<PAGE>
As filed with the Securities and Exchange Commission on March 1, 1996
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. 28
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29
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
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ X / on May 1, 1996 pursuant to paragraph (a), of Rule 485
Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940. The Rule 24f-2 Notice for the fiscal year ended December
31, 1995 was filed for the Registrant's following series on or about February
29, 1996: Connecticut Mutual Liquid Account, Connecticut Mutual Government
Securities Account, Connecticut Mutual Income Account, Connecticut Mutual Total
Return Account, Connecticut Mutual Growth Account, CMIA LifeSpan Capital
Appreciation Account, CMIA LifeSpan Balanced Account and CMIA LifeSpan
Diversified Income Account.
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Oppenheimer Disciplined Allocation Fund.
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 Additional
and Caption Information
--------------------- --------------------------
1. Cover Page....................... Cover Page.
2. Synopsis......................... About The Funds -- A Brief
Overview of the Fund.
3. Condensed Financial
Information.................... About The Funds -- Financial
Highlights.
4. General Description of
Registrant..................... Cover Page; About The Funds
-- How The Fund Is Managed -
- Organization and History.
5. Management of the Fund........... About The Funds -- How the
Funds are Managed.
6. Capital Stock and Other
Securities..................... About The Funds --
Investment Objective and
Policies.
7. Purchase of Securities
Being Offered.................. About Your Account -- How to
Buy Shares; Special Sales
Charge Arrangements for
Certain Persons; Buying
Class A Shares; Buying
Class B Shares; Buying
Class C Shares.
8. Redemption or Repurchase......... About Your Account -- How to
Buy Shares; Special Investor
Services; How to Sell
Shares; How to Exchange
Shares; Shareholder Account
Rules and Policies.
<PAGE>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
9. Pending Legal Proceedings........ Not Applicable.
10. Cover Page....................... Cover Page.
11. Table of Contents................ Cover Page.
12. General Information and
History........................ Cover Page; How The Funds
are Managed -- Organization
and History.
13. Investment Objectives and
Policy......................... About The Funds --
Investment Objectives and
Policies.
14. Management of the Fund........... About The Funds -- How the
Funds are Managed.
15. Control Persons and Principal
Holders of Securities.......... About The Funds -- How the
Funds are Managed.
16. Investment Advisory and
Other Services................. About The Funds -- How the
Funds are Managed; The
Manager, the Subadviser and
Their Affiliates; The
Distributor; The Transfer
Agent.
17. Brokerage Allocation and
Other Practices................ About the Funds -- Brokerage
Policies of the Funds.
18. Capital Stock and Other
Securities..................... About the Funds -- How the
Funds are Managed --
Organization and History.
19. Purchase, Redemption and Pricing
of Securities Being Offered.... About Your Accounts -- How
to Buy Shares; How to Sell
Shares; How to Exchange
Shares.
20. Tax Status....................... About Your Account --
Dividends, Capital Gains and
Taxes.
- 2 -
<PAGE>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
21. Underwriters..................... About The Funds -- How the
Funds are Managed -- The
Manager, the Subadvisers and
Their Affiliates; About Your
Account -- How To Buy
Shares.
22. Calculation of Performance
Data........................... About The Funds --
Performance of the Funds;
About Your Account --
Dividends, Capital Gains and
Taxes.
23. Financial Statements............. Financial Information About
the Funds -- Independent
Auditors' Report --
Financial Statements.
- 3 -
<PAGE>
OPPENHEIMER
DISCIPLINED ALLOCATION FUND
PROSPECTUS DATED MAY 1, 1996
Oppenheimer Disciplined Allocation Fund (the "Fund") is a mutual fund that
seeks to maximize total investment return (including both capital appreciation
and income) principally by allocating its assets among stocks, corporate bonds,
U.S. Government securities and money market instruments according to changing
market conditions. This allocation process utilizes quantitative asset
allocation tools, which measure the relationship among these asset categories,
in combination with the judgment of the investment manager concerning current
market dynamics. The Fund is not restricted to investing in any specific type
of security and may use "hedging" instruments to seek to reduce the risks of
market fluctuations that affect the value of the securities the Fund holds.
This Prospectus explains concisely what you should know before investing in
the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the May 1,
1996 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated into this Prospectus by reference (which
means that it is legally part of this Prospectus).
(Oppenheimer funds logo)
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY, AND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
CONTENTS
A B O U T T H E F U N D
EXPENSES
BRIEF OVERVIEW OF THE FUND
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE AND POLICIES
HOW THE FUND IS MANAGED
PERFORMANCE OF THE FUND
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
Class A Shares
Class B Shares
Class C Shares
SPECIAL INVESTOR SERVICES
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
HOW TO SELL SHARES
By Mail
By Telephone
HOW TO EXCHANGE SHARES
SHAREHOLDER ACCOUNT RULES AND POLICIES
DIVIDENDS, CAPITAL GAINS AND TAXES
APPENDIX A: DESCRIPTION OF SECURITIES RATINGS
APPENDIX B: CREDIT QUALITY DISTRIBUTION
APPENDIX C: SPECIAL SALES CHARGE ARRANGEMENTS
-2-
<PAGE>
A B O U T T H E F U N D
EXPENSES
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset value
per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and the share of a Fund's business
operating expenses that you will bear indirectly. The numbers below are based
on the Fund's expenses during its fiscal year ended December 31, 1995.
/ / SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" starting on page
___ for an explanation of how and when these charges apply.
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
- -------------------------------------------------------------------------------
Maximum Sales 5.75% None None
Charge on
Purchases (as a %
of offering price)
- -------------------------------------------------------------------------------
Sales Charge on None None None
Reinvested
Dividends
- -------------------------------------------------------------------------------
Deferred Sales None(1) 5% in the 1% if
Charge (as a % first year, shares are
of the lower declining redeemed
of the original to 1% in the within 12
purchase price sixth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)
- -------------------------------------------------------------------------------
Exchange Fee None None None
- -------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have to pay
a sales charge of up to 1% if you sell your shares within 18 calendar months
from the end of the calendar month during which you purchased those shares. See
"How to Buy Shares -- Buying Class A Shares," below.
(2) See "How to Buy Shares -- Buying Class B Shares," and "Buying Class C
Shares" below, for more information on the contingent deferred sales charges.
-3-
<PAGE>
(3) There is a $10 transaction fee for redemption proceeds paid by Federal
Funds wire, but not for redemptions paid by check or ACH transfer through
AccountLink.
/ / ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment advisor, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
-------- ------- -------
Management Fees 0.625% 0.625% 0.625%
12b-1 Plan Fees 0.25 % 1.00 % 1.00 %
Other Expenses 0.295% 0.295% 0.295%
-------- ------- -------
Total Fund Operating Expenses 1.17 % 1.92 % 1.92 %
The numbers for Class A shares in the chart above are based on the Fund's
expenses in its last fiscal year. These amounts are shown as a percentage of
the average net assets of each class of the Fund's shares for that year. Class
B shares were not publicly offered before October 1, 1995. Therefore, the
Annual Fund Operating Expenses shown are based on expenses for the period from
October 1, 1995 until December 31, 1995. Class C shares were not publicly
offered during the Fund's last fiscal year. Accordingly, the Annual Fund
Operating Expenses for Class C shares are estimates based upon amounts that
would have been payable if Class C shares had been outstanding during the year.
The actual expenses for each class of shares in future years may be more or less
than the numbers in the chart, depending on a number of factors, including the
actual amount of the Fund's assets represented by each class of shares.
The "12b-1 Distribution Plan Fees" for Class A shares are the Service Plan
Fees (which can be up to a maximum of 0.25% of average annual net assets of that
class). For Class B and Class C shares, 12b-1 Plan Fees include the Service
Plan Fees (which can be up to a maximum of 0.25%) and an annual asset-based
sales charges of 0.75%. These plans are described in greater detail in "How to
Buy Shares."
/ / EXAMPLES. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in each class of shares of the Fund,
and the Fund's annual return is 5%, and that its operating expenses for each
class are the ones shown in the Annual Fund Operating Expenses table above. If
you were to redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3, 5 and 10
years:
-4-
<PAGE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------ ------- ------- ---------
Class A Shares $ 69 $ 93 $ 118 $ 191
Class B Shares $ 70 $ 100 $ 124 $ 205
Class C Shares $ 30 $ 60 $ 104 $ 224
If you did not redeem your investment, it would incur the following
expenses:
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------ ------- ------- ---------
Class A Shares $ 69 $ 93 $ 118 $ 191
Class B Shares $ 20 $ 60 $ 104 $ 205
Class C Shares $ 20 $ 60 $ 104 $ 224
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class B
shares into Class A shares after 6 years. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge on
Class B and Class C shares, long-term Class B and Class C shareholders
could pay the economic equivalent of more than the maximum front-end sales
charge allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares into Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How to Buy
Shares" for more information.
THESE EXAMPLES SHOW THE EFFECT OF EXPENSES ON AN INVESTMENT, BUT ARE NOT
MEANT TO STATE OR PREDICT ACTUAL OR EXPECTED COSTS OR INVESTMENT RETURNS OF THE
FUND, WHICH MAY BE GREATER OR LESSER THAN THOSE SHOWN.
A BRIEF OVERVIEW OF THE FUND
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete information can
be found. You should carefully read the entire Prospectus before making a
decision about investing in the Fund. Keep the Prospectus for reference after
you invest, particularly for information about your account, such as how to sell
or exchange shares.
/ / WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund's investment
objective is to seek to maximize total investment return by utilizing the
investment strategy described below.
/ / WHAT DOES THE FUND INVEST IN? In seeking to maximize total investment
return (including capital appreciation and income), the Fund allocates its
assets among stocks, corporate bonds, U.S. Government securities and money
market instruments according to changing market conditions. This allocation
process utilizes quantitative asset allocation tools, which measure the
relationship among these asset categories, in combination with the judgment of
the Manager concerning current market dynamics. The Fund may also invest in
debt securities and preferred stocks rated below investment grade (commonly
called junk bonds) and may invest to a limited degree in securities of foreign
issuers. The Fund may write covered calls and use certain types of "hedging
instruments" and "derivative investments" to try to manage investment risks.
These investments are more fully explained in "Investment Objective and
Policies" starting on page __.
-5-
<PAGE>
/ / WHO MANAGES THE FUND? The Fund's investment advisor is
OppenheimerFunds, Inc., which (including a subsidiary) advises investment
company portfolios having over $40 billion in assets at December 31, 1995. The
Fund's Board of Directors, elected by shareholders, oversees the investment
advisor and the portfolio manager. The Manager is paid an advisory fee by the
Fund, based on its net assets. The Fund has a portfolio manager, Peter Antos,
who is employed by the Manager. He is primarily responsible for the selection
of the Fund's securities but is assisted by other managers. Please refer to
"How the Fund is Managed," starting on page ____ for more information about the
Manager, and its fees.
/ / HOW RISKY IS THE FUND? All investments carry risks to some degree.
The Fund's investments in stocks and bonds are subject to changes in their value
from a number of factors such as changes in general bond and stock market
movements. The change in value of a particular stock or bond may result from an
event affecting the issuer, or changes in interest rates that can affect stock
and bond prices. These changes affect the value of the Fund's investments and
its share prices for each class of its shares. In the Oppenheimer funds'
spectrum the Fund is more aggressive than most growth and income funds but less
so than aggressive growth funds. In addition, there are certain risks
associated with the lower quality debt securities and foreign securities the
Fund may purchase and the hedging strategies the Manager may utilize. While the
Manager tries to reduce risks by diversifying investments, by researching
securities before they are purchased for the portfolio, and in some cases by
using hedging techniques, there is no guarantee of success in achieving the
Fund's objective and your shares may be worth more or less than their original
cost when you redeem them. Please refer to "Investment Objective and Policies"
starting on page ___ for a more complete discussion of the Fund's investment
risks.
/ / HOW CAN I BUY SHARES? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" beginning on page
___ for more details.
/ / WILL I PAY A SALES CHARGE TO BUY SHARES? The Fund has three classes
of shares. Each class of shares has the same investment portfolio, but
different expenses. Class A shares are offered with a front-end sales charge,
starting at 5.75% and reduced for larger purchases. Class B and Class C shares
are offered without front-end sales charges, but may be subject to a contingent
deferred sales charge if redeemed within 6 years or 12 months, respectively, of
purchase. There is also an annual asset-based sales charge on Class B and
Class C shares. Please review "How To Buy Shares" starting on page ___ for more
details, including a discussion about factors you and your financial advisor
should consider in determining which class may be appropriate for you.
/ / HOW CAN I SELL MY SHARES? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day or through your dealer.
Please refer to "How To Sell Shares" on page ___. The Fund also offers exchange
privileges to other Oppenheimer funds, described in "How to Exchange Shares" on
page ____.
/ / HOW HAS THE FUND PERFORMED? The Fund measures its performance by
quoting average annual total return and cumulative total return, which measure
historical performance. Those returns can be compared to the total returns
(over similar periods) of other funds. Of course, other funds may have
different objectives, investments, and levels of risk. Please remember that
past performance does not guarantee future results.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended December 31, 1995
has been derived from audited financial statements together with the
auditors' report for the year ended December 31, 1995 which is included in
the Statement of Additional Information. The tables on the following pages
present selected financial information about the Fund, including per share
data and expense ratios and other data based on the Fund's average net
assets. Class B shares have been offered since October 1, 1995. Class C
shares were not publicly offered during the periods shown.
-7-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* CLASS A SHARES
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $13.44 $14.54 $13.81 $14.02 $11.94 $12.69 $11.51 $10.91 $11.87 $10.91
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .60 .55 .48 .50 .54 .66 .76 .53 .38 .31
Net realized and unrealized 2.59 (.86) 1.70 .86 2.79 (.68) 1.81 .60 .13 .99
gain (loss) on investment, ---- ----- ---- --- ---- ----- ---- --- --- ---
options written and foreign
currency transactions
Total income (loss) from 3.19 (.31) 2.18 1.36 3.33 (.02) 2.57 1.13 .51 1.30
investment operations
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment (.60) (.55) (.48) (.50) (.54) (.66) (.76) (.53) (.38) (.30)
income
Distributions from net (.57) (.24) (.97) (1.07) (.71) (.07) (.63) -- (1.09) (.04)
realized gain on investments ----- ----- ----- ------ ----- ----- ---- ----- ------ -----
and foreign currency
transactions
Total dividends and (1.17) (.79) (1.45) (1.57) (1.25) (.73) (1.39) (.53) (1.47) (.34)
distributions to shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.46 $13.44 $14.54 $13.81 $14.02 $11.94 $12.69 $11.51 $10.91 $11.87
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(a) 23.95% (2.11)% 15.89% 9.90% 28.21% (0.21)% 22.61% 10.40% 3.92% 11.88%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $218,099 $177,904 $171,205 $109,701 $86,455 $66,382 $65,071 $54,253 $44,770 $35,382
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Net investment income (loss) 4.00% 3.80% 3.40% 3.61% 4.02% 5.31% 5.90% 4.61% 3.15% 3.22%
Expenses 1.17% .96% 1.02% 1.11% 1.20% 1.24% 1.20% 1.11% 1.08% 1.26%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 55.20% 115.01% 155.16% 177.85% 122.40% 115.45% 149.22% 223.62% 197.79% 143.32%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* G.R. Phelps & Co. managed the Fund during these periods.
(a) Annual total returns do not include the effect of sales charges.
-8-
<PAGE>
FINANCIAL HIGHLIGHTS* (CONT'D.) CLASS B SHARES(c)
PERIOD ENDED
DECEMBER 31, 1995
------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 15.48
- -------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .07
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions .70
-----------
Total income (loss) from investment operations .77
- -------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07)
Distributions from net realized gain on investments (.52)
and foreign currency transactions -----------
Total dividends and distributions to shareholders (.59)
- -------------------------------------------------------------------------------
Net asset value, end of period $ 15.66
-----------
-----------
- -------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(b) 4.93%
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 650
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .73%(a)
Expenses 1.92%(a)
- -------------------------------------------------------------------------------
Portfolio turnover rate 55.20%
- -------------------------------------------------------------------------------
* G.R. Phelps & Co. managed the Fund during this period.
(a) Annualized.
(b) Total returns do not include the effect of sales charges.
(c) For the period from October 1, 1995 (inception) through December 31, 1995.
-9-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
OBJECTIVE. The Fund seeks to maximize total investment return (including
capital appreciation and income) by allocating its assets among stocks,
corporate bonds, U.S. Government securities and money market instruments
according to changing market conditions.
INVESTMENT POLICIES AND STRATEGIES. The Fund's allocation process utilizes
quantitative asset allocation tools, which measure the relationship among these
asset categories, in combination with the judgment of the Manager concerning
current market dynamics. Allocating assets among different types of investments
allows the Fund to take advantage of opportunities wherever they occur, but also
subjects the Fund to the risks of a given investment type.
The Fund's debt securities are expected to have a portfolio maturity of 6
to 12 years. At least 25% of the Fund's total assets will be invested in fixed
income senior securities. The Fund may invest up to 25% of its total assets in
the aggregate in debt securities and preferred stocks rated below investment
grade (commonly called junk bonds) and unrated securities determined by the
Manager to be of comparable credit quality. The Fund will not invest in lower
rated securities rated below B at the time of purchase. Unrated debt securities
will not exceed 10% of the Fund's total assets.
The Fund may invest up to 20% of its total assets in mortgage dollar rolls.
The Fund may also invest up to 5% of its total assets in inverse floating rate
instruments which are a type of derivative security. Consistent with the
foregoing policies, the Fund may invest to a limited degree in securities of
foreign issuers.
/ / CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund has
an investment objective, described above, as well as investment policies it
follows to try to achieve its objective. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those investment policies.
The Fund's investment policies and practices are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a particular
policy is "fundamental." The Fund's investment objective is not a fundamental
policy. Shareholders of the Fund will be given 30 days' advance written notice
of a change to the Fund's investment objective.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of a Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Fund's Board of Directors may change
non-fundamental policies without shareholder approval, although significant
changes will be described in amendments to this Prospectus.
/ / STOCK INVESTMENT RISKS. Because the Fund invests a substantial
portion of its assets in stocks, the value of the Fund's portfolio will be
affected by changes in the stock markets. At times, the stock markets can be
volatile and stock prices can change substantially. This market risk will
affect the Fund's net asset value per share, which will fluctuate as the values
of the Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, and other factors can affect a particular stock's
prices (for example, poor earnings reports by an issuer, loss of major
customers, major litigation against an issuer, and changes in government
regulations affecting an industry). Not all of these factors can be predicted.
-10-
<PAGE>
The Fund attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of the stock of any one company and
by not investing too great a percentage of the Fund's assets in any one company.
Also, the Fund does not concentrate its investments in any one industry or group
of industries. Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for investors who are
investing for the long term. It is not intended for investors seeking assured
income or preservation of capital. Because changes in overall market prices can
occur at any time, and because the income earned on securities is subject to
change, there is no assurance that the Fund will achieve its investment
objective, and when you redeem your shares, they may be worth more or less than
what you paid for them.
/ / INTEREST RATE RISKS. Debt securities in which the Fund may invest
include 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. Debt securities are subject to
changes in their values due to changes in prevailing interest rates. When
prevailing interest rates fall, the value of already-issued debt securities
generally rise. When interest rates rise, the values of already-issued debt
securities generally decline. The magnitude of these fluctuations will often be
greater for longer-term debt securities than shorter-term debt securities.
Changes in the value of securities held by the Fund mean that the Fund's share
prices can go up or down when interest rates change because of the effect of the
change on the value of the Fund's portfolio of debt securities.
/ / SPECIAL RISKS OF INVESTING IN LOWER-RATED SECURITIES. The Fund can
invest in high-yield, below grade debt securities (including both rated and
unrated securities). These "lower-grade" securities are commonly known as "junk
bonds." They generally offer higher income potential than investment grade
securities. "Lower-grade" securities have a rating below "BBB" by Standard &
Poor's Ratings Group ("Standard & Poor's") or "Baa" by Moody's Investors
Services, Inc. ("Moody's") or similar ratings by other domestic or foreign
rating organizations, or they are not rated by a nationally-recognized rating
organization but the Manager judges them to be comparable to lower-rated
securities. The Fund will not purchase securities rated below B by Moody's or
Standard & Poor's. The Fund may retain securities whose ratings fall below B
after purchase unless and until the Manager determines that disposing of such
securities is in the best interests of the Fund. Appendix A to this Prospectus
describes the rating categories of Moody's and Standard & Poor's. Appendix B
provides a summary of ratings assigned to the Fund's debt holdings. These
percentages are historical and do not necessarily indicate the current or future
debt holdings of the Fund.
All corporate debt securities (whether foreign or domestic) are subject to
some degree of credit risk. High yield, lower-grade securities, whether rated
or unrated, often have speculative characteristics and special risks that make
them riskier investments than investment grade securities. They may be subject
to greater market fluctuations and risk of loss of income and principal than
lower yielding, investment grade securities. There may be less of a market for
them and therefore they may be harder to sell at an acceptable price. There is
a relatively greater possibility that the issuer's earnings may be insufficient
to make the payments of interest due on the bonds. The issuer's low
creditworthiness may increase the potential for its insolvency. For foreign
lower-grade debt securities, these risks are in addition to the risks of
investing in foreign securities, described below. These risks mean that the
Fund may not achieve the expected income from lower-grade securities, and that
the Fund's net asset value per share may be affected by declines in value of
these securities.
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/ / FOREIGN SECURITIES. Consistent with its investment objective and
policies, the Fund may purchase equity and debt securities issued or guaranteed
by foreign companies or foreign governments or their agencies. The Fund may
purchase securities in any country, developed or underdeveloped. Investments in
securities of issuers in underdeveloped countries or countries that have
emerging markets generally may offer greater potential for gain but involve more
risk and may be considered highly speculative. As a matter of fundamental
policy, the Fund may not invest more than 10% of its total assets in foreign
securities, except that the Fund may invest up to 25% of its total assets in
foreign equity and debt securities that are (i) issued, assumed or guaranteed by
foreign governments or their political subdivisions or instrumentalities,
(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. Foreign currency
will be held by the Fund only in connection with the purchase or sale of foreign
securities.
/ / FOREIGN SECURITIES HAVE SPECIAL RISKS. The change in value of a
foreign currency against the U.S. dollar will result in a change in the value of
securities denominated in that foreign currency. For example, foreign issuers
are not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected by
exchange control regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or other
political and economic factors. More information about the risks and potential
rewards of investing in foreign securities is contained in the Statement of
Additional Information.
/ / PORTFOLIO TURNOVER. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund ordinarily does not engage in short-
term trading to try to achieve its objective. For the fiscal year ended
December 31, 1995, the Fund's portfolio turnover rate was 55.20%. The
"Financial Highlights," above, show the Fund's portfolio turnover rates during
past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and other
transaction costs, and results in the Fund's realization of capital gains or
losses for tax purposes. It may also affect the ability of the Fund to qualify
as a "regulated investment company" under the Internal Revenue Code and avoid
being taxed on amounts distributed as dividends and capital gains to
shareholders. The Fund qualified as such in its fiscal year ended December 31,
1995 and intends to do so in the future, although it reserves the right not to
qualify.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES. The Fund may also use the
investment techniques and strategies described below, which involve certain
risks. The Statement of Additional Information contains more detailed
information about these practices, including limitations on their use that may
help to reduce some of the risks.
/ / WARRANTS AND RIGHTS. Warrants basically are options to purchase stock
at set prices that are valid for a limited period of time. Rights are similar
to warrants but normally have a short duration and are distributed directly by
the issuer to its shareholders. The Fund may invest up to 5% of its total
assets in warrants or rights. That 5% limitation does not apply to warrants the
Fund has acquired as part of units with other securities or that are attached to
other securities. No more than 2% of the Fund's total assets may be invested in
warrants that are not listed on either The New York Stock Exchange or The
American Stock Exchange. For further details, see "Warrants and Rights" in the
Statement of Additional Information.
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/ / U.S. GOVERNMENT SECURITIES. Certain U.S. Government Securities,
including U.S. Treasury bills, notes and bonds, and mortgage participation
certificates guaranteed by the Government National Mortgage Association ("Ginnie
Mae") are supported by the full faith and credit of the U.S. Government, which
in general terms means that the U.S. Treasury stands behind the obligation to
pay principal and interest. Ginnie Mae certificates are one type of
mortgage-related U.S. Government Security the Fund may invest in. Other
mortgage-related U.S. Government Securities the Fund invests in that are issued
or guaranteed by federal agencies or government-sponsored entities are not
supported by the full faith and credit of the U.S. Government. Those securities
include obligations supported by the right of the issuer to borrow from the U.S.
Treasury, such as obligations of the Federal Home Loan Mortgage Corporation
("Freddie Mac"), obligations supported only by the credit of the
instrumentality, such as the Federal National Mortgage Association ("Fannie
Mae") or the Student Loan Marketing Association and obligations supported by the
discretionary authority of the U.S. Government to repurchase certain obligations
of U.S. Government agencies or instrumentalities such as the Federal Land Banks
and the Federal Home Loan Banks. Other U.S. Government Securities the Fund may
invest in are collateralized mortgage obligations ("CMOs").
The value of U.S. Government Securities will fluctuate until they mature
depending on prevailing interest rates. Because the yields on U.S. Government
Securities are generally lower than on corporate debt securities, when the Fund
holds U.S. Government Securities it may attempt to increase the income it can
earn from them by writing covered call options against them, when market
conditions are appropriate. Writing covered calls is explained below, under
"Hedging."
/ / MORTGAGE-BACKED SECURITIES AND CMOS. Certain mortgage-backed
securities, whether issued by the U.S. Government or by private issuers,
"pass-through" to investors the interest and principal payments generated by a
pool of mortgages assembled for sale by government agencies. Pass-through
mortgage-backed securities entail the risk that principal may be repaid at any
time because of prepayments on the underlying mortgages. That may result in
greater price and yield volatility than traditional fixed-income securities that
have a fixed maturity and interest rate.
The Fund may also invest in CMOs, which generally are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payment of the interest and principal generated by the pool of mortgages
relating to the CMOs are passed through to the holders as the payments are
received. CMOs are issued with a variety of classes or series which have
different maturities. Certain CMOs may be more volatile and less liquid than
other types of mortgage-related securities, because of the possibility of the
prepayment of principal due to prepayments on the underlying mortgage loans.
The Fund may also invest in CMOs that are "stripped." That means that the
security is divided into two parts, one of which receives some or all of the
principal payments (and is known as a "P/O") and the other which receives some
or all of the interest (and is known as an "I/O"). P/Os and I/Os are generally
referred to as "derivative investments," discussed further below.
The yield to maturity on the class that receives only interest is extremely
sensitive to the rate of payment of the principal on the underlying mortgages.
Principal prepayments increase that sensitivity. Stripped securities that pay
"interest only" are therefore subject to greater price volatility when interest
rates change, and they have the additional risk that if the underlying mortgages
are prepaid, the Fund will lose the anticipated cash flow from the interest on
the
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prepaid mortgages. That risk is increased when general interest rates
fall, and in times of rapidly falling interest rates, the Fund might receive
back less than its investment.
The value of "principal only" securities generally increases as interest
rates decline and prepayment rates rise. The price of these securities is
typically more volatile than that of coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and sold by
institutional investors through investment banking firms. At present,
established trading markets have not yet developed for these securities.
Therefore, most private-issuer stripped securities may be deemed "illiquid." If
the Fund holds illiquid stripped securities, the amount it can hold will be
subject to the Fund's investment policy limiting investments in illiquid
securities to 10% of the Fund's net assets.
/ / ASSET-BACKED SECURITIES. The Fund may invest in "asset-backed"
securities. These represent interests in pools of consumer loans and other
trade receivables, similar to mortgage-backed securities. They are issued by
trusts and "special purpose corporations." They are backed by a pool of assets,
such as credit card or auto loan receivables, which are the obligations of a
number of different parties. The income from the underlying pool is passed
through to holders, such as the Fund. These securities may be supported by a
credit enhancement, such as a letter of credit, a guarantee or a preference
right. However, the extent of the credit enhancement may be different for
different securities and generally applies to only a fraction of the security's
value. These securities present special risks. For example, in the case of
credit card receivables, the issuer of the security may have no security
interest in the related collateral.
/ / INVERSE FLOATING RATE INSTRUMENTS. The Fund 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. The Fund may invest up to 20% of its assets in
mortgage dollar rolls. In a mortgage dollar roll the Fund 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 Fund foregoes principal
and interest paid on the mortgage-backed securities. The Fund 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 Fund 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 Fund'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 Fund treats mortgage rolls
as two separate transactions: one involving the purchase of securities and a
separate transaction involving a sale. The Fund does not currently intend to
enter into mortgage dollar roll transactions that are accounted for as a
financing.
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<PAGE>
/ / SHORT-TERM DEBT SECURITIES. When the Manager believes it is
appropriate, the Fund can hold cash or invest without limit in money market
instruments. The Fund will invest in high quality, short-term money market
instruments such as U.S. Treasury and agency obligations; commercial paper
(short-term, unsecured, negotiable promissory notes of a domestic or foreign
company); short-term debt obligations of corporate issuers; and certificates of
deposit and bankers' acceptances (time drafts drawn on commercial banks usually
in connection with international transactions) of domestic or foreign banks and
savings and loan associations. The Fund will purchase money market instruments
denominated in a foreign currency only within the limitations described under
"Foreign Securities." The issuers of these foreign money market instruments
have at least one billion dollars (U.S.) of assets.
The Fund may also invest in obligations of foreign branches of U.S. banks
(referred to as Eurodollar obligations) and U.S. branches of foreign banks
(Yankee dollars) as well as foreign branches of foreign banks. These
investments involve risks that are different from investment in securities of
U.S. banks as described in "Foreign Securities" above.
/ / LOANS OF PORTFOLIO SECURITIES. Subject to its investment policies and
restrictions, the Fund may seek to increase its income by lending portfolio
securities in transactions other than repurchase agreements. The Fund must
receive collateral for a loan. As a matter of fundamental policy, these loans
are limited to not more than 33 1/3% of the Fund's total assets (taken at market
value) and are subject to other conditions described in the Statement of
Additional Information. See "Loans of Portfolio Securities" in the Statement of
Additional Information on securities loans.
/ / "WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell securities
on a "delayed delivery" basis. These terms refer to securities that have been
created and for which a market exists, but which are not available for immediate
delivery. There may be a risk of loss to the Fund if the value of the security
declines prior to the settlement date.
/ / REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
In a repurchase transaction, the Fund buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements must be
fully collateralized. However, if the vendor fails to pay the resale price on
the delivery date, the Fund may experience costs in disposing of the collateral
and may experience losses if there is any delay in doing so. As a matter of
fundamental policy, the Fund will not enter into a repurchase agreement that
causes more than 10% of its net assets in illiquid and restricted securities (as
described below) which includes repurchase agreements having a maturity beyond
seven days.
/ / ILLIQUID AND RESTRICTED SECURITIES. Under the policies established by
the Fund's Board of Directors, the Manager determines the liquidity of certain
of the Fund's investments. Investments may be illiquid because of the absence
of an active trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly until it
is registered under the Securities Act of 1933. As a matter of fundamental
policy, the Fund will not invest more than 10% of its total assets in illiquid
and restricted securities (including repurchase agreements having a maturity
beyond 7 days, portfolio securities which do not have readily available market
quotations and time deposits maturing in more than 2 days).
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<PAGE>
/ / HEDGING. The Fund may write covered call options on securities, stock
or bond indices and foreign currency and may purchase and sell certain kinds of
futures contracts, forward contracts, and options on futures, broadly based
stock or bond indices and foreign currencies, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments." The Fund may
use hedging instruments for hedging and, in the case of covered calls,
non-hedging purposes as described below.
The Fund may write covered call options and buy and sell futures and
forward contracts for a number of purposes. It may do so to try to manage its
exposure to the possibility that the prices of its portfolio securities may
decline, or to establish a position in the securities market as a temporary
substitute for purchasing individual securities. It may do so to try to manage
its exposure to changing interest rates. Some of these strategies, such as
selling futures and writing covered calls, hedge the Fund's portfolio against
price fluctuations.
Other hedging strategies, such as buying futures, tend to increase the
Fund's exposure to the securities market. Forward contracts are used to try to
manage foreign currency risks on the Fund's foreign investments. Foreign
currency options are used to try to protect against declines in the dollar value
of foreign securities the Fund owns, or to protect against an increase in the
dollar cost of buying foreign securities. Writing covered call options may also
provide income to the Fund for liquidity purposes, defensive reasons, or to
raise cash to distribute to shareholders.
/ / FUTURES. The Fund may buy and sell futures contracts that relate to
(1) foreign currencies (these are referred to as "Forward Contracts" and are
discussed below), (2) financial indices, such as U.S. or foreign government
securities indices, corporate debt securities indices or equity securities
indices (these are referred to as Financial Futures) and (3) interest rates
(those are referred to as Interest Rate Futures). These types of Futures are
described in "Hedging" in the Statement of Additional Information. The Fund
engages in Futures transactions and related options only for bona fide hedging
purposes.
/ / COVERED CALL OPTIONS AND OPTIONS ON FUTURES. The Fund may write (that
is, sell) call options on securities, indices and foreign currencies for
hedging or liquidity purposes and write call options on Futures for hedging
and non-hedging purposes, but only if all such calls are "covered." This
means the Fund must own the investment on which the call was written or it
must own other securities that are acceptable for the escrow arrangements
required for calls while the call is outstanding or, in the case of calls on
futures, segregate appropriate liquid assets. When the Fund writes a call,
it receives cash (called a premium). The call gives the buyer the ability to
buy the investment on which the call was written from the Fund at the call
price during the period in which the call may be exercised. If the value of
the investment does not rise above the call price, it is likely that the call
will lapse without being exercised, while the Fund keeps the cash premium
(and the investment). After the Fund writes a call, not more than 20% of the
value of its total assets may be subject to calls.
The Fund may sell covered call options that are traded on U.S. or foreign
securities or commodity exchanges or which are used by Options Clearing
Corporation. In the case of foreign currency options, they may be quoted by
major recognized dealers in those options.
/ / FORWARD CONTRACTS. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery at
a fixed price. The Fund uses them for hedging purposes to try to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that the Fund
has purchased or sold, or to protect against possible losses from
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changes in the relative value of the U.S. dollar and a foreign currency.
Normally, the Fund will not use "cross hedging," where the Fund hedges
against changes in currencies other than the currency in which a security it
holds is denominated. The Fund will not speculate in foreign exchange.
/ / HEDGING INSTRUMENTS CAN BE VOLATILE INVESTMENTS AND MAY INVOLVE SPECIAL
RISKS. The use of hedging instruments requires special skills and knowledge of
investment techniques that are different from what is required for normal
portfolio management. If the Manager uses a hedging instrument at the wrong
time or judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments or
if it could not close out a position because of an illiquid market for the
future or option.
Options trading involves the payment of premiums, and options, futures and
forward contracts are subject to special tax rules that may affect the amount,
timing and character of the Fund's income and distributions. There are also
special risks in particular hedging strategies. For example, if a covered call
written by the Fund is exercised on an investment that has increased in value,
the Fund will be required to sell the investment at the call price and will not
be able to realize any profit if the investment has increased in value above the
call price. The use of Forward Contracts may reduce the gain that would
otherwise result from a change in the relationship between the U.S. dollar and a
foreign currency. Interest rate swaps are subject to the risk that the other
party will fail to meet its obligations (or that the underlying issuer will fail
to pay on time), as well as interest rate risks. The Fund could be obligated to
pay more under its swap agreements than it received under them, as a result of
interest rate changes. These risks are described in greater detail in the
Statement of Additional Information.
/ / DERIVATIVE INVESTMENTS. The Fund can invest in a number of different
kinds of "derivative" investments. In general, a "derivative investment" is a
specially designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index, currency or
commodity. The Fund may not purchase or sell physical commodities; however, the
Fund may purchase and sell foreign currency in hedging transactions. This shall
not prevent the Fund from selling covered call options or buying or selling
futures contracts or from investing in securities or other instruments backed by
physical commodities.
Derivative investments used by the Fund are used in some cases for hedging
purposes and in other cases to seek income. In the broadest sense,
exchange-traded options and futures contracts (discussed in "Hedging," above)
may be considered "derivative investments."
"Index-linked" or "commodity-linked" notes are debt securities of companies
that call for interest payments and/or payment on the maturity of the note in
different terms than the typical note where the borrower agrees to pay a fixed
sum on the maturity of the note. Principal and/or interest payments on an
index-linked note depend on the performance of one or more market indices, such
as the S&P 500 Index or a weighted index of commodity futures, such as crude
oil, gasoline and natural gas. The Fund may invest in "debt exchangeable for
common stock" of an issuer or "equity-linked" debt securities of an issuer. At
maturity, the principal amount of the debt security is exchanged for common
stock of the issuer or is payable in an amount based on the issuer's common
stock price at the time of maturity. In either case there is a risk that the
amount payable at maturity will be less than the expected principal amount of
the debt.
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<PAGE>
The Fund may also invest in currency-indexed securities. Typically, these
are short-term or intermediate-term debt securities having a value at maturity
and/or an interest rate determined by reference to one or more foreign
currencies. The currency-indexed securities purchased by the Fund may make
payments based on a formula. The payment of principal or periodic interest may
be calculated as a multiple of the movement of one currency against another
currency, or against an index. These investments may entail increased risk to
principal and increased price volatility.
