees available to meet with the
Company's officers and Board of Directors at least quarterly on due notice to
review the investments and investment program of the Sub-Account 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 Account'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 Account
including, but not limited to, the following: legal expenses; auditing and
accounting expenses; expenses of maintenance of the Account's books and records
relating to the Account, including computation of the Account'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 Account's shares; expenses of registering and qualifying
Account shares for sale under applicable federal and state law; expenses of
preparing, setting in print, printing and distributing prospectuses, reports,
notices and dividends to Account shareholders; cost of stationery; costs of
shareholders and other meetings of the Account; traveling expenses of officers,
Directors and employees of the Company or Account, if any; fees of the Company's
Directors and salaries of any officers or employees of the Company or Account;
and the Account's pro rata portion of premiums on any fidelity bond and other
insurance covering the Company, the Account and their officers and Directors.
The Account shall reimburse the Subadviser for any such expenses or other
expenses of the Account, as may be reasonably incurred by such Subadviser on the
Account's behalf. The Subadviser shall keep and supply to the Account 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
B-10
<PAGE>
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 Account
shall have no responsibility for any fee payable to the Subadviser.
In the event that the advisory fee payable by the Account to the Investment
Adviser shall be reduced as required by the securities laws or regulations of
any jurisdiction in which the Account's shares are offered for sale, the amount
payable by the Adviser to the Subadviser shall be likewise reduced by a
proportionate amount.
4. In connection with purchases or sales of securities on behalf of the
Account, 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 Account, 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-Account 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
Account the best execution available. Neither the Subadviser nor any affiliate
of the Subadviser will act as principal or receive directly or indirectly any
compensation in connection with the purchase or sale of investment securities by
the Sub-Account, other than compensation provided for in this Agreement or in
the Investment Advisory Agreement of the Account 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-Account 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 Account 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 Account 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-Account with such
certain brokers, subject to review by the Company's Board of Directors from time
to time with respect to the extent and continuation of this practice. It
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<PAGE>
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-Account, the Subadviser will act solely as investment
counsel for such clients and not in any way on behalf of the Account. The
Subadviser's services to the Account 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 Account are adhered to, and such
aggregation is in the best interests of the Account, the Subadviser may
aggregate sales and purchase orders of securities held for the Account 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
Account and shall result in an overall economic benefit to the Account, 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 Account's custodian and the Investment
Adviser on a prompt basis of each purchase and sale of a portfolio security,
specifying the name of the issuer, the description and amount or number of
shares of the security purchases, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required. From time to
time as the Board of Directors of the Company or the Investment Adviser may
reasonably request, the Subadviser will furnish to the Company's officers and to
each of its Directors, at the Subadviser's expense, reports on portfolio
transactions and reports on issues of securities held in the Sub-Account, all in
such detail as the Account 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-Account in its discretion to vote, tender or convert
any securities in the Sub-Account; to execute proxies, waivers, consents,
account documentation, agreements, contracts and other instruments with respect
to such securities and the assets of the Sub-Account; to endorse, transfer or
deliver such securities and to participate in or consent to any class action,
plan of reorganization, merger, combination, consolidation, liquidation or
similar plan with reference to such securities; and the Subadviser shall not
incur any liability to the Investment Adviser or the Sub-Account by reason of
any exercise of, or failure to exercise, any such discretion in the absence of
willful misfeasance, bad faith, or gross negligence.
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<PAGE>
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
Account or its share-holders by reason of: (a) the Subadviser negligently
causing the Sub-Account to be in violation of any federal or state law, rule or
regulation or any investment policy or restriction set forth in the Account'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-Account to
fail to satisfy the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") due to the Subadviser's failure to comply with the
requirements set forth in the second paragraph of Section 9; or (c) the
Subadviser's willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement; provided that, with respect to (a)
and (b) above, Subadviser shall be deemed not to have been negligent if it acts
in reliance upon written reports provided by Investment Advisor, the Company,
the Account, or any of their respective authorized agents.
The Subadviser will indemnify the Adviser to the fullest extent permitted by
law against any and all loss, damage, judgment, fines, amounts paid in
settlement and attorneys fees incurred by the Investment Adviser to the extent
resulting, in whole or in part, from any of the Subadviser's acts or omissions
specified in (a), (b) or (c) above or otherwise from the Subadviser's willful
misfeasance, bad faith, or gross negligence, provided, however, that nothing
herein contained will provide indemnity to the Investment Adviser for liability
resulting from its own willful misfeasance, bad faith, or gross negligence in
the performance of its duties or reckless disregard of such duties.
