[Federal Register Volume 61, Number 61 (Thursday, March 28, 1996)]
[Notices]
[Pages 13894-13896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7542]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21841; 812-9952]
Connecticut Mutual Investment Accounts, Inc., et al.; Notice of
Application
March 22, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Connecticut Mutual Investment Accounts, Inc. (the
``Company''), on behalf of Connecticut Mutual Liquid Account (``CM
Liquid Account'') and Connecticut Mutual Government Securities Account
(``CM Government Account'') (the ``Acquired Accounts''); Oppenheimer
Money Market Fund, Inc. (``Oppenheimer Money Fund'') and Oppenheimer
U.S. Government Trust (``Oppenheimer Government Trust'') (the
``Acquiring Funds''); Oppenheimer Funds, Inc. (``Oppenheimer''); and
Massachusetts Mutual Life Insurance Company (``Massachusetts Mutual'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) of the Act
granting an exemption from section 17(a).
SUMMARY OF APPLICATION: Applicants request an order to permit
Oppenheimer Money Fund to acquire substantially all of the assets of CM
Liquid Account, and Oppenheimer Government Trust to acquire
substantially all of the assets of CM Government Account. Because of
certain affiliations, each Acquiring Fund and its corresponding
Acquired Account may not rely on rule 17a-8 under the Act.
FILING DATES: The application was filed on January 17, 1996 and amended
and restated on March 15, 1996.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on April 16, 1996,
and should be accompanied by proof of service on the applicants, in the
form of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants: The Company, CM Liquid Account, and CM Government
Securities Account, 140 Garden Street, Hartford, Connecticut 06154;
Oppenheimer Money Fund, Oppenheimer Government Trust, and Oppenheimer,
Two World Trade Center, New York, New York 10048; and Massachusetts
Mutual, 1295 State Street, Springfield, Massachusetts 01111.
FOR FURTHER INFORMATION CONTACT: Mary Kay Frech, Senior Attorney, at
(202) 942-0579, or Alison E. Baur, Branch Chief, at (202) 942-0564
(Office of Investment Company Regulation, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicants' Representations
1. The Company is a Maryland corporation registered under the Act
as an open-end management investment company. The Company currently
offers thirteen series of shares, including the Acquired Accounts.
2. Oppenheimer Government Trust is a Massachusetts business trust
registered under the Act as an open-end management investment company.
Oppenheimer Money Fund is a Maryland corporation registered under the
Act as an open-end management investment company. Oppenheimer is the
investment adviser to each Acquiring Fund.
3. On March 1, 1996, pursuant to the terms of an Agreement and Plan
of Merger, Connecticut Mutual merged with and into Massachusetts Mutual
(the ``Life Company Merger''). Subsequent to the Life Company Merger
and effective March 1, 1996, Oppenheimer became the investment adviser
to the Acquired Accounts
[[Page 13895]]
pursuant to the terms of new investment management agreements, which
were approved by the shareholders of each Acquired Account on February
14, 1996. As of March 15, 1996, Massachusetts Mutual owned
approximately 50% and 14% of the outstanding voting shares of CM Liquid
Account and CM Government Account, respectively.
4. CM Liquid Account and Oppenheimer Money Fund each have
outstanding a single class of shares, which shares are offered without
any sales charges. CM Government Account and Oppenheimer Government
Trust each have outstanding two classes of shares, Class A and Class B
shares.\1\ CM Government Account's and Oppenheimer Government Trust's
Class A shares are offered with a maximum front-end sales charge of
4.00% and 4.75%, respectively, of the offering price, and are subject
to a fee imposed in accordance with rule 12b-1 under the Act at an
annual rate of up to 0.25% of average net assets. CM Government
Account's and Oppenheimer Government Trust's Class B shares are offered
subject to a maximum contingent deferred sales charge of 5.00% and a
rule 12b-1 fee. CM Government Account's Class B rule 12b-1 fee includes
an asset based sales charge of up to 0.75% of average daily net assets
and a service fee of up to 0.25% of average daily net assets.
Oppenheimer Government Trust's Class B rule 12b-1 fee includes an asset
based sales charge at an annual rate equal to 0.75% and a service fee
at an annual rate of up to 0.25% of average net assets.