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the maturity of
the instrument. Also, the underlying investment or security might not perform
the way the Manager expected it to perform. Markets, underlying securities and
indices may move in a direction not anticipated by the Manager. Performance of
derivative investments may also be influenced by interest rate and stock market
changes in the U.S. and abroad. All of this can mean that the Fund will realize
less principal or income from the investment than expected. Certain derivative
investments held by the Fund may be illiquid. Please refer to "Illiquid and
Restricted Securities."
OTHER INVESTMENT RESTRICTIONS. The Fund has other investment restrictions which
are "fundamental" policies. Among these fundamental policies, the Fund cannot
do any of the following:
/ / Borrow amounts in excess of 10% of the Fund's total assets, taken at
market value at the time of the borrowing, and then only from banks as a
temporary measure for extraordinary or emergency purposes, or make investments
in portfolio securities while such outstanding borrowings exceed 5% of the
Fund's total assets.
/ / (a) Invest more than 5% of the Fund's 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% of the
Fund's total assets in the obligations of any one bank; and (b) purchase more
than either (i) 10% in principal amount of the outstanding debt securities of an
issuer, or (ii) 10% of the outstanding voting securities of an issuer, except
that such restrictions shall not apply to securities issued or guaranteed by the
United States Government or its agencies, bank money instruments or bank
repurchase agreements.
/ / Invest more than 25% of its assets in securities of issuers in any
single industry, provided that this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
For the purpose of this restriction, each utility that provides a separate
service (e.g., gas, gas transmission, electric or telephone) shall be considered
a separate industry. This test shall be applied on a pro forma basis using the
market value of all assets immediately prior to making any investment.
/ / 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).
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time the Fund purchases a security, and the Fund
need not dispose of a security merely because the Fund's assets have changed or
the security has increased in value relative to the size of the Fund. There are
other fundamental policies discussed in the Statement of Additional Information.
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HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORY. The Fund is a diversified series of Oppenheimer
Series Fund, Inc. (the "Company"). The Company was organized in 1981 as a
Maryland corporation and is an open-end management investment company.
Organized as a series fund, the Company presently has eight series, including
the Fund.
The Fund is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors meet
periodically throughout the year to oversee the Fund's activities, review its
performance, and review the actions of the Manager. "Directors and Officers of
the Funds" in the Statement of Additional Information names the Directors and
officers of the Fund and provides more information about them. Although the
Fund is not required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have the right
to call a meeting to remove a Director or to take other action described in the
Fund's Articles of Incorporation.
The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board has done
so, and the Fund currently has three classes of shares, Class A, Class B and
Class C. All classes invest in the same investment portfolio. Each class has
its own dividends and distributions, and pays certain expenses which may be
different for the different classes. Each class may have a different net asset
value. Each share has one vote at shareholder meetings, with fractional shares
voting proportionally on matters submitted to the vote of shareholders. Shares
of each class may have separate voting rights on matters in which interests of
one class are different from interests of another class, and shares of a
particular class vote as a class on matters that affect that class alone.
Shares are freely transferrable. Please refer to "How the Funds are Managed" in
the Statement of Additional Information for further information on voting of
shares.
THE MANAGER AND ITS AFFILIATES. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Directors, under an
Investment Advisory Agreement which states the Manager's responsibilities. The
Agreement sets forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The Manager
and its affiliates currently manage investment companies, including other
Oppenheimer funds, with assets of more than $40 billion as of December 31, 1995,
and with more than 2.8 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
/ / PORTFOLIO MANAGEMENT. The principal Portfolio Manager of the Fund is
Peter M. Antos. He is a Vice President of the Fund and the Manager and has been
the senior portfolio manager of the Fund's portfolio since 1989. He is also a
Chartered Financial Analyst and serves as a portfolio manager of other
Oppenheimer funds. Mr. Antos was employed since 1989 by the Fund's prior
investment adviser, G.R. Phelps & Co., Inc., as a Vice President and Senior
Portfolio Manager, Equities, before joining OppenheimerFunds, Inc. Mr. Michael
C. Strathearn, Mr. Stephen F. Libera, and Mr. Authur J.
Zimmer are also Vice Presidents and portfolio managers of the Fund. Messrs.
Strathearn and Libera are each a chartered Financial
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<PAGE>
Analyst. Messrs. Strathearn and Libera was each employed by
Connecticut Mutual Life Insurance Company, the parent of G. R. Phelps, as a
Portfolio Manager prior to joining Oppenheimer Funds, Inc. on March 1, 1996.
Mr. Zimmer is a Vice President of Oppenheimer Management Corporation and is
an officer of other Oppenheimer funds. Formerly, Mr. Zimmer was a Vice
President of Hanifen Imhoff Management Company (a mutual fund investment
adviser).
/ / FEES AND EXPENSES. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fee, which declines on additional assets
as the Fund grows: 0.625% of the first $300 million of aggregate net assets;
0.500% of the next $100 million; and 0.450% of net assets in excess of $400
million. The Fund's management fee for its last fiscal year was 0.625% of the
average annual net assets for Class A and Class B shares (on an annualized
basis). There were no Class C shares outstanding during the year.
The Fund pays expenses related to its daily operations, such as custodian
fees, Directors' fees, transfer agency fees, legal and auditing costs. Those
expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of shares, and
therefore are indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other expenses paid
by the Fund is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and practices
in "Brokerage Policies of the Funds" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which brokers to use, the Manager is
permitted by the Investment Advisory Agreement to consider whether brokers have
sold shares of the Fund or any other funds for which the Manager serves as
investment adviser.
/ / THE DISTRIBUTOR. The Fund's shares are sold through dealers and
brokers that have a sales agreement with OppenheimerFunds Distributor, Inc., a
subsidiary of the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
/ / THE TRANSFER AGENT. The Fund's Transfer Agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for the other Oppenheimer funds. Shareholders should direct
inquiries about their accounts to the Transfer Agent at the address and
toll-free number shown below in this Prospectus or on the back cover.
PERFORMANCE OF THE FUND
EXPLANATION OF PERFORMANCE TERMINOLOGY. The Fund uses the terms "total return"
to illustrate its performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will usually be
different as a result of the different kinds of expenses each class bears.
These returns measure the performance of a hypothetical account in the Fund over
various periods, and do not show the performance of each shareholder's account
(which will vary if dividends are received in cash, or shares are sold or
purchased). The Fund's performance data may help you see how well your
investment has done over time and to compare it to market indices, as we have
done below.
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<PAGE>
It is important to understand that the Fund's total returns represent past
performance and should not be considered to be predictions of future returns or
performance. This performance data is described below, but more detailed
information about how total returns are calculated is contained in the Statement
of Additional Information, which also contains information about other ways to
measure and compare the Fund's performance. The Fund's investment performance
will vary over time, depending on market conditions, the composition of the
portfolio, expenses and which class of shares you purchase.
/ / TOTAL RETURNS. There are different types of "total returns" used to
measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, they include the payment
of the current maximum initial sales charge. When total returns are shown for
Class B and Class C shares, they include the effect of the contingent deferred
sales charge that applies to the period for which total return is shown. When
total returns are shown for a one-year period (or less) for Class C shares, they
include the effect of the contingent deferred sales charge. Total returns may
also be quoted at "net asset value," without including the effect of either the
front-end or the appropriate contingent deferred sales charge, as applicable,
and those returns would be reduced if sales charges were deducted.
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
CLASSES OF SHARES. The Fund offers investors three different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
/ / CLASS A SHARES. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
OppenheimerFunds prototype 401(k) plans). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for OppenheimerFunds
prototype 401(k) plans) in shares of one or more Oppenheimer funds, you will not
pay an initial sales charge, but if you sell any of those shares within 18
months of buying them, you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you invested.
Sales charge rates are described in "Buying Class A Shares," below.
/ / CLASS B SHARES. If you buy Class B shares, you pay no sales charge at
the time of purchase, but if you sell your shares within six years of buying
them, you will normally pay a contingent deferred sales charge that varies
depending on how long you owned your shares, as described in "Buying Class B
Shares," below.
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<PAGE>
/ / CLASS C SHARES. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%, as
discussed in "Buying Class C Shares," below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your financial advisor
with a framework in which to choose a class, we have made some assumptions using
a hypothetical investment in the Fund. We used the sales charge rates that
apply to each class, and considered the effect of the asset-based sales charge
on Class B and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed that there is a
10% rate of appreciation in your investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based on the
Fund's actual investment returns, and the operating expenses borne by each class
of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one class of
shares and not a combination of shares of different classes.
/ / HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of shares.
Because of the effect of class-based expenses your choice will also depend on
how much you invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the effect of paying
an initial sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the effect
over time of higher class-based expenses on the shares of Class B or Class C for
which no initial sales charge is paid.
/ / INVESTING FOR THE SHORT TERM. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than six years), you
should probably consider purchasing Class A or Class C shares rather than
Class B shares, because of the effect of the Class B contingent deferred sales
charge if you redeem in less than seven years, as well as the effect of the
Class B asset-based sales charge on the investment return for that class in the
short-term. Class C shares might be the appropriate choice (especially for
investments of less than $100,000), because there is no initial sales charge on
Class C shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases toward
six years Class C shares might not be as advantageous as Class A shares. That
is because the annual asset-based sales charge on Class C shares will have a
greater economic impact on your account over the longer term than the
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<PAGE>
reduced front-end sales charge available for larger purchases of Class A
shares. For example, Class A might be more advantageous than Class C (as
well as Class B) for investments of more than $100,000 expected to be held
for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more advantageous than
Class C (and B). If investing $500,000 or more, Class A may be more
advantageous as your investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you intend to
hold your shares. For that reason, the Distributor normally will not accept
purchase orders of $500,000 or more of Class B or $1 million or more of Class C
shares from a single investor.
/ / INVESTING FOR THE LONGER TERM. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to your
money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to invest
more than $100,000 over the long term, Class A shares will likely be more
advantageous than Class B shares or Class C shares, as discussed above, because
of the effect of the expected lower expenses for Class A shares and the reduced
initial sales charge available for larger investments in Class A shares under a
Fund's Right of Accumulation.
Of course all of these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over time,
using the assumed annual performance return stated above, and you should analyze
your options carefully.
/ / ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Because
some features may not be available to Class B or C shareholders, or other
features (such as Automatic Withdrawal Plans) may not be advisable (because of
the effect of the contingent deferred sales charge in non-retirement accounts)
for Class B or Class C shareholders, you should carefully review how you plan to
use your investment account before deciding which class of shares to buy. For
example, share certificates are not available for Class B or Class C shares and
if you are considering using your shares as collateral for a loan, this may be a
factor to consider. Additionally, dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne by those classes
that are not borne by Class A, such as the Class B and Class C asset-based sales
charges described below and in the Statement of Additional Information.
/ / HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares, may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales charges and
asset-based sales charges is the same as the purpose of the front-end sales
charge on sales of Class A shares: to reimburse the Distributor for commissions
it pays to dealers and financial institutions for selling shares.
HOW MUCH MUST YOU INVEST? You can open the Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25 can
be made by telephone through AccountLink.
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<PAGE>
Under pension and profit-sharing plans and Individual Retirement Accounts
(IRAs), you can make an initial investment of as little as $250 (if your IRA
is established under an Asset Builder Plan, the $25 minimum applies), and
subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other Oppenheimer funds (a list of
them appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
/ / HOW ARE SHARES PURCHASED? You can buy shares several ways -- through
any dealer, broker or financial institution that has a sales agreement with
the Distributor, or directly through the Distributor, or automatically from
your bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. WHEN YOU BUY SHARES, BE SURE TO SPECIFY CLASS A, CLASS B
OR CLASS C SHARES. IF YOU DO NOT CHOOSE, YOUR INVESTMENT WILL BE MADE IN
CLASS A SHARES.
/ / BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order
with the Distributor on your behalf.
/ / BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds
New Account Application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor, to
be sure it is appropriate for you.
/ / BUYING SHARES THROUGH OPPENHEIMERFUNDS ACCOUNTLINK. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member to
transmit funds electronically to PURCHASE SHARES, to have the Transfer Agent
SEND REDEMPTION PROCEEDS, or to TRANSMIT DIVIDENDS AND DISTRIBUTIONS.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink," below for more
details.
/ / ASSET BUILDER PLANS. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
/ / AT WHAT PRICES ARE SHARES SOLD? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to receive
that day's offering price, the Distributor must receive your order by the
time of day The New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net
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<PAGE>
asset value of each class of shares is determined as of that time on each day
The New York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order by
the close of The New York Stock Exchange on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. THE
DISTRIBUTOR, IN ITS SOLE DISCRETION, MAY REJECT ANY PURCHASE ORDER FOR THE
FUND'S SHARES.
SPECIAL SALES CHARGE ARRANGEMENTS FOR CERTAIN PERSONS. Appendix C to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of shares
of the Fund (including purchases by exchange) by a person who was a
shareholder of one of the Former Quest for Value Funds and Former Connecticut
Mutual Funds (each as defined in that Appendix).
BUYING CLASS A SHARES. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However, in
some cases, described below, purchases are not subject to an initial sales
charge, and the offering price may be net asset value. In some cases, reduced
sales charges may be available, as described below. Out of the amount you
invest, the Fund receives the net asset value to invest for your account.
The sales charge varies depending on the amount of your purchase. A portion
of the sales charge may be retained by the Distributor and allocated to your
dealer as commission. Different sales charge rates and commissions applied to
sales of Class A shares prior to March 21, 1996. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
FRONT-END SALES FRONT-END SALES COMMISSION AS
AMOUNT OF PURCHASE CHARGE AS PERCENTAGE CHARGE AS PERCENTAGE PERCENTAGE OF
OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED OFFERING PRICE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- -------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- -------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- -------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- -------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- -------------------------------------------------------------------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
/ / CLASS A CONTINGENT DEFERRED SALES CHARGE. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
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<PAGE>
/ / purchases aggregating $1 million or more, or
/ / purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more or (2) has, at the time of purchase, 100
or more eligible participants, or (3) certifies that it projects to have
annual plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those purchases in
an amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50% of
the next $2.5 million, plus 0.25% of purchases over $5 million. That
commission will be paid only on the amount of those purchases in excess of $1
million ($500,000 for purchases by OppenheimerFunds 401(k) prototype plans)
that were not previously subject to a front-end sales charge and dealer
commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called
the "Class A contingent deferred sales charge") will be deducted from the
redemption proceeds. That sales charge will be equal to 1.0% either (1) of
the aggregate net asset value of the redeemed shares (not including shares
purchased by reinvestment of dividends or capital gain distributions) or (2)
the original cost of the shares, whichever is less. The Class A contingent
deferred sales charge will not exceed the aggregate commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer
funds you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains,
and then will redeem other shares in the order that you purchased them. The
Class A contingent deferred sales charge is waived in certain cases described
in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However, if
the shares acquired by exchange are redeemed within 18 months of the end of
the calendar month of the purchase of the exchanged shares, the sales charge
will apply.
/ / SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients. Dealers
whose sales of Class A shares of Oppenheimer funds (other than money market
funds) under OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5
million per year (calculated per quarter), will receive monthly one-half of
the Distributor's retained commissions on those sales, and if those sales
exceed $10 million per year, those dealers will receive the Distributor's
entire retained commission on those sales.
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES. You may be eligible to
buy Class A shares at reduced sales charge rates in one or more of the
following ways:
/ / RIGHT OF ACCUMULATION. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for a
trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
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<PAGE>
Additionally, you can add together current purchases of Class A and Class
B shares of the Fund and other Oppenheimer funds to reduce the sales charge
rate for current purchases of Class A shares. You can also include Class A
and Class B shares of Oppenheimer funds you previously purchased subject to
an initial or contingent deferred sales charge to reduce the sales charge
rate for current purchases of Class A shares, provided that you still hold
your investment in one of the Oppenheimer funds. The value of those shares
will be based on the greater of the amount you paid for the shares or their
current value (at offering price). The Oppenheimer funds are listed in
"Reduced Sales Charges" in the Statement of Additional Information, or a list
can be obtained from the Distributor. The reduced sales charge will apply
only to current purchases and must be requested when you buy your shares.
/ / LETTER OF INTENT. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of the Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies
to your purchases of Class A shares. The total amount of your intended
purchases of both Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period. More
information is contained in the Application and in "Reduced Sales Charges" in
the Statement of Additional Information.
/ / WAIVERS OF CLASS A SALES CHARGES. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of
this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES FOR CERTAIN
PURCHASERS. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
/ / the Manager or its affiliates;
/ / present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
/ / registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor
for that purpose;
/ / dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans for
their employees;
/ / employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is for
the purchaser's own account (or for the benefit of such employee's spouse or
minor children);
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use of
shares of the Fund in particular investment products made available to their
clients (those clients may be charged a transaction fee by their dealer,
broker or advisor for the purchase or sale of shares of the Fund)
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<PAGE>
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares of defined contribution
employee retirement plans for which the dealer, broker or investment adviser
provides administrative services.
/ / directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
/ / accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial owner
of such accounts;
/ / any unit investment trust that has entered into an appropriate
agreement with the Distributor;
/ / a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of the
Class B and C TRAC-2000 program on November 24, 1995; or
/ / qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds
at net asset value, with such shares to be held through DCXchange, a
sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by March 31, 1996.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES IN CERTAIN
TRANSACTIONS. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
/ / shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
/ / shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or one of its
affiliates acts as sponsor;
/ / shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
/ / shares purchased and paid for with the proceeds of shares redeemed in
the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund, Inc. that
were purchased and paid for in this manner); this waiver must be requested
when the purchase order is placed for your Fund shares, and the Distributor
may require evidence of your qualification for this waiver; and
/ / shares purchased with the proceeds of maturing principal of units of
any Qualified Unit Investment Liquid Trust Series.
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<PAGE>
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN
REDEMPTIONS. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales
charge are redeemed in the following cases:
/ / for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans or
other employee benefit plans, including OppenheimerFunds prototype 401(k)
plans (these are all referred to as "Retirement Plans");
/ / to return excess contributions made to Retirement Plans;
/ / to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
/ / involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
/ / if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales charge,
the dealer agrees in writing to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month
(and no further commission will be payable if the shares are redeemed within
18 months of purchase); or
/ / for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or disability
(as defined in the Internal Revenue Code) of the participant or beneficiary
(the death or disability must occur after the participant's account was
established); (2) hardship withdrawals, as defined in the plan; (3) under a
Qualified Domestic Relations Order, as defined in the Internal Revenue Code;
(4) to meet the minimum distribution requirements of the Internal Revenue
Code; (5) to establish "substantially equal periodic payments" as described
in Section 72(t) of the Internal Revenue Code, or (6) separation from service.
/ / SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan
for Class A shares to reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and maintenance of accounts
that hold Class A shares. Reimbursement is made quarterly at an annual rate
that may not exceed 0.25% of the average annual net assets of Class A shares
of the Fund. The Distributor uses all of those fees to compensate dealers,
brokers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold
Class A shares and to reimburse itself (if the Fund's Board of Directors
authorizes such reimbursements, which it has not done as yet) for its other
expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining accounts
in the Fund, making the Fund's investment plans available and providing other
services at the request of the Fund or the Distributor. Payments are made by
the Distributor quarterly at an annual rate not to exceed 0.25% of the
average annual net assets of Class A shares held in accounts of the dealer or
its customers. The payments under the Plan increase the annual expenses of
Class A shares. For more details, please refer to "Distribution and Service
Plans" in the Statement of Additional Information.
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<PAGE>
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within six years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset
value of the shares at the time of redemption or the original purchase price.
The contingent deferred sales charge is not imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions). The Class B contingent deferred sales charge is
paid to the Distributor to compensate it for providing distribution-related
services to the Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over six years, and (3) shares held the longest during the
six-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
<TABLE>
<CAPTION>
YEARS SINCE BEGINNING OF CONTINGENT DEFERRED SALES CHARGE
MONTH IN WHICH ON REDEMPTIONS IN THAT YEAR
PURCHASE ORDER WAS ACCEPTED (AS % OF AMOUNT SUBJECT TO CHARGE)
- -----------------------------------------------------------------------------------------
<S> <C>
0-1 5.0%
- -----------------------------------------------------------------------------------------
1-2 4.0%
- -----------------------------------------------------------------------------------------
2-3 3.0%
- -----------------------------------------------------------------------------------------
3-4 3.0%
- -----------------------------------------------------------------------------------------
4-5 2.0%
- -----------------------------------------------------------------------------------------
5-6 1.0%
- -----------------------------------------------------------------------------------------
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to March 31, 1996.
/ / AUTOMATIC CONVERSION OF CLASS B SHARES. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
and Service Plan, described below. The conversion is based on the relative
net asset value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and
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<PAGE>
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements -- Class A, Class B and
Class C Shares" in the Statement of Additional Information.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed
within 12 months of their purchase, a contingent deferred sales charge of
1.0% will be deducted from the redemption proceeds. That sales charge will
not apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original purchase
price. The contingent deferred sales charge is not imposed on the amount of
your account value represented by the increase in net asset value over the
initial purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent deferred
sales charge is paid to the Distributor to reimburse its expenses of
providing distribution-related services to the Fund in connection with the
sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
/ / DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate the Distributor for its costs in distributing Class B
and C shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for six years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under the Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge allows
investors to buy Class B or C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or C shares. Those services
are similar to those provided under the Class A Service Plan, described
above. The Distributor pays the 0.25% service fees to dealers in advance for
the first year after Class B or Class C shares have been sold by the dealer
and retains the service fee paid by the Fund in that year. After the shares
have been held for a year, the Distributor pays the service fees to dealers
on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% on the
purchase price of Class B shares to dealers from its own resources at the
time of sale. The total amount paid by the Distributor to the dealer at the
time of sales of Class B shares is therefore 4.00% of the purchase price. The
Fund pays the asset-based sales charge to the Distributor for its services
rendered in distributing Class B shares. Those payments, retained by the
Distributor, are at a fixed rate that is not related to the Distributor's
expenses. The services rendered by the Distributor include paying and
financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B shares.
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<PAGE>
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of
sale. The total amount paid by the Distributor to the dealer at the time of
sale of Class C shares is therefore 1.00% of the purchase price. The
Distributor retains the asset-based sales charge during the first year Class
C shares are outstanding to recoup the sales commissions it has paid, the
advances of service fee payments it has made, and its financing costs and
other expenses. The Distributor plans to pay the asset-based sales charge as
an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plans for Class B and C shares. Therefore, those expenses may be
carried over and paid in future years. If the Fund terminates its Plan, the
Board of Directors may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the Plan was
terminated.
/ / WAIVERS OF CLASS B AND CLASS C SALES CHARGES. The Class B and Class
C contingent deferred sales charge will not be applied to shares purchased in
certain types of transactions nor will it apply to Class B and Class C shares
redeemed in certain circumstances as described below. The reasons for this
policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
WAIVERS FOR REDEMPTIONS IN CERTAIN CASES. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases, if the Transfer Agent is notified that these conditions
apply to the redemption:
/ / distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after
the participant reaches age 59-1/2, as long as the payments are no more than
10% of the account value annually (measured from the date the Transfer Agent
receives the request), or (b) following the death or disability (as defined
in the Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
/ / redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by the
Social Security Administration);
/ / returns of excess contributions to Retirement Plans;
/ / distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant is
age 59-1/2 but only after the participant has separated from service, if the
distributions are made in substantially equal periodic payments over the life
(or life expectancy) of the participant or the joint lives (or joint life and
last survivor expectancy) of the participant and the participant's designated
beneficiary (and the distributions must comply with other requirements for
such distributions under the Internal Revenue Code and may not exceed
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<PAGE>
10% of the account value annually, measured from the date the Transfer Agent
receives the request);
/ / shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
/ / distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of the
Internal Revenue Code; or (5) for separation from service.
WAIVERS FOR SHARES SOLD OR ISSUED IN CERTAIN TRANSACTIONS. The
contingent deferred sales charge is also waived on Class B and Class C shares
sold or issued in the following cases:
/ / shares sold to the Manager or its affiliates;
/ / shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; and
/ / shares issued in plans of reorganization to which the Fund is a party.
SPECIAL INVESTOR SERVICES
ACCOUNTLINK. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types of
account transactions. These include purchases of shares by telephone (either
through a service representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to your bank
account. Please refer to the Application for details or call the Transfer
Agent for more information.
AccountLink privileges should be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed instructions
to the Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives written
instructions terminating or changing those privileges. After you establish
AccountLink for your account, any change of bank account information must be
made by signature-guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
/ / USING ACCOUNTLINK TO BUY SHARES. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts
up to $250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
-33-
<PAGE>
/ / PHONELINK. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
/ / PURCHASING SHARES. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these
purchases.
/ / EXCHANGING SHARES. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How to
Exchange Shares," below, for details.
/ / SELLING SHARES. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below
for details.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
/ / AUTOMATIC WITHDRAWAL PLANS. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of
at least $50 on a monthly, quarterly, semi-annual or annual basis. The checks
may be sent to you or sent automatically to your bank account on AccountLink.
You may even set up certain types of withdrawals of up to $1,500 per month
by telephone. You should consult the Application and Statement of Additional
Information for more details.
/ / AUTOMATIC EXCHANGE PLANS. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms
of the Exchange Privilege, described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares, you have up to 6 months to reinvest all or part of the redemption
proceeds in Class A shares of the same Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies to Class A shares that
you purchased subject to an initial sales charge and to Class A or Class B
shares on which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must be sure to
ask the Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
RETIREMENT PLANS. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for your
retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
/ / INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for
individuals and their spouses
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<PAGE>
/ / 403(B)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
/ / SEP-IRAS (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-IRAs
/ / PENSION AND PROFIT-SHARING PLANS for self-employed persons and other
employers
/ / 401(K) PROTOTYPE RETIREMENT PLANS for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
HOW TO SELL SHARES
You can arrange to take money out of your account by selling (redeeming)
some or all of your shares on any regular business day. Your shares will be
sold at the next net asset value calculated after your order is received and
accepted by the Transfer Agent. The Fund offers you a number of ways to sell
your shares: in writing or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above. IF
YOU HAVE QUESTIONS ABOUT ANY OF THESE PROCEDURES, AND ESPECIALLY IF YOU ARE
REDEEMING SHARES IN A SPECIAL SITUATION, SUCH AS DUE TO THE DEATH OF THE
OWNER, OR FROM A RETIREMENT PLAN, PLEASE CALL THE TRANSFER AGENT FIRST, AT
1-800-525-7048, FOR ASSISTANCE.
/ / RETIREMENT ACCOUNTS. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a distribution
request form. There are special income tax withholding requirements for
distributions from retirement plans and you must submit a withholding form
with your request to avoid delay. If your retirement plan account is held
for you by your employer, you must arrange for the distribution request to be
sent by the plan administrator or trustee. There are additional details in
the Statement of Additional Information.
/ / CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and
the Fund from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
/ / You wish to redeem more than $50,000 worth of shares and receive a
check
/ / The redemption check is not payable to all shareholders listed on the
account statement
/ / The redemption check is not sent to the address of record on your
account statement
/ / Shares are being transferred to a Fund account with a different owner
or name
/ / Shares are redeemed by someone other than the owners (such as an
Executor)
/ / WHERE CAN I HAVE MY SIGNATURE GUARANTEED? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association,
or by a foreign bank that has a U.S. correspondent
-35-
<PAGE>
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. IF YOU
ARE SIGNING AS A FIDUCIARY OR ON BEHALF OF A CORPORATION, PARTNERSHIP OR
OTHER BUSINESS, OR AS A FIDUCIARY YOU MUST ALSO INCLUDE YOUR TITLE IN THE
SIGNATURE.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
/ / Your name
/ / The Fund's name
/ / Your Fund account number (from your account statement)
/ / The dollar amount or number of shares to be redeemed
/ / Any special payment instructions
/ / Any share certificates for the shares you are selling
/ / The signatures of all registered owners exactly as the account is
registered, and
/ / Any special requirements or documents requested by the Transfer Agent
to assure proper authorization of the person asking to sell shares.
USE THE FOLLOWING ADDRESS FOR REQUESTS BY MAIL:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
SEND COURIER OR EXPRESS MAIL REQUESTS TO:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
SELLING SHARES BY TELEPHONE. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price on a
regular business day, your call must be received by the Transfer Agent by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M.,
but may be earlier on some days. YOU MAY NOT REDEEM SHARES HELD IN AN
OPPENHEIMERFUNDS RETIREMENT PLAN OR UNDER A SHARE CERTIFICATE BY TELEPHONE.
/ / To redeem shares through a service representative, call 1-800-852-8457
/ / To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank account.
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<PAGE>
/ / TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone, in any seven-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
/ / TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK OR WIRE. There are no
dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer to your
bank is initiated on the business day after the redemption. You do not
receive dividends on the proceeds of the shares you redeemed while they are
waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account
if the bank is a member of the Federal Reserve wire system. There is a $10
fee for each Federal Funds wire. To place a wire redemption request, call
the Transfer Agent at 1-800-852-8457. The wire will normally be transmitted
on the next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable the Fund
to sell securities to pay the redemption proceeds. No dividends are accrued
or paid on the proceeds of shares that have been redeemed and are awaiting
transmittal by wire. To establish wire redemption privileges on an account
that is already established, please contact the Transfer Agent for
instructions.
SELLING SHARES THROUGH YOUR DEALER. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
HOW TO EXCHANGE SHARES
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
/ / Shares of the fund selected for exchange must be available for sale
in your state of residence.
/ / The prospectuses of the Fund and the fund whose shares you want to
buy must offer the exchange privilege.
/ / You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares every regular business day.
/ / You must meet the minimum purchase requirements for the fund you
purchase by exchange.
/ / BEFORE EXCHANGING INTO A FUND, YOU SHOULD OBTAIN AND READ ITS
PROSPECTUS.
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<PAGE>
SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME
CLASS IN THE OTHER OPPENHEIMER FUNDS. For example, you can exchange Class A
shares of the Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which
are considered to be Class A shares for this purpose. In some cases, sales
charges may be imposed on exchange transactions. Please refer to "How to
Exchange Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
/ / WRITTEN EXCHANGE REQUESTS. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the Transfer
Agent at the addresses listed in "How to Sell Shares."
/ / TELEPHONE EXCHANGE REQUESTS. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
names and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by calling
a service representative at 1-800-525-7048. That list can change from time to
time.
There are certain exchange policies you should be aware of:
/ / Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on
which the Transfer Agent receives an exchange request that is in proper form
by the close of The New York Stock Exchange that day, which is normally 4:00
P.M. but may be earlier on some days. However, either fund may delay the
purchase of shares of the fund you are exchanging into up to seven days if it
determines it would be disadvantaged by a same-day transfer of the proceeds
to buy shares. For example, the receipt of multiple exchange requests from a
dealer in a "market-timing" strategy might require the disposition of
securities at a time or price disadvantageous to the Fund.
/ / Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
/ / The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever it
is reasonably able to do so, it may impose these changes at any time.
/ / For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund,
which may result in a taxable gain or a loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
/ / If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange
will be exchanged.
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<PAGE>
SHAREHOLDER ACCOUNT RULES AND POLICIES
/ / NET ASSET VALUE PER SHARE is determined for each class of shares as
of the close of The New York Stock Exchange which is normally 4:00 P.M., but
may be earlier on some days, on each day the Exchange is open by dividing the
value of the Fund's net assets attributable to a class by the number of
shares of that class that are outstanding. The Fund's Board of Directors has
established procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value. There are
special procedures for valuing illiquid and restricted securities and
obligations for which market values cannot be readily obtained. These
procedures are described more completely in the Statement of Additional
Information.
/ / THE OFFERING OF SHARES may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Directors at any time the Board believes it is in
the Fund's best interest to do so.
/ / TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any time.
If an account has more than one owner, the Fund and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply to each
owner of the account and the dealer representative of record for the account
unless and until the Transfer Agent receives cancellation instructions from
an owner of the account.
/ / THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the Transfer
Agent during periods of unusual market activity, you may not be able to
complete a telephone transaction and should consider placing your order by
mail.
/ / REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL THE
TRANSFER AGENT RECEIVES ALL REQUIRED DOCUMENTS IN PROPER FORM. From time to
time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
/ / DEALERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS BY
PARTICIPATING IN NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction erroneously.
/ / THE REDEMPTION PRICE FOR SHARES WILL VARY from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally be
different for Class A, Class B and Class C shares. Therefore, the redemption
value of your shares may be more or less than their original cost.
/ / PAYMENT FOR REDEEMED SHARES is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer Agent
receives redemption instructions in proper form, except under unusual
circumstances determined by the Securities and Exchange Commission
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<PAGE>
delaying or suspending such payments. For accounts registered in the name of
a broker-dealer, payment will be forwarded within 3 business days. THE
TRANSFER AGENT MAY DELAY FORWARDING A CHECK OR PROCESSING A PAYMENT VIA
ACCOUNTLINK FOR RECENTLY PURCHASED SHARES, BUT ONLY UNTIL THE PURCHASE
PAYMENT HAS CLEARED. THAT DELAY MAY BE AS MUCH AS 10 DAYS FROM THE DATE THE
SHARES WERE PURCHASED. THAT DELAY MAY BE AVOIDED IF YOU PURCHASE SHARES BY
CERTIFIED CHECK OR ARRANGE WITH YOUR BANK TO PROVIDE TELEPHONE OR WRITTEN
ASSURANCE TO THE TRANSFER AGENT THAT YOUR PURCHASE PAYMENT HAS CLEARED.
/ / INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by the Fund if
the account has fewer than 100 shares, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
/ / UNDER UNUSUAL CIRCUMSTANCES, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to "How to Sell Shares" in the
Statement of Additional Information for more details.
/ / "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund your correct, certified Social
Security or Employer Identification Number and any other certifications
required by the Internal Revenue Service ("IRS") when you sign your
application, or if you violate IRS regulations on tax reporting of income.
/ / THE FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be subject
to a contingent deferred sales charge when redeeming certain Class A, Class B
and Class C shares.
/ / TO AVOID SENDING DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to
ask that copies of those materials be sent personally to that shareholder.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS. The Fund declares and pays dividends separately for Class A, Class
B and Class C shares from net investment income semi-annually. Normally,
dividends are paid on the last business day every dividend period, but the
Board of Directors can change that date. Dividends paid on Class A shares
generally are expected to be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will generally be
higher.
CAPITAL GAINS. The Fund may make distributions annually in December out of
any net short-term or long-term capital gains. Long-term capital gains will
be separately identified in the tax information your Fund sends you after the
end of the year. Distributions of short-term capital gains are treated as
ordinary income for tax purposes. There can be no assurance that the Fund
will pay any capital gains distributions in a particular year.
DISTRIBUTION OPTIONS. When you open your account, specify on your
application how you want to receive your distributions. For OppenheimerFunds
retirement accounts, all distributions are reinvested. For other accounts,
you have four options:
-40-
<PAGE>
/ / REINVEST ALL DISTRIBUTIONS IN THE FUND. You can elect to reinvest
all dividends and long-term capital gains distributions in additional shares
of the Fund.
/ / REINVEST CAPITAL GAINS ONLY. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to your
bank account on AccountLink.
/ / RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them sent
to your bank on AccountLink.
/ / REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMERFUNDS ACCOUNT.
You can reinvest all distributions in another Oppenheimer funds account you
have established.
TAXES. If your account is not a tax-deferred retirement account, you should
be aware of the following tax implications of investing in the Fund. The
Fund's distributions from long-term capital gains are taxable to shareholders
as long-term capital gains, no matter how long you held your shares.
Dividends paid by the Fund from short-term capital gains and net investment
income, including certain net realized foreign exchange gains, are taxable as
ordinary income. These dividends and distributions are subject to Federal
income tax and may be subject to state or local taxes. Your distributions
are taxable as described above, whether you reinvest them in additional
shares or take them in cash. Corporate shareholders may be entitled to the
corporate dividends received deduction for some portion of the Fund's
distributions treated as ordinary income, subject to applicable limitations
under the Internal Revenue Code. Every year the Fund will send you and the
IRS a statement showing the aggregate amount and character of the dividends
and other taxable distributions you received for the previous year.
/ / "BUYING A DIVIDEND". When the Fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or just
before the ex-dividend date, or just before the Fund declares a capital gains
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
/ / TAXES ON TRANSACTIONS. Share redemptions and repurchases, including
redemptions for exchanges, may produce a taxable gain or a loss, which
generally will be a capital gain or loss for shareholders who hold shares of
the Fund as capital assets. Such a gain or loss is the difference between
your tax basis, which is usually the price you paid for the shares, and the
proceeds you received when you sold them. Special tax rules may apply to
certain redemptions preceded or followed by investments in the Fund or
another Oppenheimer fund.
/ / RETURNS OF CAPITAL. In certain cases distributions made by the Fund
may be considered a return of capital to shareholders. If that occurs, it
will be identified in notices to shareholders. A return of capital will
reduce your tax basis in shares of the Fund but will not be taxable except to
the extent it exceeds such tax basis.
/ / FOREIGN TAXES. The Fund may be subject to foreign withholding taxes
or other foreign taxes on income (possibly including capital gains) on
certain of its foreign investments, if any. These taxes may be reduced or
eliminated pursuant to an income tax treaty in some cases. The Fund does not
expect to qualify to pass such foreign taxes and any related tax deductions
or credits through to its shareholders.
-41-
<PAGE>
The Fund has qualified and intends to continue to qualify as a regulated
investment company under the Internal Revenue Code. Provided that the Fund
so qualifies, it will not be required to pay any federal income tax on its
net investment income and net realized capital gains that it distributes to
its shareholders in accordance with certain timing requirements.
This information is only a summary of certain federal tax information
about your investment. Tax-exempt or tax-deferred investors, foreign
investors, and investors subject to special tax rules (such as certain banks
and securities dealers) may have different tax consequences not described
above. More tax information is contained in the Statement of Additional
Information, and in addition you should consult with your tax adviser about
the effect of an investment in the Fund on your particular tax situation.
