-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IJVJgYg6y/qrNy9HrI7vtY8SuHJIf2s6BlWxKNR1e9i9XHI9FiABQcmpSbU4jIIO ZpzxjByLNaCze/D5GWNqfA== 0000356865-95-000015.txt : 19951004 0000356865-95-000015.hdr.sgml : 19951004 ACCESSION NUMBER: 0000356865-95-000015 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19951002 EFFECTIVENESS DATE: 19951002 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTICUT MUTUAL INVESTMENT ACCOUNTS INC CENTRAL INDEX KEY: 0000356865 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 061052841 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-75276 FILM NUMBER: 95577926 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03346 FILM NUMBER: 95577927 BUSINESS ADDRESS: STREET 1: 140 GARDEN ST CITY: HARTFORD STATE: CT ZIP: 06154 BUSINESS PHONE: 2039875002 FORMER COMPANY: FORMER CONFORMED NAME: CONNECTICUT MUTUAL LIQUID ACCOUNT INC DATE OF NAME CHANGE: 19851106 485BPOS 1 485(B) As filed with the Securities and Exchange Commission on September 29, 1995 Registration No. 2-75276 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. Post-Effective Amendment No. 24 and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 25 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. (Exact name of Registrant as Specified in Charter) 140 Garden Street Hartford, Connecticut 06154 (Address of Principal Executive Office)(Zip Code) Registrant's Telephone Number, Including Area Code: (203) 987-5047 Ann F. Lomeli, Secretary Connecticut Mutual Investment Accounts, Inc. 140 Garden Street Hartford, Connecticut 06154 (Name and Address of Agent for Service) It is proposed that this filing will become effective /X/ on October 1, 1995 pursuant to paragraph (b) of Rule 485. Registrant has registered an indefinite number of securities under the Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment Company Act of 1940. The Rule 24f- 2 Notice for the fiscal year ended December 31, 1994 was filed for the Registrant's following series on February 20, 1995: Connecticut Mutual Liquid Account; Connecticut Mutual Government Securities Account; Connecticut Mutual Government Securities Account; Connecticut Mutual Total Return Account; and Connecticut Mutual Growth Account. ______________________________________________________________________________ CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Connecticut Mutual Liquid Account, Connecticut Mutual Income Account, Connecticut Mutual Government Securities Account, Connecticut Mutual Total Return Account and Connecticut Mutual Growth Account Cross-Reference Sheet Showing Location in Prospectus and Statement of Additional Information of Information Required by Items of the Registration Form
Location in Prospectus Form N-1A Item Number or Statement of and Caption Additional Information ---------------------- -------------------------- 1. Cover Page Cover Page. 2. Synopsis Prospectus Summary. 3. Condensed Financial Information Financial Highlights. 4. General Description of Registrant The Company; Management. 5. Management of the Fund The Company; Management -- The Manager 6. Capital Stock and Other Securities The Company; Dividends, Capital Gains and Taxes. 7. Purchase of Securities Being Offered Prospectus Summary -- Your Shareholder Manual; Your Account -- How to Buy Shares, How to Exchange Shares, Investor Services, Transaction Details. 8. Redemption or Repurchase Prospectus Summary -- Your Shareholder Manual; Your Account -- How to Sell Shares, How to Exchange Shares, Investor Services, Transaction Details. 9. Pending Legal Proceedings Not Applicable. 10. Cover Page Cover Page. 11. Table of Contents Cover Page. 12. General Information and History Cover Page; Management -- Other Information About the Company. 13. Investment Objectives and Policy Investment Objectives and Policies; Investment Restrictions. 14. Management of the Fund Management; Investment Advisory Arrangements; Account Expenses. 15. Control Persons and Principal Holders of Securities Management. 16. Investment Advisory and Other Services Management; Investment Advisory Arrangements; Account Expenses; Distribution Arrangements; Distribution Financing Plans; Custodian; Transfer Agent Services; Independent Certified Public Accountants. 17. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage. 18. Capital Stock and Other Securities Management. 19. Purchase, Redemption and Pricing of Securities Being Offered Purchase and Redemption of Shares; Determination of Net Asset Value. 20. Tax Status Taxes. 21. Underwriters Distribution Arrangements. 22. Calculation of Performance Data Investment Performance. 23. Financial Statements Financial Statements.
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan Balanced Account, CMIA LifeSpan Diversified Income Account Cross-Reference Sheet Showing Location in Prospectus and Statement of Additional Information of Information Required by Items of the Registration Form
Location in Prospectus Form N-1A Item Number or Statement of and Caption Additional Information ---------------------- -------------------------- 1. Cover Page Cover Page. 2. Synopsis Prospectus Summary. 3. Condensed Financial Information Financial Highlights. 4. General Description of Registrant The Company; Management. 5. Management of the Fund The Company; Management -- The Manager and the Subadvisors 6. Capital Stock and Other Securities The Company; Dividends, Capital Gains and Taxes. 7. Purchase of Securities Being Offered Prospectus Summary -- Your Shareholder Manual; Your Account -- How to Buy Shares, How to Exchange Shares, Investor Services, Transaction Details. 8. Redemption or Repurchase Prospectus Summary -- Your Shareholder Manual; Your Account -- How to Sell Shares, How to Exchange Shares, Investor Services, Transaction Details. 9. Pending Legal Proceedings Not Applicable. 10. Cover Page Cover Page. 11. Table of Contents Cover Page. 12. General Information and History Cover Page; Management -- Other Information About the Company. 13. Investment Objectives and Policy Investment Objectives and Policies; Investment Restrictions. 14. Management of the Fund Management; Investment Advisory Arrangements; Account Expenses. 15. Control Persons and Principal Holders of Securities Management. 16. Investment Advisory and Other Services Management; Investment Advisory Arrangements; Account Expenses; Distribution Arrangements; Distribution Financing Plans; Custodian; Transfer Agent Services; Independent Certified Public Accountants. 17. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage. 18. Capital Stock and Other Securities Management. 19. Purchase, Redemption and Pricing of Securities Being Offered Purchase and Redemption of Shares; Determination of Net Asset Value. 20. Tax Status Taxes. 21. Underwriters Distribution Arrangements. 22. Calculation of Performance Data Investment Performance. 23. Financial Statements Financial Statements.
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. 140 GARDEN STREET - HARTFORD, CONNECTICUT 06154 - 1-800-322-CMIA PROSPECTUS -- OCTOBER 1, 1995 - -------------------------------------------------------------------------------- CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. (COMPANY) is a management investment company offering a broad range of investment alternatives through thirteen distinct mutual funds, including the following funds (Accounts): CONNECTICUT MUTUAL LIQUID ACCOUNT (LIQUID ACCOUNT) is a money market fund offering a single class of shares. The Account seeks high current income consistent with preservation of capital and maintenance of liquidity by investing in money market instruments. AN INVESTMENT IN THE LIQUID ACCOUNT IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THE LIQUID ACCOUNT SEEKS TO MAINTAIN A STABLE PRICE PER SHARE OF $1.00, BUT THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO. CLASS A AND CLASS B SHARES CONNECTICUT MUTUAL INCOME ACCOUNT (INCOME ACCOUNT) is a short-term bond fund. The Account seeks high current income consistent with prudent investment risk and preservation of capital by investing primarily in fixed income debt securities having maturities or effective maturities of five years or less. CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT (GOVERNMENT SECURITIES ACCOUNT) is a government securities fund. The Account seeks a high level of current income with a high degree of safety of principal by investing primarily in securities issued or guaranteed as to principal and interest by the U.S. Government and its agencies and in obligations that are fully collateralized or otherwise fully backed by U.S. Government securities. CONNECTICUT MUTUAL TOTAL RETURN ACCOUNT (TOTAL RETURN ACCOUNT) is a balanced fund. The Account seeks to maximize total investment return (achieved from both capital appreciation and income) principally by allocating its assets among stocks, corporate bonds, U.S. Government securities and money market instruments. CONNECTICUT MUTUAL GROWTH ACCOUNT (GROWTH ACCOUNT) is a growth fund. The Account seeks long term growth of capital by investing primarily in common stocks with low price-earnings ratios and better than anticipated earnings. Realization of current income is a secondary consideration. Please read this prospectus before investing and keep it on file for future reference. The Prospectus contains important information, including how the Accounts invest and the services available to shareholders. A Statement of Additional Information (SAI), dated October 1, 1995, has been filed with the Securities and Exchange Commission and is incorporated herein by reference (and is legally considered a part of this prospectus). The SAI is available free upon request by calling 1-800-322-CMIA. FOR A PROSPECTUS AND INFORMATION ABOUT OTHER MUTUAL FUNDS OFFERED BY THE COMPANY CALL 1-800-234-5606. - -------------------------------------------------------------------------------- SHARES OF THE ACCOUNTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE ACCOUNTS INVOLVE INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE PRINCIPAL INVESTMENT. - -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Prospectus Page 1 Connecticut Mutual Investment Accounts, Inc. TABLE OF CONTENTS - -------------------------------------------------------------------------------- PAGE ---- Prospectus Summary...................................................... 3 Your Investment..................................................... 4 Alternative Purchase Plan........................................... 6 Your Shareholder Manual............................................. 7 Summary of Investor Expenses........................................ 9 Financial Highlights.................................................... 11 Investment Objectives and Policies...................................... 12 Your Account............................................................ 16 How to Buy Shares................................................... 16 How to Sell Shares.................................................. 19 How to Exchange Shares.............................................. 20 Investor Services................................................... 21 Transaction Details................................................. 23 Management.............................................................. 25 The Manager......................................................... 25 Breakdown of Expenses............................................... 26 Dividends, Capital Gains and Taxes...................................... 28 The Company............................................................. 30 Performance......................................................... 31 Risk Factors, Securities and Investment Techniques...................... 32 Appendix A: Description of Securities Ratings........................... A-1 Appendix B: Credit Quality Distribution................................. B-1 Prospectus Page 2 Connecticut Mutual Investment Accounts, Inc. PROSPECTUS SUMMARY - -------------------------------------------------------------------------------- CONNECTICUT MUTUAL LIQUID ACCOUNT CONNECTICUT MUTUAL INCOME ACCOUNT CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT CONNECTICUT MUTUAL TOTAL RETURN ACCOUNT CONNECTICUT MUTUAL GROWTH ACCOUNT THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING IN THE BODY OF THIS PROSPECTUS. CROSS-REFERENCES IN THIS SUMMARY REFER TO HEADINGS IN THE BODY OF THE PROSPECTUS. INVESTMENT OBJECTIVES Liquid Account is a money market fund and seeks high current income consistent with preservation of capital and maintenance of liquidity. Income Account is a short-term bond fund and seeks high current income consistent with prudent investment risk and preservation of capital. Government Securities Account is a government securities fund and seeks a high level of current income with a high degree of safety of principal and interest. Total Return Account is a balanced fund seeking to maximize total investment return. Growth Account is a growth fund and seeks long- term growth of capital. INVESTMENT MANAGER G.R. Phelps & Co., Inc. (G.R. Phelps), an indirect subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual), with over $2.7 billion in assets under management. DISTRIBUTOR Connecticut Mutual Financial Services, L.L.C. (CMFS), an indirect subsidiary of Connecticut Mutual. ALTERNATIVE PURCHASE PLAN: Each Account, except the Liquid Account, offers Class A and Class B shares, each with different expense levels and a public offering price that reflects different sales charges. The Liquid Account offers a single class of shares. / / CLASS A SHARES Offered at net asset value plus any applicable sales charge (maximum is 5.00% of public offering price) and subject to Rule 12b-1 fees at the rate of up to 0.25% of the average daily net assets of the Class A shares. / / CLASS B SHARES Offered at net asset value (a maximum deferred sales charge of 5% of the lesser of the shares' net asset value or the original purchase price is imposed on certain redemptions made within six years of date of purchase) and subject to Rule 12b-1 fees at the rate of up to 1.00% of the average daily net assets of the Class B shares. / / LIQUID ACCOUNT SHARES Offered at net asset value and subject to Rule 12b-1 fees at the rate of up to 0.10% of the average daily net assets of the shares. SHARES AVAILABLE THROUGH Many brokerage firms nationwide, or directly through the Accounts' distributor, CMFS. EXCHANGE PRIVILEGES Shares of one Account (other than Liquid Account) may be exchanged for shares of the corresponding class of other Accounts in the Company without a sales charge. Exchanges of shares of Liquid Account for shares of any other Account will be subject to the sales charge applicable to such other Account.
Prospectus Page 3 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. DIVIDENDS AND Dividends will be paid semi-annually for Growth Account and Total Return Account and OTHER DISTRIBUTIONS monthly for Government Securities Account and Income Account from available net investment income. Dividends from net investment income of Liquid Account are declared daily and paid monthly. All realized net capital gains, if any, will be distributed at least annually. DIVIDEND REINVESTMENT Distributions may be reinvested in Account shares of the same class or in a corresponding class of the other Accounts (except Liquid Account) in the Company automatically without a sales charge. See "Investor Services" for a discussion of Liquid Account dividend reinvestment privileges. FIRST PURCHASE $1000 minimum ($250 for IRAs and reduced amounts for retirement plans). Automatic Investment Plans may be established without regard to a minimum initial investment. SUBSEQUENT PURCHASES $50 minimum. OTHER FEATURES: / /CLASS A SHARES AND Statement of Intention; Quantity Discounts; Rights of Accumulation; Reinstatement LIQUID ACCOUNT SHARES Privilege; Systematic Withdrawal Plan; Automatic Investment Plan; Dollar Cost Averaging Program; Automatic Dividend Diversification; Check Writing (Liquid Account only). / / CLASS B SHARES Automatic Investment Plan; Dollar Cost Averaging Program; Automatic Dividend Diversification; Systematic Withdrawal Plan.
- -------------------------------------------------------------------------------- YOUR INVESTMENT THE ACCOUNTS. Each Account is a diversified series of the Company, a registered open-end management investment company. Each Account's shares are available through broker/dealers that have entered into agreements to sell shares with the Accounts' distributor, CMFS. Shares also may be acquired directly through CMFS or through exchanges of shares of the other accounts in the Company. Shares of the Liquid Account may be acquired through the exchange of either Class A or Class B shares of the other Accounts in the Company. See "Your Shareholder Manual," "How to Buy Shares" and "How to Exchange Shares." Shares may be redeemed either through broker/ dealers or National Financial Data Services (Transfer Agent). See "Your Shareholder Manual" and "How to Sell Shares." INVESTMENT MANAGER. G.R. Phelps is the investment manager (Manager) and administrator for each of the Accounts. G.R. Phelps provides investment management and/or administrative services to all of the accounts in the Company as well as other mutual funds and institutional clients. G.R. Phelps is an indirect subsidiary of Connecticut Mutual and has been a registered investment adviser since 1976. Connecticut Mutual is the sixth oldest life insurance company in the United States, and the oldest life insurance company in Connecticut. INVESTMENT OBJECTIVES, TECHNIQUES AND RISK FACTORS. Each Account has a different investment objective and policies and is subject to certain risks. See "Investment Objectives and Policies" and "Risk Factors, Securities and Investment Techniques." The LIQUID ACCOUNT seeks as high a level of current income as is consistent with preservation of capital and maintenance of liquidity by investing exclusively in money market instruments. These are high quality, short-term U.S. dollar denominated securities and include U.S. Government obligations, commercial paper, certificates of deposit, bankers' acceptances, bank deposits and other corporate debt securities. The Account seeks to maintain a constant net asset value of $1 per share by investing in securities having an actual or effective maturity of 365 days or less and maintaining a dollar weighted average portfolio maturity of 90 days or less. There can be no assurance that the Account will maintain a stable net asset value per share. Prospectus Page 4 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. The INCOME ACCOUNT seeks high current income consistent with prudent investment risk and preservation of capital. The Account invests primarily in corporate debt securities with remaining maturities of five years or less or mortgage debt securities with prepayment features which, in the judgment of the Manager, will result in payment of interest and principal such that the effective maturity of the securities is five years or less. The Account anticipates maintaining an average dollar weighted portfolio maturity of generally between two and three years. The Account invests at least 75% of its total assets in U.S. Government and U.S. Government-related securities, dollar-denominated foreign government and corporate securities and short-term investments, all of which are rated at least investment grade or, if unrated, judged to be of equivalent quality by the Manager. The Account may invest up to 25% of its assets in lower quality debt securities (commonly referred to as junk bonds) and preferred stocks. Consistent with these policies the Account may invest up to 5% of its assets in non-dollar-denominated securities of foreign issuers. The GOVERNMENT SECURITIES ACCOUNT seeks a high level of current income with a high degree of safety of principal. The Account invests primarily in U.S. Government securities and U.S. Government-related securities, including collateralized mortgage obligations. The remainder of its assets may be invested in other investment grade debt obligations and private issuers. The Account may enter into mortgage dollar roll transactions to enhance its yield. The TOTAL RETURN ACCOUNT seeks to maximize total investment return principally by allocating its assets among stocks, bonds and money market instruments. The Account's debt securities are expected to have a portfolio maturity of 6 to 12 years. The Account may invest up to 25% of its total assets in the aggregate in debt securities and preferred stocks rated below investment grade (commonly called junk bonds) and unrated securities determined by the manager to be of comparable credit quality. Consistent with these policies the Account may invest to a limited extent in securities of foreign issuers. The GROWTH ACCOUNT seeks long term growth of capital by investing primarily in common stocks with low price earning ratios and better than anticipated earnings. Realization of current income is a secondary consideration. In selecting investments for the Growth Account, the Manager uses a quantitative investment discipline in combination with fundamental securities analysis. The Account may invest the remainder of its assets in corporate and U.S. Government debt obligations including convertible bonds rated below investment grade but not rated below B. RISK FACTORS. There is no assurance that any Account will achieve its investment objective. Each Account's net asset value (except, generally, Liquid Account's net asset value) will change reflecting fluctuations in the market value of its portfolio positions. Any Account's portfolio of fixed income securities will generally fluctuate inversely with changes in interest rates. Investments by the Income Account, Total Return Account and Growth Account in lower rated securities involve greater risk of default and price volatility than higher rated obligations. Also, investments by the Income Account, Total Return Account and Growth Account in foreign securities involve risks not normally associated with U.S. securities relating to political and economic developments and differences in the regulations to which U.S. and foreign issuers are subject. Foreign denominated foreign securities also involve risk of adverse changes in foreign currency exchange rates. An Account's participation in currency transactions, options and futures transactions and investment in certain derivative instruments also involve special risks and transaction costs. See "Risk Factors, Securities and Investment Techniques." EXPENSES. Each Account pays G.R. Phelps an investment advisory fee based on the average daily net assets of the Account, as described under "Management -- The Manager." As the Accounts' distributor, CMFS collects the sales charges imposed on purchases of Class A shares, and reallows all or a portion of such charges to broker/dealers that have made such sales. In addition, CMFS collects any contingent deferred sales charges (CDSC) that may be imposed on certain redemptions of Class A shares, on redemptions of Class B shares and on redemptions of shares of the Liquid Account that were acquired in an exchange from Class B shares of each other Account in the Company. CMFS also pays broker/ dealers upon their sales of Class B shares and pays broker/dealers and other financial institutions ongoing commission payments for servicing shareholder accounts. See "Your Account -- How to Buy Shares." Prospectus Page 5 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Pursuant to separate distribution plans for the Liquid Account's shares and for each of the other Account's Class A shares and Class B shares adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended (1940 Act), each Account may pay CMFS a fee at an annual rate that is a certain percentage of the average daily net assets of the Liquid Account's shares or the other Account's Class A shares or Class B shares (as appropriate) as reimbursement for its expenditures incurred in distributing and servicing the Liquid Account's shares or the other Account's Class A shares or Class B shares, respectively. Each Account pays all expenses not required to be assumed by G.R. Phelps or other agents. From time to time, G.R. Phelps may agree not to impose all or a portion of its advisory fee and/or undertake to pay or reimburse an Account for all or a portion of its expenses not otherwise required to be borne or reimbursed by G.R. Phelps. See "Management -- Breakdown of Expenses." - -------------------------------------------------------------------------------- ALTERNATIVE_ PURCHASE_ PLAN Each Account except the Liquid Account offers investors two classes of shares. The Liquid Account offers a single class of shares. The primary distinction between the two classes of shares lies in their sales charge structures and ongoing expenses. See "Summary of Investor Expenses." Each class bears the separate expenses of its Rule 12b-1 plan and its transfer agency fees and expenses. Each class has a separate exchange privilege. See "Your Account -- How to Exchange Shares" and "The Company." Class A and Class B shares of an Account represent interests in the same portfolio of investments of that Account and have the same rights, except as noted. Each class has exclusive voting rights with respect to its Rule 12b-1 plan. Dividends and other distributions paid by each Account with respect to its Class A and Class B shares are calculated in the same manner and at the same time. The per share dividends on Class B shares of an Account will be lower than those on Class A shares of that Account as a result of the higher Rule 12b-1 fees applicable with respect to Class B shares. CLASS A SHARES. An investor who purchases Class A shares pays a sales charge at the time of purchase. As a result, Class A shares are not subject to any charges when they are redeemed except as described in "How To Buy Shares -- Contingent Deferred Sales Charge -- Class A Shares." Certain purchases of Class A shares qualify for reduced sales charges. See "How To Buy Shares -- Reducing or Eliminating Your Sales Charge -- Class A Shares." Class A shares currently bear a Rule 12b-1 fee at an annual rate of up to 0.25% of the Fund's average net assets attributable to Class A shares. CLASS B SHARES. Class B shares are sold without an initial sales charge, but are subject to a CDSC of up to 5.00% if redeemed within six years. Class B shares also bear a higher Rule 12b-1 fee than Class A shares, currently at an annual rate of up to 1.00% of the Fund's average net assets attributable to Class B shares. Class B shares will automatically convert into Class A shares, based on relative net asset value, eight years after purchase. See "How To Buy Shares -- Purchasing Class B Shares." CHOOSING AN ALTERNATIVE. Over time, the cumulative expense of the 1.00% annual Rule 12b-1 fees of the Class B shares will approximate or exceed the expense of the applicable 5.00% maximum initial sales charge plus the 0.25% Rule 12b-1 fees of the Class A shares. If you expect to maintain your investment in an Account over the long-term but do not qualify for a reduced sales charge, you might elect to purchase Class A shares. Class B investors, however, enjoy the benefit of permitting all their dollars to work from the time the investments are made. Any positive investment return on this additional invested amount would partially or wholly offset the higher annual expenses borne by Class B shares. Because the timing and amount of the Account's future returns cannot be predicted, however, there can be no assurance that such a positive return will be achieved. Class B shareholders pay a CDSC if they are redeemed during the first six years after purchase, unless a sales charge waiver applies. If you expect to redeem Class B shares during this period, you Prospectus Page 6 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. should consider the cost of the applicable CDSC in addition to the annual Class B Rule 12b-1 fees. MAXIMUM INVESTMENTS. Class B share purchases over $500,000 will be treated as purchases of Class A shares or declined. REDUCED SALES CHARGES. Class A share purchases over $500,000 and Class A share purchases made under an Account's reduced sales charge plans may be made at a lower initial sales charge. See "How to Buy Shares" for a complete list of reduced sales charges applicable to Class A purchases. WAIVERS OF SALES CHARGES. The entire initial sales charge on Class A shares of an Account may be waived for certain eligible purchasers and these purchasers' entire purchase price would be immediately invested in an Account. The CDSC may be waived upon redemption of certain Class B shares. If you are eligible for complete waivers of the initial sales charge you should purchase Class A shares. See "How to Buy Shares" for a complete list of initial sales charge waivers applicable to Class A purchases and CDSC waivers applicable to Class B purchases. A 1.00% CDSC is imposed on certain redemptions of Class A shares on which no initial sales charge was assessed. The CDSC on the Class B shares and the initial sales charge on the Class A shares are both intended to compensate CMFS and selling broker/ dealers for their distribution services. Broker/ dealers may receive different levels of compensation for selling a particular class of shares of an Account. See "Your Account" for a more complete description of the sales charges, Rule 12b-1 fees and investor services applicable to shares of the Accounts. - -------------------------------------------------------------------------------- YOUR SHAREHOLDER MANUAL
INITIAL SUBSEQUENT MINIMUM INVESTMENTS INVESTMENT* INVESTMENT - ------------------------------------------------------------------------------------ / /Automatic Investment Plans $ 0 $50 / /IRAs and other tax qualified plans; deferred compensation plans $ 250 $50 / / All other purchases $1,000 $50
* Minimums may be waived for certain automated payroll deduction plans.
BUYING SHARES TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT ---------------------------------------------------------------------------- BY MAIL / /Complete and sign the / /Make your check payable application. to "CMIA." Indicate your Make your check payable to account number on your "CMIA." check and mail to the Mail to CMIA, P.O. Box address printed on your 419694 account statement. Kansas City, MO 64179-0938. / /Exchange by mail: call 1-800-322-CMIA (select option "2") for instructions. ---------------------------------------------------------------------------- BY WIRE / /Call 1-800-322-CMIA by / /Call 1-800-322-CMIA by 12:00 noon Eastern Time on 12:00 noon Eastern Time on the day of investment to the day of investment to set up your account and arrange a wire arrange a wire transaction. transaction. / /Wire by 4:00 p.m. Eastern / /Wire by 4:00 p.m. Eastern Time to: Time to: State Street Bank and Trust State Street Bank and Trust Company Company Bank Routing # 011000028 Bank Routing # 011000028 NFDS Account # 99042129 NFDS Account # 99042129 Specify Account name, class Specify Account name, class of shares and include your of shares and include your name and account number. name and account number.
Prospectus Page 7 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
BUYING SHARES TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT ---------------------------------------------------------------------------- BY PHONE / /Exchange from another / /Exchange from another 1-800-322-CMIA account in the same class account in the same class (select option (or from the Liquid (or from the Liquid "2") Account) with the same Account) with the same registration, including registration, including name, address and name, address and taxpayer ID number. taxpayer ID number. ---------------------------------------------------------------------------- AUTOMATICALLY / /You may not open an / /Establish an Automatic account automatically, but Investment Plan or Dollar you may complete and sign Cost Averaging Investment an application; make your Program. Sign up for check payable to CMIA; these services when and mail to the address opening your account by indicated on the completing Section 9 on application. the enclosed application, or call 1-800-322-CMIA for information about adding these services to your account or complete an Automatic Investment Plan application. ---------------------------------------------------------------------------- SELLING SHARES ACCOUNT TYPE SPECIAL REQUIREMENTS ---------------------------------------------------------------------------- BY MAIL / /Individual, Joint Tenant, / /The letter of instruction Sole Proprietorship, UGMA, must be signed by all UTMA persons required to sign for transactions, exactly as their names appear on the account. Each redemption request is limited / /Retirement Account / /The account owner should to $50,000 unless complete a retirement you have provided distribution form. Call a signature 1-800-322-CMIA to request one. guarantee. / /Trust / /The trustee must sign the letter indicating capacity as trustee. If the trustee's name is not in the account registration, provide a copy of the trust document certified within the last 60 days. / /Business or Organization / /At least one person authorized by corporate resolution to act on the account must sign the letter. Include a corporate resolution with corporate seal or a signature guarantee. / /Executor, Administrator, / /Call 1-800-322-CMIA for Conservator, Guardian instructions. ---------------------------------------------------------------------------- BY PHONE / /All account types except / /Minimum request: $500, 1-800-322-CMIA retirement unless closing an account. Limited to $50,000 per day. (select option / / All account types / /You may exchange to the "2") same class of other Accounts (or to the Liquid Account shares) if both accounts are registered with the same name(s), address and taxpayer ID number. ---------------------------------------------------------------------------- BY WIRE / /All account types except / /Minimum wire: $1,000. retirement / /Each redemption request is limited to $50,000 unless you have provided a signature guarantee. / /A voided check and your signature, which must be signature guaranteed, must accompany a wire redemption request unless you elected Telephone Redemption on the initial application. / /Your wire redemption request must be received before 4:00 p.m. Eastern time for money to be wired on the next business day.
Prospectus Page 8 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. SUMMARY OF INVESTOR EXPENSES The following table lists Shareholder Transaction Expenses and estimated Annual Operating Expenses for the current fiscal year related to an investment in shares of the Liquid Account and Class A and Class B shares of each of the other Accounts. Annual Operating Expenses are based on expenses for shares of the Liquid Account and Class A shares incurred in the fiscal year ended December 31, 1994. Annual operating expenses of Class B shares are based on estimated expenses that would have been incurred during the previous fiscal year had Class B shares been outstanding.
GOVERNMENT SECURITIES TOTAL RETURN GROWTH INCOME ACCOUNT ACCOUNT ACCOUNT ACCOUNT ----------------- ---------------- ---------------- ------- LIQUID CLASS CLASS CLASS CLASS CLASS CLASS CLASS ACCOUNT A B A B A B A ------ ------- ------- ------- ------ ------- ------ ------- 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% 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) Exchange Fee(3).................................. 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% 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) Other Expenses (net of expense limits, if any)... .43 .00(6) .00(6) .285 .285 .335 .335 .395 ---- ----- ------ ----- ----- ----- ----- ----- TOTAL ANNUAL OPERATING EXPENSES OF EACH ACCOUNT........................................ .93% .625% 1.625% .91% 1.91% 1.21% 1.96% 1.27% ---- ----- ------ ----- ----- ----- ----- ----- ---- ----- ----- ----- ----- ----- ----- ----- CLASS B ------ SHAREHOLDER TRANSACTION EXPENSES Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............ None Deferred Sales Load (as a percentage of original purchase price or redemption proceeds, as applicable).................................... 5.00% Exchange Fee(3).................................. None ANNUAL OPERATING EXPENSES OF EACH ACCOUNT (as a percentage of average net assets) Management Fees.................................. .625% 12b-1 Fees (net of expense limits, if any)....... 1.00 Other Expenses (net of expense limits, if any)... .395 ----- TOTAL ANNUAL OPERATING EXPENSES OF EACH ACCOUNT........................................ 2.02% ----- -----
- --------- (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. See "How To Sell Shares." (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. See "How to Buy Shares -- Contingent Deferred Sales Charge -- Class A Shares." (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. See "Exchange Restrictions." (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. In the absence of such an agreement, the estimated expenses related to Class A shares and Class B shares would be .315% and .315%, 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 .94% and 1.94%, respectively. 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, 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:
GOVERNMENT TOTAL INCOME SECURITIES RETURN GROWTH ACCOUNT ACCOUNT ACCOUNT ACCOUNT ------- ---------- ------- ------- CLASS A SHARES After 1 year................................................ $ 46 $ 49 $ 62 $ 62 After 3 years............................................... 71 73 86 88 After 5 years............................................... 98 99 113 116 After 10 years.............................................. 174 173 189 195
Prospectus Page 9 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
GOVERNMENT TOTAL INCOME SECURITIES RETURN GROWTH ACCOUNT ACCOUNT ACCOUNT ACCOUNT ------- ---------- ------- ------- CLASS B SHARES ASSUMING COMPLETE REDEMPTION AT END OF PERIOD After 1 year................................................ $ 67 $ 69 $ 70 $ 71 After 3 years............................................... 98 100 102 103 After 5 years............................................... 122 123 126 129 After 10 years.............................................. 204 204 209 216 ASSUMING NO REDEMPTION After 1 year................................................ $ 17 $ 69 $ 20 $ 21 After 3 years............................................... 58 100 62 63 After 5 years............................................... 102 123 106 109 After 10 years.............................................. 204 204 209 216
With respect to the Liquid Account, your investment, based on the same assumptions as set forth in the paragraph above, would bear the following amounts in total expenses: After 1 year................................................ $ 9 After 3 years............................................... 30 After 5 years............................................... 51 After 10 years.............................................. 114
The purpose of the above table and Example is to summarize the aggregate expenses of Class A and Class B shares of each Account and the shares of the Liquid Account and to assist investors in understanding the various costs and expenses that investors in an Account will bear directly or indirectly. See "Breakdown of Expenses." 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. Shareholders should be aware that the Accounts' payment of distribution fees may result in long-term shareholders indirectly paying more than the economic equivalent of the maximum front-end sales charge permitted by the National Association of Securities Dealers, Inc. (NASD). Prospectus Page 10 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The following information for the period ended December 31, 1994 has been derived from audited financial statements together with the auditors' report for the year ended December 31, 1994 which is included in the Statement of Additional Information and incorporated herein by reference. The information for the six months ended June 30, 1995 is unaudited. Additional information about the performance of Class A shares of each Account and the Liquid Account shares is contained in the Company's 1994 Annual Report to Shareholders which may be obtained without charge by calling or writing the Company at the telephone number or address on the cover page of this Prospectus. No financial highlights exist for Class B shares. Selected data for a Class A share and, with respect to the Liquid Account, a Liquid Account share, of capital stock outstanding throughout the period:
NET REALIZED DISTRIBUTIONS NET NET & FROM ASSET ASSET UNREALIZED NET VALUE VALUE DIVIDENDS GAIN REALIZED AT AT NET FROM NET (LOSS) GAIN BEGINNING END YEARS ENDED INVESTMENT INVESTMENT ON ON OF OF DECEMBER 31 INCOME INCOME INVESTMENTS INVESTMENTS PERIOD PERIOD - --------------- ------ -------- ------ ------ ----- ----- LIQUID ACCOUNT 1985 $.0729 $(.0729) $- $- $1.00 $1.00 1986 .0588 (.0588) - - 1.00 1.00 1987 .0581 (.0581) - - 1.00 1.00 1988 .0664 (.0664) - - 1.00 1.00 1989 .0822 (.0822) - - 1.00 1.00 1990 .0731 (.0731) - - 1.00 1.00 1991 .0522 (.0522) - - 1.00 1.00 1992 .0287 (.0287) - - 1.00 1.00 1993 .0227 (.0227) - - 1.00 1.00 1994 .0334 (.0334) - - 1.00 1.00 6/30/95 .0256 (.0256) - - 1.00 1.00 (unaudited) GOVERNMENT SECURITIES ACCOUNT 1985(a) .24 (.21) .70 - 10.00 10.73 1986 .92 (.92) .28 (.11) 10.73 10.90 1987 .84 (.84) (.52) (.21) 10.90 10.17 1988 .84 (.85) (.05) (.05) 10.17 10.06 1989 .84 (.84) .52 - 10.06 10.58 1990 .84 (.84) .10 - 10.58 10.68 1991 .85 (.85) .68 - 10.68 11.36 1992 .77 (.77) (.12) (.05) 11.36 11.19 1993 .70 (.70) .36 (.64) 11.19 10.91 1994 .69 (.69) (1.14) (.01) 10.91 9.76 6/30/95 .37 (.36) .67 - 9.76 10.44 (unaudited) INCOME ACCOUNT 1985(a) .24 (.23) .54 - 10.00 10.55 1986 .83 (.83) .57 (.08) 10.55 11.04 1987 .76 (.76) (.56) (.51) 11.04 9.97 1988 .84 (.85) (.19) - 9.97 9.77 1989 .88 (.88) .02 - 9.77 9.79 1990 .94 (.94) (.35) - 9.79 9.44 1991 .81 (.81) .47 - 9.44 9.91 1992 .79 (.79) (.16) - 9.91 9.75 1993 .65 (.65) .11 - 9.75 9.86 1994 .68 (.68) (.72) - 9.86 9.14 6/30/95 .33 (.33) .30 - 9.14 9.44 (unaudited) TOTAL RETURN ACCOUNT 1985(a) .13 (.12) .90 - 10.00 10.91 1986 .31 (.30) .99 (.04) 10.91 11.87 1987 .38 (.38) .13 (1.09) 11.87 10.91 1988 .53 (.53) .60 - 10.91 11.51 1989 .76 (.76) 1.81 (.63) 11.51 12.69 1990 .66 (.66) (.68) (.07) 12.69 11.94 1991 .54 (.54) 2.79 (.71) 11.94 14.02 1992 .50 (.50) .86 (1.07) 14.02 13.81 1993 .48 (.48) 1.70 (.97) 13.81 14.54 1994 .55 (.55) (.86) (.24) 14.54 13.44 6/30/95 .31 (.30) 1.44 - 13.44 14.89 (unaudited) RATIO OF RATIO OF NET NET OPERATING INVESTMENT ASSETS EXPENSES INCOME AT END TO TO OF AVERAGE AVERAGE PERIOD ANNUAL YEARS ENDED NET NET PORTFOLIO (IN TOTAL DECEMBER 31 ASSETS ASSETS TURNOVER THOUSANDS) RETURN(C) - --------------- -------- -------- --------- -------- ----- LIQUID ACCOUNT 1985 1.00% 7.30% n/a $65,098 7.50% 1986 1.00 5.88 n/a 74,111 6.03 1987 1.00 5.81 n/a 68,908 5.97 1988 1.04 6.64 n/a 73,921 6.82 1989 1.06 8.22 n/a 87,264 8.53 1990 1.06 7.31 n/a 84,387 7.53 1991 1.01 5.22 n/a 69,932 5.31 1992 1.02 2.87 n/a 67,549 2.89 1993 .95 2.27 n/a 76,620 2.30 1994 .93 3.34 n/a 63,946 3.40 6/30/95 .94(b) 5.16(b) n/a 63,864 2.58 (unaudited) GOVERNMENT SECU 1985(a) 1.50(b) 8.00(b) 468.56%(b) 12,890 9.40 1986 1.27 8.92 111.68 22,947 11.66 1987 1.24 8.12 207.67 24,703 3.33 1988 1.16 8.27 175.50 35,910 7.99 1989 1.19 8.14 68.14 41,561 14.10 1990 1.16 8.07 44.19 47,524 9.44 1991 1.07 7.83 27.50 55,332 15.03 1992 1.01 6.92 131.79 67,612 6.07 1993 .93 6.03 224.02 77,596 9.56 1994 .91 6.71 156.90 60,162 (4.18) 6/30/95 .94(b) 7.17(b) 55.89(b) 51,528 10.83 (unaudited) INCOME ACCOUNT 1985(a) 1.50(b) 8.20(b) 242.68(b) 11,048 7.80 1986 1.29 7.69 164.13 14,620 13.54 1987 1.27 7.32 231.39 15,367 2.03 1988 1.24 8.43 150.04 16,789 6.70 1989 1.27 8.93 52.95 18,705 9.56 1990 1.24 9.78 90.20 19,809 6.33 1991 1.12 8.44 50.44 22,839 14.22 1992 .63 8.09 109.47 38,675 6.60 1993 .63 6.56 145.94 48,636 7.97 1994 .63 7.16 62.88 46,547 (0.42) 6/30/95 .63(b) 7.13 37.88(b) 46,109 6.97 (unaudited) TOTAL RETURN AC 1985(a) 1.50(b) 4.46(b) 49.82(b) 12,083 10.34 1986 1.26 3.22 143.32 35,382 11.88 1987 1.08 3.15 197.79 44,770 3.92 1988 1.11 4.61 223.62 54,253 10.40 1989 1.20 5.90 149.22 65,071 22.61 1990 1.24 5.31 115.45 66,382 (0.21) 1991 1.20 4.02 122.40 86,455 28.21 1992 1.11 3.61 177.85 109,701 9.90 1993 1.02 3.40 155.16 171,205 15.89 1994 .96 3.80 115.01 177,904 (2.11) 6/30/95 1.20(b) 4.39(b) 53.78(b) 202,718 13.04 (unaudited)
Prospectus Page 11 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
NET REALIZED DISTRIBUTIONS NET NET & FROM ASSET ASSET UNREALIZED NET VALUE VALUE DIVIDENDS GAIN REALIZED AT AT NET FROM NET (LOSS) GAIN BEGINNING END YEARS ENDED INVESTMENT INVESTMENT ON ON OF OF DECEMBER 31 INCOME INCOME INVESTMENTS INVESTMENTS PERIOD PERIOD - --------------- ------ -------- ------ ------ ----- ----- GROWTH ACCOUNT 1985(a) .11 (.11) .94 - 10.00 10.94 1986 .24 (.24) 1.11 (.08) 10.94 11.97 1987 .22 (.22) (.12) (2.05) 11.97 9.80 1988 .20 (.20) 1.20 - 9.80 11.00 1989 .51 (.51) 3.30 (1.25) 11.00 13.05 1990 .34 (.34) (1.36) (.07) 13.05 11.62 1991 .25 (.25) 4.00 (1.22) 11.62 14.40 1992 .26 (.26) 1.44 (1.64) 14.40 14.20 1993 .30 (.30) 2.64 (1.70) 14.20 15.14 1994 .22 (.22) (.32) (.62) 15.14 14.20 6/30/95 .14 (.13) 2.42 - 14.20 16.63 (unaudited) RATIO OF RATIO OF NET NET OPERATING INVESTMENT ASSETS EXPENSES INCOME AT END TO TO OF AVERAGE AVERAGE PERIOD ANNUAL YEARS ENDED NET NET PORTFOLIO (IN TOTAL DECEMBER 31 ASSETS ASSETS TURNOVER THOUSANDS) RETURN(C) - --------------- -------- -------- --------- -------- ----- GROWTH ACCOUNT 1985(a) 1.50(b) 3.81(b) 57.58(b) 11,514 10.50 1986 1.31 2.21 163.15 19,469 12.25 1987 1.17 1.71 214.32 19,638 (0.29) 1988 1.23 1.95 246.14 26,285 14.32 1989 1.18 3.90 169.75 37,323 34.86 1990 1.19 2.73 143.95 35,202 (7.98) 1991 1.19 1.74 148.30 40,716 36.91 1992 1.12 1.74 141.69 45,600 11.99 1993 1.05 1.95 99.67 64,495 20.91 1994 1.02 1.50 98.46 78,390 (0.65) 6/30/95 1.26(b) 1.88(b) 75.85(b) 97,691 18.03 (unaudited)
(a) For the period from September 16, 1985 (inception) to December 31, 1985. (b) Annualized. (c) Annual total returns do not include the effect of sales charges. - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVES AND POLICIES - -------------------------------------------------------------------------------- The Company offers a broad range of investment alternatives through a variety of mutual funds, five of which are offered by means of this Prospectus (Accounts). Each Account has its own investment objective and policies which are designed to meet specific investment goals and can be changed without shareholder approval. There can be no guarantee, however, that the Accounts will meet their investment goals. The Accounts are presented here in order of ascending risk. Generally, investors seeking higher returns must assume greater risk determined according to volatility of net asset value. Each Account invests in securities of different issuers and industry classifications in an attempt to spread and reduce the risks inherent in all investing. The Manager of each Account is G.R. Phelps & Co. (G.R. Phelps), an indirect subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual). LIQUID ACCOUNT -- A MONEY MARKET FUND The Liquid Account seeks as high a level of current income as is consistent with preservation of capital and maintenance of liquidity by investing in money market instruments. Money market instruments are high quality, short-term securities that present minimal credit risk. They consist of obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, commercial paper of U.S. and non-U.S. issuers and certificates of deposit, banker's acceptances, bank deposits of U.S. and non-U.S. banks (including Eurodollar and Yankee dollar deposits) and short-term corporate debt securities. These instruments are denominated in U.S. dollars and may carry fixed or variable interest rates. These instruments are described further under the caption "Risk Factors, Securities and Investment Techniques." The Account seeks to maintain a constant net asset value of $1.00 per share by investing in securities having an actual or effective maturity of 365 days or less and maintaining a dollar-weighted average portfolio maturity of 90 days or less. There can be no assurance, however, that the Account will be able to maintain a stable price per share of $1.00. The Account may purchase only money market instruments that are within the two highest rating categories of the major rating agencies (E.G., Moody's Investors Service, Inc. (Moody's) or Standard and Poor's Ratings Group (S&P)). The Account will not invest more than 5% of its total assets in securities that, although of high quality, have not been rated in the highest short-term rating category or, if unrated, have not been judged by the Manager to be of equivalent quality. Prospectus Page 12 Connecticut Mutual Investment Accounts, Inc. Within this 5% limitation, the Account will not invest more than 1% of its total assets, or $1 million, whichever is greater, in securities (other than U.S. Government securities) of any single issuer. The Account intends to hold its investments until maturity, but may sell them prior to maturity for a number of reasons, including: to shorten or lengthen the average maturity of the Account's portfolio; to increase yield; to maintain the quality of the portfolio; or to maintain a stable share value. Securities in which the Liquid Account invests will generally not yield as high a level of current income as lower quality and longer term securities. Such lower quality and longer term securities, however, may have less liquidity and greater credit and interest rate risk. AN INVESTMENT IN THE LIQUID ACCOUNT IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. INCOME ACCOUNT -- A SHORT-TERM BOND FUND The Income Account seeks high current income consistent with prudent investment risk and preservation of capital. The Account seeks to achieve its objective by investing primarily in corporate debt securities with remaining maturities of five years or less or mortgage debt securities with prepayment features which in the judgment of the Manager will result in the payment of interest and principal such that the effective maturity is five years or less. The Account anticipates maintaining an average dollar-weighted portfolio maturity of generally between two and three years. By restricting the maturities of the Account's investments, the potential for dramatic changes in the value of the Account's investments should be reduced, and the value of the Account's shares should remain more stable than that of a longer-term bond fund. Investors should be mindful, however, that the value of the Account's shares fluctuates based on changes in interest rates and in the credit quality of the issuers represented in its portfolio. The Account invests at least 75% of its total assets in: U.S. Government and U.S. Government-related securities (as defined below in "Government Securities Account"), dollar-denominated foreign government and corporate securities and short-term investments. These investments must be rated at least investment grade by a major rating agency at the time of purchase, or, if unrated, be judged by the Manager to be of comparable credit quality, except that the Account's investments in short-term investments must be rated, or judged to be the equivalent of, "Prime." Some of these investments in the lowest investment grade category may have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case with higher grade securities. The Income Account will not dispose of a debt security merely because of a downward change in the credit rating of that security assigned by a major credit agency. The Account may invest the remainder of its total assets (up to 25% under normal circumstances) in debt securities and preferred stocks rated below investment grade and unrated debt securities determined by the Manager to be of comparable credit quality. The lower rated securities (commonly called junk bonds) in which the Account may invest may include obligations that are in default. Unrated debt securities will not exceed 10% of the Account's total assets. Debt securities having low credit quality involve greater price volatility and risk of loss of principal and income than higher quality securities. To the extent the Account invests in lower quality debt securities, its net asset value may be subject to greater fluctuation. For a description of these and other risks associated with lower quality debt securities, see "Risk Factors, Securities and Investment Techniques -- Debt Securities." Refer to Appendix A for a description of certain rating categories. In addition, Appendix B provides a summary of ratings assigned to debt holdings (not including money market instruments) of the Account. These percentages are historical and do not necessarily indicate the current or future debt holdings of the Account. The Account may invest up to 20% of its total assets in mortgage dollar rolls. The Account may also invest up to 5% of its total assets in inverse floating rate instruments. See "Risk Factors, Securities and Investment Techniques -- Inverse Floating Rate Instruments and -- Mortgage Dollar Rolls." Consistent with the foregoing policies, the Account may invest up to 5% of its total assets in non-dollar denominated securities of foreign issuers, including issuers in developing countries. These investments are subject to special risks. See "Risk Factors, Securities and Investment Techniques -- Foreign Securities." Prospectus Page 13 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. GOVERNMENT SECURITIES ACCOUNT -- A GOVERNMENT SECURITIES FUND The Government Securities Account seeks a high level of current income with a high degree of safety of principal by investing primarily (at least 65% of its total assets under normal market conditions) in U.S. Government securities and U.S. Government-related securities. U.S. Government securities are high quality instruments issued, or guaranteed as to principal and interest, by the U.S. Treasury or by an agency or instrumentality of the U.S. Government. These may include bills, notes and bonds of the U.S. Treasury, mortgage participation certificates guaranteed by the Government National Mortgage Association (GNMA Certificates), or obligations of the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association. U.S. Government-related securities are obligations that are fully collateralized or otherwise secured by U.S. Government securities. U.S. Government securities and U.S. Government-related securities may include pools of consumer loans or mortgages, such as collateralized mortgage obligations (CMOs). The Account's investments in privately issued CMOs will be limited to those rated within the two highest rating categories by a nationally recognized rating agency. CMOs are derivative securities; for a discussion of derivative securities, see "Risk Factors, Securities and Investment Techniques -- Derivative Investments." The U.S. Government and U.S. Government-related securities in which the Account will invest may have fixed or floating rates of interest. U.S. Government and U.S. Government-related securities do not generally involve the credit risks associated with corporate debt securities. As a result, the Account's yield is generally lower than the yield of most general purpose fixed-income funds, which assume certain credit risks in exchange for higher potential yield. Like corporate debt securities, however, the value of U.S. Government and U.S. Government-related securities, and thus the Account's net asset value, generally fluctuates inversely with changes in interest rates. The Manager may seek to take advantage of market developments and yield disparities by shortening average maturity in anticipation of rising interest rates and by lengthening average maturity in anticipation of declining interest rates. The Account may also invest up to 20% of its total assets in mortgage dollar rolls. The Account may invest up to 5% of its total assets in inverse floating rate instruments. Additional characteristics and risks associated with the securities in which the Account invests and the investment techniques it uses are described under "Risk Factors, Securities and Investment Techniques -- U.S. Government Securities, -- U.S. Government Related Securities and -- Mortgage Dollar Rolls." Under normal circumstances, the Fund may invest the remainder of its assets (up to 35%) in investment grade debt obligations of private issuers. Although the Government Securities Account invests primarily in U.S. Government and U.S. Government related securities which generally have less credit risk than other securities, AN INVESTMENT IN THE GOVERNMENT SECURITIES ACCOUNT IS NOT INSURED OR GUARANTEED. TOTAL RETURN ACCOUNT -- A BALANCED FUND The Total Return Account seeks to maximize total investment return (including both capital appreciation and income) principally by allocating its assets among stocks, bonds (including corporate debt securities, U.S. Government and U.S. Government-related securities) and money market instruments according to changing market conditions. This allocation process utilizes quantitative asset allocation tools, which measure the relationship among these three asset categories, in combination with the judgment of the Manager concerning current market dynamics. Allocating assets among different types of investments allows the Account to take advantage of opportunities wherever they occur, but also subjects the Account to the risks of a given investment type. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. The value of bonds and short-term instruments fluctuates based on changes in the credit quality of the individual issuer and changes in interest rates. The Account's debt securities are expected to have a portfolio maturity of six to twelve years. Consistent with the foregoing, at least 25% of the Account's total assets will be invested in fixed income senior securities. The Account may invest up to 25% of its total assets in the aggregate in debt securities and preferred stocks rated below investment grade and unrated debt securities determined by the Manager to be of comparable credit quality. These lower quality securities (commonly called junk bonds) in which the Account may invest may include obligations that are in default. Unrated Prospectus Page 14 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. debt securities will not exceed 10% of the Account's total assets. Debt securities having low credit quality involve greater price volatility and risk of loss of principal and income. For a description of these and other risks associated with lower quality debt securities, see "Risk Factors, Securities and Investment Techniques -- Debt Securities." Refer to Appendix A of this Prospectus for a description of certain ratings categories. In addition, Appendix B provides a summary of ratings assigned to debt holdings (not including money market instruments) of the Account. These percentages are historical and do not necessarily indicate the current or future debt holdings of the Account. The Account may invest up to 20% of its total assets in mortgage dollar rolls. The Account may also invest up to 5% of its total assets in inverse floating rate instruments which are a type of derivative security. See "Risk Factors, Securities and Investment Techniques -- Inverse Floating Rate Instruments -- Mortgage Dollar Rolls and -- Derivative Investments." Consistent with the foregoing policies, the Account may invest to a limited degree in securities of foreign issuers. See "Risk Factors, Securities and Investment Techniques -- Foreign Securities." GROWTH ACCOUNT -- A GROWTH FUND The Growth Account seeks long term growth of capital by investing primarily in common stocks with low price-earnings ratios and better-than-anticipated earnings. A portion of the Account's investments may be held in cash, in short-term instruments and investment grade corporate and U.S. Government debt securities. Realization of current income is a secondary consideration. The Manager chooses investments for the Growth Account using a quantitative investment discipline in combination with fundamental securities analysis. A low price-earnings ratio (below the price-earnings ratio of the S&P 500 Index) often accompanies a stock which is out-of-favor in the market. Stocks with low price-earnings ratios have performed better than the market averages in most years of recent decades. When an out-of-favor company demonstrates better earnings than what most analysts were expecting, referred to as a favorable earnings surprise, an upward revaluation of both earnings expectations and the price-earnings multiple often results, generally causing the company's stock price to outperform the market averages. As stocks with low price-earnings ratios and favorable earnings surprises are identified, the Manager uses fundamental securities analysis to select individual stocks for the Growth Account. When the price-earnings ratio of a stock held by the Growth Account moves significantly above the multiple of the overall stock market, or the company reports a meaningful earnings disappointment, the stock will normally be sold. The stock selection methodology used in managing the Growth Account's portfolio may result in a high portfolio turnover rate in certain market conditions. High portfolio turnover (greater than 100%) may in turn result in higher transaction fees and brokerage commissions and may result in realized capital gains. Historically, common stocks have shown greater long-term growth potential than other types of securities. However, stock values fluctuate in response to the activities of individual companies and general market and economic conditions. For a further discussion of common stocks, see "Risk Factors, Securities and Investment Techniques." The Account may invest the remainder of its assets (up to 10% under normal circumstances) in corporate and U.S. Government debt obligations, including convertible bonds which may be rated as low as B by Moody's or S&P. Debt securities having low credit quality involve greater price volatility and risk of loss of principal and income. For a description of these and other risks associated with lower quality debt securities, see "Risk Factors, Securities and Investment Techniques -- Debt Securities." Refer to Appendix A for a description of the various ratings categories. Consistent with the foregoing policies, the Account may invest to a limited degree in securities of foreign issuers, including issuers in developing countries. These investments are subject to special risks. See "Risk Factors, Securities and Investment Techniques -- Foreign Securities." INVESTMENT RESTRICTIONS. Each Account is subject to certain fundamental investment restrictions that are enumerated in detail in the SAI and may not be changed without shareholder approval. Each Accounts' investment objective and certain other policies are non-fundamental and may be changed by the Company's Board of Directors without shareholder approval. An Account's shareholders will be given 30 days' advance written notice of a change to an Account's investment objective. Prospectus Page 15 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. YOUR ACCOUNT - -------------------------------------------------------------------------------- HOW TO BUY SHARES YOU MAY PURCHASE SHARES OF AN ACCOUNT AT THE PUBLIC OFFERING PRICE through any securities broker-dealer having a sales agreement with CMFS or directly from CMFS, the Accounts' distributor. Certain minimum investment requirements may apply as set forth above in Your Shareholder Manual. All share purchase orders that fail to specify a class (except Liquid Account) will be invested in Class A shares. IF YOU ARE NEW TO CONNECTICUT MUTUAL, complete and sign an account application and mail it along with your check. All orders to purchase shares are subject to acceptance or rejection by the Company or CMFS. You may also open your account by wire as described in Your Shareholder Manual. If there is no application accompanying this prospectus, call 1-800-234-5606. IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an IRA, for the first time, you will need a special application. Retirement investing also involves its own investment procedures. Call 1-800-234-5606 for more information and a retirement application. PURCHASING CLASS A SHARES AND SHARES OF THE __LIQUID ACCOUNT Class A shares of each Account are sold at the share price next calculated after receipt of your purchase order, plus a sales charge as follows: - --------------------------------------------------------------------------------
INCOME ACCOUNT AND GOVERNMENT SECURITIES GROWTH ACCOUNT AND ACCOUNT TOTAL RETURN ACCOUNT ------------ ------------------------------------------- SALES SALES CHARGES DEALER CHARGES AS % OF REALLOWANCE AS % OF -------------------------- AS A % ------------ NET AMOUNT OFFERING OF OFFERING NET AMOUNT INVESTED PRICE PRICE INVESTED ------------ ------------ --------------- ------------ Less than $50,000............................................ 5.26% 5.00% 4.50% 4.17% $50,000 but less than $75,000................................ 4.71% 4.50% 4.00% 4.17% $75,000 but less than $100,000............................... 4.44% 4.25% 3.75% 4.17% $100,000 but less than $250,000.............................. 3.36% 3.25% 3.00% 3.36% $250,000 but less than $500,000.............................. 2.83% 2.75% 2.50% 2.83% $500,000 or more............................................. 0% 0% 0% DEALER REALLOWANCE AS A % OFFERING OF OFFERING PRICE PRICE ------------ --------------- Less than $50,000............................................ 4.00% 3.50% $50,000 but less than $75,000................................ 4.00% 3.50% $75,000 but less than $100,000............................... 4.00% 3.50% $100,000 but less than $250,000.............................. 3.25% 3.00% $250,000 but less than $500,000.............................. 2.75% 2.50% $500,000 or more............................................. 0%
- -------------------------------------------------------------------------------- No sales charge is imposed on purchases of Class A shares of an Account paid from automatic reinvestment of dividends and capital gain distributions made by that Account. The sales charge on Class A shares may be reduced and/or eliminated in certain cases as further described under "Reducing or Eliminating Your Sales Charge -- Class A Shares." The entire sales charge on Class A shares for CMFS retail sales is payable to CMFS and is used for sales and other distribution expenses. Upon notice to broker-dealers with whom it has sales agreements, CMFS may pay an amount up to the full applicable sales charge. CMFS may from time to time, at its own expense, provide promotional incentives including cash compensation in excess of the applicable sales charge to certain broker-dealers whose representatives have sold or are expected to sell significant amounts of shares of one or more of the Accounts. Broker-dealers to whom substantially the entire sales charge is paid may be deemed to be underwriters as that term is defined under the Securities Act of 1933. Shares of the Liquid Account are sold at the share price next calculated after receipt of your purchase order. There is no sales charge for direct purchases of Liquid Account shares, but such shares may be subject to a distribution fee. See "Management -- Distribution Plans." Prospectus Page 16 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. CONTINGENT DEFERRED SALES CHARGE -- __CLASS A SHARES Purchases of $500,000 or more of Class A shares are sold without an initial sales charge, but a CDSC of 1% may be imposed if you sell (or redeem) your shares within one year of purchase. The 1% charge will be assessed on an amount equal to the current market value or the original purchase price of the Class A shares sold, whichever is smaller. In determining whether a CDSC will be charged, it will be assumed that those Class A shares in your account which are not subject to a CDSC will be sold first. The CDSC may be waived on certain redemptions of Class A shares subject to such charge as described below under the caption "Purchasing Class B Shares -- Waiver of the CDSC." CMFS may, in its discretion, pay a commission which may be up to the full amount of the sales charge to its representatives or other broker-dealers who initiate and are responsible for such purchases. Concessions will be paid for sales in excess of $500,000 as follows:
AMOUNT OF TRANSACTION DEALER AT OFFERING PRICE CONCESSIONS CONCESSION - ---------------------------------- ----------- ----------- $500,000 up to $2,000,000......... 1.00% .90% $2,000,000 to $3,000,000.......... .80% .75% $3,000,000 to $5,000,000.......... .20% .15% Over $5,000,000................... .08% .075%
REDUCING OR ELIMINATING YOUR SALES CHARGE -- __CLASS A SHARES REDUCING YOUR SALES CHARGE. There are various methods by which you may qualify for a reduced sales charge on your investments in Class A shares. You may qualify for a reduced sales charge on your investments in Class A shares through COMBINED PURCHASES, STATEMENT OF INTENTION and RIGHTS OF ACCUMULATION. COMBINED PURCHASES. You may aggregate purchases of Class A shares of the Accounts, shares of the Liquid Account and Class A shares of other accounts in the Company with the purchases of the other persons listed below to achieve discounts in the applicable sales charges. The sales charge applicable to a current purchase of Class A shares of each Account by a person listed below is determined by adding the value of Class A shares to be purchased to the aggregate value (at current offering price) of Class A shares of any of the other Accounts in the Company and shares of the Liquid Account previously purchased and then owned, provided that CMFS is notified by you or your broker-dealer each time a purchase is made which would qualify. For example, if you are investing $75,000 in the Growth Account and your spouse owns Class A shares of other Accounts in the Company with a value of $75,000, you would pay a sales charge of 3.25% of the offering price of the new investment. Qualifying investments include those by you, your spouse and your children under the age of 21, if all parties are purchasing Class A shares for their own account(s), which may include tax qualified plans, such as an IRA or single participant Keogh-type plan, or by a company solely controlled by such individuals as defined in the 1940 Act. Reduced sales charges also apply to purchases by a trustee or other fiduciary if the investment is for a single trust, estate or single fiduciary account, including pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under the Code. Reduced sales charges apply to combined purchases by or for qualified employee benefit plans of a single corporation, or of corporations affiliated with each other in accordance with the 1940 Act. STATEMENT OF INTENTION (SOI). You may combine the current value of all Class A shares held in one or more Accounts and shares of the Liquid Account with the investment amounts intended over the next 13-month period to qualify for a reduced sales charge. The SOI may be backdated 90 days. The terms of the SOI are set forth in more detail in the Accounts' SAI. You must identify on the Application all Accounts whose values are to be combined. If the intended investment is not made within the 13-month period, you must remit the additional sales charges, or sufficient Class A shares or shares of the Liquid Account will be redeemed from your account to cover the sales charge. RIGHTS OF ACCUMULATION. The sales charge for new purchases of Class A shares of an Account will be determined by aggregating the net asset value of all the Accounts owned by the shareholder at the time of the new purchase. The rules listed under Combined Purchases may apply. You must identify on the Application all accounts to be linked for Rights of Accumulation. ELIMINATING YOUR SALES CHARGE. There are various methods by which you may eliminate sales charges on your investments in Class A shares. Prospectus Page 17 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Class A shares of an Account may be purchased without a sales charge by: (1) any purchaser, provided the total initial amount invested in any Account or Accounts totals $500,000 or more, including investments made pursuant to the Combined Purchases, Statement of Intention and Rights of Accumulation features described in this prospectus; (2) any participant in a qualified plan, provided that the total initial amount invested by the plan in any Account or Accounts totals $500,000 or more; (3) Directors of the Company and members of their immediate families; (4) NASD registered representatives whose employer consents to such purchases, and by the spouses and immediate family members of such representatives; (5) employee benefit plans sponsored by CMFS and its affiliated companies; (6) one or more members of a group of at least 1,000 persons (and persons who are retirees from such group) engaged in a common business, profession, civic or charitable endeavor or other activity, and the spouses and minor dependent children of such persons, pursuant to a marketing program between CMFS and such group; (7) any holder of a variable annuity contract issued in New York State by Connecticut Mutual through the Panorama Separate Account which is beyond the applicable surrender charge period and which is used to fund a qualified plan, who exchanges the variable annuity contract for Class A shares of the Company; and (8) an institution acting as a fiduciary on behalf of an individual or individuals, where such institution is directly compensated by the individual(s) for recommending the purchase of the shares of the Company, provided the institution has an agreement with CMFS. Purchases of Class A shares made pursuant to (1) and (2) above may be subject to a CDSC. REINSTATEMENT PRIVILEGE. A shareholder, who has made a partial or complete redemption of Class A shares from an Account, may reinvest all or part of the redemption proceeds in Class A shares of the same Account without imposition of a sales charge with respect to the amount invested, provided such reinvestment is effected within 60 days after the date of the redemption. National Financial Data Services (NFDS) must receive from the shareholder both a written request for reinvestment and a check. The reinvestment will be made at the next calculated net asset value after receipt. Redemptions are taxable transactions, and special tax rules may apply if a reinvestment occurs. Each shareholder should consult his/her own tax adviser as to the tax consequences of any redemption and/or reinvestment. PURCHASING CLASS B SHARES The public offering price of the Class B shares of each Account is the next determined net asset value per share. No initial sales charge is imposed. A CDSC, however, is imposed on certain redemptions of Class B shares. Since the Class B shares are sold without an initial sales charge, the Account receives the full amount of the investor's purchase payment. Orders for Class B shares for $500,000 or more will be treated as orders for Class A shares or declined. The amount of any applicable CDSC will be calculated by multiplying the lesser of the original purchase price or the net asset value of such shares at the time of redemption by the applicable percentage shown in the table below. Accordingly, no CDSC is imposed on increases in net asset value above the original purchase price.