7. This Agreement shall remain in force until , 1998, and from
year to year thereafter, but only so long as such continuance, and the
continuance of the Investment Adviser as investment adviser of the Account, is
specifically approved at least annually by the vote of a majority of the
Directors who are not interested persons of the Subadviser, the Investment
Adviser or the Account, 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 Account. The aforesaid requirement
that continuance of this Agreement be "specifically approved at least annually"
shall
B-13
<PAGE>
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
Account, upon 60 days' written notice to the Adviser and Subadviser, (b) by the
Investment Adviser, upon 60 days' written notice to the Account and the
Subadviser, or (c) by the Subadviser, upon 90 days' written notice to the
Account 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
Account 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
Account, 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-Account 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 Account as each of the same shall be from time to time
in effect as set forth in the Account'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-Account, will cause the Sub-Account to comply
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<PAGE>
with the requirements of: (a) Section 851(b)(2) of the Code regarding derivation
of income from specified investment activities; and (b) Section 851(b)(3) of the
Code limiting gains from the disposition of securities and certain other
investments held less than three months, in each case as if the Sub-Account were
a "regulated investment company" as defined in Section 851(a) of the Code; and
the regulations pertaining thereto. The Subadviser shall not without the prior
express written consent of the Adviser: (a) invest Sub-Account assets having a
value exceeding five percent of the Account's total (gross) assets in securities
of one issuer; or (b) cause the Sub-Account to acquire more than ten percent of
the outstanding voting securities of any one issuer; or (c) invest Sub-Account
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 Connecticut.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Any notice given to the Subadviser by the Investment Adviser pursuant to
the terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
or mailed, postpaid, to: BEA Associates, One Citicorp Center, New York, NY
10048.
Any notice given to the Investment Adviser by the Subadviser pursuant to the
terms of this Agreement shall be deemed to have been given if provided in
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<PAGE>
writing (including by telecopy or similar hard copy reproduction) and delivered
to Oppenheimer Management Corporation, Two World Trade Center, New York, NY
10048.
14. It is understood and expressly stipulated that the Subadviser must look
solely to the property of the Account for the enforcement of any claims against
the Account and shall not look to or have recourse to the assets of the Company
generally or any other series of the Company.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above, and effective as of
, 1996.
OPPENHEIMER MANAGEMENT CORPORATION
By:
-------------------------------------------------------------
Its:
-------------------------------------------------------------
BEA ASSOCIATES
By:
-------------------------------------------------------------
Its:
-------------------------------------------------------------
B-16
<PAGE>
BEA ASSOCIATES
SCHEDULE A
TO
SUBADVISORY AGREEMENT
The fee payable by the Investment Adviser to the Subadviser shall be at an
annual rate equal to a percentage of the average daily Net Assets Under
Management (as defined below) as follows:
ANNUAL RATE
.45% of the first $25 Million of such assets
.40% of the next $25 Million of such assets
.35% of the next $50 Million of such assets
.25% of such assets over $100 Million.
For purposes of this Schedule A, Net Assets Under Management shall consist
of the aggregated net assets of each Sub-Account as follows:
(a) the High Yield Sub-Account of the CMIA LifeSpan Diversified Income
Account; (b) the High Yield Sub-Account of the Series Fund I LifeSpan
Diversified Income Portfolio; (c) the High Yield Sub-Account of the CMIA
LifeSpan Balanced Account; (d) the High Yield Sub-Account of the Series Fund I
LifeSpan Balanced Portfolio; (e) the High Yield Sub-Account of the CMIA LifeSpan
Capital Appreciation Account; and (f) the High Yield Sub-Account 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-Accounts
shall be computed in the manner specified in the applicable Prospectuses and
Statements of Additional Information for the computation of the value of the net
assets in connection with the determination of net asset value of their shares.
On any day that the net asset determination is suspended as specified in the
Prospectuses, the net asset value for purposes of calculating the subadvisory
fee with respect to each of the aforementioned shall be calculated as of the
date last determined.
B-17
<PAGE>
EXHIBIT C
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is by and between Babson-Stewart
Ivory International, a partnership organized under the laws of the Commonwealth
of Massachusetts (the "Sub-Adviser"), and Oppenheimer Management Corporation, a
Colorado corporation ("OMC"), effective , 199 .