-42-
<PAGE>
APPENDIX A: DESCRIPTION OF RATINGS CATEGORIES OF RATING SERVICES
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as "high-
grade" bonds. They are rated lower than the best bonds because margins of
protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than those of
"Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that is,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Bonds rated "B" generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or there
may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S BOND RATINGS
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
A-1
<PAGE>
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CC" the highest degree.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds rated
"D" are in default and payment of interest and/or repayment of principal is in
arrears.
A-2
<PAGE>
APPENDIX B
CREDIT QUALITY DISTRIBUTION
The average quality distribution of the portfolio of Oppenheimer Disciplined
Allocation Fund during the year ended December 31, 1995 was as follows:
QUALITY DISTRIBUTION % OF
AS ASSIGNED BY SERVICE AVERAGE VALUE PORTFOLIO
- ---------------------- -------------- ---------
Government Securities $38,963,546.03 19.48%
AAA 684,257.15 0.34%
AA 1,905,602.13 0.95%
A 18,169,459.25 9.08%
BBB 12,720,500.93 6.36%
BB 4,519,705.47 2.26%
B 287,220.83 0.14%
Unrated 2,047,630.26 1.02%
Debt Securities 79,297,922.05 39.64%
Equity Securities 79,855,031.63 39.93%
Short-Term Securities 40,893,893.07 20.44%
-------------- ---------
Total Portfolio 200,046,846.74 100.00%
B-1
<PAGE>
APPENDIX C
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER QUEST FOR VALUE FUNDS
The initial and contingent sales charge rates and waivers for Class A,
Class B and Class C shares of the Fund described elsewhere in this Prospectus
are modified as described below for those shareholders of (i) Quest for Value
Fund, Inc., Quest for Value Growth and Income Fund, Quest for Value Opportunity
Fund, Quest for Value Small Capitalization Fund and Quest for Value Global
Equity Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became the
investment adviser to those funds, and (ii) Quest for Value U.S. Government
Income Fund, Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax-Exempt Fund when
those funds merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds or (ii) received by such
shareholder pursuant to the merger of any of the Former Quest for Value Funds
into an Oppenheimer fund on November 24, 1995.
CLASS A SALES CHARGES
/ / REDUCED CLASS A INITIAL SALES CHARGE RATES FOR CERTAIN FORMER QUEST
SHAREHOLDERS
/ / PURCHASES BY GROUPS, ASSOCIATIONS AND CERTAIN QUALIFIED RETIREMENT
PLANS. The following table sets forth the initial sales charge rates for Class A
shares purchased by a "Qualified Retirement Plan" through a single broker,
dealer or financial institution, or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified Retirement Plan
or that Association purchased shares of any of the Former Quest for Value Funds
or received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan"
includes any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of
a single employer.
C-1
<PAGE>
FRONT-END SALES FRONT-END SALES
CHARGE AS A CHARGE AS A COMMISSION AS
NUMBER OF ELIGIBLE PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
EMPLOYEES OR MEMBERS OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- --------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages to of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
/ / SPECIAL CLASS A CONTINGENT DEFERRED SALES CHARGE RATES
Class A shares of the Fund purchased by exchange of shares of other Oppenheimer
funds that were acquired as a result of the merger of Former Quest for Value
Funds into those Oppenheimer funds, and which shares were subject to a Class A
contingent deferred sales charge prior to November 24, 1995 will be subject to a
contingent deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they were purchased,
at a rate equal to 1.0% if the redemption occurs within 12 months of their
initial purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales charge
in effect as of that date as set forth in the then-current prospectus for such
fund.
/ / WAIVER OF CLASS A SALES CHARGES FOR CERTAIN SHAREHOLDERS
Class A shares of the Fund purchased by the following investors are not subject
to any Class A initial or contingent deferred sales charges:
/ / Shareholders of the Fund who were shareholders of the AMA Family of
Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
/ / Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
C-2
<PAGE>
/ / WAIVER OF CLASS A CONTINGENT DEFERRED SALES CHARGE IN CERTAIN
TRANSACTIONS
The Class A contingent deferred sales charge will not apply to redemptions of
Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
/ / Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
/ / Participants in Qualified Retirement Plans that purchased shares of
any of the Former Quest For Value Funds pursuant to a special "strategic
alliance" with the distributor of those funds. The Fund's Distributor will pay
a commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
CLASS A, CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE WAIVERS
/ / WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED PRIOR TO MARCH 6, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans qualified under
Section 401(a) of the Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts, deferred
compensation plans under Section 457 of the Code, and other employee benefit
plans, and returns of excess contributions made to each type of plan,
(ii) withdrawals under an automatic withdrawal plan holding only either Class B
or C shares if the annual withdrawal does not exceed 10% of the initial value of
the account, and (iii) liquidation of a shareholder's account if the aggregate
net asset value of shares held in the account is less than the required minimum
value of such accounts.
/ / WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED ON OR AFTER MARCH 6, 1995
BUT PRIOR TO NOVEMBER 24, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to November 24, 1995:
(1) distributions to participants or beneficiaries from Individual Retirement
Accounts under Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those distributions
are made either (a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans following the
death or disability of the shareholder(s) (as evidenced by a determination of
total disability by the U.S. Social Security Administration); (4) withdrawals
under an automatic withdrawal plan (but only for Class B or C shares) where the
annual withdrawals do not exceed 10% of the initial value of the account; and
(5) liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, B or C shares of
the Fund described in this section if within 90 days
C-3
<PAGE>
after that redemption, the proceeds are invested in the same Class of shares
in the Fund or another Oppenheimer fund.
SPECIAL DEALER ARRANGEMENTS.
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and that were transferred to an OppenheimerFunds prototype 401(k) plan
shall be eligible for an additional one-time payment by the Distributor of 1% of
the value of the plan assets transferred, but that payment may not exceed $5,000
as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and (i) the shares held by those plans were exchanged for Class A shares,
or (ii) the plan assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the Distributor of
1% of the value of the plan assets transferred, but that payment may not exceed
$5,000.
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER CONNECTICUT MUTUAL FUNDS
Certain of the sales charge waivers for Class A and Class B shares of the
Fund described elsewhere in this Prospectus are modified as described below for
those shareholders of [Connecticut Mutual Liquid Account, Connecticut Mutual
Government Securities Account, Connecticut Mutual Income Account], Connecticut
Mutual Growth Account, Connecticut Mutual Total Return Account, CMIA LifeSpan
Diversified Income Account, CMIA LifeSpan Capital Appreciation Account and CMIA
LifeSpan Balanced Account (the "Former Connecticut Mutual Funds") on March 1,
1996, when OppenheimerFunds, Inc. became the investment adviser to the Former
Connecticut Mutual Funds.
CLASS A SALES CHARGE WAIVERS
Additional Class A shares of the Fund may be purchased without a sales
charge, provided that the Class A shares of the Fund were acquired prior to
March 1, 1996, by:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled $500,000 or
more, including investments made pursuant to the Combined Purchases, Statement
of Intention and Rights of Accumulation features available at the time of the
initial purchase; (2) any participant in a qualified plan, provided that the
total initial amount invested by the plan in the Fund or any one or more of the
Former Connecticut Mutual Funds totaled $500,000 or more; (3) Directors of the
Fund or any one or more of the Former Connecticut Mutual Funds 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 Connecticut Mutual
Financial Services, L.L.C. ("CMFS"), the Fund's prior distributor, 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 Life Insurance Company
through the Panorama Separate Account which was beyond the applicable surrender
charge period and which was used to fund a qualified plan, who exchanged the
variable annuity contract for Class A shares of the Fund; and (8) an institution
acting as a fiduciary on behalf of an individual or individuals, where such
institution was directly compensated by the individual(s) for
C-4
<PAGE>
recommending the purchase of the shares of the Fund or any one or more of the
Former Connecticut Mutual Funds, provided the institution had an agreement
with CMFS. Purchases of Class A shares made pursuant to (1) and (2) above
may be subject to a CDSC.
CLASS A AND CLASS B CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of the Fund and exchanges of Class A or Class B
shares of the Fund into Class A or Class B shares of a Former Connecticut Mutual
Fund provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 1, 1996 or (ii) were acquired by
exchange from an Oppenheimer Fund that was a Former Connecticut Mutual Fund and
the shares of such Former Connecticut Mutual Fund were purchased prior to
March 1, 1996:
(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 Fund due to a combination with another investment company by virtue of a
merger, acquisition or similar reorganization transaction; (7) in connection
with the Fund's right to involuntarily redeem or liquidate the Fund; (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 Fund's Articles of Incorporation, or as adopted by the Board of
Directors of the Fund.
C-5
<PAGE>
OPPENHEIMER DISCIPLINED ALLOCATION FUND
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND, OPPENHEIMERFUNDS, INC., OPPENHEIMERFUNDS
DISTRIBUTOR, INC. OR ANY AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH STATE.
*PRINTED ON RECYCLED PAPER
- --------------------
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Oppenheimer Disciplined Value Fund.
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 Additional
and Caption Information
--------------------- --------------------------
1. Cover Page....................... Cover Page.
2. Synopsis......................... About The Funds -- A Brief
Overview of the Fund.
3. Condensed Financial
Information.................... About The Funds -- Financial
Highlights.
4. General Description of
Registrant..................... Cover Page; About The Funds
-- How The Fund Is Managed -
- Organization and History.
5. Management of the Fund........... About The Funds -- How the
Funds are Managed.
6. Capital Stock and Other
Securities..................... About The Funds --
Investment Objective and
Policies.
7. Purchase of Securities
Being Offered.................. About Your Account -- How to
Buy Shares; Special Sales
Charge Arrangements for
Certain Persons; Buying
Class A Shares; Buying
Class B Shares; Buying
Class C Shares.
8. Redemption or Repurchase......... About Your Account -- How to
Buy Shares; Special Investor
Services; How to Sell
Shares; How to Exchange
Shares; Shareholder Account
Rules and Policies.
<PAGE>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
9. Pending Legal Proceedings........ Not Applicable.
10. Cover Page....................... Cover Page.
11. Table of Contents................ Cover Page.
12. General Information and
History........................ Cover Page; How The Funds
are Managed -- Organization
and History.
13. Investment Objectives and
Policy......................... About The Funds --
Investment Objectives and
Policies.
14. Management of the Fund........... About The Funds -- How the
Funds are Managed.
15. Control Persons and Principal
Holders of Securities.......... About The Funds -- How the
Funds are Managed.
16. Investment Advisory and
Other Services................. About The Funds -- How the
Funds are Managed; The
Manager, the Subadviser and
Their Affiliates; The
Distributor; The Transfer
Agent.
17. Brokerage Allocation and
Other Practices................ About the Funds -- Brokerage
Policies of the Funds.
18. Capital Stock and Other
Securities..................... About the Funds -- How the
Funds are Managed --
Organization and History.
19. Purchase, Redemption and Pricing
of Securities Being Offered.... About Your Accounts -- How
to Buy Shares; How to Sell
Shares; How to Exchange
Shares.
20. Tax Status....................... About Your Account --
Dividends, Capital Gains and
Taxes.
- 2 -
<PAGE>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
21. Underwriters..................... About The Funds -- How the
Funds are Managed -- The
Manager, the Subadvisers and
Their Affiliates; About Your
Account -- How To Buy
Shares.
22. Calculation of Performance
Data........................... About The Funds --
Performance of the Funds;
About Your Account --
Dividends, Capital Gains and
Taxes.
23. Financial Statements............. Financial Information About
the Funds -- Independent
Auditors' Report --
Financial Statements.
- 3 -
<PAGE>
OPPENHEIMER
DISCIPLINED VALUE FUND
PROSPECTUS DATED MAY 1, 1996
Oppenheimer Disciplined Value Fund (the "Fund") is a mutual fund that
seeks long term growth of capital by investing primarily in common stocks
with low price-earnings ratios and better-than-anticipated earnings. Current
income is a secondary consideration. In selecting investments for the Fund,
the investment advisor uses a quantitative investment discipline in
combination with fundamental securities analysis. The Fund may invest the
remainder of its assets in corporate and U.S. Government debt obligations and
short-term instruments. The Fund may also use "hedging" instruments to seek
to reduce the risks of market fluctuations that affect the value of the
securities the Fund holds.
If the Fund has no limits on junk, the NASAA guidelines require this
legend. If the 10% limit under "normal circumstances is a "restriction,"
then this is not need on cover.
This Prospectus explains concisely what you should know before investing
in the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the May
1, 1996 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated into this Prospectus by reference
(which means that it is legally part of this Prospectus).
(Oppenheimer funds logo)
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY,
AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
CONTENTS
A B O U T T H E F U N D
EXPENSES
BRIEF OVERVIEW OF THE FUND
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE AND POLICIES
HOW THE FUND IS MANAGED
PERFORMANCE OF THE FUND
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
Class A Shares
Class B Shares
Class C Shares
SPECIAL INVESTOR SERVICES
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
HOW TO SELL SHARES
By Mail
By Telephone
HOW TO EXCHANGE SHARES
SHAREHOLDER ACCOUNT RULES AND POLICIES
DIVIDENDS, CAPITAL GAINS AND TAXES
APPENDIX A: DESCRIPTION OF SECURITIES RATINGS
APPENDIX B: SPECIAL SALES CHARGE ARRANGEMENTS
-2-
<PAGE>
A B O U T T H E F U N D
EXPENSES
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales charges
and account transaction charges. The following tables are provided to help
you understand your direct expenses of investing in the Fund and the share of
a Fund's business operating expenses that you will bear indirectly. The
numbers below are based on the Fund's expenses during its fiscal year ended
December 31, 1995.
/ / SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account" starting on
page ___ for an explanation of how and when these charges apply.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.75% None None
Charge on
Purchases (as a %
of offering price)
- -------------------------------------------------------------------------------
Sales Charge on None None None
Reinvested
Dividends
- -------------------------------------------------------------------------------
Deferred Sales None(1) 5% in the 1% if
Charge (as a % first year, shares are
of the lower declining redeemed
of the original to 1% in the within 12
purchase price sixth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)
- -------------------------------------------------------------------------------
Exchange Fee None None None
- -------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares -- Buying Class A Shares," below.
(2) See "How to Buy Shares -- Buying Class B Shares," and "Buying Class C
Shares" below, for more information on the contingent deferred sales charges.
-3-
<PAGE>
(3) There is a $10 transaction fee for redemption proceeds paid by Federal
Funds wire, but not for redemptions paid by check or ACH transfer through
AccountLink.
/ / ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment advisor, OppenheimerFunds,
Inc. (which is referred to in this Prospectus as the "Manager"). The rates
of the Manager's fees are set forth in "How the Fund is Managed," below. The
Fund has other regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds the Fund's portfolio securities,
audit fees and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
Management Fees 0.625 % 0.625 % 0.625 %
12b-1 Plan Fees 0.25 % 1.00 % 1.00 %
Other Expenses 0.345 % 0.345 % 0.345 %
------- ------- -------
Total Fund Operating Expenses 1.22 % 1.97 % 1.97 %
</TABLE>
The numbers for Class A shares in the chart above are based on the
Fund's expenses in its last fiscal year. These amounts are shown as a
percentage of the average net assets of each class of the Fund's shares for
that year. Class B shares were not publicly offered before October 1, 1995.
Therefore, the Annual Fund Operating Expenses shown are based on expenses for
the period from October 1, 1995 until December 31, 1995. Class C shares were
not publicly offered during the Fund's last fiscal year. Accordingly, the
Annual Fund Operating Expenses for Class C shares are estimates based upon
amounts that would have been payable if Class C shares had been outstanding
during the year. The actual expenses for each class of shares in future years
may be more or less than the numbers in the chart, depending on a number of
factors, including the actual amount of the Fund's assets represented by each
class of shares.
The "12b-1 Distribution Plan Fees" for Class A shares are the Service
Plan Fees (which can be up to a maximum of 0.25% of average annual net assets
of that class). For Class B and Class C shares, 12b-1 Plan Fees include the
Service Plan Fees (which can be up to a maximum of 0.25%) and an annual
asset-based sales charges of 0.75%. These plans are described in greater
detail in "How to Buy Shares."
/ / EXAMPLES. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in each class of shares of the Fund,
and the Fund's annual return is 5%, and that its operating expenses for each
class are the ones shown in the Annual Fund Operating Expenses table above.
If you were to redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3, 5 and 10
years:
-4-
<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Class A Shares $ 69 $ 94 $ 121 $ 197
Class B Shares $ 70 $ 102 $ 126 $ 210
Class C Shares $ 30 $ 62 $ 106 $ 230
</TABLE>
If you did not redeem your investment, it would incur the following
expenses:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Class A Shares $ 69 $ 94 $ 121 $ 197
Class B Shares $ 20 $ 62 $ 106 $ 210
Class C Shares $ 20 $ 62 $ 106 $ 230
</TABLE>
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class B
shares into Class A shares after 6 years. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge on
Class B and Class C shares, long-term Class B and Class C shareholders
could pay the economic equivalent of more than the maximum front-end sales
charge allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares into Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How to Buy
Shares" for more information.
THESE EXAMPLES SHOW THE EFFECT OF EXPENSES ON AN INVESTMENT, BUT ARE NOT
MEANT TO STATE OR PREDICT ACTUAL OR EXPECTED COSTS OR INVESTMENT RETURNS OF
THE FUND, WHICH MAY BE GREATER OR LESSER THAN THOSE SHOWN.
A BRIEF OVERVIEW OF THE FUND
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete information
can be found. You should carefully read the entire Prospectus before making
a decision about investing in the Fund. Keep the Prospectus for reference
after you invest, particularly for information about your account, such as
how to sell or exchange shares.
/ / WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund 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.
/ / WHAT DOES THE FUND INVEST IN? Under normal market conditions, the
Fund expects to invest primarily in common stocks. The Fund may invest the
remainder of its assets in U.S. Government debt and corporate obligations,
including bonds rated below investment grade (commonly called "junk bonds")
and may invest to a limited degree in foreign securities. The Fund may write
covered calls and use certain types of "hedging instruments" and "derivative
investments" to seek to reduce the risks of market fluctuations that affect
the value of the securities the Fund holds or to seek total return. These
investments are more fully explained in "Investment Objective and Policies"
starting on page __.
-5-
<PAGE>
/ / WHO MANAGES THE FUND? The Fund's investment advisor is
OppenheimerFunds, Inc., which (including a subsidiary) advises investment
company portfolios having over $40 billion in assets at December 31, 1995.
The Fund's Board of Directors, elected by shareholders, oversees the
investment advisor and the portfolio manager. The Manager is paid an
advisory fee by the Fund, based on its net assets. The Fund has a portfolio
manager, Peter Antos, who is employed by the Manager. He is primarily
responsible for the selection of the Fund's securities, but is assisted by
other managers. Please refer to "How the Fund is Managed," starting on page
____ for more information about the Manager and its fees.
/ / HOW RISKY IS THE FUND? All investments carry risks to some degree.
The Fund's investments in stocks are subject to changes in their value from a
number of factors such as changes in general stock market movements. A
change in value of a particular stock may result from an event affecting the
issuer. These changes affect the value of the Fund's investments and its
share prices for each class of its shares. In the Oppenheimer funds'
spectrum, the Fund is considered a growth fund that is considerably more
aggressive than equity income or growth and income funds because it invests
for long-term growth of capital in common stocks that tend to be more
volatile than other investments. While the Manager tries to reduce risks by
diversifying investments, by researching securities before they are purchased
for a portfolio, and in some cases by using hedging techniques, there is no
guarantee of success in achieving the Fund's objective and your shares may be
worth more or less than their original cost when you redeem them. Please
refer to "Investment Objective and Policies" starting on page ___ for a more
complete discussion of the Fund's investment risks.
/ / HOW CAN I BUY SHARES? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" beginning on
page ___ for more details.
/ / WILL I PAY A SALES CHARGE TO BUY SHARES? The Fund has three classes
of shares. Each class of shares has the same investment portfolio, but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75% and reduced for larger purchases. Class B and Class
C shares are offered without front-end sales charges, but may be subject to a
contingent deferred sales charge if redeemed within 6 years or 12 months,
respectively, of purchase. There is also an annual asset-based sales charge
on Class B and Class C shares. Please review "How To Buy Shares" starting on
page ___ for more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
/ / HOW CAN I SELL MY SHARES? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day or through your
dealer. Please refer to "How To Sell Shares" on page ___. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How to
Exchange Shares" on page ____.
/ / HOW HAS THE FUND PERFORMED? The Fund measures its performance by
quoting an average annual total return and cumulative total return, which
measure historical performance. Those returns can be compared to the stock
market total returns (over similar periods) of other funds. Of course, other
funds may have different objectives, investments, and levels of risk. Please
remember that past performance does not guarantee future results.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended December 31, 1995 has
been derived from audited financial statements together with the auditors'
report for the year ended December 31, 1995 which is included in the
Statement of Additional Information. The tables on the following pages
present selected financial information about the Fund, including per share
data and expense ratios and other data based on the Fund's average net
assets. Class B shares were only offered during a portion of the fiscal year
ended December 31, 1995, commencing on October 1, 1995. Class C shares were
not publicly offered during the periods shown, and consequently, no
information on Class C shares is included in the tables on the following
pages or in the Fund's financial statements.
-7-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* CLASS A SHARES
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.20 $15.14 $14.20 $14.40 $11.62 $13.05
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .25 .22 .30 .26 .25 .34
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions 4.88 (.32) 2.64 1.44 4.00 (1.36)
------ ------ ------ ------ ------ ------
Total income (loss) from investment operations 5.13 (.10) 2.94 1.70 4.25 (1.02)
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.25) (.22) (.30) (.26) (.25) (.34)
Distributions from net realized gain on investments and
foreign currency transactions (1.24) (.62) (1.70) (1.64) (1.22) (.07)
------ ------ ------ ------ ------ ------
Total dividends and distributions to shareholders (1.49) (.84) (2.00) (1.90) (1.47) (.41)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.84 $14.20 $15.14 $14.20 $14.40 $11.62
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(a) 36.40% (0.65)% 20.91% 11.99% 36.91% (7.98)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $118,118 $78,390 $64,495 $45,600 $40,716 $35,202
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.53% 1.50% 1.95% 1.74% 1.74% 2.73%
Expenses 1.22% 1.02% 1.05% 1.12% 1.19% 1.19%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69.69% 98.46% 99.67% 141.69% 148.30% 143.95%
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FINANCIAL HIGHLIGHTS* CLASS A SHARES
YEARS ENDED DECEMBER 31,
-------------------------------------
PER SHARE OPERATING DATA: 1989 1988 1987 1986
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.00 $ 9.80 $11.97 $10.94
- -------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .51 .20 .22 .24
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions 3.30 1.20 (.12) 1.11
------ ------ ------ ------
Total income (loss) from investment operations 3.81 1.40 .10 1.35
- -------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.51) (.20) (.22) (.24)
Distributions from net realized gain on investments and
foreign currency transactions (1.25) -.- (2.05) (.08)
------ ------ ------ ------
Total dividends and distributions to shareholders (1.76) (.20) (2.27) (.32)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.05 $11.00 $9.80 $11.97
------ ------ ------ ------
------ ------ ------ ------
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(a) 34.86% 14.32% (0.29)% 12.25%
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $137,323 $26,285 $19,638 $19,469
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 3.90% 1.95% 1.71% 2.21%
Expenses 1.18% 1.23% 1.17% 1.31%
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169.75% 246.14% 214.32% 163.15%
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
* G.R. Phelps & Co. managed the Fund during these periods.
(a) Annual total returns do not include the effect of sales charges.
-8-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* (CONT'D.) CLASS B SHARES(c)
PERIOD ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 17.83
- -----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .02
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions 1.40
------
Total income (loss) from investment operations 1.42
- -----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (0.2)
Distributions from net realized gain on investments
and foreign currency transactions (1.15)
------
Total dividends and distributions to shareholders (1.17)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 18.08
------
------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(b) 8.04%
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 717
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .21%(a)
Expenses 1.97%(a)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate 69.69%
- -----------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* G.R. Phelps & Co. managed the Fund during this period.
(a) Annualized.
(b) Total returns do not include the effect of sales charges.
(c) For the period from October 1, 1995 (inception) through December 31, 1995.
-9-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
OBJECTIVE. The Fund 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.
INVESTMENT POLICIES AND STRATEGIES. Under normal circumstances, most of the
Fund's assets will be invested in stocks. The Manager chooses stock
investments for the Fund using quantitative value investment discipline in
combination with fundamental securities analysis. A stock may have a low
price-earnings ratio (for example, below the price-earnings ratio of the S&P
500 Index) because it 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, this is referred to as a
favorable earnings surprise. This may cause market analysts and investors to
reevaluate the issuer's earnings expectations and the price-earnings multiple
which may cause 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 Fund. When the price-earnings ratio of a stock
held by the Fund moves significantly above the multiple of the overall stock
market, or the company reports a material earnings disappointment, the Fund
will normally sell the stock.
The Fund may invest the remainder of its assets (up to 10% under normal
circumstances) in U.S. Government and corporate debt obligations, including
convertible bonds which may be rated as low as B by Moody's Investors
Service, Inc. ("Moody's") or Standard and Poor's Ratings Group ("S&P").
Consistent with the foregoing policies, the Fund may invest to a limited
degree in securities of foreign issuers, including issuers in developing
countries. Please refer to "Foreign Securities," below.
/ / STOCK INVESTMENT RISKS. Because the Fund invests a substantial
portion of its assets in stocks, the value of the Fund's portfolio will be
affected by changes in the stock markets. At times, the stock markets can be
volatile and stock prices can change substantially. This market risk will
affect the Fund's net asset value per share, which will fluctuate as the
values of the Fund's portfolio securities change. Not all stock prices
change uniformly or at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an issuer,
loss of major customers, major litigation against an issuer, and changes in
government regulations affecting an industry). Not all of these factors can
be predicted.
The Fund attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of the stock of any one company
and by not investing too great a percentage of the Fund's assets in any one
company. Also, the Fund does not concentrate its investments in any one
industry or group of industries. Because of the types of securities the Fund
invests in and the investment techniques the Fund uses, the Fund is designed
for investors who are investing for the long term. It is not intended for
investors seeking assured income or preservation of capital. Because changes
in overall market prices can occur at any time, and because the income earned
on securities is subject to change, there is no assurance that the Fund will
achieve
-10-
<PAGE>
its investment objective, and when you redeem your shares, they may be worth
more or less than what you paid for them.
/ / CAN A FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund has
an investment objective, described above, as well as investment policies it
follows to try to achieve its objective. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those investment
policies. The Fund's investment policies and practices are not "fundamental"
unless this Prospectus or the Statement of Additional Information says that a
particular policy is "fundamental." The Fund's investment objective is not a
fundamental policy. Shareholders of the Fund will be given 30 days' advance
written notice of a change to the Fund's investment objective.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of a Fund's outstanding voting shares. The term
"majority" is defined in the Investment Company Act to be a particular
percentage of outstanding voting shares (and this term is explained in the
Statement of Additional Information). The Fund's Board of Directors may
change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
/ / PORTFOLIO TURNOVER. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund ordinarily does not engage in
short-term trading to try to achieve its objective. For the fiscal year
ended December 31, 1995, the Fund's portfolio turnover rate was 69.69%. The
"Financial Highlights," above, show the Fund's portfolio turnover rates
during past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and other
transaction costs, and results in the Fund's realization of capital gains or
losses for tax purposes. It may also affect the ability of the Fund to
qualify as a "regulated investment company" under the Internal Revenue Code
and avoid being taxed on amounts distributed as dividends and capital gains
to shareholders. The Fund qualified in its fiscal year ended December 31,
1995 and intends to do so in the future, although it reserves the right not
to qualify.
/ / DEBT SECURITIES. Under normal circumstances, the Fund may invest
some of its assets (normally up to 10%) in debt securities. However, when
market conditions for stocks are volatile, the Fund may increase its
investments in debt securities for defensive purposes. The values of debt
securities may fluctuate because of events affecting the issuer and its
ability to pay interest and repay principal (this is referred to as "credit
risk"). Additionally, debt securities are affected by changes in interest
rates. When prevailing interest rates go up, the market value of already
issued debt securities tends to go down. When interest rates go up, the
market value of already issued debt securities tends to go up. The magnitude
of those fluctuations is generally greater for longer-term securities. While
interest rate changes do not affect the income the Fund receives on
already-purchased securities, the value of the Fund's shares can be affected.
The types of debt securities the Fund invests in are described below.
/ / U.S. GOVERNMENT SECURITIES. Certain U.S. Government Securities,
including U.S. Treasury bills, notes and bonds, and mortgage participation
certificates guaranteed by the Government National Mortgage Association
("Ginnie Mae") are supported by the full faith and credit of the U.S.
Government, which in general terms means that the U.S. Treasury stands behind
the obligation to pay principal and interest. Ginnie Mae certificates are
one type of mortgage-related U.S. Government Security the Fund may invest in.
Other mortgage-related U.S.
-11-
<PAGE>
Government Securities the Fund invests in that are issued or guaranteed by
federal agencies or government-sponsored entities are not supported by the
full faith and credit of the U.S. Government. Those securities include
obligations supported by the right of the issuer to borrow from the U.S.
Treasury, such as obligations of the Federal Home Loan Mortgage Corporation
("Freddie Mac"), obligations supported only by the credit of the
instrumentality, such as the Federal National Mortgage Association ("Fannie
Mae") or the Student Loan Marketing Association and obligations supported by
the discretionary authority of the U.S. Government to repurchase certain
obligations of U.S. Government agencies or instrumentalities such as the
Federal Land Banks and the Federal Home Loan Banks.
The value of U.S. Government Securities will fluctuate until they mature,
depending on prevailing interest rates. Because the yields on U.S.
Government Securities are generally lower than on corporate debt securities,
when the Fund holds U.S. Government Securities it may attempt to increase the
income it can earn from them by writing covered call options against them,
when market conditions are appropriate. Writing covered calls is explained
below, under "Hedging."
/ / SHORT-TERM DEBT SECURITIES. When the Manager believes it is
appropriate, the Fund can hold cash or invest without limit in money market
instruments. The Fund will invest in high quality, short-term money market
instruments such as U.S. Treasury and agency obligations; commercial paper
(short-term, unsecured, negotiable promissory notes of a domestic or foreign
company); short-term debt obligations of corporate issuers; and certificates
of deposit and bankers' acceptances (time drafts drawn on commercial banks
usually in connection with international transactions) of domestic or foreign
banks and savings loan associations. The Fund will purchase money market
instruments denominated in a foreign currency only within the limitations
described under "Foreign Securities." The issuers of these foreign money
market instruments have at least one billion dollars (U.S.) of assets.
The Fund may also invest in obligations of foreign branches of U.S. banks
(referred to as Eurodollar obligations) and U.S. branches of foreign banks
(Yankee dollars) as well as foreign branches of foreign banks. These
investments involve risks that are different from investment in securities of
U.S. banks, as described in "Foreign Securities," below.
/ / SPECIAL RISKS OF LOWER-GRADE SECURITIES. The Fund can invest in
high-yield, below-investment grade nationally-recognized debt securities
(including both rated and unrated securities). These "lower-grade securities
are commonly known as "junk bonds." They generally offer higher income
potential than investment grade securities. "Lower-grade" securities have a
rating below "BBB" by Standard & Poor's or "Baa" by Moody's or similar
ratings by other domestic and foreign rating organizations, or they are not
rated by a nationally-recognized rating organization, but the Manager judges
them to be comparable to lower-rated securities. The Fund will not purchase
securities rated below B by Moody's or S&P. The Fund may retain securities
whose ratings fall below B after purchase unless and until the Manager
determines that disposing of such securities is in the best interests of the
Fund. Appendix A to this Prospectus describes the rating categories of
Moody's and Standard & Poor's.
All corporate debt securities (whether foreign or domestic) are subject
to some degree of credit risk. High yield, lower-grade securities, whether
rated or unrated, often have speculative characteristics and special risks
that make them riskier investments than investment grade securities. They
may be subject to greater market fluctuations and risk of loss of income and
principal than lower yielding, investment grade securities. There may be
less of a market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater
-12-
<PAGE>
possibility that the issuer's earnings may be insufficient to make the
payments of interest due on the bonds. The issuer's low creditworthiness may
increase the potential for its insolvency. For foreign lower-grade debt
securities, these risks are in addition to the risks of investing in foreign
securities, described below. These risks mean that the Fund may not achieve
the expected income from lower-grade securities, and that the Fund's net
asset value per share may be affected by declines in value of these
securities.
/ / CONVERTIBLE SECURITIES. Convertible securities are bonds, preferred
stocks and other securities that pay a fixed rate of interest or dividend and
are convertible into the issuer's common stock at the option of the buyer.
While the value of these securities depends in part on interest rate changes,
their value is also sensitive to the credit quality of the issuer and will
change based on the price of the underlying stock. While these securities
generally offer less potential for gains than common stock and less income
than non-convertible bonds, but their income helps to provide a cushion
against the stock price's declines.
/ / FOREIGN SECURITIES. The Fund may purchase equity and debt
securities issued or guaranteed by foreign companies. The Fund may purchase
securities in any country, developed or underdeveloped. Investments in
securities of issuers in underdeveloped countries or countries that have
emerging markets generally may offer greater potential for gain but involve
more risk and may be considered highly speculative. As a matter of
fundamental policy, the Fund may not invest more than 10% of its total assets
in foreign securities, except that the Fund may invest up to 25% of its total
assets in foreign equity and debt securities that are (i) issued, assumed or
guaranteed by foreign governments or their political subdivisions or
instrumentalities, (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. Foreign currency will be held by the Fund only in connection with
the purchase or sale of foreign securities.
/ / FOREIGN SECURITIES HAVE SPECIAL RISKS. The change in value of a
foreign currency against the U.S. dollar will result in a change in the value
of the securities denominated in that foreign currency. Foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected
by exchange control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of transactions,
changes in governmental, economic or monetary policy in the U.S. or abroad,
or other political and economic factors. More information about the risks
and potential rewards of investing in foreign securities is contained in the
Statement of Additional Information.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains more
information about the practices, including limitations on their use that may
help to reduce some of the risks.
/ / WARRANTS AND RIGHTS. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time. Rights are
similar to warrants but normally have a short duration and are distributed
directly by the issuer to its shareholders. The Fund may invest up to 5% of
its total assets in warrants or rights. That 5% limitation does not apply to
warrants the Fund has acquired as part of units with other securities or that
are attached to other securities. No more than 2% of the Fund's total assets
may be invested in warrants that are not listed on either The
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New York Stock Exchange or The American Stock Exchange. For further details,
see "Warrants and Rights" in the Statement of Additional Information.
/ / LOANS OF PORTFOLIO SECURITIES. Subject to its investment policies
and restrictions, the Fund may seek to increase its income by lending
portfolio securities in transactions other than repurchase agreements. The
Fund must receive collateral for a loan. As a matter of fundamental policy,
these loans are limited to not more than 33 1/3% of the Fund's total assets
(taken at market value) and are subject to other conditions described in the
Statement of Additional Information. See "Loans of Portfolio Securities" in
the Statement of Additional Information on securities loans.
/ / "WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss to the Fund if
the value of the security declines prior to the settlement date.
/ / REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may experience
costs in disposing of the collateral and may experience losses if there is
any delay in doing so. As a matter of fundamental policy, the Fund will not
enter into a repurchase agreement that causes more than 10% of its net assets
in illiquid and restricted securities (as described below) which includes
repurchase agreements having a maturity beyond seven days.
/ / ILLIQUID AND RESTRICTED SECURITIES. Under the policies established
by the Fund's Board of Directors, the Manager determines the liquidity of
certain of the Fund's investments. Investments may be illiquid because of
the absence of an active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is
one that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933. As a
matter of fundamental policy, the Fund will not invest more than 10% of its
total assets in illiquid and restricted securities (including repurchase
agreements having a maturity beyond 7 day portfolio securities which do not
have readily available market quotations and time deposits maturing in more
than 2 days).
/ / HEDGING. The Fund may write covered call options on securities,
stock indices and foreign currency and may purchase and sell certain kinds of
futures contracts, forward contracts, and options on futures, broadly based
stock indices and foreign currencies. These are all referred to as "hedging
instruments." The Fund may use hedging instruments for hedging and, in the
case of covered calls, non-hedging purposes as well, as described below.
The Fund may write covered call options and buy and sell futures and
forward contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio securities
may decline, or to establish a position in the securities market as a
temporary substitute for purchasing individual securities. Some of these
strategies, such as selling futures and writing covered calls, hedge the
Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures, tend to increase the
Fund's exposure to the securities market. Forward contracts are used to try
to manage foreign currency risks on the Fund's foreign investments. Foreign
currency options are used to try to protect against declines in
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the dollar value of foreign securities the Fund owns, or to protect against
an increase in the dollar cost of buying foreign securities. Writing covered
call options may also provide income to the Fund for liquidity purposes,
defensive reasons, or to raise cash to distribute to shareholders.
/ / FUTURES. The Fund may buy and sell futures contracts that relate to
(1) foreign currencies (these are referred to as "Forward Contracts" and are
discussed below), and stock indices (these are referred to as "Stock Index
Futures"). These types of Futures are described in "Hedging" in the
Statement of Additional Information. The Fund engages in Futures
transactions and related options only for bona fide hedging purposes.
/ / COVERED CALL OPTIONS AND OPTIONS ON FUTURES. The Fund may write
(that is, sell) call options on securities, indices and foreign currencies
for hedging or liquidity purposes and write call options on Futures for
hedging and non-hedging purposes, but only if all such calls are "covered."