\1\ Oppenheimer Government Trust also has outstanding a third
class of shares, Class C shares, which shares will not be issued in
connection with the Reorganization of CM Government Account and
Oppenheimer Government Trust.
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5. Subject to approval by the shareholders of the Acquired
Accounts, applicants propose to combine CM Liquid Account with and into
Oppenheimer Money Fund and CM Oppenheimer Government Account with and
into Oppenheimer Government Trust (the ``Reorganizations''). Pursuant
to separate Agreements and Plans of Reorganization (the
``Reorganization Agreements''), each Acquiring Fund would acquire
substantially all of the assets of the corresponding Acquired Account
in exchange solely for the assumption by such Acquiring Fund of certain
liabilities of the corresponding Acquired Account and the issuance of
Class A \2\ and, if any, Class B shares of the Acquiring Fund to its
corresponding Acquired Account. The Acquired Account would distribute
such Class A shares to its Class A shareholders and such Class B shares
to its Class B shareholders, if any, in proportion to their respective
ownership of Acquired Accounts shares, and on the basis of their
relative net asset value per share computed as of the close of business
on the New York Stock Exchange on the business day preceding the
closing date, in liquidation of the Acquired Account. Thereafter, each
Acquired Account would be terminated as a series of the Company.
\2\ For ease of reference, all references to Class A shares
herein include the single class of shares of each CM Liquid Account
and Oppenheimer Money Fund. No Class B shares will be issued in
connection with the Reorganization of CM Liquid Account and
Oppenheimer Money Fund.
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6. On November 17, 1995 and December 14, 1995, respectively, the
board of directors of the Acquired Accounts and the boards of directors
or trustees of the Acquiring Funds (collectively, the ``Boards''),
including the members of the Boards who are not interested persons,
found, as required by rule 17a-8 of the Act, that participation in the
Reorganization is in the best interests of each Acquired Account and
its corresponding Acquiring Fund and that the interests of existing
fund shareholders will not be diluted as a result of the
Reorganizations.
7. At the same meetings, the Boards unanimously approved the terms
and conditions of the Reorganization Agreements. In doing so, the
Boards considered (a) the compatibility of the investment objectives
and policies of each Acquired Account and its corresponding Acquiring
Fund and the disadvantages of operating and marketing each Acquired
Account separately from its substantially similar Acquiring Fund; (b)
the future cost savings or other advantages that could be achieved by
combining an Acquired Account and its corresponding Acquiring Fund; (c)
the tax-free nature of the Reorganizations; and (d) the costs
associated with the Reorganizations; (e) the investment advisory and
rule 12b-1 fees, and the sales charges applicable to an Acquired
Account and its corresponding Acquiring Fund; and (f) the potential
benefits to Oppenheimer of the transactions contemplated by the
Reorganization Agreements.
8. In considering the compatibility of the funds, the respective
Boards noted, among other things, that: the investment objectives and
policies of each Acquired Account and its corresponding Acquiring Fund
generally are similar; the existence of a competing fund within the
same fund complex with substantially similar investment characteristics
is likely to impede the marketing and asset growth of both funds; each
Acquiring Fund has maintained lower expense ratios than the
corresponding Acquired Account (before fee or expense limitations);
greater diversification of an investment portfolio can be achieved than
currently is possible in either the Acquired Accounts or the Acquiring
Funds; former shareholders of the Acquired Accounts would remain
subject to a class and expenses structure that is similar to, and, in
certain respects, more advantageous than the existing expense structure
for each class of the Acquired Accounts; and after the Reorganizations,
the effective advisory fee rate payable as a percentage of average net
assets by the former shareholders of the Acquired Accounts will
decrease.
9. On February 15 and 18, 1996, applicants filed with the SEC
registration statements on Form N-14 with respect to the respective
Reorganizations, each containing a combined prospectus/proxy statement.
Applicants intend to submit the Reorganization Agreements to the
respective shareholders of the Acquired Accounts for their approval at
shareholder meetings expected to be held on April 24, 1996.
Massachusetts Mutual intends to vote its interests in the Acquired
Accounts in favor of the respective Reorganizations.
10. Applicants agree not to make any material changes to the
Reorganization Agreements that affect the application without the prior
approval of the SEC. Applicants also will not waive, amend, or modify
any provision of the Reorganization Agreements that is required by
state or federal law in order to effect the Reorganization. Each
Acquired Account's and each Acquiring Fund's Reorganization expenses
will be borne by Massachusetts Mutual.