WHEREAS, Oppenheimer Fund (the "Fund") is a series of
Oppenheimer Fund, 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 OMC as the investment adviser for the Fund, pursuant to the terms of
an Investment Advisory Agreement (the "Advisory Agreement");
WHEREAS, the Advisory Agreement provides that OMC may, at its option,
subject to approval by the Board of Directors of the Company, and, to the extent
necessary, shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of OMC under the Advisory Agreement;
WHEREAS, OMC and the Sub-Adviser are investment advisers registered as such
with the Commission, and OMC desires to appoint the Sub-Adviser as a sub-adviser
for the Fund and the Sub-Adviser is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, OMC and the Sub-Adviser, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. GENERAL PROVISION.
OMC hereby employs the Sub-Adviser and the Sub-Adviser hereby undertakes to
act as the investment sub-adviser of the international portion of the
portfolio of the Fund designated by OMC (the "Sub-Account") and to provide
investment advice and to perform for the Fund such other duties and
functions as are hereinafter set forth. The Sub-Adviser shall, in all
matters, give to the Fund and the Company's Board of Directors, directly or
through OMC, the benefit of the Sub-Adviser's best judgment, effort, advice
and recommendations and shall, at all times conform to, and use its best
efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations thereunder;
(b) the provisions of Subchapter M of the Internal Revenue Code, as it may
be amended from time to time;
<PAGE>
(c) any other applicable provisions of state or federal law;
(d) the provisions of the Articles of Incorporation and By-Laws of the
Company as amended from time to time;
(e) policies and determinations of the Board of Directors of the Company and
OMC;
(f) the fundamental policies and investment restrictions of the Fund as
reflected in the Company's registration statement under the 1940 Act or
as such fundamental policies and investment restrictions may, from time
to time, be amended by the Fund's shareholders;
(g) the Prospectus and Statement of Additional Information of the Fund in
effect from time to time; and
(h) any investment guidelines or other instructions received in writing from
OMC.
The appropriate officers and employees of the Sub-Adviser shall be available
upon reasonable notice for consultation with any of the Directors and
officers of the Company and OMC with respect to any matters dealing with the
business and affairs of the Fund including without limitation the valuation
of portfolio securities of the Sub-Account that are either not registered
for public sale or not traded on any securities market.
In the performance of its duties hereunder, the Sub-Adviser is and shall be
an independent contractor and unless otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or
represent the Company, the Fund or OMC in any way or otherwise be deemed to
be an agent of the Company, the Fund or OMC.
2. DUTIES OF THE SUB-ADVISER.
(a) The Sub-Adviser shall, subject to the direction and control by the
Company's Board of Directors or OMC, to the extent OMC's direction is
not inconsistent with that of the Board of Directors, (i) regularly
provide investment advice and recommendations to the Fund, directly or
through OMC, with respect to the Sub-Account's investments, investment
policies and the purchase and sale of securities; (ii) supervise and
monitor continuously the investment program of the Fund with respect to
the Sub-Account and the portfolio composition of the Sub-Account and
determine what securities shall be purchased or sold for the Sub-Account
of the Fund; (iii) arrange, subject to the provisions of paragraph 5
hereof, for the purchase of securities and other investments for the
Sub-Account of the Fund and
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the sale of securities and other portfolio investments held in the Sub-
Account of the Fund; and (iv) provide reports on the foregoing to the
Board of Directors at each Board meeting.
(b) Provided that neither OMC nor the Fund or the Company shall be required
to pay any compensation other than as provided by the terms of this
Agreement and subject to the provisions of paragraph 5 hereof, the
Sub-Adviser may obtain investment information, research or assistance
from any other person, firm or corporation to supplement, update or
otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Sub-Adviser
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, the Sub-Adviser shall not be liable for any
loss sustained by reason of good faith errors or omissions in connection
with any matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or the Sub-Adviser or any
officer thereof from acting as investment adviser or sub-adviser for any
other person, firm or corporation and shall not in any way limit or
restrict OMC or the Sub-Adviser or any of their respective directors,
officers, stockholders, partners or employees from buying, selling or
trading any securities for its or their own account or for the account
of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance
by any party of its duties and obligations under this Agreement.
(e) The Sub-Adviser shall cooperate with OMC by providing OMC with any
information in the Sub-Adviser's possession necessary for supervising
the activities of all administrative and clerical personnel as shall be
required to provide effective corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. Any records required to
be maintained shall be the property of the Company and shall be
surrendered promptly to the Company on request. The Sub-Adviser shall,
at its own expense, provide such officers for the Company as its Board
may request.
3. DUTIES OF OMC.
OMC shall provide (or cause to be provided to) the Sub-Adviser the following
information about the Sub-Account:
(a) cash flow estimates on request;
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<PAGE>
(b) notice of the Sub-Account's "investable funds" by 11:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in subparagraphs (d), (e), (f), (g)
and (h) of paragraph 1 above.