This means the Fund must own the investment on which the call was written or
it must own other securities that are acceptable for the escrow arrangements
required for calls while the call is outstanding or in the case of calls on
futures, segregate appropriate liquid assets. When the Fund writes a call,
it receives cash (called a premium). The call gives the buyer the ability to
buy the investment on which the call was written from the Fund at the call
price during the period in which the call may be exercised. If the value of
the investment does not rise above the call price, it is likely that the call
will lapse without being exercised, while the Fund keeps the cash premium
(and the investment). After the Fund writes a call, not more than 20% of the
value of its total assets may be subject to calls.
The Fund may sell covered call options that are traded on U.S. or foreign
securities or commodity exchanges or which are used by the Options Clearing
Corporation. In the case of foreign currency options, they may be quoted by
major recognized dealers in those options.
/ / FORWARD CONTRACTS. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery
at a fixed price. The Fund uses them for hedging purposes to try to "lock
in" the U.S. dollar price of a security denominated in a foreign currency
that the Fund has purchased or sold, or to protect against possible losses
from changes in the relative value of the U.S. dollar and a foreign currency.
Normally, the Fund will not use "cross hedging," where the Fund hedges
against changes in currencies other than the currency in which a security it
holds is denominated. The Fund will not speculate in foreign exchange.
/ / HEDGING INSTRUMENTS CAN BE VOLATILE INVESTMENTS AND MAY INVOLVE
SPECIAL RISKS. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is required
for normal portfolio management. If the Manager uses a hedging instrument at
the wrong time or judges market conditions incorrectly, hedging strategies
may reduce the Fund's return. The Fund could also experience losses if the
prices of its futures and options positions were not correlated with its
other investments or if it could not close out a position because of an
illiquid market for the future or option.
Options trading involves the payment of premiums, and options, futures
and forward contracts are subject to special tax rules that may affect the
amount, timing and character of the Fund's income and distributions. There
are also special risks in particular hedging strategies. For example, if a
covered call written by the Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the investment at the
call price and will not be able to realize any profit if the investment has
increased in value above the call price. The use of Forward
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Contracts may reduce the gain that would otherwise result from a change in
the relationship between the U.S. dollar and a foreign currency. These risks
are described in greater detail in the Statement of Additional Information.
/ / DERIVATIVE INVESTMENTS. The Fund can invest in a number of
different kinds of "derivative" investments. In general, a "derivative
investment" is a specially designed investment whose performance is linked to
the performance of another investment or security, such as an option, future,
index, currency or commodity. The Fund may not purchase or sell physical
commodities; however, the Fund may purchase and sell foreign currency in
hedging transactions. This shall not prevent the Fund from selling covered
call options or buying or selling futures contracts or from investing in
securities or other instruments backed by physical commodities.
Derivative investments used by the Fund are used in some cases for
hedging purposes and in other cases to seek income. In the broadest sense,
exchange-traded options and futures contracts (discussed in "Hedging," above)
may be considered "derivative investments."
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the maturity
of the instrument. Also, the underlying investment or security might not
perform the way the Manager expected it to perform. Markets, underlying
securities and indices may move in a direction not anticipated by the
Manager. Performance of derivative investments may also be influenced by
interest rate and stock market changes in the U.S. and abroad. All of this
can mean that the Fund will realize less principal or income from the
investment than expected. Certain derivative investments held by the Fund
may be illiquid. Please refer to "Illiquid and Restricted Securities."
OTHER INVESTMENT RESTRICTIONS. The Fund has other investment restrictions
which are "fundamental" policies. Among these fundamental policies, the Fund
cannot do any of the following:
/ / Borrow amounts in excess of 10 percent of the Fund's total assets,
taken at market value at the time of the borrowing, and then only from banks
as a temporary measure for extraordinary or emergency purposes, or make
investments in portfolio securities while such outstanding borrowings exceed
5 percent of the Fund's total assets.
/ / Invest more than 25% of its assets in securities by issuers in any
single industry, provided that this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For the purpose of this restriction, each utility that
provides a separate service (e.g., gas, gas transmission, electric or
telephone) shall be considered a separate industry. This test shall be
applied on a pro forma basis using the market value of all assets immediately
prior to making any investment.
/ / Borrow amounts in excess of 10% of its total assets, taken at market
value at the time of 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.
/ / Invest more than 5 percent of the Fund's 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 the Fund's total assets in the obligations of any one bank; and
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(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.
/ / 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).
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time the Fund purchases a security, and the Fund
need not dispose of a security merely because the Fund's assets have changed
or the security has increased in value relative to the size of the Fund.
There are other fundamental policies discussed in the Statement of Additional
Information.
HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORY. The Fund is a diversified series of Oppenheimer
Series Fund, Inc. (the "Company"). The Company was organized in 1981 as a
Maryland corporation and is an open-end management investment company.
Organized as a series fund, the Company presently has eight series, including
the Fund.
The Fund is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors
meet periodically throughout the year to oversee the Fund's activities,
review its performance, and review the actions of the Manager. "Directors
and Officers of the Funds" in the Statement of Additional Information names
the Directors and officers of the Fund and provides more information about
them. Although the Fund is not required by law to hold annual meetings, it
may hold shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Director or to take
other action described in the Fund's Articles of Incorporation.
The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board has
done so, and the Fund currently has three classes of shares, Class A, Class B
and Class C. All classes invest in the same investment portfolio. Each
class has its own dividends and distributions, and pays certain expenses
which may be different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder meetings,
with fractional shares voting proportionally on matters submitted to the vote
of shareholders. Shares of each class may have separate voting rights on
matters in which interests of one class are different from interests of
another class, and shares of a particular class vote as a class on matters
that affect that class alone. Shares are freely transferrable. Please refer
to "How the Funds are Managed" in the Statement of Additional Information for
further information on voting of shares.
THE MANAGER AND ITS AFFILIATES. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Directors, under
an Investment Advisory Agreement which states the Manager's responsibilities.
The Agreement sets forth the fees paid by the Fund to the Manager and
describes the expenses that the Fund is responsible to pay to conduct its
business.
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The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manage investment companies, including
other Oppenheimer funds, with assets of more than $40 billion as of December
31, 1995, and with more than 2.8 million shareholder accounts. The Manager
is owned by Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by Massachusetts Mutual
Life Insurance Company.
/ / PORTFOLIO MANAGEMENT. The principal Portfolio Manager of the Fund is
Peter M. Antos. He is a Vice President of the Fund and the Manager and has
been the senior portfolio manager of the Fund's portfolio since 1989. He is
also a Chartered Financial Analyst and serves as a portfolio manager of other
Oppenheimer funds. Mr. Antos was employed since 1989 by the Fund's prior
investment adviser, G.R. Phelps & Co., Inc., as a Vice President and Senior
Portfolio Manager, Equities, before joining Oppenheimer Funds. Mr. Michael
C. Strathearn and Mr. Kenneth B. White are also Vice Presidents and portfolio
managers of the Fund. Each is also a chartered Financial Analyst, and each
was also employed by Connecticut Mutual Life Insurance Company, the parent of
G.R. Phelps, as a Portfolio Manager prior to joining Oppenheimer Funds, Inc.
on March 1, 1996.
/ / FEES AND EXPENSES. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fee, which declines on additional
assets as the Fund grows: 0.625% of the first $300 million of aggregate net
assets; 0.500% of the next $100 million; and 0.450% of net assets in excess
of $400 million. The Fund's management fee for its last fiscal year was
0.625% of the average annual net assets for Class A and Class B shares (on an
annualized basis). There were no Class C shares outstanding during the year.
The Fund pays expenses related to its daily operations, such as custodian
fees, Directors' fees, transfer agency fees, legal and auditing costs. Those
expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of shares,
and therefore are indirectly borne by shareholders through their investment.
More information about the Investment Advisory Agreement and the other
expenses paid by the Fund is contained in the Statement of Additional
Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Funds" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for
the Fund's portfolio transactions. When deciding which brokers to use, the
Manager is permitted by the Investment Advisory Agreement to consider whether
brokers have sold shares of the Fund or any other funds for which the Manager
serves as investment adviser.
/ / THE DISTRIBUTOR. The Fund's shares are sold through dealers and
brokers that have a sales agreement with OppenheimerFunds Distributor, Inc.,
a subsidiary of the Manager that acts as the Fund's Distributor. The
Distributor also distributes the shares of the other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
/ / THE TRANSFER AGENT. The Fund's Transfer Agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for the other Oppenheimer funds. Shareholders should direct
inquiries about their accounts to the Transfer Agent at the address and
toll-free number shown below in this Prospectus or on the back cover.
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PERFORMANCE OF THE FUND
EXPLANATION OF PERFORMANCE TERMINOLOGY. The Fund uses the terms "total
return" to illustrate its performance. The performance of each class of
shares is shown separately, because the performance of each class of shares
will usually be different as a result of the different kinds of expenses each
class bears. These returns measure the performance of a hypothetical account
in the Fund over various periods, and do not show the performance of each
shareholder's account (which will vary if dividends are received in cash, or
shares are sold or purchased). The Fund's performance data may help you see
how well your investment has done over time and to compare it to market
indices, as we have done below.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. This performance data is described below, but more
detailed information about how total returns are calculated is contained in
the Statement of Additional Information, which also contains information
about other ways to measure and compare the Fund's performance. The Fund's
investment performance will vary over time, depending on market conditions,
the composition of the portfolio, expenses and which class of shares you
purchase.
/ / TOTAL RETURNS. There are different types of "total returns" used to
measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return shows
the average rate of return for each year in a period that would produce the
cumulative total return over the entire period. However, average annual total
returns do not show the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, they include the
payment of the current maximum initial sales charge. When total returns are
shown for Class B and Class C shares, they include the effect of the
contingent deferred sales charge that applies to the period for which total
return is shown. When total returns are shown for a one-year period (or
less) for Class C shares, they include the effect of the contingent deferred
sales charge. Total returns may also be quoted at "net asset value," without
including the effect of either the front-end or the appropriate contingent
deferred sales charge, as applicable, and those returns would be reduced if
sales charges were deducted.
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
CLASSES OF SHARES. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will likely
have different share prices.
/ / CLASS A SHARES. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
OppenheimerFunds prototype 401(k) plans). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for OppenheimerFunds
prototype 401(k) plans) in shares of one or more Oppenheimer
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funds, you will not pay an initial sales charge, but if you sell any of those
shares within 18 months of buying them, you may pay a contingent deferred
sales charge. The amount of that sales charge will vary depending on the
amount you invested. Sales charge rates are described in "Buying Class A
Shares," below.
/ / CLASS B SHARES. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years of
buying them, you will normally pay a contingent deferred sales charge that
varies depending on how long you owned your shares, as described in "Buying
Class B Shares," below.
/ / CLASS C SHARES. If you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of
buying them, you will normally pay a contingent deferred sales charge of 1%,
as discussed in "Buying Class C Shares," below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply
to a class of shares and the effect of the different types of sales charges
on your investment will vary your investment results over time. The most
important factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you
plan to purchase additional shares, you should re-evaluate those factors to
see if you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class, and considered the effect of the
asset-based sales charge on Class B and Class C expenses (which, like all
expenses, will affect your investment return). For the sake of comparison,
we have assumed that there is a 10% rate of appreciation in your investment
each year. Of course, the actual performance of your investment cannot be
predicted and will vary, based on the Fund's actual investment returns, and
the operating expenses borne by each class of shares, and which class of
shares you invest in.
The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to
consider in purchasing a particular class of shares assumes that you will
purchase only one class of shares and not a combination of shares of
different classes.
/ / HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the appropriate
class of shares. Because of the effect of class-based expenses your choice
will also depend on how much you invest. For example, the reduced sales
charges available for larger purchases of Class A shares may, over time,
offset the effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares for your
account), compared to the effect over time of higher class-based expenses on
the shares of Class B or Class C for which no initial sales charge is paid.
/ / INVESTING FOR THE SHORT TERM. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than six years),
you should probably consider purchasing Class A or Class C shares rather than
Class B shares, because of the effect of the
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Class B contingent deferred sales charge if you redeem in less than seven
years, as well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might be
the appropriate choice (especially for investments of less than $100,000),
because there is no initial sales charge on Class C shares, and the
contingent deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases
toward six years Class C shares might not be as advantageous as Class A
shares. That is because the annual asset-based sales charge on Class C
shares will have a greater economic impact on your account over the longer
term than the reduced front-end sales charge available for larger purchases
of Class A shares. For example, Class A might be more advantageous than
Class C (as well as Class B) for investments of more than $100,000 expected
to be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may become more
advantageous than Class C (and B). If investing $500,000 or more, Class A
may be more advantageous as your investment horizon approaches 3 years or
more.
And for most investors who invest $1 million or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you intend
to hold your shares. For that reason, the Distributor normally will not
accept purchase orders of $500,000 or more of Class B or $1 million or more
of Class C shares from a single investor.
/ / INVESTING FOR THE LONGER TERM. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to your
money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely be
more advantageous than Class B shares or Class C shares, as discussed above,
because of the effect of the expected lower expenses for Class A shares and
the reduced initial sales charge available for larger investments in Class A
shares under a Fund's Right of Accumulation.
Of course all of these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over time,
using the assumed annual performance return stated above, and you should
analyze your options carefully.
/ / ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Because
some features may not be available to Class B or C shareholders, or other
features (such as Automatic Withdrawal Plans) may not be advisable (because
of the effect of the contingent deferred sales charge in non-retirement
accounts) for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which class of
shares to buy. For example, share certificates are not available for Class B
or Class C shares and if you are considering using your shares as collateral
for a loan, this may be a factor to consider. Additionally, dividends payable
to Class B and Class C shareholders will be reduced by the additional
expenses borne by those classes that are not borne by Class A, such as the
Class B and Class C asset-based sales charges described below and in the
Statement of Additional Information.
/ / HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for
selling Fund shares, may receive different compensation for selling one class
than for selling another class. It is important that investors understand
that the purpose of the Class B and Class C contingent deferred sales charges
and asset-based sales charges is the same as the purpose of the front-end
sales charge on sales of
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Class A shares: to reimburse the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
HOW MUCH MUST YOU INVEST? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as
little as $25. There are reduced minimum investments under special investment
plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25
can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement Accounts
(IRAs), you can make an initial investment of as little as $250 (if your IRA
is established under an Asset Builder Plan, the $25 minimum applies), and
subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other Oppenheimer funds (a list of
them appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
/ / HOW ARE SHARES PURCHASED? You can buy shares several ways --through
any dealer, broker or financial institution that has a sales agreement with
the Distributor, or directly through the Distributor, or automatically from
your bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. WHEN YOU BUY SHARES, BE SURE TO SPECIFY CLASS A, CLASS B
OR CLASS C SHARES. IF YOU DO NOT CHOOSE, YOUR INVESTMENT WILL BE MADE IN
CLASS A SHARES.
/ / BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order
with the Distributor on your behalf.
/ / BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds
New Account Application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor, to
be sure it is appropriate for you.
/ / BUYING SHARES THROUGH OPPENHEIMERFUNDS ACCOUNTLINK. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member to
transmit funds electronically to PURCHASE SHARES, to have the Transfer Agent
SEND REDEMPTION PROCEEDS, or to TRANSMIT DIVIDENDS AND DISTRIBUTIONS.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink," below for more
details.
-22-
<PAGE>
/ / ASSET BUILDER PLANS. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
/ / AT WHAT PRICES ARE SHARES SOLD? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to receive
that day's offering price, the Distributor must receive your order by the
time of day The New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class of
shares is determined as of that time on each day The New York Stock Exchange
is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order by
the close of The New York Stock Exchange on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. THE
DISTRIBUTOR, IN ITS SOLE DISCRETION, MAY REJECT ANY PURCHASE ORDER FOR THE
FUND'S SHARES.
SPECIAL SALES CHARGE ARRANGEMENTS FOR CERTAIN PERSONS. Appendix B to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of shares
of the Fund (including purchases by exchange) by a person who was a
shareholder of one of the Former Quest for Value Funds and Former Connecticut
Mutual Funds (as defined in that Appendix).
BUYING CLASS A SHARES. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However, in
some cases, described below, purchases are not subject to an initial sales
charge, and the offering price may be net asset value. In some cases, reduced
sales charges may be available, as described below. Out of the amount you
invest, the Fund receives the net asset value to invest for your account.
The sales charge varies depending on the amount of your purchase. A portion
of the sales charge may be retained by the Distributor and allocated to your
dealer as commission. Different sales charge rates and commissions applied to
sales of Class A shares prior to March 18, 1996. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
-23-
<PAGE>
<TABLE>
<CAPTION>
FRONT-END SALES FRONT-END SALES COMMISSION AS
AMOUNT OF PURCHASE CHARGE AS PERCENTAGE CHARGE AS PERCENTAGE PERCENTAGE OF
OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED OFFERING PRICE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- ----------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ----------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ----------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ----------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ----------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- ----------------------------------------------------------------------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
/ / CLASS A CONTINGENT DEFERRED SALES CHARGE. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
/ / purchases aggregating $1 million or more, or
/ / purchases by an OppenheimerFunds prototype 401(k) plan that: (1) buys
shares costing $500,000 or more or (2) has, at the time of purchase, 100 or
more eligible participants, or (3) certifies that it projects to have annual
plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those purchases in
an amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50% of
the next $2.5 million, plus 0.25% of purchases over $5 million. That
commission will be paid only on the amount of those purchases in excess of $1
million ($500,000 for purchases by OppenheimerFunds 401(k) prototype plans)
that were not previously subject to a front-end sales charge and dealer
commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called
the "Class A contingent deferred sales charge") will be deducted from the
redemption proceeds. That sales charge will be equal to 1.0% either (1) of
the aggregate net asset value of the redeemed shares (not including shares
purchased by reinvestment of dividends or capital gain distributions) or (2)
the original cost of the shares, whichever is less. The Class A contingent
deferred sales charge will not exceed the aggregate commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer
funds you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains,
and then will redeem other shares in the order that you purchased
-24-
<PAGE>
them. The Class A contingent deferred sales charge is waived in certain
cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However, if
the shares acquired by exchange are redeemed within 18 months of the end of
the calendar month of the purchase of the exchanged shares, the sales charge
will apply.
/ / SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients. Dealers
whose sales of Class A shares of Oppenheimer funds (other than money market
funds) under OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5
million per year (calculated per quarter), will receive monthly one-half of
the Distributor's retained commissions on those sales, and if those sales
exceed $10 million per year, those dealers will receive the Distributor's
entire retained commission on those sales.
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES. You may be eligible to
buy Class A shares at reduced sales charge rates in one or more of the
following ways:
/ / RIGHT OF ACCUMULATION. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for a
trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and Class
B shares of the Fund and other Oppenheimer funds to reduce the sales charge
rate for current purchases of Class A shares. You can also include Class A
and Class B shares of Oppenheimer funds you previously purchased subject to
an initial or contingent deferred sales charge to reduce the sales charge
rate for current purchases of Class A shares, provided that you still hold
your investment in one of the Oppenheimer funds. The value of those shares
will be based on the greater of the amount you paid for the shares or their
current value (at offering price). The Oppenheimer funds are listed in
"Reduced Sales Charges" in the Statement of Additional Information, or a list
can be obtained from the Distributor. The reduced sales charge will apply
only to current purchases and must be requested when you buy your shares.
/ / LETTER OF INTENT. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of the Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies
to your purchases of Class A shares. The total amount of your intended
purchases of both Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period. More
information is contained in the Application and in "Reduced Sales Charges" in
the Statement of Additional Information.
/ / WAIVERS OF CLASS A SALES CHARGES. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of
this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
-25-
<PAGE>
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES FOR CERTAIN
PURCHASERS. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
/ / the Manager or its affiliates;
/ / present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
/ / registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor
for that purpose;
/ / dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans for
their employees;
/ / employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is for
the purchaser's own account (or for the benefit of such employee's spouse or
minor children);
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use of
shares of the Fund in particular investment products made available to their
clients (those clients may be charged a transaction fee by their dealer,
broker or advisor for the purchase or sale of shares of the Fund)
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares of defined contribution
employee retirement plans for which the dealer, broker or investment adviser
provides administrative services.
/ / directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
/ / accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial owner
of such accounts;
/ / any unit investment trust that has entered into an appropriate
agreement with the Distributor;
/ / a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of the
Class B and C TRAC-2000 program on November 24, 1995; or
/ / qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds
at net asset value, with such shares to
-26-
<PAGE>
be held through DCXchange, a sub-transfer agency mutual fund clearinghouse,
provided that such arrangements are consummated and share purchases commence
by March 31, 1996.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES IN CERTAIN
TRANSACTIONS. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
/ / shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
/ / shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or one of its
affiliates acts as sponsor;
/ / shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
/ / shares purchased and paid for with the proceeds of shares redeemed in
the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund, Inc. that
were purchased and paid for in this manner); this waiver must be requested
when the purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this waiver; and
/ / shares purchased with the proceeds of maturing principal of units of
any Qualified Unit Investment Liquid Trust Series.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN
REDEMPTIONS. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales
charge are redeemed in the following cases:
/ / for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans or
other employee benefit plans, including OppenheimerFunds prototype 401(k)
plans (these are all referred to as "Retirement Plans");
/ / to return excess contributions made to Retirement Plans;
/ / to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
/ / involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
/ / if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales charge,
the dealer agrees in writing to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month
(and no further commission will be payable if the shares are redeemed within
18 months of purchase); or
-27-
<PAGE>
/ / for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or disability
(as defined in the Internal Revenue Code) of the participant or beneficiary
(the death or disability must occur after the participant's account was
established); (2) hardship withdrawals, as defined in the plan; (3) under a
Qualified Domestic Relations Order, as defined in the Internal Revenue Code;
(4) to meet the minimum distribution requirements of the Internal Revenue
Code; (5) to establish "substantially equal periodic payments" as described
in Section 72(t) of the Internal Revenue Code, or (6) separation from service.
/ / SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan
for Class A shares to reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and maintenance of accounts
that hold Class A shares. Reimbursement is made quarterly at an annual rate
that may not exceed 0.25% of the average annual net assets of Class A shares
of the Fund. The Distributor uses all of those fees to compensate dealers,
brokers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold
Class A shares and to reimburse itself (if the Fund's Board of Directors
authorizes such reimbursements, which it has not done as yet) for its other
expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining accounts
in the Fund, making the Fund's investment plans available and providing other
services at the request of the Fund or the Distributor. Payments are made by
the Distributor quarterly at an annual rate not to exceed 0.25% of the
average annual net assets of Class A shares held in accounts of the dealer or
its customers. The payments under the Plan increase the annual expenses of
Class A shares. For more details, please refer to "Distribution and Service
Plans" in the Statement of Additional Information.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within six years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset
value of the shares at the time of redemption or the original purchase price.
The contingent deferred sales charge is not imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions). The Class B contingent deferred sales charge is
paid to the Distributor to compensate it for providing distribution-related
services to the Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over six years, and (3) shares held the longest during the
six-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
-28-
<PAGE>
<TABLE>
<CAPTION>
YEARS SINCE BEGINNING OF CONTINGENT DEFERRED SALES CHARGE
MONTH IN WHICH ON REDEMPTIONS IN THAT YEAR
PURCHASE ORDER WAS ACCEPTED (AS % OF AMOUNT SUBJECT TO CHARGE)
- -------------------------------------------------------------------------------
<S> <C>
0-1 5.0%
- -------------------------------------------------------------------------------
1-2 4.0%
- -------------------------------------------------------------------------------
2-3 3.0%
- -------------------------------------------------------------------------------
3-4 3.0%
- -------------------------------------------------------------------------------
4-5 2.0%
- -------------------------------------------------------------------------------
5-6 1.0%
- -------------------------------------------------------------------------------
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to March 18, 1996.
/ / AUTOMATIC CONVERSION OF CLASS B SHARES. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
and Service Plan, described below. The conversion is based on the relative
net asset value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative Sales
Arrangements - Class A, Class B and Class C Shares" in the Statement of
Additional Information.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed
within 12 months of their purchase, a contingent deferred sales charge of
1.0% will be deducted from the redemption proceeds. That sales charge will
not apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original purchase
price. The contingent deferred sales charge is not imposed on the amount of
your account value represented by the increase in net asset value over the
initial purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent deferred
sales charge is paid to the Distributor to reimburse its expenses of
providing distribution-related services to the Fund in connection with the
sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
-29-
<PAGE>
/ / DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate the Distributor for its costs in distributing Class B
and C shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for six years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under the Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge allows
investors to buy Class B or C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or C shares. Those services
are similar to those provided under the Class A Service Plan, described
above. The Distributor pays the 0.25% service fees to dealers in advance for
the first year after Class B or Class C shares have been sold by the dealer
and retains the service fee paid by the Fund in that year. After the shares
have been held for a year, the Distributor pays the service fees to dealers
on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% on the purchase
price of Class B shares to dealers from its own resources at the time of
sale. The total amount paid by the Distributor to the dealer at the time of
sales of Class B shares is therefore 4.00% of the purchase price. The Fund
pays the asset-based sales charge to the Distributor for its services
rendered in distributing Class B shares. Those payments, retained by the
Distributor, are at a fixed rate that is not related to the Distributor's
expenses. The services rendered by the Distributor include paying and
financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B shares.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of
sale. The total amount paid by the Distributor to the dealer at the time of
sale of Class C shares is therefore 1.00% of the purchase price. The
Distributor retains the asset-based sales charge during the first year Class
C shares are outstanding to recoup the sales commissions it has paid, the
advances of service fee payments it has made, and its financing costs and
other expenses. The Distributor plans to pay the asset-based sales charge as
an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plans for Class B and C shares. Therefore, those expenses may be
carried over and paid in future years. If the Fund terminates its Plan, the
Board of Directors may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the Plan was
terminated.
/ / WAIVERS OF CLASS B AND CLASS C SALES CHARGES. The Class B and Class
C contingent deferred sales charge will not be applied to shares purchased in
certain types of transactions nor will it apply to Class B and Class C shares
redeemed in certain circumstances as described below. The reasons for this
policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
-30-
<PAGE>
WAIVERS FOR REDEMPTIONS IN CERTAIN CASES. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases, if the Transfer Agent is notified that these conditions
apply to the redemption:
/ / distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after
the participant reaches age 59-1/2, as long as the payments are no more than
10% of the account value annually (measured from the date the Transfer Agent
receives the request), or (b) following the death or disability (as defined
in the Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
/ / redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by the
Social Security Administration);
/ / returns of excess contributions to Retirement Plans;
/ / distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant is
age 59-1/2 but only after the participant has separated from service, if the
distributions are made in substantially equal periodic payments over the life
(or life expectancy) of the participant or the joint lives (or joint life and
last survivor expectancy) of the participant and the participant's designated
beneficiary (and the distributions must comply with other requirements for
such distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request);
/ / shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
/ / distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of the
Internal Revenue Code; or (5) for separation from service.
WAIVERS FOR SHARES SOLD OR ISSUED IN CERTAIN TRANSACTIONS. The
contingent deferred sales charge is also waived on Class B and Class C shares
sold or issued in the following cases:
/ / shares sold to the Manager or its affiliates;
/ / shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; and
/ / shares issued in plans of reorganization to which the Fund is a party.
-31-
<PAGE>
SPECIAL INVESTOR SERVICES
ACCOUNTLINK. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types of
account transactions. These include purchases of shares by telephone (either
through a service representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to your bank
account. Please refer to the Application for details or call the Transfer
Agent for more information.
AccountLink privileges should be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed instructions
to the Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives written
instructions terminating or changing those privileges. After you establish
AccountLink for your account, any change of bank account information must be
made by signature-guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
/ / USING ACCOUNTLINK TO BUY SHARES. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts
up to $250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
/ / PHONELINK. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
/ / PURCHASING SHARES. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these
purchases.
/ / EXCHANGING SHARES. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How to
Exchange Shares," below, for details.
/ / SELLING SHARES. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below
for details.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
/ / AUTOMATIC WITHDRAWAL PLANS. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of
at least $50 on a monthly, quarterly, semi-annual or annual basis. The checks
may be sent to you or sent automatically to
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your bank account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.
/ / AUTOMATIC EXCHANGE PLANS. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms
of the Exchange Privilege, described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares, you have up to 6 months to reinvest all or part of the redemption
proceeds in Class A shares of the same Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies to Class A shares that
you purchased subject to an initial sales charge and to Class A or Class B
shares on which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must be sure to
ask the Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
RETIREMENT PLANS. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for your
retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
/ / INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for
individuals and their spouses
/ / 403(b)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
/ / SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-IRAs
/ / PENSION AND PROFIT-SHARING PLANS for self-employed persons and other
employers
/ / 401(k) PROTOTYPE RETIREMENT PLANS for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
HOW TO SELL SHARES
You can arrange to take money out of your account by selling (redeeming)
some or all of your shares on any regular business day. Your shares will be
sold at the next net asset value calculated after your order is received and
accepted by the Transfer Agent. The Fund offers you a number of ways to sell
your shares: in writing or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above. IF
YOU HAVE QUESTIONS ABOUT ANY OF THESE PROCEDURES, AND ESPECIALLY IF YOU ARE
REDEEMING SHARES IN A SPECIAL SITUATION, SUCH AS DUE TO THE DEATH OF THE
OWNER, OR FROM A RETIREMENT PLAN, PLEASE CALL THE TRANSFER AGENT FIRST, AT
1-800-525-7048, FOR ASSISTANCE.
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<PAGE>
/ / RETIREMENT ACCOUNTS. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a distribution
request form. There are special income tax withholding requirements for
distributions from retirement plans and you must submit a withholding form
with your request to avoid delay. If your retirement plan account is held
for you by your employer, you must arrange for the distribution request to be
sent by the plan administrator or trustee. There are additional details in
the Statement of Additional Information.
/ / CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and
the Fund from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
/ / You wish to redeem more than $50,000 worth of shares and receive a
check
/ / The redemption check is not payable to all shareholders listed on the
account statement
/ / The redemption check is not sent to the address of record on your
account statement
/ / Shares are being transferred to a Fund account with a different owner
or name
/ / Shares are redeemed by someone other than the owners (such as an
Executor)
/ / WHERE CAN I HAVE MY SIGNATURE GUARANTEED? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association,
or by a foreign bank that has a U.S. correspondent bank, or by a U.S.
registered dealer or broker in securities, municipal securities or government
securities, or by a U.S. national securities exchange, a registered
securities association or a clearing agency. IF YOU ARE SIGNING AS A
FIDUCIARY OR ON BEHALF OF A CORPORATION, PARTNERSHIP OR OTHER BUSINESS, OR AS
A FIDUCIARY YOU MUST ALSO INCLUDE YOUR TITLE IN THE SIGNATURE.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
/ / Your name
/ / The Fund's name
/ / Your Fund account number (from your account statement)
/ / The dollar amount or number of shares to be redeemed
/ / Any special payment instructions
/ / Any share certificates for the shares you are selling
/ / The signatures of all registered owners exactly as the account is
registered, and
/ / Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
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<PAGE>
USE THE FOLLOWING ADDRESS FOR REQUESTS BY MAIL:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
SEND COURIER OR EXPRESS MAIL REQUESTS TO:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
SELLING SHARES BY TELEPHONE. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price on a
regular business day, your call must be received by the Transfer Agent by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M.,
but may be earlier on some days. YOU MAY NOT REDEEM SHARES HELD IN AN
OPPENHEIMERFUNDS RETIREMENT PLAN OR UNDER A SHARE CERTIFICATE BY TELEPHONE.
/ / To redeem shares through a service representative, call 1-800-852-8457
/ / To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank account.
/ / TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone, in any seven-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
/ / TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK OR WIRE. There are no
dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer to your
bank is initiated on the business day after the redemption. You do not
receive dividends on the proceeds of the shares you redeemed while they are
waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account
if the bank is a member of the Federal Reserve wire system. There is a $10
fee for each Federal Funds wire. To place a wire redemption request, call
the Transfer Agent at 1-800-852-8457. The wire will normally be transmitted
on the next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable the Fund
to sell securities to pay the redemption proceeds. No dividends are accrued
or paid on the proceeds of shares that have been redeemed and are awaiting
transmittal by wire. To establish wire redemption privileges on an account
that is already established, please contact the Transfer Agent for
instructions.
SELLING SHARES THROUGH YOUR DEALER. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the
Statement of Additional Information for more details.
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<PAGE>
HOW TO EXCHANGE SHARES
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
/ / Shares of the fund selected for exchange must be available for sale
in your state of residence.
/ / The prospectuses of the Fund and the fund whose shares you want to
buy must offer the exchange privilege.
/ / You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares every regular business day.
/ / You must meet the minimum purchase requirements for the fund you
purchase by exchange.
/ / BEFORE EXCHANGING INTO A FUND, YOU SHOULD OBTAIN AND READ ITS
PROSPECTUS.
SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME
CLASS IN THE OTHER OPPENHEIMER FUNDS. For example, you can exchange Class A
shares of the Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which
are considered to be Class A shares for this purpose. In some cases, sales
charges may be imposed on exchange transactions. Please refer to "How to
Exchange Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
/ / WRITTEN EXCHANGE REQUESTS. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the Transfer
Agent at the addresses listed in "How to Sell Shares."
/ / TELEPHONE EXCHANGE REQUESTS. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
names and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by calling
a service representative at 1-800-525-7048. That list can change from time to
time.
There are certain exchange policies you should be aware of:
/ / Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on
which the Transfer Agent receives an exchange request that is in proper form
by the close of The New York Stock Exchange that day, which is normally 4:00
P.M. but may be earlier on some days. However, either fund may delay
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<PAGE>
the purchase of shares of the fund you are exchanging into up to seven days
if it determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple exchange
requests from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the Fund.
/ / Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
/ / The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever it
is reasonably able to do so, it may impose these changes at any time.
/ / For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund,
which may result in a taxable gain or a loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
/ / If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange
will be exchanged.
SHAREHOLDER ACCOUNT RULES AND POLICIES
/ / NET ASSET VALUE PER SHARE is determined for each class of shares as
of the close of The New York Stock Exchange which is normally 4:00 P.M., but
may be earlier on some days, on each day the Exchange is open by dividing the
value of the Fund's net assets attributable to a class by the number of
shares of that class that are outstanding. The Fund's Board of Directors has
established procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value. There are
special procedures for valuing illiquid and restricted securities and
obligations for which market values cannot be readily obtained. These
procedures are described more completely in the Statement of Additional
Information.
/ / THE OFFERING OF SHARES may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Directors at any time the Board believes it is in
the Fund's best interest to do so.
/ / TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any time.
If an account has more than one owner, the Fund and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply to each
owner of the account and the dealer representative of record for the account
unless and until the Transfer Agent receives cancellation instructions from
an owner of the account.
/ / THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the Transfer
Agent
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<PAGE>
during periods of unusual market activity, you may not be able to complete a
telephone transaction and should consider placing your order by mail.
/ / REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL THE
TRANSFER AGENT RECEIVES ALL REQUIRED DOCUMENTS IN PROPER FORM. From time to
time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
/ / DEALERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS BY
PARTICIPATING IN NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction erroneously.
/ / THE REDEMPTION PRICE FOR SHARES WILL VARY from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally be
different for Class A, Class B and Class C shares. Therefore, the redemption
value of your shares may be more or less than their original cost.
/ / PAYMENT FOR REDEEMED SHARES is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer Agent
receives redemption instructions in proper form, except under unusual
circumstances determined by the Securities and Exchange Commission delaying
or suspending such payments. For accounts registered in the name of a
broker-dealer, payment will be forwarded within 3 business days. THE
TRANSFER AGENT MAY DELAY FORWARDING A CHECK OR PROCESSING A PAYMENT VIA
ACCOUNTLINK FOR RECENTLY PURCHASED SHARES, BUT ONLY UNTIL THE PURCHASE
PAYMENT HAS CLEARED. THAT DELAY MAY BE AS MUCH AS 10 DAYS FROM THE DATE THE
SHARES WERE PURCHASED. THAT DELAY MAY BE AVOIDED IF YOU PURCHASE SHARES BY
CERTIFIED CHECK OR ARRANGE WITH YOUR BANK TO PROVIDE TELEPHONE OR WRITTEN
ASSURANCE TO THE TRANSFER AGENT THAT YOUR PURCHASE PAYMENT HAS CLEARED.
/ / INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by the Fund if
the account has fewer than 100 shares.
/ / UNDER UNUSUAL CIRCUMSTANCES, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to "How to Sell Shares" in the
Statement of Additional Information for more details.
/ / "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund your correct, certified Social
Security or Employer Identification Number and any other certifications
required by the Internal Revenue Service ("IRS") when you sign your
application, or if you violate IRS regulations on tax reporting of income.
/ / THE FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be subject
to a contingent deferred sales charge when redeeming certain Class A, Class B
and Class C shares.
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<PAGE>
/ / TO AVOID SENDING DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to
ask that copies of those materials be sent personally to that shareholder.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS. The Fund declares and pays dividends separately for Class A, Class
B and Class C shares from net investment income semi-annually. Normally,
dividends are paid on the last business day every dividend period, but the
Board of Directors can change that date. Dividends paid on Class A shares
generally are expected to be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will generally be
higher.
CAPITAL GAINS. The Fund may make distributions annually in December out of
any net short-term or long-term capital gains. Long-term capital gains will
be separately identified in the tax information your Fund sends you after the
end of the year. Distributions of short-term capital gains are treated as
ordinary income for tax purposes. There can be no assurance that the Fund
will pay any capital gains distributions in a particular year.