Applicants' Legal Analysis
1. Section 17(a), in pertinent part, prohibits an affiliated person
of a registered investment company, or any affiliated person of such a
person, acting as principal, from selling to or purchasing from such
registered company, or any company controlled by such registered
company, any security or other property.
2. Section 2(a)(3) provides, in pertinent part, that any person
directly or indirectly owning, controlling, or holding the power to
vote, 5% or more of the outstanding voting securities of such other
person is an affiliated person of that person. Section 2(a)(3) further
provides that the term ``affiliated person of another person''
shall include
[[Page 13896]]
any investment adviser of such other person if such other person is an
investment company. Under section 2(a)(9), it is presumed that an
entity that owns 25% or more of the outstanding voting securities of
another entity controls such other entity.
3. Rule 17a-8 exempt from the prohibitions of section 17(a)
mergers, consolidations, or purchases or sales of substantially all of
the assets of registered investment companies that are affiliated
persons solely by reason of having a common investment adviser, common
directors, and/or common officers, provided that certain conditions set
forth in the rule are satisfied.
4. Contrary to the requirements of rule 17a-8, each Acquired
Account may be deemed ``an affiliated person of an affiliated person''
of its corresponding Acquiring Fund for a reason other than the fact
that it has a common adviser, common directors, and/or common officers.
Thus, the Reorganizations may not meet the ``solely by reason of''
requirement of rule 17a-8.
5. Massachusetts Mutual holds of record more than 25% of CM Liquid
Account. Massachusetts Mutual also holds of record more than 25% of the
voting securities of Oppenheimer. Therefore, Massachusetts Mutual may
be deemed to control both CM Liquid Account and Oppenheimer under
section 2(a)(9) of the Act. CM Liquid Account and Oppenheimer may be
considered affiliated persons of each other because they are under the
common control of Massachusetts Mutual under section 2(a)(3) in
addition to their investment advisory relationship. Oppenheimer, in
turn, is an affiliated person of Oppenheimer Money Fund. Massachusetts
Mutual also holds of record more than 5% of the outstanding voting
securities of CM Government Account. Because of this 5% ownership, CM
Government Account might be deemed an affiliated person of
Massachusetts Mutual under section 2(a)(3). Massachusetts Mutual, in
turn, is an affiliated person of Oppenheimer under section 2(a)(3) by
virtue of their common ownership and control. Oppenheimer, in turn, is
an affiliated person of CM Government Account under section 2(a)(3) by
virtue of its investment advisory relationship with CM Government
Account. Therefore, each Acquired Account may be deemed ``an affiliated
person of an affiliated person'' of its corresponding Acquiring Fund
for a reason other than having common advisers, common directors, and/
or common officers.
6. Section 17(b) provides that the SEC may exempt a transaction
from the provisions of section 17(a) if evidence establishes that the
terms of the proposed transaction, including the consideration to be
paid, are reasonable and fair and do not involve overreaching on the
part of any person concerned, and that the proposed transaction is
consistent with the policy of the registered investment company
concerned and with the general purposes of the Act.
7. Applicants believe, consistent with the standards set forth in
section 17(b), that the terms of the Reorganizations, including the
consideration to be paid or received, are fair and reasonable and do
not involve overreaching on the part of any person concerned. The
Boards have reviewed the terms of each Reorganization, including the
consideration to be paid or received, and have found that participation
in the Reorganizations is in the best interest of each Acquired Account
and its corresponding Acquiring Fund and that the interests of existing
shareholders of such funds will not be diluted as a result of any
Reorganization. Applicants further believe that the Reorganizations are
consistent with the policies of the Acquired Accounts and the Acquiring
Funds and that the Reorganizations, if undertaken in the manner
described in the application, are consistent with the purposes of the
Act.
8. Applicants believe that the terms and conditions of the
Reorganizations are consistent with the provisions, policies, and
purposes of the Act in that they are reasonable and fair to all
parties, do not involve overreaching, and are consistent with the
investment policies of each of the Acquiring Funds and Acquired
Accounts.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-7542 Filed 3-27-96; 8:45 am]
BILLING CODE 8010-01-M