4. COMPENSATION OF THE SUB-ADVISER.
The Sub-Adviser will bear its own costs of providing services hereunder. The
Sub-Adviser shall not be responsible for the Fund's expenses. OMC agrees to
pay the Sub-Adviser and the Sub-Adviser agrees to accept as full
compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee computed on the net
asset value of the Sub-Account of the Fund as of the close of each business
day and payable monthly by the tenth business day of the following month, at
the following annual rates:
.75% of the first $10 million of average net assets in the Sub-
Account; .625% of the next $15 million of average net assets in the
Sub-Account; .50% of the next $25 million of average net assets in
the Sub-Account; and .375% of the average net assets in excess of
$50 million in the Sub-Account.
For any period less than a full month during which this Agreement is in
effect, the fee shall be pro-rated according to the proportion which such
period bears to a full month (a month being the calendar month of which such
period is part). The Fund shall have no responsibility for any fee payable
to the Sub-Adviser.
5. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) In connection with purchases or sales of portfolio securities on behalf
of the Fund, neither the Sub-Adviser nor any of its partners, directors,
officers or employees will act as a principal or agent or receive
directly or indirectly any compensation in connection with the purchase
or sale of securities by the Fund, other than as provided herein. The
Sub-Adviser is authorized, in arranging the purchase and sale of the
Sub-Account's portfolio securities, to employ or deal with such members
of securities exchanges, brokers or dealers (hereinafter
"broker-dealers"), including broker-dealers that are "affiliated"
broker-dealers (as that term is defined in the 1940 Act), as may, in the
Sub-Adviser's best judgment, implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable security price obtainable) of the Fund's
portfolio transactions. All transactions effected through any affiliated
brokers shall
C-4
<PAGE>
be effected in compliance with Section 17(e) of the 1940 Act and any
written procedures established from time to time by the Board of
Directors of the Company pursuant to Rule 17e-1 under the 1940 Act, as
it may be amended from time to time, copies of which procedures shall be
provided to the Sub-Adviser by OMC.
(b) The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to
effect said transactions, and may enter into a contract in which the
broker acts either as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the Sub-Account's
portfolio transactions on the basis of its estimate of their ability to
obtain best execution of particular and related portfolio transactions.
The abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Sub-Adviser on the basis
of all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Sub-Account's portfolio transactions by participating
therein for its own account; the importance to the Fund of speed,
efficiency or confidentiality; the broker-dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
(d) The Sub-Adviser shall not be responsible for payment of brokerage
commissions.
(e) Provided that such aggregation is in the best interests of the Fund, the
Sub-Adviser may aggregate orders for the purchase and sale of securities
for the Sub-Account with similar orders being made simultaneously for
other funds managed by the Sub-Adviser, if, in the Sub-Adviser's
reasonable judgment, such aggregation is equitable and consistent with
the Sub-Adviser's fiduciary obligation to the Fund and shall result in
an overall economic benefit to the Fund, taking into consideration the
advantageous sale or purchase price, brokerage commissions or other
expenses.
(f) The Sub-Adviser will advise OMC and the Fund's Custodian promptly of
each purchase and sale of a portfolio security, specifying the name 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
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<PAGE>
broker or dealer, and such other information as may be reasonably
required. From time to time as the Board of Directors of the Company or
OMC may reasonably request, the Sub-Adviser will furnish to the
Company's officers and to its Directors, at the Sub-Adviser's expense,
reports on portfolio transactions and reports on issuers of securities
held in the Sub-Account, all in such detail as the Fund or OMC shall
reasonably request.
6. DURATION.
This Agreement will take effect on , 199 , and unless earlier
terminated pursuant to paragraph 7 shall remain in effect until December 31,
199 . Thereafter it shall continue in effect from year to year, so long as
such continuance and the continuance of OMC as Adviser to the Fund shall be
approved at least annually by the Company's Board of Directors, including
the vote of the majority of the Directors of the Company who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of
any such party cast in person at a meeting called for the purpose of voting
on such approval, or by the holders of a "majority" (as defined in the 1940
Act) of the outstanding voting securities of the Fund and by such a vote of
the Company's Board of Directors.