REDEMPTION DURING CDSC - --------------------------------------------- ------ 1st Year Since Purchase...................... 5% 2nd Year Since Purchase...................... 5% 3rd Year Since Purchase...................... 4% 4th Year Since Purchase...................... 4% 5th Year Since Purchase...................... 2% 6th Year Since Purchase...................... 1% Thereafter................................... 0%
In determining whether a CDSC is applicable to a redemption, the calculation will be made in a manner that results in the lowest possible rate. It will be assumed that the redemption is made first of amounts representing shares acquired pursuant to the reinvestment of dividends and distributions; then of amounts representing the cost of shares purchased seven years or more prior to the redemption; and finally of amounts representing the cost of shares held for the longest period of time within the applicable six-year period. Class B shares of an Account that are redeemed will not be subject to a CDSC to the extent that the value of such shares represents: (1) reinvestment of dividends or capital gain distributions or (2) shares redeemed more than six years after their purchase. Redemptions of most other Class B shares will be subject to a CDSC. See "Waivers of the CDSC." Proceeds from the CDSC are paid to CMFS and are used in whole or part to defray CMFS' expenses related to providing distribution-related Prospectus Page 18 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. services to the Accounts in connection with the sale of Class B shares, including the payment of compensation to broker-dealers. Class B shares will automatically convert into Class A shares on the first day of the month that is eight years after the purchase date, except as noted below. Class B shares acquired by exchange from Class B shares of another Account in the Company will convert into Class A shares based on the date of the initial purchase and the applicable CDSC. Class B shares acquired through reinvestment of distributions will convert into Class A shares based on the date of the initial purchase to which such shares relate. For this purpose, Class B shares acquired through reinvestment of distributions will be attributed to particular purchases of Class B shares in accordance with such procedures as the Directors may determine from time to time. The conversion of Class B shares to Class A shares is subject to the continuing availability of a ruling from the Internal Revenue Service, which the Company has obtained, or an opinion of counsel that such conversions will not constitute taxable events for federal tax purposes. There can be no assurance that such ruling or opinion will continue to be in effect at the time any particular conversion would occur. The conversion of Class B shares to Class A shares will not occur if such ruling is no longer in effect and such an opinion is not available and, therefore, Class B shares would continue to be subject to higher expenses than Class A shares for an indeterminate period. WAIVER OF THE CDSC. Except as otherwise noted, the CDSC is waived in the case of redemptions of Class A shares subject to a CDSC, Class B shares or Liquid Account shares subject to a CDSC made: (1) by the estate of the deceased shareholder; (2) upon the disability of the shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (Code); (3) for retirement distributions (or loans) to participants or beneficiaries from retirement plans qualified under Sections 401(a) or 403(b)(7) of the Code, or from IRAs, deferred compensation plans created under Section 457 of the Code, or other employee benefit plans; (4) as tax-free returns of excess contributions to such retirement or employee benefit plans; (5) in whole or in part, in connection with shares sold to any state, county, or city, or any instrumentality, department, authority, or agency thereof, that is prohibited by applicable investment laws from paying a sales charge or commission in connection with the purchase of shares of any registered investment management company; (6) in connection with the redemption of shares of the Company due to a combination with another investment company by virtue of a merger, acquisition or similar reorganization transaction; (7) in connection with the Company's right to involuntarily redeem or liquidate an Account; (8) in connection with automatic redemptions of Liquid Account shares, Class A shares and Class B shares in certain retirement plan accounts pursuant to a Systematic Withdrawal Plan but limited to no more than 12% of the original value annually; and (9) as involuntary redemptions of shares by operation of law, or under procedures set forth in the Company's Articles of Incorporation, or as adopted by the Board of Directors of the Company. - -------------------------------------------------------------------------------- HOW TO SELL SHARES You can arrange to take money out of your account(s) at any time by selling (redeeming) some or all of your shares. Your shares will be sold at the next share price calculated after your order is received in good form. Share price is normally calculated at 4:00 p.m. Eastern Time. If you own both Class A and Class B shares in an Account, the Class A shares will be redeemed first unless you specify otherwise. IF YOU SELL SHARES OF THE LIQUID ACCOUNT which were acquired by an exchange from Class B shares or Class A shares subject to a CDSC of any of the other Accounts in the Company, such shares of the Liquid Account when redeemed are subject to the CDSC rate of the original shares purchased minus a credit for the Rule 12b-1 fees, if any, paid while in the Liquid Account. See "How to Exchange Shares". TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods described below. TO SELL SHARES IN A RETIREMENT ACCOUNT, your request must be made in writing, except for exchanges to other Accounts, which can be requested by phone or in writing. Call 1-800-322-CMIA for a retirement distribution form. Prospectus Page 19 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least 100 shares in the account to keep it open. TO SELL SHARES BY WIRE, you must sign up for this service in advance by completing the appropriate sections in the Application. TO INITIATE A TELEPHONE REDEMPTION, call 1-800-322-CMIA (select option "2"). You must have your Account name, account number and the taxpayer identification number of the account available. Telephone redemptions are limited to $50,000 per day unless prior authorization has been obtained through a signature guaranteed letter of authorization. If you do not wish to have telephone transaction privileges on your account, you must complete the appropriate section on the Application. CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. Signature guarantees are designed to protect you and the Company from fraud. Your request to sell shares must be made in writing and include a signature guarantee if any of the following situations apply: / / You request in writing to redeem more than $50,000 worth of shares, / / Your account registration has changed within the last 30 days, / / The check is being mailed to a different address than the one on our account (record address), / / The check is being made payable to someone other than the account owner, or / / The redemption proceeds are being transferred to an account with a different registration. You should be able to obtain a signature guarantee from a bank, broker, dealer, credit union (if authorized under state law), securities exchange or association, clearing agency or savings association. The Company reserves the right to waive the requirement of a signature guarantee in certain limited circumstances. A NOTARY PUBLIC CANNOT PROVIDE A SIGNATURE GUARANTEE. SELLING SHARES IN WRITING BY MAIL Write a "letter of instruction" with: / / Your name, / / The Account's name, / / Your account number, / / The class of shares to be redeemed, / / The dollar amount or number of shares to be redeemed, and any other applicable requirements listed above in Your Shareholder Manual. / / Mail the letter of instruction to NFDS, the Company's transfer agent, at: Connecticut Mutual Investment Accounts, Inc. P.O. Box 419694 Kansas City, Missouri 64179-0948 / / Unless otherwise instructed, the Company will send a check to the address of record. CHECK WRITING (LIQUID ACCOUNT ONLY) Shareholders may redeem shares of the Liquid Account by check. See "Investor Services -- Check Writing" below. REDEMPTIONS OF CERTAIN SHAREHOLDER ACCOUNTS In order to reduce the expense of maintaining numerous small accounts, the Company reserves the right to involuntarily close any shareholder's account (other than an IRA) that has been open at least 24 months and has fewer than 100 shares if, within 30 day's after notification by the Company, the affected shareholder does not increase the size of his account to the required level. In addition, the Board of Directors may cause the Company to redeem at their net asset value shares held by a shareholder in any Account if the shareholder has failed to supply a correct, certified social security or other taxpayer identification number required to be obtained by the Company. - -------------------------------------------------------------------------------- HOW TO EXCHANGE SHARES YOU MAY EXCHANGE YOUR SHARES of an Account for shares of the same class of any other Account in the Company or for shares of the Liquid Account. To obtain a current prospectus for other Accounts, please call 1-800-322-CMIA (select option "3"). You should consider the differences in investment objectives and expenses of an Account as described in its prospectus before making an exchange. Exchanges are taxable transactions and may be subject to special tax rules about which you should consult your own tax adviser. All exchanges are subject to the following exchange restrictions: / / The Account you are exchanging into must be registered for sale in your state. Prospectus Page 20 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. / / You may exchange only between Accounts that are registered in the same name, address and taxpayer identification number. / / You may only exchange for shares of the same class of another Account or for shares of the Liquid Account (see below). / / The minimum amount you may exchange from one Account into another is $500 or the total value of the Account if less than $500. / / IF YOU WISH TO MAKE MORE THAN 12 EXCHANGES IN A 12-MONTH PERIOD, AN EXCHANGE FEE OF .75% OF THE NET ASSET VALUE OF THE SHARES REDEEMED WILL BE CHARGED. EXCHANGES MADE PURSUANT TO THE DCA PROGRAM (SEE "INVESTOR SERVICES") ARE NOT SUBJECT TO THIS FEE. / / Exchanges of shares of the Liquid Account for shares of any other Account which carry a front-end sales charge are subject to the sales charge applicable to such other Account. Shares of the Liquid Account acquired by exchange of shares of another Account on which a front-end sales charge was previously paid or which are subject to a CDSC are exchanged at net asset value. However, shares of the Liquid Account acquired through an exchange of shares which are subject to a CDSC will continue to be subject to a CDSC upon redemption. The rate of this charge will be the rate in effect for the original shares at the time of exchange without counting the time such shares were held as Liquid Account shares minus a credit for the Rule 12b-1 fees, if any, paid while in the Liquid Account. / / In addition to exchanges into and out of the Liquid Account, you may exchange your shares of other Accounts for shares of the same class of any other Account without the imposition of a sales charge. With respect to Class B shares, if you exchange such shares for Class B shares of another Account, the CDSC will be calculated based on the date on which you acquired the original Class B shares. / / An Account reserves the right to refuse exchange purchases by any person or group if, in the Manager's judgment, an Account would be unable to invest the money effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected. / / Your exchanges may be restricted or refused if an Account receives or anticipates simultaneous orders affecting significant portions of the Account's assets. In particular, a pattern of exchanges that coincides with a "market timing" strategy may be disruptive to the Account. / / Although an Account will attempt to give you prior notice whenever it is reasonably able to do so, it may impose these restrictions at any time. Each Account reserves the right to terminate or modify the exchange privilege in the future. - -------------------------------------------------------------------------------- INVESTOR SERVICES CONNECTICUT MUTUAL PROVIDES A VARIETY OF SERVICES TO HELP YOU MANAGE YOUR ACCOUNT. 24-HOUR SERVICE Call 1-800-322-CMIA (select option "1") for the following automated services. After normal business hours, please leave a message and someone will return your call during normal business hours. / / Account balance / / Last distribution / / Prices / / Account distributions / / Service representative / / Duplicate statement / / Order checks (Liquid Account only) / / Change PIN (Personal Identification Number) / / Duplicate tax forms INFORMATION SERVICES TELEPHONE REPRESENTATIVES are available during normal business hours to provide the information and services you need. STATEMENTS AND REPORTS sent to you include the following: Confirmation statements (after every transaction, except reinvestments, automatic investments and automatic payroll investments, that affects your account balance or your account registration), / / Quarterly consolidated account statements which summarize all account activity year-to-date, and / / Financial reports (every six months). Prospectus Page 21 Connecticut Mutual Investment Accounts, Inc. Call 1-800-322-CMIA (select option "2") if you need additional copies of financial reports or historical account information. INVESTOR SERVICES One easy way to pursue your financial goals is to invest money regularly. The Company offers convenient services that let you transfer money into your account, or between accounts, automatically. While regular investment plans do not guarantee a profit and will not protect you against loss in a declining market, they can be an excellent way to invest for retirement, a home, educational expenses and other long-term financial goals. Certain restrictions apply. Call 1-800-322-CMIA for more information. AUTOMATIC INVESTMENT PLAN lets you make regular monthly investments through an automatic withdrawal from your bank account ($50 minimum per Account) and you can enroll when you establish your account. Forms are available to initiate this program on existing accounts from your registered representative, or by calling 1-800-322-CMIA. DOLLAR COST AVERAGING (DCA) INVESTMENT PROGRAMS let you set up monthly exchanges in amounts of $100 or more from one Account to the same class of shares of any other Account or of the Liquid Account. Sales charges may apply. Use of the DCA PROGRAM permits the purchase of shares of an Account on a scheduled basis which disregards fluctuations in net asset value. All shareholders accounts involved in a DCA Program must have like registrations. AUTOMATIC DIVIDEND DIVERSIFICATION (ADD) lets you automatically reinvest dividends and capital gain distributions paid by one Account into shares of the same class of another Account or of the Liquid Account. The number of shares reinvested will be determined using the price in effect for the receiving Account on the dividend payment date for the Account whose dividend is to be invested. Sales charges may apply to dividends from the Liquid Account investing into Class A shares of another Account. All shareholder accounts involved in an ADD program must have like registrations. EXCHANGE PRIVILEGE. You may exchange your shares of an Account for shares of the same class of any other Account in the Company or of the Liquid Account. You may exchange your shares of the Liquid Account for shares of any other Account in the Company. To obtain a current prospectus for any Accounts in the Company, please call 1-800-322-CMIA (select option "3"). You should consider the differences in investment objectives and expenses of an Account as described in its prospectus before making an exchange. Exchanges are taxable transactions and may be subject to special tax rules about which you should consult your own tax adviser. For complete policies and restrictions governing exchanges, including circumstances under which a shareholder's exchange privilege may be suspended or revoked, see "How to Exchange Shares." SYSTEMATIC WITHDRAWAL PLANS let you set up monthly, quarterly, semi-annual or annual redemptions of Class A shares and Liquid Account shares not subject to a CDSC from any account with a value of $10,000 or more. You may direct the Company to make regular payments in fixed dollar amounts of $50 or more, or in an amount equal to the value of a fixed number of shares. Payments can be directed to the shareholder or to someone other than the registered owner(s) of the account. If this privilege is requested when the account is established, no signature guarantee is needed. If this privilege is added to an existing account and payments are directed to someone other than the registered owner(s) of the account, a signature guarantee is required on the SYSTEMATIC WITHDRAWAL PLAN application. The Company reserves the right to institute a charge for this service. Systematic Withdrawal Plans for Class B shares of an Account and for Liquid Account shares subject to a CDSC are permitted only for payments of required distributions from retirement plan accounts for a shareholder who has attained age 70 1/2. The CDSC will be waived with respect to such redemptions but only if such redemptions are limited to no more than 12% of the original value of the account. MAINTAINING A SYSTEMATIC WITHDRAWAL PLAN AT THE SAME TIME REGULAR ADDITIONAL INVESTMENTS ARE BEING MADE INTO ANY ACCOUNT EXCEPT THE LIQUID ACCOUNT, IS NOT RECOMMENDED BECAUSE A SALES CHARGE WILL BE IMPOSED ON THE NEW SHARES AT THE SAME TIME SHARES ARE BEING REDEEMED TO MAKE THE PERIODIC PAYMENTS UNDER THE SYSTEMATIC WITHDRAWAL PLAN. The Company may amend or terminate the Systematic Withdrawal Plan on 30 days' prior written notice to any participating shareholders. Minimums may be waived for the Liquid Account Prospectus Page 22 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. if used for payment of premiums due on any of the Connecticut Mutual affiliated companies. CHECK WRITING (LIQUID ACCOUNT ONLY). Shareholders may redeem shares of the Liquid Account, for which certificates have not been issued, by writing checks in an amount of $200 or more. The check is presented to NFDS for payment through normal banking channels. These checks may be used in the same manner as any other checks payable through NFDS (except that they may not be certified) and are payable upon review. This check redemption service is not, however, the equivalent of a checking account in the shareholder's name. All checks drawn by Liquid Account shareholders electing this option are drawn on a single account carried by NFDS in the Liquid Account's name. A shareholder's interest in the Account is not covered by insurance provided by the Federal Deposit Insurance Corporation or any other government agency. There is no charge to the shareholder for redemptions by use of checks. Shareholders electing this option are subject to the procedures, rules and regulations established by NFDS with respect to clearance and collection of checks. NFDS will not honor checks which are in amounts exceeding the value of the shares in the shareholder's account at the time the check is presented for payment and will not honor checks drawn against uncollected funds. Since the value of a shareholder's account changes daily, the total value of the account may not be determined in advance. Therefore, shareholders should not attempt to close their accounts by check. Any CDSC payable with respect to any Liquid Account shares redeemed by check will be debited from the shareholder's account. This service may be terminated at any time by the Company or by NFDS upon notice to shareholders. - -------------------------------------------------------------------------------- TRANSACTION DETAILS THE COMPANY IS OPEN FOR BUSINESS each day that the New York Stock Exchange (NYSE) is open. The Company normally calculates an Account's net asset value as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern Time. AN ACCOUNT'S NET ASSET VALUE (NAV) PER SHARE is the value of a single share. The NAV of a class of an Account is computed by adding the value of its investments, cash, and other assets, subtracting the liabilities attributable to the class, and then dividing the result by the number of shares of the class outstanding. The NAV of the Liquid Account is calculated in the same manner without regard to classes. The assets of each Account (except the Liquid Account) are valued primarily on the basis of market quotations. If quotations are not readily available, assets are valued by a method that the Board of Directors believes accurately reflects fair value. The assets of Liquid Account are valued at their amortized cost pursuant to procedures established by the Board of Directors. Foreign securities are valued on the basis of quotations from the primary market in which they are traded, and are translated from the local currency into U.S. dollars using current exchange rates. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of regular trading on the NYSE. The values of such securities used in computing the net asset value of an Account's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of regular trading on the NYSE. Occasionally, events which affect the values of such securities and such exchange rates may occur between the times at which they are determined and the close of regular trading on the NYSE and will, therefore, not be reflected in the computation of an Account's net asset value. If events materially affecting the value of such securities occur during such period, then these securities are valued at their fair value using a method determined in good faith by the Board of Directors. WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your Social Security or other taxpayer identification number is correct and that you are not subject to 31% backup withholding for failing to report interest or dividends to the IRS. If you are subject to backup withholding, the IRS can require the Company to withhold 31% of your taxable distributions and, except for Liquid Prospectus Page 23 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Account if a constant NAV is maintained, the proceeds of redemptions (including exchanges). YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Telephone representatives will request personalized security codes or other information and will also record calls. If reasonable procedures such as those described in the Prospectus are not followed, the Company may be liable for any loss due to unauthorized or fraudulent telephone instructions. In all other cases, neither the Company nor CMFS will be liable for acting upon telephone instructions made in accordance with the telephone transaction procedures described in this Prospectus. You should verify the accuracy of your confirmation statements immediately after you receive them. IF YOU DO NOT WANT THE ABILITY TO REDEEM AND EXCHANGE BY TELEPHONE, CALL 1-800-322-CMIA FOR INSTRUCTIONS. See the Account Application. IF YOU ARE UNABLE TO REACH THE COMPANY BY PHONE (for example, during periods of unusual market activity), consider placing your order by mail or overnight mail. EACH ACCOUNT RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period of time. Each Account also reserves the right to reject any specific purchase order, including certain purchases by exchange. See "How to Exchange Shares." Purchase orders may be refused if, in the Manager's opinion, they are of a size that would disrupt management of an Account. WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the next offering price calculated after your order is received and accepted. Note the following: / / All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. You may not purchase shares with a third party check. / / If you buy shares by check, and then redeem those shares by a method other than by exchange to another Account in the CMIA Family of Accounts, mailing the payment of the proceeds may be delayed for up to fifteen calendar days to ensure that your check has cleared. / / If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees the Account or its transfer agent has incurred. TO AVOID THE COLLECTION PERIOD associated with checks, consider buying shares by bank wire, U.S. Postal money order, U.S. Treasury check, Federal Reserve check, or direct deposit instead. WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the next NAV calculated after your request is received and accepted. Note the following: / / Normally, redemption proceeds will be mailed to you on the next business day, but under unusual circumstances, it may take up to seven days to pay you. / / As mentioned above, an Account may hold payment on redemptions until it is reasonably satisfied that investments made by check have been collected, which can take up to 15 calendar days. / / Redemptions may be suspended or payment dates postponed when the NYSE is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the SEC. SHARE CERTIFICATES. Shares are credited to your account and certificates are not issued unless specifically requested. You may request share certificates by writing to the transfer agent, NFDS, P.O. Box 419694, Kansas City, Missouri, 64179-0948. There is no cost for issuing share certificates. Transfers, exchanges and redemptions of shares will be more complicated if certificates have been issued. If your share certificate is lost or misplaced you will be required to pay a fee and furnish a bond satisfactory to the Company's transfer agent (usually in the amount of 1.5% of the face value of the lost certificate) before the shares can be transferred or redeemed, or a replacement certificate issued. Prospectus Page 24 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. MANAGEMENT - -------------------------------------------------------------------------------- THE MANAGER Each Account is managed by the Manager, which handles its business affairs and chooses the investments for the Account. The principal business address of the Manager is 10 State House Square, Hartford, Connecticut. The Manager's mailing address is 140 Garden Street, Hartford, Connecticut 06154. The Manager also manages the investments of Connecticut Mutual Financial Services Series Fund I, Inc., a diversified investment management company offering its series of common stock as funding vehicles for variable annuity contracts issued by Connecticut Mutual and CM Life Insurance Company ("CM Life"). Connecticut Mutual is the parent company for the Manager and CM Life. The persons primarily responsible for the day-to-day management of each Account are listed below. - --------------------------------------------------------------------------------
YEAR BECAME ACCOUNT PORTFOLIO MANAGER PORTFOLIO MANAGER BUSINESS EXPERIENCE (LAST 5 YEARS) - -------------- --------------------------------- ----------------- ------------------------------------------------- Liquid Account John W. Powell, Jr. 1994 Portfolio Manager, Money Market -- G.R. Phelps (1994-present); Portfolio Manager, Fixed Income -- CML (1993-present); Investment Officer, Fixed Income -- CML (1990-1993) Income Account Stephen F. Libera, C.F.A. 1985 Vice President and Senior Portfolio Manager, Fixed Income -- G.R. Phelps, (1989-Present) William H. Jefferis 1993 Portfolio Manager, Fixed Income -- CML (1993-present); Investment Officer, Fixed Income -- CML (1990-1993) Government Stephen F. Libera, C.F.A. 1985 Vice President and Senior Portfolio Manager, Securities Fixed Income -- G.R. Phelps (1989-Present) Account William H. Jefferis 1993 Portfolio Manager, Fixed Income -- CML (1993-present); Investment Officer, Fixed Income -- CML (1990-1993) Total Return Michael C. Strathearn, C.F.A. 1988 Portfolio Manager, Equities -- CML (1988-Present) Account Peter M. Antos, C.F.A. 1989 Vice President and Senior Portfolio Manager, Equities -- G.R. Phelps (1989-Present) Stephen F. Libera, C.F.A. 1985 Vice President and Senior Portfolio Manager, Fixed Income -- G.R. Phelps, (1985-Present) John W. Powell, Jr. 1994 Portfolio Manager, Money Market -- G.R. Phelps (1994-present); Portfolio Manager, Fixed Income -- CML (1993-present); Investment Officer, Fixed Income -- CML (1990-1993)
Prospectus Page 25 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
YEAR BECAME ACCOUNT PORTFOLIO MANAGER PORTFOLIO MANAGER BUSINESS EXPERIENCE (LAST 5 YEARS) - -------------- --------------------------------- ----------------- ------------------------------------------------- Growth Account Peter M. Antos, C.F.A. 1989 Vice President and Senior Portfolio Manager, Equities -- G.R. Phelps (1989-Present) Michael C. Strathearn, C.F.A. 1988 Portfolio Manager, Equities -- CML (1988-Present) Kenneth B. White, C.F.A. 1992 Portfolio Manager, Equities -- CML (1992-Present); Senior Investment Officer; Equities -- CML (1987-1992)
CMFS distributes and markets the Accounts and their services. NFDS performs transfer agent servicing and dividend disbursing functions for each Account. - -------------------------------------------------------------------------------- BREAKDOWN OF EXPENSES Like all mutual funds, each Account pays fees and expenses related to its daily operations. These Account fees and expenses are neither billed directly to shareholders nor deducted from individual shareholder accounts but are paid out of an Account's assets and are reflected in its share price or dividends. Each Account has entered into an investment advisory agreement with the Manager pursuant to which the Account pays a management fee to the Manager for managing its investments and business affairs. The Manager provides administrative services to each Account, including providing accounting, administrative and clerical personnel and monitoring the activities of the transfer agent, custodian and independent auditors of the Accounts. The Accounts also pay other expenses, which are explained below. MANAGEMENT FEES LIQUID ACCOUNT The Liquid Account pays a monthly fee to the Manager which is based on a stated percentage of the Liquid Account's average daily net asset value as follows:
NET ASSET VALUE ANNUAL RATE - -------------------------------- ----------- First $200,000,000.............. 0.50% Next $100,000,000............... 0.45% Amount over $300,000,000........ 0.40%
For the fiscal year ended December 31, 1994, the Liquid Account paid management fees equal to 0.50% of its average daily net assets. GOVERNMENT SECURITIES ACCOUNT, INCOME ACCOUNT, GROWTH ACCOUNT AND TOTAL RETURN ACCOUNT Each other Account pays a monthly fee to the Manager which is based on a stated percentage of the Account's average daily net asset value as follows:
NET ASSET VALUE ANNUAL RATE - -------------------------------- ----------- First $300,000,000.............. 0.625% Next $100,000,000............... 0.500% Amount over $400,000,000........ 0.450%
For the fiscal year ended December 31, 1994, each of the Income Account, Government Securities Account, Total Return Account and Growth Account paid management fees equal to 0.625% of its average daily net assets. From time to time, G.R. Phelps may agree not to impose all or a portion of its advisory fee and/or undertake to pay or reimburse an Account for all or a portion of its expenses not otherwise required to be borne or reimbursed by G.R. Phelps. Any such fee reduction or undertaking may be discontinued or modified by G.R. Phelps at any time. Expense limitation arrangements, which may be terminated at any time without notice, can decrease an Account's expenses and increase its performance. OTHER EXPENSES Each Account is also responsible for expenses not expressly stated to be payable by the Manager under the Account's Investment Advisory Agreement. Each Account pays other expenses, such as legal, audit and custodian fees, proxy solicitation costs and the compensation of directors who are Prospectus Page 26 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. not affiliated with Connecticut Mutual. State Street Bank and Trust Company provides custodian services to each Account. Each Account contracts with NFDS to perform many transaction and accounting functions. These services include processing shareholder transactions, valuing the Account's investments and handling securities loans. For the fiscal year ended December 31, 1994, the Liquid Account, Income Account, Government Securities Account, Total Return Account and Growth Account paid NFDS fees (as a percentage of their average net assets) equal to 0.29%, 0.15%, 0.16%, 0.24%, and 0.26%, respectively. DISTRIBUTION PLANS Each Account has adopted a distribution plan for both Class A shares (Class A Plan) and Class B shares (Class B Plan) and, with respect to the Liquid Account, for its shares (Liquid Account Plan) designed to meet the requirements of Rule 12b-1 under the 1940 Act and the sales charge rules of the NASD. Under the Class A Plan of each Account, each Account may make payments for personal services and/or the maintenance of shareholder accounts to account executives of CMFS and other broker-dealer firms with whom CMFS has agreements in amounts not exceeding 0.25% of the average daily net assets of the Account's Class A shares for any fiscal year. The Class A Plans for each Account became effective on January 1, 1995, and no amounts were paid by such Accounts pursuant to any Class A Plan during fiscal year 1994. Under the Liquid Account Plan, the Liquid Account reimburses CMFS for its actual expenses associated with the sale of shares of the Liquid Account. This may include payments to third parties, such as banks or broker-dealers, that provide shareholder support services or engage in the sale of shares of the Liquid Account. However, payments to CMFS from the assets of the Liquid Account cannot exceed 0.10% of the average daily net assets of the Liquid Account's shares. In addition, the Liquid Account Plan provides that the Liquid Account will not reimburse CMFS for expenses incurred in a given year if the Liquid Account's aggregate expenses for that year exceed 1.0% of the value of its aggregate daily net assets. CMFS temporarily agreed not to impose any reimbursement to which it may be entitled pursuant to the Liquid Account Plan during the years ended December 31, 1993 and 1994. The Liquid Account may pay, in 1995, a portion of the maximum amount payable annually under the Liquid Account Plan, which is 0.10% of the average daily net assets of the Liquid Account. Under each Account's Class B Plan, such Account may pay CMFS a service fee at the annualized rate of up to 0.25% of the average daily net assets of the Account's Class B shares for its expenditures incurred in servicing and maintaining shareholder accounts, and may pay CMFS a distribution fee at the annualized rate of up to 0.75% of the average daily net assets of the Account's Class B shares for its expenditures incurred in providing services as distributor. Expenses incurred under the Class B Plan in excess of 1.00% annually may be carried forward for reimbursement in subsequent years as long as the Class B Plan continues in effect. Each of the Class A Plans, Class B Plans and the Liquid Account Plan were approved, on behalf of the respective Account, by a majority of the Company's Directors who are not interested persons of the Company and who have no financial interest in the respective Plan. Neither a Class A Plan, Class B Plan nor the Liquid Account Plan may be amended to increase materially the annual percentage limitation of average net assets that may be spent for the services described in a Class A Plan or Class B Plan or the Liquid Account Plan without the approval of the shareholders of the affected Account. Any unreimbursed expenses under a Class A Plan or the Liquid Account Plan are not carried beyond one year from the date of incurrence. PORTFOLIO TURNOVER RATES For the fiscal year ended December 31, 1994, the portfolio turnover rates for the Income Account, Government Securities Account, Total Return Account and Growth Account were 62.88%, 156.9%, 115.01% and 98.46%, respectively. High portfolio turnover rates (above 100%) increase transaction costs and may increase taxable capital gains. The Manager considers these effects when evaluating the anticipated benefits of that turnover. PORTFOLIO TRANSACTIONS AND BROKERAGE The Manager is primarily responsible for placing orders for the portfolio transactions of each Account. In placing orders, it is the policy of the Manager to seek to obtain the most favorable net results, taking into account various factors, Prospectus Page 27 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. including financial responsibility, quality of execution, price, dealer spread or commissions, if any, size of the transaction, difficulty of execution, the provision of research and other services rendered. As a result, while the Manager seeks reasonably competitive spreads or commissions, the commissions paid to a broker may be greater than the amount another firm might charge, provided the Manager determines in good faith that the amount of such commission is reasonable in relation to the value of the brokerage services and research information provided by such broker. Such information may be used by the Manager in managing all of its accounts and not all of such information may be used in managing the Accounts. In selecting other brokers, each Account may also consider the sale of its shares effected through such other brokers as a factor in their selection, provided the Account obtains the best price and execution of orders. Money market securities and other fixed income securities in which the Accounts may invest are traded primarily in the over-the-counter (OTC) market. For transactions effected in the OTC market, the Accounts intend to deal with the primary market-makers in the securities involved, unless a more favorable result is obtainable elsewhere. Commission rates on foreign exchanges are generally fixed and are generally higher than negotiated commission rates available in the United States. MERGER OF PARENT OF G.R. PHELPS The Boards of Directors of Connecticut Mutual Life Insurance Company (the parent company to G.R. Phelps) ("CML") and Massachusetts Mutual Life Insurance Company ("MassMutual") have approved a plan of merger pursuant to which CML would merge with and into MassMutual. The agreement was signed on September 13, 1995. The merger, if consummated, will result in the Adviser becoming a wholly-owned subsidiary of MassMutual. The merger is expected to be consummated on or about December 31, 1995, subject to the approval of certain policy holders and insureds of CML and MassMutual and applicable regulatory authorities. Consummation of the merger may result in an assignment, and consequently a termination, of each existing investment management agreement between the Adviser and the Fund and any sub-investment management agreement among the Adviser, Sub-Adviser and the Fund. Fund shareholders on the record date will be asked to vote on new investment management agreements to become effective at or about the time the transaction is completed. - -------------------------------------------------------------------------------- DIVIDENDS, CAPITAL GAINS AND TAXES - -------------------------------------------------------------------------------- It is the Company's intention to distribute all or substantially all the net investment income and net realized capital gains, if any, of each Account for each taxable year. For dividend purposes, net investment income of each Account will consist of all payments of dividends received or interest accrued by such Account less the estimated expenses of such Account (including fees payable to the Manager). Dividends from net investment income of the Growth Account and Total Return Account are declared and paid semi-annually. Dividends from net investment income of the Government Securities Account and Income Account are declared monthly and paid monthly. Dividends from net investment income of the Liquid Account are declared and accrued daily and paid monthly. Dividends for the Liquid Account are not paid on shares until the day following the date on which the shares are issued. All realized net short-term capital gains in excess of net long-term capital losses of an Account, if any, and all realized net long-term capital gains in excess of net realized short-term capital losses of the Account, if any, are declared and paid at least annually. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full and fractional shares of each Account. Prospectus Page 28 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Dividends from each Account's net investment income, certain net foreign exchange gains and net short-term capital gains are taxable as ordinary income, and dividends from each Account's net long-term capital gains are taxable as long-term capital gains. For federal income tax purposes, all dividends are taxable as described above whether a shareholder takes them in cash or reinvests them in additional shares of the Account. Certain dividends paid in January may be treated as if they were received on December 31 of the prior year. Information as to the federal tax status of dividends and distributions will be provided annually. Each Account has elected to be treated, has qualified and intends to continue to qualify for treatment as a "regulated investment company" under Subchapter M of the Code, so that it will not pay federal income taxes on income and capital gains provided such income and capital gains are distributed to shareholders within the time period prescribed by the Code. Under the Code, an Account will be subject to a nondeductible 4% excise tax on a portion of its undistributed income and capital gains if it fails to meet certain distribution requirements with respect to each calendar year. Each Account intends to make distributions in a timely manner and accordingly does not expect to be subject to the excise tax. A portion of any dividend income received by an Account from U.S. domestic corporations and distributed as a dividend to its corporate shareholders may be eligible for the 70% dividends-received deduction, subject to certain conditions and limitations under the Code. An Account may be subject to foreign withholding or other foreign taxes with respect to income and, in some cases, capital gains from its foreign investments. In some cases, it is possible that these taxes may be reduced under applicable income tax treaties. A state income (and possibly local income and/or intangible property) tax exemption is generally available to the extent an Account's distributions are derived from interest on (or, in the case of intangibles taxes, the value of its assets is attributable to) certain U.S. Government obligations, provided in some states that certain thresholds for holdings of such obligations and/or reporting requirements are satisfied. Accordingly, each Account will report annually to its shareholders the percentage of interest income earned from such securities during the preceding year. Each shareholder is advised to consult his own tax adviser regarding the exemption, if any, of such income under applicable state and local law. Redemptions (including exchanges and repurchases) of shares are taxable transactions in which a shareholder may realize a gain or loss. No such gain or loss would normally arise for transactions in shares of the Liquid Account, provided that it maintains a stable $1.00 per share net asset value, except to the extent a loss may result from the imposition of a CDSC. Special tax rules may apply to the calculation of gains or losses and the deductibility of any losses in particular circumstances. Dividends and other distributions and, except for the Liquid Account if it maintains a constant NAV, the proceeds of redemptions or repurchases of Account shares paid to individuals and other non-exempt payees will be subject to a 31% backup withholding of federal income tax if the Account is not provided with the shareholder's correct taxpayer identification number and certification that the number is correct and the shareholder is not subject to backup withholding or the Account receives notice from the Internal Revenue Service (the "IRS") or a broker that such withholding applies. Please refer to the Account Application for additional information. The description above relates only to U.S. federal income tax consequences for shareholders who are U.S. persons, I.E., U.S. citizens or residents or U.S. corporations, partnerships, trust or estates, and who are subject to U.S. federal income tax. Shareholders should consult their own tax advisors regarding state, local and other applicable tax laws. Prospectus Page 29 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. THE COMPANY - -------------------------------------------------------------------------------- Each Account is a mutual fund: an entity that pools shareholders' money and invests it toward specified goals. In technical terms, each Account is a separate diversified portfolio or "series" of the Company, an open-end management investment company which was organized as a corporation under the laws of Maryland on December 9, 1981. The Company has authorized 3 billion shares of Common Stock, par value $0.001 per share and may create and classify the Common Stock into separate mutual funds (or investment series or portfolios of shares) without further approval of the Company's shareholders. As of the date of this prospectus, the Company has established the five Accounts described in this Prospectus; the following five municipal bond funds: CMIA National Municipals Account, CMIA California Municipals Account, CMIA Massachusetts Municipals Account, CMIA New York Municipals Account and CMIA Ohio Municipals Account (the "Municipals Accounts"); and the following three "LifeSpan" funds: CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan Balanced Account and CMIA Life Span Diversified Income Account (the "LifeSpan Accounts"). The Municipal Accounts and LifeSpan Accounts are offered by means of separate prospectuses. Additional series of the Company may be added in the future. ' The Board of Directors is authorized, without further shareholder approval, to classify and reclassify the Accounts into one or more classes. Accordingly, the Directors have authorized the issuance of two classes of shares of each of the Accounts (except for the Liquid Account), designated as Class A shares and Class B shares. The shares of each class represent an interest in the same portfolio of investments of the Accounts and have equal rights as to voting, redemption, dividends and liquidation. However, each class bears different distribution and transfer agency fees and expenses and each class has exclusive voting rights with respect to its respective Rule 12b-1 distribution plan. As of August 31, 1995, Connecticut Mutual and its affiliates owned 29% of the shares of the Company, including 33% of the shares of the Liquid Account, 15% of the shares of the Government Securities Account, 31% of the shares of the Income Account, 31% of the shares of the Growth Account, and 0% of the shares of the Total Return Account. The Company is governed by a Board of Directors which is responsible for protecting your interests as a shareholder. The directors are experienced executives who meet at least quarterly to oversee the activities of each Account, review contractual arrangements with companies that provide services to the Accounts and review each Account's performance. The majority of the directors are not otherwise affiliated with Connecticut Mutual. The SAI contains the names and general background of each director and executive officer of the Company. The Company does not hold annual meetings of shareholders. The Company may hold shareholder meetings, however, to elect or remove directors, change the fundamental policies of an Account, approve the management contract of an Account or for other purposes. On matters affecting only one series, only the shareholders of that series are entitled to vote. On matters relating to all of the series but affecting the series differently, separate votes by each series are required. On matters relating to a single class of shares of a series, only the shareholders of that class are entitled to vote. Shareholders holding more than 50% of the Company can elect all of the Company's directors if they so choose. Each share is entitled to one vote within each series. Prospectus Page 30 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. PERFORMANCE From time to time the Company may advertise yields and total returns for the Accounts. In addition, the Company may advertise the effective yield of the Liquid Account. These figures will be based on historical performance and are not intended to indicate future performance. The yield of the Liquid Account refers to the annualized net income generated by an investment in that Account over a specified seven-day period. The yield is "annualized" by assuming that the income generated for that seven-day period is generated each seven-day period over a 52-week period, and is shown as a percentage of that investment. The effective yield is calculated similarly, but, when annualized, the income earned by an investment in that Account is assumed to be reinvested. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. Performance data for the classes of the other Accounts may be calculated pursuant to a standardized formula or in non-standardized manners. The standardized yield of these other Accounts refer to the annualized net income generated by an investment in a class of that Account over a specified 30-day period. The yield is calculated by assuming that the income generated by the investment during the 30-day period is generated each 30-day period over a 12-month period, and is shown as a percentage of the investment. The standardized total return of a class of an Account refers to return quotations assuming an investment has been held in the Account for various periods of time including, but not limited to, one year, five years and ten years (or any such shorter period from the Account's or the class's inception). The total return quotations will represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods for which total return quotations are provided. Accordingly, the total return quotations will reflect not only income but also changes in principal value (that is, changes in the net asset value per share of the class), whereas the yield figures will only reflect income. The standardized yield and total return quotations for the Class A shares of Accounts will reflect the maximum sales charge imposed on purchases of Class A shares of the Account. For Class B shares of an Account, these calculations reflect the deduction of any applicable CDSC. In addition, the Company may from time to time also disclose yield or total return in non-standard formats, and cumulative total return for the classes of the Accounts. The non-standard average annual total return and cumulative total return may be based on net asset value per share of a class, rather than a $1,000 investment. These non-standard return figures would not reflect the initial sales charge on Class A shares or the CDSC on Class B shares, which, if reflected, would lower the performance figures. In addition, non-standardized yields figures may be advertised that also would not reflect the applicable sales charge. The Company may from time to time also disclose yield, standard total returns, and non-standard total returns for the classes of the Accounts based on or covering periods of time other than those indicated above. Non-standard performance data will only be disclosed if the standard performance is also disclosed. For additional information regarding the calculation of performance data, please refer to the SAI. Also from time to time, in advertisements or in reports to shareholders, the Company may compare the performance of the classes of the Accounts to that of other mutual funds with similar investment objectives, and to other relevant indices published by recognized mutual fund statistical rating services or publications of general interest, such as FORBES or MONEY. The SAI contains a list of publications which may contain comparative studies which the Company may use in advertisements or shareholder materials. For example, the Company may compare an Account's Class A or Class B performance to that of other mutual funds with a similar investment objective as compiled by Lipper Analytical Services, Inc. In addition, the Company may compare the performance to that of recognized stock market indicators, including, but not limited to, the S&P 500 Stock Index (which is a group of unmanaged securities widely regarded by investors as representative of Prospectus Page 31 Connecticut Mutual Investment Accounts, Inc. the stock market in general), and the Dow Jones Industrial Average (which is a price-weighted average of 30 large, well-known industrial stocks that are generally the leaders in their industry). Performance comparisons should not be considered representative of the future performance of an Account. The effects of compounding may also be discussed. Performance data may also be calculated for shorter or longer base periods. The Company may use various base periods as may be deemed necessary to provide investors with the most informative yield or total return information, depending on the then-current market conditions. Performance will vary from time to time, and historical results will not be representative of future performance. Performance information may not provide a basis for comparison with other investments or other investment companies using a different method of calculating performance. Current yield is not fixed and varies with changes in investment income and net asset value per share. The yield of Class A or Class B shares of an Account or the shares of the Liquid Account will be affected if it experiences a net inflow of new money which is invested at interest rates different from those being earned on its then-current investments. An investor's principal in an Account and an Account's return are not guaranteed and will fluctuate according to market conditions. The investment results of an Account's Class A and Class B shares and of the Liquid Account shares will vary from time to time depending on market conditions, the composition of the Account's portfolio and operating expenses. For further information about the calculation methods and uses of an Account's Class A and Class B shares and of the Liquid Account's shares investment results, see the SAI. - -------------------------------------------------------------------------------- RISK FACTORS, SECURITIES AND INVESTMENT TECHNIQUES - -------------------------------------------------------------------------------- The following discussions contain more detailed information about types of instruments in which the Accounts may invest and strategies the Manager may employ in pursuit of the Accounts' investment objectives. A summary of risks and restrictions associated with these instrument types and investment practices is included as well. Policies and limitations are considered at the time of purchase; the sale of instruments is not required in the event of a subsequent change in circumstances. Some of the restrictions described below are fundamental and may be changed only with shareholder approval. These restrictions are set forth in greater detail in the SAI. The Manager may not buy all of these instruments or use all of these techniques to the full extent permitted unless it believes that doing so will help an Account achieve its goals. As a shareholder, you will receive financial reports every six months detailing holdings of your Account(s) and describing recent investment activities. EQUITY SECURITIES (TOTAL RETURN ACCOUNT AND GROWTH ACCOUNT) Equity securities include common stocks, preferred stocks, convertible securities and warrants. Common stocks represent an equity (ownership) interest in a corporation. This ownership interest often gives an Account the right to vote on measures affecting the company's organization and operations. Although common stocks have a history of long-term growth in value, their prices tend to fluctuate in the short term, particularly those of smaller capitalization companies. Preferred stocks represent a limited equity interest in a corporation. Preferred stocks are often entitled only to dividends at a specified rate, and have a preference over common stock, dividends and on liquidation of assets. Preferred stocks generally have lesser voting rights than common stocks. Because their dividends are often fixed, the value of many preferred stocks fluctuates inversely with changes in interest rates. Prospectus Page 32 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Convertible securities are bonds, preferred stocks and other securities that pay a fixed rate of interest or dividend and offer the buyer the option of converting the security into common stock. The value of convertible securities depends partially on interest rate changes and the credit quality of the issuer. The value of convertible securities is also sensitive to company, market and other economic news, and will change based on the price of the underlying common stock. For this reason, the Manager considers the growth potential of the underlying stock when selecting an Account's investments. Convertible securities generally have less potential for gain than common stock, but also less potential for loss, since their income provides a cushion against the stock's price declines. However, because the buyer is also exposed to the risk and reward potential of the underlying stock, convertible securities generally pay less income than similar non-convertible bonds. DEBT SECURITIES (ALL ACCOUNTS) DEBT SECURITIES GENERALLY. Each Account may purchase debt securities consisting of corporate debt obligations, U.S. Government securities, municipal obligations, mortgage-backed and asset-backed securities, adjustable rate securities, stripped securities, custodial receipts for Treasury certificates, zero coupon bonds, equipment trust certificates, loan participation notes, structured notes and money market instruments. Bonds and other debt instruments are used by domestic and foreign issuers to borrow money from investors. The issuer pays the investor a fixed or variable rate of interest, and must repay the amount borrowed at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are purchased at a discount from their face values. Zero coupon bonds accrue income for tax and accounting purposes and such income must be distributed to shareholders. Because no cash is received at the time of such accruals, an Account may be required to liquidate other securities to satisfy distribution obligations. Debt securities have varying degrees of quality and varying levels of sensitivity to changes in interest rates. A decrease in interest rates will generally result in an increase in the value of an Account's portfolio of debt securities, and, conversely, during periods of rising interest rates, the value of an Account's portfolio of debt securities will generally decline. Longer-term bonds are generally more sensitive to interest rate changes than shorter-term bonds. LOWER QUALITY AND UNRATED DEBT SECURITIES. Each Account, except Liquid Account and Government Account, may purchase lower quality and unrated debt securities. No Account will purchase securities rated below B by Moody's or S&P. Lower quality debt securities I.E., rated below BBB or Baa, (commonly called high yield bonds or junk bonds) are often considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. An economic downturn could also disrupt the high yield bond market generally and impair the ability of issuers to repay principal and interest. An increase in interest rates would (as is the case with debt instruments generally) reduce market values of a portfolio of lower rated fixed income securities. The market price and liquidity of lower rated fixed income securities generally responds to short-term corporate and market developments to a greater extent than do higher rated securities because such developments are perceived to have a more direct relationship to the ability of an issuer of such lower rated securities to meet its ongoing debt obligations. The market prices of zero coupon and payment-in-kind bonds are affected to a greater extent by interest rate changes, and thereby tend to be more volatile, than securities which pay interest periodically and in cash. Increasing rate note securities are typically refinanced by the issuers within a short period of time. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield obligations, especially in a thinly traded market. Reduced volume and liquidity in the high yield, high risk bond market or the reduced availability of market quotations for such bonds will make it more difficult to dispose of the bonds and to value accurately an Account's assets. The reduced availability of reliable, objective pricing data may increase an Account's reliance on management's judgment in valuing high yield, high risk bonds. The Manager does not rely on credit ratings assigned by rating agencies in assessing investment opportunities in such bonds. Ratings by credit agencies focus on safety of principal and interest payments and do not evaluate market risks. In addition, ratings by credit agencies may not be changed by the agencies in a timely manner to reflect subsequent economic events. By conducting intensive credit research, carefully selecting individual issues and diversifying portfolio holdings by Prospectus Page 33 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. industry sector and issuer, the Manager believes that the default risk of lower rated securities can be reduced. Emphasis on credit risk management involves the Manager's own internal analysis to determine the debt service capability, financial flexibility and liquidity of an issuer, as well as the fundamental trends and outlook for the issuer and its industry. The Manager's rating helps it determine the attractiveness of specific issues relative to the valuation by the market place of similarly rated credits. The Manager may retain securities whose ratings fall below B after purchase until the Manager determines that disposing of such securities is in the best interests of the respective Account. DERIVATIVE INSTRUMENTS. Each of the Accounts may invest in derivative instruments which are securities or contracts that provide for payments based on or "derived" from the performance of an underlying asset, index or other economic benchmark. Transactions in derivative instruments can be, but are not necessarily, riskier than investments in conventional stocks, bonds and money market instruments. The use of derivative instruments for non-hedging purposes or to generate additional income may be considered a speculative investment practice. A derivative instrument is more accurately viewed as a way of reallocating risk among different parties or substituting one type of risk for another. Transactions in derivative instruments often enable an Account to take investment positions that more precisely reflect the portfolio manager's expectations concerning the future performance of the various investments available to the Account. Derivative instruments can be a legitimate and often cost-effective method of accomplishing the same investment goals as could be achieved through other authorized investments in conventional securities. Derivative securities include collateralized mortgage obligations, stripped mortgage backed securities, asset backed securities, structured notes and floating interest rate securities. Derivative contracts include futures contracts, forward contracts, forward commitment and when-issued securities transactions, forward foreign currency exchange contracts and interest rate swaps. The principal risks associated with derivative instruments are: / / Market risk: The instrument will decline in value or that an alternative investment would have appreciated more, but this is no different from the risk of investing in conventional securities. / / Leverage and associated price volatility: Leverage causes increased volatility in the price and magnifies the impact of adverse market changes, but this risk may be consistent with a fund's investment objective in order to achieve an average portfolio volatility that is within the expected range for that type of fund. The SEC has taken the position that the risk of leverage is not an appropriate risk for a money market fund. / / Credit risk: The issuer of the instrument may default on its obligation to pay interest and principal, but derivatives based on U.S. Government agency mortgage securities may actually present less credit risk than some conventional corporate debt securities. / / Liquidity and valuation risk: Many derivative instruments are traded in institutional markets rather than on an exchange. Nevertheless, many derivative instruments are actively traded and can be priced with as much accuracy as conventional securities. Derivative instruments that are custom designed to meet the specialized investment needs of a relatively narrow group of institutional investors such as the Accounts are not readily marketable and are subject to an Account's restrictions on illiquid investments. / / Correlation risk: There may be imperfect correlation between the price of the derivative and the underlying asset; for example, there may be price disparities between the trading markets for the derivative contract and the underlying asset. FOREIGN SECURITIES (ALL ACCOUNTS EXCEPT THE LIQUID ACCOUNT AND THE GOVERNMENT SECURITIES ACCOUNT) Each Account (except the Liquid Account and Government Securities Account) may purchase, as appropriate to its investment objective and policies, equity and debt securities issued by foreign issuers, denominated in foreign currency and traded primarily on foreign markets. (For this purpose Eurodollar and Yankee dollar fixed income securities are not considered "foreign securities.") Investments in foreign equity and debt securities involve risks different from those encountered when investing in securities of domestic issuers. Such risks include: the adverse impact of trade balances and imbalances and related economic policies; currency exchange rate fluctuations; adverse foreign exchange control policies; nationalization, expropriation or confiscatory taxation; income tax withholding at the source; limitations Prospectus Page 34 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. on the removal of funds or other assets; political or social instability; difficulty in obtaining and enforcing judgments abroad; restrictions on foreign investments in other jurisdictions; price volatility; problems arising from the diverse structure and illiquidity of securities markets in various countries and regions; and other specific local, political and economic considerations. See the SAI for additional discussion of the risks of investing in foreign markets. The value of foreign securities may be adversely affected by fluctuations in the relative rates of exchange between the currencies of difference nations and by exchange control regulations. The investment performance of an Account may be significantly affected, either positively or negatively, by currency exchange rates because the U.S. dollar value of securities denominated in a foreign currency will increase or decrease in response to changes in the value of foreign currencies in relation to the U.S. dollar. Also, there may be higher transaction costs in foreign securities and less government regulation of foreign stock exchanges, brokers, and issuers than is present in the United States. Equity securities and debt instruments acquired in foreign markets will not, as a rule, be subject to registration under the Securities Act of 1933 or be under the jurisdiction of the SEC. Most foreign securities of an Account are held outside the United States by local foreign subcustodians that satisfy certain eligibility requirements. However, foreign subcustodian arrangements are significantly more expensive than domestic custody arrangements. In addition, foreign custody and settlement of securities transactions is subject to local law and custom that is not, generally, as well established or as reliable as U.S. regulation and custom applicable to custody and settlements of securities transactions and, accordingly, there is generally perceived to be a greater risk of loss in connection with securities custody and securities transactions in many foreign countries. Finally, there may be less publicly available information about foreign issuers, and such issuers may not be subject to the same accounting and auditing standards as publicly held domestic issuers. The Accounts, other than Liquid Account and Government Securities Account, may invest in companies located in emerging countries. Compared to the United States and other developed countries, developing countries may have relatively unstable governments, economies based on only a few industries, and securities markets that are less liquid and trade a small number of securities. Prices on these exchanges tend to be volatile and, in the past, securities in these countries have offered greater potential for gain (as well as loss) than securities of companies located in developed countries. See the SAI for additional discussion of the risks of investing in securities of issuers in emerging countries. RESTRICTIONS: No Account may invest more than 10% of its total assets in foreign securities, except the following securities, in which such Accounts may invest up to 25% of their total assets: foreign equity and debt securities (i) issued, assumed or guaranteed by foreign governments or their political subdivisions or instrumentalities, (ii) assumed or guaranteed by domestic issuers, including Eurodollar securities, and (iii) issued, assumed or guaranteed by foreign issuers having a class of securities listed for trading on the NYSE. FOREIGN CURRENCY TRANSACTIONS. Each Account (other than the Liquid Account and the Government Securities Account) may enter into foreign currency transactions in order to protect the U.S. dollar value of the Account's foreign currency- denominated portfolio securities against the U.S. dollar effects of adverse changes in foreign currency exchange rates (Base Currency Hedging). Normally, an Account will not engage in cross-hedging (I.E., dealing in foreign exchange between currencies of the different countries in which it has invested for the purpose of hedging against possible variations in the foreign exchange rate between those countries). Both Base Currency Hedging and cross-hedging may be accomplished through direct purchases or sales of currency, purchases of options or futures contracts with respect to currency, and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange-traded futures contracts. An Account may also purchase and sell options on futures contracts, forward contracts, or futures contracts which are denominated in a particular currency to hedge the risk of fluctuations in the value of another currency. An Account's dealings in foreign Prospectus Page 35 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. exchange will be limited to hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of currency with respect to specific receivables or payables of the Account accruing in connection with the purchase or sale of its portfolio securities. Position hedging is the purchase or sale of currency with respect to portfolio security positions denominated or quoted in a foreign currency. No Account will speculate in foreign exchange. If an Account enters into a forward foreign currency exchange contract to buy foreign currency, the Account will be required to place and maintain in a segregated account with the Account's custodian for the duration of the contract an amount of cash or liquid, high grade debt securities equal to the Account's obligations under the contract. U.S. GOVERNMENT SECURITIES (ALL ACCOUNTS) Each Account may purchase U.S. Government securities. Government Securities include: (1) U.S. Treasury obligations, which differ only in their interest rates, maturities and times of issuance, U.S. Treasury bills (maturity of one year or less), U.S. Treasury notes (maturities of one to 10 years), and U.S. Treasury bonds (generally maturities of greater than 10 years), all of which are backed by the full faith and credit of the United States, and (2) obligations issued or guaranteed by U.S. Government agencies or instrumentalities, some of which are backed by the full faith and credit of the U.S. Treasury, such as direct pass-through certificates of the Government National Mortgage Association (GNMA); some of which are supported by the right of the issuer to borrow from the U.S. Government, such as obligations of Federal Home Loan Banks; and some of which are backed only by the credit of the issuer itself, such as obligations of the Student Loan Marketing Association. A large percentage of the assets of the Government Securities Account have at times been invested in GNMA certificates of the modified pass-through type. GNMA certificates are debt securities issued by a mortgage banker or other mortgagee, and represent an interest in a pool of mortgages insured by the Federal Housing Administration or the Farmers Home Administration, or guaranteed by the Veterans Administration. GNMA guarantees the timely payment of monthly installments of principal and interest on modified pass-through certificates at the time such payments are due, whether or not such amounts are collected by the issuer of these certificates on the underlying mortgages. Mortgages included in single-family residential mortgage pools backing an issue of GNMA certificates have a maximum maturity of 30 years. Scheduled payments of principal and interest are made to the registered holders of GNMA certificates (such as the Account) each month. Unscheduled prepayments of mortgages included in these pools occur as a result of the prepayment or refinancing of such mortgages by homeowners, or as a result of the foreclosure of such mortgages. Such prepayments are passed through to the registered holders of GNMA certificates with the regular monthly payments of principal and interest, which has the effect of reducing future payments on such certificates. That portion of monthly payments received by an Account which represents interest and discount will be included in an Account's net income. Principal payments on GNMA certificates will be reinvested by an Account. Prepayments and scheduled payments of principal on GNMA certificates will be reinvested at prevailing interest rates, which may be less than the rate of interest payable on the GNMA certificates on which such prepayment and payments are made. U.S. GOVERNMENT-RELATED SECURITIES (GOVERNMENT SECURITIES ACCOUNT, INCOME ACCOUNT AND TOTAL RETURN ACCOUNT) Government-related Securities include collateralized mortgage obligations (CMOs). CMOs are debt obligations issued by U.S. government agencies, or by financial institutions and other mortgage lenders, and collateralized by mortgage pass-through securities, such as GNMA, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation certificates. Payments of principal and interest on the underlying collateral and any reinvestment income thereon provide the funds to pay debt service obligations to the CMOs. CMOs are issued in a number of classes or series, each with its own maturity and interest rate. While the classes or series are often retired in sequence as the underlying mortgages are repaid, payments of principal and interest on the underlying mortgages may be allocated among the different series or classes in innumerable ways. As with any mortgage-related security, principal prepayment on the collateral may cause the CMOs to be retired substantially earlier than the stated Prospectus Page 36 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. maturities or final distribution dates. Prepayment may thus shorten the stated maturity of the obligation and can result in the loss of premium if any has been paid. Certain of these securities may have variable or floating interest rates and others may be stripped (securities which provide only the principal or only the interest feature of the underlying security). Stripped mortgage backed securities are derivative multiple-class mortgage-backed securities. Stripped mortgage backed securities are usually structured with two classes that receive different proportions of interest and principal distributions on a pool of mortgage assets. A typical stripped mortgage backed security will have one class receiving some of the interest and most of the principal, while the other class will receive most of the interest and the remaining principal. In the most extreme case, one class will receive all of the interest (the "interest only" class) while the other class will receive all of the principal (the "principal only" class). The yields and market risk of interest only and principal only stripped mortgage backed securities, respectively, may be more volatile than those of other fixed-income securities. The staff of the SEC considers privately issued stripped mortgage backed securities to be illiquid. ASSET-BACKED SECURITIES (INCOME ACCOUNT, GOVERNMENT ACCOUNT AND TOTAL RETURN ACCOUNT) The Income Account, Government Account and Total Return Account may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets such as motor vehicle installment sale contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Asset-backed securities may also be collateralized by a portfolio of U.S. Government securities, but are not direct obligations of the U.S. Government, its agencies or instrumentalities. Such asset pools are securitized through the use of privately-formed trusts or special purpose corporations. Payments or distributions of principal and interest on asset-backed securities may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present; however privately issued obligations collateralized by a portfolio of privately issued asset-backed securities do not involve any government-related guarantee or insurance. In addition to the risks similar to those associated with mortgage-backed securities (see "-- U.S. Government Securities," above), asset-backed securities present further risks that are not presented by the mortgage-backed securities because asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. STRUCTURED NOTES (INCOME ACCOUNT, GOVERNMENT ACCOUNT AND TOTAL RETURN ACCOUNT) The Income Account, Government Account and Total Return Account may invest in structured notes. The distinguishing feature of a structured note is that the amount of interest and/or principal payable on the notes is based on the performance of a benchmark asset or market other than fixed-income securities or interest rates. Examples of these benchmarks include stock prices, currency exchange rates and physical commodity prices. Investing in a structured note allows an Account to gain exposure to the benchmark market while fixing the maximum loss that the Account may experience in the event that market does not perform as expected. Depending on the terms of the note, the Account may forego all or part of the interest and principal that would be payable on a comparable conventional note; the Account's loss cannot exceed this foregone interest and/or principal. An investment in structured notes involves risks similar to those associated with a direct investment in the benchmark asset. INVERSE FLOATING RATE INSTRUMENTS (INCOME ACCOUNT, GOVERNMENT ACCOUNT AND TOTAL RETURN ACCOUNT) The Income Account, Government Account and Total Return Account may invest in inverse floating rate debt instruments ("inverse floaters"), including leveraged inverse floaters and inverse floating rate mortgage-backed securities, such as inverse floating rate "interest only" stripped mortgage-backed securities. The interest rate on inverse floaters resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values. MORTGAGE DOLLAR ROLLS (INCOME ACCOUNT, GOVERNMENT ACCOUNT AND TOTAL RETURN ACCOUNT) The Income Account, Government Account and Total Return Account may each invest up to 20% Prospectus Page 37 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. of their respective assets in mortgage dollar rolls in which the Government Account sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Account foregoes principal and interest paid on the mortgage-backed securities. The Account is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the "drop") as well as by the interest earned on the cash proceeds of the initial sale. A "covered roll" is a specific type of dollar roll for which there is an offsetting cash position or a cash equivalent security position which matures on or before the forward settlement date of the dollar roll transaction. All rolls entered into by the Account will be covered rolls. Covered rolls are not treated as a borrowing or other senior security and will be excluded from the calculation of the Account's borrowings and other senior securities. The Manager is also permitted to purchase mortgage-backed securities and to sell such securities without regard to the length of time held in separate transactions that do not constitute dollar rolls. For financial reporting and tax purposes, the Accounts treat mortgage rolls as two separate transactions: one involving the purchase of securities and a separate transaction involving a sale. The Accounts do not currently intend to enter into mortgage dollar transactions that are accounted for as a financing. LENDING OF PORTFOLIO SECURITIES (ALL ACCOUNTS) Subject to its investment policies and restrictions, each Account may also seek to increase its income by lending portfolio securities. Such loans may be made to qualified institutions, such as certain broker-dealers, and are required to be secured continuously by collateral in cash, cash equivalents, or U.S. Government securities maintained on a current basis at an amount at least equal to the market value of the securities loaned. The value of the securities loaned will not exceed 33 1/3% of the value of the total assets of the Account. An Account may experience a loss or delay in the recovery of its securities if the borrowing institution breaches its agreement with the Account. FORWARD COMMITMENTS (ALL ACCOUNTS EXCEPT THE LIQUID ACCOUNT) Securities may be purchased by all Accounts (other than the Liquid Account) on a "when-issued" or on a "forward commitment" basis, which means it may take 60 days or more before the securities are delivered to an Account. Securities purchased on a "when-issued" or "forward commitment" basis involve a risk that the value of the security to be purchased may decline prior to the settlement date. Also, if the dealer through which the trade is made fails to consummate the transaction, the Account may lose an advantageous yield or price. COVERED CALL OPTIONS (ALL ACCOUNTS EXCEPT THE LIQUID ACCOUNT) Each Account (other than the Liquid Account) may write covered call options on securities, securities indices and foreign currencies, in each case as a hedge against decreases in prices of existing portfolio securities or increases in prices of anticipated portfolio securities. A call option on a security gives the holder (purchaser) the right to buy, and obligates the writer (seller) to sell (if the option is exercised), in return for a premium paid, the underlying security at a specified exercise price during the option period. A call option on a currency operates in a similar manner, except that delivery is made of the specified currency. A call option on an index is also similar except that the value of the option depends on the weighted value of the group of securities in the index and settlement of the option is made in the form of cash rather than the delivery of a security. Because call options may be used to generate additional income and to attempt to reduce the effect of any adverse price movement in the securities or currency subject to the option, they do involve certain risks that are different in some respects from investment risks associated with similar funds which do not engage in such activities. The risk of writing covered call options includes the inability to participate in the appreciation of the underlying securities or currencies above the exercise price. In addition, the effectiveness of hedging through the purchase or sale of securities index options, including options on the S&P 500 Index, will depend upon the extent to which price movements in the portion of the securities portfolio being hedged correlate with the price movements in the selected securities index. Perfect correlation may not be possible because the securities held or to be acquired by an Account may not exactly match the composition of the securities index on which options are written. If the forecasts of the Manager regarding movements in securities prices, interest rates, or currency exchange rates are Prospectus Page 38 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. incorrect, an Account's investment results may have been better without the hedge transactions. INTEREST RATE SWAPS (INCOME ACCOUNT, GOVERNMENT ACCOUNT AND TOTAL RETURN ACCOUNT) The Income Account, Government Account and Total Return Account may enter into interest rate swaps both for hedging and to seek to increase total return. Each Account will typically use interest rate swaps to adjust the effective duration of its portfolio. Interest rate swaps involve the exchange by an Account with another party of their respective commitments to pay or receive interest, such as an exchange of fixed rate payments for floating rate payments. Since interest rate swaps are individually negotiated, an Account expects to achieve an acceptable degree of correlation between its portfolio investments and its interest rate swap positions. An Account will enter into interest rate swaps only on a net basis, which means that the two payment streams are netted out, with the Account receiving or paying, as the case may be, only the net amount of the two payments. Interest rate swaps do not involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that an Account is contractually obligated to make. If the other party to an interest rate swap defaults, an Account's risk of loss consists of the net amount of interest payments that the Account is contractually entitled to receive. An Account will maintain in a segregated account with the Account's custodian cash and liquid high grade debt securities equal to the net amount, if any, of the excess of the Account's obligations over its entitlements with respect to swap transactions. To the extent that the net amount of a swap is held in a segregated account consisting of cash and high liquid grade debt securities, the Accounts and the Manager believe that swaps do not constitute senior securities under the Act and, accordingly, will not treat them as being subject to an Account's borrowing restriction. The use of interest rate swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If the Manager is incorrect in its forecasts of market values and interest rates, the investment performance of the Accounts would be less favorable than it would have been if this investment technique were not used. FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS (ALL ACCOUNTS OTHER THAN LIQUID ACCOUNT) To hedge against changes in interest rates, securities prices or currency exchange rates or for non-hedging purposes, each Account (other than Liquid Account) may, subject to its investment objectives and policies, purchase and sell various kinds of futures contracts, and purchase and write call and put options on any of such futures contracts. An Account may also enter into closing purchase and sale transactions with respect to any of such contracts and options. Futures contracts may be based on various securities (such as U.S. Government securities), securities indices, foreign currencies and other financial instruments and indices. The Growth Account and Total Return Account may purchase and sell futures contracts on stock indices and purchase and sell options on such futures. The Income Account and Total Return Account may purchase and sell interest rate futures and purchase and sell options on such futures. In addition, each Account that may invest in securities that are denominated in foreign currency may purchase and sell futures on currencies and purchase and sell options on such futures. An Account will engage in futures and related options transactions only for bona fide hedging purposes as permitted in regulations of the Commodity Futures Trading Commission. The aggregate initial margin and premiums required to establish positions in futures contracts and options on futures may not exceed 5 percent of the market value of the Account's total assets after taking into account unrealized profits and losses on any such positions and excluding the amount by which such options were in-the-money at the time of purchase. The use of futures contracts entails certain risks, including but not limited to the following: no assurance that futures contracts transactions can be offset at favorable prices; possible reduction of the Account's income due to the use of hedging; possible reduction in value of both the securities hedged and the hedging instrument; possible lack of liquidity due to daily limits on price fluctuations; imperfect correlation between the contract and the securities being hedged; and potential losses in excess of the amount initially invested in the futures contracts themselves. If the expectations of the Manager regarding movements in securities prices or interest rates are incorrect, an Prospectus Page 39 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Account may have experienced better investment results without hedging. The use of futures contracts and options on futures contracts requires special skills in addition to those needed to select portfolio securities. A further discussion of futures contracts is set forth in the Accounts' SAI. MONEY MARKET INSTRUMENTS (ALL ACCOUNTS) All Accounts may in the judgment of the Manager hold cash or invest without limit in money market instruments. All Accounts (other than the Liquid Account and Government Securities Account) may invest in banker's acceptances, certificates of deposit, time deposits and commercial paper denominated in foreign currency but within the limitations described above under "--Foreign Securities." These Accounts will purchase only money market instruments denominated in a foreign currency whose issuers have at least one billion dollars (U.S.) of assets. Banker's acceptances are bills of exchange or time drafts drawn on and accepted by a commercial bank. They are used by corporations to finance the shipment and storage of goods and to furnish dollar exchanges. Banker's acceptances generally mature in six months or less. Certificates of deposit are negotiable interest-bearing instruments with specific maturities. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity. Time deposits are nonnegotiable receipts issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time. Time deposits cannot be traded in the secondary market. Commercial paper is the term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on commercial paper vary from a few days to nine months. Each Account may invest in obligations of foreign branches of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars). These investments involve risks that are different from investments in securities of U.S. banks or U.S. branches of U.S. banks, including potential unfavorable political and economic developments, different tax provisions, seizure of foreign deposits, currency controls, interest limitations or other governmental restrictions which might affect payment of principal or interest. REPURCHASE AGREEMENTS (ALL ACCOUNTS) Each Account may enter into repurchase agreements. In a repurchase agreement, an Account buys a security at one price and simultaneously agrees to sell it back at a higher price. Delays or losses could result if the other party to the agreement defaults or becomes insolvent. RESTRICTIONS: An Account will not invest more than 10% of its net assets in repurchase agreements maturing in more than seven days and securities which are not readily marketable. RESTRICTED AND ILLIQUID SECURITIES (ALL ACCOUNTS) Each Account may invest up to 10% of its net assets in illiquid investments, which includes repurchase agreements maturing in more than seven days, restricted securities and securities not readily marketable. Each Account may also invest in restricted securities eligible for resale to certain institutional investors pursuant to Rule 144A under the Securities Act of 1933. WARRANTS (ALL ACCOUNTS EXCEPT THE LIQUID ACCOUNT AND THE GOVERNMENT SECURITIES ACCOUNT) Each Account (except the Liquid Account and the Government Securities Account) may purchase rights and warrants, which represent rights to purchase the common stock of companies at designated prices. Each Account will not purchase such rights and warrants if the Accounts' holding of warrants (valued at the lower of cost or market) would exceed 5% of the value of the Account's total assets as a result of the purchase. In addition, each Account will not purchase a warrant or right which is not listed on the New York or American Stock Exchanges if the purchase would result in the Account's owning unlisted warrants in an amount exceeding 2% of its total assets. Prospectus Page 40 Connecticut Mutual Investment Accounts, Inc. APPENDIX A - -------------------------------------------------------------------------------- DESCRIPTION OF SECURITIES RATINGS As described in the Prospectus, the debt securities purchased by an Account may include securities in the lower rating categories (that is, rated below Baa by Moody's or below BBB by S&P, or unrated). MOODY'S DESCRIBES ITS LOWER RATINGS FOR CORPORATE BONDS AS FOLLOWS: Bonds which are rated Baa are considered as medium grade obligations, I.E., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Bonds which are rated Ba are judged to have speculative elements; their future cannot be consi- dered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. S&P DESCRIBES ITS LOWER RATINGS FOR CORPORATE BONDS AS FOLLOWS: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Debt rated BB, B, CCC, or CC is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. BB indicates the lowest degree of speculation and CC the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. MOODY'S DESCRIBES ITS THREE HIGHEST RATINGS FOR COMMERCIAL PAPER AS FOLLOWS: Issuers rated P-1 (Prime-1) (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. P-1 repayment capacity will normally be evidenced by the following characteristics: (1) leading market positions in well-established industries; (2) high rates of return on funds employed; (3) conservative capitalization structures and moderate reliance on debt and ample asset protection; (4) broad margins in earnings coverage of fixed financial charges and high internal cash generation; and (5) well-established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated P-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will Appendix Page A-1 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Issuers rated P-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. S&P DESCRIBES ITS THREE HIGHEST RATINGS FOR COMMERCIAL PAPER AS FOLLOWS: A-1. This designation indicates that the degree of safety regarding timely payment is very strong. A-2. Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is not as overwhelming as for issues designated A-1. A-3. Issues carrying this designation have a satisfactory capacity for timely payment. They are, however, somewhat more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. Appendix Page A-2 Connecticut Mutual Investment Accounts, Inc. APPENDIX B - -------------------------------------------------------------------------------- CREDIT QUALITY DISTRIBUTION INCOME ACCOUNT The average quality distribution of the portfolio of Income Account during the year ended December 31, 1994 was as follows:
QUALITY DISTRIBUTION % OF AS ASSIGNED BY SERVICE AVERAGE VALUE PORTFOLIO - ------------------------------ ------------- ---------- AAA $ 10,899,567 22.9% AA 2,601,601 5.5 A 14,889,330 31.3 BBB 13,090,718 27.4 BB 2,061,858 4.3 B 288,235 0.6 Unrated 877,239 1.8 Debt Securities 44,708,548 93.8 Short-Term Securities 2,936,465 6.2 Total Portfolio 47,645,465 100.0
TOTAL RETURN ACCOUNT The average quality distribution of the portfolio of Total Return Account during the year ended December 31, 1994 was as follows:
QUALITY DISTRIBUTION % OF AS ASSIGNED BY SERVICE AVERAGE VALUE PORTFOLIO - ----------------------------- --------------- --------- AAA $ 48,259,445 25.7% AA 3,578,850 1.9 A 12,772,383 6.8 BBB 14,352,761 7.6 BB 3,351,301 1.8 B 44,269 0 Unrated 1,418,350 0.8 Debt Securities 83,777,359 44.6 Equity Securities 85,156,418 45.3 Short-Term Securities 18,883,627 10.1 Total Portfolio 187,817,404 100.0
Appendix Page B-1 CMIA SHAREHOLDER SERVICES AGENT National Financial Data Services P.O. Box 419694 Kansas City, Missouri 64179-0948 1-800-322-CMIA YOUR REPRESENTATIVE IS: National Distributor Connecticut Mutual Financial Services, L.L.C. A subsidiary of CONNECTICUT MUTUAL The Blue Chip Company Connecticut Mutual Life Insurance Company 140 Garden Street Hartford, CT 06154 800-234-5606 C M I A CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. PROSPECTUS DATED OCTOBER 1, 1995 PROSPECTUS & APPLICATION CONNECTICUT MUTUAL THE BLUE CHIP COMPANY F5000(95) MCMXCIII CONNECTICUT MUTUAL LIFE INSURANCE COMPANY CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. 140 GARDEN STREET - HARTFORD, CONNECTICUT 06154 - 1-800-322-CMIA PROSPECTUS -- OCTOBER 1, 1995 - -------------------------------------------------------------------------------- CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. (COMPANY) is an open-end management investment company offering a broad range of investment alternatives through thirteen distinct mutual funds, including the following three "life span" accounts (CMIA LifeSpan Accounts or Accounts): CLASS A AND CLASS B SHARES CMIA LIFESPAN CAPITAL APPRECIATION ACCOUNT (CAPITAL APPRECIATION ACCOUNT) is resigned for the investor seeking capital appreciation. The Capital Appreciation Account seeks long-term capital appreciation through a strategically allocated portfolio consisting primarily of equity securities. Current income is not a primary consideration. CMIA LIFESPAN BALANCED ACCOUNT (BALANCED ACCOUNT) is designed for the investor seeking a blend of capital appreciation and income. The Balanced Account seeks a blend of capital appreciation and income through a strategically allocated portfolio of equity securities and fixed-income securities with a slightly stronger emphasis on equity securities. CMIA LIFESPAN DIVERSIFIED INCOME ACCOUNT (DIVERSIFIED INCOME ACCOUNT) is designed for the investor with a relatively low tolerance for risk who is seeking current income with some long-term inflation protection. The Diversified Income Account seeks high current income, with opportunities for capital appreciation, through a strategically allocated portfolio consisting primarily of fixed-income securities. PLEASE READ THIS PROSPECTUS BEFORE INVESTING AND KEEP IT ON FILE FOR FUTURE REFERENCE. The Prospectus contains important information, including how the Accounts invest and the services available to shareholders. A Statement of Additional Information (SAI), dated October 1, 1995, has been filed with the Securities and Exchange Commission and is incorporated herein by reference (and is legally considered a part of this Prospectus). The SAI is available free upon request by calling 1-800-322-CMIA. FOR A PROSPECTUS AND INFORMATION ABOUT OTHER MUTUAL FUNDS OFFERED BY THE COMPANY CALL 1-800-234-5606. - -------------------------------------------------------------------------------- SHARES OF THE ACCOUNTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE ACCOUNTS INVOLVE INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE PRINCIPAL INVESTMENT. - -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Prospectus Page 1 Connecticut Mutual Investment Accounts, Inc. TABLE OF CONTENTS - --------------------------------------------------------------------------------
PAGE --------- Prospectus Summary............................................................................................... 3 Your Investment.............................................................................................. 4 Alternative Purchase Plan.................................................................................... 5 Your Shareholder Manual...................................................................................... 7 Summary of Investor Expenses................................................................................. 9 Financial Highlights............................................................................................. 10 Investment Objectives and Policies............................................................................... 11 Your Account..................................................................................................... 17 How to Buy Shares............................................................................................ 17 How to Sell Shares........................................................................................... 20 How to Exchange Shares....................................................................................... 21 Investor Services............................................................................................ 22 Transaction Details.......................................................................................... 23 Management....................................................................................................... 25 The Manager and the Subadvisers.............................................................................. 25 Breakdown of Expenses........................................................................................ 27 Dividends, Capital Gains and Taxes............................................................................... 29 The Company...................................................................................................... 30 Performance.................................................................................................. 31 Risk Factors, Securities and Investment Techniques............................................................... 32 Appendix A: Description of Securities Ratings.................................................................... A-1
Prospectus Page 2 Connecticut Mutual Investment Accounts, Inc. PROSPECTUS SUMMARY - -------------------------------------------------------------------------------- CMIA LIFESPAN CAPITAL APPRECIATION ACCOUNT CMIA LIFESPAN BALANCED ACCOUNT CMIA LIFESPAN DIVERSIFIED INCOME ACCOUNT THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING IN THE BODY OF THIS PROSPECTUS. CROSS-REFERENCES IN THIS SUMMARY REFER TO HEADINGS IN THE BODY OF THE PROSPECTUS. INVESTMENT OBJECTIVES The Capital Appreciation Account seeks long-term capital appreciation. The Balanced Account seeks a blend of capital appreciation and income. The Diversified Income Account seeks high current income, with opportunities for capital appreciation. PRINCIPAL INVESTMENTS Each LifeSpan Account is a carefully selected and professionally managed diversified mix of equity (stock) and fixed-income (bond) Components that are structured to achieve specific risk and return objectives. INVESTMENT MANAGER G.R. Phelps & Co., Inc. (G.R. Phelps), an indirect subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual), with over $2.7 billion in assets under management. DISTRIBUTOR Connecticut Mutual Financial Services, L.L.C. (CMFS), an indirect subsidiary of Connecticut Mutual. ALTERNATIVE PURCHASE PLAN: Each Account offers Class A and Class B shares, each with different expense levels and a public offering price that reflects different sales charges. / / CLASS A SHARES Offered at net asset value plus any applicable sales charge (maximum is 5.00% of public offering price) and subject to Rule 12b-1 fees at the rate of up to 0.25% of the average daily net assets of the Class A shares. / / CLASS B SHARES Offered at net asset value (a maximum deferred sales charge of 5% of the lesser of the shares' net asset value or the original purchase price is imposed on certain redemptions made within six years of date of purchase) and subject to Rule 12b-1 fees at the rate of up to 1.00% of the average daily net assets of the Class B shares. SHARES AVAILABLE THROUGH Many brokerage firms nationwide, or directly through the Accounts' distributor CMFS. EXCHANGE PRIVILEGES Shares of each CMIA LifeSpan Account may be exchanged for shares of the corresponding class of other Accounts in the Company without a sales charge. DIVIDENDS AND OTHER DISTRIBUTIONS Dividends will be paid semi-annually for the Capital Appreciation and Balanced Accounts and monthly for the Diversified Income Account from available net investment income. All realized net capital gains, if any, will be distributed at least annually. DIVIDEND REINVESTMENT Distributions may be reinvested in shares of the same class of an Account or of the corresponding class of other accounts in the Company (except Connecticut Mutual Liquid Account) automatically without a sales charge.
Prospectus Page 3 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. FIRST PURCHASE $1000 minimum ($250 for IRAs and reduced amounts for certain other retirement plans). Automatic Investment Plans may be established without regard to a minimum initial investment. SUBSEQUENT PURCHASES $50 minimum. OTHER FEATURES: / / CLASS A SHARES Statement of Intention; Quantity Discounts; Rights of Accumulation; Reinstatement Privilege; Systematic Withdrawal Plan; Automatic Investment Plan; Dollar Cost Averaging Program; Automatic Dividend Diversification. / / CLASS B SHARES Automatic Investment Plan; Dollar Cost Averaging Program; Automatic Dividend Diversification; Systematic Withdrawal Plan.
- -------------------------------------------------------------------------------- YOUR INVESTMENT THE ACCOUNTS. Each LifeSpan Account is a diversified series of the Company, a registered open-end management investment company. Each Account's shares are available through broker-dealers that have entered into agreements to sell shares with the Accounts' distributor, CMFS. Shares also may be acquired directly through CMFS or through exchanges of shares of the other Accounts in the Company. See "Your Shareholder Manual," "Your Account -- How to Buy Shares and -- How to Exchange Shares." Shares may be redeemed either through broker-dealers or National Financial Data Services (Transfer Agent). See "Your Shareholder Manual" and "How to Sell Shares." INVESTMENT MANAGER. G.R. Phelps (Manager) is the investment manager and administrator for each of the Accounts. G.R. Phelps provides investment management and/or administrative services to all of the Accounts in the Company as well as other mutual funds and institutional clients. G.R. Phelps is an indirect subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual) and has been a registered investment adviser since 1976. Connecticut Mutual is the sixth oldest life insurance company in the United States, and the oldest life insurance company in Connecticut. The Manager has engaged three Subadvisers to assist in the selection of portfolio investments for three of the Components. Scudder, Stevens & Clark, Inc. (Scudder, Stevens), the Sub-adviser to the International Component, has been providing investment counseling services for over 70 years and had over $90 billion in assets under management as of May 31, 1995. BEA Associates, the Subadviser to the High Yield Bond Component, has been providing fixed income and equity management services to institutional clients since 1984. As of May 31, 1995, BEA Associates had over $25 billion in assets under management. Pilgrim Baxter & Assoc. Ltd. (Pilgrim Baxter), the Subadviser to the Small Cap Component, was established in 1982 and had over $4 billion in assets under management as of May 31, 1995. See "Management." INVESTMENT STRATEGY OF THE LIFESPAN ACCOUNTS. Each LifeSpan Account is a carefully selected and professionally managed diversified mix of equity (stock) and fixed-income (bond) Components that are structured to achieve certain risk and return objectives. There is a normal percentage of each LifeSpan Account that is allocated between the broad equity class of investments and the broad fixed-income class of investments. The Accounts' normal allocations generally correlate to different levels of investment risk and return. In determining normal asset allocations, the Manager has looked at broad market and economic variables such as inflation and interest rates and has used the information to determine the overall mix of each Account's assets between the two general asset classes: broad equity class and broad fixed-income class. Equity securities have the potential to outperform fixed-income securities over the long-term. Equity securities have the greatest potential for growth of capital, yet are generally the most volatile of the two broad asset types. Fixed-income securities sometimes move in the opposite direction of equity securities and may provide investment balance to an Account. Additionally, fixed-income securities can provide regular income to investors. The risks of each broad asset class will vary. Prospectus Page 4 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. The Manager will diversify the broad equity class of each Account by allocating the Account's portfolio of equity securities among four Components: international stocks, value/growth stocks, growth and income stocks, and small-capitalized growth stocks. Each Component in the broad equity class is also permitted to invest a portion of its assets in fixed-income securities when the Subadviser determines that increased flexibility in portfolio management is required to enhance appreciation or income. The Manager will diversify an Account's broad fixed-income class by allocating an Account's portfolio of fixed-income securities among three Components: government and corporate bonds, high yield/high risk bonds and short-term bonds. These Components have been selected because the Manager believes that this additional level of asset diversification will provide each Account with the potential for higher returns with lower overall volatility. RISK FACTORS. There is no assurance that any Account will achieve its investment objective. Each Account's net asset value will change reflecting fluctuations in the market value of its portfolio positions. Each Account's portfolio of fixed income securities will generally fluctuate inversely with changes in interest rates. Investments by an Account in lower rated securities involve greater risk of default and price volatility than higher rated obligations. Also, investments by an Account in foreign securities involve risks not normally associated with U.S. securities relating to political and economic developments and differences in the regulations to which U.S. and foreign issuers are subject. Foreign denominated foreign securities also involve risk of adverse changes in foreign currency exchange rates. An Account's participation in currency transactions, options and futures transactions and investment in certain derivative instruments also involve special risks and transaction costs. For additional information about the risks of investing in the Accounts, see "Risk Factors, Securities and Investment Techniques." EXPENSES. The Capital Appreciation Account, the Balanced Account and the Diversified Income Account each pay G.R. Phelps an investment management fee based on the average daily net assets of the Account, at the annualized rate of .85%, .85% and .75%, respectively. The Manager pays out of its own assets the fees to the Subadvisers for the services they provide to the Manager in managing certain Components. See "Management -- The Manager and Subadvisers." As the Accounts' distributor, CMFS collects the sales charges imposed on purchases of Class A shares and reallows all or a portion of such charges to broker-dealers that have made such sales. In addition, CMFS collects any contingent deferred sales charges (CDSC) that may be imposed on certain redemptions of Class A shares and on redemptions of Class B shares. CMFS also pays broker-dealers upon their sales of Class B shares and pays broker-dealers and other financial institutions ongoing commission payments for servicing shareholder accounts. See "Your Account -- How to Buy Shares." Pursuant to separate distribution plans for each of the Account's Class A and Class B shares adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended (1940 Act), each Account may pay CMFS a fee at an annual rate that is a certain percentage of the average daily net assets of the Account's Class A and Class B shares as appropriate, as reimbursement for its expenditures incurred in distributing and servicing Class A shares or Class B shares, respectively. Each Account pays all expenses not required to be assumed by G.R. Phelps or other agents. From time to time, G.R. Phelps may agree not to impose all or a portion of its advisory fee and/or undertake to pay or reimburse an Account for all or a portion of its expenses not otherwise required to be borne or reimbursed by G.R. Phelps. See "Management -- Breakdown of Expenses." - -------------------------------------------------------------------------------- ALTERNATIVE_ PURCHASE_ PLAN Each Account offers investors two classes of shares. The primary distinction between the two classes of shares lies in their sales charge structures and ongoing expenses. See "Summary of Investor Expenses." Each class bears the separate expenses of its Rule 12b-1 plan and its transfer agency fees and expenses. Each class has a separate exchange privilege. See "How to Exchange Shares" and "The Company." Class A and Class B shares of an Account represent interests in the same portfolio of investments of that Account and have the same rights, except as noted. Each class has exclusive voting rights with respect to its Rule 12b-1 plan. Dividends and other distributions paid by each Prospectus Page 5 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Account with respect to its Class A and Class B shares are calculated in the same manner and at the same time. The per share dividends on Class B shares of an Account will be lower than those on Class A shares of that Account as a result of the higher Rule 12b-1 fees applicable with respect to Class B shares. CLASS A SHARES. An investor who purchases Class A shares pays a sales charge at the time of purchase. As a result, Class A shares are not subject to any charges when they are redeemed except as described in "How To Buy Shares -- Contingent Deferred Sales Charge -- Class A Shares." Certain purchases of Class A shares qualify for reduced sales charges. See "How To Buy Shares -- Reducing or Eliminating Your Sales Charge -- Class A Shares." Class A shares currently bear a Rule 12b-1 fee at an annual rate of up to 0.25% of the Fund's average net assets attributable to Class A shares. CLASS B SHARES. Class B shares are sold without an initial sales charge, but are subject to a CDSC of up to 5.00% if redeemed within six years. Class B shares also bear a higher Rule 12b-1 fee than Class A shares, currently at an annual rate of up to 1.00% of the Fund's average net assets attributable to Class B shares. Class B shares will automatically convert into Class A shares, based on relative net asset value, eight years after purchase. See "How To Buy Shares -- Purchasing Class B Shares." CHOOSING AN ALTERNATIVE. Over time, the cumulative expense of the 1.00% annual Rule 12b-1 fees of the Class B shares will approximate or exceed the expense of the applicable 5.00% maximum initial sales charge plus the 0.25% Rule 12b-1 fees of the Class A shares. If you expect to maintain your investment in an Account over the long-term but do not qualify for a reduced sales charge, you might elect to purchase Class A shares. Class B investors, however, enjoy the benefit of permitting all their dollars to work from the time the investments are made. Any positive investment return on this additional invested amount would partially or wholly offset the higher annual expenses borne by Class B shares. Because the timing and amount of the Accounts' future returns cannot be predicted, however, there can be no assurance that such a positive return will be achieved. Class B shareholders pay a CDSC if their shares are redeemed during the first six years after purchase, unless a sales charge waiver applies. If you expect to redeem Class B shares during this period, you should consider the cost of the applicable CDSC in addition to the annual Class B Rule 12b-1 fees. MAXIMUM INVESTMENTS. Class B share purchases over $500,000 will be treated as purchases of Class A shares or declined. REDUCED SALES CHARGES. Class A share purchases over $500,000 and Class A share purchases made under an Account's reduced sales charge plans may be made at a lower initial sales charge. See "Your Account -- How to Buy Shares" for a complete list of reduced sales charges applicable to Class A purchases. WAIVERS OF SALES CHARGES. The entire initial sales charge on Class A shares of an Account may be waived for certain eligible purchasers and these purchasers' entire purchase price would be immediately invested in an Account. The CDSC may be waived upon redemption of certain Class B shares. If you are eligible for complete waivers of the initial sales charge you should purchase Class A shares. See "Your Account -- How to Buy Shares" for a complete list of initial sales charge waivers applicable to Class A purchases and CDSC waivers applicable to Class B purchases. A 1.00% CDSC is imposed on certain redemptions of Class A shares on which no initial sales charge was assessed. The CDSC on the Class B shares and the initial sales charge on the Class A shares are both intended to compensate CMFS and selling broker-dealers for their distribution services. Broker-dealers may receive different levels of compensation for selling a particular class of shares of an Account. See "Your Account" for a more complete description of the sales charges, Rule 12b-1 fees and investor services applicable to shares of the Accounts. Prospectus Page 6 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. YOUR SHAREHOLDER MANUAL
INITIAL SUBSEQUENT MINIMUM INVESTMENTS INVESTMENT* INVESTMENT - ------------------------------------------------------------------------------------ / / Automatic Investment Plans $ 0 $50 / /IRAs and other tax qualified plans; deferred compensation plans $ 250 $50 / / All other purchases $1,000 $50
* Minimums may be waived for certain automated payroll deduction plans.
BUYING SHARES TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT ---------------------------------------------------------------------------- BY MAIL / /Complete and sign the / /Make your check payable application. to "CMIA." Indicate your Make your check payable to account number on your "CMIA." check and mail to the Mail to CMIA, P.O. Box address printed on your 419694 account statement. Kansas City, MO 64179-0938. / /Exchange by mail: call 1-800-322-CMIA (select option "2") for instructions. ---------------------------------------------------------------------------- BY WIRE / /Call 1-800-322-CMIA by / /Call 1-800-322-CMIA by 12:00 noon Eastern Time on 12:00 noon Eastern Time on the day of investment to the day of investment to set up your account and arrange a wire arrange a wire transaction. transaction. / /Wire by 4:00 p.m. Eastern / /Wire by 4:00 p.m. Eastern Time to: Time to: State Street Bank and Trust State Street Bank and Trust Company Company Bank Routing # 011000028 Bank Routing # 011000028 NFDS Account # 99042129 NFDS Account # 99042129 Specify Account name, class Specify Account name, class of shares and include your of shares and include your name and account number. name and account number. ---------------------------------------------------------------------------- BY PHONE / /Exchange from another / /Exchange from another 1-800-322-CMIA account in the same class account in the same class (select option with the same with the same "2") registration, including registration, including name, address and name, address and taxpayer ID number. taxpayer ID number. ---------------------------------------------------------------------------- AUTOMATICALLY / /You may not open an / /Establish an Automatic account automatically, but Investment Plan or Dollar you may complete and sign Cost Averaging Investment an application; make your Program. Sign up for check payable to CMIA; these services when and mail to the address opening your account by indicated on the completing Section 9 on application. the enclosed application, or call 1-800-322-CMIA for information about adding these services to your account or complete an Automatic Investment Plan application.
Prospectus Page 7 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. SELLING SHARES ACCOUNT TYPE SPECIAL REQUIREMENTS ---------------------------------------------------------------------------- BY MAIL / /Individual, Joint Tenant, / /The letter of instruction Each redemption Sole Proprietorship, UGMA, must be signed by all request is limited UTMA persons required to sign to $50,000 unless for transactions, exactly as their names appear on the account. you have provided a signature / /Retirement Account / /The account owner should guarantee. complete a retirement distribution form. Call 1-800-322-CMIA to request one. / /Trust / /The trustee must sign the letter indicating capacity as trustee. If the trustee's name is not in the account registration, provide a copy of the trust document certified within the last 60 days. / /Business or Organization / /At least one person authorized by corporate resolution to act on the account must sign the letter. Include a corporate resolution with corporate seal or a signature guarantee. / /Executor, Administrator, / /Call 1-800-322-CMIA for Conservator, Guardian instructions. ---------------------------------------------------------------------------- BY PHONE / /All account types except / /Minimum request: $500, 1-800-322-CMIA retirement unless closing an account. Limited to $50,000 per day. (select option / / All account types / /You may exchange to the "2") same class of other Accounts if both accounts are registered with the same name(s), address and taxpayer ID number. ---------------------------------------------------------------------------- BY WIRE / /All account types except / /Minimum wire: $1,000. retirement / /Each redemption request is limited to $50,000 unless you have provided a signature guarantee. / /A voided check and your signature, which must be signature guaranteed, must accompany a wire redemption request unless you elected Telephone Redemption on the initial application. / /Your wire redemption request must be received before 4:00 p.m. Eastern time for money to be wired on the next business day.