DISTRIBUTION OPTIONS. When you open your account, specify on your
application how you want to receive your distributions. For OppenheimerFunds
retirement accounts, all distributions are reinvested. For other accounts,
you have four options:
/ / REINVEST ALL DISTRIBUTIONS IN THE FUND. You can elect to reinvest
all dividends and long-term capital gains distributions in additional shares
of the Fund.
/ / REINVEST CAPITAL GAINS ONLY. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to your
bank account on AccountLink.
/ / RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them sent
to your bank on AccountLink.
/ / REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMERFUNDS ACCOUNT. You
can reinvest all distributions in another Oppenheimer funds account you have
established.
TAXES. If your account is not a tax-deferred retirement account, you should
be aware of the following tax implications of investing in the Fund. The
Fund's distributions from long-term capital gains are taxable to shareholders
as long-term capital gains, no matter how long you held your shares.
Dividends paid by the Fund from short-term capital gains and net investment
income, including certain not realized foreign exchange gains, are taxable as
ordinary income. These dividends and distributions are subject to Federal
income tax and may be subject to state or local taxes. Your distributions
are taxable as described above, whether you reinvest them in additional
shares or take them in cash. Corporate shareholders may be entitled to the
corporate dividends received deduction for some portion of the Fund's
distributions treated as ordinary income, subject to applicable limitations
under the Internal Revenue Code. Every year the Fund will send you and the
IRS a statement showing the aggregate amount and character of taxable
distributions you received for in the previous year.
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<PAGE>
/ / "BUYING A DIVIDEND". When the Fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or just
before the ex-dividend date, or just before the Fund declares a capital gains
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
/ / TAXES ON TRANSACTIONS. Share redemptions and repurchases, including
redemptions for exchanges, may produce a taxable gain or a loss, which
generally will be a capital gain or loss for shareholders who hold shares of
the Fund as capital assets. Such a gain or loss is the difference between
your tax basis, which is usually the price you paid for the shares, and the
proceeds you received when you sold them. Special tax rules may apply to
certain redemptions preceded or followed by investments in the Fund or
another Oppenheimer fund.
/ / RETURNS OF CAPITAL. In certain cases distributions made by the Fund
may be considered a return of capital to shareholders. If that occurs, it
will be identified in notices to shareholders. A return of capital will
reduce your tax basis in shares of the Fund but will not be taxable except to
the extent it exceeds such tax basis.
/ / FOREIGN TAXES. The Fund may be subject to foreign withholding taxes
or other foreign taxes on income (possibly including capital gains) on
certain of its foreign investments, if any. These taxes may be reduced or
eliminated pursuant to an income tax treaty in some cases. The Fund does not
expect to qualify to pass such foreign taxes and any related tax deductions
or credits through to its shareholders.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under the Internal Revenue Code. Provided that the Fund
so qualifies, it will not be required to pay any federal income tax on its
net investment income and net realized capital gains that it distributes to
its shareholders in accordance with certain timing requirements.
This information is only a summary of certain federal tax information
about your investment. Tax-exempt or tax-deferred investors, foreign
investors, and investors subject to special tax rules (such as certain banks
and securities dealers) may have different tax consequences not described
above. More tax information is contained in the Statement of Additional
Information, and in addition you should consult with your tax adviser about
the effect of an investment in the Fund on your particular tax situation.
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APPENDIX A: DESCRIPTION OF RATINGS CATEGORIES OF RATING SERVICES
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as
"high-grade" bonds. They are rated lower than the best bonds because margins
of protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that is,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Bonds rated "B" generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or there
may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S BOND RATINGS
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions
<PAGE>
or changing circumstances are more likely to lead to a weakened capacity to
pay principal and interest for bonds in this category than for bonds in the
"A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CC" the highest degree.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds rated
"D" are in default and payment of interest and/or repayment of principal is in
arrears.
A-2
<PAGE>
APPENDIX B
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER QUEST FOR VALUE FUNDS
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares of the Fund described elsewhere in this
Prospectus are modified as described below for those shareholders of (i)
Quest for Value Fund, Inc., Quest for Value Growth and Income Fund, Quest for
Value Opportunity Fund, Quest for Value Small Capitalization Fund and Quest
for Value Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and (ii)
Quest for Value U.S. Government Income Fund, Quest for Value Investment
Quality Income Fund, Quest for Value Global Income Fund, Quest for Value New
York Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest for
Value California Tax-Exempt Fund when those funds merged into various
Oppenheimer funds on November 24, 1995. The funds listed above are referred
to in this Prospectus as the "Former Quest for Value Funds." The waivers of
initial and contingent deferred sales charges described in this Appendix
apply to shares of the Fund (i) acquired by such shareholder pursuant to an
exchange of shares of one of the Oppenheimer funds that was one of the Former
Quest for Value Funds or (ii) received by such shareholder pursuant to the
merger of any of the Former Quest for Value Funds into an Oppenheimer fund on
November 24, 1995.
CLASS A SALES CHARGES
/ / REDUCED CLASS A INITIAL SALES CHARGE RATES FOR CERTAIN
FORMER QUEST SHAREHOLDERS
/ / PURCHASES BY GROUPS, ASSOCIATIONS AND CERTAIN QUALIFIED
RETIREMENT PLANS. The following table sets forth the initial sales charge
rates for Class A shares purchased by a "Qualified Retirement Plan" through a
single broker, dealer or financial institution, or by members of
"Associations" formed for any purpose other than the purchase of securities
if that Qualified Retirement Plan or that Association purchased shares of any
of the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
B-1
<PAGE>
FRONT-END SALES FRONT-END SALES
CHARGE AS A CHARGE AS A COMMISSION AS
NUMBER OF ELIGIBLE PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
EMPLOYEES OR MEMBERS OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- ------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no initial sales
charge on purchases of Class A shares, but those shares are subject to the
Class A contingent deferred sales charge described on pages to of
this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above in
the Prospectus. In addition, purchases by 401(k) plans that are Qualified
Retirement Plans qualify for the waiver of the Class A initial sales charge
if they qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1 million or
more each year. Individuals who qualify under this arrangement for reduced
sales charge rates as members of Associations, or as eligible employees in
Qualified Retirement Plans also may purchase shares for their individual or
custodial accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
/ / SPECIAL CLASS A CONTINGENT DEFERRED SALES CHARGE RATES
Class A shares of the Fund purchased by exchange of shares of other Oppenheimer
funds that were acquired as a result of the merger of Former Quest for Value
Funds into those Oppenheimer funds, and which shares were subject to a Class A
contingent deferred sales charge prior to November 24, 1995 will be subject to a
contingent deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they were purchased,
at a rate equal to 1.0% if the redemption occurs within 12 months of their
initial purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales charge
in effect as of that date as set forth in the then-current prospectus for such
fund.
/ / WAIVER OF CLASS A SALES CHARGES FOR CERTAIN SHAREHOLDERS
Class A shares of the Fund purchased by the following investors are not subject
to any Class A initial or contingent deferred sales charges:
/ / Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any of the
Former Quest for Value Funds by merger of a portfolio of the AMA Family of
Funds.
/ / Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the Unified Funds.
B-2
<PAGE>
/ / WAIVER OF CLASS A CONTINGENT DEFERRED SALES CHARGE IN CERTAIN
TRANSACTIONS
The Class A contingent deferred sales charge will not apply to redemptions of
Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
/ / Investors who purchased Class A shares from a dealer that
is or was not permitted to receive a sales load or redemption fee imposed on
a shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted under
that law.
/ / Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund shares
as described above in "Class A Contingent Deferred Sales Charge."
CLASS A, CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE WAIVERS
/ / WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED PRIOR TO MARCH
6, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans qualified under
Section 401(a) of the Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts, deferred
compensation plans under Section 457 of the Code, and other employee benefit
plans, and returns of excess contributions made to each type of plan,
(ii) withdrawals under an automatic withdrawal plan holding only either Class B
or C shares if the annual withdrawal does not exceed 10% of the initial value of
the account, and (iii) liquidation of a shareholder's account if the aggregate
net asset value of shares held in the account is less than the required minimum
value of such accounts.
/ / WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED ON OR AFTER
MARCH 6, 1995 BUT PRIOR TO NOVEMBER 24, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to November 24, 1995:
(1) distributions to participants or beneficiaries from Individual Retirement
Accounts under Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those distributions
are made either (a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans following the
death or disability of the shareholder(s) (as evidenced by a determination of
total disability by the U.S. Social Security Administration); (4) withdrawals
under an automatic withdrawal plan (but only for Class B or C shares) where the
annual withdrawals do not exceed 10% of the initial value of the account; and
(5) liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, B or C shares of
the Fund described in this section if within 90 days
B-3
<PAGE>
after that redemption, the proceeds are invested in the same Class of shares
in the Fund or another Oppenheimer fund.
SPECIAL DEALER ARRANGEMENTS.
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and that were transferred to an OppenheimerFunds prototype 401(k) plan
shall be eligible for an additional one-time payment by the Distributor of 1% of
the value of the plan assets transferred, but that payment may not exceed $5,000
as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and (i) the shares held by those plans were exchanged for Class A shares,
or (ii) the plan assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the Distributor of
1% of the value of the plan assets transferred, but that payment may not exceed
$5,000.
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER CONNECTICUT MUTUAL FUNDS
Certain of the sales charge waivers for Class A and Class B
shares of the Fund described elsewhere in this Prospectus are modified as
described below for those shareholders of Connecticut Mutual Liquid Account,
Connecticut Mutual Government Securities Account, Connecticut Mutual Income
Account, Connecticut Mutual Growth Account, Connecticut Mutual Total Return
Account, CMIA LifeSpan Diversified Income Account, CMIA LifeSpan Capital
Appreciation Account and CMIA LifeSpan Balanced Account (the "Former
Connecticut Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc.
became the investment adviser to the Former Connecticut Mutual Funds.
CLASS A SALES CHARGE WAIVERS
Additional Class A shares of the Fund may be purchased without
a sales charge, provided that the Class A shares of the Fund were acquired
prior to March 1, 1996, by:
(1) any purchaser, provided the total initial amount invested
in the Fund or any one or more of the Former Connecticut Mutual Funds totaled
$500,000 or more, including investments made pursuant to the Combined
Purchases, Statement of Intention and Rights of Accumulation features
available at the time of the initial purchase; (2) any participant in a
qualified plan, provided that the total initial amount invested by the plan
in the Fund or any one or more of the Former Connecticut Mutual Funds totaled
$500,000 or more; (3) Directors of the Fund or any one or more of the Former
Connecticut Mutual Funds 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 Connecticut Mutual Financial Services,
L.L.C. ("CMFS"), the Fund's prior distributor, 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 Life Insurance Company through the Panorama
Separate Account which was beyond the applicable surrender charge period and
which was used to fund a qualified plan, who exchanged the variable annuity
contract for Class A shares of the Fund; and (8) an institution acting as a
fiduciary on behalf of an individual
B-4
<PAGE>
or individuals, where such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the Fund or any
one or more of the Former Connecticut Mutual Funds, provided the institution
had an agreement with CMFS. Purchases of Class A shares made pursuant to (1)
and (2) above may be subject to a CDSC.
CLASS A AND CLASS B CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for
redemptions of Class A and Class B shares of the Fund and exchanges of Class
A or Class B shares of the Fund into Class A or Class B shares of a Former
Connecticut Mutual Fund provided that the Class A or Class B shares of the
Fund to be redeemed or exchanged were (i) acquired prior to March 1, 1996 or
(ii) were acquired by exchange from an Oppenheimer Fund that was a Former
Connecticut Mutual Fund and the shares of such Former Connecticut Mutual Fund
were purchased prior to March 1, 1996:
(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 Fund due to a combination with another
investment company by virtue of a merger, acquisition or similar
reorganization transaction; (7) in connection with the Fund's right to
involuntarily redeem or liquidate the Fund; (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 Fund's
Articles of Incorporation, or as adopted by the Board of Directors of the
Fund.
B-5
<PAGE>
OPPENHEIMER DISCIPLINED VALUE FUND
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND, OPPENHEIMERFUNDS, INC., OPPENHEIMERFUNDS
DISTRIBUTOR, INC. OR ANY AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH STATE.
____________________ *PRINTED ON RECYCLED PAPER
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Oppenheimer LifeSpan Growth Fund, Oppenheimer LifeSpan Balanced
Fund and Oppenheimer LifeSpan Income Fund.
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 Additional
and Caption Information
--------------------- --------------------------
1. Cover Page....................... Cover Page.
2. Synopsis......................... About The Funds -- A Brief
Overview of the Fund.
3. Condensed Financial
Information.................... About The Funds -- Financial
Highlights.
4. General Description of
Registrant..................... Cover Page; About The Funds
-- How The Fund Is Managed -
- Organization and History.
5. Management of the Fund........... About The Funds -- How the
Funds are Managed.
6. Capital Stock and Other
Securities..................... About The Funds --
Investment Objective and
Policies.
7. Purchase of Securities
Being Offered.................. About Your Account -- How to
Buy Shares; Special Sales
Charge Arrangements for
Certain Persons; Buying
Class A Shares; Buying
Class B Shares; Buying
Class C Shares.
<PAGE>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
8. Redemption or Repurchase......... About Your Account -- How to
Buy Shares; Special Investor
Services; How to Sell
Shares; How to Exchange
Shares; Shareholder Account
Rules and Policies.
9. Pending Legal Proceedings........ Not Applicable.
10. Cover Page....................... Cover Page.
11. Table of Contents................ Cover Page.
12. General Information and
History........................ Cover Page; How The Funds
are Managed -- Organization
and History.
13. Investment Objectives and
Policy......................... About The Funds --
Investment Objectives and
Policies.
14. Management of the Fund........... About The Funds -- How the
Funds are Managed.
15. Control Persons and Principal
Holders of Securities.......... About The Funds -- How the
Funds are Managed.
16. Investment Advisory and
Other Services................. About The Funds -- How the
Funds are Managed; The
Manager, the Subadviser and
Their Affiliates; The
Distributor; The Transfer
Agent.
17. Brokerage Allocation and
Other Practices................ About the Funds -- Brokerage
Policies of the Funds.
18. Capital Stock and Other
Securities..................... About the Funds -- How the
Funds are Managed --
Organization and History.
- 2 -
<PAGE>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
19. Purchase, Redemption and Pricing
of Securities Being Offered.... About Your Accounts -- How
to Buy Shares; How to Sell
Shares; How to Exchange
Shares.
20. Tax Status....................... About Your Account --
Dividends, Capital Gains and
Taxes.
21. Underwriters..................... About The Funds -- How the
Funds are Managed -- The
Manager, the Subadvisers and
Their Affiliates; About Your
Account -- How To Buy
Shares.
22. Calculation of Performance
Data........................... About The Funds --
Performance of the Funds;
About Your Account --
Dividends, Capital Gains and
Taxes.
23. Financial Statements............. Financial Information About
the Funds -- Independent
Auditors' Report --
Financial Statements.
- 3 -
<PAGE>
OPPENHEIMER
LIFESPAN GROWTH FUND
LIFESPAN BALANCED FUND
LIFESPAN INCOME FUND
PROSPECTUS DATED MAY 1, 1996
Oppenheimer Series Fund, Inc. (the "Company") is an open-end investment
company consisting of eight separate mutual funds, three of which are offered
in this prospectus (individually, a "Fund" and collectively, the "Funds"):
OPPENHEIMER LIFESPAN GROWTH FUND ("Growth Fund") seeks long-term capital
appreciation. Growth Fund invests in a strategically allocated portfolio
consisting primarily of stocks. Current income is not a primary
consideration.
OPPENHEIMER LIFESPAN BALANCED FUND ("Balanced Fund") seeks a blend of capital
appreciation and income. Balanced Fund invests in a strategically allocated
portfolio of stocks and bonds with a slightly stronger emphasis on stocks.
OPPENHEIMER LIFESPAN INCOME FUND ("Income Fund") seeks high current income,
with opportunities for capital appreciation. Income Fund invests in a
strategically allocated portfolio consisting primarily of bond instruments.
Please refer to "Investment Policies and Strategies" for more information
about the types of securities the Funds invest in and the risks of investing
in the Funds.
This Prospectus explains concisely what you should know before investing
in the Funds. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about each Fund in the May
1, 1996 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Funds' Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated into this Prospectus by reference
(which means that it is legally part of this Prospectus).
(Oppenheimer funds logo)
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY,
AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
CONTENTS
A B O U T T H E F U N D S
EXPENSES
BRIEF OVERVIEW OF THE FUNDS
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
HOW THE FUNDS ARE MANAGED
PERFORMANCE OF THE FUNDS
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
Class A Shares
Class B Shares
Class C Shares
SPECIAL INVESTOR SERVICES
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
HOW TO SELL SHARES
By Mail
By Telephone
HOW TO EXCHANGE SHARES
SHAREHOLDER ACCOUNT RULES AND POLICIES
DIVIDENDS, CAPITAL GAINS AND TAXES
APPENDIX A: DESCRIPTION OF SECURITIES RATINGS
APPENDIX B: SPECIAL SALES CHARGE ARRANGEMENTS
2
<PAGE>
A B O U T T H E F U N D S
EXPENSES
Each Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales charges
and account transaction charges. The following tables are provided to help
you understand your direct expenses of investing in a Fund and the share of a
Fund's business operating expenses that you will bear indirectly. The
numbers below are based on the Funds' expenses during its last fiscal period
ended December 31, 1995.
/ / SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or
sell shares of a Fund. Please refer to "About Your Account" starting on page
___ for an explanation of how and when these charges apply.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.75% None None
Charge on
Purchases (as a %
of offering price)
- ----------------------------------------------------------------------------
Sales Charge on None None None
Reinvested
Dividends
- ----------------------------------------------------------------------------
Deferred Sales None(1) 5% in the 1% if
Charge (as a % first year, shares are
of the lower declining redeemed
of the original to 1% in the within 12
purchase price sixth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)
- ----------------------------------------------------------------------------
Exchange Fee None None None
- ----------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares -- Buying Class A Shares," below.
(2) See "How to Buy Shares -- Buying Class B Shares," and "Buying Class C
Shares" below, for more information on the contingent deferred sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal
Funds wire, but not for redemptions paid by check or ACH transfer through
AccountLink.
3
<PAGE>
/ / ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets and
represent the Fund's expenses in operating its business. For example, a Fund
pays management fees to its investment advisor, OppenheimerFunds, Inc. (which
is referred to in this Prospectus as the "Manager"). The rates of the
Manager's fees are set forth in "How the Funds are Managed," below. A Fund
has other regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds the Fund's portfolio securities,
audit fees and legal expenses. Those expenses are detailed in a Fund's
Financial Statements in the Statement of Additional Information.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees
Growth Fund 0.85% 0.85% 0.85%
Balanced Fund 0.85% 0.85% 0.85%
Income Fund 0.75% 0.75% 0.75%
- -------------------------------------------------------------------------
12b-1 Plan Fees
Growth Fund 0.25% 1.00% 1.00%
Balanced Fund 0.25% 1.00% 1.00%
Income Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------
Other Expenses
Growth Fund 0.45% 0.45% 0.45%
Balanced Fund 0.45% 0.45% 0.45%
Income Fund 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------
Total Fund Operating Expenses
Growth Fund 1.55% 2.30% 2.30%
Balanced Fund 1.55% 2.30% 2.30%
Income Fund 1.50% 2.25% 2.25%
</TABLE>
The numbers for the Class A and Class B shares in the chart above are
based on the Fund's expenses for its last fiscal period ended December 31,
1995. These amounts are shown as a percentage of the average net assets of
each class of each Fund's shares for that year. Class A and Class B shares
were not publicly offered before May 1, 1995 and October 1, 1995,
respectively. Therefore, the Annual Fund Operating Expenses shown are based
on expenses for the period from May 1, 1995 or October 1, 1995 (Inception for
Class A or Class B shares, respectively) until December 31, 1995. Class C
shares were not publicly offered during the fiscal period ended December 31,
1995. Accordingly, the Annual Fund Operating Expenses for Class C shares are
estimates based upon amounts that would have been payable if Class C shares
had been outstanding during the period from May 1, 1995 to December 31, 1995.
The actual expenses for each class of shares in future years may be more or
less than the numbers in the chart, depending on a number of factors,
including the actual amount of a Fund's assets represented by each class of
shares.
The "12b-1 Distribution Plan Fees" for Class A shares are the Service
Plan Fees (which can be up to a maximum of 0.25% of average annual net assets
of that class). For Class B and Class C shares, 12b-1 Plan Fees include the
Service Plan Fees (which can be up to a maximum of 0.25%) and an annual
asset-based sales charges of 0.75%. These plans are described in greater
detail in "How to Buy Shares."
4
<PAGE>
/ / EXAMPLES. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in each class of shares of each
Fund, and each Fund's annual return is 5%, and that its operating expenses
for each class are the ones shown in the Annual Fund Operating Expenses table
above. If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the end of 1 and
3 years:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------------------------------------------------------------------
<S> <C> <C>
Class A Shares
Growth Fund $72 $104
Balanced Fund $72 $104
Income Fund $72 $102
- ----------------------------------------------------------------------
Class B Shares
Growth Fund $73 $112
Balanced Fund $73 $112
Income Fund $73 $110
- ----------------------------------------------------------------------
Class C Shares
Growth Fund $34 $72
Balanced Fund $34 $72
Income Fund $33 $70
If you did not redeem your investment, it would incur the following expenses:
Class A Shares
Growth Fund $72 $104
Balanced Fund $72 $104
Income Fund $72 $102
- ----------------------------------------------------------------------
Class B Shares
Growth Fund $23 $72
Balanced Fund $23 $72
Income Fund $23 $70
- ----------------------------------------------------------------------
Class C Shares
Growth Fund $23 $72
Balanced Fund $23 $72
Income Fund $23 $70
</TABLE>
Because of the effect of the asset-based sales charge and the contingent
deferred sales charge on Class B and Class C shares, long-term Class B and
Class C shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable regulations. For
Class B shareholders, the automatic conversion of Class B shares into Class A
shares is designed to minimize the likelihood that this will occur. Please
refer to "How to Buy Shares" for more information.
THESE EXAMPLES SHOW THE EFFECT OF EXPENSES ON AN INVESTMENT, BUT ARE NOT
MEANT TO STATE OR PREDICT ACTUAL OR EXPECTED COSTS OR INVESTMENT RETURNS OF
THE FUNDS, WHICH MAY BE GREATER OR LESSER THAN THOSE SHOWN.
5
<PAGE>
A BRIEF OVERVIEW OF THE FUNDS
Some of the important facts about each Fund are summarized below, with
references to the section of this Prospectus where more complete information
can be found. You should carefully read the entire Prospectus before making
a decision about investing in a Fund. Keep the Prospectus for reference
after you invest, particularly for information about your account, such as
how to sell or exchange shares.
/ / WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Each Fund has its own investment objective:
GROWTH FUND seeks long-term capital appreciation. Current income is not
a primary consideration.
BALANCED FUND seeks a blend of capital appreciation and income.
INCOME FUND seeks high current income, with opportunities for capital
appreciation.
/ / WHAT DO THE FUNDS INVEST IN?
Each Fund is an asset allocation fund and seeks to achieve its
investment objective by allocating its assets among two broad classes of
investments -- stocks and bonds. The STOCK CLASS includes equity securities
of all types. The BOND CLASS includes all varieties of fixed-income
instruments. The Manager will diversify each Fund's stock class by allocating
the Fund's stock portfolio among four STOCK COMPONENTS: international
stocks, value/growth stocks, growth and income stocks and small-capitalized
growth stocks (small cap). Each stock component is also permitted to invest
a portion of its assets in bonds when increased flexibility in portfolio
management is required to enhance appreciation or income. The Manager will
diversify a Fund's bond class by allocating a Fund's bond portfolio among
three BOND COMPONENTS: government and corporate bonds, high yield/high risk
bonds (also called "junk bonds") and short-term bonds. There is no
requirement that the Manager allocate a Fund's assets among all stock or bond
components at all times. These stock and bond components have been selected
because the Manager believes that this additional level of asset
diversification will provide each Fund with the potential for higher returns
with lower overall volatility. Each Fund's normal allocation is shown in the
chart on page below. The Funds' investments are more fully explained in
"Investment Objectives and Policies," starting on page __.
/ / WHO MANAGES THE FUNDS? The Funds' investment advisor is
OppenheimerFunds, Inc., which (including a subsidiary) advises investment
company portfolios having over $40 billion in assets at December 31, 1995.
The Funds' Board of Directors, elected by shareholders, oversees the
investment advisor and the portfolio manager. The Manager is paid an
advisory fee by each Fund, based on its net assets. The Manager has engaged
three Sub-Advisers --Babson-Stewart Ivory International ("Babson-Stewart"),
BEA Associates ("BEA") and Pilgrim Baxter & Assoc. Ltd. ("Pilgrim") -- to
manage the assets in the international stocks component, the small cap stocks
component and the high yield/high risk bonds component of each Fund,
respectively. The Manager will manage the remaining components using its own
investment management personnel. Please refer to "How the Funds are Managed,"
starting on page ____ for more information about the Manager, the
Sub-Advisers and their fees.
/ / HOW RISKY ARE THE FUNDS? All investments carry risks to some
degree. Allocating assets among different types of investments allows
each Fund to take advantage of opportunities wherever they may occur, but
also subjects the Fund to the risks of a given
6
<PAGE>
investment type. Stock values fluctuate in response to the activities of
individual companies and general market economic conditions. The value of
bonds fluctuates based on changes in interest rates and in the credit quality
of the issuer. A Fund's investments in foreign securities are subject to
additional risks associated with investing abroad, such as the effect of
currency rate changes on stock values. Non-investment grade securities may
have speculative characteristics and be subject to a greater risk of default
than investment grade securities. These changes affect the value of a Fund's
investments and its share prices for each class of its shares. In the
OppenheimerFunds spectrum, Growth Fund, a stock fund, is generally more
volatile than Balanced Fund, an income and growth fund, which in turn is
generally more volatile than Income Fund, a [moderately risky] income fund.
While the Manager tries to reduce risks by diversifying investments, by
carefully researching securities before they are purchased for a portfolio
and in some cases by using hedging techniques, there is no guarantee of
success in achieving a Fund's objective and your shares may be worth more or
less than their original cost when you redeem them. Please refer to
"Investment Objectives and Policies" starting on page ___ for a more complete
discussion of each Fund's investment risks.
/ / HOW CAN I BUY SHARES? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" beginning on
page ___ for more details.
/ / WILL I PAY A SALES CHARGE TO BUY SHARES? Each Fund has three
classes of shares. Each class of shares has the same investment portfolio,
but different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75% and reduced for larger purchases. Class B and Class
C shares are offered without front-end sales charges, but may be subject to a
contingent deferred sales charge if redeemed within 6 years or 12 months,
respectively, of purchase. There is also an annual asset-based sales charge
on Class B and Class C shares. Please review "How To Buy Shares" starting on
page ___ for more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
/ / HOW CAN I SELL MY SHARES? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day or through your
dealer. Please refer to "How To Sell Shares" on page ___. Each Fund also
offers exchange privileges to other Oppenheimer funds, described in "How to
Exchange Shares" on page ____.
/ / HOW HAVE THE FUNDS PERFORMED? Each Fund measures its performance by
quoting average annual total return and cumulative total return, which
measure historical performance. Those returns can be compared to the total
returns (over similar periods) of other funds. Of course, other funds may
have different objectives, investments, and levels of risk. Please remember
that past performance does not guarantee future results.
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended December 31, 1995 has
been derived from audited financial statements together with the auditors'
report for the year ended December 31, 1995 which is included in the
Statement of Additional Information. The tables on the following pages
present selected financial information about the Funds, including per share
data and expense ratios and other data based on each Fund's respective
average net assets. Class C shares were not publicly offered during the
period shown, and consequently, no information on Class C shares is included
in the tables on the following pages or in the Funds' financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A(c)
-------------------------------------
PERIOD
ENDED
DECEMBER 31, 1995*
-------------------------------------
CAPITAL DIVERSIFIED
APPRECIATION BALANCED INCOME
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.00 $10.00 $10.00
- -----------------------------------------------------------------------------------------
Income (loss from investment operations -- -- --
Net investment income (loss) .16 .24 .37
Net realized and unrealized gain (loss on
investments and foreign currency transactions 1.63 1.29 .73
---- ---- ---
Total income (loss) from investment operations 1.79 1.53 1.10
- -----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.17) (.25) (.36)
Distributions from net realized gain on investments
and foreign currency transactions (.23) (.23) (.04)
----- ----- -----
Total dividends and distributions to shareholders (.40) (.48) (.40)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $11.39 $11.05 $10.70
------ ------ ------
------ ------ ------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(b) 18.02% 15.33% 11.22%
- -----------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- -----------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $34,368 $41,861 $24,619
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 2.32%(a) 3.47%(a) 5.35%(a)
Expenses 1.55%(a) 1.55%(a) 1.50%(a)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate 71.77%(a) 76.26%(a) 45.78%(a)
- -----------------------------------------------------------------------------------------
</TABLE>
* G.R. Phelps & Co. managed the Funds during this period.
(a) Annualized
(b) Total returns do not include the effect of sales charges.
(c) For the period from May 1, 1995 (Inception) to December 31, 1995
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS B(c)
-------------------------------------
PERIOD
ENDED
DECEMBER 31, 1995*
-------------------------------------
CAPITAL DIVERSIFIED
APPRECIATION BALANCED INCOME
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.14 $10.95 $10.45
- -----------------------------------------------------------------------------------------
Income (loss from investment operations -- -- --
Net investment income (loss) .03 .05 .12
Net realized and unrealized gain (loss on
investments and foreign currency transactions .56 .45 .32
---- ---- ---
Total income (loss) from investment operations .59 .50 .44
- -----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.03) (.06) (.11)
Distributions from net realized gain on investments
and foreign currency transactions (.23) (.23) (.04)
----- ----- -----
Total dividends and distributions to shareholders (.26) (.29) (.15)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $11.47 $11.16 $10.74
------ ------ ------
------ ------ ------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(b) 5.34% 4.49% 4.30%
- -----------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- -----------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $561 $441 $192
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.70%(a) 3.01%(a) 5.23%(a)
Expenses 2.30%(a) 2.30%(a) 2.25%(a)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate 71.77%(a) 76.26%(a) 45.78%(a)
- -----------------------------------------------------------------------------------------
</TABLE>
* G.R. Phelps & Co. managed the Funds during this period.
(a) Annualized
(b) Total returns do not include the effect of sales charges.
(c) For the period from October 1, 1995 (Inception) to December 31, 1995
9
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
OBJECTIVES. Each Fund has its own investment objective:
GROWTH FUND seeks long-term capital appreciation. Current income is not
a primary consideration.
BALANCED FUND seeks a blend of capital appreciation and income.
INCOME FUND seeks high current income, with opportunities for capital
appreciation.
INVESTMENT POLICIES AND STRATEGIES. Each Fund is an asset allocation fund
and seeks to achieve its investment objective by allocating its assets among
two broad classes of investments -- stocks and bonds. The STOCK CLASS
includes equity securities of all types. The BOND CLASS includes all
varieties of fixed-income instruments. Allocating assets among different
types of investments allows each Fund to take advantage of opportunities
wherever they may occur, but also subjects the Fund to the risks of a given
investment type. Stock values fluctuate in response to the activities of
individual companies and general market economic conditions. The value of
bonds fluctuates based on changes in interest rates and in the credit quality
of the issuer.
The Manager has the ability to allocate a Fund's assets within specified
ranges. A Fund's NORMAL ALLOCATION indicates the benchmark for its
combination of investments in each asset class over time. As market and
economic conditions change, however, the Manager may adjust the asset mix
between the stock and bond classes within a normal asset allocation range as
long as the relative risk and return characteristics of the three Funds
remain distinct and each Fund's investment objective is preserved. The
Manager will review normal allocations between the stock and bond classes
quarterly and will rebalance, if necessary, at that time. Additional
adjustments may be made if an asset allocation shift of 5% or more is
warranted.
The Manager will diversify each Fund's stock class by allocating the
Fund's stock portfolio among four STOCK COMPONENTS: international stocks,
value/growth stocks, growth and income stocks and small-capitalized growth
stocks (small cap). Each stock component is also permitted to invest a
portion of its assets in bonds when the Manager or relevant Sub-Adviser
determines that increased flexibility in portfolio management is required to
enhance appreciation or income. The Manager will diversify a Fund's bond
class by allocating a Fund's bond portfolio among three BOND COMPONENTS:
government and corporate bonds, high yield/high risk bonds (also called "junk
bonds") and short-term bonds. There is no requirement that the Manager
allocate a Fund's assets among all stock or bond components at all times.
These stock and bond components have been selected because the Manager
believes that this additional level of asset diversification will provide
each Fund with the potential for higher returns with lower overall
volatility. Each Fund's normal allocation is shown in the chart below.
10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
------------------- ------------------- -------------------
Normal Normal Normal
Asset Class Allocation Range Allocation Range Allocation Range
- ----------- ---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
STOCKS 80% 70-90% 60% 50-70% 25% 15-35%
COMPONENT
International 20% 15-25% 15% 5-20% 0% 0%
Value/Growth 20% 15-30% 15% 10-25% 0% 0%
Growth/Income 20% 15-30% 15% 10-25% 25% 15-35%
Small Cap 20% 15-25% 15% 5-20% 0% 0%
BONDS 20% 10-30% 40% 30-50% 75% 65-85%
COMPONENT
Government/Corporate 10% 5-15% 15% 10-25% 35% 30-34%
High Yield/High Risk
Bonds 10% 5-15% 15% 5-20% 15% 5-20%
Short Term Bonds 0% 0% 10% 5-20% 25% 15-30%
</TABLE>
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 Fund, the Manager or
the relevant Sub-Adviser will then select the individual securities to be
included in each component. Each Sub-Adviser will manage the portion of a
Fund's assets in the particular component assigned to it by the Manager. As
of the date of this Prospectus, the Manager has assigned the management of
the components as follows:
Sub-Adviser Component of Investments
----------- --------------------------------------
Babson-Stewart International Stocks
Pilgrim Small Cap Stocks
BEA High Yield/High Risk Bonds
The Manager will manage the remaining components using its own investment
management personnel. See "How the Fund is Managed -- The Manager, the
Sub-Advisers and Their Affiliates and -- Portfolio Managers" for additional
information.
/ / THE STOCK COMPONENT. Each Fund will invest those assets which are
allocated to the stock class among four components each of which invests
principally in equity securities but which differ with respect to
capitalization, country and investment style as described below:
/ / INTERNATIONAL COMPONENT. This component seeks long-term growth of
capital primarily through a diversified portfolio of marketable international
equity securities. The international component intends to allocate
investments among several countries (usually between 8-12), primarily those
included in the Morgan Stanley Capital International (MSCI) Europe, Australia
and Far East (EAFE) Index and Canada. In addition, the component may invest
up to 25% of its assets in stocks and bonds of companies based in emerging
countries. Stocks are purchased on the basis of fundamental and valuation
criteria. Global themes, identifying attractive economic sectors and
industries; country analysis, assessing opportunities through quantitative
and qualitative analysis; and unique situations, are used to identify
companies with exceptional growth opportunities. Issues are sold because of
changing fundamentals,
11
<PAGE>
overvaluation, performance issues, or better relative opportunities. The
component may also, consistent with the provisions of the Investment Company
Act, invest in the securities of closed-end investment companies that invest
in foreign securities. A portion of the international component's
investments may be held in corporate bonds and government securities of
foreign issuers and cash and short-term instruments.
/ / VALUE/GROWTH COMPONENT. This component seeks to achieve long-term
growth of capital by investing primarily in common stocks with low
price-earnings ratios and better than anticipated earnings. Realization of
current income is not a primary consideration. Stocks with low
price-earnings ratios and favorable earnings surprises are identified by the
Manager who uses fundamental securities analysis to select individual stocks
for purchase in this component. When the price earnings ratio of a stock
held by the value/growth component moves significantly above the multiple of
the overall stock market, or the company reports a meaningful earnings
disappointment, the stock becomes a candidate for sale. Up to 15% of the
component's assets may be invested in international stocks, whose issuers
generally have a substantial portion of their business in the United States,
and in ADRs. A portion of the component's assets may be held in cash and in
short-term investments.
/ / GROWTH/INCOME COMPONENT. This component seeks to enhance each
Fund's total return through capital appreciation and dividend income by
investing primarily in common stocks with low price-earnings ratios,
better-than-anticipated earnings and better than market average dividend
yields. Stocks with low price-earnings ratios (below the price-earnings ratio
of the S&P 500 Index), favorable earnings surprises and above-average yields
are identified by the Manager who uses fundamental securities analysis to
select individual stocks for purchase in this component. When the
price-earnings ratio of a stock held by the component moves significantly
above the multiple of the overall stock market, or the company reports a
meaningful earnings disappointment, or when the yield drops significantly
below the market yield, stocks in this component will normally be sold. Up
to 15% of the component's assets may be invested in international stocks,
whose issuers generally have a substantial portion of their business in the
United States, and in ADRs. A portion of the component's investments may be
held in investment grade or below investment grade convertible securities,
corporate bonds and U.S. Government securities, cash and short-term
instruments.
/ / SMALL CAP COMPONENT. This component seeks long-term growth of
capital by investing primarily in stocks of companies with relatively small
market capitalizations, typically between $250 million to $1.5 billion.
Current income is a secondary consideration. When selecting individual
securities for the component's portfolio, the Sub-Adviser seeks companies
which have an outlook for strong growth in earnings and the potential for
significant capital appreciation, particularly in industry segments that are
experiencing rapid growth. Securities will be sold when the Sub-Adviser
believes that anticipated appreciation is no longer probable and that
alternative investments offer superior appreciation prospects, or the risk of
a decline in market price is too great. Historical results tend to confirm
the benefits of investing in companies with small capitalizations.