7. TERMINATION.
This Agreement shall terminate automatically upon its assignment or in the
event of the Company's termination of the Advisory Agreement; it may also be
terminated: (i) by-the Sub-Adviser at any time without penalty upon ninety
days' written notice to OMC and the Company; or (ii) by the Company at any
time without penalty upon sixty days' written notice to OMC and the
Sub-Adviser provided that such termination by the Company shall be directed
or approved by a vote of a majority of all of the Directors of the Company
then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the 1940 Act); or
(iii) by OMC, upon 60 days' written notice to the Fund and the Sub-Adviser.
8. NOTICE.
Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party, with a copy to the Company,
at the addresses below or such other address as such other party may
designate for the receipt of such notice.
C-6
<PAGE>
If to OMC:
Oppenheimer Management Corporation
Two World Trade Center, 34th Floor
New York, NY 10048-0203
Attention: General Counsel
If to the Sub-Adviser:
Babson-Stewart Ivory International
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Attention:
---------------------------
If to either party, copy
Oppenheimer --------- Fund
--------------------------------------------
--------------------------------------------
Attention:
---------------------------, Chairman
9. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until its
approval by vote of the holders of a majority of the outstanding voting
securities of the Fund and by the Board of Directors of the Company,
including a majority of the Directors who are not interested persons of OMC,
the Sub-Adviser or the Fund, cast in person at a meeting called for the
purpose of voting on such approval.
10. The Sub-Adviser represents that it has reviewed the Registration Statement
of the Company, including any amendments or supplements thereto, and any
Proxy Statement relating to the approval of this Agreement, as filed with
the Securities and Exchange Commission and represents and warrants that with
respect to disclosure about the Sub-Adviser or information relating directly
or indirectly to the Sub-Adviser, such Registration Statement or Proxy
Statement contains, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. The Sub-Adviser further represents and warrants that
it is an investment adviser registered under the Investment Advisers Act of
1940, as amended, and under the laws of all jurisdictions in which the
conduct of its business hereunder requires such registration.
C-7
<PAGE>
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
12. It is expressly understood and stipulated that the Sub-Adviser must look
solely to the property of the Fund for the enforcement of any claims against
the Fund and shall not look to or have recourse to the assets of the Company
generally or any other series of the Company.
13. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, OMC and the Sub-Adviser have caused this Agreement to be
executed on the day and year first above written.
OPPENHEIMER MANAGEMENT CORPORATION
By:
---------------------------------------------------------
(Name) (Title)
BABSON-STEWART IVORY INTERNATIONAL, a
Partnership
By:
-----------------------------------------------------------
(Name) (Title)
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<PAGE>
EXHIBIT D
FORM OF
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
[NAME]
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT (the Plan) dated the day of , 1996,
by and between (the "Fund") and OPPENHEIMER FUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written service plan for its Class A
Shares described in the Fund's registration statement as of the date this Plan
takes effect, contemplated by and to comply with Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers,
pursuant to which the Fund will reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and the maintenance of
shareholder accounts ("Accounts") that hold Class A Shares (the "Shares") of
such series and class of the Fund. The Fund may be deemed to be acting as
distributor of securities of which it is the issuer, pursuant to Rule 12b-l
under the Investment company Act of 1940 (the "1940 Act"), according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering services and for the
maintenance of Accounts. Such Recipients are intended to have certain rights as
third party beneficiaries under this Plan.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other institution
which: (i) has rendered services in connection with the personal service and
maintenance of Accounts; (ii) shall furnish the Distributor (on behalf of
the Fund) with such information as the Distributor shall reasonably request
to answer such questions as may arise concerning such service; and (iii) has
been selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Fund's Board of Directors
(the "Board") who are not "interested persons" (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation of
this Plan or in any agreements relating to this Plan (the "Independent
Directors") may remove any broker, dealer, bank or other institution as a
Recipient, whereupon such entity's rights as a third-party beneficiary
hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
brokerage or other customers, or investment advisory or other clients of
such Recipient and/or accounts as to which such Recipient is a fiduciary or
<PAGE>
custodian or co-fiduciary or co-custodian (collectively, the "customers"),
but in no event shall any such Shares be deemed owned by more than one
Recipient for purposes of this Plan. In the event that two entities would
otherwise qualify as Recipients as to the same Shares, the Recipient which
is the dealer of record on the Fund's books shall be deemed the Recipient as
to such Shares for purposes of this Plan.
3. PAYMENTS.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of the
lesser of: (i) .06250% (.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares, computed as of
the close of each business day, or (ii) the Distributor's actual expenses under
the Plan for that quarter of the type approved by the Board. The Distributor
will use such fee received from the Fund in its entirety to reimburse itself for
payments to Recipients and for its other expenditures and costs of the type
approved by the Board incurred in connection with the personal service and
maintenance of Accounts including, but not limited to, the services described in
the following paragraph. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if such
affiliated person qualifies as a Recipient.