Prospectus Page 8 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. SUMMARY OF INVESTOR EXPENSES The following table lists Shareholder Transaction Expenses and estimated Annual Operating Expenses for the current fiscal year related to an investment in Class A and Class B shares of each Account.
CAPITAL APPRECIATION DIVERSIFIED ACCOUNT BALANCED ACCOUNT INCOME ACCOUNT ----------------- ----------------- ----------------- CLASS CLASS CLASS CLASS CLASS CLASS A B A B A B ------- ------- ------- ------- ------- ------- 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(1) 5.00% None(1) 5.00% None(1) 5.00% Exchange Fee(2)........................... None None None None None None ANNUAL OPERATING EXPENSES OF EACH ACCOUNT (estimated 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 (net of limits)(3)......... .45% .45% .45% .45% .50% .50% TOTAL ANNUAL OPERATING EXPENSES OF EACH ACCOUNT (net of limits).................. 1.55% 2.30% 1.55% 2.30% 1.50% 2.25%
- --------- (1) Purchases in amounts of $500,000 or more are not subject to an initial sales charge but may be subject to a contingent deferred sales charge of 1.00% if such shares are redeemed within 12 months after the calendar month of purchase. See "How to Buy Shares -- Contingent Deferred Sales Charge -- Class A Shares." (2) All exchanges in excess of 12 exchanges in a 12-month period are subject to an exchange fee of 0.75% of the net asset value of the shares redeemed. See "How to Exchange Shares." (3) G.R. Phelps has temporarily agreed to limit or otherwise absorb each Account's operating expenses except taxes and interest on borrowed money, if any, to limit the operating expenses of the Capital Appreciation and Balanced Accounts to 1.55% and 2.30% of each of such Account's average daily net assets attributable to Class A shares and Class B shares, respectively, and to 1.50% and 2.25% of such assets of the Diversified Income Account. In the absence of such an agreement by G.R. Phelps, the estimated Total Annual Operating Expenses of the Capital Appreciation Account, Balanced Account and Diversified Income Account for the current fiscal year would be 2.50%, 3.25%, 1.74%, 2.49%, 1.71% and 2.46% of net assets attributable to Class A and Class B shares, respectively. 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:
CAPITAL DIVERSIFIED APPRECIATION BALANCED INCOME ACCOUNT ACCOUNT ACCOUNT ------------ -------- ----------- CLASS A SHARES After 1 year........................................................... $ 65 $ 65 $ 65 After 3 years.......................................................... $ 96 $ 96 $ 95 CLASS B SHARES ASSUMING COMPLETE REDEMPTION AT END OF PERIOD After 1 year........................................................... $ 73 $ 73 $ 72 After 3 years.......................................................... $112 $112 $110 ASSUMING NO REDEMPTION After 1 year........................................................... $ 23 $ 23 $ 23 After 3 years.......................................................... $ 25 $ 25 $ 24
Prospectus Page 9 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. The purpose of the above table and Example is to summarize the aggregate expenses of Class A and Class B shares of each Account and to assist investors in understanding the various costs and expenses that investors in an Account will bear directly or indirectly. See "Breakdown of Expenses." 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. Shareholders should be aware that an Account's payment of distribution fees may result in long-term shareholders indirectly paying more than the economic equivalent of the maximum front-end sales charge permitted by the National Association of Securities Dealers, Inc. (NASD). - -------------------------------------------------------------------------------- FINANCIAL_ HIGHLIGHTS - -------------------------------------------------------------------------------- The following information for the period from May 1, 1995 (Inception) to August 31, 1995 relates to Class A shares and has been derived from the Accounts' unaudited financial statements as of August 31, 1995 which are included in the Statement of Additional Information. No financial highlights exist for Class B shares. Selected data for a Class A share of capital stock outstanding throughout the period:
DISTRIBUTIONS RATIO OF RATIO OF NET DIVIDENDS NET REALIZED FROM NET NET ASSET NET ASSET OPERATING INVESTMENT NET FROM NET & UNREALIZED REALIZED VALUE AT VALUE AT EXPENSES TO INCOME TO PERIOD ENDED INVESTMENT INVESTMENT GAIN (LOSS) GAIN ON BEGINNING END AVERAGE AVERAGE AUGUST 31 INCOME INCOME ON INVESTMENTS INVESTMENTS OF PERIOD OF PERIOD NET ASSETS(B) NET ASSETS(B) - --------------- ---------- ---------- --------------- --------------- ----------- ----------- -------------- ------------- CAPITAL APPRECIATION ACCOUNT 1995(a) $ .09 $ (.05) $ .83 $ - $ 10.00 $ 10.87 1.55% 2.68% BALANCED ACCOUNT 1995(a) $ .12 $ (.06) $ .66 $ - $ 10.00 $ 10.72 1.55% 3.59% DIVERSIFIED INCOME ACCOUNT 1995(a) $ .18 $ (.17) $ .30 $ - $ 10.00 $ 10.31 1.50% 5.26% NET ASSETS AT END OF PERIOD ANNUAL PERIOD ENDED PORTFOLIO (IN TOTAL AUGUST 31 TURNOVER THOUSANDS) RETURN(C) - --------------- -------------- ----------- ------------- CAPITAL APPRECIATION ACCOUNT 1995(a) 64.27% $ 28,837 9.25% BALANCED ACCOUNT 1995(a) 81.69% $ 37,689 7.83% DIVERSIFIED INCOME ACCOUNT 1995(a) 50.19% $ 22,156 4.81%
(a)_For the period from May 1, 1995 (Inception) to August 31, 1995 (b)_Annualized (c)_Annual total returns do not include the effect of sales charges Prospectus Page 10 Connecticut Mutual Investment Accounts, Inc. INVESTMENT OBJECTIVES AND POLICIES - -------------------------------------------------------------------------------- The Company offers a broad range of investment alternatives through a variety of mutual funds, three of which are offered by means of this Prospectus (Accounts or CMIA LifeSpan Accounts). Each CMIA LifeSpan Account has its own investment objective and policies which are designed to meet specific investment goals. There can be no guarantee, however, that the CMIA LifeSpan Accounts will meet their investment goals. The Manager of each CMIA LifeSpan Account is G.R. Phelps, an indirect subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual). The Manager has engaged Scudder, Stevens & Clark, Inc. (Scudder, Stevens), Pilgrim Baxter & Assoc. Ltd. (Pilgrim Baxter) and BEA Associates as subadvisers to assist in the investment management of three components of these CMIA LifeSpan Accounts. See "Management -- The Manager and Subadvisers." CAPITAL APPRECIATION ACCOUNT seeks long-term capital appreciation. BALANCED ACCOUNT seeks a blend of capital appreciation and income. DIVERSIFIED INCOME ACCOUNT seeks high current income, with opportunities for capital appreciation. THE CMIA LIFESPAN ACCOUNTS The CMIA LifeSpan Accounts are asset allocation funds. Such funds have been a basic tool of investment professionals and are differentiated by the use of investment management strategies and techniques that range from the least aggressive to the most aggressive. The CMIA LifeSpan Accounts offer you a convenient way to own a diversified professionally managed portfolio tailored to your specific investment goals. While your age is a factor, it is not necessarily the determinative factor in choosing to invest in one of the CMIA LifeSpan Accounts. Your investment goals, such as buying a home, educating your children, caring for aging parents or saving for retirement all determine the appropriate asset allocation that you seek and the associated expectation of risk and return. The CAPITAL APPRECIATION ACCOUNT is designed for the investor willing and able to take higher risks in the pursuit of long-term capital appreciation. Such investors generally have many years until retirement, are relatively young and have a long-term investment plan and/or discretionary assets. The BALANCED ACCOUNT offers a blend of capital appreciation and income for the investor seeking diversification while maintaining a balance between growth and income. Investors in the Balanced Account tend to have a middle career profile or are mid-life in the life cycle and may be saving for their children's education, their elderly parents' care or both. The DIVERSIFIED INCOME ACCOUNT is expected to be the least volatile of the three CMIA LifeSpan Accounts designed for the investor with a lower tolerance for risk. Investment in the Diversified Income Account is intended for those further along in the life cycle or closer to retirement and seeking higher income from their investments. This Account may also be a suitable investment for young adults saving for a home or others who have cash flow requirements over a short-term time horizon. INVESTMENT STRATEGY OF THE LIFESPAN ACCOUNTS Each LifeSpan Account is a carefully selected and professionally managed diversified mix of equity (stock) and fixed-income (bond) Components that are structured to achieve certain risk and return objectives. There is a normal percentage of each LifeSpan Account that is allocated between the broad equity class of investments and the broad fixed-income class of investments. See the chart on page 13. This allocation or asset mix is determined by the Manager to be the optimal combination of stocks and bonds that produces diversification of risk and potential return for three distinct investment objectives: capital appreciation, a blend of capital appreciation and current income, or high current income with lesser opportunities for capital appreciation. The Accounts' normal allocations generally correlate to different levels of investment risk and return. In determining normal asset allocations, the Manager has looked at broad market and economic variables such as inflation and interest Prospectus Page 11 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. rates and has used the information to determine the overall mix of each Account's assets between the two general asset classes: broad equity class and broad fixed-income class. Equity securities have the potential to outperform fixed-income securities over the long-term. Equity securities have the greatest potential for growth of capital, yet are generally the most volatile of the two broad asset types. Fixed-income securities sometimes move in the opposite direction of equity securities and may provide investment balance to an Account. Additionally, fixed-income securities can provide regular income to investors. The risks of each broad asset class will vary. The normal asset allocation represents the way each Account's investments will generally be allocated over the long-term. As market and economic conditions change, however, the Manager may adjust the asset mix between the broad equity and broad fixed-income classes within a normal asset allocation range as long as the relative risk and return characteristics of the three Accounts remain distinct and each Account's investment objective is preserved. The Manager will review normal allocations between broad equity and broad fixed-income investments quarterly and will rebalance, if necessary, at that time. Additional adjustments may be made if an asset allocation shift of 5% or more is warranted. The Manager will diversify the broad equity class of each Account by allocating the Account's portfolio of equity securities among four Components: international stocks, value/growth stocks, growth and income stocks and small-capitalized growth stocks (Small Cap). Each Component in the broad equity class is also permitted to invest a portion of its assets in fixed-income securities when the Subadviser determines that increased flexibility in portfolio management is required to enhance appreciation or income. The Manager will diversify an Account's broad fixed-income class by allocating an Account's portfolio of fixed-income securities among three Components: government and corporate bonds, high yield/high risk bonds and short-term bonds. There is no requirement that the Manager allocate an Account's assets among all Components at all times. These Components have been selected because the Manager believes that this additional level of asset diversification will provide each Account with the potential for higher returns with lower overall volatility. Each Account's normal allocation is shown in the chart below. - --------------------------------------------------------------------------------
CAPITAL APPRECIATION DIVERSIFIED INCOME ACCOUNT BALANCED ACCOUNT ACCOUNT -------------------------- ---------------------- ------------------------ NORMAL NORMAL NORMAL ASSET CLASS ALLOCATION RANGE ALLOCATION RANGE ALLOCATION RANGE - ---------------------------------------------- --------------- --------- ----------- --------- ------------- --------- BROAD EQUITY 80% 70-90% 60% 50-70% 25% 15-35% COMPONENT International 20% 15-25% 15% 5-20% 0% 0% Value/Growth 20% 15-30% 15% 10-25% 0% 0% Growth/Income 20% 15-30% 15% 10-25% 25% 15-35% Small Cap 20% 15-25% 15% 5-20% 0% 0% FIXED-INCOME 20% 10-30% 40% 30-50% 75% 65-85% COMPONENT Government/Corporate 10% 5-15% 15% 10-25% 35% 30-45% High Yield/High Risk Bonds 10% 5-15% 15% 5-20% 15% 5-20% Short Term Bonds 0% 0% 10% 5-20% 25% 15-30%
- -------------------------------------------------------------------------------- All percentage limitations are applied at the time of purchase. The Manager may rebalance the asset allocations quarterly to realign them in response to market conditions. Once the Manager has determined the weighting of the general asset classes and the Components of each Account, the Manager or the respective Subadviser will then select the individual securities to be included in each Component. Each Subadviser will manage the portion of an Account's assets in the particular Component assigned to it by the Manager. As of the date of this Prospectus, the Manager has assigned the management of the Components as follows:
SUBADVISER COMPONENT OF INVESTMENTS - ------------------- -------------------------------- Scudder, Stevens International Stocks Pilgrim Baxter Small Cap Stock BEA Associates High Yield/High Risk Bonds
Prospectus Page 12 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. The Manager will manage the remaining Components using its own investment management personnel. See "Management -- The Manager and Subadvisers" for additional information. THE BROAD EQUITY CLASS Each CMIA LifeSpan Account will invest those assets which are allocated to the broad equity class among four Components each of which invests principally in equity securities but which differ with respect to capitalization, country and investment style. The four Components in the broad equity class are expected from time to time to have a portion of their assets in fixed-income securities. EQUITY SECURITIES GENERALLY. While equity securities have historically experienced a higher level of volatility risk than fixed-income securities, they have also historically produced higher levels of total return. Longer term, investors with diversified stock portfolios have a higher probability of achieving their investment goals with lower levels of volatility than those who have not diversified. Diversification can be achieved through active equity management strategies. A growth oriented strategy generally involves buying companies with rapidly growing sales, earnings or cash flows which are enhancing their value by reinvesting profits in the company. A value oriented strategy focuses on securities selling at low prices relative to current, normal or discounted future earnings. A value strategy could also focus on companies with above-average yields, or those that are able to maintain and increase dividend payments. A growth and income strategy generally seeks to achieve returns through price appreciation and dividend income of companies with a higher than average market dividend yield and a history of stable and growing dividend payments. Diversification across the broad equity class will be achieved using a series of Components, whose management strategies and investments are noted as follows. INTERNATIONAL COMPONENT. This Component seeks long-term growth of capital primarily through a diversified portfolio of marketable international equity securities. The international Component invests in companies based outside of the United States. The international Component intends to allocate investments among several countries (usually between 8-12), primarily those included in the Morgan Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE) Index and Canada. In addition, the Component may invest up to 25% of its assets in equity and debt securities of companies based in emerging countries. The Subadviser considers emerging countries to include any country that is defined as an emerging or developing economy by the International Bank for Reconstruction and Development, the International Finance Committee, the United Nations or its authorities, or the MSCI Emerging Markets Index. Stocks are purchased on the basis of fundamental and valuation criteria, which include the integration of three analytical disciplines. Global themes, identifying attractive economic sectors and industries; country analysis, assessing opportunities through quantitative and qualitative analysis; and unique situations, are used to identify companies with exceptional growth opportunities. Issues are sold because of changing fundamentals, overvaluation, performance issues, or better relative opportunities. International securities further diversify a portfolio's equity holdings and can help to reduce overall portfolio volatility. The U.S. investor benefits from exposure to international equity securities and foreign economies, which may be influenced by distinctly different factors impacting a country's rate of economic growth, interest rate structure, currency, industry and local stock market environment. In addition, investments in the non-U.S. equity markets allow for further diversification as many countries and regions have risk/reward characteristics and market performance that are not highly correlated to each other or to the U.S. market. International investments, however, particularly in emerging countries, are subject to special risks not generally present in domestic equity investments. See "Risk Factors, Securities and Investment Techniques -- International Securities." In appropriate circumstances, such as when a direct investment by the Component in the securities of a particular country cannot be made or when the securities of an investment company are more liquid than the underlying portfolio securities, the Component may, consistent with the provisions of the Investment Company Act of 1940, as amended (1940 Act), invest in the securities of closed-end investment companies that invest in foreign securities. Since the Component's shareholders would be subject to additional fees, including management fees, for any assets so invested, the Subadviser will invest in such closed-end investment companies only where, in its opinion, the potential returns justify incurring the additional expense. A portion of the Component's investments may be held in Prospectus Page 13 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. cash and short-term instruments. Current income is not a primary consideration but income may be enhanced from time to time by investing a portion of the Component's assets in corporate bonds and government securities of foreign issuers. VALUE/GROWTH COMPONENT. This Component seeks to achieve long-term growth of capital by investing primarily in common stocks with low price-earnings ratios and better than anticipated earnings. Realization of current income is not a primary consideration in stock selection. Investments for the value/growth Component are chosen using a highly disciplined and quantitatively oriented investment management strategy in combination with fundamental securities analysis. Stocks with low price-earnings ratios are often out of favor in the market. When an out-of-favor company demonstrates better earnings than what most analysts were expecting (referred to as a favorable earnings surprise), an upward revaluation of both earnings expectations and the price-earnings multiple often results, causing the stock price to outperform the market averages. When the price-earnings ratio of a stock held by the value/growth Component moves significantly above the multiple of the overall stock market, or the company reports a meaningful earnings disappointment, the stock becomes a candidate for sale. The Subadviser to the value/growth Component may also invest a portion of the Component's assets in international equities when the Subadviser determines that opportunities exist in the international markets that will assist in achieving the Component's investment objective. Such investments will be limited to 15% of the Subaccount's total assets and to those issuers which generally have a substantial portion of their business in the United States, and to ADRs. See "Risk Factors, Securities and Investment Techniques -- International Securities" for a discussion of the risks of investing in international securities. A portion of the Component's assets may be held in cash and in short-term investments. GROWTH/INCOME COMPONENT. This Component seeks to enhance each Account's total return through capital appreciation and dividend income by investing primarily in common stocks with low price-earnings ratios, better-than-anticipated earnings and better than market average dividend yields. Investments are selected using a highly disciplined and quantitatively oriented investment management strategy. Stocks with low price-earnings ratios (below the price-earnings ratio of the S&P 500 Index), favorable earnings surprises and above-average yields are identified by the Manager who uses fundamental securities analysis to select individual stocks for purchase in this Component. When the price-earnings ratio of a stock held by the Component moves significantly above the multiple of the overall stock market, or the company reports a meaningful earnings disappointment, or when the yield drops significantly below the market yield, stocks in this Component will normally be sold. The Subadviser to the growth/income Component may also invest a portion of the Component's assets in international equities when the Subadviser determines that opportunities exist in the international markets that will assist in achieving the Component's investment objective. Such investments will be limited to 15% of the Subaccount's total assets and to those issuers which generally have a substantial portion of their business in the United States, and to ADRs. See "Risk Factors, Securities and Investment Techniques -- International Securities" for a discussion of the risks of investing in international equity securities. In order to enhance the growth/ income Component's potential for total return by providing maximum investment flexibility to the Subadviser, a portion of the growth/income Component's investments may be held in investment grade or below investment grade convertible securities and in corporate bonds and U.S. Government securities. A portion of the Component's assets may also be held in cash and short-term instruments. SMALL CAP COMPONENT. This Component seeks long-term growth of capital by investing primarily in equity securities of companies with relatively small market capitalizations, typically between $250 million to $1.5 billion. Current income is a secondary consideration. When selecting individual securities for the Component's portfolio, the Subadviser seeks companies which have an outlook for strong growth in earnings and the potential for significant capital appreciation, particularly in industry segments that are experiencing rapid growth. Securities will be sold when the Subadviser believes that anticipated appreciation is no longer probable and that alternative investments offer superior appreciation prospects, or the risk of a decline in market price is too great. Historical results tend to confirm the benefits of investing in companies with small capitalizations. Capitalization is the aggregate value of a company's stock, or its price per share times the number of shares outstanding. Smaller capitalization companies are Prospectus Page 14 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. generally represented in new or rapidly changing industries. They may offer more profit opportunity in growing industries and during certain economic conditions than do large and medium sized companies. However, smaller capitalization companies also involve special risks. Often, liquidity and overall business stability of a small capitalization company may be less than that associated with larger capitalized companies. Small capitalization stocks frequently involve smaller, rapidly growing companies with high growth rates, negligible dividend yields and extremely high levels of volatility. However, diversification by market capitalization improves profit potential, and serves as a means for reducing volatility of equity securities overall. A portion of the small cap Component's investments may also be held in cash and short-term instruments. THE BROAD FIXED-INCOME CLASS Each CMIA LifeSpan Account will invest those assets which are allocated to the broad fixed-income class among three Components each of which invests in an array of fixed-income securities. FIXED-INCOME SECURITIES GENERALLY. Fixed-income securities, in general, offer a fixed stream of cash flow and may provide good to moderate relative total return benefits over time. The diversified approaches to bond management are partly, but not completely, analogous to strategies in managing equities. Most bond investments focus on generating income, while the potential for capital appreciation is a secondary objective. The bond markets provide diversification benefits to a holder of equity securities depending upon the characteristics of the bonds comprising the broad fixed-income class of each Account. In addition to sector and quality characteristics, the bond market allows for diversification by maturity across the yield curve, I.E., short term (0 to 3 years); intermediate term (3 to 10 years); and long term (10+ years). The value of fixed-income securities generally fluctuates inversely with changes in interest rates and other market and credit factors as well. See "Risk Factors, Securities and Investment Techniques -- Fixed-Income Securities -- General." U.S. GOVERNMENT SECURITIES. U.S. Government securities may provide opportunities for income with minimal credit risk. U.S. Treasury securities are considered the safest of all Government securities. U.S. Government securities are high quality instruments issued or guaranteed as to principal and interest by the U.S. Government or by an agency or instrumentality of the U.S. Government. U.S. government securities are, however, not immune from the market risk of principal fluctuation associated with rising interest rates. See "Risk Factors, Securities and Investment Techniques -- U.S. Government Securities" for a discussion of the types of securities, including mortgage-backed securities, in which the Accounts may invest. CORPORATE BONDS. Investment in corporate bonds may provide relatively higher levels of current income. These bonds are used by U.S. and foreign corporate issuers to borrow money from investors. Corporate bonds have varying degrees of quality and varying degrees of sensitivity to changes in interest rates. The value of these investments fluctuates based on changes in interest rates and in the underlying credit quality of the bond issuers represented in the portfolio. HIGH YIELD/HIGH RISK BONDS. These corporate and government obligations are included in the broad fixed-income class to provide opportunities for higher levels of current income. High yield/ high risk bonds (often called junk bonds) are generally regarded as those rated below Baa by Moody's Investor Service, Inc. (Moody's) or BBB by Standard & Poor's Rating Group (S&P) or, if unrated, determined by the Subadviser to be of comparable credit quality. High yield bonds are also considered "hybrid" securities because they can be constructed with a bias toward income or with an orientation toward appreciation. High yield bonds of small, young, growing companies emerging from bankruptcy or reorganization may tend to exhibit characteristics of growth stocks. See "Risk Factors, Securities and Investment Techniques -- Fixed-Income Securities -- High Yield/ High Risk Bonds" for a discussion of the risks of investing in these securities. Diversification across the broad fixed-income class will be achieved through a series of Components, whose investment and management strategies are noted as follows: GOVERNMENT/CORPORATE COMPONENT. This Component seeks current income and the potential for capital appreciation by investment primarily in fixed-income debt securities, including investment grade corporate debt obligations of foreign and U.S. issuers and securities issued by the U.S. Government and its agencies and instrumentalities and by foreign governments. Though the government/ Prospectus Page 15 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. corporate Component may invest in securities with maturities across the entire slope of the yield curve, including long bonds (10+ years), intermediate notes (3 to 10 years) and short term notes (1 to 3 years), the Manager expects to maintain characteristics of an intermediate average maturity and duration. In assessing maturity, the Manager may take into account pre-payment features. The Manager's investment strategy includes the purchase of bonds that are underpriced relative to other debt securities having similar risk profiles. The Manager utilizes a systematic and disciplined evaluation of a broad array of factors, including maturity, creditworthiness, cash flow certainty and interest rate volatility, and examines yield relationships in relation to trends in the economy, the financial and commodity markets and interest rates. The Component may also invest a portion of its assets in cash and short-term instruments. HIGH YIELD/HIGH RISK BOND COMPONENT. This Component seeks to earn as high a level of current income as is consistent with the risks associated with high yield investments. See "Risk Factors, Securities and Investment Techniques -- Fixed-Income Securities -- High Yield Bonds." The Component's assets are invested primarily in bonds that are rated BB or lower by S&P or Ba or lower by Moody's or, if not rated, that are deemed by the Subadviser to be of comparable quality. This Component may invest in bonds that are in default. Bonds in default are not making interest or principal payments on the date due. The Subadviser employs an active sector rotational style utilizing all sectors of the high yield market, with an emphasis on diversification to control risk. The Subadviser typically favors higher quality companies in the non-investment grade market, senior debt over junior debt, and secured over unsecured credits. The Subadviser will screen individual securities for such characteristics as minimum yield and issue size, issue liquidity and financial and operational strength. In-depth credit research will then be conducted to arrive at a core group of securities within the high yield universe from which the Component will be constructed. Continuous credit monitoring and adherence to sell disciplines associated with both price appreciation and depreciation will be utilized to achieve the overall yield and price objectives of the Component. The Component may also invest a portion of its assets in cash and short-term instruments. SHORT-TERM BOND COMPONENT. This Component seeks to obtain a high level of current income consistent with prudent investment risk and preservation of capital by investing primarily in debt obligations of foreign and U.S. issuers and securities issued by the U.S. Government and its agencies and instrumentalities and by foreign governments. In doing so, this Component will invest primarily in fixed-income securities generally maturing within five years of date of purchase, or with prepayment or similar features which, in the view of the Manager, give the instrument an average life of five years. It is anticipated that the average dollar weighted maturity of the Component will generally range between two and three years. The Manager's investment management process incorporates analysis of an issuer's debt service capability, financial flexibility and liquidity, as well as the fundamental trends and the outlook for an issuer and its industry. Credit risk management is also an important factor, particularly in the Manager's internal fixed-income analysis. The Manager conducts intensive credit research, and carefully selects individual issues and broadly diversifies portfolio holdings by industry sector and issuer. The Manager believes that determination of an issue's attractiveness relative to alternative issues and/or valuations within the marketplace are important considerations in its investment decision-making. The Component may also invest a portion of its assets in cash and money market securities. INVESTMENT RESTRICTIONS. Each Account is subject to certain fundamental investment restrictions that are enumerated in detail in the SAI and may not be changed without shareholder approval. Each Account's investment objective and policies are non-fundamental and may be changed by the Company's Board of Directors without shareholder approval. An Account's shareholders will be given 30 days' advance written notice of a change to an Account's investment objective. Prospectus Page 16 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. YOUR ACCOUNT - -------------------------------------------------------------------------------- HOW TO BUY SHARES YOU MAY PURCHASE SHARES OF AN ACCOUNT AT THE PUBLIC OFFERING PRICE through any securities broker-dealer having a sales agreement with CMFS or directly from CMFS, the Accounts' distributor. Certain minimum investment requirements may apply as set forth in your Shareholder Manual above. All share purchase orders that fail to specify a class will be invested in Class A shares. IF YOU ARE NEW TO CONNECTICUT MUTUAL, complete and sign an account application and mail it along with your check. All orders to purchase shares are subject to acceptance or rejection by the Company or CMFS. You may also open your account by wire as described in Your Shareholder Manual. If there is no application accompanying this prospectus, call 1-800-234-5606. IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an IRA, for the first time, you will need a special application. Retirement investing also involves its own investment procedures. Call 1-800-234-5606 for more information and a retirement application. PURCHASING CLASS A SHARES Class A shares of each Account are sold at the share price next computed after receipt of your purchase order, plus a sales charge as follows: - --------------------------------------------------------------------------------
SALES CHARGE AS PERCENT OF -------------------- DEALER NET NET REALLOWANCE AS AMOUNT OFFERING PERCENT OF AMOUNT OF PURCHASE INVESTED PRICE OFFERING PRICE - ----------------------------------------------------------------------- --------- --------- -------------- Less than $50,000...................................................... 5.26% 5.00% 4.50% $50,000 but less than $75,000.......................................... 4.71% 4.50% 4.00% $75,000 but less than $100,000......................................... 4.44% 4.25% 3.75% $100,000 but less than $250,000........................................ 3.36% 3.25% 3.00% $250,000 but less than $500,000........................................ 2.83% 2.75% 2.50% $500,000 or more....................................................... 0% 0%
- -------------------------------------------------------------------------------- No sales charge is imposed on purchases of Class A shares of an Account paid from automatic reinvestment of dividends and capital gain distributions made by that Account. The sales charge on Class A shares may be reduced and/or eliminated in certain cases as further described under "Reducing or Eliminating Your Sales Charge -- Class A Shares." The entire sales charge on Class A shares for CMFS retail sales is payable to CMFS and is used for sales and other distribution expenses. Upon notice to broker-dealers with whom it has sales agreements, CMFS may pay to such broker-dealer an amount up to the full applicable sales charge. CMFS may from time to time, at its own expense, provide promotional incentives including cash compensation in excess of the applicable sales charge to certain broker-dealers whose representatives have sold or are expected to sell significant amounts of shares of one or more of the Accounts. Broker-dealers to whom substantially the entire sales charge is paid may be deemed to be underwriters as that term is defined under the Securities Act of 1933. CONTINGENT DEFERRED SALES CHARGE -- __CLASS A SHARES Purchases of $500,000 or more of Class A shares are sold without an initial sales charge, but a CDSC of 1.00% may be imposed if you sell (or redeem) such shares within one year of purchase. The CDSC of 1.00% will be assessed on an amount equal to the current market value or the original purchase price of the Class A shares sold, whichever is smaller. In determining whether a CDSC will be charged, it will be assumed that Prospectus Page 17 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. those Class A shares in your account which are not subject to a CDSC will be sold first. The CDSC may be waived on certain redemptions of Class A shares subject to such charge as described below under the caption "Purchasing Class B Shares -- Waiver of the CDSC." CMFS may, in its discretion, pay a commission which may be up to the full amount of the sales charge to its representatives or other broker-dealers who initiate and are responsible for such purchases. Concessions will be paid for sales in excess of $500,000 as follows:
AMOUNT OF TRANSACTION DEALER AT OFFERING PRICE CONCESSIONS CONCESSION - ---------------------------------- ----------- ----------- $500,000 up to $2,000,000......... 1.00% .90% $2,000,000 to $3,000,000.......... .80% .75% $3,000,000 to $5,000,000.......... .20% .15% Over $5,000,000................... .08% .075%
REDUCING OR ELIMINATING YOUR SALES CHARGE -- __CLASS A SHARES REDUCING YOUR SALES CHARGE. There are various methods by which you may qualify for a reduced sales charge on your investments in Class A shares. You may qualify for a reduced sales charge on your investments in Class A shares through COMBINED PURCHASES, STATEMENT OF INTENTION and RIGHTS OF ACCUMULATION. COMBINED PURCHASES. You may aggregate purchases of Class A shares of the Accounts and Class A shares of other Accounts in the Company with the purchases of the other persons listed below to achieve discounts in the applicable sales charges. The sales charge applicable to a current purchase of Class A shares of each Account by a person listed below is determined by adding the value of the Class A shares to be purchased to the aggregate value (at current offering price) of Class A shares of any of the other Accounts in the Company previously purchased and then owned, provided that CMFS is notified by you or your broker-dealer each time a purchase is made which would qualify. For example, if you are investing $75,000 in the Capital Appreciation Account and your spouse owns Class A shares of other Accounts in the Company with a value of $75,000, you would pay a sales charge of 3.25% of the offering price of the new investment. Qualifying investments include those by you, your spouse and your children under the age of 21, if all parties are purchasing Class A shares for their own account(s), which may include tax qualified plans, such as an IRA or single participant Keogh-type plan, or by a company solely controlled (as defined in the 1940 Act) by such individuals. Reduced sales charges also apply to purchases of Class A shares in more than one Account by a trustee or other fiduciary if the investment is for a single trust, estate or single fiduciary account, including pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under the Code. Reduced sales charges apply to combined purchases by or for qualified employee benefit plans of a single corporation, or of corporations affiliated (as defined in the 1940 Act) with each other. STATEMENT OF INTENTION (SOI). You may combine the current value of all Class A shares held in one or more Accounts with the investment amounts intended over the next 13-month period to qualify for a reduced sales charge. The SOI may be backdated 90 days. The terms of the SOI are set forth in more detail in the Accounts' SAI. You must identify on the Application all Accounts whose values are to be combined. If the intended investment is not made within the 13-month period, you must remit the additional sales charges, or sufficient Class A shares will be redeemed from your account to cover the sales charge. RIGHTS OF ACCUMULATION. The sales charge for new purchases of Class A shares of an Account will be determined by aggregating the net asset value of all the Accounts owned by the shareholder at the time of the new purchase. The rules listed under COMBINED PURCHASES may apply. You must identify on the Application all Accounts to be linked for RIGHTS OF ACCUMULATION. ELIMINATING YOUR SALES CHARGE. There are various methods by which you may eliminate sales charges on your investments in Class A shares. Class A shares of an Account may be purchased without a sales charge by (1) any purchaser, provided the total initial amount invested in any Account or Accounts totals $500,000 or more, including investments made pursuant to the COMBINED PURCHASES, STATEMENT OF INTENTION and RIGHTS OF ACCUMULATION features described in this prospectus; (2) any participant in a qualified plan, provided that the total initial amount invested by the plan in any Account or Accounts totals Prospectus Page 18 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. $500,000 or more; (3) Directors of the Company and members of their immediate families; (4) NASD registered representatives whose employer consents to such purchases, and by the spouses and immediate family members of such representatives; (5) employee benefit plans sponsored by CMFS and its affiliated companies; (6) one or more members of a group of at least 1,000 persons (and persons who are retirees from such group) engaged in a common business, profession, civic or charitable endeavor or other activity, and the spouses and minor dependent children of such persons, pursuant to a marketing program between CMFS and such group; and (7) any holder of a variable annuity contract issued in New York state by Connecticut Mutual through the Panorama Separate Account which is beyond the applicable surrender charge period and is used to fund a qualified plan, who exchange the variable annuity contract for Class A shares of the Company; and (8) an institution acting as a fiduciary on behalf of an individual or individuals, where such institution is directly compensated by the individual(s) for recommending the purchase of the shares of the Company, provided the institution has an agreement with CMFS. Purchases of Class A shares made pursuant to (1) and (2) above may be subject to a CDSC. REINSTATEMENT PRIVILEGE. A shareholder who has made a partial or complete redemption of Class A shares from an Account may reinvest all or part of the redemption proceeds in Class A shares of the same Account without imposition of a sales charge with respect to the amount invested, provided such reinvestment is effected within 60 days after the date of the redemption. National Financial Data Services (NFDS), the Accounts' transfer agent, must receive from the shareholder both a written request for reinvestment and a check. The reinvestment will be made at the next calculated net asset value after receipt. Redemptions are taxable transactions, and special tax rules may apply if a reinvestment occurs. Each shareholder should consult his/her own tax adviser as to the tax consequences of any redemption and/or reinvestment. PURCHASING CLASS B SHARES. The public offering price of the Class B shares of each Account is the next determined net asset value per share. No initial sales charge is imposed. A CDSC, however, is imposed on certain redemptions of Class B shares. Since the Class B shares are sold without an initial sales charge, the Account receives the full amount of the investor's purchase payment. Orders for Class B shares for $500,000 or more will be treated as orders for Class A shares or declined. The amount of any applicable CDSC will be calculated by multiplying the lesser of the original purchase price or the net asset value of such shares at the time of redemption by the applicable percentage shown in the table below. Accordingly, no CDSC is imposed on increases in net asset value above the original purchase price.
REDEMPTION DURING CDSC - --------------------------------------------- ------ 1st Year Since Purchase...................... 5% 2nd Year Since Purchase...................... 5% 3rd Year Since Purchase...................... 4% 4th Year Since Purchase...................... 4% 5th Year Since Purchase...................... 2% 6th Year Since Purchase...................... 1% Thereafter................................... 0%
In determining whether a CDSC is applicable to a redemption, the calculation will be made in a manner that results in the lowest possible rate. It will be assumed that the redemption is made first of amounts representing shares acquired pursuant to the reinvestment of dividends and distributions; then of amounts representing the cost of shares purchased seven years or more prior to the redemption; and finally of amounts representing the cost of shares held for the longest period of time within the applicable six-year period. Class B shares of an Account that are redeemed will not be subject to a CDSC to the extent that the value of such shares represents: (1) reinvestment of dividends or capital gain distributions or (2) shares redeemed more than six years after their purchase. Redemptions of most other Class B shares will be subject to a CDSC. See "Waivers of the CDSC." Proceeds from the CDSC are paid to CMFS and are used in whole or part to defray CMFS' expenses related to providing distribution-related services to the Accounts in connection with the sale of Class B shares, including the payment of compensation to broker-dealers. Class B shares will automatically convert into Class A shares on the first day of the month that is eight years after the purchase date, except as noted below. Class B shares acquired by exchange from Class B shares of another Account in the Company will convert into Class A shares based on Prospectus Page 19 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. the date of the initial purchase and the applicable CDSC. Class B shares acquired through reinvestment of distributions will convert into Class A shares based on the date of the initial purchase to which such shares relate. For this purpose, Class B shares acquired through reinvestment of distributions will be attributed to particular purchases of Class B shares in accordance with such procedures as the Directors may determine from time to time. The conversion of Class B shares to Class A shares is subject to the continuing availability of a ruling from the Internal Revenue Service, which the Company has obtained, or an opinion of counsel that such conversions will not constitute taxable events for federal tax purposes. There can be no assurance that such ruling or opinion will continue to be in effect at the time any particular conversion would occur. The conversion of Class B shares to Class A shares will not occur if such ruling is no longer in effect and such an opinion is not available and, therefore, Class B shares would continue to be subject to higher expenses than Class A shares for an indeterminate period. WAIVER OF THE CDSC. Except as otherwise noted, the CDSC is waived in the case of redemptions of Class A shares subject to a CDSC or Class B shares made: (1) by the estate of the deceased shareholder; (2) upon the disability of the shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (Code); (3) for retirement distributions (or loans) to participants or beneficiaries from retirement plans qualified under Sections 401(a) or 403(b)(7) of the Code, or from IRAs, deferred compensation plans created under Section 457 of the Code, or other employee benefit plans; (4) as tax-free returns of excess contributions to such retirement or employee benefit plans; (5) in whole or in part, in connection with shares sold to any state, county, or city, or any instrumentality, department, authority, or agency thereof, that is prohibited by applicable investment laws from paying a sales charge or commission in connection with the purchase of shares of any registered investment management company; (6) in connection with the redemption of shares of the Company due to a combination with another investment company by virtue of a merger, acquisition or similar reorganization transaction; (7) in connection with the Company's right to involuntarily redeem or liquidate an Account; (8) in connection with automatic redemptions of Class A shares and Class B shares in certain retirement plan accounts pursuant to a SYSTEMATIC WITHDRAWAL PLAN but limited to no more than 12% of the original value annually; and (9) as involuntary redemptions of shares by operation of law, or under procedures set forth in the Company's Articles of Incorporation, or as adopted by the Board of Directors of the Company. - -------------------------------------------------------------------------------- HOW TO SELL SHARES You can arrange to take money out of your account(s) at any time by selling (redeeming) some or all of your shares. Your shares will be sold at the next share price calculated after your order is received in good form. Share price is normally calculated at 4:00 p.m. Eastern Time. If you own both Class A and Class B shares in an Account, the Class A shares will be redeemed first unless you specify otherwise. TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods described above in Your Shareholder Manual. TO SELL SHARES IN A RETIREMENT ACCOUNT, your request must be made in writing, except for exchanges to other Accounts, which can be requested by phone or in writing. Call 1-800-322-CMIA for a retirement distribution form. IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least 100 shares in the account to keep it open. TO SELL SHARES BY WIRE, you must sign up for this service in advance by completing the appropriate sections in the Application. Prospectus Page 20 Connecticut Mutual Investment Accounts, Inc. TO INITIATE A TELEPHONE REDEMPTION, call 1-800-322-CMIA (select option "2"). You must have your Account name, account number and the taxpayer identification number of your account available. Telephone redemptions are limited to $50,000 per day unless prior authorization has been obtained through a signature guaranteed letter of authorization. If you do not wish to have telephone transaction privileges on your account, you must complete the appropriate section of the application. CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. Signature guarantees are designed to protect you and the Company from fraud. Your request to sell shares must be made in writing and include a signature guarantee if any of the following situations apply: / / You request in writing to redeem more than $50,000 worth of shares, / / Your account registration or address has changed within the last 30 days, / / The check is being mailed to a different address than the one on our account (record address), / / The check is being made payable to someone other than the account owner, or / / The redemption or exchange proceeds are being transferred to an account with a different registration. You should be able to obtain a signature guarantee from a bank, broker, dealer, credit union (if authorized under state law), securities exchange or association, clearing agency or savings association. The Company reserves the right to waive the requirement of a signature guarantee in certain limited circumstances. A NOTARY PUBLIC CANNOT PROVIDE A SIGNATURE GUARANTEE. SELLING SHARES IN WRITING BY MAIL / / Write a "letter of instruction" with: / / Your name, / / The Account's name, / / Your account number, / / The class of shares to be redeemed, / / The dollar amount or number of shares to be redeemed, and / / Any other applicable requirements listed above in Your Shareholder Manual. / / Mail the letter of instruction to NFDS, the Company's transfer agent, at: Connecticut Mutual Investment Accounts, Inc. P.O. Box 419694 Kansas City, Missouri 64179-0948 Unless otherwise instructed, the Company will send a check to the address of record. REDEMPTIONS OF CERTAIN SHAREHOLDER ACCOUNTS In order to reduce the expense of maintaining numerous small accounts, the Company reserves the right to involuntarily close any shareholder's account (other than an IRA) that has been open at least 24 months and which has fewer than 100 shares if within 30 day's after notification by the Company, the affected shareholder does not increase the size of his account to the required level. In addition, the Board of Directors may cause the Company to redeem at their net asset value shares held by a shareholder in any Account if the shareholder has failed to supply a correct, certified social security or other taxpayer identification number required to be obtained by the Company. - -------------------------------------------------------------------------------- HOW TO EXCHANGE SHARES YOU MAY EXCHANGE YOUR SHARES of a CMIA LifeSpan Account for shares of the same class of any other Account in the Company. To obtain a current prospectus for other Accounts, please call 1-800-322-CMIA (select option "3"). You should consider the differences in investment objectives and expenses of an Account as described in its prospectus before making an exchange. Exchanges are taxable transactions and may be subject to special tax rules about which you should consult your own tax adviser. All exchanges are subject to the following exchange restrictions: / / The Account you are exchanging into must be registered for sale in your state. / / You may exchange only between Accounts that are registered in the same name, address and taxpayer identification number. / / You may only exchange for shares of the same class of another Account. Prospectus Page 21 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. / / The minimum amount you may exchange from one Account into another Account is $500 or the total value of the Account if less than $500. / / IF YOU WISH TO MAKE MORE THAN 12 EXCHANGES IN A 12-MONTH PERIOD, AN EXCHANGE FEE OF .75% OF THE NET ASSET VALUE OF THE SHARES REDEEMED WILL BE CHARGED. EXCHANGES MADE PURSUANT TO THE DCA PROGRAM (SEE "INVESTOR SERVICES") ARE NOT SUBJECT TO THIS FEE. / / You may exchange your shares of a CMIA LifeSpan Account for shares of the same class of any other account in the Company without the imposition of a sales charge at the time of the exchange. With respect to Class B shares, if you exchange such shares of a CMIA LifeSpan Account for Class B shares of another account in the Company, the CDSC will be calculated based on the date on which you acquired the original Class B shares. / / An Account reserves the right to refuse exchange purchases by any person or group if, in the Manager's judgment, an Account would be unable to invest the money effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected. / / Your exchanges may be restricted or refused if an Account receives or anticipates simultaneous orders affecting significant portions of the Account's assets. In particular, a pattern of exchanges that coincides with a "market timing" strategy may be disruptive to the Account. / / Although an Account will attempt to give you prior notice whenever it is reasonably able to do so, it may impose these restrictions at any time. Each Account reserves the right to terminate or modify the exchange privilege in the future. - -------------------------------------------------------------------------------- INVESTOR SERVICES CONNECTICUT MUTUAL PROVIDES A VARIETY OF SERVICES TO HELP YOU MANAGE YOUR ACCOUNT. 24-HOUR SERVICE Call 1-800-322-CMIA (select option "1") for the following automated services. After normal business hours, please leave a message and someone will return your call during normal business hours. / / Account balance / / Last distribution / / Prices / / Account distributions / / Service representative / / Duplicate statement / / Change PIN (Personal Identification Number) / / Duplicate tax forms INFORMATION SERVICES TELEPHONE REPRESENTATIVES are available during normal business hours to provide the information and services you need. STATEMENTS AND REPORTS sent to you include the following: / / Confirmation statements (after every transaction, except reinvestments, automatic investments and automatic payroll investments, that affects your account balance or your account registration), / / Quarterly consolidated account statements which summarize all account activity year-to-date, and / / Financial reports (every six months). Call 1-800-322-CMIA (select option "2") if you need additional copies of financial reports or historical account information. INVESTOR SERVICES One easy way to pursue your financial goals is to invest money regularly. The Company offers convenient services that let you transfer money into your account, or between accounts, automatically. While regular investment plans do not guarantee a profit and will not protect you against loss in a declining market, they can be an excellent way to invest for retirement, a home, educational expenses and other long-term financial goals. Certain restrictions apply. Call 1-800-322-CMIA for more information. AUTOMATIC INVESTMENT PLAN lets you make regular monthly investments through an automatic withdrawal from your bank account ($50 minimum per Account) and you can enroll when you establish your account. Forms are available to initiate Prospectus Page 22 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. this program on existing accounts from your registered representative, or by calling 1-800-322-CMIA. DOLLAR COST AVERAGING (DCA) INVESTMENT PROGRAMS let you set up monthly exchanges in amounts of $100 or more from one Account to the same class of shares of any other Account. Sales charges may apply. Use of the DCA Program permits the purchase of shares of an Account on a scheduled basis which disregards fluctuations in net asset value. All shareholder accounts involved in a DCA Program must have like registrations. AUTOMATIC DIVIDEND DIVERSIFICATION (ADD) lets you automatically reinvest dividends and capital gain distributions paid by one Account into shares of the same class of another Account. The number of shares reinvested will be determined using the price in effect for the receiving Account on the dividend payment date for the Account whose dividend is to be invested. Sales charges may apply. All shareholder accounts involved in an ADD program must have like registrations. EXCHANGE PRIVILEGE. You may exchange your shares of a CMIA LifeSpan Account for shares of the same class of any other Account in the Company. To obtain a current prospectus for any Accounts in the Company, please call 1-800-322-CMIA (select option "3"). You should consider the differences in investment objectives and expenses of an Account as described in its prospectus before making an exchange. Exchanges are taxable transactions and may be subject to special tax rules about which you should consult your own tax adviser. For complete policies and restrictions governing exchanges, including circumstances under which a shareholder's exchange privilege may be suspended or revoked, see "How to Exchange Shares." SYSTEMATIC WITHDRAWAL PLANS let you set up monthly, quarterly, semi-annual or annual redemptions with respect to Class A shares only from any account with a value of $10,000 or more. You may direct the Company to make regular payments in fixed dollar amounts of $50 or more, or in an amount equal to the value of a fixed number of shares. Payments can be directed to the shareholder or to someone other than the registered owner(s) of the account. If this privilege is requested when the account is established, no signature guarantee is needed. If this privilege is added to an existing account and payments are directed to someone other than the registered owner(s) of the account, a signature guarantee is required on the SYSTEMATIC WITHDRAWAL PLAN application. The Company reserves the right to institute a charge for this service. Systematic Withdrawal Plans for Class B shares of an Account are permitted only for payments of required distributions from retirement plan accounts for a shareholder who has attained age 70 1/2. The CDSC will be waived with respect to such redemptions but only if such redemptions are limited to no more than 12% of the original value of the account. MAINTAINING A SYSTEMATIC WITHDRAWAL PLAN AT THE SAME TIME REGULAR ADDITIONAL INVESTMENTS ARE BEING MADE INTO ANY ACCOUNT IS NOT RECOMMENDED BECAUSE A SALES CHARGE WILL BE IMPOSED ON THE NEW SHARES AT THE SAME TIME SHARES ARE BEING REDEEMED TO MAKE THE PERIODIC PAYMENTS UNDER THE SYSTEMATIC WITHDRAWAL PLAN. The Company may amend or terminate the SYSTEMATIC WITHDRAWAL PLAN on 30 days' prior written notice to any participating shareholders. - -------------------------------------------------------------------------------- TRANSACTION DETAILS THE COMPANY IS OPEN FOR BUSINESS each day that the New York Stock Exchange (NYSE) is open. The Company normally calculates an Account's net asset value as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern Time. AN ACCOUNT'S NET ASSET VALUE (NAV) PER SHARE is the value of a single share. The NAV of a class of an Account is computed by adding the value of its investments, cash, and other assets, subtracting the liabilities attributable to the class, and then dividing the result by the number of shares of the class outstanding. The sale of shares of any Account will be suspended during any period when the determination of its net asset value is suspended pursuant to rules or orders of the SEC. The assets of each Account are valued primarily on the basis of market quotations. If quotations are not readily available, assets are valued by a Prospectus Page 23 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. method that the Board of Directors believes accurately reflects fair value. Foreign securities are valued on the basis of quotations from the primary market in which they are traded, and are translated from the local currency into U.S. dollars using current exchange rates. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of regular trading on the NYSE. The values of such securities used in computing the net asset value of an Account's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of regular trading on the NYSE. Events which affect the values of such securities and such exchange rates may occur between the times at which they are determined and the close of regular trading on the NYSE and will, therefore, not be reflected in the computation of an Account's net asset value. If events materially affecting the value of such securities occur during such period, then these securities are valued at their fair value using a method determined in good faith by the Board of Directors. WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your Social Security or other taxpayer identification number is correct and that you are not subject to 31% backup withholding for failing to report interest or dividends to the IRS. If you are subject to backup withholding, the IRS can require the Company to withhold 31% of your dividends, capital gain distributions, and the proceeds of redemptions (including exchanges). YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Telephone representatives will request personalized security codes or other information and will also record calls. If reasonable procedures such as those described in the Prospectus are not followed, the Company may be liable for any loss due to unauthorized or fraudulent telephone instructions. In all other cases, neither the Company nor CMFS will be liable for acting upon telephone instructions made in accordance with the telephone transaction procedures described in this Prospectus. You should verify the accuracy of your confirmation statements immediately after you receive them. If you do not want the ability to redeem and exchange by telephone, call 1-800-322-CMIA for instructions. See the Account Application. IF YOU ARE UNABLE TO REACH THE COMPANY BY PHONE (for example, during periods of unusual market activity), consider placing your order by mail or overnight mail. EACH ACCOUNT RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period of time. Each Account also reserves the right to reject any specific purchase order, including certain purchases by exchange. See "How to Exchange Shares." Purchase orders may be refused if, in the Manager's opinion, they are of a size that would disrupt management of an Account. WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the next offering price calculated after your order is received and accepted. Note the following: / / All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. Checks are accepted subject to cancellation at full value. You may not purchase shares for a new account or an existing account with a third party check. / / If you buy shares by check, and then redeem those shares by a method other than by exchange to another Account in the Connecticut Mutual Family of Accounts, mailing the payment of the proceeds may be delayed for up to fifteen calendar days to ensure that your check has cleared. / / If your check does not clear, your purchase will be cancelled and you could be liable for any losses or fees the Account or its transfer agent has incurred. There will be a $20.00 fee for any check returned for any reason. TO AVOID THE COLLECTION PERIOD associated with checks, consider buying shares by bank wire of federal funds, U.S. Postal money order, U.S. Treasury check, Federal Reserve check, or direct deposit instead. "Wiring federal funds" means that your bank sends money to the Company's bank through the Federal Reserve System. To wire funds see "By Wire" in Your Account Manual. WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the next NAV calculated after your request is received and accepted. Note the following: / / Normally, redemption proceeds will be mailed to you on the next business day, but if making immediate payment could adversely affect an Account, it may take up to seven days to pay you. Prospectus Page 24 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. / / As mentioned above, an Account may hold payment on redemptions until it is reasonably satisfied that investments made by check have been collected, which can take up to 15 calendar days. / / Redemptions may be suspended or payment dates postponed when the NYSE is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the SEC. SHARE CERTIFICATES. Shares are credited to your account and certificates are not issued unless specifically requested. You may request share certificates by writing to the transfer agent, NFDS, P.O. Box 419694, Kansas City, Missouri, 64179-0948. There is no cost for issuing share certificates. Transfers, exchanges and redemptions of shares will be more complicated if certificates have been issued. If your share certificate is lost or misplaced you will be required to pay a fee and furnish a bond satisfactory to the Company's transfer agent (usually in the amount of 1.5% of the face value of the lost certificate) before the shares can be transferred or redeemed, or a replacement certificate issued. - -------------------------------------------------------------------------------- MANAGEMENT - -------------------------------------------------------------------------------- THE MANAGER AND THE SUBADVISERS Each Account is managed by G.R. Phelps, the Manager, who handles their business and administrative affairs. The Manager is responsible for the overall management of the Accounts' investments, including the allocation of the Accounts' assets both between and within asset classes for each Component. The Manager is also responsible for the selection of portfolio investments for the following Components: value/growth; growth/ income; government/corporate bonds; and short-term bond. The Manager has engaged Subadvisers to manage the other Components. The principal business address of the Manager is 10 State House Square, Hartford, Connecticut. The Manager's mailing address is 140 Garden Street, Hartford, Connecticut 06154. The Manager also manages the investments of Connecticut Mutual Financial Services Series Fund I, Inc. (Series Fund I), a diversified investment management company offering its series of common stock as funding vehicles for variable annuity and variable life contracts issued by Connecticut Mutual and CM Life Insurance Company (CM Life). Connecticut Mutual is the parent company for the Manager and CM Life. The Manager has engaged three Subadvisers to assist in the selection of portfolio investments for certain Components. Scudder, Stevens, 345 Park Avenue, New York, NY 10154, the Subadviser to the international Component, has been providing investment counseling services for over 70 years, since its founding in 1919. Scudder, Stevens supervises assets for institutional clients, investment companies and individuals and had over $90 billion in assets under management as of May 31, 1995. BEA Associates, Citicorp Center, 153 East 53rd Street, 57th Floor, New York, NY 10022, the Subadviser to the high yield/high risk bond Component, has been providing fixed-income and equity management services to institutional clients since 1984. As of May 31, 1995, BEA Associates, together with its global affiliate, had $25 billion in assets under management. Pilgrim Baxter, 1255 Drummers Lane, Wayne, PA 19087, the Subadviser to the small cap Component, was established in 1982 to provide specialized equity management for institutional investors including other investment companies. As of May 31, 1995, Pilgrim Baxter had over $4.0 billion in assets under management. The Manager provides supervision for the portfolio management of the CMIA LifeSpan Accounts through the Asset Allocation Committee, which consists of four members who meet quarterly to evaluate, among other things, the asset allocation Prospectus Page 25 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. between the broad asset classes of the CMIA LifeSpan Accounts. The persons primarily responsible for the day-to-day management of each Component in the primary asset classes of each Account are listed below. - --------------------------------------------------------------------------------
COMPONENT PORTFOLIO MANAGER BUSINESS EXPERIENCE (LAST 5 YEARS) - ---------------------- ------------------------- -------------------------------------------------------------------- International Nicholas Bratt Managing Director and Director, Global Equity Group, Scudder, (Scudder, Stevens) Stevens (since 1976) Joan Gregory Vice President, Scudder, Stevens (since 1992); Assistant Portfolio Manager, U.S. Trust Company (1989-1992) Value/Growth Peter Antos, C.F.A. Vice President and Senior Portfolio Manager, Equities, G.R. Phelps (G.R. Phelps) (since 1989) Michael C. Portfolio Manager, Equities -- CML (1988-Present) Strathearn, C.F.A. Kenneth B. White, C.F.A. Portfolio Manager, Equities -- CML (1992-Present), Senior Investment Officer, Equities -- CML (1987-1992) Growth/Income Kenneth B. White, C.F.A. Portfolio Manager, Equities -- CML (1992-Present), Senior Investment (G.R. Phelps) Officer, Equities -- CML (1987-1992) Peter M. Antos, C.F.A. Vice President and Senior Portfolio Manager, Equities, G.R. Phelps (since 1989) Small Cap Gary L. Pilgrim Director, Member of Executive Committee, President and Chief (Pilgrim Baxter) Investment Officer, Pilgrim Baxter (1985-Present) John F. Force Portfolio Manager/Analyst, Pilgrim Baxter (since 1993); and Vice President/Portfolio Manager, Fiduciary Management Associates (1989-1993) James M. Smith Portfolio Manager/Analyst, Pilgrim Baxter (since 1993); Senior Vice President/Portfolio Manager, Selected Financial Services (1992-1993); and Vice President, Sears Investment Management Company (prior to 1992) Michael D. Jones Portfolio Manager/Analyst, Pilgrim Baxter (since 1995); Vice President/Portfolio Manager, Bank of New York (1990-1995) Government Stephen F. Libera, Vice President and Senior Portfolio Manager, Securities/ Corporate C.F.A. Fixed-income, G.R. Phelps (1989-Present) Bonds (G.R. Phelps) William H. Jefferis Portfolio Manager, Fixed-income -- CML, (1993-Present), Investment Officer, Fixed-income -- CML (1990-1993); High Yield Bonds Richard J. Lindquist Managing Director and High Yield Portfolio Manager, BEA Associates (BEA Associates) (1995); CS First Boston (1989-1995) Short-Term Bond Stephen F. Libera, C.F.A. Vice President and Senior Portfolio Manager, Fixed-income -- G.R. (G.R. Phelps) Phelps (1989-Present) William H. Jefferis Portfolio Manager, Fixed-income -- CML, (1993-Present), Investment Officer, Fixed-income -- CML (1990-1993);
CMFS distributes and markets the Accounts and their services. NFDS performs transfer agent servicing and dividend disbursing functions for each Account. Prospectus Page 26 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. BREAKDOWN OF EXPENSES Like all mutual funds, each Account pays fees and expenses related to its daily operations. These Account fees and expenses are neither billed directly to shareholders nor deducted from individual shareholder accounts but are paid out of an Account's assets and are reflected in its share price or dividends. Each Account has entered into an investment advisory agreement with the Manager pursuant to which the Account pays a management fee to the Manager for managing its investments and business affairs. The Manager provides administrative services to each Account, including providing accounting, administrative and clerical personnel and monitoring the activities of the transfer agent, custodian and independent auditors of the Accounts. The Accounts also pay other expenses, which are explained below. MANAGEMENT AND SUBADVISORY FEES The Capital Appreciation Account, Balanced Account and Diversified Income Account each pay monthly to the Manager a fee equal on an annual basis to .85%, .85% and .75%, respectively, of the respective Account's average daily net asset value up to $250 million and .75%, .75% and .65%, respectively, on such assets over $250 million. While higher than advisory fees paid by most mutual funds, these fees are comparable to those paid by mutual funds with similar objectives and investment strategies. SUBADVISORY FEES. The Manager pays out of its own assets the fees to the Subadvisers for the services they provide to the Manager in managing certain Components. The Manager pays Scudder, Stevens a subadvisory fee equal on an annual basis to .75% of the first $10 million of assets under management; .70% on the next $15 million of such assets; .65% on the next $15 million of such assets; .50% on the next $60 million of such assets; and .35% on such assets over $100 million. The Manager pays BEA Associates a subadvisory fee equal on an annual basis to .45% of the first $25 million of assets under management; .40% on the next $25 million of such assets; .35% on the next $50 million of such assets; and .25% on all such assets over $100 million. The Manager pays Pilgrim Baxter a subadvisory fee equal on an annual basis to 0.60% of assets under management. For purposes of determining the applicable rate of the subadvisory fee for Pilgrim Baxter and BEA Associates, assets under management include all assets described above and the assets of Series Fund I managed by the Subadviser. From time to time, G.R. Phelps may agree not to impose all or a portion of its advisory fee and/or undertake to pay or reimburse an Account for all or a portion of its expenses not otherwise required to be borne or reimbursed by G.R. Phelps. Any such fee reduction or undertaking may be discontinued or modified by G.R. Phelps at any time. Expense limitation arrangements can decrease an Account's expenses and increase its performance. OTHER EXPENSES Each Account is also responsible for expenses not expressly stated to be payable by the Manager under the Account's Investment Advisory Agreement. Each Account pays other expenses, such as legal, audit and custodian fees, proxy solicitation costs and the compensation of directors who are not affiliated with Connecticut Mutual. State Street Bank & Trust Company (State Street) provides custodian services to each Account. Each Account contracts with NFDS, a subsidiary of State Street, to perform many transaction and accounting functions. These services include processing shareholder transactions, valuing the Account's investments and handling securities loans. DISTRIBUTION PLANS Each Account has adopted a distribution plan for both Class A shares (Class A Plan) and Class B shares (Class B Plan) designed to meet the requirements of Rule 12b-1 under the 1940 Act and the sales charge rules of the NASD. Under the Class A Plan of each Account, each Account may make payments for personal services and/or the maintenance of shareholder accounts to account executives of CMFS and other broker-dealer firms with whom CMFS has agreements in amounts not exceeding 0.25% of the Account's average daily net assets for any fiscal year. Under each Account's Class B Plan, such Account may pay CMFS a service fee at the annualized rate of up to 0.25% of the average daily net assets of the Account's Class B shares for its expenditures incurred in servicing and maintaining shareholder accounts, and may pay CMFS a distribution fee at Prospectus Page 27 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. the annualized rate of up to 0.75% of the average daily net assets of the Account's Class B shares for its expenditures incurred in providing services as distributor. Expenses incurred under the Class B Plan in excess of 1.00% annually may be carried forward for reimbursement in subsequent years as long as the Class B Plan continues in effect. Each of the Class A Plans and Class B Plans were approved, on behalf of the respective Account, by a majority of the Company's Directors who are not interested persons of the Company and who have no financial interest in the respective Plans. Neither a Class A Plan nor a Class B Plan may be amended to increase materially the annual percentage limitation of average net assets that may be spent for the services described in a Class A Plan or Class B Plan without the approval of the shareholders of the affected Account. Any unreimbursed expenses under a Class A Plan are not carried beyond one year from the date of incurrence. PORTFOLIO TURNOVER RATES Each Account's portfolio securities in each Component may be changed without regard to the holding period of such securities (subject to certain tax restrictions) when the Manager deems it appropriate to do so in order to achieve each Account's normal allocation between the primary asset classes and the Components in view of a change in the financial or business operations of an issuer or changes in general market conditions. The portfolio turnover rate for the Capital Appreciation Account, Balanced Account and Diversified Income Account for the four month period ended August 31, 1995 was 64.27%, 81.69%, and 50.19% respectively on an annualized basis. Under normal market conditions, the portfolio turnover rates of the Capital Appreciation Account and the Diversified Income Account are each expected to be 75%. The turnover rates of the fixed income portion and the equity portion of the Balanced Account are expected to be 70% and 85%, respectively. High portfolio turnover rates, I.E., in excess of 100%, increase transaction costs and may increase taxable capital gains. The Manager considers these effects when evaluating the anticipated benefits of rebalancing an Account's normal allocation. PORTFOLIO TRANSACTIONS AND BROKERAGE The Manager and the Subadvisers are primarily responsible for placing orders for the portfolio transactions of each Account. In placing orders, it is the policy of each Account to obtain the most favorable net results, taking into account various factors, including price, dealer spread or commissions, if any, size of the transaction, difficulty of execution and other services rendered. While the Manager and Subadvisers seek reasonably competitive spreads or commissions, an Account will not necessarily be paying the lowest spread or commissions available. Subject to the requirements of best execution, brokerage transactions may be directed to broker-dealers who also sell shares of the Accounts. Commission rates on foreign exchanges are generally fixed and are generally higher than negotiated commission rates available in the United States. MERGER OF PARENT OF G.R. PHELPS The Boards of Directors of Connecticut Mutual Life Insurance Company (the parent company to G.R. Phelps) ("CML") and Massachusetts Mutual Life Insurance Company ("MassMutual") have approved a plan of merger pursuant to which CML would merge with and into MassMutual. The agreement was signed on September 13, 1995. The merger, if consummated, will result in the Adviser becoming a wholly-owned subsidiary of MassMutual. The merger is expected to be consummated on or about December 31, 1995, subject to the approval of certain policy holders and insureds of CML and MassMutual and applicable regulatory authorities. Consummation of the merger may result in an assignment, and consequently a termination, of each existing investment management agreement between the Adviser and the Fund and any sub-investment management agreement among the Adviser, Sub-Adviser and the Fund. Fund shareholders on the record date will be asked to vote on new investment management agreements to become effective at or about the time the transaction is completed. Prospectus Page 28 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. DIVIDENDS, CAPITAL GAINS AND TAXES - -------------------------------------------------------------------------------- It is the Company's intention to distribute all or substantially all the net investment income and net realized capital gains, if any, of each Account for each taxable year. For dividend purposes, net investment income of each Account will consist of all payments of dividends received or interest accrued by such Account less the estimated expenses of such Account (including fees payable to the Manager). Dividends from the net investment income of the Capital Appreciation and Balanced Accounts are declared and paid semi-annually and dividends from the net investment income of the Diversified Income Account are declared and paid monthly. All realized net short-term capital gains in excess of net long-term capital losses of an Account, if any, and all realized net long-term capital gains in excess of net realized short-term capital losses of the Account, if any, are declared and paid at least annually. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full and fractional shares of each Account. Dividends from each Account's net investment income, certain net foreign exchange gains and net short- term capital gains are taxable as ordinary income, and dividends from each Account's net long-term capital gains are taxable as long-term capital gains. For federal income tax purposes, all dividends are taxable as described above whether a shareholder takes them in cash or reinvests them in additional shares of the Account. Certain dividends paid in January may be treated as if they were received on December 31 of the prior year. Information as to the federal tax status of dividends and distributions will be provided annually. Each Account intends to elect to be treated and qualify each year for treatment as a "regulated investment company" under Subchapter M of the Code, so that it will not pay federal income taxes on income and capital gains provided such income and capital gains are distributed to shareholders within the time period prescribed by the Code. Under the Code, an Account will be subject to a nondeductible 4% excise tax on a portion of its undistributed income and capital gains if it fails to meet certain distribution requirements with respect to each calendar year. Each Account intends to make distributions in a timely manner and accordingly does not expect to be subject to the excise tax. A portion of any dividend income received by an Account from U.S. domestic corporations and distributed as a dividend to its corporate shareholders may be eligible for the 70% dividends-received deduction, subject to certain conditions and limitations under the Code. An Account may be subject to foreign withholding or other foreign taxes with respect to income and, in some cases, capital gains from its foreign investments. In some cases it is possible that these taxes may be reduced under applicable income tax treaties. A state income (and possibly local income and/or intangible property) tax exemption is generally available to the extent an Account's distributions are derived from interest on (or, in the case of intangible taxes, the value of its assets is attributable to) certain U.S. Government obligations, provided in some states that certain thresholds for holdings of such obligations and/or reporting requirements are satisfied. Accordingly, each Account will report annually to its shareholders the percentage of interest income earned from such securities during the preceding year. Each shareholder is advised to consult his own tax adviser regarding the exemption, if any, of such income under applicable state and local law. Redemptions (including exchanges and repurchases) of shares are taxable transactions on which a shareholder may realize a gain or loss. Special tax rules may apply to the calculation of gains or losses and the deductibility of any losses in particular circumstances. Dividends and other distributions and the proceeds of redemptions or repurchases of Account shares paid to individuals and other non-exempt payees will be subject to a 31% backup withholding of federal income tax if the Account is not provided with the shareholder's correct Prospectus Page 29 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. taxpayer identification number and certification that the number is correct and the shareholder is not subject to backup withholding or the Account receives notice from the Internal Revenue Service (the "IRS") or a broker that such withholding applies. Please refer to the Account Application for additional information. The description above relates only to U.S. federal income tax consequences for shareholders who are U.S. persons, I.E., U.S. citizens or residents or U.S. corporations, partnerships, trust or estates, and who are subject to U.S. federal income tax. Shareholders should consult their own tax advisers regarding state, local and other applicable tax laws. - -------------------------------------------------------------------------------- THE COMPANY - -------------------------------------------------------------------------------- Each Account is a mutual fund: an entity that pools shareholders' money and invests it toward specified goals. In technical terms, each Account is a separate diversified portfolio or "series" of the Company, an open-end management investment company which was organized as a corporation under the laws of Maryland on December 9, 1981. The Company may create and classify the Common Stock, par value $0.001 per share, into separate mutual funds (or investment series or portfolios of shares), without further approval of the Company's shareholders. As of the date of this prospectus, the Company has established the three CMIA LifeSpan Accounts described in this prospectus; the following five municipal bond accounts, which are offered by means of a separate prospectus, CMIA National Municipals Account, CMIA California Municipals Account, CMIA Massachusetts Municipals Account, CMIA New York Municipals Account and CMIA Ohio Municipals Account; and five other accounts which are offered by means of a separate prospectus, Connecticut Mutual Liquid Account, Connecticut Mutual Government Securities Account, Connecticut Mutual Income Account, Connecticut Mutual Total Return Account and Connecticut Mutual Growth Account. The Board of Directors is authorized, without shareholder approval, to establish additional series of the Company. As of August 31, 1995, Connecticut Mutual and its affiliates owned 29% of the shares of the Company, including 95% of the shares of the Diversified Income Account, 95% of the shares of the Capital Appreciation Account and 96% of the shares of the Balanced Account. The Board of Directors is authorized, without further shareholder approval, to classify and reclassify the Accounts into one or more classes. Accordingly, the Directors have authorized the issuance of two classes of shares of each of the Accounts, designated as Class A shares and Class B shares. The shares of each class represent an interest in the same portfolio of investments of the Accounts and have equal rights as to voting, redemption, dividends and liquidation. However, each class bears different distribution and transfer agency fees and expenses and each class has exclusive voting rights with respect to its respective Rule 12b-1 distribution plan. The Company is governed by a Board of Directors which is responsible for protecting your interests as a shareholder. The directors are experienced executives who meet at least quarterly to oversee the activities of each Account, review contractual arrangements with companies that provide services to the Accounts and review each Account's performance. The majority of the directors are not otherwise affiliated with Connecticut Mutual. The SAI contains the names and general background of each director and executive officer of the Company. The Company does not hold annual meetings of shareholders. The Company may hold shareholder meetings, however, to elect or remove directors, change the fundamental policies of an Account, approve the management contract of an Account or for other purposes. On matters affecting only one series, only the shareholders of that series are entitled to vote. On matters relating to all of the series but affecting the Accounts differently, separate votes by each series are required. Shareholders holding more than 50% of the shares of the Company can elect all of the Company's directors if they so choose. Each share is entitled to one vote within each series. Prospectus Page 30 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. PERFORMANCE From time to time the Company may advertise yields and total returns for the Accounts. These figures will be based on historical performance and are not intended to indicate future performance. Performance data for the classes of the Accounts may be calculated pursuant to a standardized formula or in non-standardized manners. The standardized yield refers to the annualized net income generated by an investment in a class of an Account over a specified 30-day period. The yield is calculated by assuming that the income generated by the investment during the 30-day period is generated each 30-day period over a 12-month period, and is shown as a percentage of the investment. The standardized total return of a class of an Account refers to return quotations assuming an investment has been held in the Account for various periods of time including, but not limited to, one year, five years and ten years (or any such shorter period from the Account's or that class's inception). The total return quotations will represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods for which total return quotations are provided. Accordingly, the total return quotations will reflect not only income but also changes in principal value (that is, changes in the net asset value per share), whereas the yield figures will only reflect income. The standardized yield and total return quotations for the Class A shares of Accounts will reflect the maximum sales charge imposed on purchases of such shares. For Class B shares of an Account, these calculations reflect the deduction of any applicable CDSC. In addition, the Company may from time to time also disclose yield or total return in non-standard formats, and cumulative total return for the classes of the Accounts. The non-standard average annual total return and cumulative total return may be based on net asset value per share of a class, rather than a $1,000 investment. These non-standard return figures would not reflect the initial sales charge on Class A shares or the CDSC on Class B shares, which, if reflected, would lower the performance figures. In addition, non-standardized yield figures may be advertised that also would not reflect the applicable sales charge. The Company may from time to time also disclose yield, standard total returns and non-standard total returns for the classes of the Accounts based on or covering periods of time other than those indicated above. Non-standard performance data will only be disclosed if the standard performance is also disclosed. For additional information regarding the calculation of performance data, please refer to the SAI. From time to time, in advertisements or in reports to shareholders, the Company may compare the performance of the classes of the Accounts to that of other mutual funds with similar investment objectives, and to other relevant indices published by recognized mutual fund statistical rating services or publications of general interest, such as FORBES or MONEY. The SAI contains a list of publications which may contain comparative studies which the Company may use in advertisements or shareholder materials. For example, the Company may compare an Account's Class A or Class B performance to that of other mutual funds with a similar investment objective as compiled by Lipper Analytical Services, Inc. In addition, the Company may compare the performance to that of recognized stock market indicators, including, but not limited to, the Standard & Poor's 500 Stock Index (which is a group of unmanaged securities widely regarded by investors as representative of the stock market in general), and the Dow Jones Industrial Average (which is a price-weighted average of 30 large, well-known industrial stocks that are generally the leaders in their industry). Performance comparisons should not be considered representative of the future performance of an Account. The effects of compounding may also be discussed. Performance data may also be calculated for shorter or longer base periods. The Company may use various base periods as may be deemed necessary to provide investors with the most informative yield or total return information, depending on the then-current market conditions. Performance will vary from time to time, and historical results will not be representative of future performance. Performance information may not provide a basis for comparison with other investments or other Prospectus Page 31 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. investment companies using a different method of calculating performance. Current yield is not fixed and varies with changes in investment income and net asset value per share. The yield of Class A or Class B shares of an Account will be affected if it experiences a net inflow of new money which is invested at interest rates different from those being earned on its then-current investments. Your principal in an Account and an Account's return are not guaranteed and will fluctuate according to market conditions. The investment results of an Account's Class A and Class B shares will vary from time to time depending on market conditions, the composition of the Account's portfolio and operating expenses. For further information about the calculation methods and uses of an Account's Class A and Class B shares investment results, see the SAI. - -------------------------------------------------------------------------------- RISK FACTORS, SECURITIES AND INVESTMENT TECHNIQUES - -------------------------------------------------------------------------------- The following discussions contain more detailed information about types of instruments in which the Accounts may invest and strategies the Manager and Subadvisers may employ in pursuit of the Accounts' investment objectives. A summary of risks and restrictions associated with these instrument types and investment practices is included as well. Policies and limitations are considered at the time of purchase; the sale of instruments is not required in the event of a subsequent change in circumstances. Some of the restrictions described below are fundamental, I.E., subject to change only by shareholder approval. These fundamental restrictions are set forth in greater detail in the SAI. The Manager and Subadvisers may not buy all of these investments or use all of these techniques to the full extent permitted unless it is believed that doing so will help an Account achieve its goals. EQUITY SECURITIES. Each Account may hold equity securities. Equity securities may include common stocks, preferred stocks, convertible securities and warrants. Common stocks represent an equity (ownership) interest in a corporation. This ownership interest often gives an Account the right to vote on measures affecting the company's organization and operations. Although common stocks generally have a history of long-term growth in value, their prices tend to fluctuate in the short term, particularly those of smaller capitalization companies. Preferred stocks represent a limited equity interest in a corporation. Preferred stocks are often entitled only to dividends at a specified rate, and have a preference over common stock, with respect to dividends and on liquidation of assets. Preferred stocks generally have lesser voting rights than common stocks. Because their dividends are often fixed, the value of many preferred stocks fluctuates inversely with changes in interest rates. Convertible securities are bonds, preferred stocks and other securities that pay a fixed rate of interest or dividends. As an additional feature, however, they offer the buyer the option of converting the security into common stock. The value of convertible securities depends partially on interest rate changes and the credit quality of the issuer. The value of convertible securities is also sensitive to company, market and other economic news, and will change based on the price of the underlying common stock. For this reason, the Manager and the Subadvisers consider the growth potential of the underlying stock when selecting an Account's investments. Convertible securities generally have less potential for gain than common stock, but also less potential for loss, since their income provides a cushion against the stock's price declines. However, because the buyer is also exposed to the risk and reward potential of the underlying stock, convertible securities generally pay less income than similar non-convertible bonds. FIXED-INCOME SECURITIES. GENERAL. Each Account may purchase fixed-income securities. Bonds and other fixed-income instruments are used by issuers to borrow money from investors. The issuer pays the investor a fixed or variable rate of interest, Prospectus Page 32 Connecticut Mutual Investment Accounts, Inc. and must repay the amount borrowed at maturity. Some fixed-income securities, such as zero coupon bonds, do not pay current interest, but are purchased at a discount from their face values. Fixed-income securities have varying degrees of quality and varying levels of sensitivity to changes in interest rates. A decrease in interest rates will generally result in an increase in the value of an Account's portfolio of fixed-income securities, and, conversely, during periods of rising interest rates, the value of an Account's portfolio of fixed-income securities will generally decline. Longer-term bonds are generally more sensitive to interest rate changes than shorter-term bonds. Changes by recognized agencies in the rating of any fixed-income security and in the ability of an issuer to make payments of interest and principal will also affect the value of these investments. HIGH YIELD/HIGH RISK BONDS. Each Account may purchase lower quality and unrated bonds. Bonds rated below investment grade (I.E., below Baa by Moody's and BBB by S&P) (commonly called junk bonds) are often considered to be speculative and involve greater risk of default or price changes than investment grade bonds due to changes in the issuer's creditworthiness and the outlook for economic growth. Obligations rated below investment grade may provide greater opportunities for investment income and higher yield than higher rated obligations but are subject to risks not generally associated with an investment in investment grade obligations. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. An economic downturn could also disrupt the high yield bond market generally and impair the ability of issuers to repay principal and interest. An increase in interest rates would (as is the case with fixed-income instruments generally) reduce market values of a portfolio of lower rated fixed-income securities. The market price and liquidity of lower rated fixed-income securities generally responds to short term corporate and market developments to a greater extent than do higher rated securities because such developments are perceived to have a more direct relationship to the ability of an issuer of such lower rated securities to meet its ongoing debt obligations. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield bonds, especially in a thinly traded market. Reduced volume and liquidity in the high yield/ high risk bond market or the reduced availability of market quotations for such bonds may make it more difficult to dispose of the bonds and to value accurately an Account's assets. The reduced availability of reliable, objective pricing data may increase an Account's reliance on management's judgment in valuing high yield bonds. Prices for high yield securities may be affected by legislative and regulatory developments. These laws could adversely affect the Account's net asset value and investment practices, the secondary market for high yield securities, the financial condition of issuers of these securities and the value of outstanding high yield securities. For example, federal legislation requiring the divestiture by federally insured savings and loan associations for the investments in high yield bonds and limiting the deductibility of interest by certain corporate issuers of high yield bonds adversely affected the market in recent years. Lower rated or unrated debt obligations also present risks based on payment expectations. If an issuer calls the obligations for redemption, the Account may have to replace the security with a lower yielding security, resulting in a decreased return for investors. If an Account experiences unexpected net redemptions, it may be forced to sell its higher rated securities, resulting in a decline in the overall credit quality of the Account's investment portfolio and increasing the exposure of the portfolio to the risks of high yield securities. Ratings by credit agencies focus on safety of principal and interest payments and do not evaluate market risks. In addition, ratings by credit agencies may not be changed by the agencies in a timely manner to reflect subsequent economic events. By conducting intensive credit research, carefully selecting individual issues and broadly diversifying portfolio holdings by industry sector and issuer, the Subadviser believes that the default risk of lower rated securities can be reduced. Emphasis on credit risk management involves the Subadviser's own internal analysis to determine the debt service capability, financial flexibility and liquidity of an issuer, as well as the fundamental trends and outlook for the issuer and its industry. The Subadviser's rating helps it determine the attractiveness of specific issues relative to the valuation by the marketplace of similarly rated credits. DERIVATIVE INSTRUMENTS. Each of the Accounts may invest in derivative instruments which are securities or contracts that provide for payments based Prospectus Page 33 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. on or "derived" from the performance of an underlying asset, index or other economic benchmark. Transactions in derivative instruments can be, but are not necessarily, riskier than investments in conventional stocks, bonds and money market instruments. The use of derivative instruments for non-hedging purposes or to generate additional income may be considered a speculative investment practice. A derivative instrument is more accurately viewed as a way of reallocating risk among different parties or substituting one type of risk for another. Transactions in derivative instruments often enable an Account to take investment positions that more precisely reflect the portfolio manager's expectations concerning the future performance of the various investments available to the Account. Derivative instruments can be a legitimate and often cost-effective method of accomplishing the same investment goals as could be achieved through other authorized investments in conventional securities. Derivative securities include collateralized mortgage obligations, stripped mortgage backed securities, asset backed securities, structured notes and floating interest rate securities. Derivative contracts include futures contracts, forward contracts, forward commitment and when-issued securities transactions, forward foreign currency exchange contracts and interest rate swaps. The principal risks associated with derivative instruments are: / / Market risk: The instrument will decline in value or that an alternative investment would have appreciated more, but this is no different from the risk of investing in conventional securities. / / Leverage and associated price volatility: Leverage causes increased volatility in the price and magnifies the impact of adverse market changes, but this risk may be consistent with a fund's investment objective in order to achieve an average portfolio volatility that is within the expected range for that type of fund. The SEC has taken the position that the risk of leverage is not an appropriate risk for a money market fund. / / Credit risk: The issuer of the instrument may default on its obligation to pay interest and principal, but derivatives based on U.S. Government agency mortgage securities may actually present less credit risk than some conventional corporate debt securities. / / Liquidity and valuation risk: Many derivative instruments are traded in institutional markets rather than on an exchange. Nevertheless, many derivative instruments are actively traded and can be priced with as much accuracy as conventional securities. Derivative instruments that are custom designed to meet the specialized investment needs of a relatively narrow group of institutional investors such as the Accounts are not readily marketable and are subject to an Account's restrictions on illiquid investments. / / Correlation risk: There may be imperfect correlation between the price of the derivative and the underlying asset; for example, there may be price disparities between the trading markets for the derivative contract and the underlying asset. INTERNATIONAL SECURITIES. Each Account may purchase securities issued by foreign issuers, denominated in foreign currency and traded primarily on foreign markets. Investments in non-U.S. equity securities involve risks different from those encountered when investing in securities of domestic issuers. Such risks include: the adverse impact of trade balances and imbalances and related economic policies; currency exchange rate fluctuations; adverse foreign exchange control policies; nationalization, expropriation or confiscatory taxation; income tax withholding at the source; limitations on the removal of funds or other assets; political or social instability; difficulty in obtaining and enforcing judgments abroad; restrictions on foreign investments in other jurisdictions; price volatility; problems arising from the diverse structure and illiquidity of securities markets in various countries and regions; and other specific local, political and economic considerations. See the SAI for additional discussion of the risks of investing in foreign markets. The value of non-U.S. securities may be adversely affected by fluctuations in the relative rates of exchange between the currencies of different nations and by exchange control regulations. The investment performance of an Account may be affected depending on the extent to which it is invested in foreign securities, either positively or negatively, by currency exchange rates because the U.S. dollar value of securities denominated in a foreign currency will increase or decrease in response to changes in the value of foreign Prospectus Page 34 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. currencies in relation to the U.S. dollar. Also, there may be higher transaction costs in foreign securities and less government regulation of foreign stock exchanges, brokers, and issuers than is present in the United States. Equity securities acquired in foreign markets will not, as a rule, be subject to registration under the Securities Act of 1933 or be under the jurisdiction of the SEC. Most foreign securities of an Account are held outside the United States by local foreign subcustodians that satisfy certain eligibility requirements. However, foreign subcustodian arrangements are significantly more expensive than domestic custody. In addition, foreign custody and settlement of securities transactions is subject to local law and custom that is not, generally, as well established or as reliable as U.S. regulation and custom applicable to custody and settlements of securities transactions and, accordingly, there is generally perceived to be a greater risk of loss in connection with securities custody and securities transactions in many foreign countries. Finally, there may be less publicly available information about foreign issuers, and such issuers may not be subject to the same accounting and auditing standards as publicly held domestic issuers. Scudder, Stevens, as the Subadviser to the international Component, may invest a portion of an Account's assets in companies located in emerging countries as described under "Investment Objectives and Policies." Compared to the United States and other developed countries, emerging countries may have relatively unstable governments, economies based on only a few industries, and securities markets that are less liquid and trade a small number of securities. Prices on these exchanges tend to be volatile and, in the past, securities in these countries have offered greater potential for gain (as well as loss) than securities of companies located in developed countries. All of the risks of investing in international equity securities are present (and, in fact, may be exacerbated) when investing in issuers in developing countries. See the SAI for additional information about the risks of investing in emerging countries. Each Account may invest in ADRs, EDRs and GDRs. ADRs are receipts issued by a U.S. bank or trust company which evidence ownership of underlying securities of foreign corporations. ADRs are traded on domestic exchanges or in the U.S. over- the-counter market and, generally, are in registered form. To the extent the Account acquires ADRs through banks which do not have a contractual relationship with the foreign issuer of the security underlying the ADR to issue and service such ADRs, there may be an increased possibility that the Account would not become aware of and be able to respond in a timely manner to corporate actions such as stock splits or rights offerings involving the foreign issuer. In addition, the lack of information may result in inefficiencies in the valuation of such instruments. The Account may also invest in EDRs and GDRs, which are receipts evidencing an arrangement with a non-U.S. bank similar to that for ADRs and are designed for use in non-U.S. securities markets. EDRs and GDRs are not necessarily quoted in the same currency as the underlying security. Accounts may also invest in obligations of foreign branches of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars) as well as foreign branches of foreign banks. These investments involve risks that are different from investments in securities of U.S. banks, including potential unfavorable political and economic developments, different tax provisions, seizure of foreign deposits, currency controls, interest limitations or other governmental restrictions which might affect payment of principal or interest. COVERED CALL OPTIONS. Each Account may purchase and write covered call options on securities, securities indices and foreign currencies, in each case as a hedge against decreases in prices of existing portfolio securities or increases in prices of anticipated portfolio securities. A call option on a security gives the holder (purchaser) the right to buy, and obligates the writer (seller) to sell (if the option is exercised), in return for a premium paid, the underlying security at an exercise price during the option period. A call option on a currency operates in a similar manner, except that delivery is made of the specified currency. A call option on an index is also similar except that the value of the option depends on the weighted value of the group of securities in the index and settlement of the option is made in the form of cash rather than the delivery of a security. Because call options will be used to generate additional income and to attempt to reduce the effect of any adverse price movement in the securities or currency subject to the option, they do involve certain risks that are different in some respects from investment risks associated with similar funds which do not engage in such activities. These risks Prospectus Page 35 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. include the following: for writing covered call options, the inability to participate in the appreciation of the underlying securities or currencies above the exercise price; and for purchasing call options, possible loss of the entire premium paid. In addition, the effectiveness of hedging through the purchase or sale of securities index options, including options on the S&P 500 Index, will depend upon the extent to which price movements in the portion of the securities portfolio being hedged correlate with the price movements in the selected securities index. Perfect correlation may not be possible because the securities held or to be acquired by an Account may not exactly match the composition of the securities index on which options are written. If the forecasts of the Manager or Subadviser regarding movements in securities prices, interest rates, or current exchange rates are incorrect, an Account's investment results may have been better without the hedge transactions. A further discussion of covered call options is contained in the SAI. INTEREST RATE SWAPS. Each Account may enter into interest rate swaps both for hedging and to seek to increase total return. An Account will typically use interest rate swaps to shorten the effective duration of its portfolio. Interest rate swaps involve the exchange by the Account with another party of their respective commitments to pay or receive interest, such as an exchange of fixed rate payments for floating rate payments. Since interest rate swaps are individually negotiated, each Account expects to achieve an acceptable degree of correlation between its portfolio investments and its interest rate swap positions. An Account will enter into interest rate swaps only on a net basis, which means that the two payment streams are netted out, with the Account receiving or paying, as the case may be, only the net amount of the two payments. Interest rate swaps do not involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that an Account is contractually obligated to make. If the other party to an interest rate swap defaults, an Account's risk of loss consists of the net amount of interest payments that the Account is contractually entitled to receive. An Account will maintain in a segregated account with the Account's custodian cash and liquid high grade debt securities equal to the net amount, if any, of the excess of the Account's obligations over its entitlements with respect to swap transactions. To the extent that the net amount of a swap is held in a segregated account consisting of cash and high liquid grade debt securities, the Accounts and the Manager and Subadviser believe that swaps do not constitute senior securities under the Act and, accordingly, will not treat them as being subject to an Account's borrowing restriction. The use of interest rate swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If the Manager of Subadviser is incorrect in its forecasts of market values and interest rates, the investment performance of the Accounts would be less favorable than it would have been if this investment technique were not used. FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. To hedge against changes in interest rates, securities prices or currency exchange rates or for non-hedging purposes, each Account may, subject to its investment objectives and policies, purchase and sell various kinds of futures contracts, and purchase and write call and put options on any of such futures contracts. An Account may also enter into closing purchase and sale transactions with respect to any of such contracts and options. Futures contracts may be based on various securities (such as U.S. Government securities), securities indices, foreign currencies and other financial instruments and indices. Each Account may purchase and sell futures contracts on stock indices and purchase and sell options on such futures. Each Account may purchase and sell interest rate futures and purchase and sell options on such futures. In addition, each Account that may invest in securities that are denominated in foreign currency may purchase and sell futures on currencies and purchase and sell options on such futures. An Account will engage in futures and related options transactions only for bona fide hedging and non-hedging purposes as permitted in regulations of the Commodity Futures Trading Commission. No Account will enter into futures contracts or options thereon for non-hedging purposes if, immediately thereafter, the aggregate initial margin and premiums required to establish non-hedging positions in futures contracts and options on futures will exceed 5 percent of the net asset value of the Account's portfolio, after taking into account unrealized profits and losses on any such Prospectus Page 36 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. positions and excluding the amount by which such options were in-the-money at the time of purchase. The use of futures contracts entails certain risks, including but not limited to the following: no assurance that futures contracts transactions can be offset at favorable prices; possible reduction of the Account's income due to the use of hedging; possible reduction in value of both the securities hedged and the hedging instrument; possible lack of liquidity due to daily limits on price fluctuations; imperfect correlation between the contract and the securities being hedged; and potential losses in excess of the amount initially invested in the futures contracts themselves. If the expectations of the Manager or the Subadviser regarding movements in securities prices or interest rates are incorrect, an Account may have experienced better investment results without hedging. The use of futures contracts and options on futures contracts requires special skills in addition to those needed to select portfolio securities. A further discussion of futures contracts is set forth in the Accounts' SAI. FOREIGN CURRENCY TRANSACTIONS. Each Account may, to the extent it invests in foreign securities, enter into foreign currency transactions in order to protect the U.S. dollar value of the Account's foreign currency-denominated portfolio securities against adverse changes in foreign currency exchange rates between the U.S. dollar and any other foreign currency. An Account may engage in cross-hedging (I.E., dealing in foreign exchange between currencies of different countries in which it has invested for the purpose of hedging against possible variations in the foreign exchange rate between those countries) if Scudder determines that there is a pattern of correlation between the two currencies. Such contractual commitments may be forward contracts entered into directly with another party or exchange-traded futures contracts. An Account may also purchase and sell options on futures contracts, forward contracts, or futures contracts which are denominated in a particular currency to hedge the risk of fluctuations in the value of another currency. An Account's dealings in foreign exchange will be limited to hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of currency with respect to specific receivables or payables of the Account accruing in connection with the purchase or sale of its portfolio securities. Position hedging is the purchase or sale of currency with respect to portfolio security positions denominated or quoted in a foreign currency. No Account will speculate in foreign exchange. If an Account enters into a forward foreign currency exchange contract to buy foreign currency, the Account will be required to place an amount of cash or liquid, high grade debt securities equal to the Account's obligations under the contract in a segregated account with the Account's custodian. U.S. GOVERNMENT SECURITIES. Each Account may purchase U.S. Government securities. Government Securities include: (1) U.S. Treasury obligations, which differ only in their interest rates, maturities and times of issuance, U.S. Treasury bills (maturity of one year or less), U.S. Treasury notes (maturities of one to 10 years), and U.S. Treasury bonds (generally maturities of greater than 10 years), all of which are backed by the full faith and credit of the United States, and (2) obligations issued or guaranteed by U.S. Government agencies or instrumentalities, some of which are backed by the full faith and credit of the U.S. Treasury, such as direct pass-through certificates of the Government National Mortgage Association; some of which are supported by the right of the issuer to borrow from the U.S. Government, such as obligations of Federal Home Loan Banks; and some of which are backed only by the credit of the issuer itself, such as obligations of the Student Loan Marketing Association. MORTGAGE-BACKED SECURITIES. The Accounts may invest in mortgage pass-through certificates and multiple- class pass-through securities, such as real estate mortgage investment conduits ("REMIC") pass-through certificates, collateralized mortgage obligations ("CMOs") and stripped mortgage-backed securities ("SMBS"), and other types of Mortgage-Backed Securities that may be available in the future. GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Guaranteed mortgage pass-through securities represent participation interests in pools of residential mortgage loans and are issued by U.S. Governmental or private lenders and guaranteed by the U.S. Government or one of its agencies or instrumentalities, including but not limited to the Government National Mortgage Association ("Ginnie Mae"), the Federal National Mortgage Prospectus Page 37 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full faith and credit of the United States government for timely payment of principal and interest on the certificates. Fannie Mae certificates are guaranteed by Fannie Mae, a federally chartered and privately owned corporation, for full and timely payment of principal and interest on the certificates. Freddie Mac certificates are guaranteed by Freddie Mac, a corporate instrumentality of the United States government, for timely payment of interest and the ultimate collection of all principal of the related mortgage loans. Guarantees do not extend to the value of the securities. MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS. CMOs and REMIC pass-through or participation certificates may be issued by, among others, U.S. Government agencies and instrumentalities as well as private lenders. CMOs and REMIC certificates are issued in multiple classes and the principal of and interest on the mortgage assets may be allocated among the several classes of CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC certificates, often referred to as a "tranche," is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Generally, interest is paid or accrues on all classes of CMOs or REMIC certificates on a monthly basis. Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie Mac certificates but also may be collateralized by other mortgage assets such as whole loans or private mortgage pass-through securities. Debt service on CMOs is provided from payments of principal and interest on mortgaged assets and any reinvestment income thereon. A REMIC is a CMO that qualifies for special tax treatment under the Code and invests in certain mortgages primarily secured by interests in real property and other permitted investments. Investors may purchase "regular" and "residual" interest shares of beneficial interest in REMIC trusts although the Accounts do not intend to invest in residual interests. STRIPPED MORTGAGE-BACKED SECURITIES. SMBS are derivative multiple-class mortgage-backed securities. SMBS are usually structured with two classes that receive different proportions of interest and principal distributions on a pool of mortgage assets. A typical SMBS will have one class receiving some of the interest and most of the principal, while the other class will receive most of the interest and the remaining principal. In the most extreme case, one class will receive all of the interest (the "interest only" class) while the other class will receive all of the principal (the "principal only" class). The yields and market risk of interest only and principal only SMBS, respectively, may be more volatile than those of other fixed-income securities. The staff of the SEC considers privately issued SMBS to be illiquid. RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. Investing in Mortgage-Backed Securities involves certain risks, including the failure of a counter-party to meet its commitments, adverse interest rate changes and the effects of prepayments on mortgage cash flows. In addition, investing in the lowest tranche of CMOs and REMIC certificates involves risks similar to those associated with investing in equity securities. Further, the yield characteristics of Mortgage-Backed Securities differ from those of traditional fixed-income securities. The major differences typically include more frequent interest and principal payments (usually monthly), the adjustability of interest rates, and the possibility that prepayments of principal may be made substantially earlier than their final distribution dates. Prepayment rates are influenced by changes in current interest rates and a variety of economic, geographic, social and other factors and cannot be predicted with certainty. Both adjustable rate mortgage loans and fixed rate mortgage loans may be subject to a greater rate of principal prepayments in a declining interest rate environment and to a lesser rate of principal prepayments in an increasing interest rate environment. Under certain interest rate and prepayment rate scenarios, a Account may fail to recoup fully its investment in Mortgage-Backed Securities notwithstanding any direct or indirect governmental or agency guarantee. When an Account reinvests amounts representing payments and unscheduled prepayment of principal, it may receive a rate of interest that is lower than the rate on existing adjustable rate mortgage pass-through securities. Thus, Mortgage-Backed Securities, and adjustable rate mortgage pass-through securities in particular, may be less effective than other types of U.S. Government securities as a means of "locking in" interest rates. Prospectus Page 38 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Conversely, in a rising interest rate environment, a declining prepayment rate will extend the average life of many Mortgage-Backed Securities. This possibility is often referred to as extension risk. Extending the average life of a Mortgage-Backed Security increases the risk of depreciation due to future increases in market interest rates. ASSET-BACKED SECURITIES. The Accounts may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets such as motor vehicle installment sale contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Asset-backed securities may also be collateralized by a portfolio of U.S. Government securities, but are not direct obligations of the U.S. Government, its agencies or instrumentalities. Such asset pools are securitized through the use of privately-formed trusts or special purpose corporations. Payments or distributions of principal and interest on asset-backed securities may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present; however privately issued obligations collateralized by a portfolio of privately issued asset-backed securities do not involve any government-related guarantee or insurance. In addition to the risks similar to those associated with Mortgage-Backed Securities, asset-backed securities present further risks that are not presented by the Mortgage-Backed Securities because asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. INVERSE FLOATING RATE INSTRUMENTS. The Accounts may invest in inverse floating rate debt instruments ("inverse floaters"), including leveraged inverse floaters and inverse floating rate Mortgage-Backed Securities, such as inverse floating rate "interest only" stripped Mortgage-Backed Securities. The interest rate on inverse floaters resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values. STRUCTURED NOTES. The Accounts may invest in structured notes. The distinguishing feature of a structured note is that the amount of interest and/or principal payable on the notes is based on the performance of a benchmark asset or market other than fixed-income securities or interest rates. Examples of these benchmarks include stock prices, currency exchange rates and physical commodity prices. Investing in a structured note allows an Account to gain exposure to the benchmark market while fixing the maximum loss that the Account may experience in the event that market does not perform as expected. Depending on the terms of the note, the Account may forego all or part of the interest and principal that would be payable on a comparable conventional note; the Account's loss cannot exceed this foregone interest and/or principal. An investment in structured notes involves risks similar to those associated with a direct investment in the benchmark asset. FORWARD COMMITMENTS. Securities may be purchased by all Accounts on a "when-issued" or on a "forward commitment" basis which means it may take 60 days or more before the securities are delivered to an Account. Securities purchased on a "when-issued" or "forward commitment" basis involve a risk that the value of the security to be purchased may decline prior to the settlement date. Also, if the dealer through which the trade is made fails to consummate the transaction, the Account may lose an advantageous yield or price. MONEY MARKET INSTRUMENTS. All Accounts may invest in banker's acceptances, certificates of deposit, time deposits and commercial paper. Banker's acceptances are bills of exchange or time drafts drawn on and accepted by a commercial bank. They are used by corporations to finance the shipment and storage of goods and to furnish dollar exchanges. Banker's acceptances generally mature in six months or less. Certificates of deposit are negotiable interest-bearing instruments with specific maturities. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity. Time deposits are nonnegotiable receipts issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time. Prospectus Page 39 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. Time deposits cannot be traded in the secondary market. Commercial paper is the term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on commercial paper vary from a few days to nine months. Capital Appreciation and Balanced Accounts will only purchase money market instruments denominated in a foreign currency whose issuers have at least one billion dollars (U.S.) of assets. REPURCHASE AGREEMENTS. In a repurchase agreement, an Account buys a security at one price and simultaneously agrees to sell it back at a higher price. Delays or losses could result if the other party to the agreement defaults or becomes insolvent. LENDING OF SECURITIES. For the purpose of realizing additional income, each Account may lend to broker-dealers portfolio securities amounting to not more than 33 1/3% of its total assets taken at current value. These loans must be fully collateralized at all times. The Accounts may reinvest any cash collateral in short-term highly liquid debt securities. However, lending of securities may involve some credit risk to the Account if the other party should default on its obligation and the Account is delayed in or prevented from recovering the collateral. Securities loaned by the Account will remain subject to fluctuations of market value. RESTRICTED AND ILLIQUID SECURITIES. Each Account may invest up to 15% of its net assets in illiquid investments, which includes repurchase agreements maturing in more than seven days, certain restricted securities and securities not readily marketable. Each Account may also invest in restricted securities eligible for resale to certain institutional investors pursuant to Rule 144A under the Securities Act of 1933. WARRANTS. Each Account may purchase rights and warrants, which represent rights to purchase the common stock of companies at designated prices. Each Account will not purchase such rights and warrants if the Accounts' holding of warrants (valued at the lower of cost or market) would exceed 5% of the value of the Account's total assets as a result of the purchase. In addition, each Account will not purchase a warrant or right which is not listed on the New York or American Stock Exchanges if the purchase would result in the Account's owning unlisted warrants in an amount exceeding 2% of its total assets. TEMPORARY DEFENSIVE POSITION. When, in the opinion of the Manager and the Subadvisers, market conditions warrant, each Account may invest substantially all of its assets in cash or short-term money market instruments for temporary defensive purposes. Prospectus Page 40 Connecticut Mutual Investment Accounts, Inc. APPENDIX A - -------------------------------------------------------------------------------- DESCRIPTION OF SECURITIES RATINGS As described in the Prospectus, the high yield bonds offering the high current income sought by an Account are ordinarily in the lower rating categories (that is, rated Baa or lower by Moody's or BBB or lower by S&P, or are unrated). MOODY'S DESCRIBES ITS LOWER RATINGS FOR CORPORATE BONDS AS FOLLOWS: Bonds which are rated Baa are considered as medium grade obligations, I.E., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Bonds which are rated Ba are judged to have speculative elements; their future cannot be consid- ered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. S&P DESCRIBES ITS LOWER RATINGS FOR CORPORATE BONDS AS FOLLOWS: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Debt rated BB, B, CCC, or CC is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. BB indicates the lowest degree of speculation and CC the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. MOODY'S DESCRIBES ITS THREE HIGHEST RATINGS FOR COMMERCIAL PAPER AS FOLLOWS: Issuers rated P-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. P-1 repayment capacity will normally be evidenced by the following characteristics: (1) leading market positions in well-established industries; (2) high rates of return on funds employed; (3) conservative capitalization structures and moderate reliance on debt and ample asset protection; (4) broad margins in earnings coverage of fixed financial charges and high internal cash generation; and (5) well-established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated P-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will Appendix Page A-1 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Issuers rated P-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. S&P DESCRIBES ITS THREE HIGHEST RATINGS FOR COMMERCIAL PAPER AS FOLLOWS: A-1. This designation indicates that the degree of safety regarding timely payment is very strong. A-2. Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is not as overwhelming as for issues designated A-1. A-3. Issues carrying this designation have a satisfactory capacity for timely payment. They are, however, somewhat more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. Appendix Page A-2 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. (the Company) CONNECTICUT MUTUAL LIQUID ACCOUNT CLASS A AND CLASS B SHARES CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT CONNECTICUT MUTUAL INCOME ACCOUNT CONNECTICUT MUTUAL TOTAL RETURN ACCOUNT CONNECTICUT MUTUAL GROWTH ACCOUNT (collectively, the CMIA Accounts) CMIA LIFESPAN CAPITAL APPRECIATION ACCOUNT CMIA LIFESPAN BALANCED ACCOUNT CMIA LIFESPAN DIVERSIFIED INCOME ACCOUNT (collectively, the LifeSpan Accounts) (each, an Account and collectively, the Accounts) 140 Garden Street Hartford, Connecticut 06154 1-800-322-CMIA STATEMENT OF ADDITIONAL INFORMATION CLASS A AND CLASS B SHARES OCTOBER 1, 1995 This Statement of Additional Information (SAI) (Part B of the Registration Statement) is not a prospectus, but should be read in conjunction with the Company's Prospectus for the Connecticut Mutual Liquid Account and the Class A and Class B Shares Prospectus for the other CMIA Accounts and the Class A and Class B Shares Prospectus for the LifeSpan Accounts, each dated October 1, 1995 (together, the Prospectuses). Copies of the Prospectuses can be obtained free of charge by calling or writing the Company at the number or address noted above. TABLE OF CONTENTS Page
1. General Information 1 2. Investment Objectives and Policies 1 3. Investment Restrictions 20 4. Management 30 5. Investment Advisory Arrangements 35 6. Account Expenses 39 7. Distribution Arrangements 39 8. Distribution Financing Plans 40 9. Portfolio Transactions and Brokerage 42 10. Determination of Net Asset Value 44 11. Purchase and Redemption of Shares 45 12. Investment Performance 47 13. Taxes .... 54 14. Custodian 58 15. Transfer Agent Services 58 16. Independent Certified Public Accountants 58 17. Other Information 58 18. Financial Statements 59
____________________ THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. GENERAL INFORMATION Connecticut Mutual Investment Accounts, Inc. (the Company) is an open- end management investment company consisting of thirteen separate accounts. This Statement of Additional Information (SAI) relates to the single class of shares of the Connecticut Mutual Liquid Account (Liquid Account) and to Class A and Class B shares of seven accounts including: the following four accounts - -- Connecticut Mutual Government Securities Account (Government Securities Account), Connecticut Mutual Income Account (Income Account), Connecticut Mutual Total Return Account (Total Return Account) and Connecticut Mutual Growth Account (Growth Account) (collectively with Liquid Account, the CMIA Accounts); and three "life span" accounts -- CMIA LifeSpan Capital Appreciation Account (Capital Appreciation Account), CMIA LifeSpan Balanced Account (Balanced Account) and CMIA LifeSpan Diversified Income Account (Diversified Income Account) (collectively, the LifeSpan Accounts). Each CMIA Account and each LifeSpan Account is referred to herein individually as an Account and collectively as the Accounts. Each Account is managed for investment purposes as if it were a separate fund issuing its own shares. G.R. Phelps & Co. (G.R. Phelps or the Manager) is the investment manager for each of the Accounts. In the case of the LifeSpan Accounts, G.R. Phelps has engaged Scudder, Stevens & Clark, Inc. (Scudder), BEA Associates and Pilgrim, Baxter & Assoc. Ltd. (Pilgrim) as subadvisers to assist in the management of the LifeSpan Accounts. Scudder, BEA Associates and Pilgrim are sometimes referred to herein individually as a "Subadviser" and collectively as the "Subadvisers." INVESTMENT OBJECTIVES AND POLICIES The investment objective of each of the Accounts is set forth in its respective Prospectus, each dated October 1, 1995 (collectively, the Prospectuses). A further description of certain of the policies described in the Prospectuses is set forth below. FOREIGN SECURITIES AND EMERGING COUNTRIES (All Accounts except the Liquid Account and the Government Securities Account) Each Account (other than the Liquid Account and the Government Securities Account) may invest in securities of foreign issuers. Each Account (other than the Liquid Account and the Government Securities Account) may also invest in debt and equity securities of corporate and governmental issuers of countries with emerging economies or securities markets. Investing in securities of non-U.S. issuers, and in particular in emerging countries, may entail greater risks than investing in securities of issuers in the United States. These risks include (i) less social, political and economic stability; (ii) the small current size of the markets for many such securi-ties and the currently low or nonexistent volume of trading, which result in a lack of liquidity and in greater price volatility; (iii) certain national policies which may restrict an Account's investment opportunities, including restrictions on investment in issuers or industries deemed sensitive to national interests; (iv) foreign taxation; and (v) the absence of developed structures governing private or foreign investment or allowing for judicial redress for injury to private property. Investing in securities of non-U.S. companies may entail additional risks due to the potential political and economic instability of certain countries and the risks of expropriation, nationalization, confiscation or the imposition of restrictions on foreign investment and on repatriation of capital invested. In the event of such expropriation, nationalization or other confiscation by any country, an Account could lose its entire investment in any such country. In addition, even though opportunities for investment may exist in foreign countries, and in particular emerging markets, any change in the leadership or policies of the governments of those countries or in the leadership or policies of any other government which exercises a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and thereby eliminate any investment opportunities which may currently exist. Investors should note that upon the accession to power of authoritarian regimes, the governments of a number of emerging countries previously expropriated large quantities of real and personal property similar to the property which may be represented by the securities purchased by the Accounts. The claims of property owners against those governments were never finally settled. There can be no assurance that any property represented by foreign securities purchased by an Account will not also be expropriated, nationalized, or otherwise confiscated. If such confiscation were to occur, an Account could lose a substantial portion of its investments in such countries. An Account's investments would similarly be adversely affected by exchange control regulation in any of those countries. Certain countries in which the Accounts may invest may have vocal minorities that advocate radical religious or revolutionary philosophies or support ethnic independence. Any disturbance on the part of such individuals could carry the potential for wide- spread destruction or confiscation of property owned by individuals and entities foreign to such country and could cause the loss of an Account's investment in those countries. Certain countries prohibit or impose substantial restrictions on investments in their capital markets, particularly their equity markets, by foreign entities such as the Accounts. As illustrations, certain countries require governmental approval prior to investments by foreign persons, or limit the amount of investment by foreign persons in a particular company, or limit the invest-ment by foreign persons to only a specific class of securities of a company that may have less advantageous terms than securities of the company available for purchase by nationals. Moreover, the national policies of certain countries may restrict investment opportunities in issuers or industries deemed sensitive to national interests. In addition, some countries require govern-mental approval for the repatriation of investment income, capital or the proceeds of securities sales by foreign investors. An Account could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investments. Foreign companies are subject to accounting, auditing and financial standards and requirements that differ, in some cases significantly, from those applicable to U.S. companies. In particular, the assets, liabilities and profits appearing on the financial statements of such a company may not reflect its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with U.S. generally accepted accounting principles. Most foreign securities held by the Accounts will not be registered with the Securities and Exchange Commission (SEC) and such issuers thereof will not be subject to the SEC's reporting requirements. Thus, there may be less available information concerning foreign issuers of securities held by the Accounts than is available concerning U.S. issuers. In instances where the financial statements of an issuer are not deemed to reflect accurately the financial situation of the issuer, the Manager or the relevant Subadviser will take appropriate steps to evaluate the proposed investment, which may include on-site inspection of the issuer, interviews with its management and consultations with accountants, bankers and other specialists. There is substantially less publicly available information about many foreign companies than there are reports and ratings published about U.S. companies and the U.S. government. In addition, where public information is available, it may be less reliable than such information regarding U.S. issuers. Because the Accounts may invest a portion of their total assets in securities which are denominated or quoted in foreign currencies, the strength or weakness of the U.S. dollar against such currencies may account for part of the Accounts' investment performance. A decline in the value of any particular currency against the U.S. dollar will cause a decline in the U.S. dollar value of an Account's holdings of securities denominated in such currency and, therefore, will cause an overall decline in the Account's net asset value and any net investment income and capital gains to be distributed in U.S. dollars to shareholders of the Account. The rate of exchange between the U.S. dollar and other currencies is determined by several factors including the supply and demand for particular currencies, central bank efforts to support particular currencies, the movement of interest rates, the pace of business activity in certain other countries and the U.S., and other economic and financial conditions affecting the world economy. Although the Accounts value their respective assets daily in terms of U.S. dollars, the Accounts do not intend to convert their holdings of foreign currencies into U.S. dollars on a daily basis. However, the Accounts may do so from time to time, and investors should be aware of the costs of currency conversion. Although currency dealers do not charge a fee for conversion, they do realize a profit based on the difference (spread) between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to an Account at one rate, while offering a lesser rate of exchange should the Account desire to sell that currency to the dealer. Securities of foreign issuers, and in particular many emerging country issuers, may be less liquid and their prices more volatile than securities of comparable U.S. issuers. In addition, foreign securities exchanges and brokers are generally subject to less governmental supervision and regulation than in the U.S., and foreign securities exchange transactions are usually subject to fixed commissions, which are generally higher than negotiated commissions on U.S. transactions. In addition, foreign securities exchange transactions may be subject to difficulties associated with the settlement of such transactions. Delays in settlement could result in temporary periods when assets of an Account are uninvested and no return is earned thereon. The inability of an Account to make intended security purchases due to settlement problems could cause the Account to miss attractive investment opportunities. Inability to dispose of a portfolio security due to settlement problems could either result in losses to an Account due to subsequent declines in value of the portfolio security or, if the Account has entered into a contract to sell the security could result in possible liability to the purchaser. The Accounts' investment income or, in some cases, capital gains from foreign issuers may be subject to foreign withholding or other foreign taxes, thereby reducing the Accounts' net investment income and/or net realized capital gains. See "Taxes." FOREIGN CURRENCY EXCHANGE CONTRACTS (All Accounts except the Liquid Account and the Government Securities Account) Each Account (other than the Liquid Account and the Government Securities Account) may exchange currencies in the normal course of managing its investments and may incur costs in doing so because a foreign exchange dealer will charge a fee for conversion. An Account may conduct foreign currency exchange transactions on a "spot" basis (i.e., for prompt delivery and settlement) at the prevailing spot rate for purchasing or selling currency in the foreign currency exchange market. An Account also may enter into forward currency exchange contracts or other contracts to purchase and sell currencies for settlement at a future date. A foreign exchange dealer, in that situation, will expect to realize a profit based on the difference between the price at which a foreign currency is sold to the Account and the price at which the dealer will cover the purchase in the foreign currency market. Foreign exchange transactions are entered into at prices quoted by dealers, which may include a mark-up over the price that the dealer must pay for the currency. A forward currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward currency exchange contract generally has no deposit requirement, and no commissions are generally charged at any stage for trades. At the maturity of a forward currency exchange contract an Account may either accept or make delivery of the currency specified in the contract or, at or prior to maturity, enter into a closing purchase transaction involving the purchase or sale of an offsetting contract. Closing purchase transactions with respect to forward currency exchange contracts are usually effected with the currency trader who is a party to the original forward currency exchange contract. The Accounts may enter into forward currency exchange contracts in several circumstances for hedging and non- hedging purposes. First, when an Account enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when an Account anticipates the receipt in a foreign currency of dividend or interest payments on such a security which it holds, the Account may desire to "lock in" the U.S. dollar price of the security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. By entering into a forward currency exchange contract for the purchase or sale, for a fixed amount of dollars, of the amount of foreign currency involved in the underlying transactions, an Account will attempt to protect itself against an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is declared, and the date on which such payments are made or received. Additionally, when management of an Account believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may enter into a forward currency exchange contract to sell, for a fixed amount of dollars, the amount of foreign currency approximating the value of some or all of the Account's portfolio securities denominated in such foreign currency. The precise matching of the forward currency exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Using forward currency exchange contracts to protect the value of an Account's portfolio securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange which an Account can achieve at some future point in time. The precise projection of short-term currency market movements is not possible, and short-term hedging provides a means of fixing the dollar value of only a portion of an Account's foreign assets. An Account's custodian will place cash or liquid, high grade debt securities (High Grade Debt Securities) (i.e., securities rated in one of the top three ratings categories by Moody's Investors Service, Inc. (Moody's), Standard & Poor's Ratings Group (Standard & Poor's), or a comparable rating agency, or, if unrated, deemed by the Manager or relevant Subadviser to be of comparable credit quality) into a segregated account of the Account in an amount equal to the value of the Account's total assets committed to the consummation of forward currency exchange contracts requiring the Account to purchase foreign currencies or forward currency exchange contracts entered into for non-hedging purposes. If the value of the securities placed in the segregated account declines, additional cash or securities will be placed in the account on a daily basis so that the value of the account will equal the amount of an Account's commitments with respect to such contracts. The segregated account will be marked-to-market on a daily basis. Although the contracts are not presently regulated by the Commodity Futures Trading Commission (CFTC), the CFTC may in the future assert authority to regulate these contracts. In such event, the Accounts' ability to utilize forward currency exchange contracts may be restricted. The Accounts generally will not enter into a forward currency exchange contract with a term of greater than one year. While the Accounts will enter into forward currency exchange contracts to reduce currency exchange rate risks, transactions in currency contracts involve certain other risks. Thus, while the Accounts may benefit from currency transactions, unanticipated changes in currency prices may result in a poorer overall performance for an Account than if it had not engaged in any such transactions. Moreover, there may be an imperfect correlation between an Account's portfolio holdings of securities denominated in a particular currency and forward currency exchange contracts entered into by the Account. Such imperfect correlation may cause an Account to sustain losses which will prevent the Account from achieving a complete hedge or expose the Account to risk of foreign exchange loss. COVERED CALL OPTIONS ON SECURITIES, SECURITIES INDICES AND FOREIGN CURRENCIES (All Accounts except the Liquid Account) Each CMIA Account (other than the Liquid Account) may write covered call options. Each LifeSpan Account may purchase and write covered call options. Such options may relate to particular U.S. or non-U.S. securities, to various U.S. or non- U.S. stock indices or to U.S. or non-U.S. currencies. The Accounts may purchase and write, as the case may be, call options which are issued by the Options Clearing Corporation (OCC) or which are traded on U.S. and non-U.S. exchanges. Capital Appreciation Account and Balanced Account (with respect to the international Component) may purchase options on currency in the over-the-counter (OTC) markets. An option on a securities index provides the holder with the right to receive a cash payment upon exercise of the option if the market value of the underlying index exceeds the option's exercise price. The amount of this payment will be equal to the difference between the closing price of the index at the time of exercise and the exercise price of the option expressed in U.S. dollars or a foreign currency, times a specified multiple. A call option on a currency gives its holder the right to purchase an amount (specified in units of the underlying currency) of the underlying currency at the stated exercise price at any time prior to the option's expiration. Capital Appreciation Account and Balanced Account will engage in over-the-counter (OTC) options only with broker-dealers deemed creditworthy by the Account's Manager or relevant Subadviser. Closing transactions in certain options are usually effected directly with the same broker-dealer that effected the original option transaction. An Account bears the risk that the broker-dealer may fail to meet its obligations. There is no assurance that an Account will be able to close an unlisted option position. Furthermore, unlisted options are not subject to the protections afforded purchasers of listed options by the OCC, which performs the obligations of its members who fail to do so in connection with the purchase or sale of options. OTC options will be deemed illiquid for purposes of an Account's limitation on investments in illiquid securities, except that with respect to options written with primary dealers in U.S. Government securities pursuant to an agreement requiring a closing purchase transaction at a formula price, the amount of illiquid securities may be calculated with reference to a formula approved by the staff of the SEC. An Account will write call options only if they are "covered." In the case of a call option on a security, the option is "covered" if a portfolio owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, cash or High Grade Debt Securities in such amount as are held in a segregated account by the Account's custodian) upon conversion or exchange of other securities held by the portfolio. For a call option on an index, the option is covered if the Account maintains cash or cash equivalents equal to the contract value with the Account's custodian. A call option on a security or an index is also covered if the Account holds a call on the same security or index as the call written by the Account where the exercise price of the call held is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written provided the difference is maintained by the Account in cash or cash equivalents in a segregated account with the Account's custodian. A call option on currency written by an Account is covered if the Account owns an equal amount of the underlying currency. When an Account purchases or writes an option, an amount equal to the net premium (the premium less the commission paid by the Account) received by the Account is included in the liability section of the Account's statement of assets and liabilities as a deferred credit. The amount of this asset or deferred credit will be marked-to-market on an ongoing basis to reflect the current value of the option purchased or written. The current value of a traded option is the last sale price or, in the absence of a sale, the average of the closing bid and asked prices. If an option purchased by the Account expires unexercised, the Account realizes a loss equal to the premium paid. If the Account enters into a closing sale transaction on an option purchased by it, the Account will realize a gain if the premium received by the Account on the closing transaction is more than the premium paid to purchase the option, or a loss if it is less. If an option written by the Account expires on the stipulated expiration date or if the Account enters into a closing purchase transaction, it will realize a gain (or loss if the cost of a closing purchase transaction exceeds the net premium received when the option is sold) and the deferred credit related to such option will be eliminated. If an option written by the Account is exercised, the proceeds to the Account from the exercise will be increased by the net premium originally received, and the Account will realize a gain or loss. There are several risks associated with transactions in options on securities, securities indices and currencies. For example, there are significant differences between the securities markets, currency markets and the corresponding options markets that could result in imperfect correlations, causing a given option transaction not to achieve its objectives. In addition, a liquid secondary market for particular options, whether traded OTC or on a U.S. or non-U.S. securities exchange may be absent for reasons which include the following: there may be insufficient trading interest in certain options; restrictions may be imposed by an exchange on opening transactions or closing transactions or both; trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities; unusual or unforeseen circumstances may interrupt normal operations on an exchange; the facilities of an exchange or the OCC may not at all times be adequate to handle current trading volume; or one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options that had been issued by the OCC as a result of trades on that exchange would continue to be exercisable in accordance with their terms. No Account shall write a covered call option if as a result thereof the assets underlying calls outstanding (including the proposed call option) would exceed 20% of the value of the assets of the Account. FUTURES CONTRACTS AND RELATED OPTIONS (All Accounts except the Liquid Account) To hedge against changes in interest rates, securities prices or currency exchange rates or for certain non-hedging purposes, each Account (other than the Liquid Account) may, subject to its investment objectives and policies, purchase and sell various kinds of futures contracts, and purchase and write call and put options on any of such futures contracts. An Account may also enter into closing purchase and sale transactions with respect to any of such contracts and options. The futures contracts may be based on various securities (such as U.S. Government securities), securities indices, currencies and other financial instruments and indices. The Growth Account and Total Return Account may purchase and sell futures contracts on stock indices and sell options on such futures. The Income Account and Total Return Account may purchase and sell interest rate futures and sell options on such futures. In addition, each Account that may invest in securities that are denominated in a foreign currency may purchase and sell futures on currencies and sell options on such futures. An Account will engage in futures and related options transactions only for bona fide hedging or other non-hedging purposes as defined in regulations promulgated by the CFTC. All futures contracts entered into by the Accounts are traded on U.S. exchanges or boards of trade that are licensed and regulated by the CFTC or on foreign exchanges approved by the CFTC. FUTURES CONTRACTS. A futures contract may generally be described as an agreement between two parties to buy and sell a particular financial instrument for an agreed price during a designated month (or to deliver the final cash settlement price, in the case of a contract relating to an index or otherwise not calling for physical delivery at the end of trading in the contract). Futures contracts obligate the long or short holder to take or make delivery of a specified quantity of a commodity or financial instrument, such as a security or the cash value of a securities index, during a specified future period at a specified price. When interest rates are rising or securities prices are falling, an account can seek to offset a decline in the value of its current portfolio securities through the sale of futures contracts. When interest rates are falling or securities prices are rising, an Account, through the purchase of futures contracts, can attempt to secure better rates or prices than might later be available in the market when it effects anticipated purchases. Positions taken in the futures markets are not normally held to maturity but are instead liquidated through offsetting transactions which may result in a profit or a loss. While futures contracts on securities will usually be liquidated in this manner, the Accounts may instead make, or take, delivery of the underlying securities whenever it appears economically advantageous to do so. A clearing corporation associated with the exchange on which futures on securities are traded guarantees that, if still open, the sale or purchase will be performed on the settlement date. HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to establish with more certainty the effective price and rate of return on portfolio securities and securities that an Account proposes to acquire. The Accounts may, for example, take a "short" position in the futures market by selling futures contracts in order to hedge against an anticipated rise in interest rates or a decline in market prices that would adversely affect the value of an Account's portfolio securities. Such futures contracts may include contracts for the future delivery of securities held by the Account or securities with characteristics similar to those of the Account's portfolio securities. If, in the opinion of the Account's Manager or the relevant Subadviser, there is a sufficient degree of correlation between price trends for an Account's portfolio securities and futures contracts based on other financial instruments, securities indices or other indices, the Account may also enter into such futures contracts as part of its hedging strategy. Although under some circumstances prices of securities in an Account's portfolio may be more or less volatile than prices of such futures contracts, the Manager or the relevant Subadviser will attempt to estimate the extent of this volatility difference based on historical patterns and compensate for any such differential by having the Account enter into a greater or lesser number of futures contracts or by attempting to achieve only a partial hedge against price changes affecting an Account's securities portfolio. When hedging of this character is successful, any depreciation in the value of portfolio securities will be substantially offset by appreciation in the value of the futures position. On the other hand, any unanticipated appreciation in the value of an Account's portfolio securities would be substantially offset by a decline in the value of the futures position. On other occasions, the Accounts may take a "long" position by purchasing futures contracts. This would be done, for example, when an Account anticipates the subsequent purchase of particular securities when it has the necessary cash, but expects the prices then available in the applicable market to be less favorable than prices that are currently available. OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options on futures contracts will give the Accounts the right (but not the obligation) for a specified price to sell or to purchase, respectively, the underlying futures contract at any time during the option period. As the purchaser of an option on a futures contract, an Account obtains the benefit of the futures position if prices move in a favorable direction but limits its risk of loss in the event of an unfavorable price movement to the loss of the premium and transaction costs. The writing of a call option on a futures contract generates a premium which may partially offset a decline in the value of an Account's assets. By writing a call option, an Account becomes obligated, in exchange for the premium, to sell a futures contract (if the option is exercised), which may have a value higher than the exercise price. Conversely, the writing of a put option on a futures contract generates a premium which may partially offset an increase in the price of securities that an Account intends to purchase. However, an Account becomes obligated to purchase a futures contract (if the option is exercised) which may have a value lower than the exercise price. Thus, the loss incurred by an Account in writing options on futures is potentially unlimited and may exceed the amount of the premium received. The Accounts will incur transaction costs in connection with the writing of options on futures. The holder or writer of an option on a futures contract may terminate its position by selling or purchasing an offsetting option on the same series. There is no guarantee that such closing transactions can be effected. The Accounts' ability to establish and close out positions on such options will be subject to the development and maintenance of a liquid market. The Accounts may use options on futures contracts solely for bona fide hedging or other non-hedging purposes as described below. OTHER CONSIDERATIONS. The Accounts will engage in futures and related options transactions only for bona fide hedging or non- hedging purposes as permitted by CFTC regulations which permit principals of an investment company registered under the Investment Company Act of 1940, as amended (the Investment Company Act), to engage in such transactions without registering as commodity pool operators. An Account will determine that the price fluctuations in the futures contracts and options on futures used for hedging purposes are substantially related to price fluctuations in securities or instruments held by the Account or securities or instruments which they expect to purchase. Except as stated below, the Accounts' futures transactions will be entered into for traditional hedging purposes -- i.e., futures contracts will be sold to protect against a decline in the price of securities (or the currency in which they are denominated) that an Account owns or futures contracts will be purchased to protect an Account against an increase in the price of securities (or the currency in which they are denominated) that an Account intends to purchase. As evidence of this hedging intent, each Account expects that, on 75% or more of the occasions on which it takes a long futures or option position (involving the purchase of futures contracts), the Account will have purchased, or will be in the process of purchasing, equivalent amounts of related securities (or assets denominated in the related currency) in the cash market at the time when the futures or option position is closed out. However, in particular cases, when it is economically advantageous for an Account to do so, a long futures position may be terminated or an option may expire without the corresponding purchase of securities or other assets. As an alternative to compliance with the bona fide hedging definition, a CFTC regulation now permits an Account to elect to comply with a different test under which the aggregate initial margin and premiums required to establish non-hedging positions in futures contracts and options on futures will not exceed 5% of the net asset value of an Account's portfolio, after taking into account unrealized profits and losses on any such positions and excluding the amount by which such options were in-the-money at the time of purchase. An Account will engage in transactions in futures contracts and related options only to the extent such transactions are consistent with the requirements of the Internal Revenue Code for maintaining its qualification as a regulated investment company for federal income tax purposes. See "Taxes." An Account will be required, in connection with transactions in futures contracts and the writing of options on futures contracts, to make margin deposits, which will be held by the Company's custodian for the benefit of the futures commission merchant through whom the Account engages in such futures contracts and option transactions. These transactions involve brokerage costs, require margin deposits and, in the case of futures contracts and options obligating an Account to purchase securities, require an Account to segregate cash or High Grade Debt Securities in an account maintained with the Company's custodian to cover such contracts and options. While transactions in futures contracts and options on futures may reduce certain risks, such transactions themselves entail certain other risks. Thus, unanticipated changes in interest rates or securities prices may result in a poorer overall performance for an Account than if it had not entered into any futures contracts or options transactions. The other risks associated with the use of futures contracts and options thereon are (i) imperfect correlation between the change in market value of the securities held by an Account and the prices of the futures and options and (ii) the possible absence of a liquid secondary market for a futures contract or option and the resulting inability to close a futures position prior to its maturity date. In the event of an imperfect correlation between a futures position and portfolio position which is intended to be protected, the desired protection may not be obtained and the Account may be exposed to risk of loss. The risk of imperfect correlation may be minimized by investing in contracts whose price behavior is expected to resemble that of an Account's underlying securities. The risk that the Accounts will be unable to close out a futures position will be minimized by entering into such transactions on a national exchange with an active and liquid secondary market. "WHEN-ISSUED" PURCHASES AND FORWARD COMMITMENTS (All Accounts except the Liquid Account) Securities may be purchased by all Accounts (other than the Liquid Account) on a "when-issued" or on a "forward commitment" basis. These transactions, which involve a commitment by an Account to purchase or sell particular securities with payment and delivery taking place at a future date, permit the Account to lock in a price or yield on a security, regardless of future changes in interest rates. An Account will purchase securities on a "when-issued" or forward commitment basis only with the intention of completing the transaction and actually purchasing the securities. If deemed appropriate by the Manager or relevant Subadviser, however, an Account may dispose of or renegotiate a commitment after it is entered into, and may sell securities it has committed to purchase before those securities are delivered to the Account on the settlement date. In these cases the Account may realize a gain or loss. When an Account agrees to purchase securities on a "when--issued" or forward commitment basis, the Account's custodian will set aside cash or High Grade Debt Securities equal to the amount of the commitment in a separate account. Normally, the custodian will set aside portfolio securities to satisfy a purchase commitment, and in such a case the Account may be required subsequently to place additional assets in the separate account in order to ensure that the value of the account remains equal to the amount of the Account's commitments. The market value of an Account's net assets may fluctuate to a greater degree when it sets aside portfolio securities to cover such purchase commitments then when it sets aside cash. Because an Account's liquidity and ability to manage its portfolio might be affected when it sets aside cash or portfolio securities to cover such purchase commitments, each Account expects that its commitments to purchase when-issued securities and forward commitments will not exceed 33% of the value of its total assets absent unusual market conditions. When an Account engages in "when-issued" and forward commitment transactions, it relies on the other party to the transaction to consummate the trade. Failure of such party to do so may result in the Account incurring a loss or missing an opportunity to obtain a price considered to be advantageous. The market value of the securities underlying a "when-issued" purchase or a forward commitment to purchase securities, and any subsequent fluctuations in their market value, are taken into account when determining the market value of an Account starting on the day the Account agrees to purchase the securities. The Account does not earn interest or dividends on the securities it has committed to purchase until the settlement date. DEBT SECURITIES (All Accounts) VARIABLE AND FLOATING RATE INSTRUMENTS. Debt instruments purchased by an Account may be structured to have variable or floating interest rates. These instruments may include variable amount master demand notes that permit the indebtedness to vary in addition to providing for periodic adjustments in the interest rates. The Manager and the Subadvisers will consider the earning power, cash flows and other liquidity ratios of the issuers and guarantors of such instruments and, if the instrument is subject to a demand feature, will continuously monitor their financial ability to meet payment on demand. If deemed necessary by the manager or relevant Subadvisers to ensure that a variable or floating rate instrument is equivalent to the quality standards applicable to an Account's fixed income investments, the issuer's obligation to pay the principal of the instrument may be backed by an unconditional bank letter or line of credit, guarantee or commitment to lend. Any bank providing such a bank letter, line of credit, guarantee or loan commitment will meet the Account's investment quality standards relating to investments in bank obligations. An Account will invest in variable and floating rate instruments only when the Manager or the relevant Subadviser deems the investment to meet the investment guidelines applicable to the Account. The Manager or the relevant Subadviser will also continuously monitor the creditworthiness of issuers of such instruments to determine whether an Account should continue to hold the investments. The absence of an active secondary market for certain variable and floating rate notes could make it difficult to dispose of the instruments, and an Account could suffer a loss if the issuer defaults or during periods in which an Account is not entitled to exercise its demand rights. Variable and floating rate instruments held by an Account will be subject to the Account's limitation on investments in illiquid securities when a reliable trading market for the instruments does not exist and the Account may not demand payment of the principal amount of such instruments within seven days. YIELDS AND RATINGS. The yields on certain obligations, including the money market instruments in which each Account may invest (such as commercial paper, bank obligations and corporate debt securities), are dependent on a variety of factors, including general money market conditions, conditions in the particular market for the obligation, the financial condition of the issuer, the size of the offering, the maturity of the obligation and the ratings of the issue. The ratings of Standard and Poor's, Moody's and other nationally and internationally recognized rating service organizations represent their respective opinions as to the quality of the obligations they undertake to rate. Ratings, however, are general and are not absolute standards of quality or value. Consequently, obligations with the same rating, maturity and interest rate may have different market prices. See the Appendices to the Prospectuses for a description of the ratings provided by recognized statistical ratings organizations. Subsequent to its purchase by an Account, a rated security may cease to be rated or its rating may be reduced below the minimum rating required for purchase by the Account. The Board of Directors, or the Account's Manager or relevant Subadviser, pursuant to guidelines established by the Board of Directors, will consider such an event in determining whether the Account should continue to hold the security in accordance with the interests of the Account and applicable regulations of the SEC. INTEREST RATE SWAPS. The Accounts may enter into interest rate swaps. Inasmuch as these transactions are entered into for good faith hedging purposes or are offset by a segregated account, the Accounts, the Manager and the Subadvisers believe that such obligations do not constitute senior securities as defined in the Investment Company Act and, accordingly, will not treat them as being subject to the Accounts' borrowing restrictions. An Account will not enter into any interest rate swap transaction unless the unsecured commercial paper, senior debt or the claims-paying ability of the other party thereto is considered to be investment grade by the Account's Manager or the relevant Subadviser. If there is a default by the other party to such a transaction, an Account will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with the markets for other similar instruments which are traded in the interbank market. However, the staff of the SEC takes the position that swaps, caps and floors are illiquid investments that are subject to the Accounts' limitation on such investments. ZERO COUPON AND DEFERRED INTEREST BONDS. The Accounts may invest in zero coupon bonds and deferred interest bonds. Zero coupon and deferred interest bonds are debt obligations which are issued at a significant discount from face value. The original discount approximates the total amount of interest the bonds will accrue and compound over the period until maturity or the first interest accrual date at a rate of interest reflecting the market rate of the security at the time of issuance. While zero coupon bonds do not require the periodic payment of interest, deferred interest bonds generally provide for a period of delay before the regular payment of interest begins. Although this period of delay is different for each deferred interest bond, a typical period is approximately one-third of the bond's term to maturity. Such investments benefit the issuer by mitigating its initial need for cash to meet debt service, but some also provide a higher rate of return to attract investors who are willing to defer receipt of such cash. The market price of zero coupon and deferred interest bonds are more volatile than instruments that pay interest regularly. HIGH YIELD/HIGH RISK DEBT OBLIGATIONS. Each Account (other than the Liquid Account and Government Securities Account) may invest in high yield/high risk, fixed income securities (commonly called junk bonds) rated Ba or lower by Moody's, BB or lower by Standard & Poor's, or an equivalent rating, or unrated securities. The CMIA Accounts may invest in debt securities rated as low as "B" by Moody's or Standard & Poor's. The LifeSpan Accounts may invest in securities rated as low as "C" by Moody's or "D" by Standard & Poor's which indicate that the obligations are speculative and may be in default. Ratings are based largely on the historical financial condition of the issuer. Consequently, the rating assigned to any particular security is not necessarily a reflection of the issuer's current financial condition, which may be better or worse than the rating would indicate. High yield obligations are subject to risks not generally associated with an investment in investment grade bonds. The market for high yield obligations is relatively new and has not been exposed for a long period of time to the effects of cyclical and sometimes adverse changes in the economy. The prices of high yield obligations have been less sensitive to interest rate changes than higher rated investments, but are more sensitive to adverse economic changes or individual corporate developments. During an economic downturn or substantial period of rising interest rates, issuers may experience financial stress that adversely affects their ability to meet principal and interest payment obligations. If an issuer of a high yield obligation defaulted on its obligation to pay principal or interest or entered into bankruptcy proceedings, an Account may incur additional expense to seek recovery of its investment. In addition, periods of uncertainty and change can be expected to result in increased volatility of market prices of high yield, high risk bonds and an Account's net asset value. High yield obliga-tions may contain redemption or call provisions that, if exercised, may require the Account to replace the security with a lower yielding security, resulting in a decreased return for investors. The market for high yield obligations is likely to be less liquid than the market for higher rated obligations and the Manager or Subadviser's judgment may play a greater role in the valuation of high yield obligations. Market conditions may restrict the availability of high yield obligations and may affect the choice of securities to be sold when an Account attempts to meet redemption requests. Each Account is dependent on its Manager's or Subadviser's judgment, analysis and experience in evaluating the quality of high yield obligations. In evaluating the credit quality of a particular issue, whether rated or unrated, the Manager and Subadviser will normally take into consideration, among other things, the financial resources of the issuer (or, as appropriate, of the underlying source of funds for debt service), its sensitivity to economic conditions and trends, any operating history of and the community support for the facility financed by the issuer, the ability of the issuer's management and regulatory matters. The Manager and Subadviser will attempt to reduce the risks of investing in high yield obligations through active portfolio management, credit analysis and attention to current developments and trends in the economy and the financial markets. The Accounts may invest in pay- in- kind (PIK) securities, which pay interest in either cash or additional securities, at the issuer's option, for a specified period. PIKs may be more speculative and subject to greater fluctuations in value than securities which pay interest periodically and in cash, due to changes in interest rates. The Accounts' purchase of debt securities that have original issue discount, including zero coupon, deferred interest and PIK securities, present special tax issues. See "Taxes." PREFERRED STOCK (All Accounts except the Liquid Account and Government Securities Account) Each of the Accounts (other than the Liquid Account and the Government Securities Account), subject to its investment objectives, may purchase preferred stock. Preferred stocks are equity securities, but possess certain attributes of debt securities and are generally considered fixed income securities. Holders of preferred stocks normally have the right to receive dividends at a fixed rate when and as declared by the issuer's board of directors, but do not participate in other amounts available for distribution by the issuing corporation. Dividends on the preferred stock may be cumulative, and all cumulative dividends usually must be paid prior to dividend payments to common stockholders. Because of this preference, preferred stocks generally entail less risk than common stocks. Upon liquidation, preferred stocks are entitled to a specified liquidation preference, which is generally the same as the par or stated value, and are senior in right of payment to common stocks. However, preferred stocks are equity securities in that they do not represent a liability of the issuer and therefore do not offer as great a degree of protection of capital or assurance of continued income as investments in corporate debt securities. In addition, preferred stocks are subordinated in right of payment to all debt obligations and creditors of the issuer, and convertible preferred stocks may be subordinated to other preferred stock of the same issuer. WARRANTS (All Accounts except the Liquid Account and Government Securities Account) Each of the Accounts (other than the Liquid Account and the Government Securities Account) may purchase warrants, which are privileges issued by corporations enabling the owners to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time. The purchase of warrants involves a risk that an Account could lose the purchase value of a warrant if the right to subscribe to additional shares is not exercised prior to the warrant's expiration. Also, the purchase of warrants involves the risk that the effective price paid for the warrant added to the subscription price of the related security may exceed the value of the subscribed security's market price such as when there is no movement in the level of the underlying security. An Account will not invest more than 5% of its net assets, taken at market value, in warrants, or more than 2% of its net assets, taken at market value, in warrants not listed on a recognized securities exchange. Warrants acquired by an Account in units or attached to other securities shall not be included in determining compliance with these percentage limitations. MORTGAGE-BACKED SECURITIES (All Accounts) Each Account may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect participations in or obligations collateralized by and payable from mortgage loans secured by real property. Each mortgage pool underlying mortgage-backed securities will consist of mortgage loans evidenced by promissory notes secured by first mortgages or first deeds of trust or other similar security instruments creating a first lien on owner and non-owner occupied one-unit to four-unit residential properties, multifamily residential properties, agricultural properties, commercial properties and mixed use properties. AGENCY MORTGAGE SECURITIES. Each Account may invest in mortgage backed securities issued or guaranteed by the U.S. Government, foreign governments or any of their agencies, instrumentalities or sponsored enterprises. Agencies, instrumentalities or sponsored enterprises of the U.S. Government include but are not limited to the Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Ginnie Mae securities are backed by the full faith and credit of the U.S. Government, which means that the U.S. Government guarantees that the interest and principal will be paid when due. Fannie Mae securities and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government; however, these enterprises have the ability to obtain financing from the U.S. Treasury. There are several types of agency mortgage securities currently available, including, but not limited to, guaranteed mortgage pass-through certificates and multiple class securities. PRIVATELY ISSUED MORTGAGE-BACKED SECURITIES. Each Account may also invest in mortgage-backed securities issued by trusts or other entities formed or sponsored by private originators of and institutional investors in mortgage loans and other foreign or domestic non-governmental entities (or representing custodial arrangements administered by such institutions). These private originators and institutions include domestic and foreign savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing. Privately issued mortgage-backed securities are generally backed by pools of conventional (i.e., non-government guaranteed or insured) mortgage loans. Since such mortgage-backed securities are not guaranteed by an entity having the credit standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to receive a high quality rating, they normally are structured with one or more types of "credit enhancement." Such credit enhancements fall generally into two categories; (1) liquidity protection and (2) protection against losses resulting after default by a borrower and liquidation of the collateral. Liquidity protection refers to the providing of cash advances to holders of mortgage-backed securities when a borrower on an underlying mortgage fails to make its monthly payment on time. Protection against losses resulting after default and liquidation is designed to cover losses resulting when, for example, the proceeds of a foreclosure sale are insufficient to cover the outstanding amount on the mortgage. Such protection may be provided through guarantees, insurance policies or letters of credit, though various means of structuring the transaction or through a combination of such approaches. MORTGAGE PASS-THROUGH SECURITIES. Each Account may invest in mortgage pass-through securities, which are fixed or adjustable rate mortgage-backed securities that provide for monthly payments that are a "pass-through" of the monthly interest and principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees or other amounts paid to any guarantor, administrator and/or services of the underlying mortgage loans. MULTIPLE CLASS MORTGAGE-BACKED SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS. The Government Securities Account, Income Account, Total Return Account and each of the LifeSpan Accounts may invest in collateralized mortgage obligations (CMOs), which are multiple class mortgage-backed securities. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes, each with a specified fixed or adjustable interest rate and a final distribution date. In most cases, payments of principal are applied to the CMO classes in the order of their respective stated maturities, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. Sometimes, however, CMO classes are "parallel pay" (i.e., payments of principal are made to two or more classes concurrently). STRIPPED MORTGAGE-BACKED SECURITIES. The Government Securities Account Income Account, Total Return Account and each of the LifeSpan Accounts may also invest in stripped mortgage-backed securities (SMBS), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions from a pool of mortgage loans. If the underlying mortgage loans experience greater than anticipated prepayments of principal, an Account may fail to fully recoup its initial investment in these securities. A common type of SMBS will have one class receiving all of the interest from a pool of mortgage loans (IOs), while the other class will receive all of the principal (POs). The market value of POs generally is unusually volatile in response to changes in interest rates. The yields on IOs are generally higher than prevailing market yields on other mortgage-backed securities because the cash flow patterns of IOs are more volatile and there is a greater risk that the initial investment will not be fully recouped. Because an investment in an IO consists entirely of a right to an interest income stream and prepayments of mortgage loan principal amounts can reduce or eliminate such income stream, the value of IO's can be severely adversely affected by significant prepayments of underlying mortgage loans. In accordance with a requirement imposed by the staff of the SEC, the Manager and the Subadvisers will consider privately-issued fixed rate IOs and POs to be illiquid securities for purposes of Accounts' limitation on investments in illiquid securities. Unless the Manager or the relevant Subadviser, acting pursuant to guidelines and standards established by the Board of Directors, determines that a particular government-issued fixed rate IO or PO is liquid, management will also consider these IOs and POs to be illiquid. CUSTODIAL RECEIPTS (All Accounts) Each of the Accounts may acquire U.S. Government securities and their unmatured interest coupons that have been separated (stripped) by their holder, typically a custodian bank or investment brokerage firm. Having separated the interest coupons from the underlying principal of the U.S. Government securities, the holder will resell the stripped securities in custodial receipt programs with a number of different names, including Treasury Income Growth Receipts (TIGRs) and Certificate of Accrual on Treasury Securities (CATS). The stripped coupons are sold separately from the underlying principal, which is usually sold at a deep discount because the buyer receives only the right to receive a future fixed payment on the security and does not receive any rights to periodic interest (cash) payments. The underlying U.S. Treasury bonds and notes themselves are generally held in book-entry form at a Federal Reserve Bank. Counsel to the underwriters of these certificates or other evidences of ownership of U.S. Treasury securities have stated that, in their opinion, purchasers of the stripped securities most likely will be deemed the beneficial holders of the underlying U.S. government securities for federal tax and securities purposes. In the case of CATS and TIGRs, the IRS has reached this conclusion for the purpose of applying the tax diversification requirements applicable to regulated investment companies such as the Accounts. CATS and TIGRs are not considered U.S. Government securities by the Staff of the SEC, however. Further, the IRS' conclusion is contained only in a general counsel memorandum, which is an internal document of no precedential value or binding effect, and a private letter ruling, which also may not be relied upon by the Accounts. The Company is not aware of any binding legislative, judicial or administrative authority on this issue. COMMERCIAL PAPER (All Accounts) Commercial paper is a short- term, unsecured negotiable promissory note of a U.S or non- U.S issuer. Each of the Accounts may purchase commercial paper for temporary defensive purposes as described in the Prospectuses. An Account may also invest in variable rate master demand notes which typically are issued by large corporate borrowers providing for variable amounts of principal indebtedness and periodic adjustments in the interest rate according to the terms of the instrument. Demand notes are direct lending arrangements between an Account and an issuer, and are not normally traded in a secondary market. An Account, however, may demand payment of principal and accrued interest at any time. In addition, while demand notes generally are not rated, their issuers must satisfy the same criteria as those set forth above for issuers of commercial paper. The Manager and the Subadvisers will consider the earning power, cash flow and other liquidity ratios of issuers of demand notes and continually will monitor their financial ability to meet payment on demand. BANK OBLIGATIONS (All Accounts) Certificates of Deposit (CDs) are short- term negotiable obligations of commercial banks. Time Deposits (TDs) are non- negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Bankers' acceptances are time drafts drawn on commercial banks by borrowers usually in connection with international transactions. U.S. commercial banks organized under federal law are supervised and examined by the Comptroller of the Currency and are required to be members of the Federal Reserve System and to be insured by the Federal Deposit Insurance Corporation (FDIC). U.S. banks organized under state law are supervised and examined by state banking authorities but are members of the Federal Reserve System only if they elect to join. Most state banks are insured by the FDIC (although such insurance may not be of material benefit to an Account, depending upon the principal amount of CDs of each bank held by the Account) and are subject to federal examination and to a substantial body of federal law and regulation. As a result of governmental regulations, U.S. branches of U.S. banks, among other things, generally are required to maintain specified levels of reserves, and are subject to other supervision and regulation designed to promote financial soundness. U.S. savings and loan associations, the CDs of which may be purchased by the Accounts, are supervised and subject to examination by the Office of Thrift Supervision. U.S. savings and loan associations are insured by the Savings Association Insurance Account which is administered by the FDIC and backed by the full faith and credit of the U.S. Government. REPURCHASE AGREEMENTS (All Accounts) Each of the Accounts may enter into repurchase agreements as described in the Prospectuses. For purposes of the Investment Company Act and, generally, for tax purposes, a repurchase agreement is considered to be a loan from the Account to the seller of the obligation. For other purposes, it is not clear whether a court would consider such an obligation as being owned by the Account or as being collateral for a loan by the Account to the seller. In the event of the commencement of bankruptcy or insolvency proceedings with respect to the seller of the obligation before its repurchase, under the repurchase agreement, the Account may encounter delay and incur costs before being able to sell the security. Such delays may result in a loss of interest or decline in price of the obligation. If the court characterizes the transaction as a loan and the Account has not perfected a security interest in the obligation, the Account may be treated as an unsecured creditor of the seller and required to return the obligation to the seller's estate. As an unsecured creditor, the Account would be at risk of losing some or all of the principal and income involved in the transaction. As with any unsecured debt instrument purchased for the Accounts, the Manager and the Subadvisers seek to minimize the risk of loss from repurchase agreements by analyzing the creditworthiness of the obligor, in this case, the seller of the obligation. In addition to the risk of bankruptcy or insolvency proceedings, there is the risk that the seller may fail to repurchase the security. However, if the market value of the obligation falls below the repurchase price (including accrued interest), the seller of the obligation will be required to deliver additional securities so that the market value of all securities subject to the repurchase agreement equals or exceeds the repurchase price. RESTRICTED AND ILLIQUID SECURITIES Each Account (other than Liquid Account) may invest in restricted securities eligible for resale to certain institutional investors pursuant to Rule 144A under the Securities Act of 1933, as amended (the "1933 Act"), and foreign securities acquired in accordance with Regulation S under the 1933 Act. No Account (except each of the LifeSpan Accounts) will invest more than 10% of its net assets in illiquid investments, which include repurchase agreements maturing in more than seven days, securities that are not readily marketable, restricted securities, purchased over-the-counter (OTC) options, certain assets used to cover written OTC options, and privately issued stripped mortgage-backed securities. Each of the LifeSpan Accounts will not invest more than 15% of its net assets in such illiquid investments. If the Board of Directors determines, based upon a continuing review of the trading markets for specific Rule 144A securities, that such securities are liquid, then these securities may be purchased without regard to the Accounts' 10% or 15% limit on illiquid investments, as the case may be. However, each LifeSpan Account has undertaken to limit investments in restricted securities including those eligible for resale pursuant to Rule 144A to 15% of total assets. The Board of Directors may adopt guidelines and delegate to the Manager or relevant Subadviser the daily function of determining and monitoring the liquidity of restricted securities. The Board of Directors, however, will retain sufficient oversight and be ultimately responsible for the determinations. The Board of Directors will carefully monitor each Account's investments in these securities, focusing on such important factors, among others, as valuation, liquidity and availability of information. This investment practice could have the effect of increasing the level of illiquidity in the Accounts if qualified institutional buyers become for a time uninterested in purchasing these restricted securities. PORTFOLIO TURNOVER Each Account's particular portfolio securities may be changed without regard to the holding period of these securities (subject to certain tax restrictions), when the Manager or respective Subadviser deems that this action will help achieve the Account's objective given a change in an issuer's operations or changes in general market conditions. Short-term trading means the purchase and subsequent sale of a security after it has been held for a relatively brief period of time. The Accounts do not generally intend to invest for the purpose of seeking short-term profits. Variations in portfolio turnover rate from year to year reflect the investment discipline applied to the particular Account and do not generally reflect trading for short-term profits. INVESTMENT RESTRICTIONS A. FUNDAMENTAL INVESTMENT RESTRICTIONS. Each Account has adopted the following fundamental investment restrictions which may not be changed without approval of a majority of the applicable Account's outstanding voting securities. Under the Investment Company Act, and as used in the Prospectuses and this SAI, a "majority of the outstanding voting securities" requires the approval of the lesser of (1) the holders of 67% or more of the shares of an Account represented at a meeting if the holders of more than 50% of the outstanding shares of the Account are present in person or by proxy or (2) the holders of more than 50% of the outstanding shares of the Account. The Income, Growth and Total Return Accounts of the Company each may not: 1. Issue senior securities, except as permitted by paragraphs 7, 8, 9 and 11 below. For purposes of this restriction, the issuance of shares of common stock in multiple classes or series, the purchase or sale of options, futures contracts and options on futures contracts, forward commitments, and repurchase agreements entered into in accordance with the Account's investment policies, and the pledge, mortgage or hypothecation of the Account's assets are not deemed to be senior securities. 2. (a) Invest more than 5 percent of its total assets (taken at market value at the time of each investment) in the securities (other than United States Government or Government agency securities) of any one issuer (including repurchase agreements with any one bank or dealer) or more than 15 percent of its total assets in the obligations of any one bank; and (b) purchase more than either (i) 10 percent in principal amount of the outstanding debt securities of an issuer, or (ii) 10 percent of the outstanding voting securities of an issuer, except that such restrictions shall not apply to securities issued or guaranteed by the United States Government or its agencies, bank money instruments or bank repurchase agreements. 3. Invest more than 25 percent of the value of its total assets in the securities of issuers in any single industry, provided that this limitation shall not apply to the purchase of obligations issued or guaranteed by the United States Government, its agencies or instrumentalities. For the purpose of this restriction, each utility that provides a separate service (e.g., gas, gas transmission, electric or telephone) shall be considered to be a separate industry. This test shall be applied on a proforma basis using the market value of all assets immediately prior to making any investment. 4. Alone, or together with any other portfolio or portfolios, make investments for the purpose of exercising control over, or management of, any issuer. 5. Purchase securities of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization, or by purchase in the open market of securities of closed- end investment companies where no underwriter or dealer's commission or profit, other than the customary broker's commission is involved and only if immediately thereafter not more than 10 percent of such portfolio's total assets, taken at market value, would be invested in such securities. 6. Purchase or sell interests in oil, gas or other mineral exploration or development programs, commodities, commodity contracts or real estate, except that such portfolio may: (1) purchase securities of issuers which invest or deal an any of the above and (2) invest for hedging purposes in futures contracts on securities, financial instruments and indices, and foreign currency, as are approved for trading on a registered exchange. 7. Purchase any securities on margin (except that the Company may obtain such short- term credits as may be necessary for the clearance of purchases and sales of portfolio securities) or make short sales of securities or maintain a short position. The deposit or payment by the Account of initial or maintenance margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin. 8. Make loans, except that the Account (1) may lend portfolio securities in accordance with the Account's investment policies up to 33 1/3% of the Account's total assets taken at market value, (2) enter into repurchase agreements, and (3) purchase all or a portion of an issue of publicly distributed debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities. 9. Borrow amounts in excess of 10 percent of its total assets, taken at market value at the time of the borrowing, and then only from banks as a temporary measure for extraordinary or emergency purposes, or make investments in portfolio securities while such outstanding borrowings exceed 5 percent of its total assets. 10. Allow its current obligations under reverse repurchase agreements, together with borrowings, to exceed 1/3 of the value of its total assets (less all its liabilities other than the obligations under borrowings and such agreements). 11. Mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by such Account except as may be necessary in connection with borrowings as mentioned in investment restriction (9) above, and then such mortgaging, pledging or hypothecating may not exceed 10 percent of such Account's total assets, taken at market value at the time thereof. In order to comply with certain state statutes, such Account will not, as a matter of operating policy, mortgage, pledge or hypothecate its portfolio securities to the extent that at any time the percentage of the value of pledged securities plus the maximum sales charge will exceed 10 percent of the value of such Account's shares at the maximum offering price. The deposit of cash, cash equivalents and liquid debt securities in a segregated account with the custodian and/or with a broker in connection with futures contracts or related options transactions and the purchase of securities on a "when- issued" basis is not deemed to be a pledge. 12. Underwrite securities of other issuers except insofar as the Company may be deemed an underwriter under the 1933 Act in selling portfolio securities. 13. Write, purchase or sell puts, calls or combinations thereof, except that covered call options may be written. 14. Invest in securities of foreign issuers if at the time of acquisition more than 10 percent of its total assets, taken at market value at the time of the investment, would be invested in such securities. However, up to 25 percent of the total assets of such portfolio may be invested in the aggregate in such securities (i) issued, assumed or guaranteed by foreign governments, or political subdivisions or instrumentalities thereof, (ii) assumed or guaranteed by domestic issuers, including Eurodollar securities, or (iii) issued, assumed or guaranteed by foreign issuers having a class of securities listed for trading on the New York Stock Exchange. 15. Invest more than 10 percent in the aggregate of the value of its total assets in repurchase agreements maturing in more than seven days, time deposits maturing in more than 2 days, portfolio securities which do not have readily available market quotations and all other illiquid assets. The Government Securities Account may not: 1. Issue senior securities, except as permitted by para-graphs 3, 4, 5 and 15 below. For purposes of this restriction, the issuance of shares of common stock in multiple classes or series, the purchase or sale of options, futures contracts and options on futures contracts, forward commitments, and repurchase agreements entered into in accordance with the Account's investment policies, and the pledge, mortgage or hypothecation of the Account's assets are not deemed to be senior securities. 2. Purchase equity securities (e.g., common stocks, preferred stocks), voting securities or local or state government securities (e.g., municipal bonds, state bonds). 3. Borrow money, except from banks for temporary or emer-gency purposes, including the meeting of redemption requests which might otherwise require the untimely disposition of securities, borrow in the aggregate more than 10 percent of the value of its total assets, or invest in portfolio securities while outstanding borrowings exceed 5 percent of the value of its total assets. 4. Pledge, hypothecate, mortgage or otherwise encumber its assets, except in an amount of not more than 10 percent of the value of its net assets to secure borrowings for temporary or emergency purposes and except as may be necessary in connection with securities lending as provided in investment restriction (10) below. The deposit of cash, cash equivalents and liquid debt securities in a segregated account with the custodian and/or with a broker in connection with futures contracts or related options transactions and the purchase of securities on a "when- issued" basis is not deemed to be a pledge. 5. Sell securities short or purchase securities on margin. The deposit or payment by the Account of initial or maintenance margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin. 6. Write or purchase put or call options, except that the Account may engage in covered call option writing. 7. Underwrite the securities of other issuers or purchase restricted securities. 8. Purchase or sell real estate, real estate investment trust securities, commodities or commodity contracts, or oil and gas interests, except that the Account may invest for hedging purposes in futures contracts on securities, financial instruments, and indices as are approved for trading on a registered exchange. 9. Make loans, except that the Account (1) may lend portfolio securities in accordance with the Account's investment policies up to 33 1/3 percent of the Account's total assets taken at market value, (2) enter into repurchase agreements, and (3) purchase all or a portion of an issue of publicly distributed debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities. 10. Invest more than 15 percent of the value of its total assets in the obligations of any one bank, or invest more than 5 percent of the value of its total assets in the commercial paper of any one issuer. 11. Invest more than 25 percent of the value of its total assets in the securities of issuers in any single industry, provided that this limitation shall not apply to the purchase of obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, certificates of deposit issued by domestic banks and domestic bankers' acceptances (excluding foreign branches of domestic banks). 12. Invest more than 10 percent in the aggregate of the value of its total assets in repurchase agreements maturing in more than 7 days, time deposits maturing in more than 2 days and portfolio securities which do not have readily available market quotations. 13. Invest in companies for the purpose of exercising control. 14. Invest in securities of other investment companies, except as they may be acquired as part of a merger, consolidation or acquisition of assets. 15. Allow its current obligations under reverse repurchase agreements, together with borrowings, to exceed one- third of the value of its total assets (less all its liabilities other than the obligations under borrowings and such agreements). The Liquid Account may not: 1. Issue senior securities, except as permitted by paragraphs 3, 4, 5 and 15 below. For purposes of this restriction, the issuance of shares of common stock in multiple classes or series, the purchase or sale of options, futures contracts and options on futures contracts, forward commitments, and repurchase agreements entered into in accordance with the Account's investment policies, and the pledge, mortgage or hypothecation of the Account's assets are not deemed to be senior securities. 2. Purchase equity securities (e.g., common stocks, preferred stocks), voting securities or local or state government securities (e.g., municipal bonds, state bonds). 3. Borrow money, except from banks for temporary or emer-gency purposes, including the meeting of redemption requests which might otherwise require the untimely disposition of securities, borrow in the aggregate more than 10 percent of the value of its total assets, or invest in portfolio securities while outstanding borrowings exceed 5 percent of the value of its total assets. 4. Pledge, hypothecate, mortgage or otherwise encumber its assets, except in an amount of not more than 10 percent of the value of its net assets to secure borrowings for temporary or emergency purposes and except as may be necessary in connection with securities lending as provided in investment restriction (10) below. The deposit of cash, cash equivalents and liquid debt securities in a segregated account with the custodian and/or with a broker in connection with futures contracts or related options transactions and the purchase of securities on a "when- issued" basis is not deemed to be a pledge. 5. Sell securities short or purchase securities on margin. The deposit or payment by the Account of initial or maintenance margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin. 6. Write or purchase put or call options. 7. Underwrite the securities of other issuers or purchase restricted securities. 8. Purchase or sell real estate, real estate investment trust securities, commodities or commodities contracts, or oil and gas interests. 9. Make loans, except that the Account (1) may lend portfolio securities in accordance with the Account's investment policies up to 33 1/3 percent of the Account's total assets taken at market value, (2) enter into repurchase agreements, and (3) purchase all or a portion of an issue of publicly distributed debt securities, bank loan participation interests, bank certificates of deposit, bankers' acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities. 10. Invest more than 15 percent of the value of its total assets in the obligations of any one bank or invest more than 5 percent of the value of its total assets in the commercial paper of any one issuer. 11. Invest more than 25 percent of the value of its total assets in the securities of issuers in any single industry, provided that this limitation shall not apply to the purchase of obligations issued or guaranteed by the United States Government, its agencies or instrumentalities, certificates of deposit issued by domestic banks and domestic bankers' acceptances (excluding foreign branches of domestic banks). 12. Invest more than 10 percent in the aggregate of the value of its total assets in repurchase agreements maturing in more than 7 days, time deposits maturing in more than 2 days and portfolio securities which are not readily marketable. 13. Invest in companies for the purpose of exercising control. 14. Invest in securities of other investment companies, except as they may be acquired as part of a merger, consolidation or acquisition of assets. 15. Enter into a reverse repurchase agreement if as a result its current obligations under such agreement would exceed one- third of the value of its total assets (less all its liabilities other than the obligations under such agreements). 16. Invest in any security with a maturity in excess of one year. For purposes of the fundamental investment restrictions, the term "borrow" does not include mortgage dollar rolls, reverse repurchase agreements or lending portfolio securities and the terms "illiquid securities" and "portfolio securities which do not have readily available market quotations" shall include restricted securities. However, as non- fundamental policies, the Company will treat reverse repurchase agreements as borrowings, master demand notes as illiquid securities and mortgage dollar rolls as sales transactions and not as a financing. For purposes of the restriction on investing more than 25% of an Account's assets in the securities of issuers in any single industry, the category Financial Services as used in the Financial Statements may include several different industries such as mortgage- backed securities, brokerage firms and other financial institutions. Each of the Income, Growth, Total Return and Liquid Accounts of the Company may not, as a non-fundamental investment restriction, invest more than 5% of its total assets in securities of any issuer which, together with its predecessors, has been in operation for less than three years. Each of the LifeSpan Accounts each may not: 1. Issue senior securities, except as permitted by paragraphs 2, 3, 6 and 7 below. For purposes of this restriction, the issuance of shares of common stock in multiple classes or series, the purchase or sale of options, futures contracts and options on futures contracts, forward commitments and repurchase agreements entered into in accordance with the Account's investment policies, are not deemed to be senior securities. 2. Purchase any securities on margin (except that the Company may obtain such short- term credits as may be necessary for the clearance of purchases and sales of portfolio securities) or make short sales of securities or maintain a short position. The deposit or payment by the Account of initial or maintenance margin in connection with futures contracts or related options trans-actions is not considered the purchase of a security on margin. 3. Borrow money, except for emergency or extraordinary purposes including (i) from banks for temporary or short-term purposes or for the clearance of transactions in amounts not to exceed 33 1/3% of the value of the Account's total assets (including the amount borrowed) taken at market value, (ii) in connection with the redemption of Account shares or to finance failed settlements of portfolio trades without immediately liquidating portfolio securities or other assets; and (iii) in order to fulfill commitments or plans to purchase additional securities pending the anticipated sale of other portfolio securities or assets, but only if after each such borrowing there is asset coverage of at least 300% as defined in the Investment Company Act. For purposes of this investment restriction, reverse repurchase agreements, mortgage dollar rolls, short sales, futures contracts, options on futures contracts, securities or indices and forward commitment transactions shall not constitute borrowing. 4. Act as an underwriter, except to the extent that in connection with the disposition of portfolio securities, the Account may be deemed to be an underwriter for purposes of the 1933 Act. 5. Purchase or sell real estate except that the Account may (i) acquire or lease office space for its own use, (ii) invest in securities of issuers that invest in real estate or interests therein, (iii) invest in securities that are secured by real estate or interests therein, (iv) purchase and sell mortgage-related securities and (v) hold and sell real estate acquired by the Account as a result of the ownership of securities. 6. Invest in commodities, except the Account may purchase and sell options on securities, securities indices and currency, futures contracts on securities, securities indices and currency and options on such futures, forward foreign currency exchange contracts, forward commitments, securities index put or call warrants and repurchase agreements entered into in accordance with the Account's investment policies. 7. Make loans, except that the Account (1) may lend portfolio securities in accordance with the Account's investment policies up to 33 1/3% of the Account's total assets taken at market value, (2) enter into repurchase agreements, and (3) purchase all or a portion of an issue of publicly distributed bonds, debentures or other similar obligations. 8. Purchase the securities of issuers conducting their principal activity in the same industry if, immediately after such purchase, the value of its investments in such industry would exceed 25% of its total assets taken at market value at the time of such investment. This limitation does not apply to investments in obligations of the U.S. Government or any of its agencies, instrumentalities or authorities. 9. With respect to 75% of total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities), if: (a) such purchase would cause more than 5% of the Account's total assets taken at market value to be invested in the securities of such issuer; or (b) such purchase would at the time result in more than 10% of the outstanding voting securities of such issuer being held by the Account. B. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions are designated as non-fundamental and may be changed by the Board of Directors without the approval of shareholders. The LifeSpan Accounts each may not: (1) Pledge, mortgage or hypothecate its assets, except to secure permitted borrowings and then only if such pledging, mortgaging or hypothecating does not exceed 33 1/3% of the Account's total assets taken at market value. Collateral arrangements with respect to margin, option and other risk management and when-issued and forward commitment transac-tions are not deemed to be pledges or other encumbrances for purposes of this restriction. (2) Participate on a joint or joint-and-several basis in any securities trading account. The "bunching" of orders for the sale or purchase of marketable portfolio securities with other accounts under the management of the Manager or the Subadvisers to save commissions or to average prices among them is not deemed to result in a joint securities trading account. (3) Purchase or retain securities of an issuer if one or more of the Directors or officers of the Company or directors or officers of the Manager or any Subadviser or any investment management subsidiary of the Manager or any Subadviser individually owns beneficially more than 0.5% and together own beneficially more than 5% of the securities of such issuer. (4) Purchase a security if, as a result, (i) more than 10% of the Account's assets would be invested in securities of other investment companies, (ii) such purchase would result in more than 3% of the total outstanding voting securities of any one such investment company being held by the Account or (iii) more than 5% of the Account's assets would be invested in any one such investment company. The Account will not purchase the securities of any open-end investment company except when such purchase is part of a plan of merger, consolidation, reorganization or purchase of substantially all of the assets of any other investment company, or purchase the securities of any closed-end investment company except in the open market where no commission or profit to a sponsor or dealer results from the purchase, other than customary brokerage fees. The Account has no current intention of investing in other investment companies. (5) Invest more than 15% of total assets in restricted securities, including securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933. (6) Invest more than 5% of total assets in securities of any issuer which, together with its predecessors, has been in operation for less than three years. (7) Invest in securities which are illiquid if, as a result, more than 15% of its net assets would consist of such securities, including repurchase agreements maturing in more than seven days, securities that are not readily marketable, certain restricted securities, purchased OTC options, certain assets used to cover written OTC options, and privately issued stripped mortgage-backed securities. (8) Purchase securities while outstanding borrowings exceed 5% of the Account's total assets. (9) Invest in real estate limited partnership interests. (10) Purchase warrants of any issuer, if, as a result of such purchase, more than 2% of the value of the Account's total assets would be invested in warrants which are not listed on an exchange or more than 5% of the value of the total assets of the Account would be invested in warrants generally, whether or not so listed. For these purposes, warrants are to be valued at the lesser of cost or market, but warrants acquired by the Account in units with or attached to debt securities shall be deemed to be without value. (11) Purchase interests in oil, gas, or other mineral exploration programs or mineral leases; however, this policy will not prohibit the acquisition of securities of companies engaged in the production or transmission of oil, gas, or other minerals. (12) Write covered call or put options with respect to more than 25% of the value of its total assets, invest more than 25% of its total assets in protective put options or invest more than 5% of its total assets in puts, calls, spreads or straddles, or any combination thereof, other than protective put options. The aggregate value of premiums paid on all options, other than protective put options, held by the Account at any time will not exceed 20% of the Account's total assets. (13) Invest for the purpose of exercising control over or management of any company. If a percentage restriction on investment or utilization of assets as set forth above is adhered to at the time an investment is made, a later change in percentage resulting from changes in the values of an Account's assets will not be considered a violation of the restriction. In order to permit the sale of shares of the Accounts in certain states, the Board of Directors may, in its sole discretion, adopt restrictions on investment policy more restrictive than those described above. Should the Board of Directors determine that any such more restrictive policy is no longer in the best interest of an Account and its shareholders, the Account may cease offering shares in the state involved and the Board of Directors may revoke such restrictive policy. Moreover, if the states involved shall no longer require any such restrictive policy, the Board of Directors may, in its sole discretion, revoke such policy. MANAGEMENT The Company's Board of Directors provides broad supervision over the affairs of the Company. The officers of the Company are responsible for the day-to-day operations of the Company. The Directors of the Company and the officers of the Company are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Unless otherwise noted, the business address of each Director and officer of the Company is 140 Garden Street, Hartford, Connecticut 06154. Those Directors and officers who are "interested persons" of the Company, as defined in the Investment Company Act, by virtue of their affiliation with the Company, are indicated by an asterisk(*). DIRECTORS AND OFFICERS OF THE COMPANY. RICHARD H. AYERS, 52, DIRECTOR Chairman and Chief Executive Officer, The Stanley Works (tool manufacturer). Address: The Stanley Works, 1000 Stanley Drive, New Britain, Connecticut 06050 DAVID E.A. CARSON, 61, DIRECTOR President, Chairman and Chief Executive Officer, People's Bank. Address: People's Bank, 899 Main Street, Bridgeport, Connecticut 06604 RICHARD W. GREENE, 60, DIRECTOR Executive Vice President and Treasurer, University of Rochester. Address: University of Rochester, Wilson Boulevard, Rochester, New York 14627 BEVERLY L. HAMILTON, 48, DIRECTOR President, ARCO Investment Management Company (1991-Present); Deputy Comptroller, City of New York (1987-1991). Address: ARCO Investment Management Company, 555 South Flower Street, Los Angeles, California 90071 DONALD H. POND, JR., 52, DIRECTOR AND PRESIDENT* Executive Vice President, Connecticut Mutual Life Insurance Company (CML) (1988-June, 1995). DAVID E. SAMS, JR., 52, DIRECTOR* President and Chief Executive Officer, CML (1993-present); President and Chief Executive Officer, Agency Group, Capital Holdings Corporation (1987-1993). LINDA M. NAPOLI, 38, TREASURER AND CONTROLLER* Assistant Vice President, CML (1987-present); Associate Director, CML (1988-1993). LOUIS A. LACCAVOLE, 46, GENERAL AUDITOR* Vice President and General Auditor, CML (1990-Present); Assistant Vice President and General Auditor, CML (1981-1990). ANN F. LOMELI, 39, SECRETARY* Secretary of the Company; Corporate Secretary, CML (1988-present). All Board members of the Company are board members of, Mr. Pond is a board member and President of, and Ms. Lomeli is Secretary, Ms. Napoli is Treasurer and Mr. Laccavole is General Auditor of, Connecticut Mutual Financial Services Series Fund I, Inc. ("CMFS Fund"), an investment company for which the Manager acts as investment adviser. Each of the Directors and principal officers affiliated with the Company who is also an affiliated person of the Manager or any Subadviser is named above, together with the capacity in which such person is affiliated with the Company, the Manager or Subadviser. As of August 31, 1995, the Directors and officers of the Company owned, in the aggregate, less than 1% of the outstanding securities of the Company. COMPENSATION OF OFFICERS AND DIRECTORS. The Accounts pay no salaries or compensation to any of their officers. The chart below sets forth the fees paid or expected to be paid by each Account to the Directors and certain other information:
RICHARD M. DONALD E. RICHARD W. BEVERLY L. DONALD H. DAVID E. AYERS A.CARSON GREENE HAMILTON POND, JR. SAMS, JR. COMPENSATION RECEIVED FROM ACCOUNT Liquid Account* $1,000 $962.50 $1,100 $1,000 $-0- $-0-
Government Securities
Account* 1,000 962.50 1,100 1,000 -0- -0- Income Account* 1,000 962.50 1,100 1,000 -0- -0- Total Return Account* 1,000 962.50 1,100 1,000 -0- -0- Growth Account* 1,000 962.50 1,100 1,000 -0- -0- Diversified Income Account** 275 275 275 275 -0- -0- Balanced Account** 275 275 275 275 -0- -0- Capital Appreciation Account** 275 275 275 275 -0- -0- PENSION OR RETIREMENT BENEFITS ACCRUED AS ACCOUNT EXPENSE* Liquid Account -0- -0- -0- -0- -0- -0- Government Securities Account -0- -0- -0- -0- -0- -0- Income Account -0- -0- -0- -0- -0- -0- Total Return Account -0- -0- -0- -0- -0- -0- Growth Account -0- -0- -0- -0- -0- -0- Diversified Income Account -0- -0- -0- -0- -0- -0- Balanced Account -0- -0- -0- -0- -0- -0- Capital Appreciation Account -0- -0- -0- -0- -0- -0- TOTAL COMPENSATION FROM COMPANY AND COMPLEX PAID TO DIRECTORS*** 9,250 9,063 10,250 9,250 -0- -0-
____________ * As of most recently completed fiscal year. ** Estimated for current fiscal year. *** As of the calendar year ended December 31, 1994, there were sixteen investment companies in the Complex (including the Accounts). Other Information about the Company. The Company was incorporated in Maryland on December 9, 1981. The authorized capital stock of the Company consists of 3 billion shares of common stock, par value $0.001 per share (Common Stock). The shares of common stock are divided into thirteen series accounts: Government Securities Account (200,000,000 shares); Income Account (200,000,000 shares); Total Return Account (200,000,000 shares); Growth Account (200,000,000 shares); Liquid Account (600,000,000 shares); Capital Appreciation Account (200,000,000 shares); Balanced Account (200,000,000 shares); Diversified Income Account (200,000,000 shares); CMIA National Municipals Account (200,000,000 shares); CMIA California Municipals Account (200,000,000 shares); CMIA Massachusetts Municipals Account (200,000,000 shares); CMIA New York Municipals Account 200,000,000 shares); and CMIA Ohio Municipals Account (200,000,000 shares). The Board of Directors may reclassify authorized shares to add to one or more of the accounts described above or to add any new accounts to the Company. The Board of Directors is also authorized, without further shareholder approval, to classify and reclassify existing and new accounts into one or more classes. Accordingly, the Directors have authorized the issuance of two classes of shares of each of the CMIA Accounts, except for the Liquid Account, and each of the LifeSpan Accounts, designated in each instance as Class A shares and Class B shares. The Directors have authorized only one class of shares for the Liquid Account. As of August 31, 1995, CML and its affiliates owned shares of certain accounts as follows: Government Securities Account (733,944 shares) (15% of shares outstanding); Income Account (1,550,411 shares) (31% of shares outstanding); Total Return Account (211 shares) (0% of shares outstanding); Growth Account (1,848,510 shares) (31% of shares outstanding); and Liquid Account (23,540,988 shares) (33% of shares outstanding), Capital Appreciation Account (2,512,549 shares) (95% of shares outstanding); Balanced Account (3,359,773 shares) (96% of shares outstanding); Diversified Income (2,033,202 shares) (95% of shares outstanding). CML is incorporated under the laws of the state of Connecticut. CML and its affiliates are deemed to be controlling persons of any account of the Company of which they own more than 25% of the shares outstanding. As such, the exercise by CML and its affiliates of their voting rights may diminish the voting power of other shareholders. As of August 31, 1995, no other shareholder of the Company owns of record or beneficially 5% or more of the shares outstanding of any Account. As of August 30, 1995, the following persons held an interest in the following accounts equal to 5% or more of such account's outstanding shares: SHAREHOLDER PERCENTAGE OWNERSHIP CMIA NATIONAL MUNICIPAL ACCOUNT Claud J. Jacobs 9% Yoakum, TX Julius and Deanna Staatz 7% Yoakum, TX James A. Jones Bettendorf, IA 12% CMIA CALIFORNIA MUNICIPAL ACCOUNT Frank J. Edwards IV Houston, TX 18% Archie and Winifred Dingwall Fresno, CA 22% Frank E. Blakeley Fresno, CA 56% CMIA MASSACHUSETTS MUNICIPAL ACCOUNT Tom F. and Edna M. Cavanaugh Carver, MA 35% CML Hartford, CT 8% Martin J. Healey Lynn, MA 21% Eugene F. and Jean K. Walsh Tewksbury, MA 27% CMIA NEW YORK MUNICIPAL ACCOUNT Robert W. Lang Gloversville, NY 5% Michael Nicoletto Huntington, NY 6% Herbert F. Ross Rochester, NY 7% Shirley M. Baker Elma, NY 9% Arnold and Ellen Ostrower New York, NY 17% Salvatore J. Bellavia Syracuse, NY 29% CMIA OHIO MUNICIPAL ACCOUNT Martha L. Lanter Springfield, OH 5% Lawrence H. Stookey, Jr. Sandusky, OH 6% Hardy & Hardy Co. Lima, OH 7% Lawrence A. Walborn Sylvania, OH 7% Friddle Trust Mason, OH 19% Warren and Mary Copeland Lima, OH 24% Any shareholder with an interest in any of the above accounts exceeding 25% of such accounts' outstanding shares is deemed to be a controlling person of such account. As such, the exercise by a greater than 25% shareholder of his or her voting rights may diminish the voting power of other shareholders. The shares of the Accounts are entitled to vote separately to approve investment advisory agreements or changes in investment restrictions, but shareholders of all series vote together in the election and selection of Directors and accountants. Shares of an Account vote together as a class on matters that affect the Account in substantially the same manner. As to matters affecting a single class, shares of such class will vote separately. Shares of the Company do not have cumulative voting rights. The Company does not intend to hold annual meetings of shareholders unless required to do so by the Investment Company Act or the Maryland statute under which the Company is organized. Although Directors are not elected annually by the shareholders, shareholders have under certain circumstances the right to remove one or more Directors. Each Account's shares are fully paid and nonassessable when issued and have no preference, preemptive, conversion or similar rights and are freely transferable. The Company's Articles of Incorporation provide that the Directors, officers and employees of the Company may be indemnified by the Company to the fullest extent permitted by Maryland law. The Company's Bylaws provide that the Company shall indemnify each of its Directors, officers and employees against liabilities and expenses reasonably incurred by them, in connection with, or resulting from, any claim, action, suit or proceeding, threatened against or otherwise involving such Director, officer or employee, directly or indirectly, by reason of being or having been a Director, officer or employee of the Company. Neither the Articles of Incorporation nor the Bylaws authorize the Company to indemnify any Director or officer against any liability to which he or she would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person's duties. INVESTMENT ADVISORY ARRANGEMENTS The Company, on behalf of each Account, has entered into an investment advisory agreement with G.R. Phelps & Co. (the Manager). The investment advisory agreement provides that the Manager, subject to the supervision and approval of the Company's Board of Directors, is responsible for the actual management of each Account. The Manager is responsible for the selection of portfolio investments for each Account (other than the international Component, the small-cap Component and the high yield/high risk bond Component for the LifeSpan Accounts). In connection therewith, the Manager provides investment research and supervision of the investments held by an Account and conducts a continuous program of investment, evaluation and, if appropriate, sale and reinvestment of the Account's assets, in accordance with the investment objectives and policies of the Account. The Manager also furnishes the Company such statistical information, with respect to the investments which the Accounts may hold or contemplate purchasing, as the Company may reasonably request. The Manager will apprise the Company of important developments materially affecting any of the Accounts and furnish the Company from time to time with such information as the Manager may believe appropriate for this purpose. In addition, the Manager agrees to furnish the Board of Directors such periodic and special reports as the Board may reasonably request and to provide persons satisfactory to the Board of Directors to serve as the Company's officers. The Manager will also, without charge, render such clerical, accounting, administrative and other services as the Manager may believe appropriate or as the Company may reasonably request. With respect to the international Component for LifeSpan Capital Appreciation and Balanced Account, the Manager has entered into subadvisory investment agreements with Scudder. With respect to the small cap Component of each LifeSpan Account, the Manager has entered into subadvisory investment agreements with Pilgrim. With respect to the high yield/high risk bond Component for each LifeSpan Account, the Manager has entered into subadvisory investment agreements with BEA Associates. Under the respective subadvisory investment agreement, the corresponding Subadviser, subject to the review of the Board of Directors and the over-all supervision of the Manager, is responsible for managing the investment operations of the corresponding LifeSpan Account Component and the composition of the Component's portfolio and furnishing the LifeSpan Account with advice and recommendations with respect to investments and the purchase and sale of securities for the respective Component. As provided by the investment advisory agreement, each Account pays the Manager an investment management fee, which is accrued daily and paid monthly, equal on an annual basis to a stated percentage of the respective Account's average daily net asset value. The Manager, not any Account, pays the subadvisory fees as described in the Prospectuses. See "The Manager and the Subadvisers" and "Breakdown of Expenses" in the Prospectuses for additional description of the management and subadvisory fees and certain other information concerning each Account's investment advisory agreement and the subadvisory investment agreements of the LifeSpan Accounts. No person other than the Manager and the corresponding Subadviser and their directors and employees regularly furnishes advice to the Accounts with respect to the desirability of the Accounts investing in, purchasing or selling securities. The Manager and Subadvisers may from time to time receive statistical or other similar factual information, and information regarding general economic factors and trends, from CML and its affiliates. Under the terms of the investment advisory agreement with the Company on behalf of each Account, the Manager provides each Account with office space, supplies and other facilities required for the business of the Account. The Manager pays the compensation of all officers and employees of the Company and Directors of the Company affiliated with the Manager, the office expenses of the Accounts and other expenses incurred by the Manager in connection with the performance of its duties. All other expenses which are not specifically paid by the Manager and which are incurred in the operation of the Accounts including fees of directors who are not "interested persons," as such term is defined in the Investment Company Act, of the Company or CML and the continuous public offering of the shares of the Accounts are borne by the Accounts. Securities held by any Account may also be held by other portfolios for which the Manager, the Subadvisers or their respective affiliates provides investment advice. Because of different investment objectives or other factors, a particular security may be bought by the Manager or a Subadviser for one or more clients when one or more clients are selling the same security. If purchases or sales of securities arise for consideration at or about the same time for any Account or other funds for which the Manager or a Subadviser acts as an investment adviser or for their advisory clients, transactions in such securities will be made, insofar as feasible, for the respective funds and clients in a manner deemed equitable to all. To the extent that transactions on behalf of more than one client of the Manager, the Subadvisers or their respective affiliates during the same period may increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price. The advisory fees paid by the following Accounts for the last three fiscal years were:
1992 1993 1994 ---------- ---------- ---------- Liquid Account $ 344,999 $ 357,506 $ 385,774 Government Securities Account $ 392,761 $ 465,806 $ 460,523 Income Account $ 187,813 $ 277,291 $ 304,391 Total Return Account $ 601,883 $ 867,544 $1,173,401 Growth Account $ 264,629 $ 342,082 $ 447,812 ---------- ---------- ---------- Total All Accounts $1,792,085 $2,310,229 $2,771,901 ========== ========== ========== The LifeSpan Accounts commenced operations in fiscal 1995 and therefore paid no advisory fees during the periods listed above.
The investment advisory agreement provides that the Manager will limit the aggregate ordinary operating expenses (including the advisory fee and 12b-1 fees, but excluding interest, taxes, brokerage fees, commissions and extraordinary charges such as litigation costs) of the Liquid Account to no more than 1.0% of the Account's average net assets. The investment advisory contract provides that the Manager will limit the aggregate ordinary operating expenses (including the advisory fee, but excluding interest, taxes, brokerage fees, commissions and extraordinary charges such as litigation costs) of each of the Government Securities Account, Income Account, Growth Account and Total Return Account to no more than 1.5% of the average daily net assets of the respective Account. The Manager has voluntarily and temporarily agreed to limit the expenses of each of the Capital Appreciation Account and the Balanced Account to 1.55% and of the Diversified Income Account to 1.50% of such Account's average daily net assets. Pursuant to the investment advisory agreement and, where applicable, each subadvisory investment agreement, neither the Manager nor any Subadviser is liable to the Accounts or their shareholders for any error of judgment or mistake of law or for any loss suffered by the Accounts in connection with the matters to which their respective agreement relate, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Manager or Subadviser in the performance of their duties or from their reckless disregard of the obligations and duties under the applicable agreement. Each Subadviser has agreed to indemnify the Manager 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 Manager to the extent resulting in whole or in part from any of the respective Subadviser's acts or omissions related to the performance of its duties as set forth specifically in the respective subadvisory investment agreement or otherwise from the respective Subadviser's willful misfeasance, bad faith or gross negligence. The Manager, whose principal business address is at 10 State House Square, Hartford, Connecticut and whose mailing address is 140 Garden Street, Hartford, Connecticut 06154, was organized in 1976 and has over $2.7 billion in assets under management in its capacity as investment adviser to the Accounts and the other mutual funds in the Connecticut Mutual group of funds having a combined total of over 30,000 shareholders. The Manager is a wholly owned subsidiary of DHC, which is in turn a wholly owned subsidiary of CML. Scudder, 345 Park Avenue, New York, NY 10154, is a Delaware corporation and has been providing investment counseling services for over 70 years, since its founding in 1919. Scudder supervises assets for institutional clients, mutual funds and individuals and had $90 billion in assets under management as of May 31, 1995. All of the outstanding voting and non-voting securities of Scudder are held of record by the Managing Directors, Daniel Pierce, Edmond D. Villani, Stephen R. Beckwith, and Juris Padegs, in their capacity as the Representatives of the beneficial owners of such securities pursuant to a Security Holders Agreement, under which such Representatives have the right to reallocate shares among the beneficial owners from time to time, at net book value in cash transactions. BEA Associates, Citicorp Center, 153 E. 53rd Street, 57th Floor, New York, NY 10022, is a partnership between Credit Suisse Capital Corporation and BEA Associate's employee shareholders. BEA Associates has been providing domestic and global fixed income and equity investment management services for institutional clients and mutual funds since 1984 and, together with its global affiliate, had $25 billion in assets under management as of May 31, 1995. Pilgrim, 1255 Drummers Lane, Wayne, Pennsylvania 19087, was established in 1982 to provide specialized equity management for institutional investors. Pilgrim is a Delaware corporation and a wholly owned subsidiary of United Asset Management Corporation. As of May 31, 1995, Pilgrim had over $4 billion in assets under management. The investment advisory agreement and subadvisory investment agreements continue in effect from year to year if approved annually by a vote of a majority of the Directors of the Company who are not interested persons of one of the parties to the contract, cast in person at a meeting called for the purpose of voting on such approval, or by either the Directors or the holders of a majority of the applicable Account's outstanding voting securities. Each contract automatically terminates upon assign-ment. The investment advisory agreement may be terminated without penalty on 60 days' notice at the option of either party to the respective contract or by vote of the holders of a majority of the outstanding voting securities of the applicable Account. Each subadvisory investment agreement may be terminated at any time without the payment of any penalty by the Board of Directors or by vote of a majority of the outstanding voting securities of the Account upon 60 days' notice to the Manager and respective Subadviser, by the Manager upon 60 days' written notice to the Account and the Subadviser and by the Subadvisor upon 90 days' written notice to the Account and the Manager (with respect to that Account only). Each subadvisory investment agreement terminates automatically upon the termination of the corresponding investment advisory agreement. ACCOUNT EXPENSES EXPENSES OF THE ACCOUNTS. Each Account pays its own expenses including, without limitation: (i) expenses of maintaining the Account and continuing its existence, (ii) registration of the Company under the Investment Company Act, (iii) auditing, accounting and legal expenses, (iv) taxes and interest, (v) governmental fees, (vi) expenses of issue, sale, repurchase and redemption of Account shares, (vii) expenses of registering and qualifying the Account and its shares under federal and state securities laws and of preparing and printing prospectuses for such purposes and for distributing the same to shareholders and investors, and fees and expenses of registering and maintaining registrations of the Account and of the Account's principal underwriter, if any, as broker- dealer or agent under state securities laws, (viii) expenses of reports and notices to share-holders and of meetings of shareholders and proxy solicitations therefor, (ix) expenses of reports to governmental officers and commissions, (x) insurance expenses, (xi) association membership dues, (xii) fees, expenses and disbursements of custodians for all services to the Account, (xiii) fees, expenses and disbursements of transfer agents, dividend disbursing agents, shareholder servicing agents and registrars for all services to the Account, (xiv) expenses for servicing shareholder accounts, (xv) any direct charges to shareholders approved by the Directors of the Company, (xvi) compensation and expenses of Directors of the Company who are not "interested persons" of the Account, and (xvii) such non- recurring items as may arise, including expenses incurred in connection with litigation, proceedings and claims and the obligation of the Company to indemnify its Directors and officers with respect thereto. DISTRIBUTION ARRANGEMENTS Connecticut Mutual Financial Services, L.L.C. ("CMFS") serves as the principal underwriter for each Account pursuant to an Underwriting Agreement initially approved by the Board of Directors of the Company. CMFS is a registered broker/dealer and member of the National Association of Securities Dealers, Inc. (NASD). Shares of each Account will be continuously offered and will be sold by registered representa-tives of CMFS and selected broker- dealers who have executed selling agreements with CMFS. CMFS bears all the expenses of providing services pursuant to the Underwriting Agreement including the payment of all sales commissions for sales of the Company shares and the printing and distribution of prospectuses to non-shareholders as well as of any advertising or sales literature. The Company bears the expenses of registering its shares with the SEC and qualifying them with state regulatory authorities. CMFS has also agreed to assume certain expenses relating to the operations of the Accounts as necessary to comply with expense limitations imposed by certain states in which shares of one or more of the Accounts may be registered and also as otherwise described in the Accounts' Prospectuses. The Underwriting Agreement continues in effect for successive one-year periods, provided that each such continuance is specifically approved (i) by the vote of a majority of the Directors who are not interested persons, as such term is defined in the Investment Company Act, of the Company (non-interested Directors) or parties to the Agreement and (ii) either (a) by the vote of a majority of the outstanding voting securities of each Account or (b) by the vote of a majority of the Board of Directors. The compensation paid by the following Accounts to G.R. Phelps, the prior distributor of the Accounts' shares, for underwriting fees for the last three fiscal years was:
1992 1993 1994 ---------- ---------- ---------- Liquid Account 0 0 0 Government Securities Account $ 547,446 $ 365,583 $ 189,799 Income Account $ 237,717 $ 203,149 $ 127,640 Total Return Account $1,101,367 $1,790,711 $1,671,181 Growth Account $ 244,985 $ 416,056 $ 513,544 Each of the LifeSpan Accounts commenced operations in fiscal 1995 and therefore paid no underwriting fees during the periods listed above.
CMFS's principal business address is at Ten State House Square, Hartford, Connecticut 06103 and its mailing address is at 140 Garden Street, Hartford, Connecticut 06154. CMFS was organized as a limited liability company in Connecticut on November 10, 1994, and is a direct subsidiary of CML. DISTRIBUTION FINANCING PLANS The Company on behalf of each Account has adopted plans of distribution designed to meet the requirements of Rule 12b-1 (the Rule) under the Investment Company Act and the requirements of the revised sales charge rule of the NASD with respect to the Class A shares (the Class A Plan) and a plan of distribution with respect to the Class B shares (the Class B Plan) and a plan of distribution with respect to the Liquid Account (the Liquid Account Plan and, collectively with the Class A Plan and the Class B Plan, the Plans). CLASS A PLAN Pursuant to the Class A Plan, an Account may reimburse CMFS for its expenditures in financing any activity primarily intended to result in the sale of Account shares. Certain categories of such expenditures have been approved by the Board of Directors and are set forth in the Prospectuses. See "Breakdown of Expenses -- Distribution Plans" in the Prospectuses. The expenses of an Account pursuant to the Class A Plan are accrued on a fiscal year basis and may not exceed, with respect to the Class A shares of each Account, the annual rate of 0.25% of the Account's average annual net assets attributable to Class A. No Class A Plan was in effect during the most recently completed fiscal year with respect to the Accounts. CLASS B PLAN The Class B Plan for each Account provides that each Account shall pay CMFS, as the Account's distributor for its Class B shares, a daily distribution fee equal on an annual basis to 0.75% of the Account's average daily net assets attributable to Class B shares and will pay CMFS a service fee equal to 0.25% of the Account's average daily net assets attributable to Class B shares (which CMFS will in turn pay to securities dealers which enter into a sales agreement with CMFS at a rate of up to 0.25% of the Account's average daily net assets attributable to Class B shares owned by investors for whom that securities dealer is the holder or dealer of record). This service fee is intended to be in consideration of personal services and/or account maintenance services rendered by the dealer with respect to Class B shares. CMFS will advance to dealers the first- year service fee at a rate equal to 0.25% of the amount invested. As compensation for such advance, CMFS may retain the service fee paid by an Account with respect to such shares for the first year after purchase. Dealers will become eligible for additional service fees with respect to such shares commencing in the thirteenth month following purchase. Dealers may from time to time be required to meet certain other criteria in order to receive service fees. CMFS or its affiliates are entitled to retain all service fees payable under the Class B Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by CMFS or its affiliates for shareholder accounts. The purpose of distribution payments to CMFS under the Class B Plan is to compensate CMFS for its distribution services to the Account. CMFS pays commissions to dealers as well as expenses of printing prospectuses and reports used for sales purposes, expenses with respect to the preparation and printing of sales literature and other distribution related expenses, including without limitation, the cost necessary to provide distribution-related services, or personnel, travel office expenses and equipment. The Class B Plan also provides that CMFS will receive all CDSC's attributable to Class B shares. (See "Distribution Plans" in the Prospectuses.) LIQUID ACCOUNT PLAN Under the Liquid Account Plan, the amount of compensation paid by the Liquid Account for expenses shall not exceed 0.10% of the average daily net assets of the Account, provided, however, that the Liquid Account will make no payment with respect to a particular year if the Liquid Account's aggregate expenses for that year (including payments made to CMFS pursuant to the Liquid Account Plan, but excluding interest, taxes, brokerage commissions, and extraordinary expenses) exceed 1.0% of the value of the Liquid Account's aggregate daily net assets. GENERAL In accordance with the terms of the Plans, CMFS provides to each Account, for review by the Board of Directors, a quarterly written report of the amounts expended under the respective Plans and the purpose for which such expenditures were made. In the Board of Directors' quarterly review of the Plans, they will consider the continued appropriateness and the level of reimbursement or compensation the Plans provide. The Plans were adopted by a majority vote of the Board of Directors, including all of the Directors who are not, and were not at the time they voted, interested persons of the Company, as defined in the Investment Company Act (none of whom had or have any direct or indirect financial interest in the operation of the Plans), cast in person at a meeting called for the purpose of voting on the Plans. In approving the Plans, the Directors identified and considered a number of potential benefits which the Plans may provide. The Board of Directors believes that there is a reasonable likelihood that the Plans will benefit each Account and its current and future shareholders. Under their terms, the Plans remain in effect from year to year provided such continuance is approved annually by vote of the Directors in the manner described above. The Plans may not be amended to increase materially the annual percentage limitation of average net assets which may be spent for the services described therein without approval of the shareholders of the Account affected thereby, and material amendments of the Plans must also be approved by the Board of Directors in the manner described above. A Plan may be terminated at any time, without payment of any penalty, by vote of the majority of the Directors who are not interested persons of the Company and have no direct or indirect financial interest in the operations of the Plan, or by a vote of a "majority of the outstanding voting securities" (as defined in the Investment Company Act) affected thereby. A Plan will automatically terminate in the event of its assignment (as defined in the Investment Company Act). During the fiscal year ended December 31, 1994, the Liquid Account made no payments to G.R. Phelps under its Plan as a result of G.R. Phelps's agreement not to impose such expenses to which it would otherwise be entitled. During this period, no Class A Plans were in effect for the other Accounts and no Class B shares were outstanding. PORTFOLIO TRANSACTIONS AND BROKERAGE The Company has no obligation to deal with any dealer or group of dealers in the execution of transactions in portfolio securities. Subject to any policy established by the Board of Directors, the Manager and the Subadvisers (if applicable) are primarily responsible for the investment decisions of each Account and the placing of its portfolio transactions. In placing orders, it is the policy of each Account to obtain the most favorable net results, taking into account various factors, including price, dealer spread or commission, if any, size of the transaction and difficulty of execution. While the Manager and the Subadvisers generally seek reasonably competitive spreads or commissions, the Accounts will not necessarily be paying the lowest spread or commission available. The Manager and the Subadvisers may direct brokerage transactions to broker/dealers who also sell shares of the Company and the sale of shares of the Company may be taken into account by the Manager and the Subadvisers when allocating brokerage transactions. The Manager and the Subadvisers will generally deal directly with the dealers who make a market in the securities involved (unless better prices and execution are available elsewhere) if the securities are traded primarily in the over-the-counter market. Such dealers usually act as principals for their own account. On occasion, securities may be purchased directly from the issuer. Bonds and money market securities are generally traded on a net basis and do not normally involve either brokerage commissions or transfer taxes. Portfolio securities in the Liquid Account normally are purchased directly from, or sold directly to, the issuer, an underwriter or market maker for the securities. There usually will be no brokerage commissions paid by the Liquid Account for such purchases or sales and, in 1992, 1993 and 1994, no such commissions were paid. Similarly, no brokerage commissions were paid by the Government Securities Account or the Income Account during those three years. Each of the LifeSpan Accounts commenced operations in fiscal 1995, and accordingly paid no brokerage commissions during the last three years. Brokerage commissions for the most recent three year period for the Growth Account and the Total Return Account were as follows:
1992 1993 1994 ------------ ------------ ------------ Brokerage Brokerage Brokerage Account Commissions Commissions Commissions - -------------------- ------------ ------------ ------------ Growth Account $ 201,111 $ 187,654 $ 249,665 Total Return Account $ 277,519 $ 297,403 $ 379,734
While the Manager and the Subadvisers seek to obtain the most favorable net results in effecting transactions in an Account's portfolio securities, dealers who provide supplemental investment research to the Manager or a Subadviser may receive orders for transactions from the Manager or the relevant Subadviser. Such supplemental research services ordinarily consist of assessments and analyses of the business or prospects of a company, industry, or economic sector. If, in the judgment of the Manager or the corresponding Subadviser, an Account will be benefited by such supplemental research services, the Manager and the corresponding Subadviser are authorized to pay spreads or commissions to brokers or dealers furnishing such services which are in excess of spreads or commissions which another broker or dealer may charge for the same transaction. Information so received will be in addition to and not in lieu of the services required to be performed by the Manager and the corresponding Subadviser under the investment advisory agreement or the sub-investment advisory agreement. The expenses of the Manager and the Subadvisers will not necessarily be reduced as a result of the receipt of such supplemental information. The Manager and the Subadvisers may use such supplemental research in providing investment advice to portfolios other than those for which the transactions are made. Similarly, the Accounts may benefit from such research obtained by the Manager and the Subadvisers for portfolio transactions for other clients. Investment decisions for the Accounts will be made independently from those of any other clients that may be or become managed by the Manager, any Subadviser or their affiliates. If, however, accounts managed by the Manager or any Subadviser are simultaneously engaged in the purchase of the same security, then, pursuant to the authorization of the Company's Board of Directors, available securities may be allocated to each account and may be averaged as to price in whatever manner the Manager or the corresponding Subadviser deems to be fair. In some cases, this system might adversely affect the price paid by an Account (for example, during periods of rapidly rising or falling interest rates) or limit the size of the position obtainable for an Account (for example, in the case of a small issue). Scudder, or its affiliate, Scudder Investor Services Inc. ("SIS"), shall arrange for the placing of all orders for the purchase and sale of securities for the international Component of Capital Appreciation and Balanced Account with brokers or dealers selected by SIS, provided that neither Scudder nor SIS shall be responsible for payment of brokerage commissions. In the selection of such brokers or dealers and the placing of such orders, SIS is directed at all times to seek for the international Component of Capital Appreciation Account and Balanced Account the best execution available. Neither Scudder nor any affiliate of Scudder will act as principal or receive directly or indirectly any compensation in connection with the purchase or sale of investment securities by the international Components of Capital Appreciation Account and Balanced Account, other than compensation provided for in the Subadvisory Investment Agreements with Scudder, and such brokerage commissions as are permitted by the Investment Company Act. If and to the extent authorized to act as broker in the relevant jurisdiction, Scudder or any of its affiliates may act as broker for the international Components of Capital Appreciation Account and Balanced Account, in the purchase and sale of securities. Scudder agrees that all transactions effected through Scudder or brokers affiliated with Scudder will be effected in compliance with Section 17(e) of the Investment Company Act and written procedures established from time to time by the Board of Directors of the Company pursuant to Rule 17e- 1 under the Investment Company Act. (SIS does not receive any compensation for performing this service). DETERMINATION OF NET ASSET VALUE The net asset value of the shares of each Account is determined by State Street Bank and Trust Company (State Street) (as dividend paying agent and custodian for the Accounts) in the manner described under "Your Account--Transaction Details" in the Accounts' Prospectuses. The Accounts will be closed for business and will not price their shares on the following business holi-days: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Securities held by each Account other than Liquid Account will be valued as follows: portfolio securities which are traded on stock exchanges are valued at the last sale price on the principal exchange as of the close of business on the day the securities are being valued, or, lacking any sales, at the last bid price. Securities traded in the over-the-counter market and included in the National Market System are valued at the most recent bid price which may be based on valuations furnished by a pricing service or from independent securities dealers. Otherwise, over-the-counter securities are valued at the mean between the bid and asked prices or yield equivalent as obtained from one or more dealers that make markets in the securities. Portfolio securities which are traded both in the over-the-counter market and on an exchange are valued according to the broadest and most representative market, and it is expected that for debt securities this ordinarily will be the over-the-counter market. Securities with remaining maturities of less than 60 days are valued at amortized cost, which approximates market value. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors, including valuations furnished by a pricing service retained by the Custodian. The net asset value per share of the Liquid Account is determined by using the amortized cost method of valuing its portfolio instruments (including master demand notes). Under the amortized cost method of valuation, an instrument is valued at cost and the interest payable at maturity upon the instrument is accrued as income, on a daily basis, over the remaining life of the instrument. Neither the amount of daily income nor the net asset value is affected by unrealized appreciation or depreciation of the portfolio's investments. In periods of declining interest rates, the indicated daily yield on shares of the portfolio computed using amortized cost may tend to be higher than a similar computation made using a method of valuation based upon market prices and estimates. In periods of rising interest rates, the indicated daily yield on shares of the portfolio computed using amortized cost may tend to be lower than a similar computation made using a method of valuation based upon market prices and estimates. The amortized cost method of valuation permits the Liquid Account to maintain a stable $1.00 net asset value per share. The Company's Board of Directors periodically reviews the extent of any deviation from the $1.00 per share value that would occur if a method of valuation based on market prices and estimates were used. In the event such a deviation would exceed one-half of one percent, the Board of Directors will promptly consider any action that reasonably should be initiated to eliminate or reduce material dilution or other unfair results to shareholders. Such action may include selling portfolio securities prior to maturity, not declaring earned income dividends, valuing portfolio securities on the basis of current market prices, if available, or, if not available, at fair market value as determined in good faith by the Board of Directors, and (considered highly unlikely by management of the Company) redemption of shares in kind (i.e., portfolio securities). An Account's maximum offering price per Class A share is determined by adding the maximum sales charge to the net asset value per share. Class B shares and Liquid Account shares are offered at net asset value without the imposition of a sales charge. PURCHASE AND REDEMPTION OF SHARES For information regarding the purchase of Account shares, see "Your Account--How to Buy Shares" in the Accounts' Prospectuses. For a description of how a shareholder may have an Account redeem his/her shares, or how he/she may sell shares, see "Your Account- - How to Sell Shares" in the Accounts' Prospectuses. RIGHTS OF ACCUMULATION. Each Account and each of the other mutual funds of the Company offer to all qualifying investors Rights of Accumulation under which investors are permitted to purchase Class A shares of other Accounts of the Company at the offering price applicable to the total of (a) the dollar amount then being purchased plus (b) an amount equal to the then current net asset value of the purchaser's holdings of Class A shares of other Accounts of the Company. Acceptance of the purchase order is subject to confirmation of qualification. The rights of accumulation may be amended or terminated at any time as to subsequent purchases. STATEMENT OF INTENTION. Any person may qualify for a reduced sales charge on purchases of Class A shares made within a thirteen-month period pursuant to a Statement of Intention (SOI). Class A shares acquired through the reinvestment of distributions do not constitute purchases for purposes of the SOI. A Class A shareholder may include, as an accumulation credit towards the completion of such SOI, the value of all Class A shares of all Accounts of the Company owned by the shareholder. Such value is determined based on the public offering price on the date of the SOI. During the term of a SOI, National Financial Data Services ("NFDS"), the Company's transfer agent, will hold shares in escrow to secure payment of the higher sales charge applicable for shares actually purchased if the indicated amount on the SOI is not purchased. Dividends and capital gains will be paid on all escrowed shares and these shares will be released when the amount indicated on the SOI has been purchased. An SOI does not obligate the investor to buy or the Company to sell the indicated amount of the SOI. If a Class A shareholder exceeds the specified amount of the SOI and reaches an amount which would qualify for a further quantity discount, a retroactive price adjustment will be made at the time of the expiration of the SOI. The resulting difference in offering price will purchase additional Class A shares for the shareholder's account at the applicable offering price. If the specified amount of the SOI is not purchased, the shareholder shall remit to NFDS an amount equal to the difference between the sales charge paid and the sales charge that would have been paid had the aggregate purchases been made at a single time. If the Class A shareholder does not within twenty days after a written request by NFDS pay such difference in sales charge, NFDS will redeem an appropriate number of escrowed shares in order to realize such difference. Additional information about the terms of the Statement of Intention are available from your registered representative or from NFDS at 1- 800- 322- CMIA. SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient method of receiving fixed payments at regular intervals from Class A shares and Liquid Account shares not subject to a CDSC only (except as noted below) of an Account deposited by the applicant under this SWP. The applicant must deposit or purchase for deposit shares of the Account having a total value of not less than $10,000. Periodic checks of $50 or more will be sent to the applicant, or any person designated by him, monthly or quarterly. SWP's for Class B shares of an Account and Liquid Account shares subject to a CDSC are permitted only for payments of required distributions from retirement plan accounts for a shareholder who has attained the age of 70. The CDSC will be waived with respect to such redemptions but only if such redemptions are limited to no more than 12% of the original value of the Account. Any income dividends or capital gains distributions on shares under the SWP will be credited to the SWP account on the payment date in full and fractional shares at the net asset value per share in effect on the record date. SWP payments are made from the proceeds of the redemption of shares deposited in a SWP account. Redemptions are potentially taxable transactions to shareholders. To the extent that such redemptions for periodic withdrawals exceed dividend income reinvested in the SWP account, such redemptions will reduce and may ultimately exhaust the number of shares deposited in the SWP account. In addition, the amounts received by a shareholder cannot be considered as an actual yield or income on his or her investment because part of such payments may be a return of his or her capital. The SWP may be terminated at any time (1) by written notice to the Account or from the Account to the shareholder; (2) upon receipt by the Account of appropriate evidence of the shareholder's death; or (3) when all shares under the SWP have been redeemed. The fees of the Account for maintaining SWPs are paid by the Account. Special Redemptions. Although it would not normally do so, each Account has the right to pay the redemption price of shares of the Account in whole or in part in portfolio securities as prescribed by the Directors. When the shareholder sells portfolio securities received in this fashion, he would incur a brokerage charge. Any such securities would be valued for the purposes of making such payment at the same value as used in determining net asset value. The Accounts have elected to be governed by Rule 18f-1 under the Investment Company Act, pursuant to which each Account is obligated to redeem shares solely in cash up to the lesser of $250,000 of 1% of the net asset value of the applicable Account during any 90 day period for any one account. INVESTMENT PERFORMANCE Each Account's average annual total return quotations and yield quotations as they may appear in the Prospectuses, this SAI or in advertising are calculated by standard methods prescribed by the SEC. LIQUID ACCOUNT In accordance with regulations prescribed by the SEC, the Company is required to compute the Liquid Account's current annualized yield for a seven-day period in a manner which does not take into consideration any realized or unrealized gains or losses on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation) in the value of a hypothetical account having a balance of one share of the Liquid Account at the beginning of such seven-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return and annualizing this quotient on a 365- day basis. The SEC also permits the Company to disclose the effective yield of the Liquid Account for the same seven-day period, determined on a compounded basis. The effective yield is calculated by compounding the unannualized base period return by adding one to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting one from the result. For the seven day period ending June 30, 1995, the Liquid Account's annualized yield was 5.11%. For the same period, the effective yield was 5.24%. The yield on amounts held in the Liquid Account normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The Liquid Account's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the Liquid Account, the types and quality of portfolio securities held by the Liquid Account, and its operating expenses. OTHER ACCOUNTS STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS. Average annual total return quotations for Class A and Class B shares are computed by finding the average annual compounded rates of return that would cause a hypothetical investment made on the first day of a designated period to equal the ending redeemable value of such hypothetical investment on the last day of the designated period in accordance with the following formula:
P(1+T) n = ERV Where: P = a hypothetical initial payment of $1,000, less the maximum sales load applicable to an Account T = average annual total return n = number of years ERV = ending redeemable value of the hypothetical $1,000 initial payment made at the beginning of the designated period (or fractional portion thereof)
The computation above assumes that all dividends and distributions made by an Account are reinvested at net asset value during the designated period. The average annual total return quotation is determined to the nearest 1/100 of 1%. One of the primary methods used to measure perform-ance is "total return." "Total return" will normally represent the percentage change in value of a class of an Account, or of a hypothetical investment in a class of an Account, over any period up to the lifetime of the class. Unless otherwise indicated, total return calculations will assume the deduction of the maximum sales charge (5.00% for the Growth Account, the Total Return Account and each of the LifeSpan Accounts, 4.00% for the Government Securities Account and the Income Account) and usually assume the reinvest-ment of all dividends and capital gains distributions and will be expressed as a percentage increase or decrease from an initial value, for the entire period or for one or more specified periods within the entire period. Total return calculations that do not reflect the reduction of sales charges will be higher than those that do reflect such charges. All non-standardized performance will be advertised only if the standard performance data for the same period, as well as for the required periods, is also presented. Total return percentages for periods longer than one year will usually be accompanied by total return percentages for each year within the period and/or by the average annual compounded total return for the period. The income and capital components of a given return may be separated and portrayed in a variety of ways in order to illustrate their relative significance. Performance may also be portrayed in terms of cash or investment values, without percentages. Past performance cannot guarantee any particular future result. In determining the average annual total return (calculated as provided above), recurring fees, if any, that are charged to all shareholder accounts are taken into consideration. For any account fees that vary with the size of the account, the account fee used for purposes of the above computation is assumed to be the fee that would be charged to the mean account size of a class of the Account. The charts below set forth certain performance information for the Class A shares of the Government Securities, Income, Total Return and Growth Accounts as of June 30, 1995 and Capital Appreciation, Balanced, and Diversified Income Accounts as of August 31, 1995, adjusted to reflect the maximum sales charge (5.00% for the Growth, Total Return, Capital Appreciation, Balanced and Diversified Income Accounts and 4.00% for the Government Securities Account and the Income Account) and the account fees of the Class A shares. Total return percentages do not include the effect of the Rule 12b-1 fees to which the Class A shares of Total Return and Growth Accounts will be subject in 1995. Past performance of the Class A shares is no guarantee and is not necessarily indicative of future performance of the Class A shares. The actual annual returns for Class A shares of an Account may vary significantly from the past and future performance of Class A shares of the Account. Investment returns and the value of the Class A shares of the Accounts will fluctuate in response to market and economic conditions as well as other factors and shares, when redeemed, may be worth more or less than their original cost. Total returns are based on capital changes plus reinvestment of all distributions for the time periods noted in the charts below. Total return of the Class A shares of the Income Account would have been lower without the expense limitation effected by the Manager. Value of a $1,000 Investment in the Class A shares of the Government Securities Account:
Total Return Total Return Annualized Annualized Investment Investment (including 4% (excluding 4% Period Date sales charge) sales charge) Life of Account 9/16/85 9.43% 8.98% to 6/30/95 5 Years Ended 6/30/90 8.62% 7.73% 6/30/95 1 Year Ended 6/30/94 11.65% 7.18% 6/30/95 Value of a $1,000 Investment in the Class A shares of the Income Account:
Total Return Total Return Annualized Annualized Investment Investment (excluding 4% (including 4% Period Date sales charge) sales charge) Life of Account 9/16/85* 8.26% 7.81% to 6/30/95 5 Years Ended 6/30/90 7.48% 6.61% 6/30/95 1 Year Ended 6/30/94 8.06% 3.74% 6/30/95 *Date of Inception Value of a $1,000 Investment in the Class A shares of the Total Return Account:
Total Return Total Return Annualized Annualized Investment Investment (excluding 5% (including 5% Period Date sales charge) sales charge) Life of Account 9/16/85* 12.37% 11.78% to 6/30/95 5 Years Ended 6/30/95 11.86% 10.72% 6/30/95 1 Year Ended 6/30/94 15.53% 9.75% 6/30/95 *Date of Inception Value of a $1,000 Investment in the Class A shares of the Growth Account:
Total Return Total Return Annualized Annualized Investment Investment (excluding 5% (including 5% Period Date sales charge) sales charge) Life of Account 9/16/85* 14.66% 14.06% to 6/30/95 5 Years Ended 6/30/90 14.06% 12.89% 6/30/95 1 Year Ended 6/30/94 22.43% 16.31% 6/30/95 *Date of Inception Value of a $1,000 Investment in the Class A shares of the Capital Appreciation Account:
Total Return Total Return Annualized Annualized Investment Investment (excluding 5% (including 5% Period Date sales charge) sales charge) Life of Account 5/1/95* 9.25% 3.78% to 8/31/95 Value of a $1,000 Investment in the Class A shares of the Balanced Account:
Total Return Total Return Annualized Annualized Investment Investment (excluding 5% (including 5% Period Date sales charge) sales charge) Life of Account 5/1/95* 9.25% 3.78% to 8/31/95 Value of a $1,000 Investment in the Class A shares of the Diversified Income Account:
Total Return Total Return Annualized Annualized Investment Investment (excluding 5% (including 5% Period Date sales charge) sales charge) Life of Account 5/1/95* 9.25% 3.78% to 8/31/95 No Class B shares of any of the Accounts were outstanding during the periods.
Each Account may also publish its distribution rate and/or its effective distribution rate. An Account's distribution rate is computed by dividing the most recent monthly distribution per share annualized, by the current net asset value per share. An Account's effective distribution rate is computed by dividing the distribution rate by the ratio used to annualize the most recent monthly distribution and reinvesting the resulting amount for a full year on the basis of such ratio. The effective distribution rate will be higher than the distribution rate because of the compounding effect of the assumed reinvestment. An Account's yield is calculated using a standardized formula, the income component of which is computed from the yields to maturity of all debt obligations held by the Account based on prescribed methods (with all purchases and sales of securities during such period included in the income calculation on a settlement date basis), whereas the distribution rate is based on an Account's last monthly distribution. An Account's monthly distribution tends to be relatively stable and may be more or less than the amount of net investment income and short- term capital gain actually earned by the Account during the month (see "Dividends, Capital Gains and Taxes" in the Accounts' Prospectuses). Other data that may be advertised or published about each Account include the average portfolio quality, the average portfolio maturity and the average portfolio duration. STANDARDIZED YIELD QUOTATIONS. The yield of a class is computed by dividing the class's net investment income per share during a base period of 30 days, or one month, by the maximum offering price per share of the class on the last day of such base period in accordance with the following formula: YIELD = 2[ (a-b +1 ) 6 -1] ----------------------------- cd
Where: a = net investment income earned during the period attributable to the subject class b = net expenses accrued for the period attributable to the subject class c = the average daily number of shares of the subject class outstanding during the period that were entitled to receive dividends d = the maximum offering price per share of the subject class on the last day of the period
Net investment income will be determined in accordance with rules established by the SEC. The price per share of Class A shares will include the maximum sales charge (5.00% for the Growth Account, the Total Return Account and each of the LifeSpan Accounts and 4.00% for the Government Securities Account and for the Income Account) imposed on purchases of Class A shares which decreases with the amount of shares purchased. GENERAL INFORMATION. The following publications and other newspapers and business and financial publications, may be cited in each Account's advertising and in shareholder materials which contain articles describing investment results or other data relative to one or more of the Accounts.