Capitalization is the aggregate value of a company's stock, or its price per
share times the number of shares outstanding. A portion of the component's
investments may also be held in cash and short-term instruments.
/ / THE BOND COMPONENTS. Each Fund will invest those assets which are
allocated to the bond class among three components, each of which invests in
an array of fixed-income securities as described below:
/ / GOVERNMENT/CORPORATE COMPONENT. This component seeks current income
and the potential for capital appreciation by investment primarily in
fixed-income debt securities, including investment grade corporate debt
obligations of foreign and U.S. issuers and securities issued by the U.S.
Government and its agencies and instrumentalities and by foreign governments.
12
<PAGE>
Although the component may invest in securities with maturities across the
entire slope of the yield curve, including long bonds (10+ years),
intermediate notes (3 to 10 years) and short term notes (1 to 3 years), the
Manager expects to maintain characteristics of an intermediate average
maturity and duration. In assessing maturity, the Manager may take into
account prepayment features. The Manager's investment strategy includes the
purchase of bonds that are underpriced relative to other debt securities
having similar risk profiles. The Manager evaluates a broad array of
factors, including maturity, creditworthiness, cash flow certainty and
interest rate volatility, and examines yield relationships in relation to
trends in the economy, the financial and commodity markets and interest
rates. The component may also invest a portion of its assets in cash and
short-term instruments.
/ / HIGH YIELD/HIGH RISK BOND COMPONENT. This component seeks to earn
as high a level of current income as is consistent with the risks associated
with high yield investments. The component's assets are invested primarily
in bonds that are rated BB or lower by S&P or Ba or lower by Moody's Investor
Service, Inc. ("Moody's") or, if not rated, that are deemed by the
Sub-Adviser to be of comparable quality. This component may invest in bonds
that are in default. Bonds in default are not making interest or principal
payments on the date due. The Sub-Adviser employs an active sector
rotational style utilizing all sectors of the high yield market, with an
emphasis on diversification to control risk. The Sub-Adviser typically
favors higher quality companies in the non-investment grade market, senior
debt over junior debt, and secured over unsecured credits. The Sub-Adviser
will screen individual securities for such characteristics as minimum yield
and issue size, issue liquidity and financial and operational strength.
In-depth credit research will then be conducted to arrive at a core group of
securities within the high yield universe from which the component will be
constructed. Continuous credit monitoring and adherence to sell disciplines
associated with both price appreciation and depreciation will be utilized to
achieve the overall yield and price objectives of the component. The
component may also invest a portion of its assets in cash and short-term
instruments.
/ / SHORT-TERM BOND COMPONENT. This component seeks to obtain a high
level of current income consistent with prudent investment risk and
preservation of capital by investing primarily in debt obligations of foreign
and U.S. issuers and securities issued by the U.S. Government and its
agencies and instrumentalities and by foreign governments. This component
will invest primarily in fixed-income securities generally maturing within
five years of date of purchase, or with prepayment or similar features which,
in the view of the Manager, give the instrument an average life of five
years. It is anticipated that the average dollar weighted maturity of the
component will generally range between two and three years. The Manager's
investment management process incorporates analysis of an issuer's debt
service capability, financial flexibility and liquidity, as well as the
fundamental trends and the outlook for an issuer and its industry. Credit
risk management is also an important factor, particularly in the Manager's
internal fixed-income analysis. The Manager conducts intensive credit
research, and carefully selects individual issues and broadly diversifies
portfolio holdings by industry sector and issuer. The Manager believes that
determination of an issuer's attractiveness relative to alternative issues
and/or valuations within the marketplace are important considerations in its
investment decision-making. The component may also invest a portion of its
assets in cash and money market securities.
/ / CAN A FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? Each Fund
has an investment objective, described above, as well as investment policies
it follows to try to achieve its objective. Additionally, a Fund uses
certain investment techniques and strategies in carrying out those investment
policies. A Fund's investment policies and practices are not "fundamental"
unless this Prospectus or the Statement of Additional Information says that a
particular policy is "fundamental." A Fund's investment objective is not a
fundamental policy. Fund shareholders will be given 30 days' advance written
notice of a change to a Fund's investment objective.
13
<PAGE>
Fundamental policies are those that cannot be changed without the
approval of a "majority" of a Fund's outstanding voting shares. The term
"majority" is defined in the Investment Company Act to be a particular
percentage of outstanding voting shares (and this term is explained in the
Statement of Additional Information). A Fund's Board of Directors may change
non-fundamental policies without shareholder approval, although significant
changes will be described in amendments to this Prospectus.
/ / INVESTMENT RISKS. Because changes in securities market prices can
occur at any time, there is no assurance that the Funds will achieve their
investment objectives, and when you redeem your shares, they may be worth
more or less than what you paid for them.
/ / STOCK INVESTMENT RISKS. Each Fund may invest in common stocks,
preferred stocks, convertible securities, warrants and other equity
securities of domestic or foreign companies of any size. At times, the stock
markets can be volatile, and stock prices can change substantially. This
market risk will affect a Fund's net asset values per share, which will
fluctuate as the values of the Fund's portfolio securities change. Not all
stock prices change uniformly or at the same time, not all stock markets move
in the same direction at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an issuer,
loss of major customers, major litigation against an issuer, or changes in
government regulations affecting an industry). Not all of these factors can
be predicted. Each Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of stock of any one
company and by not investing too great a percentage of a Fund's assets in any
one company.
Because of the types of securities the Growth Fund and Balanced Fund
invest in and the investment techniques these Funds use, these Funds are
designed for investors who are investing for the longer-term and who are
willing to accept greater risks of loss of their investment in hope of
achieving capital appreciation. These Funds are not intended for investors
seeking assured income and preservation of capital. Investing for capital
appreciation entails the risk of loss of all or part of your investment.
/ / RISKS OF DEBT SECURITIES. In addition to credit risks, described
below, debt securities are subject to changes in their value due to changes
in prevailing interest rates. When prevailing interest rates fall, the
values of already-issued debt securities generally rise. When interest rates
rise, the values of already-issued debt securities generally decline. The
magnitude of these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. Changes in the value of
securities held by a Fund mean that the Fund's share prices can go up or down
when interest rates change, because of the effect of the change on the value
of the Fund's portfolio of debt securities. Credit risk relates to the
ability of the issuer of a debt security to make interest or principal
payments on the security as they become due. Generally, higher-yielding,
lower-rated bonds (which a Fund may hold) are subject to greater credit risk
than higher-rated bonds. See "Other Investment Techniques and Strategies --
Investing in Lower-Grade Securities."
/ / FOREIGN SECURITIES HAVE SPECIAL RISKS. There are special risks in
investing in foreign securities and in securities issued by companies and
governments located in emerging market countries. Because each Fund may
purchase securities denominated in foreign currencies or traded primarily in
foreign markets, a change in the value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of those foreign
securities. Foreign issuers are not required to use generally-accepted
accounting principles that apply to U.S. issuers. If foreign securities are
not registered for sale in the U.S. under U.S. securities laws, the issuer
does not have to comply with the disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by other
factors, including exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in
14
<PAGE>
settlement of transactions, changes in governmental, economic or monetary
policy in the U.S. or abroad, or other political and economic factors.
In addition, it is generally more difficult to obtain court judgements
outside the U.S. if a Fund were to sue a foreign issuer or broker. Additional
costs may be incurred because foreign brokerage commissions are generally
higher than U.S. rates, and there are additional custodial costs associated
with holding securities abroad. More information about the risks and
potential rewards of investing in foreign securities, particularly those of
emerging countries, is contained in "Other Investment Techniques and
Strategies -- Investing in Emerging Markets" and in the Statement of
Additional Information.
/ / PORTFOLIO TURNOVER. A change in the securities held by a Fund is
known as "portfolio turnover." The Funds ordinarily do not engage in
short-term trading to try to achieve their objectives. Growth Fund's and
Income Fund's portfolio turnover rate is not expected to exceed 75%. The
portfolio turnover rates of the fixed income portion and the equity portion
of the Balanced Fund are expected to be 70% and 85%, respectively. The
"Financial Highlights," above, show the Funds' portfolio turnover rates
during past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and other
transaction costs, and results in a Fund's realization of capital gains or
losses for tax purposes. It may also affect the ability of a Fund to qualify
as a "regulated investment company" under the Internal Revenue Code and avoid
being taxed on amounts distributed as dividends and capital gains to
shareholders. Each Fund qualified as such in its fiscal period ended December
31, 1995 and intends to do so in the future, although it reserves the right
not to qualify.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES. The Funds may also use the
investment techniques and strategies described below, which involve certain
risks. The Statement of Additional Information contains more detailed
information about these practices, including limitations on their use that
may help to reduce some of the risks.
/ / INVESTING IN LOWER-RATED SECURITIES. Each Fund can invest in
high-yield, below grade debt securities (including both rated and unrated
securities). These "lower-grade" securities are commonly known as "junk
bonds." They generally offer higher income potential than investment grade
securities. "Lower-grade" securities have a rating below "BBB" by Standard &
Poor's or "Baa" by Moody's or similar ratings by other domestic or foreign
rating organizations, or they are not rated by a nationally-recognized rating
organization but the Manager or Sub-Adviser judges them to be comparable to
lower-rated securities. A Fund may invest in securities rated as low as "D"
by Standard & Poor's or "C" by Moody's. Appendix A to this Prospectus
describes the rating categories of Moody's and Standard & Poor's.
All corporate debt securities (whether foreign or domestic) are subject
to some degree of credit risk. High yield, lower-grade securities, whether
rated or unrated, often have speculative characteristics and special risks
that make them riskier investments than investment grade securities. They
may be subject to greater market fluctuations and risk of loss of income and
principal than lower yielding, investment grade securities. There may be
less of a market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of interest due on
the bonds. The issuer's low creditworthiness may increase the potential for
its insolvency. For foreign lower-grade debt securities, these risks are in
addition to the risks of investing in foreign securities, described in
"Investment Risks," above. These risks mean that a Fund may not achieve the
expected income from lower-grade securities, and that a Fund's net asset
value per share may be affected by declines in value of these securities.
15
<PAGE>
/ / INVESTING IN EMERGING MARKET COUNTRIES. Babson-Stewart, as the
Sub-Adviser to the international component, may invest a portion of a Fund's
assets in companies located in emerging countries. The Sub-Adviser 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. Investments in emerging
market countries may involve risks in addition to those identified above for
investments in foreign securities. Securities issued by emerging market
countries and by companies located in those countries may be subject to
extended settlement periods, whereby a Fund might not receive principal
and/or income on a timely basis and its net asset values could be affected.
Emerging market countries may have smaller, less well-developed markets and
exchanges; there may be a lack of liquidity for emerging market securities;
interest rates and foreign currency exchange rates may be more volatile;
sovereign limitations on foreign investments may be more likely to be
imposed; there may be significant balance of payment deficits; and their
economies and markets may respond in a more volatile manner to economic
changes than those of developed countries.
/ / U.S. GOVERNMENT SECURITIES. Certain U.S. Government Securities,
including U.S. Treasury bills, notes and bonds, and mortgage participation
certificates guaranteed by the Government National Mortgage Association
("Ginnie Mae") are supported by the full faith and credit of the U.S.
Government, which in general terms means that the U.S. Treasury stands behind
the obligation to pay principal and interest. Ginnie Mae certificates are
one type of mortgage-related U.S. Government Security a Fund may invest in.
Other mortgage-related U.S. Government Securities the Funds invest in that
are issued or guaranteed by federal agencies or government-sponsored entities
are not supported by the full faith and credit of the U.S. Government. Those
securities include obligations supported by the right of the issuer to borrow
from the U.S. Treasury, such as obligations of Federal Home Loan Mortgage
Corporation ("Freddie Mac"), obligations supported only by the credit of the
instrumentality, such as Federal National Mortgage Association ("Fannie Mae")
or the Student Loan Marketing Association and obligations supported by the
discretionary authority of the U.S. Government to repurchase certain
obligations of U.S. Government agencies or instrumentalities such as the
Federal Land Banks and the Federal Home Loan Banks. Other U.S. Government
Securities a Fund may invest in are collateralized mortgage obligations
("CMOs").
The value of U.S. Government Securities will fluctuate until they mature
depending on prevailing interest rates. Because the yields on U.S.
Government Securities are generally lower than on corporate debt securities,
when a Fund holds U.S. Government Securities it may attempt to increase the
income it can earn from them by writing covered call options against them,
when market conditions are appropriate. Writing covered calls is explained
below, under "Hedging."
/ / SHORT-TERM DEBT SECURITIES. The Fund will invest in high quality,
short-term money market instruments such as U.S. Treasury and agency
obligations; commercial paper (short-term, unsecured, negotiable promissory
notes of a domestic or foreign company); short-term debt obligations of
corporate issuers; and certificates of deposit and bankers' acceptances (time
drafts drawn on commercial banks usually in connection with international
transactions) of banks and savings loan associations.
/ / MORTGAGE-BACKED SECURITIES, CMOS AND REMICS. Certain
mortgage-backed securities, whether issued by the U.S. Government or by
private issuers, "pass-through" to investors the interest and principal
payments generated by a pool of mortgages assembled for sale by government
agencies. Pass-through mortgage-backed securities entail the risk that
principal may be repaid at any time because of prepayments on the underlying
mortgages. That may result in greater price and yield volatility than
traditional fixed-income securities that have a fixed maturity and interest
rate.
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<PAGE>
Each Fund may also invest in CMOs, which generally are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities,
and in real estate mortgage investment conduits ("REMICs"). Payment of the
interest and principal generated by the pool of mortgages on CMOs and REMICs
are passed through to the holders as the payments are received. CMOs and
REMICs are issued with a variety of classes or series which have different
maturities. Certain CMOs and REMICs may be more volatile and less liquid
than other types of mortgage-related securities, because of the possibility
of the prepayment of principal due to prepayments on the underlying mortgage
loans. The Funds do not intend to acquire "residual" interests in REMICs.
Each Fund may also invest in CMOs and REMICs that are "stripped." That
means that the security is divided into two parts, one of which receives some
or all of the principal payments (and is known as a "P/O") and the other
which receives some or all of the interest (and is known as an "I/O"). P/Os
and I/Os are generally referred to as "derivative investments," discussed
further below.
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the underlying
mortgages. Principal prepayments increase that sensitivity. Stripped
securities that pay "interest only" are therefore subject to greater price
volatility when interest rates change, and they have the additional risk that
if the underlying mortgages are prepaid, a Fund will lose the anticipated
cash flow from the interest on the prepaid mortgages. That risk is increased
when general interest rates fall, and in times of rapidly falling interest
rates, a Fund might receive back less than its investment.
The value of "principal only" securities generally increases as interest
rates decline and prepayment rates rise. The price of these securities is
typically more volatile than that of coupon-bearing bonds of the same
maturity.
Private-issuer stripped securities are generally purchased and sold by
institutional investors through investment banking firms. At present,
established trading markets have not yet developed for these securities.
Therefore, most private-issuer stripped securities may be deemed "illiquid."
If a Fund holds illiquid stripped securities, the amount it can hold will be
subject to the Fund's investment policy limiting investments in illiquid
securities to 15% of the Fund's net assets.
/ / ASSET-BACKED SECURITIES. A Fund may invest in "asset-backed"
securities. These represent interests in pools of consumer loans and other
trade receivables, similar to mortgage-backed securities. They are issued by
trusts and "special purpose corporations." They are backed by a pool of
assets, such as credit card or auto loan receivables, which are the
obligations of a number of different parties. The income from the underlying
pool is passed through to holders, such as one of the Funds. These
securities may be supported by a credit enhancement, such as a letter of
credit, a guarantee or a preference right. However, the extent of the credit
enhancement may be different for different securities and generally applies
to only a fraction of the security's value. These securities present special
risks. For example, in the case of credit card receivables, the issuer of
the security may have no security interest in the related collateral.
/ / INVERSE FLOATING RATE INSTRUMENTS. The Funds 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.
-17-
<PAGE>
/ / ADRS, EDRS AND GDRS. Each Fund may invest in ADRs, EDRs and GDRs.
ADRs are receipts issued by a U.S. bank or trust company which evidence
ownership of underlying securities of foreign corporations. ADRs are traded
on domestic exchanges or in the U.S. over-the-counter market and, generally,
are in registered form. To the extent a Fund 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 Fund would not become aware of and be able to
respond in a timely manner to corporate actions such as stock splits or
rights offerings involving the foreign issuer. In addition, the lack of
information may result in inefficiencies in the valuation of such
instruments. A Fund may also invest in EDRs and GDRs, which are receipts
evidencing an arrangement with a non-U.S. bank similar to that for ADRs and
are designed for use in non-U.S. securities markets. EDRs and GDRs are not
necessarily quoted in the same currency as the underlying security.
/ / EURODOLLARS AND YANKEE DOLLARS. The Funds 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 investment 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.
/ / WARRANTS AND RIGHTS. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time. Rights are
similar to warrants but normally have a short duration and are distributed
directly by the issuer to its shareholders. A Fund may invest up to 5% of
its total assets in warrants or rights. That 5% limitation does not apply to
warrants a Fund has acquired as part of units with other securities or that
are attached to other securities. No more than 2% of a Fund's total assets
may be invested in warrants that are not listed on either The New York Stock
Exchange or The American Stock Exchange. For further details, see "Warrants
and Rights" in the Statement of Additional Information.
/ / SMALL, UNSEASONED COMPANIES. Each Fund may invest in securities of
small, unseasoned companies. These are companies that have been in operation
less than three years, including the operations of any predecessors.
Securities of these companies may have limited liquidity (which means that a
Fund may have difficulty selling them at an acceptable price when it wants
to) and the price of these securities may be volatile. See "Investing in
Small, Unseasoned Companies" in the Statement of Additional Information for a
further discussion of the risks involved in such investments.
/ / LOANS OF PORTFOLIO SECURITIES. To attempt to increase its income or
raise cash for liquidity purposes, each Fund may lend its portfolio
securities, other than repurchase transactions, to brokers, dealers and other
financial institutions. A Fund must receive collateral for a loan. As a
matter of fundamental policy, these loans are limited to not more than 33
1/3% of the Fund's total assets (taken at market value) and are subject to
other conditions described in the Statement of Additional Information. See
"Loans of Portfolio Securities" in the Statement of Additional Information on
securities loans.
/ / "WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS. Each Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss to a Fund if
the value of the security declines prior to the settlement date.
/ / REPURCHASE AGREEMENTS. Each Fund may enter into repurchase
agreements. In a repurchase transaction, a Fund buys a security and
simultaneously sells it to the vendor for
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delivery at a future date. Repurchase agreements must be fully
collateralized. However, if the vendor fails to pay the resale price on the
delivery date, a Fund may experience costs in disposing of the collateral and
may experience losses if there is any delay in doing so.
/ / ILLIQUID AND RESTRICTED SECURITIES. Under the policies established
by the Funds' Board of Directors, the Manager determines the liquidity of
certain of the Funds' investments. Investments may be illiquid because of
the absence of an active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is
one that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933. A Fund
will not invest more than 15% of its total assets in illiquid and restricted
securities (including repurchase agreements having a maturity beyond 7 days,
portfolio securities which do not have readily available market quotations
and time deposits maturing in more than 2 days).
/ / HEDGING. Each Fund may write covered call options or securities,
stock or bond indices and foreign currency and may purchase and sell certain
kinds of futures contracts, forward contracts, and options on futures,
broadly-based stock or bond indices and foreign currency, or enter into
interest rate swap agreements. These are all referred to as "hedging
instruments." A Fund may use hedging instruments for non-hedging purposes as
described below.
A Fund may write covered call options and buy and sell futures and
forward contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio securities
may decline, or to establish a position in the securities market as a
temporary substitute for purchasing individual securities. It may do so to
try to manage its exposure to changing interest rates. Some of these
strategies, such as selling futures and writing covered calls, hedge a Fund's
portfolio against price fluctuations.
Other hedging strategies, such as buying futures, tend to increase a
Fund's exposure to the securities market. Forward contracts are used to try
to manage foreign currency risks on a Fund's foreign investments. Foreign
currency options are used to try to protect against declines in the dollar
value of foreign securities a Fund owns, or to protect against an increase in
the dollar cost of buying foreign securities. Writing covered call options
may also provide income to a Fund for liquidity purposes, defensive reasons,
or to raise cash to distribute to shareholders.
/ / FUTURES. A Fund may buy and sell futures contracts for hedging and
non-hedging purposes that relate to (1) foreign currencies (these are
referred to as "Forward Contracts" and are discussed below), (2) financial
indices, such as U.S. or foreign government securities indices, corporate
debt securities indices or equity securities indices (these are referred to
as Financial Futures), and (3) interest rates (these are referred to as
Interest Rate Futures). These types of Futures are described in "Hedging" in
the Statement of Additional Information.
/ / COVERED CALL OPTIONS AND OPTIONS ON FUTURES. A Fund may write (that
is, sell) call options on securities, indices and foreign currencies for
hedging purposes and write call options on Futures for hedging and
non-hedging purposes but only if they are "covered." This means a Fund must
own the security subject to the call while the call is outstanding or
segregate appropriate liquid assets. Calls on Futures must be covered by
securities or other liquid assets a Fund owns and segregates to enable it to
satisfy its obligations if the call is exercised. When a Fund writes a call,
it receives cash (called a premium). The call gives the buyer the ability to
buy the investment on which the call was written from a Fund at the call
price during the period in which the call may be exercised. If the value of
the investment does not rise above the call price, it is likely that the call
will lapse without being exercised, while the Fund keeps the cash premium
(and the investment).
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<PAGE>
A Fund may purchase put options on Futures. Buying a put on an
investment gives a Fund the right to sell the investment at a set price to a
seller of a put on that investment. A Fund may sell a put on Futures, but
only if the puts are covered by segregated liquid assets.
A Fund may sell covered call options that are traded on U.S. or foreign
securities or commodity exchanges or are traded in the over-the-counter
markets. In the case of foreign currency options, they may be quoted by
major recognized dealers in those options. Options traded in the
over-the-counter market may be "illiquid," and therefore may be subject to a
Fund's restrictions on illiquid investments.
/ / FORWARD CONTRACTS. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery
at a fixed price. A Fund uses them to try to "lock in" the U.S. dollar price
of a security denominated in a foreign currency that the Fund has purchased
or sold, or to protect against possible losses from changes in the relative
value of the U.S. dollar and a foreign currency. A Fund may also use "cross
hedging," where the Fund hedges against changes in currencies other than the
currency in which a security it holds is denominated. No Fund will speculate
in foreign exchange.
/ / INTEREST RATE SWAPS. A Fund may enter into interest rate swaps both
for hedging and to seek to increase total return. In an interest rate swap,
a Fund and another party exchange their right to receive, or their obligation
to pay, interest on a security. For example, they may swap a right to
receive floating rate interest payments for fixed rate payments. A Fund
enters into swaps only on a net basis, which means the two payment streams
are netted out, with the Fund receiving or paying, as the case may be, only
the net amount of the two payments. A Fund will segregate liquid assets
(such as cash or U.S. Government securities) to cover any amounts it could
owe under swaps that exceed the amounts it is entitled to receive, and it
will adjust that amount daily, as needed.
/ / HEDGING INSTRUMENTS CAN BE VOLATILE INVESTMENTS AND MAY INVOLVE
SPECIAL RISKS. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is required
for normal portfolio management. If the Manager or a Sub-Adviser uses a
hedging instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce a Fund's return. A Fund could also experience
losses if the prices of its futures and options positions were not correlated
with its other investments or if it could not close out a position because of
an illiquid market for the future or option.
Options trading involves the payment of premiums, and options, futures
and forward contracts are subject to special tax rules that may affect the
amount, timing and character of a Fund's income and distributions. There are
also special risks in particular hedging strategies. For example, if a
covered call written by a Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the investment at the
call price and will not be able to realize any profit if the investment has
increased in value above the call price. In writing puts, there is a risk
that a Fund may be required to buy the underlying security at a
disadvantageous price. The use of Forward Contracts may reduce the gain that
would otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. Interest rate swaps are subject to the risk
that the other party will fail to meet its obligations (or that the
underlying issuer will fail to pay on time), as well as interest rate risks.
A Fund could be obligated to pay more under its swap agreements than it
receives under them, as a result of interest rate changes. These risks are
described in greater detail in the Statement of Additional Information.
/ / DERIVATIVE INVESTMENTS. The Fund can invest in a number of
different kinds of "derivative" investments. In general, a "derivative
investment" is a specially designed investment whose performance is linked to
the performance of another investment or security, such as an option, future,
index, currency or commodity. A Fund may not purchase or sell physical
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<PAGE>
commodities; however, a Fund may purchase and sell foreign currency in
hedging transactions. This shall not prevent a Fund from buying or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities.
Derivative investments used by a Fund are used in some cases for hedging
purposes and in other cases to seek income. In the broadest sense,
exchange-traded options and futures contracts (discussed in "Hedging," above)
may be considered "derivative investments."
"Index-linked" or commodity-linked" notes are debt securities of
companies that call for interest payments and/or payment on the maturity of
the note in different terms than the typical note where the borrower agrees
to pay a fixed sum on the maturity of the note. Principal and/or interest
payments on an index-linked note depend on the performance of one or more
market indices, such as the S&P 500 Index or a weighted index of commodity
futures, such as crude oil, gasoline and natural gas. A Fund may invest in
"debt exchangeable for common stock" of an issuer or "equity-linked" debt
securities of an issuer. At maturity, the principal amount of the debt
security is exchanged for common stock of the issuer or is payable in an
amount based on the issuer's common stock price at the time of maturity. In
either case there is a risk that the amount payable at maturity will be less
than the expected principal amount of the debt.
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the maturity
of the instrument. Also, the underlying investment or security might not
perform the way the Manager or relevant Sub-Adviser expected it to perform.
Markets, underlying securities and indices may move in a direction not
anticipated by the Manager or relevant Sub-Adviser. Performance of
derivative investments may also be influenced by interest rate and stock
market changes in the U.S. and abroad. All of this can mean that a Fund will
realize less principal or income from the investment than expected. Certain
derivative investments held by a Fund may be illiquid. Please refer to
"Illiquid and Restricted Securities."
OTHER INVESTMENT RESTRICTIONS. The Funds have other investment restrictions
which are "fundamental" policies. Among these fundamental policies, a Fund
cannot do any of the following:
/ / 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 Fund's total assets (including the amount borrowed) taken at market
value, (ii) in connection with the redemption of Fund 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.
/ / Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund'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.
/ / 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
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<PAGE>
limitation does not apply to investments in obligations of the U.S.
Government or any of its agencies, instrumentalities or authorities.
/ / 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 Fund'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 Fund.
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time a Fund purchases a security, and a Fund
need not dispose of a security merely because the Fund's assets have changed
or the security has increased in value relative to the size of the Fund.
There are other fundamental policies discussed in the Statement of Additional
Information.
HOW THE FUNDS ARE MANAGED
ORGANIZATION AND HISTORY. The Company was organized in 1981 as a Maryland
corporation. The Company is an open-end management investment company.
Organized as a series fund, the Company presently has eight series, each of
which is diversified.
The Company is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors
meet periodically throughout the year to oversee each Fund's activities,
review its performance, and review the actions of the Manager. "Directors and
Officers of the Fund" in the Statement of Additional Information names the
Directors and officers of the Funds and provides more information about them.
Although the Funds are not required by law to hold annual meetings, they may
hold shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Director or to take
other action described in the Company's Articles of Incorporation.
The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Company into two or more classes. The Board has
done so, and each Fund currently has three classes of shares, Class A, Class
B and Class C. All classes invest in the same investment portfolio. Each
class has its own dividends and distributions, and pays certain expenses
which may be different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder meetings,
with fractional shares voting proportionally on matters submitted to the vote
of shareholders. Shares of each class may have separate voting rights on
matters in which interests of one class are different from interests of
another class, and shares of a particular class vote as a class on matters
that affect that class alone. Shares are freely transferrable. Please refer
to "How the Funds are Managed" in the Statement of Additional Information for
further information on voting of shares.
THE MANAGER, THE SUB-ADVISERS AND THEIR AFFILIATES. The Funds are managed by
the Manager, OppenheimerFunds, Inc., which supervises each Fund's investment
program and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Directors, under
separate Investment Advisory Agreements for each Fund which state the
Manager's responsibilities and its fees. The Agreements set forth the fees
paid by a Fund to the Manager, and describes the expenses that a Fund is
responsible to pay to conduct its business.
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<PAGE>
The Manager has operated as an investment adviser since 1959. The Manager
and its affiliates currently manage investment companies, including other
Oppenheimer funds, with assets of more than $40 billion as of December 31,
1995, and with more than a 2.8 million shareholder accounts. The Manager is
owned by Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by Massachusetts Mutual
Life Insurance Company.
The Manager has engaged three Sub-Advisers to provide day-to-day
portfolio management for certain components of the Funds. Babson-Stewart,
One Memorial Drive, Cambridge, MA 02142, the Sub-Adviser to the
international component, was originally established in 1987. As of September
30, 1995, Babson-Stewart had approximately $917 million in assets under
management. BEA Associates, Citicorp Center, 153 East 53rd Street, 57th
Floor, New York, NY 10022, the Sub-Adviser to the high yield/high risk bond
component, has been providing fixed-income and equity management services to
institutional clients since 1984. As of June 30, 1995, BEA Associates,
together with its global affiliate, had $28.9 billion in assets under
management. Pilgrim Baxter, 1255 Drummers Lane, Wayne, PA 19087, the
Sub-Adviser to the small cap component, was established in 1982 to provide
specialized equity management for institutional investors including other
investment companies. As of May 31, 1995, Pilgrim Baxter had over $4 billion
in assets under management. Each Sub-Adviser is responsible for choosing the
investments of its respective component for each Fund and its duties and
responsibilities are set forth in its respective contract with the Manager.
The Manager, not the Funds, pay the Sub-Advisers.
/ / PORTFOLIO MANAGERS. The Manager supervises each Fund's investment
program through the Asset Allocation Committee, which consists of four
members who meet quarterly to evaluate, among other things, the asset
allocation between each Fund's classes and components. The Portfolio
Managers of each component are listed below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
COMPONENT PORTFOLIO MANAGER BUSINESS EXPERIENCE (LAST 5 YEARS)
- ------------------ ----------------------------- --------------------------------------------------------------
<S> <C> <C>
International
(Babson-Stewart)
Value/Growth Peter M. Antos, C.F.A. Vice President and Senior Portfolio Manager, Equities
(the Manager) -- G.R. Phelps & Co. ("G.R. Phelps") (1989-Present)
Michael C. Strathearn, C.F.A. Portfolio Manager, Equities -- Connecticut Mutual Life
Insurance Company ("CML") (1988-Present)
Kenneth B. White, C.F.A. Portfolio Manager, Equities -- CML (1982-Present);
Senior Investment Officer; Equities -- CML (1987-1992)
Growth/Income Michael C. Strathearn, C.F.A. Portfolio Manager, Equities -- CML (1988-Present)
(the Manager)
Peter M. Antos, C.F.A. Vice President and Senior Portfolio Manager, Equities -- G.R.
Phelps (1989-Present)
Stephen F. Libera, C.F.A. Vice President and Senior Portfolio Manager, Fixed Income --
G.R. Phelps (1985-Present)
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Small Cap Gary L. Pilgrim Director, Member of Executive Committee, President and
(Pilgrim Baxter) Chief Investment Officer, Pilgrim Baxter (1985-Present)
John F. Force Portfolio Manager/Analyst, Pilgrim Baxter (since 1993); and
Vice President/Portfolio Manager, Fiduciary Management
Associates (1989-1993)
James M. Smith Portfolio Manager/Analyst, Pilgrim Baxter (since 1993); Senior
Vice President/Portfolio Manager, Selected Financial Services
(1992-1993); and Vice President, Sears Investment Management
Company (prior to 1992)
Michael D. Jones Portfolio Manager/Analyst, Pilgrim Baxter (since 1995); Vice
President/Portfolio Manager, Bank of New York (1990-1995)
Government David Rosenberg Portfolio Manager, Oppenheimer Funds, Inc. (1994-Present);
Securities/ Senior Portfolio Manager, Delaware Investment Advisers
Corporate Bonds (1986-1994)
(the Manager)
High Yield Bonds Richard J. Lindquist Managing Director and High Yield Portfolio Manager, BEA
(BEA Associates) Associates (1995); CS First Boston (1989-1995)
Short-Term Bond David Rosenberg Portfolio Manager, Oppenheimer Funds, Inc. (1994-Present);
(the Manager) Senior Portfolio Manager, Delaware Investment Advisers
(1986-1994)
</TABLE>
/ / FEES AND EXPENSES. Under separate Investment Advisory Agreements
with each Fund, Growth Fund, Balanced Fund and Income Fund pay the Manager an
annual fee equal to 0.85%, 0.85% and 0.75%, respectively, of the respective
Fund's average daily net asset value up to $250 million and 0.75%, 0.75% and
0.65%, 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.
Under its Investment Subadvisory Agreement with Babson-Stewart, the
Manager pays Babson-Stewart a monthly fee which declines as the average daily
net assets of that portion of Growth Fund and Balanced Fund allocated to
Babson-Stewart grow: 0.75% of the first $10 million of average daily net
assets allocated to Babson-Stewart, 0.625% of the next $15 million, 0.50% of
the next $25 million and 0.375% of such assets in excess of $50 million. The
portion of the net assets of all Funds allocated to Babson-Stewart will not
be aggregated in applying these breakpoints.
Under its Investment Subadvisory Agreement with BEA, the Manager pays BEA
a quarterly fee which declines as the combined average daily net assets of
each Fund allocated to BEA grow: 0.45% of the first $25 million of combined
average daily net assets allocated to BEA, 0.40% of the next $25 million,
0.35% of the next $50 million and 0.25% of the such assets in excess of $100
million. Under its Investment Subadvisory Agreement with Pilgrim, the Manager
pays Pilgrim a monthly fee equal to 0.60% of the combined average daily net
assets of the Funds allocated to Pilgrim. For purposes of calculating the
fee payable to BEA and Pilgrim, the net asset
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<PAGE>
values of that portion of the assets of each Fund subadvised by BEA and
Pilgrim are aggregated with that portion of the net asset value of the assets
of Panorama Series Fund I, Inc. managed by BEA and Pilgrim, respectively.
Each Fund pays expenses related to its daily operations, such as
custodian fees, Directors' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of a Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset value
of shares, and therefore are indirectly borne by shareholders through their
investment. More information about the Investment Advisory Agreements and
the other expenses paid by the Funds is contained in the Statement of
Additional Information.
There is also information about the Funds' brokerage policies and
practices in "Brokerage Policies of the Funds" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for
the Funds' portfolio transactions. When deciding which brokers to use, the
Manager is permitted by the Investment Advisory Agreements to consider
whether brokers have sold shares of the Funds or any other funds for which
the Manager serves as investment adviser.
/ / THE DISTRIBUTOR. A Fund's shares are sold through dealers and
brokers that have a sales agreement with OppenheimerFunds Distributor, Inc.,
a subsidiary of the Manager that acts as each Fund's Distributor. The
Distributor also distributes the shares of the other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
/ / THE TRANSFER AGENT. Each Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for each Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for the other Oppenheimer funds. Shareholders should direct
inquiries about their accounts, to the Transfer Agent at the address and
toll-free number shown below in this Prospectus or on the back cover.
PERFORMANCE OF THE FUNDS
EXPLANATION OF PERFORMANCE TERMINOLOGY. Each Fund uses the terms "total
return" to illustrate its performance. The performance of each class of
shares is shown separately, because the performance of each class of shares
will usually be different as a result of the different kinds of expenses each
class bears. These returns measure the performance of a hypothetical account
in a Fund over various periods, and do not show the performance of each
shareholder's account (which will vary if dividends are received in cash, or
shares are sold or purchased). A Fund's performance data may help you see
how well your investment has done over time and to compare it to market
indices, as we have done below.
It is important to understand that a Fund's total returns represent past
performance and should not be considered to be predictions of future returns
or performance. This performance data is described below, but more detailed
information about how total returns are calculated is contained in the
Statement of Additional Information, which also contains information about
other ways to measure and compare a Fund's performance. A Fund's investment
performance will vary over time, depending on market conditions, the
composition of the portfolio, expenses and which class of shares you purchase.
/ / TOTAL RETURNS. There are different types of "total returns" used to
measure a Fund's performance. Total return is the change in value of a
hypothetical investment in a Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return shows
the average rate of return for each
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<PAGE>
year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show a Fund's
actual year-by-year performance.
When total returns are quoted for Class A shares, they include the
payment of the current maximum initial sales charge. When total returns are
shown for Class B and Class C shares, they include the effect of the
contingent deferred sales charge that applies to the period for which total
return is shown. When total returns are shown for a one-year period (or
less) for Class C shares, they include the effect of the contingent deferred
sales charge. Total returns may also be quoted at "net asset value," without
including the effect of either the front-end or the appropriate contingent
deferred sales charge, as applicable, and those returns would be reduced if
sales charges were deducted.
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
CLASSES OF SHARES. Each Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will likely
have different share prices.
/ / CLASS A SHARES. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
OppenheimerFunds prototype 401(k) plans). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for OppenheimerFunds
prototype 401(k) plans) in shares of one or more Oppenheimer funds, you will
not pay an initial sales charge, but if you sell any of those shares within
18 months of buying them, you may pay a contingent deferred sales charge.
The amount of that sales charge will vary depending on the amount you
invested. Sales charge rates are described in "Buying Class A Shares," below.