The services to be rendered by the Distributor and Recipients in connection
with the personal service and the maintenance of Accounts may include, but shall
not be limited to, the following: answering routine inquiries from the
Recipient's customers concerning the Fund, providing such customers with
information on their investment in shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing such
other information and customer liaison services and the maintenance of Accounts
as the Distributor or the Fund may reasonably request. It may be presumed that a
Recipient has provided services qualifying for compensation under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate services, then the Distributor, at the request of the
Board, shall require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate services in
this regard. If the Distributor still is not satisfied, it may take appropriate
steps to terminate the Recipient's status as such under the Plan, whereupon such
entity's rights as a third-party beneficiary hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan will not
be used to pay any interest expense, carrying charges or other financial costs,
or allocation of overhead by the Distributor, or for any other purpose other
than
D-2
<PAGE>
for the payments described in this Section 3. The amount payable to the
Distributor each quarter will be reduced to the extent that reimbursement
payments otherwise permissible under the Plan have not been authorized by the
Board of Trustees for that quarter. Any unreimbursed expenses incurred for any
quarter by the Distributor may not be recovered in later periods.
(b) The Distributor shall make payments to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed .0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares computed as of the close
of each business day, of Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers. However, no such payments shall be made to
any Recipient for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the Independent
Directors. A majority of the Independent Directors may at any time or from time
to time increase or decrease and thereafter adjust the rate of fees to be paid
to the Distributor or to any Recipient, but not to exceed the rate set forth
above, and/or increase or decrease the number of shares constituting Minimum
Qualified Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings and the rate of payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty (30) days
after any change in these provisions. Inclusion of such provisions or a change
in such provisions in a revised current prospectus shall constitute sufficient
notice.
(c) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect,
the selection or replacement of Independent Directors and the nomination of
those persons to be Directors of the Fund who are not "interested persons" of
the Fund shall be committed to the discretion of the Independent Directors.
Nothing herein shall prevent the Independent Directors from soliciting the views
or the involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority of the
incumbent Independent Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the Fund shall
provide at least quarterly a written report to the Fund's Board for its review,
detailing the amount of all payments made pursuant to this Plan, the identity of
the Recipient of each such payment, and the purposes for which the payments were
made. The report shall state whether all provisions of Section 3 of this Plan
have been complied with. The Distributor shall annually certify to the Board the
D-3
<PAGE>
amount of its total expense incurred that year with respect to the personal
service and maintenance of Accounts in conjunction with the Board's annual
review of the continuation of the Plan.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Directors cast in person at a meeting called for the purpose of
voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Plan has
been approved by a vote of the Independent Trustees cast in person at a meeting
called on , 1995 for the purpose of voting on this Plan, and shall
take effect on the date first noted above. Unless terminated as hereinafter
provided, it shall continue in effect until , and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Directors cast in person at a meeting called for the purpose of
voting on such continuance. This Plan may be terminated at any time by vote of a
majority of the Independent Directors or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities of the class. This Plan may not be amended to increase materially the
amount of payments to be made without approval of the class A Shareholders, in
the manner described above, and all material amendments must be approved by a
vote of the Board and of the Independent Directors.
<TABLE>
<S> <C>
OPPENHEIMER FUNDS DISTRIBUTOR, [NAME]
INC.
By: --------------------------- By: ---------------------------
Vice President Assistant Secretary
& Secretary
</TABLE>
D-4
<PAGE>
EXHIBIT E
FORM OF
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
[NAME]
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the day
of , 1996, by and between [NAME] (the "Fund") and OPPENHEIMER FUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written distribution and service plan
for Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-l (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (l) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with
such information as the Distributor shall reasonably request to answer such
questions as may arise concerning the sale of Shares; and (iii) has been
selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Fund's Board of Directors
(the "Board") who are not "interested persons" (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation of
this
<PAGE>
Plan or in any agreements relating to this Plan (the "Independent
Directors") may remove any broker, dealer, bank or other person or entity as
a Recipient, whereupon such person's or entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
brokerage or other customers, or investment advisory or other clients of
such Recipient and/or accounts as to which such Recipient is a fiduciary or
custodian or co-fiduciary or co-custodian (collectively, the "Customers"),
but in no event shall any such Shares be deemed owned by more than one
Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by
the Distributor shall be deemed the Recipient as to such Shares for purposes
of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25%) on an annual basis) of the average during the calendar quarter
of the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in
connection with the rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those
E-2
<PAGE>
furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter, at a rate not to exceed (i) 0.25% of the average during
the calendar quarter of the aggregate net asset value of Shares, computed as of
the close of business on the day such Shares are sold, constituting Qualified
Holdings sold by the Recipient during that quarter and owned beneficially or of
record by the Recipient or by its Customers ("Advance Service Fee Payments"),
plus (ii) 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (l)
year, subject to reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients that are, or may be,
imposed by Article III, Section 26, of the NASD Rules of Fair Practice. In the
event Shares are redeemed less than one year after the date such Shares were
sold, the Recipient is obligated and will repay to the Distributor on demand a
pro rata portion of such Advance Service Fee Payments, based on the ratio of the
time such shares were held to one (l) year.