Broker World Value Line Across the Board Financial World American Banker Advertising Age Best's Review Barron's Business Month Business Insurance Changing Times Business Week Economist Consumer Reports Forbes Financial Planning Inc. Fortune Insurance Forum Institutional Investor Insurance Week Insurance Sales Journal of the American Society Journal of Accountancy of CLU & ChFC Journal of Commerce Life Insurance Selling Life Association News Lipper Analytical Services, Inc. Manager's Magazine MarketFacts Money National Underwriter Nation's Business New Choices (formerly 50 Plus) New York Times Pension World Pensions & Investments Rough Notes Round the Table U.S. Banker Wall Street Journal Working Woman Morningstar, Inc. Financial Services Week Wiesenberger Investment Kiplinger's Personal Finance Service Registered Representative Medical Economics U.S. News & World Report Investment Advisor CDA Tillinghast Financial Times American Agent and Broker Insurance Product News Insurance Times LIMRA's Marketfacts Professional Insurance Agents Investment Dealers Digest Insurance Review Investor's Business Daily Insurance Advocate Independent Agent Professional Agent California Broker Life Times Hartford Courant New England Business Entrepreneur Entrepreneurial Woman USA Today Business Marketing Adweek Independent Business Newsweek Time Success The Standard The Boston Globe Crain's The Washington Post United Press International Associated Press Bloomberg Reuter's Business News Features Business Wire Knight-Ridder Dow Jones News Service Consumer Digest
From time to time the Company may publish the sales of shares of one or more of the Accounts on a gross or net basis and for various periods of time, and compare such sales with sales similarly reported by other investment companies. TAXES Each Account is treated as a separate entity for accounting and tax purposes. Each Account has qualified and elected or intends to qualify and elect to be treated as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and intends to continue to so qualify in the future. As such and by complying with the applicable provisions of the Code regarding the sources of its income, the timing of its distributions, and the diversification of its assets, each Account will not be subject to federal income tax on taxable income (including net short-term and long-term capital gains) which is distributed to shareholders at least annually in accordance with the timing requirements of the Code. Each Account will be subject to a 4% non-deductible federal excise tax on certain amounts not distributed (and not treated as having been distributed) on a timely basis in accordance with annual minimum distribution requirements. Each Account intends under normal circumstances to avoid liability for such tax by satisfying such distribution requirements. Distributions from an Account's current or accumulated earnings and profits ("E&P"), as computed for federal income tax purposes, will be taxable as described in the Accounts' prospectuses whether taken in shares or in cash. Distributions, if any, in excess of E&P will constitute a return of capital, which will first reduce an investor's tax basis in an Account's shares and thereafter (after such basis is reduced to zero) will generally give rise to capital gains. Shareholders electing to receive distributions in the form of additional shares will have a cost basis for federal income tax purposes in each share so received equal to the amount of cash they would have received had they elected to receive the distributions in cash, divided by the number of shares received. If an Account acquires stock in certain non-U.S. corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, rents, royalties or capital gain) or hold at least 50% of their assets in investments producing such passive income ("passive foreign investment companies"), that Account could be subject to federal income tax and additional interest charges on "excess distributions" received from such companies or gain from the sale of stock in such companies, even if all income or gain actually received by the Account is timely distributed to its shareholders. The Account would not be able to pass through to its shareholders any credit or deduction for such a tax. Certain elections may, if available, ameliorate these adverse tax consequences, but any such election would require the applicable Account to recognize taxable income or gain without the concurrent receipt of cash. Any Account that is permitted to acquire stock in foreign corporations may limit and/or manage its holdings in passive foreign investment companies to minimize its tax liability or maximize its return from these investments. Foreign exchange gains and losses realized by an Account in connection with certain transactions involving foreign currency-denominated debt securities, certain foreign currency futures and options, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currency are subject to Section 988 of the Code, which generally causes such gains and losses to be treated as ordinary income and losses and may affect the amount, timing and character of distributions to shareholders. Any such transactions that are not directly related to an Account's investment in stock or securities, possibly including speculative currency positions or currency derivatives not used for hedging purposes, may increase the amount of gain it is deemed to recognize from the sale of certain investments held for less than three months, which gain is limited under the Code to less than 30% of its annual gross income, and could under future Treasury regulations produce income not among the types of "qualifying income" from which the Account must derive at least 90% of its annual gross income. Some Accounts may be subject to withholding and other taxes imposed by foreign countries with respect to their investments in foreign securities. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. The Accounts anticipate that they generally will not qualify to pass such foreign taxes and any associated tax deductions or credits through to their shareholders, who therefore generally will not report such amounts on their own tax returns. At the time of an investor's purchase of shares of an Account (other than Liquid Account), a portion of the purchase price is often attributable to realized or unrealized appreciation in the Account's portfolio or undistributed taxable income of the Account. Consequently, subsequent distributions from such appreciation or income may be taxable to such investor even if the net asset value of the investor's shares is, as a result of the distributions, reduced below the investor's cost for such shares, and the distributions in reality represent a return of a portion of the purchase price. Upon a redemption of shares of an Account, other than Liquid Account, (including by exercise of the exchange privilege) a shareholder may realize a taxable gain or loss depending upon his basis in his shares. Such gain or loss will be treated as capital gain or loss if the shares are capital assets in the shareholder's hands and will be long-term or short-term, depending upon the shareholder's tax holding period for the shares. A sales charge paid in purchasing shares of an Account cannot be taken into account for purposes of determining gain or loss on the redemption or exchange of such shares within 90 days after their purchase to the extent shares of the Account or another CMIA Account are subsequently acquired without payment of a sales charge pursuant to the reinvestment or exchange privilege. Such disregarded load will result in an increase in the shareholder's tax basis in the shares subsequently acquired. Also, any loss realized on a redemption or exchange will be disallowed to the extent the shares disposed of are replaced with shares of the same Account within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to an election to reinvest dividends or capital gain distributions automatically. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Any loss realized upon the redemption of shares with a tax holding period of six months or less will be treated as a long-term capital loss to the extent of any amounts treated as distributions of long-term capital gain with respect to such shares. For Federal income tax purposes, each Account is permitted to carry forward a net capital loss in any year to offset its own capital gains, if any, during the eight years following the year of the loss. To the extent subsequent capital gains are offset by such losses, they would not result in federal income tax liability to the applicable Account and would not be distributed as such to shareholders. For purposes of the dividends received deduction available to corporations, dividends received by an Account, if any, from U.S. domestic corporations in respect of the stock of such corporations held by the Account, for federal income tax purposes, for at least 46 days (91 days in the case of certain preferred stock) and distributed and designated by the Account may be treated as qualifying dividends. Corporate shareholders must meet the minimum holding period requirement stated above (46 or 91 days) with respect to their shares of the applicable Account in order to qualify for the deduction and, if they borrow to acquire such shares, may be denied a portion of the dividends received deduction. The entire qualifying dividend, including the otherwise deductible amount, will be included in determining the excess (if any) of a corporate shareholder's adjusted current earnings over its alternative minimum taxable income, which may increase its alternative minimum tax liability. Additionally, any corporate shareholder should consult its tax adviser regarding the possibility that its basis in its shares may be reduced, for federal income tax purposes, by reason of "extraordinary dividends" received with respect to the shares, for the purpose of computing its gain or loss on redemption or other disposition of the shares. Each Account that invests in certain PIKs, zero coupon securities or certain deferred interest securities (and, in general, any other securities with original issue discount or with market discount if the Account elects to include market discount in income currently) must accrue income on such investments prior to the receipt of the corresponding cash payments. However, each Account must distribute, at least annually, all or substantially all of its net income, including such accrued income, to shareholders to qualify as a regulated investment company under the Code and avoid federal income and excise taxes. Therefore, an Account may have to dispose of its portfolio securities under disadvantageous circumstances to generate cash, or may have to leverage itself by borrowing the cash, to satisfy distribution requirements. Investment in debt obligations that are at risk of or in default presents special tax issues for any Account that may hold such obligations. Tax rules are not entirely clear about issues such as when the Account may cease to accrue interest, original issue discount, or market discount, when and to what extent deductions may be taken for bad debts or worthless securities, how payments received on obligations in default should be allocated between principal and income, and whether exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by any Account that may hold such obligations in order to reduce the risk of distributing insufficient income to preserve its status as a regulated investment company and seek to avoid becoming subject to federal income or excise tax. Different tax treatment, including penalties on certain excess contributions and deferrals, certain pre-retirement and post-retirement distributions and certain prohibited transactions, is accorded to shareholder accounts maintained as qualified retirement plans. Shareholders should consult their tax advisers for more information. Limitations imposed by the Code on regulated investment companies like the Accounts may restrict an Account's ability to enter into futures, options, and forward transactions. Certain options, futures and forward foreign currency transactions undertaken by an Account may cause the Account to recognize gains or losses from marking to market even though its positions have not been sold or terminated and affect the character as long-term or short-term (or, in the case of certain currency forwards, options and futures, as ordinary income or loss) and timing of some capital gains and losses realized by the Account. Also, certain of an Account's losses on its transactions involving options, futures or forward contracts and/or offsetting portfolio positions may be deferred rather than being taken into account currently in calculating the Account's taxable income. Certain of the applicable tax rules may be modified if an Account is eligible and chooses to make one or more of certain tax elections that may be available. These transactions may therefore affect the amount, timing and character of an Account's distributions to shareholders. The Accounts will take into account the special tax rules (including consideration of available elections) applicable to options, futures or forward contracts in order to minimize any potential adverse tax consequences. The federal income tax rules applicable to interest rate swaps, caps and floors are unclear in certain respects, and an Account may be required to account for these transactions in a manner that, in certain circumstances, may limit the degree to which it may utilize these transactions. The foregoing discussion relates solely to U.S. Federal income tax law as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic corporations, partnerships, trusts or estates) subject to tax under such law. The discussion does not address special tax rules applicable to certain classes of investors, such as tax-exempt entities, insurance companies, and financial institutions. Dividends, capital gain distributions, and ownership of or gains realized on the redemption (including an exchange) of the shares of an Account may also be subject to state and local taxes. Shareholders should consult their own tax advisers as to the federal, state or local tax consequences of ownership of shares of, and receipt of distributions from, the Accounts in their particular circumstances. Non-U.S. investors not engaged in a U.S. trade or business with which their investment in an Account is effectively connected will be subject to U.S. Federal income tax treatment that is different from that described above. These investors may be subject to nonresident alien withholding tax at the rate of 30% (or a lower rate under an applicable tax treaty) on amounts treated as ordinary dividends from an Account and, unless an effective IRS Form W-8 or authorized substitute is on file, to 31% backup withholding on certain other payments from the Account. Non-U.S. investors should consult their tax advisers regarding such treatment and the application of foreign taxes to an investment in any Account. STATE AND LOCAL. Each Account may be subject to state or local taxes in jurisdictions in which such Account may be deemed to be doing business. In addition, in those states or localities which have income tax laws, the treatment of such Account and its shareholders under such laws may differ from their treatment under federal income tax laws, and investment in such Account may have different tax consequences for shareholders than would direct investment in such Account's portfolio securities. Shareholders should consult their own tax advisers concerning these matters. CUSTODIAN Portfolio securities of each Account are held pursuant to a Custodian Agreement between the Manager and State Street, 225 Franklin Street, Boston, Massachusetts 02110. Under the Custodian Agreement, State Street performs custody, portfolio and fund accounting services for the Accounts. TRANSFER AGENT SERVICES NFDS, P.O. Box 419694, Kansas City, Missouri 64179-0948, is the transfer agent for each Account. NFDS is an indirect wholly owned subsidiary of State Street Bank and Trust Company. From May 1, 1994 to December 31, 1994, each Account paid NFDS an annual fee as a percentage of average net assets accrued daily as follows: Liquid Account (0.16%); Government Securities Account (0.08%); Income Account (0.08%); Total Return Account (0.12%); and Growth Account (0.13%); plus certain out-of-pocket expenses. For the period from January 1, 1994 to April 30, 1994, each Account paid to Citadel Service Company, Inc. (the Accounts' transfer agent prior to May 1, 1994) an annual fee as a percentage of average net assets accrued daily as follows: Liquid Account (0.10%); Government Securities Account (0.07%); Income Account (0.06%); Total Return Account (0.10%); and Growth Account (0.10%); plus certain out-of-pocket expenses. INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Arthur Andersen LLP, has been selected as the independent certified public accountants of the Company to provide audit services and assistance and consultation with respect to the preparation of filings with the SEC. OTHER INFORMATION CML has granted the Company the right to use the name, "Connecticut Mutual," and has reserved the right to withdraw its consent to the use of such name by the Company at any time, or to grant the use of such name to any other company. CML was founded in 1846 and is one of the nation's largest mutual life insurance companies with nearly 150 years of experience and assets of $11.5 billion and $105 billion of life insurance in force. CML has over 1.2 million policyholders and offers a broad range of insurance, retirement and investment products in all 50 states, Puerto Rico and the District of Columbia through a network of general agents and more than 3,000 career agents and brokers. FINANCIAL STATEMENTS Each of the CMIA Account's audited financial statements as of December 31, 1994, together with the notes thereto and the report of Arthur Andersen LLP are attached to this SAI. Each of the CMIA Account's unaudited semi-annual financial statements as of June 30, 1995, together with the notes thereto are also attached to this SAI. In addition, unaudited financial statements as of August 31, 1995, together with the notes thereto for each of the LifeSpan Accounts are attached to this SAI. Each of the attached unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. SCHEDULE OF INVESTMENTS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. December 31, 1994
LIQUID ACCOUNT
PRINCIPAL MARKET AMOUNT SECURITY VALUE COMMERCIAL PAPER (94.2% OF NET ASSETS) American Express Credit Corp. $ 900,000 5.80%, due 1/5/95 $ 900,000 1,042,000 5.85%, due 1/6/95 1,042,000 Banc One Corp. 2,240,000 5.97%, due 1/18/95 2,233,685 1,000,000 5.75%, due 2/13/95 993,132 Bell Atlantic Financial Services, Inc. 2,000,000 5.57%, due 1/10/95 1,997,215 1,000,000 5.98%, due 1/25/95 996,013 Cargill, Inc. 1,050,000 5.45%, due 1/26/95 1,046,026 1,100,000 5.50%, due 2/6/95 1,093,950 Cargill Financial Services Corp. 1,000,000 5.05%, due 2/7/95 994,810 Central & South West Corp. 1,000,000 5.80%, due 1/24/95 996,294 500,000 6.17%, due 2/7/95 496,829 1,200,000 6.10%, due 2/14/95 1,191,053 Cincinnati Bell, Inc. 2,600,000 6.10%, due 1/3/95 2,599,119 Corporate Asset Funding Co., Inc. 1,000,000 5.45%, due 1/26/95 996,215 Corporate Receivables Corp. 580,000 5.47%, due 1/9/95 579,295 Dover Corp. 1,000,000 5.90%, due 1/24/95 996,231 1,500,000 5.85%, due 1/31/95 1,492,688 Ford Motor Credit Co. 1,700,000 5.81%, due 2/16/95 1,700,000 545,000 5.81%, due 2/21/95 545,000 1,200,000 5.83%, due 3/13/95 1,200,000 General Electric Capital Corp. 1,250,000 5.06%, due 2/27/95 1,250,000 647,000 6.03%, due 3/2/95 647,000 General Mills, Inc. 1,840,000 6.02%, due 1/4/95 1,839,077 Golden Peanut Co. 1,200,000 5.62%, due 2/3/95 1,193,818 1,000,000 5.63%, due 2/7/95 994,214 800,000 6.22%, due 3/17/95 789,633 International Lease Finance Corp. 500,000 5.00%, due 1/10/95 499,375 1,000,000 5.40%, due 1/12/95 998,350 1,950,000 5.87%, due 3/21/95 1,924,881 Interstate Power Co. 2,000,000 5.92%, due 1/23/95 1,992,764 McGraw-Hill Inc. 1,840,000 5.63%, due 2/2/95 1,830,792 900,000 5.80%, due 2/17/95 893,185 Merrill Lynch & Co., Inc. 900,000 5.60%, due 2/7/95 894,820 1,000,000 5.77%, due 2/15/95 992,788 $ 1,000,000 5.90%, due 2/28/95 $ 990,494 Michigan Consolidated Gas Co. 1,500,000 5.45%, due 1/13/95 1,497,275 1,000,000 5.48%, due 1/13/95 998,173 Morgan (J.P.) & Co., Inc. 1,000,000 6.20%, due 3/1/95 989,839 National Rural Utilities Cooperative Finance Corp. 1,095,000 5.65%, due 1/3/95 1,094,656 2,075,000 5.95%, due 1/11/95 2,071,571 Norwest Corp. 1,000,000 5.63%, due 1/17/95 997,498 1,230,000 5.78%, due 2/15/95 1,221,113 PHH Corp. 755,000 6.00%, due 1/5/95 754,497 1,600,000 6.05%, due 1/25/95 1,593,547 Philip Morris Companies Inc. 1,100,000 6.05%, due 1/19/95 1,096,673 U.S. Bancorp 1,000,000 5.42%, due 1/12/95 998,344 1,000,000 5.37%, due 1/17/95 997,613 1,085,000 5.50%, due 1/27/95 1,080,690 U S West Communications, Inc. 1,500,000 5.35%, due 1/11/95 1,497,771 1,500,000 5.55%, due 1/23/95 1,494,913 ----------- TOTAL COMMERCIAL PAPER (COST $60,204,919) 60,204,919 ----------- U.S. AGENCY SHORT-TERM OBLIGATIONS (5.8% OF NET ASSETS) Federal Farm Credit Banks 1,000,000 5.55%, due 2/6/95 994,450 Federal National Mortgage Assn. 750,000 5.73%, due 2/28/95 743,076 Student Loan Marketing Assn. 2,000,000 5.90%, due 5/14/96 2,000,000 ----------- TOTAL U. S. AGENCY SHORT-TERM OBLIGATIONS (COST $3,737,526) 3,737,526 ----------- TOTAL INVESTMENTS (COST $63,942,445) $63,942,445 ----------- -----------
GOVERNMENT SECURITIES ACCOUNT
PRINCIPAL MARKET AMOUNT SECURITY VALUE U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (97.9% OF NET ASSETS) Federal National Mortgage Assn. $ 1,388,913 7.00%, 2019 $ 1,333,787 Government National Mortgage Assn. 107,126 11.50%, 1998 116,030 60,135 9.50%, 2001 62,202 53,621 7.25%, 2005 52,507 349,172 7.50%, 2006 338,459
4 The accompanying notes are an integral part of these financial statements. GOVERNMENT SECURITIES ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE $ 211,624 8.00%, 2006 $ 210,221 480,723 7.50%, 2007 464,062 558,997 8.00%, 2007 546,593 193,430 8.25%, 2008 191,938 91,430 9.00%, 2008 93,258 618,933 9.00%, 2009 631,312 10,208 13.50%, 2010 11,816 123,467 13.00%, 2011 141,679 4,378 13.50%, 2011 5,068 66,694 14.00%, 2011 77,865 60,289 15.00%, 2011 71,443 3,798 12.00%, 2012 4,221 109,397 13.50%, 2012 125,857 192,524 15.00%, 2012 228,141 111,335 11.50%, 2013 122,330 45,728 13.00%, 2013 52,472 218,165 13.50%, 2013 252,526 90,819 12.00%, 2014 100,922 300,618 12.50%, 2014 337,068 141,917 13.00%, 2014 162,850 1,421 13.50%, 2014 1,645 583,317 8.50%, 2016 578,418 457,298 6.75%, 2017 454,298 447,698 10.00%, 2019 470,499 105,652 12.50%, 2019 118,463 2,205,499 6.50%, 2023 1,911,197 8,673,606 7.00%, 2023 7,784,561 3,652,606 7.00%, 2024 3,278,214 U.S. Treasury Bonds 2,250,000 11.75%, 2010 2,832,547 11,000,000 9.25%, 2016 12,376,760 U.S. Treasury Notes 2,000,000 9.25%, 1996 2,038,120 6,000,000 9.375%, 1996 6,133,140 4,500,000 8.50%, 1997 4,567,500 3,500,000 8.875%, 1997 3,592,435 6,750,000 9.25%, 1998 7,043,220 ----------- TOTAL U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (COST $62,872,182) 58,915,644 ----------- REPURCHASE AGREEMENTS* (.3% OF NET ASSETS) State Street Bank & Trust Co. 165,000 5.15%, due 1/3/95 (COST $165,000) 165,000 ----------- TOTAL INVESTMENTS (COST $63,037,182) $59,080,644 ----------- -----------
INCOME ACCOUNT
PRINCIPAL MARKET AMOUNT SECURITY VALUE CORPORATE BONDS (82.4% OF NET ASSETS) AEROSPACE (1.6%) British Aerospace Finance Inc. $ 500,000 8.00%, 1997 $ 495,312 Coltec Industries Inc. 250,000 9.75%, 2000 246,250 ----------- 741,562 ----------- AIRLINES (1.1%) Southwest Airlines Co. 500,000 9.25%, 1998 510,795 ----------- AUTO & AUTO RELATED (2.9%) Burmah Castrol Capital, Ltd. 500,000 7.00%, 1997 484,650 Chrysler Corp. 500,000 13.00%, 1997 504,720 Ford Motor Co. 404,047 6.27%, 2000 369,485 ----------- 1,358,855 ----------- BANKING (13.3%) Banco Ganadero S.A. 400,000 9.75%, 1999 388,000 Bank of Boston Corp. 400,000 10.30%, 2000 406,272 BankAmerica Corp. 500,000 6.00%, 1997 474,125 Barnett Banks, Inc. 515,000 8.50%, 1999 512,101 Chemical Banking Corp. 500,000 6.625%, 1998 476,535 First Fidelity Bancorporation 500,000 8.50%, 1998 500,590 First Union Corp. 500,000 6.75%, 1998 476,690 First USA Bank of Delaware 500,000 5.05%, 1995 487,240 250,000 5.35%, 1996 234,484 Home Savings of America 500,000 10.50%, 1997 513,550 Mellon Financial Co. 500,000 6.50%, 1997 478,050 Security Pacific Corp. 500,000 7.75%, 1996 497,290 Shawmut National Corp. 750,000 8.875%, 1996 754,995 ----------- 6,199,922 ----------- BROKER/DEALER (1.3%) Merrill Lynch & Co., Inc. 600,000 8.25%, 1996 599,182 -----------
*Repurchase agreements are fully collateralized by U.S. Government obligations. 5 INCOME ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE BUILDING MATERIALS & CONSTRUCTION (.5%) Cemex $ 250,000 8.875%, 1998 $ 239,854 ----------- CHEMICALS (2.6%) Grace (W.R.) & Co. 500,000 7.40%, 2000 473,650 Lyondell Petrochemical Co. 750,000 8.25%, 1997 742,102 ----------- 1,215,752 ----------- CONGLOMERATES (.8%) Tenneco, Inc. 375,000 10.00%, 1998 391,620 ----------- DRUGS & COSMETICS (.8%) Roche Holdings Inc. 500,000 2.75%, 2000 384,687 ----------- ELECTRIC UTILITIES (2.6%) Consumers Power Co. 250,000 8.75%, 1998 250,040 Long Island Lighting Co. 500,000 8.75%, 1996 501,765 Midwest Power Systems Inc. 500,000 6.25%, 1998 471,880 ----------- 1,223,685 ----------- ELECTRICAL & ELECTRONIC EQUIPMENT (1.6%) Electrolux 500,000 7.75%, 1997 491,250 Westinghouse Electric Corp. 250,000 7.75%, 1996 247,745 ----------- 738,995 ----------- FINANCIAL SERVICES (14.6%) Allied Lyons 500,000 6.50%, 1997 478,750 American General Finance Corp. 500,000 8.50%, 1998 501,500 Aristar, Inc. 500,000 6.25%, 1996 486,075 Avco Financial Services, Inc. 500,000 5.875%, 1997 470,745 Banque Nationale de Paris 205,000 9.875%, 1998 213,700 Chrysler Financial Corp. 500,000 5.08%, 1997 470,280 Countrywide Funding Corp. 500,000 6.57%, 1997 479,960 Discover Credit Corp. 250,000 8.73%, 1996 251,958 Fleet Mortgage Group, Inc. 500,000 6.125%, 1997 474,285 General Motors Acceptance Corp. 1,000,000 5.65%, 1997 925,080 Green Tree Financial Corp. 250,000 7.70%, 2019 243,125 Household Financial Corporation Ltd. $ 250,000 6.00%, 1998 $ 232,075 Household International Netherlands B.V. 250,000 6.00%, 1999 229,015 Nacional Financier 400,000 10.625%, 2001 362,500 Norwest Financial, Inc. 500,000 6.50%, 1997 478,700 Transamerica Finance Group, Inc. 500,000 7.42%, 1998 487,435 ----------- 6,785,183 ----------- FOOD & BEVERAGES (3.3%) ConAgra, Inc. 500,000 9.75%, 1997 514,865 Grand Metropolitan Investment Corp. 500,000 8.125%, 1996 500,935 Seagram Company Ltd. 500,000 9.75%, 2000 506,945 ----------- 1,522,745 ----------- INSURANCE (.8%) SunAmerica Inc. 370,000 9.00%, 1999 373,522 ----------- LEASING (2.1%) Penske Truck Leasing Co. 500,000 7.75%, 1999 483,630 U.S. Leasing International Inc. 500,000 7.00%, 1997 482,365 ----------- 965,995 ----------- LODGING & RESTAURANTS (.4%) Host Marriott Hospitality Inc. 206,000 9.125%, 2000 203,168 ----------- MACHINERY & EQUIPMENT (1.0%) Caterpillar Financial Services Corp. 500,000 6.85%, 1997 481,610 ----------- MORTGAGE-BACKED SECURITIES (5.6%) American Southwest Financial Corp. 1,559,244 8.25%, 2016 1,493,459 GE Capital Mortgage Services, Inc. 161,584 6.50%, 2024 154,767 Housing Securities, Inc. 250,000 7.25%, 2012 244,141 Ryland Mortgage Securities Corp. 444,482 8.339%, 2030 423,369 Salomon Brothers, Inc. 296,291 0.00%, 2017 199,810 200,220 12.50%, 2017 79,774 ----------- 2,595,320 ----------- OIL & GAS (10.6%) Arkla, Inc. 505,000 9.875%, 1997 510,050 BP America Inc. 500,000 8.875%, 1997 507,430
6 The accompanying notes are an integral part of these financial statements. INCOME ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE Bridas Corp. $ 250,000 12.50%, 1999 $ 241,250 Coastal Corp. 500,000 11.125%, 1998 507,500 500,000 8.75%, 1999 494,410 El Paso Natural Gas Co. 250,000 6.90%, 1997 243,333 Empresa Columbia de Petroleos 250,000 7.25%, 1998 230,000 Florida Gas Transmission Co. 500,000 7.75%, 1997 491,585 Petroleos Mexicanos 250,000 8.25%, 1998 233,125 Occidental Petroleum Corp. 500,000 6.43%, 1997 475,735 Phillips Petroleum Co. 500,000 7.53%, 1998 490,652 Transco Energy Co. 350,000 11.25%, 1999 372,312 Transcontinental Gas Pipe Line Corp. 150,000 9.00%, 1996 151,125 ----------- 4,948,507 ----------- PAPER & FOREST PRODUCTS (1.8%) Celulosa Arauco y Constitucion S.A. 350,000 7.25%, 1998 332,063 Georgia-Pacific Corp. 500,000 9.85%, 1997 513,880 ----------- 845,943 ----------- PRINTING & PUBLISHING (2.1%) Reed Publishing USA Inc. 500,000 7.20%, 1997 492,740 Time Warner Inc. 500,000 7.45%, 1998 476,565 ----------- 969,305 ----------- RETAIL TRADE (2.1%) Kmart Corp. 500,000 8.61%, 1997 503,795 Sears, Roebuck & Co. 500,000 8.39%, 1999 496,705 ----------- 1,000,500 ----------- SAVINGS & LOAN (1.1%) Golden West Financial Corp. 500,000 8.625%, 1998 502,650 ----------- TELECOMMUNICATIONS (1.3%) Tele-Communications, Inc. 615,000 5.28%, 1996 587,811 ----------- TELEPHONE UTILITIES (2.2%) GTE Corp. 500,000 8.85%, 1998 504,790 MCI Communications Corp. 500,000 7.625%, 1996 496,235 ----------- 1,001,025 ----------- TOBACCO (2.1%) B.A.T Capital Corp. $ 500,000 6.66%, 2000 $ 445,585 Philip Morris Companies Inc. 500,000 8.75%, 1996 505,040 ----------- 950,625 ----------- TRANSPORTATION (2.2%) Federal Express Corp. 500,000 9.75%, 1996 510,100 250,000 6.25%, 1998 233,953 Southern Pacific Transportation Co. 250,000 10.50%, 1999 253,750 ----------- 997,803 ----------- TOTAL CORPORATE BONDS (COST $40,705,389) 38,336,621 ----------- U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (10.0% OF NET ASSETS) Federal Home Loan Mortgage Corp. 202,261 5.50%, 1997 194,487 636,250 5.50%, 1998 611,794 Federal National Mortgage Assn. 926,229 7.50%, 2008 886,568 913,336 7.00%, 2009 855,394 877,461 8.00%, 2009 845,310 250,000 6.00%, 2019 223,592 Government National Mortgage Assn. 54,277 13.00%, 2014 62,283 U.S. Treasury Notes 500,000 5.125%, 1998 454,845 500,000 9.00%, 1998 516,795 ----------- TOTAL U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (COST $4,848,807) 4,651,068 ----------- FOREIGN GOVERNMENT BONDS (2.5% OF NET ASSETS) Fomento Economico Mexicano 250,000 9.50%, 1997 247,188 Province of Ontario 500,000 8.25%, 1996 502,270 United Mexican States 500,000 6.97%, 2000 422,616 ----------- TOTAL FOREIGN GOVERNMENT BONDS (COST $1,274,203) 1,172,074 ----------- COMMERCIAL PAPER (3.2% OF NET ASSETS) Johnson Controls, Inc. 1,500,000 5.80%, due 1/3/95 (COST $1,499,517) 1,499,517 ----------- TOTAL INVESTMENTS (COST $48,327,916) $45,659,280 ----------- -----------
7 TOTAL RETURN ACCOUNT
NUMBER OF MARKET SHARES SECURITY VALUE COMMON STOCKS (41.6% OF NET ASSETS) AEROSPACE (3.2%) 31,600 General Dynamics Corp. $ 1,374,600 20,200 General Motors Corp. Class H 704,475 19,400 Lockheed Corp. 1,408,925 34,700 Loral Corp. 1,314,262 6,000 McDonnell Douglas Corp. 852,000 ----------- 5,654,262 ----------- APPAREL & TEXTILES (.7%) 30,700 Reebok International Ltd. 1,212,650 ----------- AUTO & AUTO RELATED (.4%) 16,000 Johnson Controls, Inc. 784,000 ----------- BANKING (2.2%) 46,200 Bank of New York Co., Inc. 1,339,800 37,200 Citicorp 1,539,150 7,200 Wells Fargo & Co. 1,044,000 ----------- 3,922,950 ----------- CHEMICALS (1.6%) 14,300 FMC Corp. 825,825 21,100 Georgia Gulf Corp. 820,262 31,600 Grace (W.R.) & Co. 1,220,550 ----------- 2,866,637 ----------- CONGLOMERATES (1.0%) 23,100 AlliedSignal Inc. 785,400 19,300 Textron, Inc. 972,237 ----------- 1,757,637 ----------- DRUGS & COSMETICS (.7%) 18,600 American Home Products Corp. 1,167,150 ----------- ELECTRIC UTILITIES (2.2%) 42,400 American Electric Power Co., Inc. 1,393,900 41,000 FPL Group, Inc. 1,440,125 50,100 Illinova Corp. 1,089,675 ----------- 3,923,700 ----------- ELECTRICAL & ELECTRONIC EQUIPMENT (.6%) 10,100 LSI Logic Corp. 407,787 15,350 Micron Technology Inc. 677,319 ----------- 1,085,106 ----------- ENERGY SERVICES (.4%) 19,200 Offshore Pipelines, Inc. 434,400 9,100 Tosco Corp. 265,037 ----------- 699,437 ----------- FOOD & BEVERAGES (2.3%) 82,923 Archer Daniels Midland Co. 1,710,277 10,100 IBP, Inc. 305,525 33,200 Ralcorp Holdings, Inc. 738,700 46,800 Seagram Company Ltd. 1,380,600 ----------- 4,135,102 ----------- HEALTH SERVICES & HOSPITAL SUPPLIES (2.4%) 51,900 Baxter International Inc. 1,466,175 36,500 Charter Medical Corp. $ 784,750 31,500 Columbia Healthcare Corp. 1,149,750 25,800 Foundation Health Corp. 799,800 ----------- 4,200,475 ----------- INSURANCE (1.9%) 30,700 American General Corp. 867,275 16,800 St. Paul Companies Inc. 751,800 39,700 TIG Holdings, Inc. 744,375 34,000 Travelers, Inc. 1,105,000 ----------- 3,468,450 ----------- LEASING (.3%) 28,200 Ryder System, Inc. 620,400 ----------- LEISURE RELATED (.9%) 60,500 Mattel, Inc. 1,520,062 ----------- MACHINERY & EQUIPMENT (1.9%) 26,100 Caterpillar Inc. 1,438,763 34,900 Mark IV Industries, Inc. 689,275 25,900 Parker-Hannifin Corp. 1,178,450 ----------- 3,306,488 ----------- MISCELLANEOUS (1.3%) 63,000 Dial Corp. 1,338,750 22,800 Premark International, Inc. 1,020,300 ----------- 2,359,050 ----------- OFFICE EQUIPMENT (.8%) 15,200 Xerox Corp. 1,504,800 ----------- OIL & GAS (3.5%) 20,100 Amoco Corp. 1,188,413 25,500 El Paso Natural Gas Co. 777,750 16,300 Mobil Corp. 1,373,275 71,600 Panhandle Eastern Corp. 1,414,100 11,400 Royal Dutch Petroleum Co. 1,225,500 11,200 Ultramar Corp. 285,600 ----------- 6,264,638 ----------- PAPER & FOREST PRODUCTS (1.8%) 7,200 Georgia-Pacific Corp. 514,800 21,700 Scott Paper Co. 1,500,013 24,200 Willamette Industries, Inc. 1,149,500 ----------- 3,164,313 ----------- RETAIL TRADE (5.1%) 52,900 American Stores Co. 1,421,688 10,200 Dayton Hudson Corp. 721,650 29,800 Dillard Department Stores, Inc. 797,150 27,900 Eckerd Corp. 833,513 43,900 Kroger Co. 1,059,088 60,700 Safeway Inc. 1,934,812 30,600 Sears, Roebuck & Co. 1,407,600 50,900 Waban, Inc. 903,475 ----------- 9,078,976 ----------- TECHNOLOGY (3.4%) 44,100 Compaq Computer Corp. 1,741,950 Computer Associates International, 32,000 Inc. 1,552,000 International Business Machines 20,800 Corp. 1,528,800
8 The accompanying notes are an integral part of these financial statements. TOTAL RETURN ACCOUNT (cont'd)
NUMBER OF MARKET SHARES SECURITY VALUE 10,500 Stratus Computer, Inc. $ 399,000 21,100 Sun Microsystems, Inc. 749,050 ----------- 5,970,800 ----------- TELEPHONE UTILITIES (1.0%) 44,100 Ameritech Corp. 1,780,537 ----------- TOBACCO (1.6%) 44,300 American Brands, Inc. 1,661,250 21,700 Philip Morris Companies Inc. 1,247,750 ----------- 2,909,000 ----------- TRANSPORTATION (.4%) 27,500 Yellow Corp. 656,563 ----------- TOTAL COMMON STOCKS (COST $70,310,068) 74,013,183 ----------- PRINCIPAL CORPORATE BONDS AMOUNT (24.5% OF NET ASSETS) AEROSPACE (.4%) British Aerospace Finance Inc. $ 500,000 8.00%, 1997 495,313 Coltec Industries, Inc. 250,000 9.75%, 2000 246,250 ----------- 741,563 ----------- AUTO & AUTO RELATED (.6%) Burmah Castrol Capital, Ltd. 500,000 7.00%, 1997 484,650 Chrysler Corp. 500,000 13.00%, 1997 504,720 ----------- 989,370 ----------- BANKING (2.9%) Banco Nacional de Comercio Exterior, S.N.C. 400,000 7.25%, 2004 284,000 Bank of Boston Corp. 500,000 10.30%, 2000 507,840 BankAmerica Corp. 500,000 6.00%, 1997 474,125 Chemical Banking Corp. 250,000 10.125%, 2000 267,618 First Fidelity Bancorporation 500,000 8.50%, 1998 500,590 First USA Bank of Delaware 500,000 5.05%, 1995 487,240 750,000 5.35%, 1996 703,453 Fleet Financial Group, Inc. 250,000 9.90%, 2001 265,247 Marshall & Ilsley Corp. 500,000 6.95%, 1997 488,100 Mellon Financial Co. 400,000 6.50%, 1997 382,440 Shawmut National Corp. 750,000 8.875%, 1996 754,995 ----------- 5,115,648 ----------- BUILDING MATERIALS & CONSTRUCTION (.1%) Cemex $ 200,000 8.875%, 1998 $ 191,883 ----------- CHEMICALS (1.5%) Grace (W.R.) & Co. 750,000 7.40%, 2000 710,475 Lyondell Petrochemical Co. 1,100,000 8.25%, 1997 1,088,417 Morton International, Inc. 500,000 9.25%, 2020 536,250 PPG Industries, Inc. 250,000 9.00%, 2021 258,485 ----------- 2,593,627 ----------- CONGLOMERATES (.5%) Tenneco Credit Corp. 500,000 9.25%, 1996 507,340 Tenneco, Inc. 375,000 10.00%, 1998 391,620 ----------- 898,960 ----------- DRUGS & COSMETICS (.6%) Procter & Gamble Co. 250,000 9.36%, 2021 269,700 Roche Holdings Inc. 950,000 2.75%, 2000 730,906 ----------- 1,000,606 ----------- ELECTRIC UTILITIES (.6%) Hydro-Quebec 500,000 9.375%, 2030 516,040 Long Island Lighting Co. 500,000 8.75%, 1996 501,765 ----------- 1,017,805 ----------- ELECTRICAL & ELECTRONIC EQUIPMENT (.5%) Electrolux 500,000 7.75%, 1997 491,250 Westinghouse Electric Corp. 500,000 7.75%, 1996 495,490 ----------- 986,740 ----------- FINANCIAL SERVICES (6.3%) American General Finance Corp. 500,000 7.70%, 1997 491,335 500,000 8.50%, 1998 501,500 Aristar, Inc. 500,000 6.25%, 1996 486,075 250,000 8.125%, 1997 248,308 Associates Corp. of North America 500,000 6.75%, 1999 466,380 Avco Financial Services, Inc. 500,000 5.875%, 1997 470,745 Chrysler Financial Corp. 1,500,000 5.08%, 1997 1,410,840 Countrywide Funding Corp. 250,000 6.57%, 1997 239,980
9 TOTAL RETURN ACCOUNT (cont'd) PRINCIPAL MARKET AMOUNT SECURITY VALUE $ 500,000 6.085%, 1999 $ 455,300 Discover Credit Corp. 500,000 8.73%, 1996 503,915 Fleet Mortgage Corp. 1,000,000 6.125%, 1997 948,570 250,000 6.50%, 1999 230,150 Ford Motor Credit Co. 500,000 8.00%, 1997 496,930 500,000 6.25%, 1998 471,015 General Motors Acceptance Corp. 1,000,000 5.65%, 1997 925,080 750,000 7.75%, 1997 740,370 Green Tree Financial Corp. 500,000 8.00%, 2020 492,030 Household Financial Corporation Ltd. 250,000 6.00%, 1998 232,075 Household International Netherlands B.V. 500,000 6.00%, 1999 458,030 ITT Financial Corp. 250,000 8.75%, 2006 250,250 Norwest Financial, Inc. 500,000 6.50%, 1997 478,700 Transamerica Finance Corp. 250,000 6.80%, 1999 235,415 ----------- 11,232,993 ----------- FOOD & BEVERAGES (.8%) Bass America Inc. 250,000 6.75%, 1999 233,360 ConAgra, Inc. 500,000 9.75%, 1997 514,865 Seagram Company Ltd. 700,000 9.75%, 2000 709,723 ----------- 1,457,948 ----------- INSURANCE (.4%) Skandia Group Insurance Co. Ltd. 300,000 6.00%, 1998 273,000 SunAmerica Inc. 450,000 9.00%, 1999 454,284 ----------- 727,284 ----------- LEASING (.9%) Penske Truck Leasing Co. 750,000 7.75%, 1999 725,445 PHH Corp. 350,000 6.50%, 2000 321,804 U.S. Leasing International Inc. 500,000 7.00%, 1997 482,365 ----------- 1,529,614 ----------- MANUFACTURING (.2%) Black & Decker Corp. 400,000 6.625%, 2000 356,032 ----------- MORTGAGE-BACKED SECURITIES (.7%) Fleet Mortgage Securities, Inc. 327,524 8.25%, 2023 326,807 Housing Securities, Inc. $ 400,000 7.25%, 2012 $ 390,625 Sears Mortgage Securities Corp. 9,956 7.645%, 2019 9,906 Transamerica Finance Corp. 500,000 6.75%, 1997 482,360 ----------- 1,209,698 ----------- OIL & GAS (3.2%) Arkla, Inc. 750,000 9.875%, 1997 757,500 BP America, Inc. 500,000 8.875%, 1997 507,430 Bridas Corp. 270,000 12.50%, 1999 260,550 Coastal Corp. 500,000 11.125%, 1998 507,500 500,000 8.125%, 2002 472,850 Norsk Hydro 500,000 8.75%, 2001 498,750 Petroleos Mexicanos 150,000 8.25%, 1998 139,875 Petroliam Nasional Berhad 500,000 6.875%, 2003 448,135 Phillips Petroleum Co. 1,000,000 7.53%, 1998 981,304 TransCanada Pipelines Ltd. 500,000 9.875%, 2021 553,525 Transco Energy Co. 500,000 11.25%, 1999 531,875 ----------- 5,659,294 ----------- PAPER & FOREST PRODUCTS (.7%) Celulosa Arauco y Constitucion S.A. 500,000 7.25%, 1998 474,375 Georgia-Pacific Corp. 750,000 9.85%, 1997 770,820 ----------- 1,245,195 ----------- PRINTING & PUBLISHING (.5%) Reed Elsevier, Inc. 400,000 6.625%, 2023 312,344 Time Warner Inc. 700,000 7.45%, 1998 667,191 ----------- 979,535 ----------- RETAIL TRADE (.2%) Sears, Roebuck & Co. 300,000 8.39%, 1999 298,023 ----------- SAVINGS & LOAN (.3%) Golden West Financial Corp. 500,000 10.25%, 1997 518,390 ----------- TELECOMMUNICATIONS (.2%) Tele-Communications, Inc. 400,000 7.15%, 1998 382,480 ----------- TELEPHONE UTILITIES (.7%) GTE Corp. 750,000 8.85%, 1998 757,185
10 The accompanying notes are an integral part of these financial statements. TOTAL RETURN ACCOUNT (cont'd) PRINCIPAL MARKET AMOUNT SECURITY VALUE MCI Communications Corp. $ 500,000 7.125%, 2000 $ 476,065 ----------- 1,233,250 ----------- TOBACCO (.9%) B.A.T Capital Corp. 700,000 6.875%, 2003 622,846 Philip Morris Companies Inc. 500,000 8.75%, 1996 505,040 500,000 9.25%, 2000 508,320 ----------- 1,636,206 ----------- TRANSPORTATION (.8%) Federal Express Corp. 750,000 9.75%, 1996 765,150 250,000 6.25%, 1998 233,952 Southern Pacific Transportation Co. 500,000 10.50%, 1999 507,500 ----------- 1,506,602 ----------- TOTAL CORPORATE BONDS (COST $45,628,309) 43,508,746 ----------- U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (24.6% OF NET ASSETS) Federal Home Loan Mortgage Corp. 1,000,000 6.00%, 2007 798,750 Federal National Mortgage Assn. 1,372,522 7.50%, 2008 1,313,750 800,000 6.00%, 2019 715,496 609,333 7.00%, 2022 428,434 Government National Mortgage Assn. 646,322 8.00%, 2017 626,648 221,975 9.00%, 2018 224,510 296,675 9.00%, 2019 299,532 309,068 9.00%, 2021 312,597 691,095 7.50%, 2022 641,205 260,295 9.00%, 2022 262,572 2,604,561 6.50%, 2023 2,257,009 1,397,296 7.50%, 2023 1,296,425 287,340 8.50%, 2023 282,312 3,769,356 6.50%, 2024 3,266,373 6,681,507 7.00%, 2024 5,996,653 U.S. Treasury Bonds 2,450,000 7.50%, 2016 2,325,197 10,750,000 8.75%, 2017 11,571,408 U.S. Treasury Notes 2,500,000 3.875%, 1995 2,481,250 2,550,000 5.125%, 1998 2,319,710 5,000,000 6.375%, 2002 4,578,100 1,000,000 0.00%, 2003 512,290 800,000 5.75%, 2003 695,248 2,600,000 0.00%, 2012 644,618 ----------- TOTAL U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (COST $45,394,157) 43,850,087 ----------- FOREIGN GOVERNMENT BONDS (1.5% OF NET ASSETS) Fomento Economico Mexicano $ 750,000 9.50%, 1997 $ 741,563 Republic of Columbia 300,000 7.125%, 1998 286,500 400,000 8.75%, 1999 381,500 United Mexican States 250,000 6.97%, 2000 211,308 1,350,000 8.50%, 2002 1,086,750 ----------- TOTAL FOREIGN GOVERNMENT BONDS (COST $3,030,294) 2,707,621 ----------- COMMERCIAL PAPER (5.9% OF NET ASSETS) American Express Credit Corp. 4,306,000 5.80%, due 1/4/95 4,306,000 Johnson Controls, Inc. 6,180,000 5.80%, due 1/3/95 6,178,009 ----------- TOTAL COMMERCIAL PAPER (COST $10,484,009) 10,484,009 ----------- TOTAL INVESTMENTS (COST $174,846,837) $174,563,646 ----------- -----------
GROWTH ACCOUNT
NUMBER OF MARKET SHARES SECURITY VALUE COMMON STOCKS (88.8% OF NET ASSETS) AEROSPACE (7.4%) 33,900 General Dynamics Corp. $ 1,474,650 24,400 General Motors Corp. Class H 850,950 16,900 Lockheed Corp. 1,227,362 34,500 Loral Corp. 1,306,688 6,300 McDonnell Douglas Corp. 894,600 ----------- 5,754,250 ----------- APPAREL & TEXTILES (1.6%) 32,000 Reebok International Ltd. 1,264,000 ----------- AUTO & AUTO RELATED (.8%) 12,500 Johnson Controls, Inc. 612,500 ----------- BANKING (5.0%) 48,900 Bank of New York Co., Inc. 1,418,100 32,400 Citicorp 1,340,550 7,900 Wells Fargo & Co. 1,145,500 ----------- 3,904,150 ----------- CHEMICALS (3.5%) 14,600 FMC Corp. 843,150 19,600 Georgia Gulf Corp. 761,950 28,700 Grace (W.R.) & Co. 1,108,538 ----------- 2,713,638 ----------- CONGLOMERATES (2.1%) 20,200 AlliedSignal Inc. 686,800
11 GROWTH ACCOUNT (cont'd)
NUMBER OF MARKET SHARES SECURITY VALUE 19,300 Textron, Inc. $ 972,237 ----------- 1,659,037 ----------- DRUGS & COSMETICS (1.5%) 19,200 American Home Products Corp. 1,204,800 ----------- ELECTRIC UTILITIES (4.8%) 44,200 American Electric Power Co., Inc. 1,453,075 35,600 FPL Group, Inc. 1,250,450 49,400 Illinova Corp. 1,074,450 ----------- 3,777,975 ----------- ELECTRICAL & ELECTRONIC EQUIPMENT (1.4%) 8,400 LSI Logic Corp. 339,150 16,350 Micron Technology Inc. 721,444 ----------- 1,060,594 ----------- ENERGY SERVICES (.9%) 17,000 Offshore Pipelines, Inc. 384,625 10,700 Tosco Corp. 311,638 ----------- 696,263 ----------- FOOD & BEVERAGES (4.6%) 63,315 Archer Daniels Midland Co. 1,305,872 10,000 IBP, Inc. 302,500 30,100 Ralcorp Holdings, Inc. 669,725 46,000 Seagram Company Ltd. 1,357,000 ----------- 3,635,097 ----------- HEALTH SERVICES & HOSPITAL SUPPLIES (4.9%) 48,400 Baxter International Inc. 1,367,300 34,600 Charter Medical Corp. 743,900 28,500 Columbia Healthcare Corp. 1,040,250 22,800 Foundation Health Corp. 706,800 ----------- 3,858,250 ----------- INSURANCE (4.4%) 32,000 American General Corp. 904,000 17,600 St. Paul Companies Inc. 787,600 36,400 TIG Holdings, Inc. 682,500 33,800 Travelers, Inc. 1,098,500 ----------- 3,472,600 ----------- LEASING (.8%) 28,700 Ryder System, Inc. 631,400 ----------- LEISURE RELATED (1.5%) 47,475 Mattel, Inc. 1,192,809 ----------- MACHINERY & EQUIPMENT (4.1%) 23,100 Caterpillar Inc. 1,273,388 37,100 Mark IV Industries, Inc. 732,725 27,200 Parker-Hannifin Corp. 1,237,600 ----------- 3,243,713 ----------- MISCELLANEOUS (2.7%) 47,600 Dial Corp. 1,011,500 23,700 Premark International, Inc. $ 1,060,575 ----------- 2,072,075 ----------- OFFICE EQUIPMENT (1.8%) 14,500 Xerox Corp. 1,435,500 ----------- OIL & GAS (7.4%) 19,600 Amoco Corp. 1,158,850 21,500 El Paso Natural Gas Co. 655,750 16,700 Mobil Corp. 1,406,975 65,300 Panhandle Eastern Corp. 1,289,675 10,600 Royal Dutch Petroleum Co. 1,139,500 5,700 Ultramar Corp. 145,350 ----------- 5,796,100 ----------- PAPER & FOREST PRODUCTS (3.9%) 7,400 Georgia-Pacific Corp. 529,100 22,300 Scott Paper Co. 1,541,487 21,400 Willamette Industries, Inc. 1,016,500 ----------- 3,087,087 ----------- RETAIL TRADE (9.9%) 38,900 American Stores Co. 1,045,437 10,400 Dayton Hudson Corp. 735,800 25,700 Dillard Department Stores, Inc. 687,475 29,400 Eckerd Corp. 878,325 34,200 Kroger Co. 825,075 39,600 Safeway Inc. 1,262,250 32,100 Sears, Roebuck & Co. 1,476,600 46,800 Waban, Inc. 830,700 ----------- 7,741,662 ----------- TECHNOLOGY (7.6%) 41,700 Compaq Computer Corp. 1,647,150 Computer Associates International, 31,600 Inc. 1,532,600 International Business Machines 21,100 Corp. 1,550,850 11,000 Stratus Computer, Inc. 418,000 22,200 Sun Microsystems, Inc. 788,100 ----------- 5,936,700 ----------- TELEPHONE UTILITIES (1.7%) 33,000 Ameritech Corp. 1,332,375 ----------- TOBACCO (3.7%) 43,400 American Brands, Inc. 1,627,500 22,200 Philip Morris Companies Inc. 1,276,500 ----------- 2,904,000 ----------- TRANSPORTATION (.8%) 25,800 Yellow Corp. 615,975 ----------- TOTAL COMMON STOCKS (COST $64,780,805) 69,602,550 -----------
12 The accompanying notes are an integral part of these financial statements. GROWTH ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE COMMERCIAL PAPER (10.8% OF NET ASSETS) American Express Credit Corp. $ 1,417,000 5.83%, due 1/3/95 $ 1,417,000 1,370,000 5.80%, due 1/6/95 1,370,000 Cargill, Inc. 1,100,000 5.55%, due 1/3/95 1,099,661 Ford Motor Credit Co. 2,578,000 5.90%, due 1/4/95 2,578,000 GTE Florida, Inc. $ 2,000,000 5.90%, due 1/5/95 $ 1,998,689 TOTAL COMMERCIAL PAPER (COST $8,463,350) 8,463,350 ----------- TOTAL INVESTMENTS (COST $73,244,155) $78,065,900 ----------- -----------
NOTES TO SCHEDULE OF INVESTMENTS December 31, 1994
A C C O U N T S 1. Aggregate gross unrealized appreciation (depreciation) as of December 31, 1994, based on cost for Federal income tax purposes, was GOVERNMENT TOTAL as follows: LIQUID SECURITIES INCOME RETURN GROWTH Aggregate gross unrealized appreciation $ -- $ 208,554 $ 63,871 $ 5,869,711 $ 6,243,951 Aggregate gross unrealized depreciation -- (4,165,092) (2,732,507) (6,152,902) (1,422,206) -------------- -------------- -------------- -------------- -------------- Net unrealized appreciation (depreciation) $ -- $(3,956,538) $(2,668,636) $ (283,191) $ 4,821,745 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- 2. The aggregate cost of investments for Federal income tax purposes was: $63,942,445 $63,037,182 $48,327,916 $174,846,837 $73,244,155 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
13 STATEMENT OF NET ASSETS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. December 31, 1994
A C C O U N T S GOVERNMENT TOTAL LIQUID SECURITIES INCOME RETURN GROWTH ASSETS Investments: Bonds, at market value (Cost $62,872,182, $46,828,399, $94,052,760) $ -- $ 58,915,644 $ 44,159,763 $ 90,066,454 $ -- Common stocks, at market value (Cost $70,310,068, $64,780,805) -- -- -- 74,013,183 69,602,550 Short-term securities 63,942,445 165,000 1,499,517 10,484,009 8,463,350 -------------- -------------- -------------- -------------- -------------- 63,942,445 59,080,644 45,659,280 174,563,646 78,065,900 Cash 6,595 606 24,824 23,940 6,409 Investment income receivable 65,908 1,187,262 865,917 1,627,488 138,820 Receivable from securities sold -- -- -- 2,849,794 1,402,989 Receivable from Fund shares sold 30,609 14,864 43,564 178,542 60,677 -------------- -------------- -------------- -------------- -------------- Total Assets 64,045,557 60,283,376 46,593,585 179,243,410 79,674,795 -------------- -------------- -------------- -------------- -------------- LIABILITIES Accrued expenses payable 99,687 121,037 46,621 272,160 127,466 Payable for securities purchased -- -- -- 1,067,243 1,157,491 -------------- -------------- -------------- -------------- -------------- Total Liabilities 99,687 121,037 46,621 1,339,403 1,284,957 -------------- -------------- -------------- -------------- -------------- NET ASSETS $ 63,945,870 $ 60,162,339 $ 46,546,964 $177,904,007 $ 78,389,838 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- OUTSTANDING SHARES 63,945,870 6,163,266 5,094,374 13,232,562 5,520,444 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- NET ASSET VALUE PER SHARE $1.00 $9.76 $9.14 $13.44 $14.20 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
14 The accompanying notes are an integral part of these financial statements. STATEMENT OF OPERATIONS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. For the year ended December 31, 1994
A C C O U N T S GOVERNMENT TOTAL LIQUID SECURITIES INCOME RETURN GROWTH INVESTMENT INCOME Income: Interest $3,291,134 $5,611,282 $3,789,066 $ 6,944,799 $ 312,020 Dividends -- -- -- 1,984,611 1,499,227 -------------- -------------- -------------- -------------- ------------- Total Income 3,291,134 5,611,282 3,789,066 8,929,410 1,811,247 -------------- -------------- -------------- -------------- ------------- Expenses: Investment advisory fees 385,774 460,523 304,391 1,173,401 447,812 Transfer agent fees 229,500 119,000 74,500 462,500 187,000 Registration fees 32,955 28,353 27,023 53,194 29,159 Custodian fees 29,900 27,700 29,500 47,200 34,700 Shareholder reports 21,500 15,000 10,200 53,400 23,500 Professional services 6,200 6,200 6,200 6,200 6,200 Directors' fees 4,284 4,284 4,284 4,284 4,284 Other 5,053 8,120 -- 1,306 1,294 Expense reimbursement from investment adviser -- -- (151,707) -- -- -------------- -------------- -------------- -------------- ------------- Total Expenses 715,166 669,180 304,391 1,801,485 733,949 -------------- -------------- -------------- -------------- ------------- NET INVESTMENT INCOME 2,575,968 4,942,102 3,484,675 7,127,925 1,077,298 -------------- -------------- -------------- -------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (987) (2,822,974) (660,384) 2,872,138 3,074,097 Net unrealized depreciation on investments -- (5,366,869) (3,054,974) (14,089,642) (4,619,868) -------------- -------------- -------------- -------------- ------------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (987) (8,189,843) (3,715,358) (11,217,504) (1,545,771) -------------- -------------- -------------- -------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,574,981 $ (3,247,741) $ (230,683) $ (4,089,579) $ (468,473) -------------- -------------- -------------- -------------- ------------- -------------- -------------- -------------- -------------- -------------
15
STATEMENT OF CHANGES IN NET ASSETS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. For the years ended December 31, 1994 and 1993 A C C O U N T S LIQUID GOVERNMENT SECURITIES 1994 1993 1994 1993 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income $2,575,968 $ 1,624,974 $4,942,102 $4,494,963 Net realized gain (loss) on investments (987) 6 (2,822,974) 4,005,208 Net unrealized appreciation (depreciation) -- -- (5,366,869) (1,899,883) -------------- -------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations 2,574,981 1,624,980 (3,247,741) 6,600,288 -------------- -------------- -------------- ------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (2,574,981) (1,624,974) (4,939,034) (4,489,918) Net realized gain from investment transactions -- (6) (56,279) (4,289,205) -------------- -------------- -------------- ------------- (2,574,981) (1,624,980) (4,995,313) (8,779,123) -------------- -------------- -------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 177,469,640 195,569,442 7,468,147 13,740,760 Net asset value of shares issued to shareholders from reinvestment of dividends 2,548,202 1,594,210 4,527,905 7,959,413 Cost of shares reacquired (192,692,366) (188,092,462) (21,186,898) (9,536,822) -------------- -------------- -------------- ------------- Increase (decrease) in net assets derived from capital share transactions (12,674,524) 9,071,190 (9,190,846) 12,163,351 -------------- -------------- -------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS (12,674,524) 9,071,190 (17,433,900) 9,984,516 NET ASSETS -- BEGINNING OF PERIOD 76,620,394 67,549,204 77,596,239 67,611,723 -------------- -------------- -------------- ------------- NET ASSETS -- END OF PERIOD $63,945,870 $76,620,394 $60,162,339 $77,596,239 -------------- -------------- -------------- ------------- -------------- -------------- -------------- ------------- Undistributed net investment income included in net assets at end of period -- -- $31,978 $28,910 -------------- ------------- -------------- ------------- Undistributed net realized gain (loss) on investments included in net assets at end of period -- -- $(2,853,150) $26,103 -------------- ------------- -------------- -------------
16 The accompanying notes are an integral part of these financial statements.
A C C O U N T S INCOME TOTAL RETURN GROWTH 1994 1993 1994 1993 1994 1993 $ 3,484,675 $ 2,909,983 $ 7,127,925 $ 4,722,043 $ 1,077,298 $ 1,065,223 (660,384) 144,920 2,872,138 9,934,386 3,074,097 6,017,450 (3,054,974) 224,988 (14,089,642) 4,955,279 (4,619,868) 3,036,923 - -------------- -------------- -------------- -------------- -------------- -------------- (230,683) 3,279,891 (4,089,579) 19,611,708 (468,473) 10,119,596 - -------------- -------------- -------------- -------------- -------------- -------------- (3,473,505) (2,919,683) (7,098,435) (4,729,047) (1,076,035) (1,070,312) -- -- (3,186,699) (10,403,444) (3,254,775) (6,489,124) - -------------- -------------- -------------- -------------- -------------- -------------- (3,473,505) (2,919,683) (10,285,134) (15,132,491) (4,330,810) (7,559,436) - -------------- -------------- -------------- -------------- -------------- -------------- 11,501,443 13,802,741 52,357,416 53,648,129 20,893,600 32,723,682 3,019,579 2,554,120 10,101,758 14,889,112 4,286,409 7,458,025 (12,906,272) (6,756,110) (41,385,584) (11,512,779) (6,485,813) (23,846,490) - -------------- -------------- -------------- -------------- -------------- -------------- 1,614,750 9,600,751 21,073,590 57,024,462 18,694,196 16,335,217 - -------------- -------------- -------------- -------------- -------------- -------------- (2,089,438) 9,960,959 6,698,877 61,503,679 13,894,913 18,895,377 48,636,402 38,675,443 171,205,130 109,701,451 64,494,925 45,599,548 - -------------- -------------- -------------- -------------- -------------- -------------- $ 46,546,964 $ 48,636,402 $177,904,007 $171,205,130 $78,389,838 $ 64,494,925 - -------------- -------------- -------------- -------------- -------------- -------------- - -------------- -------------- -------------- -------------- -------------- -------------- $17,359 $6,189 $44,571 $15,081 $1,393 $130 - -------------- -------------- -------------- -------------- -------------- -------------- - -------------- -------------- -------------- -------------- -------------- -------------- $(1,698,673) $(1,038,289) $532,694 $847,255 $528,131 $708,809 - -------------- -------------- -------------- -------------- -------------- -------------- - -------------- -------------- -------------- -------------- -------------- --------------
17 NOTES TO FINANCIAL STATEMENTS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. December 31, 1994 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Connecticut Mutual Investment Accounts, Inc. (the Fund), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund is comprised of five separate Accounts: Liquid, Government Securities, Income, Total Return and Growth. An interest in the Fund is limited to the assets of the Account or Accounts in which shares are held by shareholders, and such shareholders are entitled to a pro rata share of all dividends and distributions arising from the net investment income and net realized capital gains on the investments of such Accounts. The following is a summary of significant accounting policies followed by the Fund: (a)VALUATION OF INVESTMENT SECURITIES - Except with respect to securities held by the Liquid Account, equity and debt securities which are traded on securities exchanges are valued at the last sales price as of the close of business on the day the securities are being valued. Lacking any sales, equity securities are valued at the last bid price and debt securities are valued at the mean between closing bid and asked prices. Securities traded in the over-the-counter market and included in the NASDAQ National Market System are valued using the last sales price when available. Otherwise, over-the-counter securities are valued at the mean between the bid and asked prices or yield equivalent as obtained from one or more dealers who make a market in the securities. Short-term securities are valued on an amortized cost basis, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in accordance with procedures established by the Board of Directors of the Fund, including the use of valuations furnished by a private service retained by the custodian. Securities held by the Liquid Account are valued on an amortized cost basis. This basis involves valuing a security at cost and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. The amortized cost method, in the opinion of the Board of Directors, represents the fair value of the particular security. The Board monitors the deviation between the Account's net asset value per share as determined by using available market quotations and its amortized cost price per share. If the deviation exceeds one half of one percent, the Board will consider what action, if any, should be initiated to provide fair valuation. For the year ended December 31, 1994, the deviation was less than one half of one percent. (b)FEDERAL INCOME TAXES - The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. Under such provisions, by distributing substantially all of its taxable income to its shareholders or otherwise complying with requirements for regulated investment companies, the Fund will not be subject to Federal income taxes. Accordingly, no provision for Federal income taxes is required. For Federal tax reporting purposes, each Account is treated as a separate taxable entity. (c)GAINS AND LOSSES - Realized gains and losses from sales of investments are determined on the identified cost basis. (d)AFFILIATE HOLDINGS - Connecticut Mutual Life Insurance Company and its affiliates own 31,655,715 shares of the Fund as follows:
LIQUID GOVERNMENT SECURITIES INCOME TOTAL RETURN GROWTH 26,109,655 1,826,721 1,894,554 206 1,824,579
(e)OTHER - Investment transactions are accounted for on the trade date which is the date the order to buy or sell is executed. Dividend income is recorded on the ex-dividend date and interest income is accrued on a daily basis. All expenses are accrued on a daily basis. 2. INVESTMENT ADVISORY FEES The Fund has an Investment Advisory Agreement with G.R. Phelps & Co., Inc. (the Investment Adviser), a wholly-owned subsidiary of Connecticut Mutual Life Insurance Company. The Investment Adviser, subject to review by the Board of Directors, is responsible for the investment management of each Account and has the responsibility for making decisions to buy, sell or hold any particular security. The Investment Adviser is obligated to perform certain administrative services for the Fund. As compensation for its services to the Liquid Account, the Investment Adviser receives monthly compensation at the annual rate of 0.50% of the first $200 million of average daily net assets, 0.45% of the next $100 million of average daily net assets and 0.40% of the average daily net assets in excess of $300 million of the Account. As compensation for its services to the Government Securities, Income, Total Return and Growth Accounts, the Investment Adviser receives monthly compensation at the annual rate of 0.625% of the first $300 million of average daily net assets, 0.50% of the next $100 million of average daily net assets and 0.45% of the average daily net assets in excess of $400 million of each Account. 18 The investment advisory fees, which also cover certain administrative and management services, amounted to $2,771,901 for all Accounts for the year ended December 31, 1994. For the year ended December 31, 1994, the Investment Adviser, serving as principal underwriter for sale of shares of the Accounts, earned $2,502,163 related to sales charges deducted from proceeds for shares sold. Expenses incurred in the operation of the Fund are borne by the Fund. However, the Investment Adviser has agreed that in any year the aggregate expenses (including the investment advisory fee, but excluding interest, taxes, brokerage fees, commissions and uncommon charges such as litigation costs) exceed 1% of the value of the average daily net assets of the Liquid Account or 1.5% of the value of the average daily net assets in each of the other four Accounts, it will reimburse the Accounts for such excess. 3. DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are paid monthly for the Government Securities and Income Accounts and semi-annually for the Total Return and Growth Accounts. Dividends from net investment income of the Liquid Account, which include any net short-term capital gains, are declared and accrued daily and paid monthly. 4. CAPITAL STOCK The authorized capital stock of the Fund consists of 3,000,000,000 shares of common stock, par value $0.10 per share. The shares of stock are divided into five classes as indicated below. All shares of common stock have equal voting rights, except that only shares of a particular Account are entitled to vote on matters pertaining to that Account. Transactions in capital stock were as follows:
FOR THE YEAR ENDED DECEMBER 31, 1994 GOVERNMENT TOTAL LIQUID SECURITIES INCOME RETURN GROWTH Shares authorized (in millions) 800 300 300 300 300 --- --- --- --- --- --- --- --- --- --- Shares sold 177,469,640 722,134 1,209,211 3,669,999 1,391,034 Shares issued to shareholders from reinvestment of dividends 2,548,202 445,989 320,316 743,603 298,545 ------------- ------------- ------------- ------------- ---------- Total issued 180,017,842 1,168,123 1,529,527 4,413,602 1,689,579 Shares reacquired (192,692,366) (2,116,136) (1,367,697) (2,955,224) (430,233) ------------- ------------- ------------- ------------- ---------- Net increase (decrease) (12,674,524) (948,013) 161,830 1,458,378 1,259,346 ------------- ------------- ------------- ------------- ---------- ------------- ------------- ------------- ------------- ----------
19 NOTES TO FINANCIAL STATEMENTS (CONT'D) 5. FINANCIAL HIGHLIGHTS Selected data for a share of capital stock outstanding throughout the period:
NET REALIZED DISTRIBUTIONS RATIO OF RATIO OF NET DIVIDENDS & UNREALIZED FROM NET NET ASSET NET ASSET OPERATING INVESTMENT YEARS NET FROM NET GAIN (LOSS) REALIZED VALUE AT VALUE AT EXPENSES TO INCOME TO ENDED INVESTMENT INVESTMENT ON GAIN ON BEGINNING END AVERAGE AVERAGE DECEMBER 31 INCOME INCOME INVESTMENTS INVESTMENTS OF PERIOD OF PERIOD NET ASSETS NET ASSETS - -------------------------------------------------------------------------------------------------------------------------------- LIQUID ACCOUNT 1985 $.0729 $(.0729) $ -- $ -- $1.00 $1.00 1.00% 7.30% 1986 .0588 (.0588) -- -- 1.00 1.00 1.00 5.88 1987 .0581 (.0581) -- -- 1.00 1.00 1.00 5.81 1988 .0664 (.0664) -- -- 1.00 1.00 1.04 6.64 1989 .0822 (.0822) -- -- 1.00 1.00 1.06 8.22 1990 .0731 (.0731) -- -- 1.00 1.00 1.06 7.31 1991 .0522 (.0522) -- -- 1.00 1.00 1.01 5.22 1992 .0287 (.0287) -- -- 1.00 1.00 1.02 2.87 1993 .0227 (.0227) -- -- 1.00 1.00 .95 2.27 1994 .0334 (.0334) -- -- 1.00 1.00 .93 3.34 GOVERNMENT SECURITIES ACCOUNT 1985(a) .24 (.21) .70 -- 10.00 10.73 1.50(b) 8.00(b) 1986 .92 (.92) .28 (.11) 10.73 10.90 1.27 8.92 1987 .84 (.84) (.52) (.21) 10.90 10.17 1.24 8.12 1988 .84 (.85) (.05) (.05) 10.17 10.06 1.16 8.27 1989 .84 (.84) .52 -- 10.06 10.58 1.19 8.14 1990 .84 (.84) .10 -- 10.58 10.68 1.16 8.07 1991 .85 (.85) .68 -- 10.68 11.36 1.07 7.83 1992 .77 (.77) (.12) (.05) 11.36 11.19 1.01 6.92 1993 .70 (.70) .36 (.64) 11.19 10.91 .93 6.03 1994 .69 (.69) (1.14) (.01) 10.91 9.76 .91 6.71 INCOME ACCOUNT 1985(a) .24 (.23) .54 -- 10.00 10.55 1.50(b) 8.20(b) 1986 .83 (.83) .57 (.08) 10.55 11.04 1.29 7.69 1987 .76 (.76) (.56) (.51) 11.04 9.97 1.27 7.32 1988 .84 (.85) (.19) -- 9.97 9.77 1.24 8.43 1989 .88 (.88) .02 -- 9.77 9.79 1.27 8.93 1990 .94 (.94) (.35) -- 9.79 9.44 1.24 9.78 1991 .81 (.81) .47 -- 9.44 9.91 1.12 8.44 1992 .79 (.79) (.16) -- 9.91 9.75 .63 8.09 1993 .65 (.65) .11 -- 9.75 9.86 .63 6.56 1994 .68 (.68) (.72) -- 9.86 9.14 .63 7.16 TOTAL RETURN ACCOUNT 1985(a) .13 (.12) .90 -- 10.00 10.91 1.50(b) 4.46(b) 1986 .31 (.30) .99 (.04) 10.91 11.87 1.26 3.22 1987 .38 (.38) .13 (1.09) 11.87 10.91 1.08 3.15 1988 .53 (.53) .60 -- 10.91 11.51 1.11 4.61 1989 .76 (.76) 1.81 (.63) 11.51 12.69 1.20 5.90 1990 .66 (.66) (.68) (.07) 12.69 11.94 1.24 5.31 1991 .54 (.54) 2.79 (.71) 11.94 14.02 1.20 4.02 1992 .50 (.50) .86 (1.07) 14.02 13.81 1.11 3.61 1993 .48 (.48) 1.70 (.97) 13.81 14.54 1.02 3.40 1994 .55 (.55) (.86) (.24) 14.54 13.44 .96 3.80 GROWTH ACCOUNT 1985(a) .11 (.11) .94 -- 10.00 10.94 1.50(b) 3.81(b) 1986 .24 (.24) 1.11 (.08) 10.94 11.97 1.31 2.21 1987 .22 (.22) (.12) (2.05) 11.97 9.80 1.17 1.71 1988 .20 (.20) 1.20 -- 9.80 11.00 1.23 1.95 1989 .51 (.51) 3.30 (1.25) 11.00 13.05 1.18 3.90 1990 .34 (.34) (1.36) (.07) 13.05 11.62 1.19 2.73 1991 .25 (.25) 4.00 (1.22) 11.62 14.40 1.19 1.74 1992 .26 (.26) 1.44 (1.64) 14.40 14.20 1.12 1.74 1993 .30 (.30) 2.64 (1.70) 14.20 15.14 1.05 1.95 1994 .22 (.22) (.32) (.62) 15.14 14.20 1.02 1.50 NET ASSETS YEARS AT END ANNUAL ENDED PORTFOLIO OF PERIOD TOTAL DECEMBER 31 TURNOVER (IN THOUSANDS) RETURN(C) - ----------------------------------------------------------- LIQUID ACCOUNT 1985 n/a $ 65,098 7.50% 1986 n/a 74,111 6.03 1987 n/a 68,908 5.97 1988 n/a 73,921 6.82 1989 n/a 87,264 8.53 1990 n/a 84,387 7.53 1991 n/a 69,932 5.31 1992 n/a 67,549 2.89 1993 n/a 76,620 2.30 1994 n/a 63,946 3.40 GOVERNMENT SECURITIES ACCOUNT 1985 468.56% 12,890 9.40 1986 111.68 22,947 11.66 1987 207.67 24,703 3.33 1988 175.50 35,910 7.99 1989 68.14 41,561 14.10 1990 44.19 47,524 9.44 1991 27.50 55,332 15.03 1992 131.79 67,612 6.07 1993 224.02 77,596 9.56 1994 156.90 60,162 (4.18) INCOME ACCOUNT 1985 242.68(b) 11,048 7.80 1986 164.13 14,620 13.54 1987 231.39 15,367 2.03 1988 150.04 16,789 6.70 1989 52.95 18,705 9.56 1990 90.20 19,809 6.33 1991 50.44 22,839 14.22 1992 109.47 38,675 6.60 1993 145.94 48,636 7.97 1994 62.88 46,547 (0.42) TOTAL RETURN ACCOUNT 1985 49.82(b) 12,083 10.34 1986 143.32 35,382 11.88 1987 197.79 44,770 3.92 1988 223.62 54,253 10.40 1989 149.22 65,071 22.61 1990 115.45 66,382 (0.21) 1991 122.40 86,455 28.21 1992 177.85 109,701 9.90 1993 155.16 171,205 15.89 1994 115.01 177,904 (2.11) GROWTH ACCOUNT 1985 57.58(b) 11,514 10.50 1986 163.15 19,469 12.25 1987 214.32 19,638 (0.29) 1988 246.14 26,285 14.32 1989 169.75 37,323 34.86 1990 143.95 35,202 (7.98) 1991 148.30 40,716 36.91 1992 141.69 45,600 11.99 1993 99.67 64,495 20.91 1994 98.46 78,390 (0.65) (a) For the period from September 16, 1985 (Inception) to December 31, 1985 (b) Annualized (c) Annual total returns do not include the effect of sales charges
20 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Connecticut Mutual Investment Accounts, Inc.: We have audited the accompanying statement of net assets, including the schedule of investments, of Connecticut Mutual Investment Accounts, Inc. (a Maryland corporation comprised of the Liquid, Government Securities, Income, Total Return and Growth Accounts) as of December 31, 1994, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated in Note 5 of Notes to Financial Statements. These financial statements and financial highlights are the responsibility of the Accounts' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1994, by correspondence with the custodian bank. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Accounts comprising Connecticut Mutual Investment Accounts, Inc. as of December 31, 1994, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated in Note 5 of Notes to Financial Statements, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Hartford, Connecticut February 15, 1995 PERFORMANCE -- TOTAL RETURN* SALES CHARGE ADJUSTED PERFORMANCE As of 6/30/95* -- AFTER EXPENSES
AVERAGE ANNUALIZED 30 DAY CURRENT YIELD ACCOUNTS ONE YEAR FIVE YEAR SINCE INCEPTION AS OF 6/30/95 LIQUID** 4.63% 4.04% 6.50% 5.09% GOVERNMENT SECURITIES 7.18% 7.73% 8.98% 5.46% INCOME 3.74% 6.61% 7.81% 6.21% TOTAL RETURN 9.75% 10.72% 11.78% GROWTH 16.31% 12.89% 14.06%
Sales Charge Adjusted Performance assumes the current initial sales charge reduces portfolio performance and was paid at the beginning of each period shown. The current maximum initial sales charges are 4.00% for the Government Securities and Income Accounts and 5.00% for the Total Return and Growth Accounts. The Liquid Account has no initial sales charge. ACTUAL PORTFOLIO PERFORMANCE As of 6/30/95* -- AFTER EXPENSES
AVERAGE ANNUALIZED 7-DAY CURRENT YIELD ACCOUNTS ONE YEAR FIVE YEAR SINCE INCEPTION AS OF 6/30/95 LIQUID** 4.63% 4.04% 6.50% 5.11% GOVERNMENT SECURITIES 11.65% 8.62% 9.43% INCOME 8.06% 7.48% 8.26% TOTAL RETURN 15.53% 11.86% 12.37% GROWTH 22.43% 14.06% 14.66%
Actual Portfolio Performance assumes the initial sales charge is paid by a client in a prior period and is not reflected on this table. All portfolios became effective September 16, 1985 except for the Liquid Account which was first offered to the public on March 31, 1982. *Total Return figures include reinvestment of all dividends and capital gains. Performance data quoted represents past performance. The investment return and principal values of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. **There can be no assurance that the Liquid Account will be able to maintain a stable net asset value of $1.00 per share. An investment in the Liquid Account is neither insured nor guaranteed by the U.S. Government. SCHEDULE OF INVESTMENTS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. June 30, 1995 (Unaudited) LIQUID ACCOUNT
PRINCIPAL MARKET AMOUNT SECURITY VALUE COMMERCIAL PAPER (96.7% OF NET ASSETS) American Broadcasting Companies, Inc. $ 1,500,000 5.62%, due 10/4/95 $ 1,477,754 American Express Credit Corp. 2,033,000 6.10%, due 7/10/95 2,033,000 784,000 5.75%, due 11/30/95 784,000 600,000 5.70%, due 12/15/95 600,000 American Home Products Corp. 1,035,000 5.97%, due 8/4/95 1,029,164 Banc One Corp. 1,000,000 5.92%, due 8/9/95 993,587 Bank of America 1,000,000 5.87%, due 11/10/95 978,477 2,000,000 5.71%, due 12/4/95 1,950,513 Beneficial Corp. 1,000,000 5.94%, due 8/18/95 992,080 Cargill, Inc. 2,000,000 5.67%, due 10/12/95 1,967,555 Corporate Asset Funding Co., Inc. 1,150,000 6.10%, due 8/24/95 1,139,478 Corporate Receivables Corp. 1,500,000 5.80%, due 8/3/95 1,492,025 1,000,000 5.95%, due 8/23/95 991,240 Dayton Hudson Corp. 500,000 5.97%, due 7/17/95 498,673 2,500,000 5.80%, due 8/1/95 2,487,514 Electronic Data Systems Corp. 1,200,000 5.90%, due 9/18/95 1,184,463 Ford Motor Credit Co. 2,000,000 6.07%, due 7/20/95 2,000,000 1,300,000 5.55%, due 1/12/96 1,260,919 General Electric Capital Corp. 1,160,000 5.97%, due 8/2/95 1,153,844 1,000,000 6.17%, due 10/11/95 982,518 General Electric Co. 925,000 5.87%, due 8/22/95 917,157 Golden Peanut Co. 750,000 5.95%, due 8/7/95 745,414 International Lease Finance Corp. 1,000,000 6.00%, due 7/20/95 996,833 1,000,000 5.72%, due 10/16/95 982,999 Interstate Power Co. 370,000 5.97%, due 7/17/95 369,018 640,000 5.93%, due 7/25/95 637,470 McGraw-Hill Inc. 700,000 6.10%, due 7/28/95 696,798 1,300,000 5.94%, due 8/2/95 1,293,136 PRINCIPAL MARKET AMOUNT SECURITY VALUE Merrill Lynch & Co., Inc. $ 750,000 5.93%, due 8/8/95 $ 745,305 725,000 5.95%, due 8/14/95 719,728 860,000 5.95%, due 8/15/95 853,604 900,000 5.91%, due 8/28/95 891,431 Mitsubishi International Corp. 2,800,000 5.90%, due 8/4/95 2,784,398 Monsanto Co. 1,685,000 5.85%, due 8/29/95 1,668,845 Morgan (J.P.) & Company, Inc. 1,700,000 5.84%, due 9/7/95 1,681,247 National Rural Utilities Cooperative Finance Corp. 425,000 5.93%, due 9/1/95 420,660 1,000,000 5.88%, due 9/6/95 989,057 1,100,000 5.95%, due 9/6/95 1,087,819 700,000 5.90%, due 9/29/95 689,675 Norwest Corp. 1,300,000 6.01%, due 7/24/95 1,295,008 2,000,000 5.73%, due 9/25/95 1,972,623 NYNEX Corp. 2,000,000 5.71%, due 9/5/95 1,979,063 Penney (J.C.) Funding Corp. 1,000,000 5.94%, due 7/20/95 996,865 1,570,000 5.93%, due 7/21/95 1,564,828 PHH Corp. 1,000,000 5.85%, due 7/12/95 998,213 Philip Morris Companies Inc. 1,100,000 5.99%, due 7/31/95 1,094,509 Potomac Electric Power Co. 595,000 5.97%, due 8/7/95 591,349 U.S. Bancorp 900,000 6.04%, due 7/7/95 899,094 U S West Communications, Inc. 1,480,000 6.07%, due 7/5/95 1,479,002 Wal-Mart Stores Inc. 600,000 6.15%, due 7/3/95 599,795 Xerox Corp. 1,200,000 5.90%, due 8/10/95 1,192,133 1,100,000 5.93%, due 8/22/95 1,090,578 850,000 5.94%, due 8/25/95 842,286 ------------ TOTAL COMMERCIAL PAPER (COST $61,762,744) 61,762,744 ------------ U.S. AGENCY SHORT-TERM OBLIGATIONS (3.1% OF NET ASSETS) Student Loan Marketing Assn. 5.69%, due 5/14/96 (Cost 2,000,000 $2,000,000) 2,000,000 ------------ TOTAL INVESTMENTS (COST $63,762,744) $ 63,762,744 ------------ ------------
1 The accompanying notes are an integral part of these financial statements. GOVERNMENT SECURITIES ACCOUNT INCOME ACCOUNT