/ / CLASS B SHARES. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years of
buying them, you will normally pay a contingent deferred sales charge that
varies depending on how long you owned your shares, as described in "Buying
Class B Shares," below.
/ / CLASS C SHARES. If you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of
buying them, you will normally pay a contingent deferred sales charge of 1%,
as discussed in "Buying Class C Shares," below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that a Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. A Fund's operating costs that apply to
a class of shares and the effect of the different types of sales charges on
your investment will vary your investment results over time. The most
important factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you
plan to purchase additional shares, you should re-evaluate those factors to
see if you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in a Fund. We used the sales
charge rates that apply to each class, and considered the effect of the
asset-based sales charge on Class B and Class C expenses (which, like all
expenses, will affect your investment return). For the sake of comparison,
we have assumed that there is a
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<PAGE>
10% rate of appreciation in your investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based on a
Fund's actual investment returns, and the operating expenses borne by each
class of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to
consider in purchasing a particular class of shares assumes that you will
purchase only one class of shares and not a combination of shares of
different classes.
/ / HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the appropriate
class of shares. Because of the effect of class-based expenses your choice
will also depend on how much you invest. For example, the reduced sales
charges available for larger purchases of Class A shares may, over time,
offset the effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares for your
account), compared to the effect over time or higher class-based expenses on
the shares of Class B or Class C for which no initial sales charge is paid.
/ / INVESTING FOR THE SHORT TERM. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than six years),
you should probably consider purchasing Class A or Class C shares rather than
Class B shares, because of the effect of the Class B contingent deferred
sales charge if you redeem in less than seven years, as well as the effect of
the Class B asset-based sales charge on the investment return for that class
in the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there is no
initial sales charge on Class C shares, and the contingent deferred sales
charge does not apply to amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases
toward six years Class C shares might not be as advantageous as Class A
shares. That is because the annual asset-based sales charge on Class C shares
will have a greater economic impact on your account over the longer term than
the reduced front-end sales charge available for larger purchases of Class A
shares. For example, Class A might be more advantageous than Class C (as
well as Class B) for investments of more than $100,000 expected to be held
for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more advantageous than
Class C (and B). If investing $500,000 or more, Class A may be more
advantageous as your investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you intend
to hold your shares. For that reason, the Distributor normally will not
accept purchase orders of $500,000 or more of Class B or $1 million or more
of Class C shares from a single investor.
/ / INVESTING FOR THE LONGER TERM. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to your
money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely be
more advantageous than Class B shares or Class C shares, as discussed above,
because of the effect of the expected lower expenses for Class A shares and
the reduced initial sales charge available for larger investments in Class A
shares under a Fund's Right of Accumulation.
Of course all of these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over time,
using the assumed annual performance return stated above, and you should
analyze your options carefully.
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<PAGE>
/ / ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Because
some features may not be available to Class B or C shareholders, or other
features (such as Automatic Withdrawal Plans) may not be advisable (because
of the effect of the contingent deferred sales charge in non-retirement
accounts) for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which class of
shares to buy. For example, share certificates are not available for Class B
or Class C shares and if you are considering using your shares as collateral
for a loan, this may be a factor to consider. Additionally, dividends payable
to Class B and Class C shareholders will be reduced by the additional
expenses borne by those classes that are not borne by Class A, such as the
Class B and Class C asset-based sales charges described below and in the
Statement of Additional Information.
/ / HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for
selling Fund shares, may receive different compensation for selling one class
than for selling another class. It is important that investors understand
that the purpose of the Class B and Class C contingent deferred sales charges
and asset-based sales charges are the same as the purpose of the front-end
sales charge on sales of Class A shares: to reimburse the Distributor for
commissions it pays to dealers and financial institutions for selling shares.
HOW MUCH MUST YOU INVEST? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as
little as $25. There are reduced minimum investments under special investment
plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25
can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement Accounts
(IRAs), you can make an initial investment of as little as $250 (if your IRA
is established under an Asset Builder Plan, the $25 minimum applies), and
subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from a Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
/ / HOW ARE SHARES PURCHASED? You can buy shares several ways --through
any dealer, broker or financial institution that has a sales agreement with
the Distributor, or directly through the Distributor, or automatically from
your bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. WHEN YOU BUY SHARES, BE SURE TO SPECIFY CLASS A, CLASS B
OR CLASS C SHARES. IF YOU DO NOT CHOOSE, YOUR INVESTMENT WILL BE MADE IN
CLASS A SHARES.
/ / BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order
with the Distributor on your behalf.
/ / BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds
New Account Application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor, to
be sure it is appropriate for you.
/ / BUYING SHARES THROUGH OPPENHEIMERFUNDS ACCOUNTLINK. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial
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<PAGE>
institution that is an Automated Clearing House (ACH) member to transmit
funds electronically to PURCHASE SHARES, to have the Transfer Agent SEND
REDEMPTION PROCEEDS, or to TRANSMIT DIVIDENDS AND DISTRIBUTIONS.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink," below for more
details.
/ / ASSET BUILDER PLANS. You may purchase shares of a Fund (and up to
four other Oppenheimer funds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
/ / AT WHAT PRICES ARE SHARES SOLD? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to receive
that day's offering price, the Distributor must receive your order by the
time of day The New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class of
shares is determined as of that time on each day The New York Stock Exchange
is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order by
the close of The New York Stock Exchange on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. THE
DISTRIBUTOR, IN ITS SOLE DISCRETION, MAY REJECT ANY PURCHASE ORDER FOR FUND
SHARES.
SPECIAL SALES CHARGE ARRANGEMENTS FOR CERTAIN PERSONS. Appendix B to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of Fund
shares (including purchases by exchange) by a person who was a shareholder of
one of the Former Quest for Value Funds and Former Connecticut Mutual Funds
(as defined in that Appendix).
BUYING CLASS A SHARES. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However, in
some cases, described below, purchases are not subject to an initial sales
charge, and the offering price may be net asset value. In some cases, reduced
sales charges may be available, as described below. Out of the amount you
invest, a Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A portion of
the sales charge may be retained by the Distributor and allocated to your
dealer as commission. Different sales charge rates and commissions applied to
sales of Class A shares prior to March 18, 1996. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
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<PAGE>
<TABLE>
<CAPTION>
FRONT-END SALES FRONT-END SALES COMMISSION AS
AMOUNT OF PURCHASE CHARGE AS PERCENTAGE CHARGE AS PERCENTAGE PERCENTAGE OF
OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED OFFERING PRICE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ------------------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ------------------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ------------------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- ------------------------------------------------------------------------------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
/ / CLASS A CONTINGENT DEFERRED SALES CHARGE. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
/ / purchases aggregating $1 million or more, or
/ / purchases by an OppenheimerFunds prototype 401(k) plan that: (1) buys
shares costing $500,000 or more or (2) has, at the time of purchase, 100 or
more eligible participants, or (3) certifies that it projects to have annual
plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those purchases in
an amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50% of
the next $2.5 million, plus 0.25% of purchases over $5 million. That
commission will be paid only on the amount of those purchases in excess of $1
million ($500,000 for purchases by OppenheimerFunds 401(k) prototype plans)
that were not previously subject to a front-end sales charge and dealer
commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called
the "Class A contingent deferred sales charge") will be deducted from the
redemption proceeds. That sales charge will be equal to 1.0% either (1) of
the aggregate net asset value of the redeemed shares (not including shares
purchased by reinvestment of dividends or capital gain distributions) or (2)
the original cost of the shares, whichever is less. The Class A contingent
deferred sales charge will not exceed the aggregate commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer
funds you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, a
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains,
and then will redeem other shares in the order that you purchased them. The
Class A contingent deferred sales charge is waived in certain cases described
in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under a Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are
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<PAGE>
redeemed within 18 months of the end of the calendar month of the purchase of
the exchanged shares, the sales charge will apply.
/ / SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients. Dealers whose
sales of Class A shares of Oppenheimer funds (other than money market funds)
under OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5 million
per year (calculated per quarter), will receive monthly one-half of the
Distributor's retained commissions on those sales, and if those sales exceed
$10 million per year, those dealers will receive the Distributor's entire
retained commission on those sales.
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES. You may be eligible to
buy Class A shares at reduced sales charge rates in one or more of the
following ways:
/ / RIGHT OF ACCUMULATION. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for a
trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and Class
B shares of a Fund and other Oppenheimer funds to reduce the sales charge
rate for current purchases of Class A shares. You can also include Class A
and Class B shares of Oppenheimer funds you previously purchased subject to
an initial or contingent deferred sales charge to reduce the sales charge
rate for current purchases of Class A shares, provided that you still hold
your investment in one of the Oppenheimer funds. The value of those shares
will be based on the greater of the amount you paid for the shares or their
current value (at offering price). The Oppenheimer funds are listed in
"Reduced Sales Charges" in the Statement of Additional Information, or a list
can be obtained from the Distributor. The reduced sales charge will apply
only to current purchases and must be requested when you buy your shares.
/ / LETTER OF INTENT. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of a Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies
to your purchases of Class A shares. The total amount of your intended
purchases of both Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period. More
information is contained in the Application and in "Reduced Sales Charges" in
the Statement of Additional Information.
/ / WAIVERS OF CLASS A SALES CHARGES. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of
this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES FOR CERTAIN
PURCHASERS. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
/ / the Manager or its affiliates;
/ / present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of a Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
/ / registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor
for that purpose;
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<PAGE>
/ / dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans for
their employees;
/ / employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is for
the purchaser's own account (or for the benefit of such employee's spouse or
minor children);
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use of
shares of a Fund in particular investment products made available to their
clients (those clients may be charged a transaction fee by their dealer,
broker or advisor for the purchase or sale of Fund shares)
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares of defined contribution
employee retirement plans for which the dealer, broker or investment adviser
provides administrative services.
/ / directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
/ / accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial owner
of such accounts;
/ / any unit investment trust that has entered into an appropriate
agreement with the Distributor;
/ / a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of the
Class B and C TRAC-2000 program on November 24, 1995; or
/ / qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds
at net asset value, with such shares to be held through DCXchange, a
sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by March 31, 1996.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES IN CERTAIN
TRANSACTIONS. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
/ / shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which a Fund is a party;
/ / shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or one of its
affiliates acts as sponsor;
/ / shares purchased by the reinvestment of dividends or other
distributions reinvested from a Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
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<PAGE>
/ / shares purchased and paid for with the proceeds of shares redeemed in
the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund, Inc. that
were purchased and paid for in this manner); this waiver must be requested
when the purchase order is placed for your Fund shares, and the Distributor
may require evidence of your qualification for this waiver; and
/ / shares purchased with the proceeds of maturing principal of units of
any Qualified Unit Investment Liquid Trust Series.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN
REDEMPTIONS. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales
charge are redeemed in the following cases:
/ / for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans or
other employee benefit plans, including OppenheimerFunds prototype 401(k)
plans (these are all referred to as "Retirement Plans");
/ / to return excess contributions made to Retirement Plans;
/ / to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
/ / involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
/ / if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales charge,
the dealer agrees in writing to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month
(and no further commission will be payable if the shares are redeemed within
18 months of purchase); or
/ / for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or disability
(as defined in the Internal Revenue Code) of the participant or beneficiary
(the death or disability must occur after the participant's account was
established); (2) hardship withdrawals, as defined in the plan; (3) under a
Qualified Domestic Relations Order, as defined in the Internal Revenue Code;
(4) to meet the minimum distribution requirements of the Internal Revenue
Code; (5) to establish "substantially equal periodic payments" as described
in Section 72(t) of the Internal Revenue Code, or (6) separation from service.
/ / SERVICE PLAN FOR CLASS A SHARES. Each Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of each Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their customers
that hold Class A shares and to reimburse itself (if a Fund's Board of
Directors authorizes such reimbursements, which no Fund Board has done as
yet) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about a Fund, assisting in establishing and maintaining accounts in
a Fund, making a Fund's investment plans
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<PAGE>
available and providing other services at the request of a Fund or the
Distributor. Payments are made by the Distributor quarterly at an annual rate
not to exceed 0.25% of the average annual net assets of Class A shares held
in accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within six years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset
value of the shares at the time of redemption or the original purchase price.
The contingent deferred sales charge is not imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions). The Class B contingent deferred sales charge is
paid to the Distributor to compensate it for providing distribution-related
services to a Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, a Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over six years, and (3) shares held the longest during the
six-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
<TABLE>
<CAPTION>
YEARS SINCE BEGINNING OF CONTINGENT DEFERRED SALES CHARGE
MONTH IN WHICH ON REDEMPTIONS IN THAT YEAR
PURCHASE ORDER WAS ACCEPTED (AS % OF AMOUNT SUBJECT TO CHARGE)
- ---------------------------------------------------------------------------
<S> <C>
0-1 5.0%
- ---------------------------------------------------------------------------
1-2 4.0%
- ---------------------------------------------------------------------------
2-3 3.0%
- ---------------------------------------------------------------------------
3-4 3.0%
- ---------------------------------------------------------------------------
4-5 2.0%
- ---------------------------------------------------------------------------
5-6 1.0%
- ---------------------------------------------------------------------------
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to March 18, 1996.
/ / AUTOMATIC CONVERSION OF CLASS B SHARES. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
and Service Plan, described below. The conversion is based on the relative
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net asset value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative Sales
Arrangements -Class A, Class B and Class C Shares" in the Statement of
Additional Information.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed
within 12 months of their purchase, a contingent deferred sales charge of
1.0% will be deducted from the redemption proceeds. That sales charge will
not apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original purchase
price. The contingent deferred sales charge is not imposed on the amount of
your account value represented by the increase in net asset value over the
initial purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent deferred
sales charge is paid to the Distributor to reimburse its expenses of
providing distribution-related services to a Fund in connection with the sale
of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, a Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12-month
period.
/ / DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate the Distributor for its costs in distributing Class B
and C shares and servicing accounts. Under the Plans, a Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge allows
investors to buy Class B or C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or C shares. Those services
are similar to those provided under the Class A Service Plan, described
above. The Distributor pays the 0.25% service fees to dealers in advance for
the first year after Class B or Class C shares have been sold by the dealer
and retains the service fee paid by a Fund in that year. After the shares
have been held for a year, the Distributor pays the service fees to dealers
on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% on the purchase
price of Class B shares to dealers from its own resources at the time of
sale. The total amount paid by the Distributor to the dealer at the time of
sales of Class B shares is therefore 4.00% of the purchase price. A Fund pays
the asset-based sales charge to the Distributor for its services rendered in
distributing Class B shares. Those payments, retained by the Distributor,
are at a fixed rate that is not related to the Distributor's expenses. The
services rendered by the Distributor include paying and financing the payment
of sales commissions, service fees and other costs of distributing and
selling Class B shares.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of
sale. The total amount paid by the Distributor to the dealer at the time of
sale of Class C shares is therefore 1.00% of the purchase
-35-
<PAGE>
price. The Distributor retains the asset-based sales charge during the first
year Class C shares are outstanding to recoup the sales commissions it has
paid, the advances of service fee payments it has made, and its financing
costs and other expenses. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares that have
been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from a Fund under the Distribution and
Service Plans for Class B and C shares. Therefore, those expenses may be
carried over and paid in future years. If a Fund terminates its Plan, the
Board of Directors may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the Plan was
terminated.
/ / WAIVERS OF CLASS B AND CLASS C SALES CHARGES. The Class B and Class
C contingent deferred sales charges will not be applied to shares purchased
in certain types of transactions nor will it apply to Class B and Class C
shares redeemed in certain circumstances as described below. The reasons for
this policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
WAIVERS FOR REDEMPTIONS IN CERTAIN CASES. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases, if the Transfer Agent is notified that these conditions
apply to the redemption:
/ / distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after
the participant reaches age 59-1/2, as long as the payments are no more than
10% of the account value annually (measured from the date the Transfer Agent
receives the request), or (b) following the death or disability (as defined
in the Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
/ / redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by the
Social Security Administration);
/ / returns of excess contributions to Retirement Plans;
/ / distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant is
age 59-1/2 but only after the participant has separated from service, if the
distributions are made in substantially equal periodic payments over the life
(or life expectancy) of the participant or the joint lives (or joint life and
last survivor expectancy) of the participant and the participant's designated
beneficiary (and the distributions must comply with other requirements for
such distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request);
/ / shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
/ / distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4)
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<PAGE>
to make "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code; or (5) for separation from service.
WAIVERS FOR SHARES SOLD OR ISSUED IN CERTAIN TRANSACTIONS. The
contingent deferred sales charge is also waived on Class B and Class C shares
sold or issued in the following cases:
/ / shares sold to the Manager or its affiliates;
/ / shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; and
/ / shares issued in plans of reorganization to which a Fund is a party.
SPECIAL INVESTOR SERVICES
ACCOUNTLINK. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types of
account transactions. These include purchases of shares by telephone (either
through a service representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to your bank
account. Please refer to the Application for details or call the Transfer
Agent for more information.
AccountLink privileges should be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed instructions
to the Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives written
instructions terminating or changing those privileges. After you establish
AccountLink for your account, any change of bank account information must be
made by signature-guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
/ / USING ACCOUNTLINK TO BUY SHARES. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts
up to $250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
/ / PHONELINK. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
/ / PURCHASING SHARES. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with a Fund, to pay for these purchases.
/ / EXCHANGING SHARES. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How to
Exchange Shares," below, for details.
-37-
<PAGE>
/ / SELLING SHARES. You can redeem shares by telephone automatically by
calling the PhoneLink number and a Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below
for details.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. Each Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
/ / AUTOMATIC WITHDRAWAL PLANS. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of
at least $50 on a monthly, quarterly, semi-annual or annual basis. The checks
may be sent to you or sent automatically to your bank account on AccountLink.
You may even set up certain types of withdrawals of up to $1,500 per month
by telephone. You should consult the Application and Statement of Additional
Information for more details.
/ / AUTOMATIC EXCHANGE PLANS. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms
of the Exchange Privilege, described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares, you have up to 6 months to reinvest all or part of the redemption
proceeds in Class A shares of the same Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies to Class A shares that
you purchased subject to an initial sales charge and to Class A or Class B
shares on which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must be sure to
ask the Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
RETIREMENT PLANS. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for your
retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
/ / INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for
individuals and their spouses
/ / 403(b)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
/ / SEP-IRAS (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-IRAs
/ / PENSION AND PROFIT-SHARING PLANS for self-employed persons and other
employers
/ / 401(K) PROTOTYPE RETIREMENT PLANS for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
-38-
<PAGE>
HOW TO SELL SHARES
You can arrange to take money out of your account by selling (redeeming)
some or all of your shares on any regular business day. Your shares will be
sold at the next net asset value calculated after your order is received and
accepted by the Transfer Agent. Each Fund offers you a number of ways to
sell your shares: in writing or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above. IF
YOU HAVE QUESTIONS ABOUT ANY OF THESE PROCEDURES, AND ESPECIALLY IF YOU ARE
REDEEMING SHARES IN A SPECIAL SITUATION, SUCH AS DUE TO THE DEATH OF THE
OWNER, OR FROM A RETIREMENT PLAN, PLEASE CALL THE TRANSFER AGENT FIRST, AT
1-800-525-7048, FOR ASSISTANCE.
/ / RETIREMENT ACCOUNTS. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a distribution
request form. There are special income tax withholding requirements for
distributions from retirement plans and you must submit a withholding form
with your request to avoid delay. If your retirement plan account is held
for you by your employer, you must arrange for the distribution request to be
sent by the plan administrator or trustee. There are additional details in
the Statement of Additional Information.
/ / CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and
the Funds from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
/ / You wish to redeem more than $50,000 worth of shares and receive a
check
/ / The redemption check is not payable to all shareholders listed on the
account statement
/ / The redemption check is not sent to the address of record on your
account statement
/ / Shares are being transferred to a Fund account with a different owner
or name
/ / Shares are redeemed by someone other than the owners (such as an
Executor)
/ / WHERE CAN I HAVE MY SIGNATURE GUARANTEED? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association,
or by a foreign bank that has a U.S. correspondent bank, or by a U.S.
registered dealer or broker in securities, municipal securities or government
securities, or by a U.S. national securities exchange, a registered
securities association or a clearing agency. IF YOU ARE SIGNING AS A
FIDUCIARY OR ON BEHALF OF A CORPORATION, PARTNERSHIP OR OTHER BUSINESS, OR AS
A FIDUCIARY YOU MUST ALSO INCLUDE YOUR TITLE IN THE SIGNATURE.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
/ / Your name
/ / Your Fund's name
/ / Your Fund account number (from your account statement)
/ / The dollar amount or number of shares to be redeemed
/ / Any special payment instructions
/ / Any share certificates for the shares you are selling
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<PAGE>
/ / The signatures of all registered owners exactly as the account is
registered, and
/ / Any special requirements or documents requested by the Transfer Agent
to assure proper authorization of the person asking to sell shares.
USE THE FOLLOWING ADDRESS FOR REQUESTS BY MAIL:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
SEND COURIER OR EXPRESS MAIL REQUESTS TO:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
SELLING SHARES BY TELEPHONE. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price on a
regular business day, your call must be received by the Transfer Agent by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M.,
but may be earlier on some days. YOU MAY NOT REDEEM SHARES HELD IN AN
OPPENHEIMERFUNDS RETIREMENT PLAN OR UNDER A SHARE CERTIFICATE BY TELEPHONE.
/ / To redeem shares through a service representative, call 1-800-852-8457
/ / To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank account.
/ / TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone, in any seven-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
/ / TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK OR WIRE. There are no
dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer to your
bank is initiated on the business day after the redemption. You do not
receive dividends on the proceeds of the shares you redeemed while they are
waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated commercial bank
account if the bank is a member of the Federal Reserve wire system. There is a
$10 fee for each Federal Funds wire. To place a wire redemption request, call
the Transfer Agent at 1-800-852-8457. The wire will normally be transmitted on
the next bank business day after the shares are redeemed. There is a possibility
that the wire may be delayed up to seven days to enable a Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or paid on
the proceeds of shares that have been redeemed and are awaiting transmittal by
wire. To establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
SELLING SHARES THROUGH YOUR DEALER. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the
Statement of Additional Information for more details.
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<PAGE>
HOW TO EXCHANGE SHARES
Shares of a Fund may be exchanged for shares of certain Oppenheimer funds
at net asset value per share at the time of exchange, without sales charge.
To exchange shares, you must meet several conditions:
/ / Shares of the fund selected for exchange must be available for sale
in your state of residence.
/ / The prospectuses of your Fund and the fund whose shares you want to
buy must offer the exchange privilege.
/ / You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open 7
days, you can exchange shares every regular business day.
/ / You must meet the minimum purchase requirements for the fund you
purchase by exchange.
/ / BEFORE EXCHANGING INTO A FUND, YOU SHOULD OBTAIN AND READ ITS
PROSPECTUS.
SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME
CLASS IN THE OTHER OPPENHEIMER FUNDS. For example, you can exchange Class A
shares of a Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which
are considered to be Class A shares for this purpose. In some cases, sales
charges may be imposed on exchange transactions. Please refer to "How to
Exchange Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
/ / WRITTEN EXCHANGE REQUESTS. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the Transfer
Agent at the addresses listed in "How to Sell Shares."
/ / TELEPHONE EXCHANGE REQUESTS. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
names and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by calling
a service representative at 1-800-525-7048. That list can change from time to
time.
There are certain exchange policies you should be aware of:
/ / Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on
which the Transfer Agent receives an exchange request that is in proper form
by the close of The New York Stock Exchange that day, which is normally 4:00
P.M. but may be earlier on some days. However, either fund may delay the
purchase of shares of the fund you are exchanging into up to seven days if it
determines it would be disadvantaged by a same-day transfer of the proceeds
to buy shares. For example, the receipt of multiple exchange requests from a
dealer in a "market-timing" strategy might require the disposition of
securities at a time or price disadvantageous to a Fund.
-41-
<PAGE>
/ / Because excessive trading can hurt fund performance and harm
shareholders, a Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
/ / A Fund may amend, suspend or terminate the exchange privilege at any
time. Although a Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
/ / For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund,
which may result in a taxable gain or a loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
/ / If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange
will be exchanged.
SHAREHOLDER ACCOUNT RULES AND POLICIES
/ / NET ASSET VALUE PER SHARE is determined for each class of shares as
of the close of The New York Stock Exchange which is normally 4:00 P.M., but
may be earlier on some days, on each day the Exchange is open by dividing the
value of a Fund's net assets attributable to a class by the number of shares
of that class that are outstanding. Each Fund's Board of Directors has
established procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value. There are
special procedures for valuing illiquid and restricted securities and
obligations for which market values cannot be readily obtained. These
procedures are described more completely in the Statement of Additional
Information.
/ / THE OFFERING OF SHARES may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Directors at any time the Board believes it is in a
Fund's best interest to do so.
/ / TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or
exchanges may be modified, suspended or terminated by a Fund at any time. If
an account has more than one owner, a Fund and the Transfer Agent may rely on
the instructions of any one owner. Telephone privileges apply to each owner
of the account and the dealer representative of record for the account unless
and until the Transfer Agent receives cancellation instructions from an owner
of the account.
/ / THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor a Fund will be
liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the Transfer
Agent during periods of unusual market activity, you may not be able to
complete a telephone transaction and should consider placing your order by
mail.
/ / REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL THE
TRANSFER AGENT RECEIVES ALL REQUIRED DOCUMENTS IN PROPER FORM. From time to
time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
/ / DEALERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS BY
PARTICIPATING IN NETWORKING through the National Securities Clearing
Corporation are responsible for
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obtaining their clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Funds if the dealer
performs any transaction erroneously.
/ / THE REDEMPTION PRICE FOR SHARES WILL VARY from day to day because the
value of the securities in a Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B and Class C shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
/ / PAYMENT FOR REDEEMED SHARES is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer Agent
receives redemption instructions in proper form, except under unusual
circumstances determined by the Securities and Exchange Commission delaying
or suspending such payments. For accounts registered in the name of a
broker-dealer, payment will be forwarded within 3 business days. THE
TRANSFER AGENT MAY DELAY FORWARDING A CHECK OR PROCESSING A PAYMENT VIA
ACCOUNTLINK FOR RECENTLY PURCHASED SHARES, BUT ONLY UNTIL THE PURCHASE
PAYMENT HAS CLEARED. THAT DELAY MAY BE AS MUCH AS 10 DAYS FROM THE DATE THE
SHARES WERE PURCHASED. THAT DELAY MAY BE AVOIDED IF YOU PURCHASE SHARES BY
CERTIFIED CHECK OR ARRANGE WITH YOUR BANK TO PROVIDE TELEPHONE OR WRITTEN
ASSURANCE TO THE TRANSFER AGENT THAT YOUR PURCHASE PAYMENT HAS CLEARED.
/ / INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by a Fund if
the account has fewer than 100 shares.
/ / UNDER UNUSUAL CIRCUMSTANCES, shares of a Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from a Fund's portfolio. Please refer to "How to Sell Shares" in the
Statement of Additional Information for more details.
/ / "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish a Fund a certified Social Security or
Employer Identification Number when you sign your application, or if you
violate Internal Revenue Service regulations on tax reporting of income.
/ / A FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charge when redeeming certain Class A, Class B and
Class C shares.
/ / TO AVOID SENDING DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS, a Fund
will mail only one copy of each annual and semi-annual report to shareholders
having the same last name and address on the Fund's records. However, each
shareholder may call the Transfer Agent at 1-800-525-7048 to ask that copies
of those materials be sent personally to that shareholder.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS. Each Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income each regular business day. Growth
Fund and Balanced Fund pay those dividends to shareholders semi-annually, and
Income Fund pays those dividends to shareholders monthly. Normally, dividends
are paid on the last business day every dividend period, but the Board of
Directors can change that date. Distributions may be made monthly from any
net short-term capital gains a Fund realizes in selling securities.
Dividends paid on Class A shares generally are expected to be higher than for
Class B and Class C shares because expenses allocable to Class B and Class C
shares will generally be higher.
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<PAGE>
CAPITAL GAINS. Each Fund may make distributions annually in December out of
any net short-term or long-term capital gains. Long-term capital gains will
be separately identified in the tax information your Fund sends you after the
end of the year. Distributions of capital gains are treated as ordinary
income for tax purposes. There can be no assurance that your Fund will pay
any capital gains distributions in a particular year.
DISTRIBUTION OPTIONS. When you open your account, specify on your
application how you want to receive your distributions. For OppenheimerFunds
retirement accounts, all distributions are reinvested. For other accounts,
you have four options:
/ / REINVEST ALL DISTRIBUTIONS IN YOUR FUND. You can elect to reinvest
all dividends and long-term capital gains distributions in additional shares
of your Fund.
/ / REINVEST CAPITAL GAINS ONLY. You can elect to reinvest long-term
capital gains in your Fund while receiving dividends by check or sent to your
bank account on AccountLink.
/ / RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them sent
to your bank on AccountLink.
/ / REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMER FUNDS ACCOUNT. You
can reinvest all distributions in another Oppenheimer funds account you have
established.
TAXES. If your account is not a tax-deferred retirement account, you should
be aware of the following tax implications of investing in a Fund. A Fund's
distributions from long-term capital gains are taxable to shareholders as
long-term capital gains, no matter how long you held your shares. Dividends
paid by a Fund from short-term capital gains and net investment income are
taxable as ordinary income. These dividends and distributions are subject to
Federal income tax and may be subject to state or local taxes. Your
distributions are taxable as described above, whether you reinvest them in
additional shares or take them in cash. Corporate shareholders may be
entitled to the corporate dividends received deduction for some portion of a
Fund's distributions treated as ordinary income, subject to applicable
limitations under the Internal Revenue Code. Every year your Fund will send
you and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
/ / "BUYING A DIVIDEND". When a Fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or just
before the ex-dividend date, or just before your Fund declares a capital
gains distribution, you will pay the full price for the shares and then
receive a portion of the price back as a taxable dividend or capital gain.
/ / TAXES ON TRANSACTIONS. Share redemptions and repurchases, including
redemptions for exchanges, may produce a taxable gain or a loss, which
generally will be a capital gain or loss for shareholders who hold their Fund
shares as capital assets. Such a gain or loss is the difference between your
tax basis, which is usually the price you paid for the shares, and the
proceeds you received when you sold them. Special tax rules may apply to
certain redemptions preceded or followed by investments in the same Fund or
another Oppenheimer fund.
/ / RETURNS OF CAPITAL. In certain cases distributions made by your Fund
may be considered a return of capital to shareholders. If that occurs, it
will be identified in notices to shareholders. A return of capital will
reduce your tax basis in your Fund shares but will not be taxable except to
the extent it exceeds such tax basis.
/ / FOREIGN TAXES. Each Fund may be subject to foreign withholding taxes
or other foreign taxes on income (possibly including capital gains) on
certain of its foreign investments, if any. These taxes may be reduced or
eliminated pursuant to an income tax treaty in some cases.
-44-
<PAGE>
The Funds do not expect to qualify to pass such foreign taxes and any related
tax deductions or credits through to their shareholders.
The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code. Provided that a Fund
so qualifies, it will not be required to pay any federal income tax on its
net investment income and net realized capital gains that it distributes to
its shareholders in accordance with certain timing requirements.
This information is only a summary of certain federal tax information
about your investment. Tax-exempt or tax-deferred investors, foreign
investors, and investors subject to special tax rules (such as certain banks
and securities dealers) may have different tax consequences not described
above. More tax information is contained in the Statement of Additional
Information, and in addition you should consult with your tax adviser about
the effect of an investment in a Fund on your particular tax situation.
-45-
<PAGE>
APPENDIX A: DESCRIPTION OF RATINGS CATEGORIES OF RATING SERVICES
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as "high-
grade" bonds. They are rated lower than the best bonds because margins of
protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than those of
"Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that is,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Bonds rated "B" generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or there
may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S BOND RATINGS
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal
A-1
<PAGE>
in accordance with the terms of the obligation. "BB" indicates the lowest
degree of speculation and "CC" the highest degree. While such bonds will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds rated
"D" are in default and payment of interest and/or repayment of principal is in
arrears.
A-2
<PAGE>
APPENDIX B
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER QUEST FOR VALUE FUNDS
The initial and contingent sales charge rates and waivers for Class A and
Class B shares of the Fund described elsewhere in this Prospectus are modified
as described below for those shareholders of (i) Quest for Value Fund, Inc.,
Quest for Value Growth and Income Fund, Quest for Value Opportunity Fund, Quest
for Value Small Capitalization Fund and Quest for Value Global Equity Fund, Inc.
on November 24, 1995, when OppenheimerFunds, Inc. became the investment adviser
to those funds, and (ii) Quest for Value U.S. Government Income Fund, Quest for
Value Investment Quality Income Fund, Quest for Value Global Income Fund, Quest
for Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and
Quest for Value California Tax-Exempt Fund when those funds merged into various
Oppenheimer funds on November 24, 1995. The funds listed above are referred to
in this Prospectus as the "Former Quest for Value Funds." The waivers of
initial and contingent deferred sales charges described in this Appendix apply
to shares of the Fund (i) acquired by such shareholder pursuant to an exchange
of shares of one of the Oppenheimer funds that was one of the Former Quest for
Value Funds or (ii) received by such shareholder pursuant to the merger of any
of the Former Quest for Value Funds into an Oppenheimer fund on November 24,
1995.
CLASS A SALES CHARGES
// REDUCED CLASS A INITIAL SALES CHARGE RATES FOR CERTAIN FORMER QUEST
SHAREHOLDERS
// PURCHASES BY GROUPS, ASSOCIATIONS AND CERTAIN QUALIFIED RETIREMENT
PLANS. The following table sets forth the initial sales charge rates for Class A
shares purchased by a "Qualified Retirement Plan" through a single broker,
dealer or financial institution, or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified Retirement Plan
or that Association purchased shares of any of the Former Quest for Value Funds
or received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan"
includes any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of
a single employer.
FRONT-END SALES FRONT-END SALES
CHARGE AS A CHARGE AS A COMMISSION AS
NUMBER OF ELIGIBLE PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
EMPLOYEES OR MEMBERS OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
________________________________________________________________________________
9 or fewer 2.50% 2.56% 2.00%
________________________________________________________________________________
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages to of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an
B-1
<PAGE>
Association or the sales charge rate that applies under the Rights of
Accumulation described above in the Prospectus. In addition, purchases by
401(k) plans that are Qualified Retirement Plans qualify for the waiver of the
Class A initial sales charge if they qualified to purchase shares of any of the
Former Quest For Value Funds by virtue of projected contributions or investments
of $1 million or more each year. Individuals who qualify under this arrangement
for reduced sales charge rates as members of Associations, or as eligible
employees in Qualified Retirement Plans also may purchase shares for their
individual or custodial accounts at these reduced sales charge rates, upon
request to the Fund's Distributor.
// SPECIAL CLASS A CONTINGENT DEFERRED SALES CHARGE RATES
Class A shares of the Fund purchased by exchange of shares of other Oppenheimer
funds that were acquired as a result of the merger of Former Quest for Value
Funds into those Oppenheimer funds, and which shares were subject to a Class A
contingent deferred sales charge prior to November 24, 1995 will be subject to a
contingent deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they were purchased,
at a rate equal to 1.0% if the redemption occurs within 12 months of their
initial purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales charge
in effect as of that date as set forth in the then-current prospectus for such
fund.
// WAIVER OF CLASS A SALES CHARGES FOR CERTAIN SHAREHOLDERS
Class A shares of the Fund purchased by the following investors are not subject
to any Class A initial or contingent deferred sales charges:
// Shareholders of the Fund who were shareholders of the AMA Family of
Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
// Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
// WAIVER OF CLASS A CONTINGENT DEFERRED SALES CHARGE IN CERTAIN
TRANSACTIONS
The Class A contingent deferred sales charge will not apply to redemptions of
Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
// Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
// Participants in Qualified Retirement Plans that purchased shares of any
of the Former Quest For Value Funds pursuant to a special "strategic alliance"
with the distributor of those funds. The Fund's Distributor will pay a
commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
B-2
<PAGE>
CLASS A AND CLASS B CONTINGENT DEFERRED SALES CHARGE WAIVERS
// WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED PRIOR TO MARCH 6, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A or B shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans qualified under
Section 401(a) of the Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts, deferred
compensation plans under Section 457 of the Code, and other employee benefit
plans, and returns of excess contributions made to each type of plan,
(ii) withdrawals under an automatic withdrawal plan holding only Class B shares
if the annual withdrawal does not exceed 10% of the initial value of the
account, and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required minimum
value of such accounts.
// WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED ON OR AFTER MARCH 6, 1995
BUT PRIOR TO NOVEMBER 24, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A or B shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to November 24, 1995:
(1) distributions to participants or beneficiaries from Individual Retirement
Accounts under Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those distributions
are made either (a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans following the
death or disability of the shareholder(s) (as evidenced by a determination of
total disability by the U.S. Social Security Administration); (4) withdrawals
under an automatic withdrawal plan (but only for Class B shares) where the
annual withdrawals do not exceed 10% of the initial value of the account; and
(5) liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A or B shares of the
Fund described in this section if within 90 days after that redemption, the
proceeds are invested in the same Class of shares in the Fund or another
Oppenheimer fund.
SPECIAL DEALER ARRANGEMENTS.
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and that were transferred to an OppenheimerFunds prototype 401(k) plan
shall be eligible for an additional one-time payment by the Distributor of 1% of
the value of the plan assets transferred, but that payment may not exceed $5,000
as to any one plan.