E-3
<PAGE>
The Advance Service Fee Payments described in part (i) of this paragraph (b)
may, at the Distributor's sole option, be made more often than quarterly, and
sooner than the end of the calendar quarter. However, no such payments shall be
made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Directors.
A majority of the Independent Directors may at any time or from time to time
decrease and thereafter adjust the rate of fees to be paid to the Distributor or
to any Recipient, but not to exceed the rate set forth above, and/or direct the
Distributor to increase or decrease the Maximum Holding Period, the Minimum
Holding Period or the Minimum Qualified Holdings. The Distributor shall notify
all Recipients of the Minimum Qualified Holdings, Maximum Holding Period and
Minimum Holding Period, if any, and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such provisions or
a change in such provisions in a revised current prospectus shall constitute
sufficient notice. The Distributor may make Plan payments to any "affiliated
person" (as defined in the 1940 Act) of the Distributor if such affiliated
person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount provided for in Section 3(b) of this Agreement;
(ii) paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
providing such financing from its own resources, or from an affiliate, for the
interest and other borrowing costs of the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative support
services to the Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and prospectuses
(other than those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) providing any service rendered by the Distributor
that a Recipient may render pursuant to part (a) of this Section 3. Such
services include distribution assistance and administrative support services
rendered in connection with Shares acquired by the Fund (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is
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<PAGE>
a party. In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect,
the selection and nomination of those persons to be Directors of the Fund who
are not "interested persons" of the Fund ("Disinterested Directors") shall be
committed to the discretion of such Disinterested Directors. Nothing herein
shall prevent the Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made. The reports
shall be provided quarterly and shall state whether all provisions of Section 3
of this Plan have been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a majority (as defined in the 1940 Act)
of the Fund's outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such agreement
shall automatically terminate in the event of its assignment (as defined in the
1940 Act); (iii) it shall go into effect when approved by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such agreement; and (iv) it shall, unless terminated as herein
provided, continue in effect from year to year only so long as such continuance
is
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<PAGE>
specifically approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the purpose of
voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Plan has
been approved by a vote of the Board and its Independent Directors cast in
person at a meeting called on , 199 , for the purpose of voting on this
Plan, and shall take effect on the date first written above. Unless terminated
as hereinafter provided, it shall continue in effect until , 199 and
from year to year thereafter or as the Board may otherwise determine only so
long as such continuance is specifically approved at least annually by a vote of
the Board and its Independent Directors cast in person at a meeting called for
the purpose of voting on such continuance. This Plan may not be amended to
increase materially the amount of payments to be made without approval of the
Class B Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Directors. This
Plan may be terminated at any time by vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Directors shall determine
whether the Distributor shall be entitled to payment from the Fund of the
Service Fee and/or the Asset-Based Sales Charge in respect of Shares sold prior
to the effective date of such termination.
<TABLE>
<S> <C>
OPPENHEIMER FUNDS DISTRIBUTOR, [NAME]
INC.
By: --------------------------- By: ---------------------------
Vice President Vice President
& Secretary
</TABLE>
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<PAGE>
VOTE THIS VOTING INSTRUCTION CARD TODAY!
[ACCOUNT NAME] THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF
DIRECTORS
PROXY PROXY
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
140 GARDEN STREET
HARTFORD, CONNECTICUT 06154
SPECIAL MEETING OF SHAREHOLDERS --
JANUARY 22, 1996
The undersigned hereby appoints David E. Sams, Jr., Donald H.