PRINCIPAL MARKET AMOUNT SECURITY VALUE U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (98.5% OF NET ASSETS) Federal National Mortgage Assn. $ 1,174,238 7.00%, 2019 $ 1,177,537 Government National Mortgage Assn. 81,101 11.50%, 1998 86,601 45,095 9.50%, 2001 47,251 50,138 7.25%, 2005 51,297 324,599 7.50%, 2006 328,527 200,662 8.00%, 2006 206,766 524,312 8.00%, 2007 541,022 180,541 8.25%, 2008 186,777 84,503 9.00%, 2008 89,548 562,233 9.00%, 2009 596,423 10,111 13.50%, 2010 11,425 98,967 13.00%, 2011 111,894 3,439 13.50%, 2011 3,886 64,994 14.00%, 2011 73,890 43,407 15.00%, 2011 50,135 3,718 12.00%, 2012 4,185 108,607 13.50%, 2012 121,962 168,566 15.00%, 2012 194,694 107,161 11.50%, 2013 120,053 45,032 13.00%, 2013 50,914 203,024 13.50%, 2013 229,417 83,119 12.00%, 2014 93,561 284,277 12.50%, 2014 322,475 139,709 13.00%, 2014 157,958 1,414 13.50%, 2014 1,598 534,679 8.50%, 2016 559,878 445,915 6.50%, 2017 453,023 409,588 10.00%, 2019 446,729 101,689 12.50%, 2019 114,175 2,177,473 6.50%, 2023 2,091,724 1,860,980 7.00%, 2023 1,831,316 952,018 7.00%, 2024 936,843 500,000 8.00%, TBA 511,875 U.S. Treasury Bond 9,650,000 9.25%, 2016 12,373,133 U.S. Treasury Notes 800,000 9.25%, 1996 814,248 5,000,000 9.375%, 1996 5,138,300 500,000 8.50%, 1997 522,185 3,500,000 8.875%, 1997 3,728,585 6,750,000 9.25%, 1998 7,381,733 2,500,000 7.50%, 2001 2,683,600 2,250,000 11.75%, 2001 2,856,442 3,000,000 7.25%, 2004 3,205,770 ------------ TOTAL U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (COST $49,799,117) 50,509,355 ------------ REPURCHASE AGREEMENTS* (.6% OF NET ASSETS) State Street Bank & Trust Co. 5.50%, due 7/3/95 (Cost 310,000 $310,000) 310,000 ------------ TOTAL INVESTMENTS (COST $50,109,117) $ 50,819,355 ------------ ------------ PRINCIPAL MARKET AMOUNT SECURITY VALUE CORPORATE BONDS (83.2% OF NET ASSETS) AEROSPACE (1.7%) British Aerospace Finance Inc. $ 500,000 8.00%, 1997 $ 513,750 Coltec Industries Inc. 250,000 9.75%, 2000 258,750 ------------ 772,500 ------------ AIRLINES (1.2%) Southwest Airlines Co. 500,000 9.25%, 1998 532,270 ------------ AUTO & AUTO RELATED (1.9%) Burmah Castrol Capital, Ltd. 500,000 7.00%, 1997 508,525 Ford Motor Co. 372,474 6.27%, 2000 370,097 ------------ 878,622 ------------ BANKING (12.8%) Banco Ganadero SA 400,000 9.75%, 1999 399,500 Bank of Boston Corp. 400,000 10.30%, 2000 402,312 Barnett Banks, Inc. 515,000 8.50%, 1999 543,459 Chemical Banking Corp. 500,000 6.625%, 1998 501,985 Citicorp 500,000 9.46%, 1996 513,500 First Fidelity Bancorporation 500,000 8.50%, 1998 524,650 First Union Corp. 500,000 6.75%, 1998 503,420 First USA Bank of Delaware 500,000 5.05%, 1995 497,375 Home Savings of America 500,000 10.50%, 1997 513,910 Mellon Financial Co. 500,000 6.50%, 1997 502,175 Security Pacific Corp. 500,000 7.75%, 1996 510,345 Shawmut National Corp. 500,000 8.875%, 1996 508,650 ------------ 5,921,281 ------------ BROKER/DEALER (1.3%) Merrill Lynch & Co., Inc. 600,000 8.25%, 1996 619,440 ------------ CHEMICALS (2.2%) FMC Corp. 250,000 8.75%, 1999 266,190
*Repurchase agreements are fully collateralized by U.S. Government obligations. 2 INCOME ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE Lyondell Petrochemical Co. $ 750,000 8.25%, 1997 $ 766,560 ------------ 1,032,750 ------------ COMPUTER BUSINESS EQUIPMENT & SERVICES (.8%) Unisys Corp. 350,000 9.75%, 1996 357,875 ------------ CONGLOMERATES (.9%) Tenneco, Inc. 375,000 10.00%, 1998 409,357 ------------ ELECTRIC UTILITIES (2.8%) Consumers Power Co. 250,000 8.75%, 1998 262,042 Long Island Lighting Co. 500,000 8.75%, 1996 508,750 Midwest Power Systems Inc. 500,000 6.25%, 1998 498,210 ------------ 1,269,002 ------------ ELECTRICAL & ELECTRONIC EQUIPMENT (2.2%) Electrolux 500,000 7.75%, 1997 511,875 Westinghouse Electric Corp. 500,000 7.75%, 1996 503,065 ------------ 1,014,940 ------------ FINANCIAL SERVICES (15.8%) Allied Lyons 500,000 6.50%, 1997 501,563 American General Finance Corp. 500,000 8.50%, 1998 529,015 Aristar, Inc. 500,000 6.25%, 1996 499,990 Associates Corp. of North America 500,000 7.40%, 1999 517,540 Avco Financial Services, Inc. 500,000 5.875%, 1997 495,300 Banque Nationale de Paris 205,000 9.875%, 1998 222,683 Beneficial Corp. 500,000 9.125%, 1998 532,105 Chrysler Financial Corp. 500,000 5.08%, 1997 491,280 Countrywide Funding Corp. 500,000 6.57%, 1997 502,010 Discover Credit Corp. 250,000 8.73%, 1996 256,215 Fleet Mortgage Group, Inc. 500,000 6.125%, 1997 497,035 General Motors Acceptance Corp. 500,000 5.65%, 1997 491,320 PRINCIPAL MARKET AMOUNT SECURITY VALUE Green Tree Financial Corp. $ 250,000 7.70%, 2019 $ 258,905 Household Financial Corporation Ltd. 250,000 6.00%, 1998 246,907 Household International Netherlands B.V. 250,000 6.00%, 1999 245,913 Norwest Financial, Inc. 500,000 6.50%, 1997 502,450 Transamerica Finance Group, Inc. 500,000 7.42%, 1998 512,275 ------------ 7,302,506 ------------ FOOD & BEVERAGES (4.5%) ConAgra, Inc. 500,000 9.75%, 1997 533,695 Grand Metropolitan Investment Corp. 500,000 8.125%, 1996 510,105 Nabisco Brands Inc. 500,000 8.00%, 2000 523,780 Seagram Company Ltd. 500,000 9.75%, 2000 512,335 ------------ 2,079,915 ------------ INSURANCE (.9%) SunAmerica Inc. 370,000 9.00%, 1999 395,223 ------------ LEASING (2.2%) Penske Truck Leasing Co. 500,000 7.75%, 1999 513,675 U.S. Leasing International Inc. 500,000 7.00%, 1997 507,250 ------------ 1,020,925 ------------ LEISURE & ENTERTAINMENT (.5%) Blockbuster Entertainment Corp. 250,000 6.625%, 1998 248,398 ------------ MACHINERY & EQUIPMENT (1.1%) Caterpillar Financial Services Corp. 500,000 6.85%, 1997 505,230 ------------ MANUFACTURING (.6%) First Brands Corp. 265,000 9.125%, 1999 274,164 ------------ MORTGAGE-BACKED SECURITIES (5.8%) American Southwest Financial Corp. 1,624,603 8.25%, 2016 1,627,649 GE Capital Mortgage Services, Inc. 152,509 6.50%, 2024 152,079 Housing Securities, Inc. 227,396 7.25%, 2012 227,112
3 The accompanying notes are an integral part of these financial statements. INCOME ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE Ryland Mortgage Securities Corp. $ 426,648 8.339%, 2030 $ 423,182 Salomon Brothers, Inc. 263,007 0.00%, 2017 187,637 177,728 12.50%, 2017 43,543 ------------ 2,661,202 ------------ OFFICE EQUIPMENT (.6%) Xerox Corp. 270,000 9.20%, 1999 277,104 ------------ OIL & GAS (8.6%) Arkla, Inc. 505,000 9.875%, 1997 525,200 BP America Inc. 500,000 8.875%, 1997 529,570 Bridas Corp. 250,000 12.50%, 1999 225,625 Coastal Corp. 500,000 8.75%, 1999 532,955 El Paso Natural Gas Co. 250,000 6.90%, 1997 252,230 Empresa Columbia de Petroleos 250,000 7.25%, 1998 248,125 Florida Gas Transmission Co. 500,000 7.75%, 1997 513,675 Occidental Petroleum Corp. 500,000 6.43%, 1997 499,055 Phillips Petroleum Co. 474,163 7.53%, 1998 483,461 Transcontinental Gas Pipe Line Corp. 150,000 9.00%, 1996 155,065 ------------ 3,964,961 ------------ PAPER & FOREST PRODUCTS (1.9%) Celulosa Arauco y Constitucion SA 350,000 7.25%, 1998 350,875 Georgia-Pacific Corp. 500,000 9.85%, 1997 529,880 ------------ 880,755 ------------ PRINTING & PUBLISHING (2.2%) Reed Publishing USA Inc. 500,000 7.20%, 1997 508,375 Time Warner Inc. 500,000 7.45%, 1998 504,035 ------------ 1,012,410 ------------ RETAIL TRADE (2.7%) Kmart Corp. 500,000 8.61%, 1997 516,370 Sears, Roebuck & Co. 200,000 9.44%, 1996 204,900 500,000 8.39%, 1999 530,580 ------------ 1,251,850 ------------ PRINCIPAL MARKET AMOUNT SECURITY VALUE SAVINGS & LOAN (1.1%) Golden West Financial Corp. $ 500,000 8.625%, 1998 $ 528,925 ------------ TELECOMMUNICATIONS (1.3%) Tele-Communications, Inc. 615,000 5.28%, 1996 607,522 ------------ TELEPHONE UTILITIES (2.3%) GTE Corp. 500,000 8.85%, 1998 527,595 MCI Communications Corp. 500,000 7.625%, 1996 508,645 ------------ 1,036,240 ------------ TOBACCO (2.2%) B.A.T Capital Corp. 500,000 6.66%, 2000 488,900 Philip Morris Companies Inc. 500,000 8.75%, 1996 516,130 ------------ 1,005,030 ------------ TRANSPORTATION (1.1%) Federal Express Corp. 500,000 9.75%, 1996 513,670 ------------ TOTAL CORPORATE BONDS (COST $39,041,898) 38,374,067 ------------ U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (10.7% OF NET ASSETS) Federal Home Loan Mortgage Corp. 169,307 5.50%, 1997 166,820 505,197 5.50%, 1998 497,777 Federal National Mortgage Assn. 872,111 7.50%, 2008 886,553 873,484 7.00%, 2009 875,667 816,947 8.00%, 2009 840,173 250,000 6.00%, 2019 242,968 Government National Mortgage Assn. 397,717 7.00%, 2009 399,578 46,223 13.00%, 2014 52,261 U.S. Treasury Note 1,000,000 5.25%, 1998 981,090 ------------ TOTAL U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (COST $4,889,313) 4,942,887 ------------ COMMERCIAL PAPER (4.3% OF NET ASSETS) Wal-Mart Stores Inc. 6.15%, due 7/3/95 (COST $1,984,322) 1,984,322 1,985,000 ------------ TOTAL INVESTMENTS (COST $45,915,533) $ 45,301,276 ------------ ------------
4 TOTAL RETURN ACCOUNT
NUMBER OF MARKET SHARES SECURITY VALUE COMMON STOCKS (38.7% OF NET ASSETS) AEROSPACE (4.4%) 22,600 General Dynamics Corp. $ 1,002,875 28,100 General Motors Corp. Class H 1,109,950 35,371 Lockheed Martin Corp. 2,232,794 37,600 Loral Corp. 1,945,800 19,000 McDonnell Douglas Corp. 1,458,250 26,900 Rockwell International Corp. 1,230,675 ------------ 8,980,344 ------------ AIRLINES (1.8%) 16,100 AMR Corp. 1,201,462 22,300 Delta Air Lines, Inc. 1,644,625 25,100 Northwest Airlines Corp. 887,912 ------------ 3,733,999 ------------ BANKING (2.1%) 18,600 Bank of New York Co., Inc. 750,975 26,500 Chase Manhattan Corp. 1,245,500 21,300 Morgan (J.P.) & Company, Inc. 1,493,663 4,600 Wells Fargo & Co. 829,150 ------------ 4,319,288 ------------ BUILDING MATERIALS & CONSTRUCTION (.1%) 11,500 USG Corp. 273,125 ------------ CHEMICALS (2.0%) 13,000 FMC Corp. 874,250 28,800 Grace (W.R.) & Co. 1,767,600 15,700 Monsanto Co. 1,414,963 ------------ 4,056,813 ------------ CONGLOMERATES (1.0%) 21,000 AlliedSignal Inc. 934,500 17,600 Textron, Inc. 1,023,000 ------------ 1,957,500 ------------ DRUGS & COSMETICS (.4%) 9,500 American Home Products Corp. 735,062 ------------ ELECTRIC UTILITIES (1.8%) 37,300 FPL Group, Inc. 1,440,712 45,600 Illinova Corp. 1,157,100 41,000 Unicom Corp. 1,091,625 ------------ 3,689,437 ------------ ELECTRICAL & ELECTRONIC EQUIPMENT (.5%) 18,500 Micron Technology Inc. 1,015,188 ------------ FOOD & BEVERAGES (.9%) 60,422 Archer Daniels Midland Co. 1,125,360 30,200 Ralcorp Holdings, Inc. 690,825 ------------ 1,816,185 ------------ NUMBER OF MARKET SHARES SECURITY VALUE HEALTH SERVICES & HOSPITAL SUPPLIES (1.5%) 49,100 Baxter International Inc. $ 1,786,013 28,700 Columbia Healthcare Corp. 1,241,275 ------------ 3,027,288 ------------ INSURANCE (3.4%) 26,500 Aetna Life & Casualty Co. 1,666,187 35,100 American General Corp. 1,184,625 18,500 Lincoln National Corp. 809,375 15,300 St. Paul Companies Inc. 753,525 36,100 TIG Holdings, Inc. 830,300 39,200 Travelers Group 1,715,000 ------------ 6,959,012 ------------ LEISURE RELATED (.8%) 19,300 Grand Casinos, Inc. 682,738 37,675 Mattel, Inc. 979,550 ------------ 1,662,288 ------------ MACHINERY & EQUIPMENT (1.3%) 15,700 Caterpillar Inc. 1,008,725 33,390 Mark IV Industries, Inc. 717,885 25,650 Parker-Hannifin Corp. 929,812 ------------ 2,656,422 ------------ MANUFACTURING (.8%) 25,300 Black & Decker Corp. 781,138 18,000 Philips Electronics NV 769,500 ------------ 1,550,638 ------------ METALS & MINING (1.1%) 19,800 IMC Global Inc. 1,071,675 Potash Corporation of Saskatchewan 19,800 Inc. 1,106,325 ------------ 2,178,000 ------------ MISCELLANEOUS (1.5%) 57,300 Dial Corp. 1,418,175 30,500 Premark International, Inc. 1,582,188 ------------ 3,000,363 ------------ OFFICE EQUIPMENT (.6%) 11,200 Xerox Corp. 1,313,200 ------------ OIL & GAS (3.4%) 18,300 Amoco Corp. 1,219,238 26,400 Chevron Corp. 1,230,900 14,800 Mobil Corp. 1,420,800 71,200 Panhandle Eastern Corp. 1,735,500 10,400 Royal Dutch Petroleum Co. 1,267,500 ------------ 6,873,938 ------------ PAPER & FOREST PRODUCTS (1.8%) 9,500 Georgia-Pacific Corp. 824,125 31,200 Scott Paper Co. 1,544,400
5 The accompanying notes are an integral part of these financial statements. TOTAL RETURN ACCOUNT (cont'd)
NUMBER OF MARKET SHARES SECURITY VALUE 22,000 Willamette Industries, Inc. $ 1,221,000 ------------ 3,589,525 ------------ RETAIL TRADE (2.5%) 45,900 American Stores Co. 1,290,937 18,900 Eckerd Corp. 604,800 49,700 Kroger Co. 1,335,688 30,400 Sears, Roebuck & Co. 1,820,200 ------------ 5,051,625 ------------ TECHNOLOGY (2.0%) 9,800 Applied Materials Inc. 848,925 17,100 Compaq Computer Corp. 775,912 Computer Associates International, 13,200 Inc. 894,300 International Business Machines 15,900 Corp. 1,526,400 ------------ 4,045,537 ------------ TELEPHONE UTILITIES (1.7%) 31,400 Ameritech Corp. 1,381,600 31,000 GTE Corp. 1,057,875 27,200 NYNEX Corp. 1,094,800 ------------ 3,534,275 ------------ TOBACCO (1.3%) 28,800 American Brands, Inc. 1,144,800 18,700 Philip Morris Companies Inc. 1,390,812 ------------ 2,535,612 ------------ TOTAL COMMON STOCKS (COST $64,331,079) 78,554,664 ------------ PRINCIPAL CORPORATE BONDS AMOUNT (20.8% OF NET ASSETS) AEROSPACE (.4%) British Aerospace Finance Inc. $ 500,000 8.00%, 1997 513,750 Coltec Industries, Inc. 250,000 9.75%, 2000 258,750 ------------ 772,500 ------------ AUTO & AUTO RELATED (.2%) Burmah Castrol Capital, Ltd. 500,000 7.00%, 1997 508,525 ------------ BANKING (2.5%) Bank of Boston Corp. 500,000 10.30%, 2000 502,890 BankAmerica Corp. 500,000 6.00%, 1997 496,525 Chemical Banking Corp. 250,000 10.125%, 2000 285,820 First Fidelity Bancorporation 500,000 8.50%, 1998 524,650 PRINCIPAL MARKET AMOUNT SECURITY VALUE First USA Bank of Delaware $ 500,000 5.05%, 1995 $ 497,375 750,000 5.35%, 1996 713,550 Fleet Financial Group, Inc. 250,000 9.90%, 2001 285,345 Marshall & Ilsley Corp. 500,000 6.95%, 1997 506,970 Mellon Financial Co. 400,000 6.50%, 1997 401,740 Shawmut National Corp. 750,000 8.875%, 1996 762,975 ------------ 4,977,840 ------------ CHEMICALS (1.3%) FMC Corp. 500,000 8.75%, 1999 532,380 Lyondell Petrochemical Co. 1,100,000 8.25%, 1997 1,124,288 Morton International, Inc. 500,000 9.25%, 2020 613,510 PPG Industries, Inc. 250,000 9.00%, 2021 296,102 ------------ 2,566,280 ------------ COMPUTER BUSINESS EQUIPMENT & SERVICES (.4%) Unisys Corp. 750,000 9.75%, 1996 766,875 ------------ CONGLOMERATES (.5%) Tenneco Credit Corp. 500,000 9.25%, 1996 517,255 Tenneco, Inc. 375,000 10.00%, 1998 409,358 ------------ 926,613 ------------ DRUGS & COSMETICS (.5%) Procter & Gamble Co. 250,000 9.36%, 2021 304,637 Roche Holdings Inc. 950,000 2.75%, 2000 808,688 ------------ 1,113,325 ------------ ELECTRIC UTILITIES (.7%) Hydro-Quebec 500,000 9.375%, 2030 595,605 Long Island Lighting Co. 500,000 8.75%, 1996 508,750 Public Service Co. of New Hampshire 250,000 8.875%, 1996 254,353 ------------ 1,358,708 ------------
6 TOTAL RETURN ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE ELECTRICAL & ELECTRONIC EQUIPMENT (.5%) Electrolux $ 500,000 7.75%, 1997 $ 511,875 Westinghouse Electric Corp. 500,000 7.75%, 1996 503,065 ------------ 1,014,940 ------------ FINANCIAL SERVICES (5.3%) American General Finance Corp. 500,000 7.70%, 1997 514,585 500,000 8.50%, 1998 529,015 Aristar, Inc. 500,000 6.25%, 1996 499,990 250,000 8.125%, 1997 259,777 Associates Corp. of North America 500,000 6.75%, 1999 503,895 Avco Financial Services, Inc. 500,000 5.875%, 1997 495,300 Countrywide Funding Corp. 250,000 6.57%, 1997 251,005 500,000 6.085%, 1999 491,290 Discover Credit Corp. 500,000 8.73%, 1996 512,430 Fleet Mortgage Corp. 1,000,000 6.125%, 1997 994,070 250,000 6.50%, 1999 248,640 Ford Motor Credit Co. 500,000 8.00%, 1997 518,145 500,000 6.25%, 1998 498,710 General Motors Acceptance Corp. 1,000,000 5.65%, 1997 982,640 750,000 7.75%, 1997 766,320 Green Tree Financial Corp. 500,000 8.00%, 2020 521,560 Household Financial Corporation Ltd. 250,000 6.00%, 1998 246,908 Household International Netherlands B.V. 500,000 6.00%, 1999 491,825 ITT Financial Corp. 250,000 8.75%, 2006 268,993 Norwest Financial, Inc. 500,000 6.50%, 1997 502,450 Transamerica Finance Corp. 500,000 6.75%, 1997 503,965 250,000 6.80%, 1999 252,465 ------------ 10,853,978 ------------ FOOD & BEVERAGES (1.1%) Bass America Inc. 250,000 6.75%, 1999 252,217 PRINCIPAL MARKET AMOUNT SECURITY VALUE ConAgra, Inc. $ 500,000 9.75%, 1997 $ 533,695 Nabisco Brands Inc. 500,000 8.00%, 2000 523,780 Seagram Company Ltd. 950,000 9.75%, 2000 973,436 ------------ 2,283,128 ------------ INSURANCE (.2%) SunAmerica Inc. 450,000 9.00%, 1999 480,677 ------------ LEASING (.8%) Penske Truck Leasing Co. 750,000 7.75%, 1999 770,513 PHH Corp. 350,000 6.50%, 2000 348,709 U.S. Leasing International Inc. 500,000 7.00%, 1997 507,250 ------------ 1,626,472 ------------ LEISURE & ENTERTAINMENT (.2%) Blockbuster Entertainment Corp. 500,000 6.625%, 1998 496,795 ------------ MANUFACTURING (.2%) Black & Decker Corp. 400,000 6.625%, 2000 394,040 ------------ MORTGAGE-BACKED SECURITIES (.3%) Fleet Mortgage Securities, Inc. 153,076 8.25%, 2023 153,075 Housing Securities, Inc. 363,833 7.25%, 2012 363,379 ------------ 516,454 ------------ OIL & GAS (2.5%) Arkla, Inc. 750,000 9.875%, 1997 780,000 BP America, Inc. 500,000 8.875%, 1997 529,570 Bridas Corp. 270,000 12.50%, 1999 243,675 Coastal Corp. 500,000 8.125%, 2002 526,220 Norsk Hydro 500,000 8.75%, 2001 549,062 Petroliam Nasional Berhad 500,000 6.875%, 2003 499,920 Phillips Petroleum Co. 948,326 7.53%, 1998 966,922 TransCanada Pipelines Ltd. 500,000 9.875%, 2021 628,375 Transco Energy Co. 250,000 9.625%, 2000 280,565 ------------ 5,004,309 ------------
7 The accompanying notes are an integral part of these financial statements. TOTAL RETURN ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE PAPER & FOREST PRODUCTS (.6%) Celulosa Arauco y Constitucion SA $ 500,000 7.25%, 1998 $ 501,250 Georgia-Pacific Corp. 750,000 9.85%, 1997 794,820 ------------ 1,296,070 ------------ PRINTING & PUBLISHING (.5%) Reed Elsevier, Inc. 400,000 6.625%, 2023 360,388 Time Warner Inc. 700,000 7.45%, 1998 705,649 ------------ 1,066,037 ------------ RETAIL TRADE (.2%) Sears, Roebuck & Co. 300,000 8.39%, 1999 318,348 ------------ SAVINGS & LOAN (.3%) Golden West Financial Corp. 500,000 10.25%, 1997 531,970 ------------ TELECOMMUNICATIONS (.2%) Tele-Communications, Inc. 400,000 7.15%, 1998 404,412 ------------ TELEPHONE UTILITIES (.6%) GTE Corp. 750,000 8.85%, 1998 791,393 MCI Communications Corp. 500,000 7.125%, 2000 512,780 ------------ 1,304,173 ------------ TOBACCO (.3%) Philip Morris Companies Inc. 500,000 8.75%, 1996 516,130 ------------ TRANSPORTATION (.5%) Federal Express Corp. 750,000 9.75%, 1996 770,505 250,000 6.25%, 1998 248,115 ------------ 1,018,620 ------------ TOTAL CORPORATE BONDS (COST $41,824,531) 42,117,219 ------------ U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (14.3% OF NET ASSETS) Federal Home Loan Mortgage Corp. 1,000,000 6.00%, 2007 927,180 Federal National Mortgage Assn. 1,288,885 7.50%, 2008 1,310,229 800,000 6.00%, 2019 777,496 630,973 7.00%, 2022 547,369 Government National Mortgage Assn. 680,968 7.00%, 2009 684,155 979,208 7.50%, 2009 997,871 606,893 8.00%, 2017 625,203 PRINCIPAL MARKET AMOUNT SECURITY VALUE $ 209,596 9.00%, 2018 $ 221,496 294,868 9.00%, 2019 310,726 306,072 9.00%, 2021 323,451 258,677 9.00%, 2022 272,588 2,566,997 6.50%, 2023 2,465,909 285,601 8.50%, 2023 296,488 3,705,272 6.50%, 2024 3,559,358 4,599,878 7.00%, 2024 4,526,556 U.S. Treasury Bonds 650,000 7.50%, 2016 707,688 8,250,000 8.75%, 2017 10,144,943 U.S. Treasury Note 300,000 5.75%, 2003 290,859 ------------ TOTAL U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (COST $27,188,364) 28,989,565 ------------ FOREIGN GOVERNMENT BONDS (.7% OF NET ASSETS) Fomento Economico Mexicano 450,000 9.50%, 1997 429,750 Republic of Columbia 300,000 7.125%, 1998 294,750 400,000 8.75%, 1999 414,000 United Mexican States 250,000 6.97%, 2000 180,000 ------------ TOTAL FOREIGN GOVERNMENT BONDS (COST $1,387,071) 1,318,500 ------------ COMMERCIAL PAPER (25.2% OF NET ASSETS) Armstrong World Industries Inc. 4,100,000 5.97%, due 7/18/95 4,088,441 Beneficial Corp. 1,700,000 5.95%, due 7/17/95 1,695,505 Cargill, Inc. 3,630,000 5.92%, due 7/7/95 3,626,418 Corporate Receivables Corp. 2,000,000 6.00%, due 7/19/95 1,994,000 Dayton Hudson Corp. 2,000,000 6.00%, due 7/21/95 1,993,333 Ford Motor Credit Co. 5,065,000 5.97%, due 7/12/95 5,065,000 1,914,000 5.96%, due 7/17/95 1,914,000 GTE Florida, Inc. 4,000,000 6.00%, due 7/20/95 3,987,333 Hewlett Packard Finance Co. 3,000,000 5.95%, due 7/11/95 2,995,042 Merrill Lynch & Co., Inc. 2,880,000 5.98%, due 7/6/95 2,877,608 4,025,000 5.97%, due 7/13/95 4,016,990 PACCAR Financial Corp. 2,380,000 5.95%, due 7/5/95 2,378,427 3,000,000 5.97%, due 7/14/95 2,993,533
8 TOTAL RETURN ACCOUNT (cont'd)
PRINCIPAL MARKET AMOUNT SECURITY VALUE PHH Corp. $ 1,605,000 5.97%, due 7/6/95 $ 1,603,669 Public Service Electric and Gas Co. 3,050,000 5.97%, due 7/10/95 3,045,448 U.S. Central Credit Union 2,885,000 5.98%, due 7/5/95 2,883,083 Xerox Corp. 3,895,000 5.96%, due 7/13/95 3,887,262 ------------ TOTAL COMMERCIAL PAPER (COST $51,045,092) 51,045,092 ------------ TOTAL INVESTMENTS (COST $185,776,137) $202,025,040 ------------ ------------
GROWTH ACCOUNT
NUMBER OF MARKET SHARES SECURITY VALUE COMMON STOCKS (90.8% OF NET ASSETS) AEROSPACE (10.8%) 25,400 General Dynamics Corp. $ 1,127,125 36,000 General Motors Corp. Class H 1,422,000 35,371 Lockheed Martin Corp. 2,232,794 41,700 Loral Corp. 2,157,975 24,500 McDonnell Douglas Corp. 1,880,375 38,400 Rockwell International Corp. 1,756,800 ------------ 10,577,069 ------------ AIRLINES (4.3%) 20,400 AMR Corp. 1,522,350 22,500 Delta Air Lines, Inc. 1,659,375 30,000 Northwest Airlines Corp. 1,061,250 ------------ 4,242,975 ------------ BANKING (5.0%) 18,600 Bank of New York Co., Inc. 750,975 23,800 Chase Manhattan Corp. 1,118,600 27,100 Morgan (J.P.) & Company, Inc. 1,900,388 6,300 Wells Fargo & Co. 1,135,575 ------------ 4,905,538 ------------ BUILDING MATERIALS & CONSTRUCTION (.4%) 14,800 USG Corp. 351,500 ------------ CHEMICALS (4.5%) 14,600 FMC Corp. 981,850 28,700 Grace (W.R.) & Co. 1,761,462 18,800 Monsanto Co. 1,694,350 ------------ 4,437,662 ------------ CONGLOMERATES (2.6%) 24,700 AlliedSignal Inc. 1,099,150 NUMBER OF MARKET SHARES SECURITY VALUE 24,000 Textron, Inc. $ 1,395,000 ------------ 2,494,150 ------------ DRUGS & COSMETICS (.8%) 9,900 American Home Products Corp. 766,013 ------------ ELECTRIC UTILITIES (4.1%) 35,600 FPL Group, Inc. 1,375,050 49,400 Illinova Corp. 1,253,525 52,300 Unicom Corp. 1,392,487 ------------ 4,021,062 ------------ ELECTRICAL & ELECTRONIC EQUIPMENT (1.2%) 21,000 Micron Technology Inc. 1,152,375 ------------ FOOD & BEVERAGES (2.1%) 71,115 Archer Daniels Midland Co. 1,324,517 30,100 Ralcorp Holdings, Inc. 688,538 ------------ 2,013,055 ------------ HEALTH SERVICES & HOSPITAL SUPPLIES (3.3%) 50,700 Baxter International Inc. 1,844,212 32,700 Columbia Healthcare Corp. 1,414,275 ------------ 3,258,487 ------------ INSURANCE (8.1%) 24,000 Aetna Life & Casualty Co. 1,509,000 51,300 American General Corp. 1,731,375 22,200 Lincoln National Corp. 971,250 22,700 St. Paul Companies Inc. 1,117,975 36,400 TIG Holdings, Inc. 837,200 39,500 Travelers Group 1,728,125 ------------ 7,894,925 ------------ LEISURE RELATED (1.8%) 23,300 Grand Casinos, Inc. 824,238 35,968 Mattel, Inc. 935,168 ------------ 1,759,406 ------------ MACHINERY & EQUIPMENT (3.2%) 17,400 Caterpillar Inc. 1,117,950 38,955 Mark IV Industries, Inc. 837,533 31,100 Parker-Hannifin Corp. 1,127,375 ------------ 3,082,858 ------------ MANUFACTURING (2.0%) 30,000 Black & Decker Corp. 926,250 23,300 Philips Electronics NV 996,075 ------------ 1,922,325 ------------ METALS & MINING (2.7%) 24,400 IMC Global Inc. 1,320,650 Potash Corporation of Saskatchewan 24,100 Inc. 1,346,588 ------------ 2,667,238 ------------
9 The accompanying notes are an integral part of these financial statements. GROWTH ACCOUNT (cont'd)
NUMBER OF MARKET SHARES SECURITY VALUE MISCELLANEOUS (3.1%) 64,900 Dial Corp. $ 1,606,275 27,600 Premark International, Inc. 1,431,750 ------------ 3,038,025 ------------ OFFICE EQUIPMENT (1.5%) 12,700 Xerox Corp. 1,489,075 ------------ OIL & GAS (7.9%) 22,400 Amoco Corp. 1,492,400 32,200 Chevron Corp. 1,501,325 16,700 Mobil Corp. 1,603,200 73,100 Panhandle Eastern Corp. 1,781,812 10,600 Royal Dutch Petroleum Co. 1,291,875 ------------ 7,670,612 ------------ PAPER & FOREST PRODUCTS (3.8%) 10,800 Georgia-Pacific Corp. 936,900 28,200 Scott Paper Co. 1,395,900 24,600 Willamette Industries, Inc. 1,365,300 ------------ 3,698,100 ------------ RETAIL TRADE (6.1%) 55,700 American Stores Co. 1,566,562 21,600 Eckerd Corp. 691,200 52,300 Kroger Co. 1,405,563 38,000 Sears, Roebuck & Co. 2,275,250 ------------ 5,938,575 ------------ TECHNOLOGY (4.8%) 11,700 Applied Materials Inc. 1,013,512 22,100 Compaq Computer Corp. 1,002,787 Computer Associates International, 12,100 Inc. 819,775 NUMBER OF MARKET SHARES SECURITY VALUE International Business Machines 19,700 Corp. $ 1,891,200 ------------ 4,727,274 ------------ TELEPHONE UTILITIES (4.1%) 33,000 Ameritech Corp. 1,452,000 36,900 GTE Corp. 1,259,213 32,700 NYNEX Corp. 1,316,175 ------------ 4,027,388 ------------ TOBACCO (2.6%) 28,500 American Brands, Inc. 1,132,875 18,800 Philip Morris Companies Inc. 1,398,250 ------------ 2,531,125 ------------ TOTAL COMMON STOCKS (COST $71,945,181) 88,666,812 ------------ PRINCIPAL COMMERCIAL PAPER AMOUNT (9.6% OF NET ASSETS) Armstrong World Industries Inc. $ 2,420,000 6.03%, due 7/11/95 2,415,946 CSW Credit, Inc. 2,200,000 6.00%, due 7/6/95 2,198,167 International Lease Finance Corp. 1,220,000 6.00%, due 7/5/95 1,219,187 Merrill Lynch & Co., Inc. 2,000,000 6.00%, due 7/7/95 1,998,000 U S West Communications, Inc. 1,540,000 5.97%, due 7/10/95 1,537,701 ------------ TOTAL COMMERCIAL PAPER (COST $9,369,001) 9,369,001 ------------ TOTAL INVESTMENTS (COST $81,314,182) $ 98,035,813 ------------ ------------
NOTES TO SCHEDULE OF INVESTMENTS June 30, 1995 (Unaudited) A C C O U N T S 1. Aggregate gross unrealized appreciation (depreciation) as of June 30, 1995, based on cost for Federal income tax purposes, was as GOVERNMENT TOTAL follows: LIQUID SECURITIES INCOME RETURN GROWTH Aggregate gross unrealized appreciation $ -- $ 1,077,858 $ 316,314 $ 16,947,234 $16,779,774 Aggregate gross unrealized depreciation -- (367,620) (930,571) (698,331) (58,143) ------------ ------------ ------------ ------------- ------------ Net unrealized appreciation (depreciation) $ -- $ 710,238 $ (614,257) $ 16,248,903 $16,721,631 ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------- ------------ 2. The aggregate cost of investments for Federal income tax purposes was: $63,762,744 $50,109,117 $45,915,533 $185,776,137 $81,314,182 ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------- ------------ 3. Purchases and sales of securities (excluding short-term securities) for the six months ended June 30, 1995 are summarized as follows: Purchases $ -- $15,982,930 $ 8,377,048 $ 42,898,643 $35,140,419 Sales $ -- $27,933,247 $10,605,131 $ 74,114,376 $29,874,172
10 STATEMENT OF NET ASSETS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. June 30, 1995 (Unaudited)
A C C O U N T S GOVERNMENT TOTAL LIQUID SECURITIES INCOME RETURN GROWTH ASSETS Investments: Bonds, at market value (Cost $49,799,117, $43,931,211, $70,399,966) $ -- $50,509,355 $43,316,954 $ 72,425,284 $ -- Common stocks, at market value (Cost $64,331,079, $71,945,181) -- -- -- 78,554,664 88,666,812 Short-term securities 63,762,744 310,000 1,984,322 51,045,092 9,369,001 ------------ ------------ ------------ ------------- ------------ 63,762,744 50,819,355 45,301,276 202,025,040 98,035,813 Cash 2,853 1,393 9,863 8,746 5,339 Investment income receivable 80,093 1,033,935 794,292 1,224,367 214,040 Receivable from securities sold -- -- -- 588,984 636,602 Receivable from Fund shares sold 117,807 28,911 48,828 59,956 50,401 ------------ ------------ ------------ ------------- ------------ Total Assets 63,963,497 51,883,594 46,154,259 203,907,093 98,942,195 ------------ ------------ ------------ ------------- ------------ LIABILITIES Accrued expenses payable 91,408 113,406 45,371 334,009 167,379 Payable for securities purchased -- 511,720 -- 855,457 1,083,336 Dividends payable 8,306 -- -- -- -- Total Liabilities 99,714 625,126 45,371 1,189,466 1,250,715 ------------ ------------ ------------ ------------- ------------ NET ASSETS $63,863,783 $51,258,468 $46,108,888 $202,717,627 $97,691,480 ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------- ------------ OUTSTANDING SHARES 63,863,783 4,907,718 4,882,627 13,611,392 5,874,382 ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------- ------------ NET ASSET VALUE PER SHARE $1.00 $10.44 $9.44 $14.89 $16.63 ----- ------ ----- ------ ------ ----- ------ ----- ------ ------ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $63,863,783 $53,921,691 $48,871,786 $183,199,804 $78,476,370 Undistributed net investment income -- 72,169 36,057 128,739 67,221 Accumulated undistributed net realized gain (loss) -- (3,445,630) (2,184,698) 3,140,181 2,426,258 Net unrealized appreciation (depreciation) -- 710,238 (614,257) 16,248,903 16,721,631 ------------ ------------ ------------ ------------- ------------ NET ASSETS $63,863,783 $51,258,468 $46,108,888 $202,717,627 $97,691,480 ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------- ------------
11 The accompanying notes are an integral part of these financial statements. STATEMENT OF OPERATIONS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. For the six months ended June 30, 1995 (Unaudited)
A C C O U N T S GOVERNMENT TOTAL LIQUID SECURITIES INCOME RETURN GROWTH INVESTMENT INCOME Income: Interest $2,021,301 $2,382,456 $1,807,409 $ 4,146,518 $ 276,503 Dividends -- -- -- 945,743 1,016,400 ----------- ----------- ----------- ------------ ------------ Total Income 2,021,301 2,382,456 1,807,409 5,092,261 1,292,903 ----------- ----------- ----------- ------------ ------------ Expenses: Investment advisory fees 165,853 183,692 145,711 586,971 271,369 Transfer agent fees 99,800 45,100 30,200 189,400 91,700 Distribution fees -- -- -- 83,049 39,540 Registration fees 16,750 15,250 14,250 21,750 18,250 Custodian fees 14,000 12,475 13,500 22,450 17,900 Shareholder reports 5,000 5,500 4,000 20,000 10,000 Professional services 7,700 6,050 5,500 24,200 11,550 Directors' fees 2,100 1,900 1,710 5,220 2,820 Other 116 5,158 -- 18,954 13,291 Expense reimbursement from investment adviser -- -- (69,160) -- -- ----------- ----------- ----------- ------------ ------------ Total Expenses 311,319 275,125 145,711 971,994 476,420 ----------- ----------- ----------- ------------ ------------ NET INVESTMENT INCOME 1,709,982 2,107,331 1,661,698 4,120,267 816,483 ----------- ----------- ----------- ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 2 (592,478) (486,025) 2,607,488 1,898,129 Net unrealized appreciation on investments -- 4,666,776 2,054,379 16,532,094 11,899,886 ----------- ----------- ----------- ------------ ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 2 4,074,298 1,568,354 19,139,582 13,798,015 ----------- ----------- ----------- ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,709,984 $6,181,629 $3,230,052 $23,259,849 $14,614,498 ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ------------ ------------
The accompanying notes are an integral part of these financial statements. 12 STATEMENT OF CHANGES IN NET ASSETS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. For the six months ended June 30, 1995 (Unaudited) and the year ended December 31, 1994
A C C O U N T S LIQUID GOVERNMENT SECURITIES 1995 1994 1995 1994 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income $ 1,709,982 $ 2,575,968 $ 2,107,331 $ 4,942,102 Net realized gain (loss) on investments 2 (987) (592,478) (2,822,974) Net unrealized appreciation (depreciation) -- -- 4,666,776 (5,366,869) ------------- -------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations 1,709,984 2,574,981 6,181,629 (3,247,741) ------------- -------------- ------------- ------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (1,709,984) (2,574,981) (2,067,140) (4,939,034) Net realized gain from investment transactions -- -- -- (56,279) ------------- -------------- ------------- ------------- (1,709,984) (2,574,981) (2,067,140) (4,995,313) ------------- -------------- ------------- ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 87,303,939 177,469,640 1,630,430 7,468,147 Net asset value of shares issued to shareholders from reinvestment of dividends 1,674,793 2,548,202 1,834,042 4,527,905 Cost of shares reacquired (89,060,819) (192,692,366) (16,482,832) (21,186,898) ------------- -------------- ------------- ------------- Increase (decrease) in net assets derived from capital share transactions (82,087) (12,674,524) (13,018,360) (9,190,846) ------------- -------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS (82,087) (12,674,524) (8,903,871) (17,433,900) NET ASSETS -- BEGINNING OF PERIOD 63,945,870 76,620,394 60,162,339 77,596,239 ------------- -------------- ------------- ------------- NET ASSETS -- END OF PERIOD $ 63,863,783 $ 63,945,870 $ 51,258,468 $ 60,162,339 ------------- -------------- ------------- ------------- ------------- -------------- ------------- ------------- Undistributed net investment income included in net assets at end of period -- -- $72,169 $31,978 ------------- ------------- ------------- ------------- Undistributed net realized gain (loss) on investments included in net assets at end of period -- -- $(3,445,628) $(2,853,150) ------------- ------------- ------------- -------------
13
A C C O U N T S INCOME TOTAL RETURN GROWTH 1995 1994 1995 1994 1995 1994 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income $ 1,661,698 $ 3,484,675 $ 4,120,267 $ 7,127,925 $ 816,483 $ 1,077,298 Net realized gain (loss) on investments (486,025) (660,384) 2,607,488 2,872,138 1,898,129 3,074,097 Net unrealized appreciation (depreciation) 2,054,379 (3,054,974) 16,532,094 (14,089,642) 11,899,886 (4,619,868) ------------ ------------- ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 3,230,052 (230,683) 23,259,849 (4,089,579) 14,614,498 (468,473) ------------ ------------- ------------- ------------- ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (1,643,000) (3,473,505) (4,036,099) (7,098,435) (750,655) (1,076,035) Net realized gain from investment transactions -- -- -- (3,186,699) -- (3,254,775) ------------ ------------- ------------- ------------- ------------ ------------ (1,643,000) (3,473,505) (4,036,099) (10,285,134) (750,655) (4,330,810) ------------ ------------- ------------- ------------- ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 3,779,052 11,501,443 14,787,890 52,357,416 9,109,416 20,893,600 Net asset value of shares issued to shareholders from reinvestment of dividends 1,405,785 3,019,579 3,941,409 10,101,758 737,664 4,286,409 Cost of shares reacquired (7,209,965) (12,906,272) (13,139,429) (41,385,584) (4,409,281) (6,485,813) ------------ ------------- ------------- ------------- ------------ ------------ Increase (decrease) in net assets derived from capital share transactions (2,025,128) 1,614,750 5,589,870 21,073,590 5,437,799 18,694,196 ------------ ------------- ------------- ------------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (438,076) (2,089,438) 24,813,620 6,698,877 19,301,642 13,894,913 NET ASSETS -- BEGINNING OF PERIOD 46,546,964 48,636,402 177,904,007 171,205,130 78,389,838 64,494,925 ------------ ------------- ------------- ------------- ------------ ------------ NET ASSETS -- END OF PERIOD $46,108,888 $ 46,546,964 $202,717,627 $177,904,007 $97,691,480 $78,389,838 ------------ ------------- ------------- ------------- ------------ ------------ ------------ ------------- ------------- ------------- ------------ ------------ Undistributed net investment income included in net assets at end of period $ 36,057 $ 17,359 $ 128,739 $ 44,571 $ 67,221 $ 1,393 ------------ ------------- ------------- ------------- ------------ ------ ------------ ------------- ------------- ------------- ------------ ------ Undistributed net realized gain (loss) on investments included in net assets at end of period $(2,184,698) $ (1,698,673) $ 3,140,182 $ 532,694 $ 2,426,260 $ 528,131 ------------ ------------- ------------- ------------- ------------ ------------ ------------ ------------- ------------- ------------- ------------ ------------
The accompanying notes are an integral part of these financial statements. 14 FINANCIAL HIGHLIGHTS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. June 30, 1995 (Unaudited) Selected data for a share of capital stock outstanding throughout the period:
NET REALIZED DISTRIBUTIONS DIVIDENDS & UNREALIZED FROM NET NET ASSET YEARS NET FROM NET GAIN (LOSS) REALIZED VALUE AT ENDED INVESTMENT INVESTMENT ON GAIN ON BEGINNING DECEMBER 31 INCOME INCOME INVESTMENTS INVESTMENTS OF PERIOD --------------------------------------------------------------------------- LIQUID ACCOUNT 1986 $.0588 $(.0588) $ -- $ -- $ 1.00 1987 .0581 (.0581) -- -- 1.00 1988 .0664 (.0664) -- -- 1.00 1989 .0822 (.0822) -- -- 1.00 1990 .0731 (.0731) -- -- 1.00 1991 .0522 (.0522) -- -- 1.00 1992 .0287 (.0287) -- -- 1.00 1993 .0227 (.0227) -- -- 1.00 1994 .0334 (.0334) -- -- 1.00 1995 (c) .0256 (.0256) -- -- 1.00 GOVERNMENT SECURITIES ACCOUNT 1986 .92 (.92) .28 (.11) 10.73 1987 .84 (.84) (.52) (.21) 10.90 1988 .84 (.85) (.05) (.05) 10.17 1989 .84 (.84) .52 -- 10.06 1990 .84 (.84) .10 -- 10.58 1991 .85 (.85) .68 -- 10.68 1992 .77 (.77) (.12) (.05) 11.36 1993 .70 (.70) .36 (.64) 11.19 1994 .69 (.69) (1.14) (.01) 10.91 1995 (c) .37 (.36) .67 -- 9.76 INCOME ACCOUNT 1986 .83 (.83) .57 (.08) 10.55 1987 .76 (.76) (.56) (.51) 11.04 1988 .84 (.85) (.19) -- 9.97 1989 .88 (.88) .02 -- 9.77 1990 .94 (.94) (.35) -- 9.79 1991 .81 (.81) .47 -- 9.44 1992 .79 (.79) (.16) -- 9.91 1993 .65 (.65) .11 -- 9.75 1994 .68 (.68) (.72) -- 9.86 1995 (c) .33 (.33) .30 -- 9.14 TOTAL RETURN ACCOUNT 1986 .31 (.30) .99 (.04) 10.91 1987 .38 (.38) .13 (1.09) 11.87 1988 .53 (.53) .60 -- 10.91 1989 .76 (.76) 1.81 (.63) 11.51 1990 .66 (.66) (.68) (.07) 12.69 1991 .54 (.54) 2.79 (.71) 11.94 1992 .50 (.50) .86 (1.07) 14.02 1993 .48 (.48) 1.70 (.97) 13.81 1994 .55 (.55) (.86) (.24) 14.54 1995 (c) .31 (.30) 1.44 -- 13.44 GROWTH ACCOUNT 1986 .24 (.24) 1.11 (.08) 10.94 1987 .22 (.22) (.12) (2.05) 11.97 1988 .20 (.20) 1.20 -- 9.80 1989 .51 (.51) 3.30 (1.25) 11.00 1990 .34 (.34) (1.36) (.07) 13.05 1991 .25 (.25) 4.00 (1.22) 11.62 1992 .26 (.26) 1.44 (1.64) 14.40 1993 .30 (.30) 2.64 (1.70) 14.20 1994 .22 (.22) (.32) (.62) 15.14 1995 (c) .14 (.13) 2.42 -- 14.20 RATIO OF RATIO OF NET NET ASSET OPERATING INVESTMENT NET ASSETS YEARS VALUE AT EXPENSES TO INCOME TO AT END ANNUAL ENDED END AVERAGE AVERAGE PORTFOLIO OF PERIOD TOTAL DECEMBER 31 OF PERIOD NET ASSETS NET ASSETS TURNOVER (IN THOUSANDS) RETURN(B) ----------- LIQUID ACCOUNT 1986 $ 1.00 1.00% 5.88% n/a $74,111 6.03% 1987 1.00 1.00 5.81 n/a 68,908 5.97 1988 1.00 1.04 6.64 n/a 73,921 6.82 1989 1.00 1.06 8.22 n/a 87,264 8.53 1990 1.00 1.06 7.31 n/a 84,387 7.53 1991 1.00 1.01 5.22 n/a 69,932 5.31 1992 1.00 1.02 2.87 n/a 67,549 2.89 1993 1.00 .95 2.27 n/a 76,620 2.30 1994 1.00 .93 3.34 n/a 63,946 3.40 1995 (c) 1.00 .94(a) 5.16(a) n/a 63,864 2.58 GOVERNMENT SECURITIES ACCOUNT 1986 10.90 1.27 8.92 111.68% 22,947 11.66 1987 10.17 1.24 8.12 207.67 24,703 3.33 1988 10.06 1.16 8.27 175.50 35,910 7.99 1989 10.58 1.19 8.14 68.14 41,561 14.10 1990 10.68 1.16 8.07 44.19 47,524 9.44 1991 11.36 1.07 7.83 27.50 55,332 15.03 1992 11.19 1.01 6.92 131.79 67,612 6.07 1993 10.91 .93 6.03 224.02 77,596 9.56 1994 9.76 .91 6.71 156.90 60,162 (4.18) 1995 (c) 10.44 .94(a) 7.17(a) 55.89(a) 51,258 10.83 INCOME ACCOUNT 1986 11.04 1.29 7.69 164.13 14,620 13.54 1987 9.97 1.27 7.32 231.39 15,367 2.03 1988 9.77 1.24 8.43 150.04 16,789 6.70 1989 9.79 1.27 8.93 52.95 18,705 9.56 1990 9.44 1.24 9.78 90.20 19,809 6.33 1991 9.91 1.12 8.44 50.44 22,839 14.22 1992 9.75 .63 8.09 109.47 38,675 6.60 1993 9.86 .63 6.56 145.94 48,636 7.97 1994 9.14 .63 7.16 62.88 46,547 (0.42) 1995 (c) 9.44 .63(a) 7.13(a) 37.88(a) 46,109 6.97 TOTAL RETURN ACCOUNT 1986 11.87 1.26 3.22 143.32 35,382 11.88 1987 10.91 1.08 3.15 197.79 44,770 3.92 1988 11.51 1.11 4.61 223.62 54,253 10.40 1989 12.69 1.20 5.90 149.22 65,071 22.61 1990 11.94 1.24 5.31 115.45 66,382 (0.21) 1991 14.02 1.20 4.02 122.40 86,455 28.21 1992 13.81 1.11 3.61 177.85 109,701 9.90 1993 14.54 1.02 3.40 155.16 171,205 15.89 1994 13.44 .96 3.80 115.01 177,904 (2.11) 1995 (c) 14.89 1.20(a) 4.39(a) 53.78(a) 202,718 13.04 GROWTH ACCOUNT 1986 11.97 1.31 2.21 163.15 19,469 12.25 1987 9.80 1.17 1.71 214.32 19,638 (0.29) 1988 11.00 1.23 1.95 246.14 26,285 14.32 1989 13.05 1.18 3.90 169.75 37,323 34.86 1990 11.62 1.19 2.73 143.95 35,202 (7.98) 1991 14.40 1.19 1.74 148.30 40,716 36.91 1992 14.20 1.12 1.74 141.69 45,600 11.99 1993 15.14 1.05 1.95 99.67 64,495 20.91 1994 14.20 1.02 1.50 98.46 78,390 (0.65) 1995 (c) 16.63 1.26(a) 1.88(a) 75.89(a) 97,691 18.03 (a) Annualized (b) Annual total returns do not include the effect of sales charges (c) For the six months ended June 30, 1995
15 NOTES TO FINANCIAL STATEMENTS CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. June 30, 1995 (Unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Connecticut Mutual Investment Accounts, Inc. (the Fund), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund is comprised of thirteen distinct mutual funds, including the following five Accounts included in these financial statements: Liquid, Government Securities, Income, Total Return and Growth. An interest in the Fund is limited to the assets of the Account or Accounts in which shares are held by shareholders, and such shareholders are entitled to a pro rata share of all dividends and distributions arising from the net investment income and net realized capital gains on the investments of such Accounts. The following is a summary of significant accounting policies followed by the Fund: (a)VALUATION OF INVESTMENT SECURITIES - Except with respect to securities held by the Liquid Account, equity and debt securities which are traded on securities exchanges are valued at the last sales price as of the close of business on the day the securities are being valued. Lacking any sales, equity securities are valued at the last bid price and debt securities are valued at the mean between closing bid and asked prices. Securities traded in the over-the-counter market and included in the NASDAQ National Market System are valued using the last sales price when available. Otherwise, over-the-counter securities are valued at the mean between the bid and asked prices or yield equivalent as obtained from one or more dealers who make a market in the securities. Short-term securities are valued on an amortized cost basis, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in accordance with procedures established by the Board of Directors of the Fund, including the use of valuations furnished by a private service retained by the custodian. Securities held by the Liquid Account are valued on an amortized cost basis. This basis involves valuing a security at cost and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. The amortized cost method, in the opinion of the Board of Directors, represents the fair value of the particular security. The Board monitors the deviation between the Account's net asset value per share as determined by using available market quotations and its amortized cost price per share. If the deviation exceeds one half of one percent, the Board will consider what action, if any, should be initiated to provide fair valuation. Throughout the second quarter of 1995, the deviation was less than one half of one percent. (b)FEDERAL INCOME TAXES - The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. Under such provisions, by distributing substantially all of its taxable income to its shareholders or otherwise complying with requirements for regulated investment companies, the Fund will not be subject to Federal income taxes. Accordingly, no provision for Federal income taxes is required. For Federal tax reporting purposes, each Account is treated as a separate taxable entity. (c)GAINS AND LOSSES - Realized gains and losses from sales of investments are determined on the identified cost basis. (d)AFFILIATE HOLDINGS - Connecticut Mutual Life Insurance Company and its affiliates own 29,124,112 shares of the five Accounts of the Fund as follows:
GOVERNMENT LIQUID SECURITIES INCOME TOTAL RETURN GROWTH 25,026,814 725,035 1,533,159 210 1,838,894
(e)OTHER - Investment transactions are accounted for on the trade date which is the date the order to buy or sell is executed. Dividend income is recorded on the ex-dividend date and interest income is accrued on a daily basis. All expenses are accrued on a daily basis. 2. INVESTMENT ADVISORY FEES AND OTHER AFFILIATE TRANSACTIONS The Fund has an Investment Advisory Agreement with G.R. Phelps & Co., Inc. (the Investment Adviser), a wholly-owned subsidiary of Connecticut Mutual Life Insurance Company. The Investment Adviser, subject to review by the Board of Directors, is responsible for the investment management of each Account and has the responsibility for making decisions to buy, sell or hold any particular security. The Investment Adviser is obligated to perform certain administrative services for the Fund. As compensation for its services to the Liquid Account, the Investment Adviser receives monthly compensation at the annual rate of 0.50% of the first $200 million of average daily net assets, 0.45% of the next $100 million of average daily net assets and 0.40% of the average daily net assets in excess of $300 million of the Account. As compensation for its services to the Government Securities, Income, Total Return and Growth Accounts, the Investment Adviser receives monthly compensation at the annual rate of 0.625% of the first $300 million of average daily net assets, 0.50% of the next $100 million of average daily net assets and 0.45% of the average daily net assets in excess of $400 million of each Account. 16 The investment advisory fees, which also cover certain administrative and management services, amounted to $1,353,596 for all Accounts for the six months ended June 30, 1995. For the six months ended June 30, 1995, the Investment Adviser, serving as principal underwriter for sale of shares of the Accounts, earned $809,906 related to sales charges deducted from proceeds for shares sold. Expenses incurred in the operation of the Fund are borne by the Fund. However, the Investment Adviser has agreed that in any year the aggregate expenses (including the investment advisory fee, but excluding interest, taxes, brokerage fees, commissions and uncommon charges such as litigation costs) exceed 1% of the value of the average daily net assets of the Liquid Account or 1.5% of the value of the average daily net assets in each of the other four Accounts, it will reimburse the Accounts for such excess. Each Account has adopted a distribution plan (Plan) in accordance with the requirements of Rule 12b-1 of the Investment Company Act of 1940. Under each Plan, each Account may pay G. R. Phelps & Co., Inc. (the Distributor) a fee, not exceeding 0.25% of the Account's average daily net assets for any fiscal year, as reimbursement for its expenditures incurred in distributing and servicing shares of the Account. Effective May 1, 1995, the Total Return and Growth Accounts commenced accruing fees daily and paying fees monthly to the Distributor at an annual rate of 0.25% of each Account's average daily net assets. For the two months ended June 30, 1995, the Distributor received $122,589 in fees from these Accounts. The Liquid, Government Securities and Income Accounts accrued no fees and paid no amounts pursuant to any Plan during the six months ended June 30, 1995. 3. DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are declared and paid monthly for the Government Securities and Income Accounts and semi-annually for the Total Return and Growth Accounts. Dividends from net investment income of the Liquid Account, which include any net short-term capital gains, are declared and accrued daily and paid monthly. All net realized capital gains (excluding the Liquid Account), if any, are declared and paid at least annually. 4. CAPITAL STOCK The authorized capital stock of the Fund at June 30, 1995 consisted of 3,000,000,000 shares of common stock, par value $0.001 per share. The shares of stock are divided among thirteen separate Accounts, five of which are indicated below. All shares of common stock have equal voting rights, except that only shares of a particular Account are entitled to vote on matters pertaining to that Account. Transactions in capital stock were as follows:
FOR THE SIX MONTHS ENDED JUNE 30, 1995 GOVERNMENT TOTAL LIQUID SECURITIES INCOME RETURN GROWTH Shares authorized (in millions) 600 200 200 200 200 --- --- --- --- --- --- --- --- --- --- Shares sold 87,303,939 161,212 406,488 1,034,767 595,765 Shares issued to shareholders from reinvestment of dividends 1,674,793 181,502 151,184 265,449 44,738 ------------ ----------- ---------- ------------ --------- Total issued 88,978,732 342,714 557,672 1,300,216 640,503 Shares reacquired (89,060,819) (1,598,262) (769,419) (921,386) (286,565) ------------ ----------- ---------- ------------ --------- Net increase (decrease) (82,087) (1,255,548) (211,747) 378,830 353,938 ------------ ----------- ---------- ------------ --------- ------------ ----------- ---------- ------------ ---------
17 CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. ------------------------------------------- BOARD OF DIRECTORS AND OFFICERS DIRECTORS RICHARD H. AYERS Chairman and Chief Executive Officer The Stanley Works DAVID E. A. CARSON President, Chairman and Chief Executive Officer People's Bank RICHARD W. GREENE Executive Vice President and Treasurer University of Rochester BEVERLY L. HAMILTON President ARCO Investment Management Company DAVID E. SAMS, JR. President and Chief Executive Officer Connecticut Mutual Life Insurance Company OFFICERS LINDA M. NAPOLI, Treasurer and Controller Treasurer, Mutual Funds Connecticut Mutual Life Insurance Company LOUIS A. LACCAVOLE, CPA, General Auditor Vice President and General Auditor Connecticut Mutual Life Insurance Company ANN F. LOMELI, Secretary Corporate Secretary and Counsel Connecticut Mutual Life Insurance Company AUDITORS ARTHUR ANDERSEN LLP Hartford, CT This report has been prepared for shareholders of the Account and may be distributed to prospective investors in the Account when preceded or accompanied by a current prospectus. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. FINANCIAL STATEMENTS AUGUST 31, 1995 LIFESPAN DIVERSIFIED INCOME ACCOUNT LIFESPAN BALANCED ACCOUNT LIFESPAN CAPITAL APPRECIATION ACCOUNT CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN DIVERSIFIED INCOME ACCOUNT SCHEDULE OF INVESTMENTS August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ----- COMMON STOCKS(21.6% OF NET ASSETS) Aerospace(1.4%) General Dynamics Corp. 2,800 $129,201 $147,350 Lockheed Martin Corp. 1,700 98,156 103,488 Rockwell International Corp. 1,700 74,268 76,075 -------- -------- 301,625 326,913 -------- -------- Banking(2.1%) Ahmanson (H.F.) & Co. 1,200 29,335 28,500 Bank of Boston Corp. 2,600 108,730 114,400 Chase Manhattan Corp. 1,900 87,120 109,250 Morgan (J.P.) & Company, Inc. 1,500 104,395 109,313 Wells Fargo & Co. 600 99,425 111,825 -------- -------- 429,005 473,288 -------- -------- Business Equipment & Services(.4%) New England Business Service, Inc 4,700 85,371 91,650 -------- -------- Chemicals(1.5%) Goodrich (B.F.) Company 1,500 89,602 89,250 Grace (W.R.) & Co. 1,900 101,831 126,588 Monsanto Co. 1,200 99,756 113,850 -------- -------- 291,189 329,688 -------- -------- Conglomerates(.6%) Hanson PLC 7,400 136,608 126,725 -------- -------- Drugs & Cosmetics(1.0%) American Home Products Corp. 1,400 107,962 107,800 Bristol-Myers Squibb Co. 1,700 116,766 116,662 -------- -------- 224,728 224,462 -------- -------- Electric Utilities(3.1%) Entergy Corp. 4,600 113,597 110,400 FPL Group, Inc. 3,400 125,722 132,175 Illinova Corp. 3,400 78,795 85,425 Kansas City Power & Light Co. 5,000 115,330 111,875 Unicom Corp. 4,800 126,960 135,000 Western Resources, Inc. 3,900 119,438 117,975 -------- -------- 679,842 692,850 -------- -------- Health Services & Hospital Supplies(.8%) Baxter International Inc. 4,400 151,866 171,600 -------- -------- Insurance(2.2%) Aetna Life & Casualty Co. 2,200 131,735 150,150 Allstate Corp. 1,668 49,310 56,504 American General Corp. 1,800 59,386 63,450 Hartford Steam Boiler Inspection 2,500 113,247 115,937 & Insurance St. Paul Companies Inc. 2,000 96,820 108,500 -------- -------- 450,498 494,541 -------- -------- Iron & Steel(2.0%) British Steel PLC 4,100 118,861 114,800 Carpenter Technology Corp. 1,600 96,714 122,000 UNR Industries Inc. 25,000 154,380 196,875 -------- -------- 369,955 433,675 -------- -------- Office Equipment(.2%) Xerox Corp. 400 49,441 48,300 -------- -------- Oil & Gas(2.9%) Amoco Corp. 1,300 86,736 82,875 Chevron Corp. 2,400 116,352 116,100 Mobil Corp. 1,200 116,813 114,300 Panhandle Eastern Corp. 6,200 149,110 155,000 Royal Dutch Petroleum Co. 600 74,987 71,550 Ultramar Corp. 4,300 114,126 101,587 -------- -------- 658,124 641,412 -------- -------- Real Estate(1.4%) Camden Property Trust 4,800 102,142 105,000 Health & Retirement Property Trust 6,300 95,388 96,862 Meditrust Corp. 3,100 96,289 101,912 -------- -------- 293,819 303,774 -------- -------- Retail Trade(.3%) Sears, Roebuck & Co. 1,800 49,165 58,275 -------- --------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN DIVERSIFIED INCOME ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ----- Telephone Utilities(1.7%) Ameritech Corp. 3,100 $140,077 $158,875 GTE Corp. 2,800 95,721 102,550 NYNEX Corp. 2,500 101,943 112,500 --------- --------- 337,741 373,925 --------- --------- Total Common Stocks 4,508,977 4,791,078 --------- --------- CONVERTIBLE PREFERRED STOCKS(1.5% OF NET ASSETS) Building Materials & Construction(.5%) Case Corp. 1,200 115,000 115,800 --------- --------- Computer Business Equipment & Services(.5%) Storage Technology Corp. 1,600 103,967 99,000 --------- --------- Energy Services(.5%) J. Ray McDermott, SA 2,300 142,485 113,850 --------- --------- Total Preferred Stocks 361,452 328,650 --------- --------- Principal CORPORATE BONDS(21.3% OF NET ASSETS Amount --------- Apparel & Textiles(.2%) U.S. Leather, Inc. 10.25%, 2003 $50,000 43,858 43,250 --------- --------- Auto & Auto Related(.2%) Venture Holdings 9.75%, 2004 50,000 43,503 43,750 --------- --------- Banking(2.7%) BankAmerica Corp. 6.00%, 1997 300,000 299,570 298,218 First USA Bank of Delaware 5.35%, 1996 150,000 148,472 142,944 Shawmut National Corp. 8.875%, 1996 150,000 153,152 152,075 --------- --------- 601,194 593,237 --------- --------- Chemicals(1.6%) Building Materials Corp. of America 0.00%, 2004 100,000 63,568 62,000 Crain Industries, Inc. 13.50%, 2005 50,000 50,000 50,250 G-I Holdings 0.00%, 1998 50,000 36,216 35,750 Harris Chemical North America, Inc. 0.00%, 2001 50,000 47,781 44,500 LaRoche Industries, Inc. 13.00%, 2004 75,000 77,250 78,750 Sherritt, Inc. 10.50%, 2014 75,000 74,812 76,500 --------- --------- 349,627 347,750 --------- --------- Computer Business Equipment & Services(.6%) Unisys Corp. 9.75%, 1996 125,000 128,438 127,188 --------- --------- Drugs & Cosmetics(1.5%) Revlon Consumer Products Corp. 9.375%, 2001 50,000 48,348 49,125 Revlon Worldwide Corp. 0.00%, 1998 50,000 35,456 35,375 Roche Holdings Inc. 2.75%, 2000 300,000 258,027 256,313 --------- --------- 341,831 340,813 --------- --------- Financial Services(1.9%) Chrysler Financial Corp. 6.65%, 1997 120,000 120,829 120,678 General Motors Acceptance Corp. 5.65%, 1997 300,000 296,180 295,248 --------- --------- 417,009 415,926 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN DIVERSIFIED INCOME ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Health Services & Hospital Supplies(.6%) Genesis Health Venture, Inc. 9.75%, 2005 $75,000 $74,815 $77,437 Integrated Health Services, Inc. 9.625%, 2002 50,000 50,000 51,125 ------- ------- 124,815 128,562 ------- ------- Iron & Steel(.4%) Geneva Steel Co. 9.50%, 2004 25,000 21,298 18,750 Republic Engineered Steels, Inc. 9.875%, 2001 25,000 23,580 23,250 Wierton Steel Corp. 10.75%, 2005 50,000 49,260 46,500 ------- ------- 94,138 88,500 ------- ------- Leasing(.2%) GPA Delaware, Inc. 8.75%, 1998 50,000 41,563 44,500 ------- ------- Leisure & Entertainment(3.0%) Adelphia Communications Corp. 12.50%, 2002 25,000 24,879 25,375 Australis Media Ltd. 0.00%, 2003 75,000 39,304 43,125 Bally Park Place Funding 9.25%, 2004 50,000 46,502 47,125 Bell Cablemedia PLC 0.00%, 2004 75,000 50,466 48,563 Comcast Corp. 9.375%, 2005 50,000 49,763 50,375 Greate Bay Property Funding 10.875%, 2004 25,000 21,500 21,750 GNF Corp. 10.625%, 2003 50,000 41,068 43,250 Helicon Group Ltd. 9.00%, 2003 100,000 91,923 92,250 Kloster Cruise Ltd. 13.00%, 2003 25,000 21,694 17,750 New World Communications Corp. 0.00%, 1999 75,000 50,030 49,125 Santa Fe Hotel 11.00%, 2000 50,000 49,278 44,500 Selmer Company, Inc. 11.00%, 2015 50,000 50,000 48,000 Sinclair Broadcast Group, Inc. 10.00%, 2005 50,000 50,000 50,375 Trump Plaza Funding 10.875%, 2001 50,000 43,562 46,000 Trump Taj Mahal 0.00%, 1999 50,000 38,437 42,250 ------- ------- 668,406 669,813 ------- ------- Machinery & Equipment(.2%) Specialty Equipment Companies, Inc. 11.375%, 2003 50,000 50,489 52,500 ------- ------- Manufacturing(1.7%) American Standard, Inc. 10.50%, 2005 50,000 39,416 38,625 Day International Group, Inc. 11.125%, 2005 50,000 50,000 52,625 Huntsman Corp. 10.625%, 2001 75,000 79,594 79,500 Interlake Corp. 12.125%, 2002 50,000 50,970 49,500 International Wire Group, Inc. 11.75%, 2005 50,000 50,000 50,125 Jordan Industries, Inc. 10.375%, 2003 25,000 23,780 23,187 Plantronics, Inc. 10.00%, 2001 75,000 75,937 75,937 ------- ------- 369,697 369,499 ------- -------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN DIVERSIFIED INCOME ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Oil & Gas(.4%) Maxus Energy Corp. 9.875%, 2002 $50,000 $47,083 $48,375 Mesa Capital CP 0.00%, 1998 50,000 48,920 45,750 ------- ------- 96,003 94,125 ------- ------- Paper & Forest Products(1.7%) Crown Packaging Holdings Ltd. 0.00%, 2003 100,000 51,386 47,500 Doman Industries Ltd. 8.75%, 2004 50,000 48,000 47,875 Gaylord Container Corp. 0.00%, 2005 50,000 50,605 49,750 Grupo Industrial Durango 12.00%, 2001 25,000 18,875 22,155 Indah Kiat Pulp & Paper Corp. 11.875%, 2002 50,000 51,000 51,000 Malette, Inc. 12.25%, 2004 50,000 54,125 55,500 Stone Container Corp. 9.875%, 2001 100,000 99,879 99,125 ------- ------- 373,870 372,905 ------- ------- Printing & Publishing(.1%) Marvel III Holdings Inc. 9.125%, 1998 25,000 23,027 22,875 ------- ------- Retail Trade(2.0%) Cole National Corp. 11.25%, 2001 50,000 48,550 49,500 Dairy Mart Convenience Stores, Inc. 10.25%, 2004 50,000 41,775 42,750 Duane Reade Corp. 12.00%, 2002 50,000 45,180 44,125 Farm Fresh, Inc. 12.25%, 2000 50,000 48,680 47,500 Hills Stores Co. 10.25%, 2003 50,000 49,450 46,000 Pathmark Stores, Inc. 0.00%, 2003 100,000 61,379 65,750 Penn Traffic Co. 9.625%, 2005 50,000 47,914 41,125 Ralph's Grocery Co. 11.00%, 2005 50,000 50,000 47,000 Waban, Inc. 11.00%, 2004 50,000 51,712 51,000 ------- ------- 444,640 434,750 ------- ------- Technology(.3%) Monarch Acquisition 12.50%, 2003 75,000 75,000 76,500 ------- ------- Telecommunications(.9%) Centennial Cellular Corp. 10.125%, 2005 50,000 49,816 49,500 Intermedia Communications of Florida, Inc. 13.50%, 2005 50,000 50,000 52,375 MFS Communications Company, Inc. 0.00%, 2004 75,000 53,792 55,875 Nextel Communications, Inc. 0.00%, 2004 100,000 55,337 48,500 ------- ------- 208,945 206,250 ------- ------- Telephone Utilities(.2%) Peoples Telephone Company, Inc. 12.25%, 2002 50,000 50,000 51,000 ------- ------- Transportation(.7%) Federal Express Corp. 6.25%, 1998 150,000 149,593 148,839 ------- -------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN DIVERSIFIED INCOME ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Wholesale Trade(.2%) Falcon Holdings PLC 11.00%, 2003 $50,000 $48,553 $46,500 ----------- ----------- Total Corporate Bonds 4,744,199 4,719,032 ----------- ----------- U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS(49.8% OF NET ASSETS) U.S. Treasury Bond 8.125%, 2019 1,320,000 1,414,050 1,526,250 U.S. Treasury Notes 7.375%, 1997 2,950,000 2,995,863 3,037,586 5.125%, 1998 4,500,000 4,333,370 4,413,292 7.75%, 1999 270,000 284,133 286,959 7.25%, 2004 1,670,000 1,701,809 1,772,020 ----------- ----------- Total U.S. Government & Agency Long-Term Obligations 10,729,225 11,036,107 ----------- ----------- FOREIGN GOVERNMENT BONDS(1.4% of NET ASSETS) Province of Ontario 8.25%, 1996 300,000 305,337 303,702 ----------- ----------- REPURCHASE AGREEMENTS(3.1% OF NET ASSETS) State Street Bank & Trust Co. 5.00%, due 9/1/95 688,000 688,000 688,000 ----------- ----------- TOTAL INVESTMENTS $21,337,190 $21,866,569 ----------- -----------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ COMMON STOCKS(41.7% OF NET ASSETS) Aerospace(2.2%) General Dynamics Corp. 4,300 $198,415 $226,288 General Motors Corp. Class H 1,500 60,215 59,813 Lockheed Martin Corp. 3,200 184,765 194,800 Loral Corp. 2,200 103,235 120,450 McDonnell Douglas Corp. 1,300 80,959 104,325 Rockwell International Corp. 2,900 126,692 129,775 --------- --------- 754,281 835,451 --------- --------- Airlines(.6%) AMR Corp. 1,100 74,676 77,550 Delta Air Lines, Inc. 1,300 85,166 96,688 Northwest Airlines Corp. 1,700 50,400 61,413 --------- --------- 210,242 235,651 --------- --------- Apparel & Textiles(.6%) Nautica Enterprises, Inc. 1,900 57,439 60,087 St. John Knits, Inc. 1,000 36,485 44,250 Tommy Hilfiger Corp. 3,500 85,434 117,250 --------- --------- 179,358 221,587 --------- --------- Auto & Auto Related(.2%) Discount Auto Parts, Inc. 2,800 74,088 91,350 --------- --------- Banking(2.1%) Ahmanson (H.F.) & Co. 2,300 56,226 54,625 Bank of Boston Corp. 3,300 137,892 145,200 Chase Manhattan Corp. 3,400 152,769 195,500 Morgan (J.P.) & Company, Inc. 3,100 215,831 225,913 Wells Fargo & Co. 900 149,138 167,738 --------- --------- 711,856 788,976 --------- --------- Building Materials & Construction(.2%) Case Corp. 1,900 64,875 71,725 USG Corp. 2,200 54,398 59,675 --------- --------- 119,273 131,400 --------- --------- Business Equipment & Services(.5%) Medic Computer Systems, Inc. 1,700 71,963 74,800 New England Business Service, Inc. 4,700 85,371 91,650 --------- --------- 157,334 166,450 --------- --------- Chemicals(1.7%) FMC Corp. 700 43,210 53,900 Goodrich (B.F.) Company 2,400 143,355 142,800 Grace (W.R.) & Co. 3,600 192,942 239,850 Monsanto Co. 2,200 182,886 208,725 --------- --------- 562,393 645,275 --------- --------- Commercial Services(.7%) Alternative Resources Corp. 1,300 31,915 38,675 Cambridge Technology Partners, Inc. 2,200 73,691 86,350 Corrections Corporation of America 2,000 70,141 90,000 Sylvan Learning Systems, Inc. 1,600 47,141 45,600 --------- --------- 222,888 260,625 --------- --------- Computer Business Equipment & Services(3.0%) Acxiom Corporation 4,000 96,169 107,500 ALANTEC Corp. 1,600 59,300 64,000 Avid Technology, Inc. 1,000 38,109 39,750 Cognex Corp. 2,300 74,613 114,712 Davidson and Associates, Inc. 1,400 66,881 72,100 Epic Design Technology, Inc. 400 17,238 17,250 Global Village Communication 3,600 61,276 56,250 Hyperion Software Corp. 1,700 65,248 79,050 Inso Corp. 500 34,787 31,312 McAfee Associates, Inc. 2,200 68,856 96,525 National Data Corp. 2,400 49,399 61,800 Optical Data Systems, Inc. 1,900 44,200 62,225 Seagate Technology, Inc. 800 39,206 35,400 Sierra Semiconductor Corp. 800 37,828 39,500 Storage Technology Corp. 2,000 54,934 54,750 StorMedia, Inc. 1,100 47,016 45,650 Wonderware Corp. 2,400 85,001 82,800 Zebra Technologies Corp. 1,400 82,279 81,550 --------- --------- 1,022,340 1,142,124 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Conglomerates(.9%) AlliedSignal Inc. 1,100 $43,261 $48,813 Hanson PLC 7,400 136,608 126,725 Jardine Matheson Holdings Ltd. 3,800 30,419 27,360 Textron, Inc. 1,700 99,168 116,450 --------- --------- 309,456 319,348 --------- --------- Drugs & Cosmetics(1.0%) American Home Products Corp. 2,000 154,232 154,000 Bristol-Myers Squibb Co. 1,600 109,898 109,800 Watson Pharmaceuticals, Inc. 2,862 93,319 118,415 --------- --------- 357,449 382,215 --------- --------- Electrical & Electronic Equipment(2.9%) Allen Group, Inc. 2,100 67,457 68,513 Cidco, Inc. 1,200 38,607 42,000 Credence Systems Corp. 950 23,267 33,487 GaSonics International 2,200 56,469 76,450 Integrated Silicon Solution, Inc. 1,900 73,974 94,525 Kemet Corp. 1,900 82,519 108,300 Mattson Technology, Inc. 1,100 54,951 56,375 Micron Technology Inc. 1,100 45,879 84,563 Philips Electronics NV 1,400 61,750 63,000 S3, Inc. 2,000 55,741 78,500 Sanmina Corp. 1,400 65,629 63,700 Silicon Valley Group, Inc. 2,000 65,894 86,000 Tyco International Ltd. 1,000 57,218 59,125 Ultratech Stepper, Inc. 3,000 97,807 118,500 Vicor Corp. 1,200 47,842 56,400 --------- --------- 895,004 1,089,438 --------- --------- Electric Utilities(2.6%) Entergy Corp. 7,800 192,176 187,200 FPL Group, Inc. 5,400 199,676 209,925 Illinova Corp. 5,200 120,510 130,650 Kansas City Power & Light Co. 5,000 115,330 111,875 Unicom Corp. 7,600 201,507 213,750 Western Resources, Inc. 3,900 119,438 117,975 --------- --------- 948,637 971,375 --------- --------- Environmental Control(.3%) United Waste Systems, Inc. 3,100 105,866 120,125 --------- --------- Food & Beverages(.8%) Apple South Inc. 2,300 50,663 56,350 Boston Chicken, Inc. 2,900 61,564 69,600 Dole Food Co., Inc. 800 26,959 26,200 Landry's Seafood Restaurants, Inc. 2,700 51,408 47,587 Papa John's International, Inc. 1,600 55,658 64,000 Ralcorp Holdings, Inc. 2,100 48,067 47,513 --------- --------- 294,319 311,250 --------- --------- Health Services & Hospital Supplies(2.4%) Baxter International Inc. 7,200 248,508 280,800 Columbia Healthcare Corp. 1,800 76,352 84,600 Community Health Systems, Inc. 2,200 76,111 84,700 Express Scripts, Inc. 1,200 39,366 44,400 Gulf South Medical Supply, Inc. 2,000 44,266 56,500 Idexx Laboritories, Inc. 2,500 71,719 84,687 Omnicare, Inc. 3,000 96,768 99,750 PhyCor, Inc. 1,800 66,282 75,150 Physician Sales & Service, Inc. 1,400 61,084 63,700 TheraTx, Inc. 2,400 35,211 31,800 --------- --------- 815,667 906,087 --------- --------- Insurance(2.9%) Aetna Life & Casualty Co. 3,500 205,621 238,875 Allstate Corp. 4,214 126,671 142,749 American General Corp. 2,800 92,378 98,700 Compdent Corp. 1,900 45,009 51,775 Hartford Steam Boiler Inspection & Insurance 2,400 108,718 111,300 Healthsource, Inc. 1,900 73,124 76,000 St. Paul Companies Inc. 3,200 154,912 173,600 TIG Holdings, Inc. 2,300 52,233 58,937 Travelers Group 2,800 115,920 134,400 --------- --------- 974,586 1,086,336 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Iron & Steel(1.3%) British Steel PLC 5,600 $163,105 $156,800 Carpenter Technology Corp. 1,600 96,714 122,000 UNR Industries Inc. 25,000 156,250 196,875 --------- --------- 416,069 475,675 --------- --------- Leisure & Entertainment(.7%) Clear Channel Communications, Inc 1,300 73,041 97,012 Mattel, Inc. 1,900 45,258 55,100 Regal Cinemas, Inc. 2,400 67,892 81,600 Station Casinos, Inc. 2,000 33,444 38,750 --------- --------- 219,635 272,462 --------- --------- Machinery & Equipment(.8%) AGCO Corp. 1,400 72,856 68,075 Electroglas, Inc. 1,400 77,951 105,700 Mark IV Industries, Inc. 2,200 40,066 48,950 Parker-Hannifin Corp. 1,800 62,635 71,325 --------- --------- 253,508 294,050 --------- --------- Manufacturing(1.0%) Black & Decker Corp. 1,700 50,910 55,037 FSI International, Inc. 2,900 65,975 102,225 Helix Technology Corp. 1,400 51,473 71,269 Integrated Process Equipment Corp. 1,700 78,510 61,412 Lydall, Inc. 3,700 71,194 88,337 --------- --------- 318,062 378,280 --------- --------- Metals & Mining(.4%) IMC Global Inc. 1,300 66,118 82,225 Potash Corporation of Saskatchewan Inc. 1,400 74,244 79,625 --------- --------- 140,362 161,850 --------- --------- Miscellaneous(.2%) Premark International, Inc. 1,700 82,154 89,038 --------- --------- Office Equipment(.4%) Xerox Corp. 1,100 135,962 132,825 --------- --------- Oil & Gas(3.0%) Amoco Corp. 2,100 140,112 133,875 Chevron Corp. 4,200 203,766 203,175 Mobil Corp. 2,100 204,422 200,025 Panhandle Eastern Corp. 10,500 253,051 262,500 Repsol SA (ADR) 2,000 66,370 63,250 Royal Dutch Petroleum Co. 1,100 137,477 131,175 Ultramar Corp. 4,300 114,126 101,587 YPF Sociedad Anonima (ADR) 1,500 30,165 26,438 --------- --------- 1,149,489 1,122,025 --------- --------- Paper & Forest Products(.6%) Georgia-Pacific Corp. 600 47,968 54,000 Scott Paper Co. 1,600 71,570 74,200 Willamette Industries, Inc. 1,200 61,175 82,500 --------- --------- 180,713 210,700 --------- --------- Printing & Publishing(.2%) Gartner Group, Inc. 2,300 65,262 65,262 --------- --------- Real Estate(.8%) Camden Property Trust 4,800 102,142 105,000 Health & Retirement Property Trust 6,300 95,388 96,862 Meditrust Corp. 3,100 96,289 101,912 --------- --------- 293,819 303,774 --------- --------- Retail Trade(2.4%) American Stores Co. 3,100 80,984 91,063 CDW Computer Centers, Inc. 1,500 57,483 81,000 Corporate Express, Inc. 2,900 57,085 67,787 Eckerd Corp. 1,700 51,355 62,263 General Nutrition Companies, Inc. 2,900 86,851 121,075 Gymboree Corp. 1,700 52,386 50,575 Kroger Co. 2,700 68,753 88,088 Micro Warehouse, Inc. 800 37,200 38,200 Sears, Roebuck & Co. 4,700 133,585 152,163 Service Merchandise Co., Inc. 4,600 31,759 32,775 Sunglass Hut International, Inc. 1,700 56,937 72,250 Waban, Inc. 2,500 46,958 47,188 --------- --------- 761,336 904,427 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Technology(1.1%) Applied Materials, Inc. 600 $37,375 $62,400 Compaq Computer Corp. 1,800 82,388 85,950 Computer Associates International Inc. 800 51,258 55,600 Electronics for Imaging, Inc. 1,800 97,374 101,700 International Business Machines Corp. 900 84,707 93,037 ---------- ---------- 353,102 398,687 ---------- ---------- Telcommunications(1.0%) Ascend Communications, Inc. 1,000 42,875 64,500 Aspect Telecommunications Corp. 1,300 53,495 62,075 Coherent Communication System Corp. 1,400 28,704 31,850 Ericsson LM Tel. Co.(ADR) 3,200 54,600 68,400 LCI International, Inc. 2,100 58,057 83,737 Spectrian Corp. 1,100 51,867 50,875 ---------- ---------- 289,598 361,437 ---------- ---------- Telephone Utilities(1.7%) Ameritech Corp. 5,100 230,449 261,375 GTE Corp. 5,300 181,789 194,112 NYNEX Corp. 4,400 179,419 198,000 ---------- ---------- 591,657 653,487 ---------- ---------- Transportation(.4%) Fritz Companies, Inc. 1,300 66,229 92,625 Wisconsin Central Transportation 1,000 61,350 59,500 ---------- ---------- 127,579 152,125 ---------- ---------- Wholesale Trade(.1%) CellStar Corp. 1,700 39,498 54,187 ---------- ---------- Total Common Stocks 14,132,842 15,735,354 ---------- ---------- FOREIGN COMMON STOCKS(11.5% OF NET ASSETS) Auto & Auto Related(.5%) Autoliv AB (Sweden) 1,000 48,006 60,439 Michelin CGDE (France) 1,000 46,204 43,402 Shinmaywa Industries Ltd. (Japan) 3,000 28,532 24,854 Valeo SA (France) 706 42,246 33,706 ---------- ---------- 164,988 162,401 ---------- ---------- Banking(1.0%) Banco Popular Espanol (Spain) 400 59,340 61,553 Banco Santander SA (Spain) 1,500 58,030 61,354 Bangkok Bank Company Ltd. (Thailand) 4,000 43,062 44,693 Deutsche Bank AG (Germany) 1,000 50,268 46,269 HSBC Holdings PLC (United Kingdom) 2,000 25,239 26,870 Malayan Banking Berhad (Malaysia) 6,000 48,028 49,299 Societe Generale Paris (France) 200 23,355 20,889 Thai Farmers Bank Ltd. (Thailand) 4,500 42,841 43,815 ---------- ---------- 350,163 354,742 ---------- ---------- Building Materials & Construction(.1%) Compagnie de Saint-Gobain 250 33,060 31,759 PT Indocement Tunggal Prakar (Indonesia) 7,000 28,144 24,862 ---------- ---------- 61,204 56,621 ---------- ---------- Chemicals(.2%) Akzo Nobel (Netherlands) 200 23,340 23,594 Bayer AG (Germany) 225 55,807 58,186 ---------- ---------- 79,147 81,780 ---------- ---------- Computer Business Equipment & Services(.3%) Fujitsu Ltd. (Japan) 9,000 96,487 97,576 Getronics NV (Netherlands) 600 27,165 25,722 ---------- ---------- 123,652 123,298 ---------- ---------- Conglomerates(.7%) Canadian Pacific Ltd. (Canada) 2,000 33,412 33,507 Hanson PLC (United Kingdom) 13,000 47,898 43,784 Hutchison Whampoa Ltd. (Hong Kong) 10,000 44,980 48,185 Mannesmann AG (Germany) 195 56,689 61,550 Renong Berhad (Malaysia) 22,000 41,297 42,501 Viag AG (Germany) 120 47,149 46,201 ---------- ---------- 271,425 275,728 ---------- ----------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Drugs & Cosmetics(1.3%) Astra AB (Sweden) 1,800 $52,911 $59,699 Ciba-Geigy AG (Switzerland) 100 70,174 70,788 PT Kalbe Farma (Indonesia) 6,000 28,248 24,752 Sandoz AG (Switzerland) 100 67,763 72,116 Schering AG (Germany) 1,000 68,742 72,913 SmithKline Beecham (United Kingdom) 8,051 64,773 74,849 SmithKline Bch/Bec Units (United Kingdom) 5,027 38,508 44,024 Zeneca Group PLC (Germany) 4,000 59,254 69,533 ------- ------- 450,373 488,674 ------- ------- Electric Utilities(.3%) Powergen PLC (United Kingdom) 3,366 26,026 30,588 VEBA AG (Germany) 2,000 77,279 76,511 ------- ------- 103,305 107,099 ------- ------- Electrical & Electronic Equipment(1.7%) BBC AG Brown Boveri & Cie. (Switzerland) 65 67,607 68,560 Hitachi Ltd. (Japan) 7,000 74,827 76,608 Keyence Corp. (Japan) 400 45,483 51,140 Kyocera Corp. (Japan) 1,000 75,913 88,371 Matsushita Electric Industrial Co. Ltd. (Japan) 4,000 67,996 62,596 Philips Electronics NV (Netherlands) 2,000 80,364 89,754 Pioneer Electronic Corp. (Japan) 1,000 21,612 19,127 Sony Corp. (Japan) 1,000 48,817 54,618 Sumitomo Electric Industries Ltd. (Japan) 6,000 79,781 77,938 Toshiba Corp. (Japan) 7,000 50,198 50,547 ------- ------- 612,598 639,259 ------- ------- Financial Services(.4%) Compagnie Bancaire SA (France) 220 23,395 22,934 International Nederlanden Groep NV 1,000 54,145 55,579 (Netherlands) Itochu Corporation (Japan) 4,000 28,019 24,875 Nichiei Co. Ltd. (Japan) 1,000 69,474 57,891 ------- ------- 175,033 161,279 ------- ------- Food & Beverages(.3%) Heineken NV (Netherlands) 550 74,674 77,258 Nestle SA (Switzerland) 50 50,532 50,581 ------- ------- 125,206 127,839 ------- ------- Insurance(.5%) AEGON NV (Netherlands) 2,000 65,174 67,254 Munich Reinsurance (Germany) 25 51,152 50,426 Skandia Foersaekrings AB (Sweden) 1,300 25,518 26,725 Union des Assurances Federales SA (France) 400 43,070 40,509 ------- ------- 184,914 184,914 ------- ------- Iron & Steel(.6%) Hitachi Metals Ltd. (Japan) 2,000 25,920 23,320 Kawasaki Steel (Japan) 6,000 25,374 20,558 Nisshin Steel Co., Ltd. (Japan) 12,000 48,428 48,604 Outokumpu Oy (Finland) 2,425 43,288 45,216 Rio Tinto-Zinc Corp. PLC (United Kingdom) 4,000 51,448 54,291 Sumitomo Metal Industries (Japan) 7,000 23,998 19,546 ------- ------- 218,456 211,535 ------- ------- Leisure & Entertainment(.3%) Carlton Communications PLC (United Kingdom) 3,300 50,416 53,267 Television Broadcasts Ltd. (Hong Kong) 8,000 30,940 29,557 TV Francaise (TF1) (France) 400 39,611 40,588 ------- ------- 120,967 123,412 ------- ------- Machinery & Equipment(.3%) Mabuchi Motor Co. (Japan) 800 55,738 54,250 NSK Limited (Japan) 3,000 22,759 20,221 SMC Corp. (Japan) 400 23,542 24,261 ------- ------- 102,039 98,732 ------- ------- Metals & Mining(.1%) Broken Hill Proprietary Co. Ltd. (Australia) 85 972 1,233 Poseidon Gold Ltd. (Australia) 7,400 15,183 14,409 Western Mining Corp. Holdings Ltd. (Australia) 2,000 11,491 13,443 ------- ------- 27,646 29,085 ------- ------- Miscellaneous(.1%) SGS Societe Generale de Surveillance Holding SA (Switzerland) 30 51,157 53,900 ------- ------- Office Equipment(.2%) Canon Inc. (Japan) 4,000 68,170 72,415 ------- -------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Oil & Gas(1.2%) Ampolex Ltd. (Australia) 23,000 $64,747 $54,297 British Gas Corp. (United Kingdom) 5,000 23,757 21,535 British Petroleum Co. Ltd. (United Kingdom) 6,000 44,154 44,979 Compagnie Francaise de Petroleum Total (France) 1,641 105,302 96,396 Enterprise Oil PLC (United Kingdom) 7,500 50,032 43,070 Hong Kong & China Gas Company Ltd. (Hong Kong) 13,000 21,066 20,488 Imperial Oil Ltd. (Canada) 1,100 40,429 39,520 Lasmo PLC (United Kingdom) 16,000 44,537 43,955 Saga Petroleum (Norway) 4,000 59,943 50,183 Societe Nationale Elf Aquitaine (France) 554 46,349 40,569 --------- --------- 500,316 454,992 --------- --------- Paper & Forest Products(.2%) Metsa-Serla Oy (Finland) 950 41,313 37,462 Mo och Domsjo AB (Sweden) 800 43,544 46,049 --------- --------- 84,857 83,511 --------- --------- Printing & Publishing(.2%) De La Rue PLC (United Kingdom) 1,526 22,362 20,641 Elsevier NV (Netherlands) 2,200 25,371 27,826 Wolters-Kluwer NV (Netherlands) 400 33,854 35,269 --------- --------- 81,587 83,736 --------- --------- Retail Trade(.3%) Argyll Group PLC 4,000 21,875 21,853 Carrefour Supermarche SA (France) 90 46,489 50,246 LVMH Louis Vuitton Moet-Hennessy (France) 270 53,383 48,587 --------- --------- 121,747 120,686 --------- --------- Telecommunications(.4%) Nokia AB (Finland) 1,200 51,834 83,153 Telecom Italia S.p.A (Italy) 19,000 31,390 30,519 Telecom Italia Mobile S.p.A (Italy) 19,000 22,591 28,005 --------- --------- 105,815 141,677 --------- --------- Telephone Utilities(.2%) DDI Corporation (Japan) 5 45,506 42,242 Telefonica de Espana (Spain) 2,000 27,735 27,109 --------- --------- 73,241 69,351 --------- --------- Tobacco(.1%) PT HM Sampoerna (Indonesia) 4,000 31,685 37,944 --------- --------- Total Foreign Common Stocks 4,289,691 4,344,610 --------- --------- CONVERTIBLE PREFERRED STOCKS(.8% OF NET ASSETS) Building Materials & Construction(.3%) Case Corp. 1,100 105,350 106,150 --------- --------- Computer Business Equipment & Services(.2%) Storage Technology Corp. 1,500 97,506 92,812 --------- --------- Energy Services(.3%) J. Ray McDermott, SA 2,300 142,485 113,850 --------- --------- Total Convertible Preferred Stocks 345,341 312,812 --------- --------- FOREIGN PREFERRED STOCKS(.8% OF NET ASSETS) Auto & Auto Related (.1%) Fiat S.p.A.(Italy) 13,500 35,936 30,450 --------- --------- Computer Business Equipment & Services(.2%) SAP AG (Germany) 400 41,598 59,203 --------- --------- Conglomerates(.1%) RWE AG (Germany) 185 50,545 50,186 --------- --------- Electric Utilities (.1%) CEMIG (Brazil) 2,000,000 40,147 45,273 --------- --------- Financial Services(.1%) Banco Bradesco SA (Brazil) 4,600,000 39,949 44,315 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Telecommunications(.2%) Telecomunicacoes de Sao Paulo SA (Brazil) 350,000 $43,574 $57,486 ------- ------- Total Foreign Preferred Stocks 251,749 286,913 ------- ------- Principal CORPORATE BONDS(16.4% OF NET ASSETS) Amount --------- Apparel & Textiles(.2%) U.S. Leather, Inc. 10.25%, 2003 $100,000 87,715 86,500 ------- ------- Auto & Auto Related(.2%) Venture Holdings 9.75%, 2004 100,000 87,006 87,500 ------- ------- Banking(1.1%) BankAmerica Corp. 6.00%, 1997 200,000 199,713 198,812 First USA Bank of Delaware 5.35%, 1996 100,000 98,981 95,296 Shawmut National Corp. 8.875%, 1996 100,000 102,101 101,383 ------- ------- 400,795 395,491 ------- ------- Chemicals(1.2%) Building Materials Corp. of America 0.00%, 2004 200,000 127,137 124,000 Crain Industries, Inc. 13.50%, 2005 75,000 75,000 75,375 G-I Holdings 0.00%, 1998 100,000 72,431 71,500 Harris Chemical North America, Inc. 0.00%, 2001 100,000 95,562 89,000 LaRoche Industries, Inc. 13.00%, 2004 100,000 103,000 105,000 ------- ------- 473,130 464,875 ------- ------- Computer Business Equipment & Services(.2%) Unisys Corp. 9.75%, 1996 75,000 77,063 76,313 ------- ------- Drugs & Cosmetics(.8%) Revlon Consumer Products Corp. 9.375%, 2001 100,000 96,695 98,250 Revlon Worldwide Corp. 0.00%, 1998 50,000 35,456 35,375 Roche Holdings Inc. 2.75%, 2000 200,000 172,018 170,875 ------- ------- 304,169 304,500 ------- ------- Financial Services(.7%) Chrysler Financial Corp. 6.65%, 1997 80,000 80,553 80,452 General Motors Acceptance Corp. 5.65%, 1997 200,000 197,454 196,832 ------- ------- 278,007 277,284 ------- ------- Health Services & Hospital Supplies(.3%) Integrated Health Services, Inc. 9.625%, 2002 100,000 100,000 102,250 ------- ------- Iron & Steel(.5%) Geneva Steel Co. 9.50%, 2004 50,000 42,597 37,500 Republic Engineered Steels, Inc. 9.875%, 2001 50,000 47,161 46,500 Wierton Steel Corp. 10.75%, 2005 100,000 98,519 93,000 ------- ------- 188,277 177,000 ------- ------- Leasing(.2%) GPA Delaware, Inc. 8.75%, 1998 100,000 83,125 89,000 ------- -------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Leisure & Entertainment (3.3%) Adelphia Communications Corp. 12.50%, 2002 $50,000 $49,757 $50,750 Australis Media Ltd. 0.00%, 2003 150,000 78,608 86,250 Bally Park Place Funding 9.25%, 2004 100,000 93,003 94,250 Bell Cablemedia PLC 0.00%, 2004 150,000 100,932 97,125 Comcast Corp. 9.375%, 2005 100,000 99,525 100,750 Greate Bay Property Funding 10.875%, 2004 50,000 43,140 43,500 GNF Corp. 10.625%, 2003 100,000 82,136 86,500 Helicon Group Ltd. 9.00%, 2003 50,000 45,962 46,125 Kloster Cruise Ltd. 13.00%, 2003 50,000 43,388 35,500 New World Communications Corp. 0.00%, 1999 150,000 100,061 98,250 Santa Fe Hotel 11.00%, 2000 100,000 98,556 89,000 Selmer Company, Inc. 11.00%, 2005 100,000 100,000 96,000 Sinclair Broadcast Group, Inc. 10.00%, 2005 100,000 100,000 100,750 Trump Plaza Funding 10.875%, 2001 100,000 87,537 92,000 Trump Taj Mahal 0.00%, 1999 100,000 76,873 84,500 United International Holdings, Inc. 0.00%, 1999 50,000 30,186 30,250 --------- --------- 1,229,664 1,231,500 --------- --------- Machinery & Equipment(.3%) Specialty Equipment Companies, Inc. 11.375%, 2003 100,000 101,000 105,000 --------- --------- Manufacturing(1.4%) American Standard, Inc. 0.00%, 2005 100,000 78,839 77,250 Day International Group, Inc. 11.125%, 2005 100,000 100,000 105,250 Huntsman Corp. 10.625%, 2001 100,000 106,125 106,000 Interlake Corp. 12.125%, 2002 100,000 102,000 99,000 International Wire Group, Inc. 11.75%, 2005 100,000 100,000 100,250 Jordan Industries, Inc. 10.375%, 2003 50,000 47,560 46,375 --------- --------- 534,524 534,125 --------- --------- Oil & Gas(.5%) Maxus Energy Corp. 9.875%, 2002 100,000 94,166 96,750 Mesa Capital CP 0.00%, 1998 100,000 97,839 91,500 --------- --------- 192,005 188,250 --------- --------- Paper & Forest Products(1.7%) Crown Packaging Holdings Ltd. 0.00%, 2003 200,000 102,772 95,000 Doman Industries Ltd. 8.75%, 2004 100,000 96,087 95,750 Gaylord Container Corp. 0.00%, 2005 100,000 101,210 99,500 Grupo Industrial Durango 12.00%, 2001 75,000 59,034 66,465 Indah Kiat Pulp & Paper Corp. 11.875%, 2002 100,000 102,000 102,000 Malette, Inc. 12.25%, 2004 100,000 108,250 111,000
