[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