Pond, Jr., Ann F. Lomeli and Michael A. Chong, and each of them,
the proxies of the undersigned with full power of substitution to
each of them, to vote all shares of the above-referenced account
(the "Account") which the undersigned is entitled to vote at a
Special Meeting of Shareholders of Connecticut Mutual Investment
Accounts, Inc. (the "Company") to be held at the offices of
Connecticut Mutual Life Insurance Company located at 878 Main
Street (10 State House Square), Hartford, Connecticut, on Monday,
January 22, 1996 at 2:00 p.m. Eastern Time and any adjournments
thereof.
By signing and dating this proxy form, you authorize the
above proxies to vote your shares of the Account only with respect
to the following proposals set forth on the reverse side of this
card (which are numbered to correspond to the numbering of
proposals contained in the Proxy Statement):
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY
Date:____________________________________
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR
HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________
______________________________
Signature(s) of Shareholder(s)
<PAGE>
VOTE THIS VOTING INSTRUCTION CARD TODAY!
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
INSTRUCTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
INSTRUCTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2(a), 2(b), 2(c), 3 and 5 and FOR THE NOMINEES IN PROPOSAL 4.
Please vote by filling in the appropriate box below, as shown,
using blue or black ink or dark pencil. Do not use red ink.
1. FOR EACH ACCOUNT (OTHER THAN THE MUNICIPAL ACCOUNTS) VOTING
SEPARATELY AND, WHERE REQUIRED, FOR EACH ACCOUNT'S CLASS A
AND CLASS B SHAREHOLDERS VOTING SEPARATELY. To approve the
terms of new investment advisory agreements between the
Company, on behalf of each Account, and Oppenheimer
Management Corporation ("Oppenheimer"), the proposed
investment adviser to the Account.
FOR / / AGAINST / / ABSTAIN / /
2(a). FOR LIFESPAN CAPITAL APPRECIATION ACCOUNT AND LIFESPAN
BALANCED ACCOUNT VOTING SEPARATELY. To approve the terms
of new investment subadvisory agreements between
Oppenheimer and Pilgrim, Baxter & Associates, Ltd. with
respect to each of the LifeSpan Capital Appreciation
Account and LifeSpan Balanced Account.
FOR / / AGAINST / / ABSTAIN / /
2(b). FOR LIFESPAN CAPITAL APPRECIATION ACCOUNT, LIFESPAN
BALANCED ACCOUNT AND LIFESPAN DIVERSIFIED INCOME ACCOUNT
VOTING SEPARATELY. To approve the terms of new investment
subadvisory agreements between Oppenheimer and BEA
Associates with respect to each of the LifeSpan Capital
Appreciation Account, LifeSpan Balanced Account and
LifeSpan Diversified Income Account.
FOR / / AGAINST / / ABSTAIN / /
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<PAGE>
2(c). FOR LIFESPAN CAPITAL APPRECIATION ACCOUNT AND LIFESPAN
BALANCED ACCOUNT VOTING SEPARATELY. To approve the terms
of new investment subadvisory agreements between
Oppenheimer and Babson-Stewart Ivory International with
respect to each of the LifeSpan Capital Appreciation
Account and LifeSpan Balanced Account.
FOR / / AGAINST / / ABSTAIN / /
3. FOR EACH ACCOUNT (OTHER THAN LIQUID ACCOUNT) VOTING
SEPARATELY AND, WHERE AN ACCOUNT HAS MORE THAN ONCE CLASS
OF SHARES, FOR EACH CLASS OF THE ACCOUNT VOTING SEPARATELY.
To approve the new distribution plans pursuant to Rule 12b-
1 under the Investment Company Act of 1940 for each
Account, and, where an Account has more than one Class of
shares, for each Class of shares of the Account, to make
the plans consistent with those of other funds advised by
Oppenheimer.
FOR / / AGAINST / / ABSTAIN / /
4. FOR ALL ACCOUNTS VOTING TOGETHER. To elect twelve (12)
Directors to the Company's Board of Directors to serve
until their successors have been duly elected and
qualified. The nominees are Leon Levy, Robert G. Galli,
Benjamin Lipstein, Bridget A. Macaskill, Elizabeth B.
Moynihan, Kenneth A. Randall, Edward B. Regan, Russell S.
Reynolds, Jr., Sidney M. Robbins, Donald W. Spiro, Pauline
Trigere and Clayton K. Yeutter.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME ABOVE.)
FOR all nominees VOTE WITHHELD for FOR all nominees
named at left. all the nominees named at left,
named at left. except as indicated.
/ / / / / /
5. FOR ALL ACCOUNTS VOTING TOGETHER. To ratify the selection
of Arthur Andersen LLP as the Company's independent public
accountants.
FOR / / AGAINST / / ABSTAIN / /
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<PAGE>
In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
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