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Stone Container Corp. 9.875%, 2001 $50,000 $49,939 $49,562 --------- --------- 619,292 619,277 --------- --------- Printing & Publishing(.1%) Marvel III Holdings Inc. 9.125%, 1998 50,000 46,055 45,750 --------- --------- Retail Trade(2.2%) Cole National Corp. 11.25%, 2001 50,000 48,550 49,500 Dairy Mart Convenience Stores, Inc. 10.25%, 2004 100,000 83,550 85,500 Duane Reade Corp. 12.00%, 2002 100,000 90,360 88,250 Farm Fresh, Inc. 12.25%, 2000 100,000 97,360 95,000 Hills Stores Co. 10.25%, 2003 100,000 98,901 92,000 Pathmark Stores, Inc. 0.00%, 2003 200,000 122,783 131,500 Penn Traffic Co. 9.625%, 2005 100,000 95,829 82,250 Ralph's Grocery Co. 11.00%, 2005 100,000 100,000 94,000 Waban, Inc. 11.00%, 2004 100,000 103,500 102,000 --------- --------- 840,833 820,000 --------- --------- Technology(.1%) Monarch Acquisition 12.50%, 2003 50,000 50,000 51,000 --------- --------- Telecommunications(1.1%) Centennial Cellular Corp. 10.125%, 2005 100,000 99,632 99,000 Intermedia Communications of Florida, Inc. 13.50%, 2005 100,000 100,000 104,750 MFS Communications Company, Inc. 0.00%, 2004 150,000 107,583 111,750 Nextel Communications, Inc. 0.00%, 2004 200,000 110,713 97,000 --------- --------- 417,928 412,500 --------- --------- Transportation(.3%) Federal Express Corp. 6.25%, 1998 100,000 99,728 99,226 --------- --------- Total Corporate Bonds 6,210,316 6,167,341 --------- --------- U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (20.6% OF NET ASSETS) U.S. Treasury Bond 8.125%, 2019 920,000 985,550 1,063,750 U.S. Treasury Notes 7.375%, 1997 2,000,000 2,031,094 2,059,380 5.125%, 1998 3,150,000 3,032,828 3,089,649 7.75%, 1999 230,000 242,039 244,446 7.25%, 2004 1,220,000 1,244,513 1,294,530 --------- --------- Total U.S. Government & Agency Long-Term Obligation 7,536,024 7,751,755 --------- --------- FOREIGN GOVERNMENT BONDS(.5% OF NET ASSETS) Province of Ontario 8.25%, 1996 200,000 203,558 202,468 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN BALANCED ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ FOREIGN CURRENCY (.1% OF NET ASSETS) Canadian Dollar $443 $342 $344 Deutsche Mark 6,272 4,490 4,274 Finnish Markka 9,583 2,198 2,184 French Franc 15,122 3,156 2,997 Hong Kong Dollar 15,262 1,973 1,971 Indonesian Rupiah 340,001 150 150 Italian Lira 898,170 565 553 Netherlands Guilder 2,417 1,492 1,470 Norwegian Krone 6,800 1,080 1,060 Pound Sterling 881 1,392 1,367 Spanish Pesta 195,483 1,635 1,559 Swedish Krona 10,923 1,503 1,497 Swiss Franc 2,607 2,255 2,163 Thailand Baht 9,720 388 388 ----------- ----------- Total Foreign Currency 22,619 21,977 ----------- ----------- REPURCHASE AGREEMENTS(3.6% OF NET ASSETS) State Street Bank & Trust Co. 5.00%, due 9/1/95 1,372,000 1,372,000 1,372,000 ----------- ----------- TIME DEPOSITS(1.3% OF NET ASSETS) State Street Bank & Trust Co. 484,000 484,000 484,000 3.25%, due 9/1/95 ----------- ----------- TOTAL INVESTMENTS $34,848,140 $36,679,230 ----------- -----------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ COMMON STOCKS(57.2% OF NET ASSETS) Aerospace(2.9%) General Dynamics Corp. 4,300 $198,415 $226,288 General Motors Corp. Class H 1,500 60,215 59,812 Lockheed Martin Corp. 3,200 184,765 194,800 Loral Corp. 2,200 103,235 120,450 McDonnell Douglas Corp. 1,300 80,958 104,325 Rockwell International Corp. 2,900 126,692 129,775 -------- -------- 754,280 835,450 -------- -------- Airlines(.8%) AMR Corp. 1,100 74,676 77,550 Delta Air Lines, Inc. 1,300 85,166 96,688 Northwest Airlines Corp. 1,700 50,400 61,412 -------- -------- 210,242 235,650 -------- -------- Apparel & Textiles(.8%) Nautica Enterprises, Inc. 1,900 57,439 60,087 St. John Knits, Inc. 1,100 40,064 48,675 Tommy Hilfiger Corp. 4,100 98,958 137,350 -------- -------- 196,461 246,112 -------- -------- Auto & Auto Related (.3%) Discount Auto Parts, Inc. 2,800 74,088 91,350 -------- -------- Banking(2.7%) Ahmanson (H.F.) & Co. 2,300 56,226 54,625 Bank of Boston Corp. 3,300 137,892 145,200 Chase Manhattan Corp. 3,400 152,769 195,500 Morgan (J.P.) & Company, Inc. 3,100 215,831 225,913 Wells Fargo & Co. 900 149,138 167,737 -------- -------- 711,856 788,975 -------- -------- Building Materials & Construction(.5%) Case Corp. 1,900 64,875 71,725 USG Corp. 2,200 54,398 59,675 -------- -------- 119,273 131,400 -------- -------- Business Equipment & Services(.6%) Medic Computer Systems, Inc. 2,000 85,426 88,000 New England Business Service, Inc. 4,700 85,371 91,650 -------- -------- 170,797 179,650 -------- -------- Chemicals(2.2%) FMC Corp. 700 43,210 53,900 Goodrich (B.F.) Company 2,400 143,355 142,800 Grace (W.R.) & Co. 3,600 192,942 239,850 Monsanto Co. 2,200 182,886 208,725 -------- -------- 562,393 645,275 -------- -------- Commercial Services(1.0%) Alternative Resources Corp. 1,500 36,715 44,625 Cambridge Technology Partners, Inc. 2,200 73,625 86,350 Corrections Corporation of America 2,500 87,713 112,500 Sylvan Learning Systems, Inc. 1,900 56,002 54,150 -------- -------- 254,055 297,625 -------- -------- Computer Business Equipment & Services(4.4%) Acxiom Corporation 4,900 118,556 131,688 ALANTEC Corp. 1,900 71,188 76,000 Avid Technology, Inc. 1,100 42,710 43,725 Cognex Corp. 2,600 83,400 129,675 Davidson and Associates, Inc. 1,600 76,981 82,400 Epic Design Technology, Inc. 500 21,604 21,562 Global Village Communication 3,600 61,273 56,250 Hyperion Software Corp. 1,700 65,249 79,050 Inso Corp. 600 41,034 37,575 McAfee Associates, Inc. 2,500 78,268 109,687 National Data Corp. 2,800 57,058 72,100 Optical Data Systems, Inc. 1,900 44,200 62,225 Seagate Technology, Inc. 800 39,206 35,400 Sierra Semiconductor 800 37,828 39,500
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Storage Technology Corp. 2,000 $54,934 $54,750 StorMedia, Inc. 1,500 64,432 62,250 Wonderware Corp. 2,700 96,224 93,150 Zebra Technologies Corp. 1,600 94,286 93,200 --------- --------- 1,148,431 1,280,187 --------- --------- Conglomerates(1.1%) AlliedSignal Inc. 1,100 43,261 48,813 Hanson PLC 7,400 136,608 126,725 Jardine Matheson Holdings Ltd. 3,800 30,419 27,360 Textron, Inc. 1,700 99,168 116,450 --------- --------- 309,456 319,348 --------- --------- Drugs & Cosmetics(1.4%) American Home Products Corp. 2,000 154,232 154,000 Bristol-Myers Squibb Co. 1,600 109,898 109,800 Watson Pharmaceuticals, Inc. 3,262 106,210 134,965 --------- --------- 370,340 398,765 --------- --------- Electrical & Electronic Equipment(4.2%) Allen Group, Inc. 2,100 67,457 68,513 Cidco, Inc. 1,500 49,173 52,500 Credence Systems Corp. 950 23,267 33,487 GaSonics International 3,000 75,669 104,250 Integrated Silicon Solution, Inc. 2,300 95,681 114,425 Kemet Corp. 2,000 88,623 114,000 Mattson Technology, Inc. 1,400 70,674 71,750 Micron Technology Inc. 1,100 45,879 84,563 Philips Electronics NV 1,400 61,750 63,000 Photronics, Inc. 500 12,237 17,492 S3, Inc. 2,400 65,441 94,200 Sanmina Corp. 1,500 70,279 68,250 Silicon Valley Group, Inc. 2,300 77,929 98,900 Tyco International Ltd. 1,000 57,218 59,125 Ultratech Stepper, Inc. 3,000 97,807 118,500 Vicor Corp. 1,200 47,842 56,400 --------- --------- 1,006,926 1,219,355 --------- --------- Electric Utilities(3.4%) Entergy Corp. 7,800 192,176 187,200 FPL Group, Inc. 5,400 199,676 209,925 Illinova Corp. 5,200 120,510 130,650 Kansas City Power & Light Co. 5,000 115,330 111,875 Unicom Corp. 7,600 201,507 213,750 Western Resources, Inc. 3,900 119,437 117,975 --------- --------- 948,636 971,375 --------- --------- Environmental Control(.5%) United Waste Systems, Inc. 3,500 119,116 135,625 --------- --------- Financial Services(.1%) National Auto Credit, Inc. 1,500 17,837 21,750 --------- --------- Food & Beverages(1.3%) Apple South, Inc. 2,800 61,475 68,600 Boston Chicken, Inc. 3,200 67,564 76,800 Dole Food Co., Inc. 800 26,959 26,200 Doubletree Corp. 2,100 50,900 40,425 Landry's Seafood Restaurants, Inc. 3,300 62,557 58,162 Papa John's International, Inc. 1,600 55,657 64,000 Ralcorp Holdings, Inc. 2,100 48,067 47,513 --------- --------- 373,179 381,700 --------- --------- Health Services & Hospital Supplies(3.4%) Baxter International Inc. 7,200 248,508 280,800 Columbia Healthcare Corp. 1,800 76,352 84,600 Community Health Systems, Inc. 2,500 86,554 96,250 Express Scripts, Inc. 2,000 64,766 74,000 Gulf South Medical Supply, Inc. 2,100 46,416 59,325 Idexx Laboritories, Inc. 2,800 79,444 94,850
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Omnicare, Inc. 3,000 $96,655 $99,750 PhyCor, Inc. 2,000 73,832 83,500 Physician Sales & Service, Inc. 1,400 61,084 63,700 TheraTx, Inc. 2,400 35,199 31,800 --------- --------- 868,810 968,575 --------- --------- Insurance(3.8%) Aetna Life & Casualty Co. 3,500 205,621 238,875 Allstate Corp. 4,214 126,671 142,749 American General Corp. 2,800 92,378 98,700 Compdent Corp. 2,000 47,551 54,500 Hartford Steam Boiler Inspection & Insurance Co. 2,400 108,718 111,300 Healthsource, Inc. 1,900 73,124 76,000 St. Paul Companies Inc. 3,200 154,912 173,600 TIG Holdings, Inc. 2,300 52,233 58,938 Travelers Group 2,800 115,920 134,400 --------- --------- 977,128 1,089,062 --------- --------- Iron & Steel(1.6%) British Steel PLC 5,600 163,105 156,800 Carpenter Technology Corp. 1,600 96,714 122,000 UNR Industries Inc. 25,000 156,250 196,875 --------- --------- 416,069 475,675 --------- --------- Leisure & Entertainment(1.0%) Clear Channel Communications, Inc. 1,500 84,278 111,937 Mattel, Inc. 1,900 45,258 55,100 Regal Cinemas, Inc. 2,400 67,892 81,600 Station Casinos, Inc. 2,000 33,444 38,750 --------- --------- 230,872 287,387 --------- --------- Machinery & Equipment(1.1%) AGCO Corp. 1,400 72,856 68,075 Electroglas, Inc. 1,600 87,002 120,800 Mark IV Industries, Inc. 2,200 40,066 48,950 Parker-Hannifin Corp. 1,800 62,635 71,325 --------- --------- 262,559 309,150 --------- --------- Manufacturing(1.4%) Black & Decker Corp. 1,700 50,910 55,038 FSI International, Inc. 3,300 75,075 116,325 Helix Technology Corp. 1,600 61,580 81,450 Integrated Process Equipment Corp. 1,700 78,510 61,412 Lydall, Inc. 4,400 84,202 105,050 --------- --------- 350,277 419,275 --------- --------- Metals & Mining(.6%) IMC Global Inc. 1,300 66,118 82,225 Potash Corporation of Saskatchewan Inc. 1,400 74,244 79,625 --------- --------- 140,362 161,850 --------- --------- Miscellaneous(.3%) Premark International, Inc. 1,700 82,154 89,038 --------- --------- Office Equipment(.5%) Xerox Corp. 1,100 135,962 132,825 --------- --------- Oil & Gas(3.9%) Amoco Corp. 2,100 140,112 133,875 Chevron Corp. 4,200 203,766 203,175 Mobil Corp. 2,100 204,422 200,025 Panhandle Eastern Corp. 10,500 253,051 262,500 Repsol SA (ADR) 2,000 66,370 63,250 Royal Dutch Petroleum Co. 1,100 137,477 131,175 Ultramar Corp. 4,300 114,126 101,588 YPF Sociedad Anonima (ADR) 1,500 30,165 26,438 --------- --------- 1,149,489 1,122,026 --------- --------- Paper & Forest Products(.7%) Georgia-Pacific Corp. 600 47,968 54,000 Scott Paper Co. 1,600 71,570 74,200 Willamette Industries, Inc. 1,200 61,175 82,500 --------- --------- 180,713 210,700 --------- ---------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Printing & Publishing(.2%) Gartner Group, Inc. 2,300 $65,263 $65,263 ---------- ---------- Real Estate(1.1%) Camden Property Trust 4,800 102,142 105,000 Health & Retirement Property Trust 6,300 95,388 96,862 Meditrust Corp. 3,100 96,289 101,912 ---------- ---------- 293,819 303,774 ---------- ---------- Retail Trade(3.4%) American Stores Co. 3,100 80,984 91,063 CDW Computer Centers, Inc. 1,700 64,991 91,800 Corporate Express, Inc. 3,600 70,231 84,150 Eckerd Corp. 1,700 51,355 62,263 General Nutrition Companies, Inc. 3,000 89,593 125,250 Gymboree Corp. 2,000 62,399 59,500 Kroger Co. 2,700 68,753 88,088 Micro Warehouse, Inc. 1,100 50,203 52,525 Sears, Roebuck & Co. 4,700 133,585 152,162 Service Merchandise Co., Inc. 4,600 31,759 32,775 Sunglass Hut International, Inc. 2,000 65,847 85,000 Waban, Inc. 2,500 46,958 47,188 ---------- ---------- 816,658 971,764 ---------- ---------- Technology(1.5%) Applied Materials, Inc. 600 37,375 62,400 Compaq Computer Corp. 1,800 82,388 85,950 Computer Associates International, Inc. 800 51,258 55,600 Electronics for Imaging, Inc. 2,200 119,274 124,300 International Business Machine Corp. 900 84,707 93,037 ---------- ---------- 375,002 421,287 ---------- ---------- Telcommunications(1.4%) Ascend Communications, Inc. 1,000 42,875 64,500 Aspect Telecommunications Corp. 1,600 66,446 76,400 Coherent Communications Systems Corp. 1,900 39,837 43,225 Ericsson LM Tel. Co.(Spons. ADR) 3,200 54,600 68,400 LCI International, Inc. 2,100 58,056 83,737 Spectrian Corp. 1,500 70,381 69,375 ---------- ---------- 332,195 405,637 ---------- ---------- Telephone Utilities(2.3%) Ameritech Corp. 5,100 230,449 261,375 GTE Corp. 5,300 181,789 194,112 NYNEX Corp. 4,400 179,419 198,000 ---------- ---------- 591,657 653,487 ---------- ---------- Transportation(.6%) Fritz Companies, Inc. 1,500 76,903 106,875 Wisconsin Central Transportation 1,200 73,550 71,400 ---------- ---------- 150,453 178,275 ---------- ---------- Wholesale Trade(.2%) CellStar Corp. 1,700 39,498 54,187 ---------- ---------- Total Common Stocks 14,806,306 16,498,829 ---------- ---------- FOREIGN COMMON STOCKS(15.0% OF NET ASSETS) Auto & Auto Related(.6%) Autoliv AB (Sweden) 1,000 48,006 60,439 Michelin CGDE (France) 1,000 46,204 43,402 Shinmaywa Industries Ltd. (Japan) 3,000 28,532 24,854 Valeo SA (France) 706 42,246 33,706 ---------- ---------- 164,988 162,401 ---------- ---------- Banking(1.2%) Banco Popular Espanol (Spain) 400 59,340 61,553 Banco Santander SA (Spain) 1,500 58,030 61,354 Bangkok Bank Company Ltd. (Thailand) 4,000 43,062 44,693 Deutsche Bank AG (Germany) 1,000 50,268 46,269
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ HSBC Holdings PLC (United Kingdom) 2,000 $25,239 $26,870 Malayan Banking Berhad (Malaysia) 6,000 48,028 49,299 Societe Generale Paris (France) 200 23,355 20,889 Thai Farmers Bank Ltd. (Thailand) 4,500 42,841 43,815 ------- ------- 350,163 354,742 ------- ------- Building Materials & Construction(.2%) Compagnie de Saint Gobain (France) 250 33,060 31,759 PT Indocement Tunggal Prakar (Indonesia) 7,000 28,144 24,862 ------- ------- 61,204 56,621 ------- ------- Chemicals(.3%) Akzo Nobel (Netherlands) 200 23,340 23,594 Bayer AG (Germany) 225 55,807 58,186 ------- ------- 79,147 81,780 ------- ------- Computer Business Equipment & Services(.4%) Fujitsu Ltd. (Japan) 9,000 96,487 97,576 Getronics NV (Netherlands) 600 27,165 25,722 ------- ------- 123,652 123,298 ------- ------- Conglomerates(1.0%) Canadian Pacific Ltd. (Canada) 2,000 33,412 33,507 Hanson PLC (United Kingdom) 13,000 47,898 43,784 Hutchison Whampoa Ltd. (Hong Kong) 10,000 44,980 48,185 Mannesmann AG (Germany) 195 56,689 61,550 Renong Berhad (Malaysia) 22,000 41,297 42,501 Viag AG (Germany) 120 47,149 46,201 ------- ------- 271,425 275,728 ------- ------- Drugs & Cosmetics(1.7%) Astra AB (Sweden) 1,800 52,911 59,699 Ciba-Geigy AG (Switzerland) 100 70,174 70,788 PT Kalbe Farma (Indonesia) 6,000 28,248 24,752 Sandoz AG (Switzerland) 100 67,763 72,116 Schering AG (Germany) 1,000 68,742 72,913 SmithKline Beecham (United Kingdom) 8,051 64,773 74,849 SmithKline Bch/Bec Units (United Kingdom) 5,027 38,508 44,024 Zeneca Group PLC (Germany) 4,000 59,254 69,533 ------- ------- 450,373 488,674 ------- ------- Electric Utilities(.4%) Powergen PLC (United Kingdom) 3,366 26,026 30,588 VEBA AG (Germany) 2,000 77,279 76,511 ------- ------- 103,305 107,099 ------- ------- Electrical & Electronic Equipment(2.2%) BBC AG Brown Boveri & Cie. (Switzerland) 65 67,607 68,560 Hitachi Ltd. (Japan) 7,000 74,827 76,608 Keyence Corp. (Japan) 400 45,483 51,140 Kyocera Corp. (Japan) 1,000 75,913 88,371 Matsushita Electric Industrial Co. Ltd. (Japan) 4,000 67,996 62,596 Philips Electronics NV (Netherlands) 2,000 80,364 89,754 Pioneer Electronic Corp. (Japan) 1,000 21,612 19,127 Sony Corp. (Japan) 1,000 48,817 54,618 Sumitomo Electric Industries Ltd. (Japan) 6,000 79,781 77,938 Toshiba Corp. (Japan) 7,000 50,198 50,547 ------- ------- 612,598 639,259 ------- ------- Financial Services(.6%) Compagnie Bancaire SA (France) 220 23,395 22,934 International Nederlanden Groep NV (Netherlands) 1,000 54,145 55,579 Itochu Corporation (Japan) 4,000 28,019 24,875 Nichiei Co. Ltd. (Japan) 1,000 69,474 57,891 ------- ------- 175,033 161,279 ------- ------- Food & Beverages(.4%) Heineken NV (Netherlands) 550 74,674 77,258 Nestle SA (Switzerland) 50 50,532 50,581 ------- ------- 125,206 127,839 ------- ------- Insurance(.6%) AEGON N.V. (Netherlands) 2,000 65,174 67,254 Munich Reinsurance (Germany) 25 51,152 50,426 Skandia Foersaekrings AB (Sweden) 1,300 25,518 26,725
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Union des Assurances Federales SA (France) 400 $43,070 $40,509 ------- ------- 184,914 184,914 ------- ------- Iron &Steel(.7%) Hitachi Metals Ltd. (Japan) 2,000 25,920 23,320 Kawasaki Steel (Japan) 6,000 25,374 20,558 Nisshin Steel Co. Ltd. (Japan) 12,000 48,428 48,604 Outokumpu Oy (Finland) 2,425 43,288 45,216 Rio Tinto-Zinc Corp. PLC (United Kingdom) 4,000 51,448 54,291 Sumitomo Metal Industries (Japan) 7,000 23,998 19,546 ------- ------- 218,456 211,535 ------- ------- Leisure & Entertainment(.4%) Carlton Communications PLC (United Kingdom) 3,300 50,416 53,267 Television Broadcasts Ltd. (Hong Kong) 8,000 30,940 29,557 TV Francaise (TF1) (France) 400 39,611 40,588 ------- ------- 120,967 123,412 ------- ------- Machinery & Equipment(.3%) Mabuchi Motor Co. (Japan) 800 55,738 54,250 NSK Limited (Japan) 3,000 22,759 20,221 SMC Corp. (Japan) 400 23,542 24,261 ------- ------- 102,039 98,732 ------- ------- Metals & Mining(.1%) Broken Hill Proprietary Co. Ltd. (Australia) 85 972 1,233 Poseidon Gold Ltd. (Australia) 7,400 15,183 14,409 Western Mining Corp. Holdings Ltd. (Australia) 2,000 11,491 13,443 ------- ------- 27,646 29,085 ------- ------- Miscellaneous(.2%) SGS Societe Generale de Surveillance Holding SA (Switzerland) 30 51,157 53,900 ------- ------- Office Equipment(.3%) Canon Inc. (Japan) 4,000 68,170 72,415 ------- ------- Oil & Gas(1.6%) Ampolex Ltd. (Australia) 23,000 64,747 54,297 British Gas Corp. (United Kingdom) 5,000 23,757 21,535 British Petroleum Co. Ltd. (United Kingdom) 6,000 44,154 44,979 Compagnie Francaise de Petroleum Total (France) 1,641 105,302 96,396 Enterprise Oil PLC (United Kingdom) 7,500 50,032 43,070 Hong Kong & China Gas Company Ltd. (Hong Kong) 13,000 21,066 20,488 Imperial Oil Ltd. (Canada) 1,100 40,429 39,520 Lasmo PLC (United Kingdom) 16,000 44,537 43,955 Saga Petroleum (Norway) 4,000 59,943 50,183 Societe Nationale Elf Aquitaine (France) 554 46,349 40,569 ------- ------- 500,316 454,992 ------- ------- Paper & Forest Products(.3%) Metsa-Serla Oy (Finland) 950 41,313 37,462 Mo och Domsjo AB (Sweden) 800 43,544 46,049 ------- ------- 84,857 83,511 ------- ------- Printing & Publishing(.3%) De La Rue PLC (United Kingdom) 1,526 22,362 20,641 Elsevier NV (Netherlands) 2,200 25,371 27,826 Wolters-Kluwer NV (Netherlands) 400 33,854 35,269 ------- ------- 81,587 83,736 ------- ------- Retail Trade(.4%) Argyll Group PLC (United Kingdom) 4,000 21,875 21,853 Carrefour Supermarche SA (France) 90 46,489 50,246 LVMH Louis Vuitton Moet-Hennessy (France) 270 53,383 48,587 ------- ------- 121,747 120,686 ------- ------- Telecommunications(.5%) Nokia AB (Finland) 1,200 51,834 83,153 Telecom Italia S.p.A (Italy) 19,000 31,390 30,519 Telecom Italia Mobile S.p.A (Italy) 19,000 22,591 28,005 ------- ------- 105,815 141,677 ------- -------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Market Security Shares Cost Value -------- ------ ---- ------ Telephone Utilities(.2%) DDI Corporation(Japan) 5 $45,506 $42,242 Telefonica de Espana (Spain) 2,000 27,735 27,109 --------- --------- 73,241 69,351 --------- --------- Tobacco(.1%) PT HM Sampoerna (Indonesia) 4,000 31,685 37,943 --------- --------- Total Foreign Common Stocks 4,289,691 4,344,609 --------- --------- CONVERTIBLE PREFERRED STOCKS(1.1% OF NET ASSETS) Building Materials & Construction(.4%) Case Corp. 1,100 105,350 106,150 --------- --------- Computer Business Equipment & Services(.3%) Storage Technology Corp. 1,500 97,505 92,812 --------- --------- Energy Services(.4%) J. Ray McDermott, SA 2,300 142,486 113,851 --------- --------- Total Convertible Preferred Stocks 345,341 312,813 --------- --------- FOREIGN PREFERRED STOCKS(1.0% OF NET ASSETS) Auto & Auto Related (.1%) Fiat S.p.A.(Italy) 13,500 35,936 30,449 --------- --------- Computer Business Equipment & Services(.2%) SAP AG (Germany) 400 41,598 59,203 --------- --------- Conglomerates(.2%) RWE AG (Germany) 185 50,545 50,186 --------- --------- Electric Utilities (.2%) CEMIG (Brazil) 2,000,000 40,147 45,273 --------- --------- Financial Services(.1%) Banco Bradesco SA (Brazil) 4,600,000 39,949 44,315 --------- --------- Telecommunications(.2%) Telecomunicacoes de Sao Paulo SA (Brazil) 350,000 43,573 57,486 --------- --------- Total Foreign Preferred Stocks 251,748 286,912 --------- --------- CORPORATE BONDS(8.9% OF NET ASSETS) Principal Amount --------- Apparel & Textiles(.1%) U.S. Leather, Inc. 10.25%, 2003 $50,000 43,858 43,250 --------- --------- Auto & Auto Related(.1%) Venture Holdings 9.75%, 2004 50,000 43,503 43,750 --------- --------- Chemicals(.7%) Building Materials Corp. of America 0.00%, 2004 100,000 63,568 $62,000 Crain Industries, Inc. 13.50%, 2005 25,000 25,000 25,125 G-I Holdings 0.00%, 1998 50,000 36,216 35,750 Harris Chemical North America, Inc. 0.00%, 2001 50,000 47,781 44,500
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ LaRoche Industries, Inc. 13.00%, 2004 $25,000 $25,750 $26,250 ------- ------- 198,315 193,625 ------- ------- Drugs & Cosmetics(.3%) Revlon Consumer Products Corp. 9.375%, 2001 50,000 48,348 49,125 Revlon Worldwide Corp. 0.00%, 1998 50,000 35,456 35,375 ------- ------- 83,804 84,500 ------- ------- Health Services & Hospital Supplies(.2%) Integrated Health Services, Inc. 9.625%, 2002 50,000 50,000 51,125 ------- ------- Iron & Steel(.3%) Geneva Steel Co. 9.50%, 2004 25,000 21,298 18,750 Republic Engineered Steels, Inc. 9.875%, 2001 25,000 23,580 23,250 Wierton Steel Corp. 10.75%, 2005 50,000 49,260 46,500 ------- ------- 94,138 88,500 ------- ------- Leasing(.2%) GPA Delaware, Inc. 8.75%, 1998 50,000 41,563 44,500 ------- ------- Leisure & Entertainment (2.2%) Adelphia Communications Corp. 12.50%, 2002 25,000 24,879 25,375 Australis Media Ltd. 0.00%, 2003 75,000 39,304 43,125 Bally Park Place Funding 9.25%, 2004 50,000 46,502 47,125 Bell Cablemedia PLC 0.00%, 2004 75,000 50,466 48,563 Comcast Corp. 9.375%, 2005 50,000 49,763 50,375 Greate Bay Property Funding 10.875%, 2004 25,000 21,570 21,750 GNF Corp. 10.625%, 2003 50,000 41,068 43,250 Helicon Group Ltd. 9.00%, 2003 50,000 45,962 46,125 Kloster Cruise Ltd. 13.00%, 2003 25,000 21,694 17,750 New World Communications Corp. 0.00%, 1999 75,000 50,030 49,125 Santa Fe Hotel 11.00%, 2000 50,000 49,278 44,500 Selmer Company, Inc. 11.00%, 2005 50,000 50,000 48,000 Sinclair Broadcast Group, Inc. 10.00%, 2005 50,000 50,000 50,375 Trump Plaza Funding 10.875%, 2001 50,000 43,563 46,000 Trump Taj Mahal 0.00%, 1999 50,000 38,437 42,250 ------- ------- 622,516 623,688 ------- ------- Machinery & Equipment(.2%) Specialty Equipment Companies, Inc. 11.375%, 2003 50,000 50,500 52,500 ------- -------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Manufacturing(.9%) American Standard, Inc. 0.00%, 2005 $50,000 $39,419 $38,625 Day International Group, Inc. 11.125%, 2005 50,000 50,000 52,625 Huntsman Corp. 10.625%, 2001 50,000 53,063 53,000 Interlake Corp. 12.125%, 2002 50,000 51,000 49,500 International Wire Group, Inc. 11.75%, 2005 50,000 50,000 50,125 Jordan Industries, Inc. 10.375%, 2003 25,000 23,780 23,188 ------- ------- 267,262 267,063 ------- ------- Oil & Gas(.3%) Maxus Energy Corp. 9.875%, 2002 50,000 47,083 48,375 Mesa Capital CP 0.00%, 1998 50,000 48,920 45,750 ------- ------- 96,003 94,125 ------- ------- Paper & Forest Products(1.3%) Crown Packaging Holdings Ltd. 0.00%, 2003 100,000 51,386 47,500 Doman Industries Ltd. 8.75%, 2004 50,000 48,044 47,875 Gaylord Container Corp. 0.00%, 2005 50,000 50,605 49,750 Grupo Industrial Durango 12.00%, 2001 75,000 60,907 66,465 Indah Kiat Pulp & Paper Corp. 11.875%, 2002 50,000 51,000 51,000 Malette, Inc. 12.25%, 2004 50,000 54,125 55,500 Stone Container Corp. 9.875%, 2001 50,000 49,935 49,561 ------- ------- 366,002 367,651 ------- ------- Printing & Publishing(.1%) Marvel III Holdings Inc. 9.125%, 1998 25,000 23,027 22,875 ------- ------- Retail Trade(1.3%) Dairy Mart Convenience Stores, Inc. 10.25%, 2004 50,000 41,775 42,750 Duane Reade Corp. 12.00%, 2002 50,000 45,063 44,125 Farm Fresh, Inc. 12.25%, 2000 50,000 48,680 47,500 Hills Stores Co. 10.25%, 2003 50,000 49,450 46,000 Pathmark Stores, Inc. 0.00%, 2003 100,000 61,391 65,750 Penn Traffic Co. 9.625%, 2005 50,000 47,914 41,125 Ralph's Grocery Co. 11.00%, 2005 50,000 50,000 47,000 Waban, Inc. 11.00%, 2004 50,000 51,750 51,000 ------- ------- 396,023 385,250 ------- ------- Telecommunications(.7%) Centennial Cellular Corp. 10.125%, 2005 50,000 49,816 49,500 Intermedia Communications of Florida, Inc. 13.50%, 2005 50,000 50,000 52,375 MFS Communications Company, Inc. 0.00%, 2004 75,000 53,792 55,875
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. LIFESPAN CAPITAL APPRECIATION ACCOUNT SCHEDULE OF INVESTMENTS (Cont'd) August 31, 1995 (Unaudited)
Principal Market Security Amount Cost Value -------- --------- ---- ------ Nextel Communications, Inc. 0.00%, 2004 $100,000 $55,357 $48,500 ----------- ----------- 208,965 206,250 ----------- ----------- Total Corporate Bonds 2,585,479 2,568,652 ----------- ----------- U.S. GOVERNMENT & AGENCY LONG-TERM OBLIGATIONS (9.4% OF NET ASSETS) U.S. Treasury Bond 8.125%, 2019 460,000 492,775 531,875 U.S. Treasury Notes 5.125%, 1998 1,550,000 1,492,106 1,520,457 7.250%, 2004 610,000 622,256 647,265 ----------- ----------- Total U.S. Government & Agency Long-Term Obligations 2,607,137 2,699,597 ----------- ----------- FOREIGN CURRENCY (.1% OF NET ASSETS) Canadian Dollar 1,897 349 352 Deutsche Mark 6,272 4,489 4,274 Finnish Markka 9,583 2,198 2,184 French Franc 15,122 3,156 2,997 Hong Kong Dollar 15,262 1,972 1,972 Indonesian Rupiah 340,001 150 150 Italian Lira 898,170 565 553 Netherlands Guilder 2,417 1,492 1,470 Norwegian Krone 6,800 1,080 1,059 Pound Sterling 882 1,395 1,369 Spanish Peseta 171,609 1,437 1,368 Swedish Krona 10,923 1,503 1,496 Swiss Franc 2,617 2,264 2,172 Thailand Baht 9,720 388 388 ----------- ----------- Total Foreign Currency 22,438 21,804 ----------- ----------- REPURCHASE AGREEMENTS(4.6% OF NET ASSETS) State Street Bank & Trust Co. 5.00%, due 9/1/95 1,324,000 1,324,000 1,324,000 ----------- ----------- TIME DEPOSITS(1.8% OF NET ASSETS) State Street Bank & Trust Co. 3.25%, due 9/1/95 510,000 510,000 510,000 ----------- ----------- TOTAL INVESTMENTS $26,742,140 $28,567,216 ----------- -----------
Notes to Schedule of Investments August 31, 1995 (Unaudited) 1. Aggregate gross unrealized appreciation (depreciation) as of August 31, 1995, based on cost for Federal income tax purposes, was as follows:
Accounts -------- Diversified Capital Income Balanced Appreciation ---------------------------------------------- Aggregate gross unrealized appreciation $687,083 2,272,023 $2,211,616 Aggregate gross unrealized depreciation (157,704) (440,933) (386,540) ----------- ----------- ----------- Net unrealized appreciation $529,379 $1,831,090 $1,825,076 ----------- ----------- ----------- 2. The aggregate cost of investments for Federal income tax purposes was: $21,337,190 $34,848,140 $26,742,140 ----------- ----------- ----------- 3. Purchases and sales of securities (excluding short-term securities) for the two months ended August 31, 1995 are summarized as follows: Purchases $2,299,539 $5,418,825 $4,950,124 Sales $1,234,206 $4,935,528 $4,294,460
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. STATEMENT OF NET ASSETS August 31, 1995 (Unaudited)
------------------------------------------------- LIFESPAN ACCOUNTS ------------------------------------------------- DIVERSIFIED CAPITAL INCOME BALANCED APPRECIATION ------------------------------------------------- ASSETS Investments: Bonds, at market value (Cost $15,778,761, $13,949,898, $5,192,616) $16,058,841 $14,121,564 $5,268,249 Common stocks, at market value (Cost $4,508,977, $18,422,533, $19,095,997) 4,791,078 20,079,964 20,843,438 Preferred stocks, at market value (Cost $361,452, $597,090, $597,089) 328,650 599,725 599,725 Foreign currency, at market value (Cost $22,619, $22,438) -- 21,977 21,804 Short-term securities 688,000 1,856,000 1,834,000 ------------------------------------------------- 21,866,569 36,679,230 28,567,216 Cash 57,357 132,449 113,684 Investment income receivable 308,136 308,384 138,817 Receivable from securities sold 38,047 638,065 191,262 Receivable from Fund shares sold -- 61,542 125,380 Foreign currency market receivable -- 39,255 39,255 Foreign tax receivable -- 4,826 4,826 ------------------------------------------------- Total Assets 22,270,109 37,863,751 29,180,440 ------------------------------------------------- LIABILITIES Accrued expenses payable 44,859 65,126 44,241 Payable for securities purchased 69,540 109,538 299,613 ------------------------------------------------- Total Liabilities 114,399 174,664 343,854 ------------------------------------------------- NET ASSETS $22,155,710 $37,689,087 $28,836,586 ------------------------------------------------- ------------------------------------------------- OUTSTANDING SHARES 2,149,005 3,514,925 2,652,171 ------------------------------------------------- ------------------------------------------------- NET ASSET VALUE PER SHARE $10.31 $10.72 $10.87 ------------------------------------------------- ------------------------------------------------- NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $21,533,496 $35,240,372 $26,617,638 Undistributed net investment income 19,328 220,115 108,720 Accumulated undistributed net realized gain 73,507 358,255 245,897 Net unrealized appreciation 529,379 1,870,345 1,864,331 ------------------------------------------------- NET ASSETS $22,155,710 $37,689,087 $28,836,586 ------------------------------------------------- -------------------------------------------------
The accompanying notes are an integral part of these financial statements. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. STATEMENT OF OPERATIONS For the period from May 1, 1995 (Inception) to August 31, 1995 (Unaudited)
------------------------------------------------- LIFESPAN ACCOUNTS ------------------------------------------------- DIVERSIFIED CAPITAL INCOME BALANCED APPRECIATION ------------------------------------------------- INVESTMENT INCOME Income: Interest $402,059 $443,074 $212,278 Dividends 75,153 165,387 165,547 ------------------------------------------------- Total Income 477,212 608,461 377,825 ------------------------------------------------- Expenses: Investment advisory fees 52,915 100,551 75,904 Distribution fees 17,638 29,574 22,325 Other 35,277 53,232 40,184 ------------------------------------------------- Total Expenses 105,830 183,357 138,413 ------------------------------------------------- NET INVESTMENT INCOME 371,382 425,104 239,412 ------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments 73,507 369,161 256,932 Net realized loss on foreign currency -- (10,906) (11,035) Net unrealized appreciation on investments 529,379 1,831,090 1,825,076 Net unrealized appreciation on foreign currency -- 39,255 39,255 ------------------------------------------------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 602,886 2,228,600 2,110,228 ------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $974,268 $2,653,704 $2,349,640 ------------------------------------------------- -------------------------------------------------
The accompanying notes are an integral part of these financial statements. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. STATEMENT OF CHANGES IN NET ASSETS For the period from May 1, 1995 (Inception) to August 31, 1995 (Unaudited)
------------------------------------------------- LIFESPAN ACCOUNTS ------------------------------------------------- DIVERSIFIED CAPITAL INCOME BALANCED APPRECIATION ------------------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income $371,382 $425,104 $239,412 Net realized gain on investments 73,507 369,161 256,932 Net realized loss on foreign currency -- (10,906) (11,035) Net unrealized appreciation 529,379 1,870,345 1,864,331 ------------------------------------------------- Net increase in net assets resulting from operations 974,268 2,653,704 2,349,640 ------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (352,054) (204,989) (130,692) Net realized gain from investment transactions -- -- -- ------------------------------------------------- (352,054) (204,989) (130,692) ------------------------------------------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 21,187,396 35,046,498 26,497,646 Net asset value of shares issued to shareholders from reinvestment of dividends 346,243 204,989 130,692 Cost of shares reacquired (143) (11,115) (10,700) ------------------------------------------------- Increase in net assets derived from capital share transactions 21,533,496 35,240,372 26,617,638 ------------------------------------------------- NET INCREASE IN NET ASSETS 22,155,710 37,689,087 28,836,586 NET ASSETS - BEGINNING OF PERIOD -- -- -- ------------------------------------------------- NET ASSETS - END OF PERIOD $22,155,710 $37,689,087 $28,836,586 ------------------------------------------------- ------------------------------------------------- Undistributed net investment income included in net assets at end of period $19,328 $220,115 $108,720 ------------------------------------------------- ------------------------------------------------- Undistributed net realized gain on investments included in net assets at end of period $73,507 $369,161 $256,932 ------------------------------------------------- -------------------------------------------------
The accompanying notes are an integral part of these financial statements. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. FINANCIAL HIGHLIGHTS For the period from May 1, 1995 (Inception) to August 31, 1995 (Unaudited) Selected data for a share of capital stock outstanding throughout the period:
Net Realized Distributions Ratio of Ratio of Net Dividends & Unrealized From Net Net Asset Net Asset Operating Investment Year Net From Net Gain (Loss) Realized Value at Value at Expenses to Income to Ended Investment Investment on Gain on Beginning End Average Average December 31 Income Income Investments Investments of Period of Period Net Assets (b) Net Assets (b) - --------------------------------------------------------------------------------------------------------------------------------- LIFESPAN DIVERSIFIED INCOME ACCOUNT 1995(a) $.18 $(.17) $.30 $ -- $10.00 $10.31 1.50% 5.26% LIFESPAN BALANCED ACCOUNT 1995(a) $.12 $(.06) $.66 $ -- $10.00 $10.72 1.55% 3.59% LIFESPAN CAPITAL APPRECIATION ACCOUNT 1995(a) $.09 $(.05) $.83 $ -- $10.00 $10.87 1.55% 2.68% Net Assets at End of Annual Portfolio Period (in Total Turnover (b) Thousands) Return (c) - ------------------------------------- LIFESPAN DIVERSIFIED INCOME ACCOUNT 50.19% $22,156 4.81% LIFESPAN BALANCED ACCOUNT 81.69% $37,689 7.83% LIFESPAN CAPITAL APPRECIATION ACCOUNT 64.27% $28,837 9.25% (a) For the period from May 1, 1995 (Inception) to August 31, 1995 (b) Annualized (c) Annual total returns do not include the effect of sales charges
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. NOTES TO FINANCIAL STATEMENTS For the period from May 1, 1995 (Inception) to August 31, 1995 (Unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Connecticut Mutual Investment Accounts, Inc. (the Fund), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund is comprised of thirteen distinct mutual funds, including the following three LifeSpan Accounts included in these financial statements: Diversified Income, Balanced and Capital Appreciation. An interest in the Fund is limited to the assets of the Account or Accounts in which shares are held by shareholders, and such shareholders are entitled to a pro rata share of all dividends and distributions arising from the net investment income and net realized capital gains on the investments of such Accounts. The following is a summary of significant accounting policies followed by the Fund: (a) Valuation of Investment Securities - Equity and debt securities which are traded on securities exchanges are valued at the last sales price as of the close of business on the day the securities are being valued. Lacking any sales, equity securities are valued at the last bid price and debt securities are valued at the mean between closing bid and asked prices. Securities traded in the over-the-counter market and included in the NASDAQ National Market System are valued using the last sales price when available. Otherwise, over-the-counter securities are valued at the mean between the bid and asked prices or yield equivalent as obtained from one or more dealers who make a market in the securities. Short-term securities are valued on an amortized cost basis, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in accordance with procedures established by the Board of Directors of the Fund, including the use of valuations furnished by a private service retained by the custodian. (b) Foreign Currency Transactions - Foreign currency transactions are translated to U. S. dollars at the prevailing exchange rate on the trade date. Since investment transactions are recorded on a trade date basis, the prevailing exchange rate may differ on actual settlement date. Similarly, the prevailing exchange rate on ex-dividend or interest receivable date may vary from the date when dividends or interest are received. These differences give rise to currency gains and losses which are included as a component of investment income. For the four months ended August 31, 1995, the Balanced Account and the Capital Appreciation Account had net currency gains of $5,445 and $5,603, respectively. (c) Federal Income Taxes - The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. Under such provisions, by distributing substantially all of its taxable income to its shareholders or otherwise complying with requirements for regulated investment companies, the Fund will not be subject to Federal income taxes. Accordingly, no provision for Federal income taxes is required. For Federal tax reporting purposes, each Account is treated as a separate taxable entity. (c) Gains and Losses - Realized gains and losses from sales of investments are determined on the identified cost basis. (d) Affiliate Holdings - Connecticut Mutual Life Insurance Company owns 7,905,525 shares of the three LifeSpan Accounts of the Fund as follows: Diversified Income Balanced Capital Appreciation 2,033,203 3,359,773 2,512,549 (e) Other - Investment transactions are accounted for on the trade date which is the date the order to buy or sell is executed. Dividend income is recorded on the ex-dividend date and interest income is accrued on a daily basis. All expenses are accrued on a daily basis. 2. INVESTMENT ADVISORY FEES AND OTHER AFFILIATE TRANSACTIONS The Fund has an Investment Advisory Agreement with G.R. Phelps & Co., Inc. (the Investment Adviser), a wholly-owned subsidiary of Connecticut Mutual Life Insurance Company. Subject to review by the Board of Directors of the Fund, the Investment Adviser is responsible for the investment management (the buying, holding and selling of securities) for all Accounts and has engaged three Sub-Advisers to assist in the selection of portfolio investments for three of the Components of the Accounts. Scudder, Stevens & Clark, Inc. is the Sub-Adviser to the International Equity Component, BEA Associates is the Sub-Adviser to the High Yield Bond Component and Pilgrim Baxter & Associates is the Sub-Adviser to the Small Cap Component. The Fund's Board of Directors has approved all Sub-Advisory Agreements. The Investment Adviser performs certain administrative services for all the Accounts. The Diversified Income Account, Balanced Account and Capital Appreciation Account each pay monthly to the Investment Adviser a fee equal on an annual basis to 0.75%, 0.85% and 0.85%, respectively, of the respective Accounts' first $250 million of average daily net assets and 0.65%, 0.75% and 0.75%, respectively, on such assets over $250 million. The investment advisory fees, which also cover certain administrative and management services, amounted to $229,370 for all Accounts for the four months ended August 31, 1995. As compensation for their services to the Accounts, the Sub-Advisers received the following fees for the four months ended August 31, 1995: Scudder, Stevens & Clark, Inc. - $25,965, BEA Associates - $16,189 and Pilgrim Baxter & Associates - $22,597. For the four months ended August 31, 1995, the Investment Adviser, serving as principal underwriter for sale of shares of the Accounts, earned $130,800 related to sales charges deducted from proceeds for shares sold. On May 1, 1995, each Account adopted a distribution plan (Plan) in accordance with the requirements of Rule 12b-1 of the Investment Company Act of 1940. Under each Plan, each Account pays G. R. Phelps & Co., Inc. (the Distributor) a fee as reimbursement for its expenditures incurred in distributing and servicing shares of the Account. The Accounts accrue fees daily and pay fees monthly to the Distributor at an annual rate of 0.25% of each Account's average daily net assets. For the four months ended August 31, 1995, the Distributor received $69,537 in fees from these Accounts. 3. DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are declared and paid monthly for the Diversified Income Account and semi-annually for the Balanced and Capital Appreciation Accounts. All net realized capital gains, if any, are declared and paid at least annually. 4. CAPITAL STOCK The authorized capital stock of the Fund at August 31, 1995 consisted of 3,000,000,000 shares of common stock, par value $0.001 per share. The shares of stock are divided among thirteen separate Accounts, three of which are indicated below. All shares of common stock have equal voting rights, except that only shares of a particular Account are entitled to vote on matters pertaining to that Account. Transactions in capital stock were as follows:
For the period from May 1, 1995 (Inception) to August 31, 1995 -------------------------------------------- Diversified Capital Income Balanced Appreciation -------------------------------------------- Shares authorized (in millions) 200 200 200 -------------------------------------------- -------------------------------------------- Shares sold 2,115,288 3,496,008 2,640,518 Shares issued to shareholders from reinvestment of dividends 33,731 19,960 12,688 -------------------------------------------- Total issued 2,149,019 3,515,968 2,653,206 Shares reacquired (14) (1,043) (1,035) -------------------------------------------- Net increase 2,149,005 3,514,925 2,652,171 -------------------------------------------- --------------------------------------------
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. PART C - OTHER INFORMATION ITEM 24. Financial Statements and Exhibits. (a) Financial Statements. (1) Included in Part A with respect to Connecticut Mutual Liquid Account, Connecticut Mutual Income Account, Connecticut Mutual Government Securities Account, Connecticut Mutual Total Return Account, Connecticut Mutual Growth Account, CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan Balanced Account and CMIA Diversified Income Account: Financial Highlights for Connecticut Mutual Liquid Account, Connecticut Mutual Income Account, Connecticut Mutual Government Securities Account, Connecticut Mutual Total Return Account and Connecticut Mutual Growth Account (each, an Account and collectively, the Accounts) for the period ended December 31, 1994, and the six months ended June 30, 1995. Financial Highlights for CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan Balanced Account and CMIA LifeSpan Diversified Income Account for the four-month period ended August 31, 1995. (2) Included in Part B with respect to Connecticut Mutual Liquid Account, Connecticut Mutual Income Account, Connecticut Mutual Government Securities Account, Connecticut Mutual Total Return Account, Connecticut Mutual Growth Account: Statement of Net Assets as of December 31, 1994 and June 30, 1995 Statement of Operations for year ended December 31, 1994 and six months ended June 30, 1995 Statement of Changes in Net Assets for the years ended December 31, 1993 and 1994 and six months ended June 30, 1995 Financial Highlights for the period from September 15, 1985 (inception) to December 31, 1994 and six months ended June 30, 1995 Notes to Financial Statements as of December 31, 1994 and June 30, 1995 Auditors' Report Included in Part B with respect to CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan Balanced Account and CMIA Diversified Account. Statement of Net Assets as of August 31, 1995. Statement of Operations for the period from May 1, 1995 to August 31, 1995. Statement of Changes in Net Assets for the period from May 1, 1995 to August 31, 1995 Financial Highlights for the period from May 1, 1995 to August 31, 1995 Notes to Financial Statements as of August 31, 1995
(b) Exhibits 99.B1. Articles of Incorporation* 99.B1.1 Amendment to Articles of Incorporation**** 99.B1.2 Amended and Restated Articles of Incorporation* 99.B1.3 Amended Articles of Incorporation 99.B2. By-Laws* 99.B3. Not Applicable 99.B4. Share Certificate* 99.B5. Amendment to Investment Advisory Agreement between the Registrant, on behalf of each series, and G.R. Phelps & Co., Inc. to add LifeSpan Accounts**** 99.B5.1. Subadvisory Agreement among the Registrant, on behalf of respective LifeSpan Account, G.R. Phelps & Co., Inc. and the respective Subadvisor and schedule of omitted substantially similar documents**** 99.B6. Underwriting Agreement between Registrant and G.R. Phelps & Co., Inc.* 99.B6.1. Amendment (Municipal Accounts) to Amended Underwriting Agreement between Registrant and G.R. Phelps & Co., Inc.*** 99.B6.2. Amendment (LifeSpan Accounts) to Amended Underwriting Agreement between Registrant and G.R. Phelps & Co., Inc.**** 99.B6.3. Dealer Agreement with G.R. Phelps & Co., Inc.* 99.B6.4. Underwriting Agreement between Registrant and Connecticut Mutual Financial Services, L.L.C.* 99.B7. Not Applicable 99.B8. Form of Master Custodian Agreement between Registrant and Investors' Bank & Trust Company*** 99.B8.1. Amendment (LifeSpan Accounts) to Custodian Agreement between Registrant and State Street Bank and Trust Company**** 99.B9. Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Co.* 99.B9.1. Amendment (Municipal Accounts) to Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Co.*** 99.B9.2. Amendment (LifeSpan Accounts) to Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Co.**** 99.B9.3. Form of Subscription Agreement among G.R. Phelps & Co., Inc., the Registrant, on behalf of CMIA National Municipals Account, National Tax Free Portfolio and Eaton Vance Management*** 99.B9.4. Form of Subscription Agreement among G.R. Phelps & Co., Inc., the Registrant, on behalf of CMIA California Municipals Account, California Tax Free Portfolio and Eaton Vance Management*** 99.B9.5. Form of Subscription Agreement among G.R. Phelps & Co., Inc., the Registrant, on behalf of CMIA Massachusetts Municipals Account, Massachusetts Tax Free Portfolio and Eaton Vance Management*** 99.B9.6. Form of Subscription Agreement among G.R. Phelps & Co., Inc., the Registrant, on behalf of CMIA New York Municipals Account, New York Tax Free Portfolio and Eaton Vance Management*** 99.B9.7. Form of Subscription Agreement among G.R. Phelps & Co., Inc., the Registrant, on behalf of CMIA Ohio Municipals Account, Ohio Tax Free Portfolio and Eaton Vance Management*** 99.B9.8. Form of Administrative Services Agreement & between Registrant, on behalf of CMIA National Municipals Account, and G.R. Phelps Co., Inc.*** 99.B9.9. Form of Administrative Services Agreement between the Registrant, on behalf of CMIA California Municipals Account, and G.R. Phelps & Co., Inc.*** 99.B9.10. Form of Administrative Services Agreement between the Registrant, on behalf of CMIA Massachusetts Municipals Account, and G.R. Phelps & Co., Inc.*** 99.B9.11. Form of Administrative Services Agreement between the Registrant, on behalf of CMIA New York Municipals Account, and G.R. Phelps & Co., Inc.*** 99.B9.12. Form of Administrative Services Agreement between the Registrant, on behalf of CMIA Ohio Municipals Account, and G.R. Phelps & Co., Inc.*** 99.B10. Opinion and Consent of Counsel** 99.B10.1. Consent of Counsel in California and New York*** 99.B10.2. Consent of Counsel in Ohio*** 99.B10.3. Opinion and Consent of Counsel(Rule 24e-2 shares)* 99.B10.4. Opinion and Consent of Counsel (Class B shares) (to be filed with Rule 24f-2 Notice) 99.B11. Not applicable 99.B12. Not applicable 99.B13. Not Applicable 99.B14. Not Applicable 99.B15. Form of CMIA National Municipals Account Rule 12b- 1 Plan*** 99.B15.1. Form of CMIA California Municipals Account Rule 12b- 1 Plan*** 99.B15.2. Form of CMIA Massachusetts Municipals Account Rule 12b- 1 Plan*** 99.B15.3. Form of CMIA New York Municipals Account Rule 12b- 1 Plan*** 99.B15.4. Form of CMIA Ohio Municipals Account Rule 12b- 1 Plan*** 99.B15.5. Class A Rule 12b-1 Distribution Plans for the respective Accounts and Schedule of Substantially Similar Omitted Documents**** 99.B15.6. Class B Rule 12b-1 Distribution Plan for the respective Accounts and Schedule of Substantially Similar Omitted Documents* 99.B16. Schedule of Computation for Performance Quotations (CMIA Municipal Accounts)*** 99.B17. Financial Data Schedules 99.B18. Rule 18f-3 Multiple Class Plan for the respective Accounts and Schedule of Substantially Similar Omitted Documents* 99.B19. Powers of Attorney*** 99.B27.1 Financial Data Schedule for Connecticut Mutual Liquid Account for the year ended December 31, 1994. 99.B27.2 Financial Data Schedule for Connecticut Mutual Government Securities Account for the year ended December 31, 1994. 99.B27.3 Financial Data Schedule for Connecticut Mutual Income Account for the year ended December 31, 1994. 99.B27.4 Financial Data Schedule for Connecticut Mutual Total Return Account for the year ended December 31, 1994. 99.B27.5 Financial Data Schedule for Connecticut Mutual Growth Account for the year ended December 31, 1994. 99.B27.6 Financial Data Schedule for Connecticut Mutual Liquid Account for the six months ended June 30, 1995. 99.B27.7 Financial Data Schedule for Connecticut Mutual Government Securities Account for the six months ended June 30, 1995. 99.B27.8 Financial Data Schedule for Connecticut Mutual Income Account for the six months ended June 30, 1995. 99.B27.9 Financial Data Schedule for Connecticut Mutual Total Return Account for the six months ended June 30, 1995. 99.B27.10 Financial Data Schedule for Connecticut Mutual Growth Account for the six months ended June 30, 1995. 99.B27.11 Financial Data Schedule for CMIA LifeSpan Capital Appreciation Account for the four month period ended August 31, 1995. 99.B27.12 Financial Data Schedule for CMIA LifeSpan Balanced Account for the four month period ended August 31, 1995. 99.B27.13 Financial Data Schedule for CMIA LifeSpan Diversified Income Account for the four month period ended August 31, 1995. ____________ * Previously filed as exhibit to Registrant's Registration Statement and incorporated by reference herein. ** Filed with Registrant's Rule 24f-2 Notice. *** Previously filed with post-effective amendment no. 19 to the Registration Statement (File No. 2-75276) (the "Registration Statement") on July 27, 1994 and incorporated by reference herein. **** Previously filed with post-effective amendment No. 20 to the Registration Statement on February 10, 1995 and incorporated by reference herein. ITEM 25. Persons Controlled by or Under Common Control with Registrant. The discussion that follows indicates those entities owned directly or indirectly by Connecticut Mutual Life Insurance Company: CONNECTICUT MUTUAL LIFE INSURANCE COMPANY SUBSIDIARIES AS OF 06/27/95 CM ADVANTAGE, INC. This is a Connecticut corporation incorporated February 27, 1984. Its business is acting as general partner in real estate limited partnerships. DHC, Inc. owns all the outstanding stock. CM ASSURANCE COMPANY This is a Connecticut corporation incorporated July 23, 1986 (CM Insurance Company) and renamed December 15, 1987. Type of business - life insurance, endowments, annuities, accident, disability and health insurance. Connecticut Mutual owns all the stock. CM BENEFIT INSURANCE COMPANY This is a Connecticut corporation incorporated April 22, 1986 as CM Pension Insurance Company and renamed CM Benefit Insurance Company on December 15, 1987. Type of business - life insurance, endowments, annuities, accident, disability and health insurance. Connecticut Mutual owns all the stock. CM INSURANCE SERVICES, INC. A Connecticut corporation incorporated July 20, 1981 as DIVERSIFIED INSURANCE SERVICES OF AMERICA, INC. and renamed as CM Insurance Services, Inc. on June 23, 1992. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. DHC, Inc. owns all the issued and outstanding stock. CM INSURANCE SERVICES, INC. (ARKANSAS) An Arkansas corporation incorporated January 11, 1982 as Diversified Insurance Services Agency of America and renamed CM Insurance Services, Inc. on October 19, 1992. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. owns all of the issued and outstanding common stock. CM INSURANCE SERVICES, INC. (TEXAS) A Texas corporation incorporated April 16, 1982 and renamed CM Insurance Services, Inc. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. controls 100 shares (100%) of the issued and outstanding common stock through a voting trust. CM INTERNATIONAL, INC. A Delaware corporation incorporated July 25, 1985. Type of business - holding a mortgage pool and issuance of collateralized mortgage obligations. DHC, Inc. owns all the outstanding stock. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. This is a Maryland corporation incorporated December 9, 1981 as Connecticut Mutual Liquid Account, Inc. It is a diversified open-end management investment company. As of 3/31/94, Connecticut Mutual and its various subsidiaries owned approximately 30% of its shares; AND CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC. This is a Maryland corporation organized August 17, 1981. It is a diversified open-end management investment company. Shares of the fund are sold only to Connecticut Mutual and its affiliates, primarily CML's Panorama separate account. CONNECTICUT MUTUAL FINANCIAL SERVICES, LLC A Connecticut limited liability corporation formed November 10, 1994. It is a registered broker-dealer. Connecticut Mutual has a 99% ownership interest and CM Strategic Ventures, Inc. has a 1% ownership interest. C. M. LIFE INSURANCE COMPANY A Connecticut corporation incorporated April 25, 1980. Its business is the sale of life insurance, endowments, annuities, accident, disability and accident and health insurance. Connecticut Mutual owns all the common Stock. CM PROPERTY MANAGEMENT, INC. A Connecticut corporation incorporated December 27, 1976 as URBCO, Inc., and renamed CM Property Management, Inc. on October 7, 1991. Type of business - Real estate holding company DHC, Inc. owns all the stock. CM STRATEGIC VENTURES, INC. A Connecticut corporation incorporated October 26, 1987. It acts as general partner in limited partnerships. All outstanding stock is held by G.R. Phelps & Co., Inc. CM TRANSNATIONAL S.A. A Luxembourg corporation incorporated July 8, 1987. Type of business - life insurance endowments and annuity contracts. Connecticut Mutual owns 99.7% and DHC, Inc. owns the remaining 0.3% of outstanding stock. CML INVESTMENTS I CORP. A Delaware corporation incorporated December 26, 1991. This Company is organized to authorize, co-issue, sell and deliver jointly with CML Investments I L.P. bonds, notes or other obligations secured by primarily non-investment grade corporate debt obligations and other collateral. CML Investments I L.P. owns all of the outstanding stock (State House I Corp. is the General Partner of CML Investments I L.P.). DHC, INC. A Connecticut corporation incorporated December 27, 1976. Type of business - holding company. Connecticut Mutual owns all the stock. DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA OHIO) An Ohio corporation incorporated March 18, 1982. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. holds 100 shares (100%) of the issued and outstanding Class B (non-voting) common. In addition, it controls 1 share (100%) of the issued and outstanding Class A (voting) common through a voting trust. DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA MASSACHUSETTS) A Massachusetts corporation incorporated March 18, 1982. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. owns all of the issued and outstanding stock. DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA ALABAMA) An Alabama corporation incorporated January 21, 1982. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. owns all of the issued and outstanding stock. DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA NEW YORK) A New York corporation incorporated January 20, 1982. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. owns all of the issued and outstanding common stock. DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA HAWAII) A Hawaii corporation incorporated January 13, 1982. Type of business - the sale of, solicitation for, or procurement or making of insurance or annuity contracts and any other type of contract sold by insurance companies. CM Insurance Services, Inc. owns all of the issued and outstanding common stock. G. R. PHELPS & CO., INC. A Connecticut corporation incorporated December 27, 1976 as AGCO, Inc., renamed Connecticut Mutual Financial Services, Inc. on February 10, 1981, renamed again to G. R. Phelps & Co. on May 31, 1989. Type of business - broker/dealer and investment adviser. DHC, Inc. owns all the outstanding stock. STATE HOUSE I CORPORATION A Delaware corporation incorporated December 26, 1991. This Company is organized to (a) act as a general partner of CML Investments I L.P. which will authorize, issue, sell and deliver, both by itself and jointly with CML Investments I Corp. bonds, notes or other obligations secured by primarily non-investment grade corporate debt obligations; (b) to act as general partner of State House I L.P. which will hold a limited partnership interest in CML Investments I L.P. DHC, Inc. owns all of the outstanding stock. SUNRIVER PROPERTIES, INC. - SHELL CORPORATION This is an Oregon corporation incorporated February 8, 1965. It is not actively engaged in any business. However, its name is a valuable asset which is associated with a development project in which CML has a substantial interest. Connecticut Mutual owns all the outstanding stock. URBAN PROPERTIES INC. A Delaware corporation incorporated March 30, 1970. Type of business - general partner in limited partnerships, real estate holding and development company. DHC, Inc. owns all the outstanding stock. ITEM 26. Number of Holders of Securities.
Number of Record Holders Title of Class as of August 31, 1995 - -------------- ------------------------ Connecticut Mutual Liquid Account 4,883 Connecticut Mutual Government Securities Account 2,723 Connecticut Mutual Income Account 1,856 Connecticut Mutual Total Return Account 14,041 Connecticut Mutual Growth Account 6,781 CMIA National Municipals Account 124 CMIA California Municipals Account 7 CMIA Massachusetts Municipals Account 8 CMIA New York Municipals Account 26 CMIA Ohio Municipals Account 30 CMIA LifeSpan Capital Appreciation Account 46 CMIA LifeSpan Balanced Account 165 CMIA LifeSpan Diversified Income Account 223 ________
Total Holders of Securities 30,913
ITEM 27. Indemnification. Reference is made to Article VI of By-laws filed with Post-Effective Amendment Number 13. ITEM 28. Business and Other Connections of Investment Adviser.
All of the information required by this item is set forth in the Forms ADV, as amended, of the Registrant's investment adviser, G.R. Phelps & Co., Inc. (File No. 801-16182), and subadvisers, Scudder, Stevens & Clark, Inc. (File No. 801-252), Pilgrim, Baxter & Assoc. Ltd. and BEA Associates. The following sections of each such Form ADV are incorporated herein by reference: (a) Items 1 and 2 of Part 2; and (b) Section IV, Business Background, of each Schedule D. ITEM 29. Principal Underwriters. Registrant's distributor, Connecticut Mutual Financial Services, LLC. ("CMFS") is a majority owned subsidiary of Connecticut Mutual Life Insurance Company ("CML"). CMFS is the principal underwriter for Panaroma Separate Account, Panaroma Plus Separate Account and Connecticut Mutual Variable Life Separate Account I, each a separate account of CML or its subsidiaries and a registered investment company. Panorama Separate Account and Panaroma Plus Separate Account are used to fund variable annuity policies. Connecticut Mutual Variable Life Separate Account I is used to fund variable annuity and variable life policies. CMFS is also principal underwriter for the Connecticut Mutual Financial Services Series Fund I, Inc., an open-end investment company whose shares are offered to insurance company separate accounts. The Directors and principal officers of CMFS and their principal occupations during the last two years are as follows: Name* Position with CMFS Position with Registrant Frank G. Dranginis President None Emelia M. Bruno Financial and Operations None Principal Theresa M. Squillacote Compliance Officer None Ann Iseley Vice President None Ann F. Lomeli Secretary Secretary * Principal Business Address of each person listed above is 140 Garden Street, Hartford, Connecticut 06154. ITEM 30. Location of Accounts and Records. Books or other documents required to be maintained by the Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are maintained by the Registrant's custodians, Investors Bank & Trust Company, 24 Federal Street, Boston, MA 02110 and 89 South Street, Boston, MA 02111 (with respect to the CMIA Municipal Accounts Only) and State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110 and the Registrant's transfer agent, NFDS, 1005 Baltimore, 5th Floor, Kansas City, MO 64105, with the exception of certain portfolio trading documents (with respect to CMIA Municipal Accounts only) which are in the possession and custody of Eaton Vance Management, 24 Federal Street, Boston, MA 02110. Registrant's financial ledgers and other corporate records are maintained at its offices at 140 Garden Street, Hartford, CT 06154. Registrant is informed that all applicable accounts, books and documents (with respect to CMIA Municipal Accounts only) required to be maintained by registered investment advisers are in the custody and possession of Eaton Vance Management.
ITEM 31. Management Services. Not applicable. ITEM 32. Undertakings. (a) Not applicable. (b) Not applicable. (c) The Company will furnish each person to whom a prospectus is delivered with a copy of the Company's latest annual report to shareholders, upon request and without charge.
(d) The Registrant undertakes to comply with Section 16(c) of the Investment Company Act of 1940, as amended, as it relates to the assistance to be rendered to shareholders with respect to the call of a meeting to replace a director. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 the Registrant certifies that it has caused this Post-Effective Amendment No. 24 to the Registration Statement ("PEA No. 24") to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hartford, State of Connecticut, on the 28th day of September, 1995. The Registrant certifies that it meets all of the requirements for effectiveness of this PEA 24 pursuant to paragraph (b) of Rule 485 under the Securities Act of 1933. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. By: *Donald H. Pond, Jr. ------------------------ Donald H. Pond, Jr. President Pursuant to the requirements of the Securities Act of 1933, this PEA No. 24 has been signed below by the following persons in the capacities and on the date indicated.
Signature Title Date ----------------------- ------------------ ---- *Donald H. Pond, Jr. President and Director - ---------------------------- Donald H. Pond, Jr. (Principal Executive Officer) *Richard Hixon Ayers Director - ---------------------------- Richard Hixon Ayers *David Ellis Adams Carson Director - ---------------------------- David Ellis Adams Carson *Richard Warren Greene Director - ---------------------------- Richard Warren Greene *Beverly Lannquist Hamilton Director - ---------------------------- Beverly Lannquist Hamilton *David E. Sams, Jr. Director - ---------------------------- David E. Sams, Jr. *Linda M. Napoli Treasurer - ---------------------------- Linda M. Napoli (Principal Financial and Accounting Officer) *By:/s/ Michael A. Chong Attorney-in-fact September 28, 1995 - ---------------------------- Michael A. Chong
EXHIBIT INDEX
Exhibit No. Page No. - ---------------------------------- -------- 99.B.1.3 Amended Articles of Incorporation 99.B.11 Consent of Independent Public Accountants 99.B27.1 Financial Data Schedule for Connecticut Mutual Liquid Account for the year ended December 31, 1994. 99.B27.2 Financial Data Schedule for Connecticut Mutual Government Securities Account for the year ended December 31, 1994. 99.B27.3 Financial Data Schedule for Connecticut Mutual Income Account for the year ended December 31, 1994. 99.B27.4 Financial Data Schedule for Connecticut Mutual Total Return Account for the year ended December 31, 1994. 99.B27.5 Financial Data Schedule for Connecticut Mutual Growth Account for the year ended December 31, 1994. 99.B27.6 Financial Data Schedule for Connecticut Mutual Liquid Account for the six months ended June 30, 1995. 99.B27.7 Financial Data Schedule for Connecticut Mutual Government Securities Account for the six months ended June 30, 1995. 99.B27.8 Financial Data Schedule for Connecticut Mutual Income Account for the six months ended June 30, 1995. 99.B27.9 Financial Data Schedule for Connecticut Mutual Total Return Account for the six months ended June 30, 1995. 99.B27.10 Financial Data Schedule for Connecticut Mutual Growth Account for the six months ended June 30, 1995. 99.B27.11 Financial Data Schedule for CMIA LifeSpan Capital Appreciation Account for the four month period ended August 31, 1995. 99.B27.12 Financial Data Schedule for CMIA LifeSpan Balanced Account for the four month period ended August 31, 1995. 99.B27.13 Financial Data Schedule for CMIA LifeSpan Diversified Income Account for the four month period ended August 31, 1995.
EX-99.B.1.3 2 ARTICLES SUPP. CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC. ARTICLES SUPPLEMENTARY Connecticut Mutual Investment Accounts, Inc., a Maryland corporation (the "Corporation"), having its principal office in Baltimore, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Article IV of the Corporation's Articles of Incorporation, the Board of Directors has duly divided and re-classified three billion (3,000,000,000) shares of the Class A Common Stock of each of the series as set forth below of common stock of the Corporation into Class B Common Stock and has provided for the issuance of such class as follows: [S]
Number of Number of Series Class A Shares Class B Shares -------------- -------------- Liquid Account 250,000,000 0 Government Securities Account 200,000,000 50,000,000 Income Account 200,000,000 50,000,000 Total Return Account 200,000,000 50,000,000 Growth Account 200,000,000 50,000,000 CMIA National Municipals Account 200,000,000 0 CMIA California Municipals Account 200,000,000 0 CMIA Massachusetts Municipals Account 200,000,000 0 CMIA New York Municipals Account 200,000,000 0 CMIA Ohio Municipals Account 200,000,000 0 CMIA LifeSpan Capital Appreciation Account 200,000,000 50,000,000 CMIA LifeSpan Balanced Account 200,000,000 50,000,000 CMIA LifeSpan Diversified Income Account 200,000,000 50,000,000
SECOND: The terms of each class of Common Stock are as set forth in Article IV of the Articles of Amendment and Restatement of the Corporation. IN WITNESS WHEREOF, Connecticut Mutual Investment Accounts, Inc. has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary on September 26, 1995 [S]
WITNESS: CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
By: /S/ ANN F. LOMELI By: /S/DONALD H. POND --------------------- ---------------------- Ann F. Lomeli Donald H. Pond Secretary President
THE UNDERSIGNED, President of Connecticut Mutual Investment Accounts, Inc., who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /S/DONALD H. POND - ------------------- Donald H. Pond President EX-99.B.11 3 ACCOUNTANT'S CONSENT ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports (and to all references to our Firm) included in or made a part of this Registration Statement for Connecticut Mutual Investment Accounts, Inc. (Registration Statement File No. 2-75276). /S/ Arthur Andersen LLP Hartford, Connecticut September 27, 1995 -----END PRIVACY-ENHANCED MESSAGE-----