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER CONNECTICUT MUTUAL FUNDS
Certain of the sales charge waivers for Class A and Class B shares of the
Fund described elsewhere in this Prospectus are modified as described below for
those shareholders of
B-3
<PAGE>
Connecticut Mutual Liquid Account, Connecticut Mutual Government Securities
Account, Connecticut Mutual Income Account, Connecticut Mutual Growth Account,
Connecticut Mutual Total Return Account, CMIA LifeSpan Diversified Income
Account, CMIA LifeSpan Capital Appreciation Account and CMIA LifeSpan Balanced
Account (the "Former Connecticut Mutual Funds") on March 1, 1996, when
OppenheimerFunds, Inc. became the investment adviser to the Former Connecticut
Mutual Funds.
CLASS A SALES CHARGE WAIVERS
Additional Class A shares of the Fund may be purchased without a sales
charge, provided that the Class A shares of the Fund were acquired prior to
March 1, 1996, by:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled $500,000 or
more, including investments made pursuant to the Combined Purchases, Statement
of Intention and Rights of Accumulation features available at the time of the
initial purchase; (2) any participant in a qualified plan, provided that the
total initial amount invested by the plan in the Fund or any one or more of the
Former Connecticut Mutual Funds totaled $500,000 or more; (3) Directors of the
Fund or any one or more of the Former Connecticut Mutual Funds 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 Connecticut Mutual
Financial Services, L.L.C. ("CMFS"), the Fund's prior distributor, 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 Life Insurance Company
through the Panorama Separate Account which was beyond the applicable surrender
charge period and which was used to fund a qualified plan, who exchanged the
variable annuity contract for Class A shares of the Fund; and (8) an institution
acting as a fiduciary on behalf of an individual or individuals, where such
institution was directly compensated by the individual(s) for recommending the
purchase of the shares of the Fund or any one or more of the Former Connecticut
Mutual Funds, provided the institution had an agreement with CMFS. Purchases of
Class A shares made pursuant to (1) and (2) above may be subject to a CDSC.
CLASS A AND CLASS B CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of the Fund and exchanges of Class A or Class B
shares of the Fund into Class A or Class B shares of a Former Connecticut Mutual
Fund provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 1, 1996 or (ii) were acquired by
exchange from an Oppenheimer Fund that was a Former Connecticut Mutual Fund and
the shares of such Former Connecticut Mutual Fund were purchased prior to
March 1, 1996:
(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,
B-4
<PAGE>
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 Fund due to a combination with another
investment company by virtue of a merger, acquisition or similar reorganization
transaction; (7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund; (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 Fund's Articles of Incorporation, or as
adopted by the Board of Directors of the Fund.
B-5
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
OPPENHEIMER LIFESPAN BALANCED FUND
OPPENHEIMER LIFESPAN INCOME FUND
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUNDS, OPPENHEIMERFUNDS, INC., OPPENHEIMERFUNDS
DISTRIBUTOR, INC. OR ANY AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH STATE.
____________________ *PRINTED ON RECYCLED PAPER
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Liquid Account, Government Securities Account, and Income
Account.
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of Information Required by
Items of the Registration Form
<TABLE>
<CAPTION>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
<S> <C> <C>
1. Cover Page....................... Cover Page.
2. Synopsis......................... About The Funds -- A Brief
Overview of the Fund.
3. Condensed Financial
Information.................... About The Funds -- Financial
Highlights.
4. General Description of
Registrant..................... Cover Page; About The Funds
-- How The Fund Is Managed -
- Organization and History.
5. Management of the Fund........... About The Funds -- How the
Funds are Managed.
6. Capital Stock and Other
Securities..................... About The Funds --
Investment Objective and
Policies.
7. Purchase of Securities
Being Offered.................. About Your Account -- How to
Buy Shares; Special Sales
Charge Arrangements for
Certain Persons; Buying
Class A Shares; Buying
Class B Shares.
8. Redemption or Repurchase......... About Your Account -- How to
Buy Shares; Special Investor
Services; How to Sell
Shares; How to Exchange
Shares; Shareholder Account
Rules and Policies.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
<S> <C> <C>
9. Pending Legal Proceedings........ Not Applicable.
10. Cover Page....................... Cover Page.
11. Table of Contents................ Cover Page.
12. General Information and
History........................ Cover Page; How The Funds
are Managed -- Organization
and History.
13. Investment Objectives and
Policy......................... About The Funds --
Investment Objectives and
Policies.
14. Management of the Fund........... About The Funds -- How the
Funds are Managed.
15. Control Persons and Principal
Holders of Securities.......... About The Funds -- How the
Funds are Managed.
16. Investment Advisory and
Other Services................. About The Funds -- How the
Funds are Managed; The
Manager, the Subadviser and
Their Affiliates; The
Distributor; The Transfer
Agent.
17. Brokerage Allocation and
Other Practices................ About the Funds -- Brokerage
Policies of the Funds.
18. Capital Stock and Other
Securities..................... About the Funds -- How the
Funds are Managed --
Organization and History.
19. Purchase, Redemption and Pricing
of Securities Being Offered.... About Your Accounts -- How
to Buy Shares; How to Sell
Shares; How to Exchange
Shares.
20. Tax Status....................... About Your Account --
Dividends, Capital Gains and
Taxes.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Location in Prospectus
Form N-1A Item Number or Statement of Additional
and Caption Information
--------------------- --------------------------
<S> <C> <C>
21. Underwriters..................... About The Funds -- How the
Funds are Managed -- The
Manager, the Subadvisers and
Their Affiliates; About Your
Account -- How To Buy
Shares.
22. Calculation of Performance
Data........................... About The Funds --
Performance of the Funds;
About Your Account --
Dividends, Capital Gains and
Taxes.
23. Financial Statements............. Financial Information About
the Funds -- Independent
Auditors' Report --
Financial Statements.
</TABLE>
- 3 -
<PAGE>
CONNECTICUT MUTUAL
LIQUID ACCOUNT
GOVERNMENT SECURITIES ACCOUNT
INCOME ACCOUNT
PROSPECTUS DATED MAY 1, 1996
Oppenheimer Series Fund, Inc. (the "Company") is an open-end investment company
consisting of eight separate mutual funds, three of which are offered in this
prospectus (individually, a "Fund" and collectively, the "Funds"):
CONNECTICUT MUTUAL LIQUID ACCOUNT ("Liquid Fund") seeks as high a level of
current income as is consistent with preservation of capital and maintenance of
liquidity by investing in money market instruments.
AN INVESTMENT IN THE LIQUID FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. WHILE THE LIQUID FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
CONNECTICUT MUTUAL INCOME ACCOUNT ("Income Fund") seeks high current income
consistent with prudent investment risk and preservation of capital. Income
Fund 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 investment
advisor, will result in payment of interest and principal such that the
effective maturity of the securities is five years or less.
CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT ("Government Securities Fund")
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.
Please refer to "Investment Policies and Strategies" for more information
about the types of securities the Funds may invest in and the risks of investing
in the Funds.
This Prospectus explains concisely what you should know before investing in
the Funds. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about each Fund in the May 1,
1996 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Funds' Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated into this Prospectus by reference (which
means that it is legally part of this Prospectus).
(Oppenheimer funds logo)
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY, AND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
2
<PAGE>
CONTENTS
A B O U T T H E F U N D S
EXPENSES
BRIEF OVERVIEW OF THE FUNDS
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
HOW THE FUNDS ARE MANAGED
PERFORMANCE OF THE FUNDS
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
Shares of Liquid Fund
Class A Shares
Class B Shares
SPECIAL INVESTOR SERVICES
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
HOW TO SELL SHARES
By Mail
By Telephone
By Wire (Liquid Fund only)
By Check Writing
HOW TO EXCHANGE SHARES
SHAREHOLDER ACCOUNT RULES AND POLICIES
DIVIDENDS, CAPITAL GAINS AND TAXES
APPENDIX A: DESCRIPTION OF SECURITIES RATINGS
APPENDIX B: CREDIT QUALITY DISTRIBUTION
APPENDIX C: SPECIAL SALES CHARGE ARRANGEMENTS
3
<PAGE>
A B O U T T H E F U N D S
EXPENSES
Each Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset value
per share. All shareholders therefore pay those expenses indirectly.
Shareholders of each Fund (other than Liquid Fund) pay other expenses directly,
such as sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in a Fund and
the share of a Fund's business operating expenses that you will bear indirectly.
The numbers below are based on the Funds' expenses during its last fiscal year
ended December 31, 1995.
/ / SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or
sell shares of a Fund. The Liquid Fund has no sales charges to buy shares.
Please refer to "About Your Account" starting on page ___ for an explanation of
how and when these charges apply.
<TABLE>
<CAPTION>
INCOME FUND AND
GOVERNMENT SECURITIES FUND
------------------------------
LIQUID
FUND CLASS A CLASS B
SHARES SHARES SHARES
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales None 4.75% None
Charge on
Purchases (as a %
of offering price)
- -----------------------------------------------------------------------------------
Sales Charge on None None None
Reinvested
Dividends
- -----------------------------------------------------------------------------------
Deferred Sales None(1) None(2) 5% in the
Charge (as a % first year,
of the lower declining
of the original to 1% in the
purchase price sixth year and
or redemption eliminated
proceeds) thereafter(3)
- -----------------------------------------------------------------------------------
Exchange Fee None None None
- -----------------------------------------------------------------------------------
Redemption Fee None(4) None(4) None(4)
</TABLE>
(1) Shares of Liquid Fund acquired by exchange from Class A or Class B shares
of any other fund, which are subject to a CDSC will be subject to a CDSC if
redeemed. The CDSC will be at a rate equal to the CDSC rate on the original
shares when exchanged.
(2) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have to pay
a sales charge of up to 1% if you sell your shares within 18 calendar months
from the end of the calendar month during which you purchased those shares. See
"Buying Shares -- Buying Class A Shares," below.
4
<PAGE>
(3) See "How to Buy Shares -- Buying Class B Shares" below, for more
information on the contingent deferred sales charges.
(4) There is a $10 transaction fee for redemption proceeds paid by Federal
Funds wire, but not for redemptions paid by check or ACH transfer through
AccountLink or, with respect to shares of Liquid Fund or Class A shares of
Income Fund and Government Securities Fund, for which check writing privileges
are used (see "How to Sell Shares").
/ / ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets and
represent the Fund's expenses in operating its business. For example, a Fund
pays management fees to its investment advisor, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Funds are Managed," below. A Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in a Fund's Financial Statements in the
Statement of Additional Information.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
GOVERNMENT
INCOME FUND SECURITIES FUND
--------------------- ---------------------
LIQUID CLASS A CLASS B CLASS A CLASS B
FUND SHARES SHARES SHARES SHARES
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management Fees .50% .625% .625% .625% .625%
- --------------------------------------------------------------------------------------------
12b-1 Plan Fees .00% .25% 1.00% .25% 1.00%
- --------------------------------------------------------------------------------------------
Other Expenses .46% .315% .315% .355% .355%
- --------------------------------------------------------------------------------------------
Total Fund Operating Expenses .96% 1.19% 1.94% 1.23% 1.98%
</TABLE>
The numbers for Liquid Fund and Class A shares in the chart above are based
on the Fund's expenses in its last fiscal year. These amounts are shown as a
percentage of the average net assets of Liquid Fund and each class of each of
the other Fund's shares for that year. Class B shares of Income Fund and
Government Securities Fund were not publicly offered before October 1, 1995.
Therefore, the Annual Fund Operating Expenses shown are based on expenses for
the period from October 1, 1995 until December 31, 1995. The actual expenses
for shares of Liquid Fund and each class of shares of each of the other Funds in
future years may be more or less than the numbers in the chart, depending on a
number of factors, including the actual amount of a Fund's assets represented by
each class of shares.
The "12b-1 Distribution Plan Fees" for shares of Class A shares of Income
Fund and Government Securities Fund are the Service Plan Fees (which can be up
to a maximum of 0.25% of average annual net assets of that class). For Class B
shares, 12b-1 Plan Fees include the Service Plan Fees (which can be up to a
maximum of 0.25%) and an annual asset-based sales charge of 0.75%. These plans
are described in greater detail in "How to Buy Shares."
5
<PAGE>
/ / EXAMPLES. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in shares of Liquid Fund and in each
class of shares of each of the other Funds, and each Fund's annual return is 5%,
and that its operating expenses are the ones shown in the Annual Fund Operating
Expenses table above. If you were to redeem your shares at the end of each
period shown below, your investment would incur the following expenses by the
end of each period shown:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Liquid Fund $11 $ 34 $ 58 $129
- ---------------------------------------------------------------------
Class A Shares
Income Fund $59 $ 83 $110 $185
Government
Securities Fund $59 $ 85 $112 $189
- ---------------------------------------------------------------------
Class B Shares
Income Fund $70 $101 $125 $207
Government
Securities Fund $70 $102 $127 $211
</TABLE>
If you did not redeem your investment, it would incur the following
expenses:
Class B Shares
Income Fund $20 $ 61 $105 $207
Government
Securities Fund $20 $ 62 $107 $211
- ---------------------------------------------------------------------
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class B
shares into Class A shares after 6 years. Because of the effect of the
asset-based and the contingent deferred sales charge on Class B shares,
long-term Class B shareholders could pay the economic equivalent of more
than the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of Class B
shares into Class A shares is designed to minimize the likelihood that this
will occur. Please refer to "How to Buy Shares" for more information.
THESE EXAMPLES SHOW THE EFFECT OF EXPENSES ON AN INVESTMENT, BUT ARE NOT
MEANT TO STATE OR PREDICT ACTUAL OR EXPECTED COSTS OR INVESTMENT RETURNS OF THE
FUNDS, WHICH MAY BE GREATER OR LESSER THAN THOSE SHOWN.
A BRIEF OVERVIEW OF THE FUNDS
Some of the important facts about each Fund are summarized below, with
references to the section of this Prospectus where more complete information can
be found. You should carefully read the entire Prospectus before making a
decision about investing in a Fund. Keep the Prospectus for reference after you
invest particularly for information about your account, such as how to sell or
exchange shares.
6
<PAGE>
/ / WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND WHAT DO THE FUNDS INVEST
IN? The LIQUID FUND'S investment objective is to seek as high a level of
current income as is consistent with preservation of capital and maintenance of
liquidity by investing in money market instruments. The INCOME FUND'S
investment objective is to seek high current income consistent with prudent
investment risk and preservation of capital by investing primarily in corporate
debt securities with remaining maturities of five years or less or mortgage debt
securities with prepayment features which, in the judgment of the investment
advisor, will result in payment of interest and principal such that the
effective maturity of the securities is five years or less. The GOVERNMENT
SECURITIES FUND'S investment objective is to seek 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. The Funds' investments are
more fully explained in "Investment Objectives and Policies," starting on
page __.
/ / WHO MANAGES THE FUNDS? The Fund's investment adviser is
OppenheimerFunds, Inc., which (including a subsidiary) advises investment
company portfolios having over $40 billion in assets at December 31, 1995. The
portfolio managers are as follows: For LIQUID FUND, Carol Wolf; and for INCOME
FUND and GOVERNMENT SECURITIES FUND, David Rosenberg. The Funds' Board of
Directors, elected by shareholders, oversees the investment advisor. The
Manager is paid an advisory fee by each Fund, based on its net assets. Please
refer to "How the Funds are Managed," starting on page ____ for more information
about the Manager and its fees.
/ / HOW RISKY ARE THE FUNDS? All investments carry risks to some degree.
Money market funds, like Liquid Fund, are in general relatively conservative
investments. The Liquid Fund attempts to maintain a stable share price of
$1.00, but there is no guarantee it will do so. U.S. Government securities and
other debt securities in which Government Securities Fund and Income Fund invest
may be affected by changes in interest rates. When prevailing interest rates
fall, the values of already-issued debt securities generally rise. When
interest rates rise, the values of already-issued debt securities generally
decline. The magnitude of these fluctuations will often be greater for
longer-term debt securities than shorter-term securities. In the
OppenheimerFunds spectrum, Income Fund, a short-term bond fund, and Government
Securities Fund, a government securities fund, are generally more volatile than
Liquid Fund, a money market fund. While the Manager tries to reduce risks by
diversifying investments, by carefully researching securities before they are
purchased for a portfolio and in some cases by using hedging techniques, there
is no guarantee of success in achieving a Fund's objective and your shares may
be worth more or less than their original cost when you redeem them. Please
refer to "Investment Objectives and Policies" starting on page ___ for a more
complete discussion of each Fund's investment risks.
/ / HOW CAN I BUY SHARES? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or an Automatic Investment Plan under
AccountLink. You can buy shares of Liquid Fund by using Federal Funds wires.
Please refer to "How To Buy Shares" beginning on page ___ for more details.
/ / WILL I PAY A SALES CHARGE TO BUY SHARES? Shares of Liquid Fund are
sold at net asset value, without a sales charge. Normally, the net asset value
of the Liquid Fund is $1.00 per share. There can be no assurance, however, that
Liquid Fund's net asset value will not vary. Income Fund and Government
Securities Fund each have two classes of shares. Each class of shares has the
same investment portfolio, but different expenses. Class A shares are offered
with a front-end sales charge, starting at 4.75% and reduced for larger
purchases. Class B shares are offered without front-end sales charges, but may
be subject to a contingent deferred sales charge if redeemed within five years
of purchase. There is also an annual asset-based sales charge on Class B
shares. Please review "How To Buy Shares" starting on page ___ for more
details,
7
<PAGE>
including a discussion about factors you and your financial advisor
should consider in determining which class may be appropriate for you.
/ / HOW CAN I SELL MY SHARES? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day or through your dealer.
Shares of Liquid Fund and Class A shares of the other Funds may be redeemed by
writing a check against your current account. Shares of Liquid Fund may also be
redeemed by wire to a previously designated bank account. Please refer to "How
To Sell Shares" on page ___. Each Fund also offers exchange privileges to other
Oppenheimer funds, described in "How to Exchange Shares" on page ____.
/ / HOW HAVE THE FUNDS PERFORMED? Liquid Fund measures its performance by
quoting its yield and compounded effective yield, which measure historical
performance. Each of the other Funds measures its performance by quoting a
yield, dividend yield, average annual total return and cumulative total return.
Those returns can be compared to the yields or total returns (over similar
periods) of other funds. Of course, other funds may have different objectives,
investments, and levels of risk. Please remember that past performance does not
guarantee future results.
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended December 31, 1995
has been derived from audited financial statements together with the
auditors' report for the year ended December 31, 1995 which is included in
the Statement of Additional Information. The tables on the following pages
present selected financial information about the Funds, including per share
data and expense ratios and other data based on each Fund's respective
average net assets.
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* LIQUID FUND
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .0499 .0334 .0227 .0287 .0522 .0731
Net realized and unrealized gain (loss) on investment,
options written and foreign currency transactions -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total income (loss) from investment operations .0499 .0334 .0227 .0287 .0522 .0731
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.0499) (.0334) (.0227) (.0287) (.0522) (.0731)
Distributions from net realized gain on investments and foreign
currency transactions -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions to shareholders (.0499) (.0334) (.0227) (.0287) (.0522) (.0731)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 5.11% 3.40% 2.30% 2.89% 5.31% 7.53%
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $75,808 $63,946 $76,620 $67,549 $69,932 $84,387
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 4.99% 3.34% 2.27% 2.87% 5.22% 7.31%
Expenses .96% .93% .95% 1.02% 1.01% 1.06%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate n/a n/a n/a n/a n/a n/a
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FINANCIAL HIGHLIGHTS* LIQUID FUND
YEARS ENDED DECEMBER 31,
-----------------------------------------
PER SHARE OPERATING DATA: 1989 1988 1987 1986
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .0822 .0664 .0581 .0588
Net realized and unrealized gain (loss) on investment,
options written and foreign currency transactions -- -- -- --
------- ------- ------- -------
Total income (loss) from investment operations .0822 .0664 .0581 .0588
- ----------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.0822) (.0664) (.0581) (.0588)
Distributions from net realized gain on investments and foreign
currency transactions -- -- -- --
------- ------- ------- -------
Total dividends and distributions to shareholders (.0812) (.0664) (.0581) (.0588)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
------- ------- ------- -------
------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 8.53% 6.82% 5.97% 6.03%
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $87,264 $73,921 $68,908 $74,111
- ----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 8.22% 6.64% 5.81% 5.88%
Expenses 1.06% 1.04% 1.00% 1.00%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* G.R. Phelps & Co. managed the Fund during these periods.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* INCOME FUND -- CLASS A SHARES
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.14 $9.86 $9.75 $9.91 $9.44 $9.79
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .67 .68 .65 .79 .81 .94
Net realized and unrealized gain (loss) on investment,
options written and foreign currency transactions .37 (.72) .11 (.16) .47 (.35)
------- ------- ------- ------- ------- -------
Total income (loss) from investment operations 1.04 (.04) .76 .63 1.28 .59
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.66) (.68) (.65) (.79) (.81) (.94)
Distributions from net realized gain on investments and foreign
currency transactions -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions to shareholders (.66) (.68) (.65) (.79) (.81) (.94)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.52 $9.14 $9.86 $9.75 $9.91 $9.44
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(a) 11.77% (0.42)% 7.97% 6.60% 14.22% 6.33%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $33,127 $46,547 $48,636 $38,675 $22,839 $19,809
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 6.97% 7.16% 6.56% 8.09% 8.44% 9.78%
Expenses .63% .63% .63% .63% 1.12% 1.24%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57.08% 62.88% 145.94% 109.47% 50.44% 90.20%
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FINANCIAL HIGHLIGHTS* INCOME FUND -- CLASS A SHARES
YEARS ENDED DECEMBER 31,
-----------------------------
PER SHARE OPERATING DATA: 1989 1988 1987 1986
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.77 $9.97 $11.04 $10.55
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .88 .84 .76 .83
Net realized and unrealized gain (loss) on investment,
options written and foreign currency transactions .02 (.19) (.56) .57
------- ------- ------- -------
Total income (loss) from investment operations .90 .65 .20 1.40
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.88) (.85) (.76) (.83)
Distributions from net realized gain on investments and foreign
currency transactions -- -- (.51) (.08)
------- ------- ------- -------
Total dividends and distributions to shareholders (.88) (.85) (1.27) (.91)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.79 $9.77 $9.97 $11.04
------- ------- ------- -------
------- ------- ------- -------
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(a) 9.56% 6.70% 2.03% 13.54%
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,705 $16,789 $15,367 $14,620
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 8.93% 8.43% 7.32% 7.69%
Expenses 1.27% 1.24% 1.27% 1.29%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 52.95% 150.04% 231.39% 164.13%
- --------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* G.R. Phelps & Co. managed the Fund during these periods.
(a) Annual total returns do not include the effect of sales charges.
10
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* (CONT'D.) INCOME FUND -- CLASS B SHARES(c)
PERIOD ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 9.46
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .13
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions .10
------
Total income (loss) from investment operations .23
- -----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.13)
Distributions from net realized gain on investments
and foreign currency transactions --
------
Total dividends and distributions to shareholders (.13)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.56
------
------
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(b) 2.41%
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $59
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.43%(a)
Expenses 1.63%(a)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 57.08%
- -----------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* G.R. Phelps & Co. managed the Fund during this period.
(a) Annualized.
(b) Total returns do not include the effect of sales charges.
(c) For the period from October 1, 1995 (inception) through December 31, 1995.
11
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* GOVERNMENT SECURITIES FUND -- CLASS A SHARES
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
PER SHARE OPERATING DATA: 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.76 $10.91 $11.19 $11.36 $10.68 $10.58
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .72 .69 .70 .77 .85 .84
Net realized and unrealized gain (loss) on investment,
options written and foreign currency transactions .97 (1.14) .36 (.12) .68 .10
------- ------- ------- ------- ------- -------
Total income (loss) from investment operations 1.69 (.45) 1.06 .65 1.53 .94
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.72) (.69) (.70) (.77) (.85) (.84)
Distributions from net realized gain on investments and foreign
currency transactions -- (.01) (.64) (.05) -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions to shareholders (.72) (.70) (1.34) (.82) (.85) (.84)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.73 $9.76 $10.91 $11.19 $11.36 $10.68
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(a) 17.90% (4.18)% 9.56% 6.07% 15.03% 9.44%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $49,829 $60,162 $77,596 $67,612 $55,332 $47,524
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 6.93% 6.71% 6.03% 6.92% 7.83% 8.07%
Expenses .98% .91% .93% 1.01% 1.07% 1.16%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 50.64% 156.90% 224.02% 131.79% 27.50% 44.19%
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FINANCIAL HIGHLIGHTS* GOVERNMENT SECURITIES FUND -- CLASS A SHARES
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
PER SHARE OPERATING DATA: 1989 1988 1987 1986
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.06 $10.17 $10.90 $10.73
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .84 .84 .84 .92
Net realized and unrealized gain (loss) on investment,
options written and foreign currency transactions .52 (.05) (.52) .28
------- ------- ------- -------
Total income (loss) from investment operations 1.36 .79 .32 1.20
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.84) (.85) (.84) (.92)
Distributions from net realized gain on investments and foreign
currency transactions -- (.05) (.21) (.11)
------- ------- ------- -------
Total dividends and distributions to shareholders (.84) (.90) (1.05) (1.03)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period 10.58 $10.06 $10.17 $10.90
------- ------- ------- -------
------- ------- ------- -------
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(a) 14.10% 7.99% 3.33% 11.66%
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $41,561 $35,910 $24,703 $22,947
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 8.14% 8.27% 8.12% 8.92%
Expenses 1.19% 1.16% 1.24% 1.27%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68.14% 175.50% 207.67% 111.68%
- --------------------------------------------------------------------------------------------------------
</TABLE>
* G.R. Phelps & Co. managed the Fund during these periods.
(a) Annual total returns do not include the effect of sales charges.
12
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS* (CONT'D.) GOVERNMENT SECURITIES FUND -- CLASS B SHARES(c)
PERIOD ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.45
- -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .12
Net realized and unrealized gain (loss) on investments,
options written and foreign currency transactions .32
------
Total income (loss) from investment operations .44
- -------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.12)
------
Distributions from net realized gain on investments
and foreign currency transactions --
------
Total dividends and distributions to shareholders (.12)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.77
------
------
- -------------------------------------------------------------------------------------------------------------
RETURN, AT NET ASSET VALUE(b) 4.20%
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $74
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.36%(a)
Expenses 1.98%(a)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 50.64%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* G.R. Phelps & Co. managed the Fund during this period.
(a) Annualized.
(b) Total returns do not include the effect of sales charges.
(c) For the period from October 1, 1995 (inception) through December 31, 1995.
13
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE AND POLICIES -- LIQUID FUND. The Liquid Fund seeks as
high a level of current income as is consistent with preservation of capital and
maintenance of liquidity by investing in money market instruments. Money market
instruments are high quality, short-term securities that present minimal credit
risk. They consist of obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, commercial paper of U.S. and non-U.S.,
issuers and certificates of deposit, banker's acceptances, bank deposits of U.S.
and non-U.S. banks (including Eurodollar and Yankee dollar deposits) and
short-term corporate debt securities. These instruments are denominated in U.S.
dollars and may carry fixed or variable interest rates. These instruments are
described further under the caption "Other Investment Techniques and
Strategies."
The Fund 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 Fund will be able to
maintain a stable price per share of $1.00.
The Fund may purchase only money market instruments that are within the two
highest rating categories of the major rating agencies (E.G., Moody's Investors
Service, Inc. ("Moody's") or Standard and Poor's Ratings Group ("Standard &
Poor's"). The Fund will not invest more than 5% of its total assets in
securities that, although of high quality, have not been rated in the highest
short-term rating category or, if unrated, have not been judged by the Manager
to be of equivalent quality. Within this 5% limitation, the Fund 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 Fund 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 Fund's portfolio; to increase yield; to maintain the
quality of the portfolio; or to maintain a stable share value.
Securities in which the Liquid Fund 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 FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
INVESTMENT OBJECTIVE AND POLICIES -- INCOME FUND. The Income Fund seeks
high current income consistent with prudent investment risk and preservation of
capital. The Fund 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 Fund anticipates maintaining an
average dollar-weighted portfolio maturity of generally between two and three
years. By restricting the maturities of the Fund's investments, the potential
for dramatic changes in the value of the Fund's investments should be reduced,
and the value of the Fund's shares should remain more stable than that of a
longer-term bond fund. Investors should be mindful, however, that the value of
the Fund's shares fluctuates based on changes in interest rates and in the
credit quality of the issuers represented in its portfolio.
The Fund invests at least 75% of its total assets in: U.S. Government and
U.S. Government-related securities (as defined below in "Investment Objective
and Policies -- Government Securities Fund"), 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
14
<PAGE>
comparable credit quality, except that the Fund'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 Fund 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 Fund may invest the remainder of its total assets (up to 25% under
normal circumstances) in debt securities and preferred stocks rated below
investment grade and unrated debt securities determined by the Manager to be of
comparable credit quality commonly called junk bonds. Unrated debt securities
will not exceed 10% of the Fund'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 Fund invests in
lower quality debt securities, its net asset value may be subject to greater
fluctuation. For a description of these and other risks associated with lower
quality debt securities, see "Other Investment Techniques and Strategies --
Investing in Lower-Rated Securities." Refer to Appendix A for a description of
certain rating categories. In addition, Appendix B provides a summary of
ratings assigned to debt holdings (not including money market instruments) of
the Fund. These percentages are historical and do not necessarily indicate the
current or future debt holdings of the Fund.
The Fund may invest up to 20% of its total assets in mortgage dollar rolls.
The Fund may also invest up to 5% of its total assets in inverse floating rate
instruments. See "Other Investment Techniques and Strategies --Inverse Floating
Rate Instruments and -- Mortgage Dollar Rolls." Consistent with the foregoing
policies, the Fund may invest up to 5% of its total assets in non-dollar
denominated securities of foreign issuers, including issuers in developing
countries. These investments are subject to special risks. See "Other
Investment Techniques and Strategies-- Foreign Securities."
INVESTMENT OBJECTIVE AND POLICIES -- GOVERNMENTAL SECURITIES FUND. The
Government Securities Fund seeks a high level of current income with a high
degree of safety of principal by investing primarily (at least 65% of its total
assets under normal market conditions) in U.S. Government securities and U.S.
Government-related securities.
U.S. Government securities are high quality instruments issued, or
guaranteed as to principal and interest, by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. These may include bills, notes and
bonds of the U.S. Treasury, mortgage participation certificates guaranteed by
the Government National Mortgage Association (Ginnie Mae Certificates), or
obligations of the Federal Home Loan Mortgage Corporation or the Federal
National Mortgage Association. U.S. Government-related securities are
obligations that are fully collateralized or otherwise secured by U.S.
Government securities. U.S. Government securities and U.S. Government-related
securities may include pools of consumer loans or mortgages, such as
collateralized mortgage obligations (CMOs). The Fund's investments in privately
issued CMOs will be limited to those rated within the two highest rating
categories by a nationally recognized rating agency. CMOs are derivative
securities; for a discussion of derivative securities, see "Other Investment
Techniques and Strategies -- Derivative Investments." The U.S. Government and
U.S. Government-related securities in which the Fund 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 Fund'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 Fund's net
asset value,
15
<PAGE>
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 Fund may also invest up to 20% of its total assets in mortgage
dollar rolls. The Fund 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 Fund invests and the investment techniques it uses
are described under "Other Investment Techniques and Strategies -- U.S.
Government Securities, -- Mortgage-Backed Securities and CMOs and -- Mortgage
Dollar Rolls."
Under normal circumstances, the Fund may invest the remainder of its assets
(up to 35%) in investment grade debt obligations of private issuers.
Although the Government Securities Fund 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
FUND IS NOT INSURED OR GUARANTEED.
/ / CAN A FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? Each Fund has
an investment objective, described above, as well as investment policies it
follows to try to achieve its objective. Additionally, a Fund uses certain
investment techniques and strategies in carrying out those investment policies.
A Fund's investment policies and practices are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a particular
policy is "fundamental." A Fund's investment objective is not a fundamental
policy. Fund shareholders will be given 30 days' advance written notice of a
change to a Fund's investment objective.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of a Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). A Fund's Board of Directors may change non-fundamental
policies without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
/ / PORTFOLIO TURNOVER. A change in the securities held by a Fund is
known as "portfolio turnover." Income Fund and Government Securities Fund may
take advantage of short-term differentials in yields when short-term trading is
consistent with their objectives of seeking income. While short-term trading
increases portfolio turnover, the Funds incur little or no brokerage costs for
U.S. Government securities. The portfolio turnover rates of Income Fund and
Government Securities Fund were 57.08% and 50.64%, respectively for the fiscal
year ended December 31, 1995. The "Financial Highlights," above, show the
Funds' (other than Liquid Fund's) portfolio turnover rates during past fiscal
years.
High portfolio turnover may affect the ability of a Fund to qualify as a
"regulated investment company" under the Internal Revenue Code and avoid being
taxed on amounts distributed as dividends and capital gains to shareholders.
Each Fund qualified as such in its fiscal period ended December 31, 1995 and
intends to do so in the future, although it reserves the right not to qualify.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES. The Funds may also use the
investment techniques and strategies described below, which involve certain
risks. The Statement of Additional Information contains more detailed
information about these practices, including limitations on their use that may
help to reduce some of the risks.
16
<PAGE>
/ / DEBT SECURITIES. Each Fund 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. Debt securities are subject to changes in their
value due to changes in prevailing interest rates. When prevailing interest
rates fall, the values of already-issued debt securities generally rise. When
interest rates rise, the values of already-issued debt securities generally
decline. The magnitude of these fluctuations will often be greater for
longer-term debt securities than shorter-term debt securities. Changes in the
value of securities held by a Fund mean that the Fund's share prices can go up
or down when interest rates change, because of the effect of the change on the
value of the Fund's portfolio of debt securities. Credit risk relates to the
ability of the issuer of a debt security to make interest or principal payments
on the security as they become due. Generally, higher-yielding, lower-rated
bonds (which Income Fund may hold) are subject to greater credit risk than
higher-rated bonds.
/ / INVESTING IN LOWER-RATED SECURITIES (INCOME FUND ONLY). The domestic
and foreign debt securities Income Fund can invest in may include high-yield,
"lower-grade" debt securities (including both high-yielding rated and unrated
securities), commonly known as "junk bonds," because they generally offer higher
income potential than investment grade securities. "Lower-grade" securities are
those rated below "investment grade," which means they have a rating below "BBB"
by Standard & Poor's or "Baa" by Moody's or similar ratings by other rating
organizations. "Lower-grade" debt securities also include securities that are
not rated by a nationally-recognized rating organization like Standard & Poor's
or Moody's, but which the Manager judges to be comparable to lower-rated
securities. Income Fund may not invest in securities rated below "B" by
Standard & Poor's or Moody's. 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 Fund. Appendix B to this Prospectus
describes the rating categories.
High yield, lower-grade securities, whether rated or unrated, often have
speculative characteristics. Lower-grade securities have special risks that
make them riskier investments than investment grade securities. They may be
subject to greater market fluctuations and risk of loss of income and principal
than lower yielding, investment grade securities. There may be less of a market
for them and therefore they may be harder to sell at an acceptable price. There
is a relatively greater possibility that the issuer's earnings may be
insufficient to make the payments of interest due on the bonds. The issuer's
low creditworthiness may increase the potential for its insolvency ("credit
risk"). All corporate debt securities (whether foreign or domestic) are subject
to some degree of credit risk. For foreign lower-grade debt securities, these
risks are in addition to the risks of investing in foreign securities, described
below. These risks mean that Income Fund may not achieve the expected income
from lower-grade securities, and that Income Fund's net asset value per share
may be affected by declines in value of these securities.
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 carefully
selecting individual issues and diversifying portfolio holdings by 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.
17
<PAGE>
/ / FOREIGN SECURITIES (INCOME FUND ONLY). Consistent with its investment
objective and policies, Income Fund may purchase equity and debt securities
issued or guaranteed by foreign companies or foreign governments or their
agencies. The Fund may purchase securities in any country, developed or
underdeveloped. Investments in securities of issuers in underdeveloped
countries generally involve more risk and may be considered highly speculative.
As a matter of fundamental policy, Income Fund may not invest more than 10% of
its total assets in foreign securities, except the following securities, in
which the Fund may invest up to 25% of its 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 will be held by Income Fund only in connection with
the purchase or sale of foreign securities.
/ / FOREIGN SECURITIES HAVE SPECIAL RISKS. For example, foreign issuers
are not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected by
changes in foreign currency rates, exchange control regulations, expropriation
or nationalization of a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental, economic or monetary policy in the U.S.
or abroad, or other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is contained in
the Statement of Additional Information.
/ / WARRANTS AND RIGHTS (INCOME FUND ONLY). Warrants are options to
purchase stock at set prices that are valid for a limited period of time.
Rights are similar to warrants but normally have a short duration and are
distributed directly by the issuer to its shareholders. Income Fund may invest
up to 5% of its total assets in warrants or rights. That 5% limitation does not
apply to warrants Income Fund has acquired as part of units with other
securities or that are attached to other securities. No more than 2% of Income
Fund's total assets may be invested in warrants that are not listed on either
The New York Stock Exchange or The American Stock Exchange. For further
details, see "Warrants and Rights" in the Statement of Additional Information.
/ / U.S. GOVERNMENT SECURITIES (ALL FUNDS). Each Fund may purchase U.S.
Government Securities. Certain U.S. Government Securities, including U.S.
Treasury bills, notes and bonds, and mortgage participation certificates
guaranteed by the Government National Mortgage Association ("Ginnie Mae") are
supported by the full faith and credit of the U.S. Government, which in general
terms means that the U.S. Treasury stands behind the obligation to pay principal
and interest. Ginnie Mae certificates are one type of mortgage-related U.S.
Government Security a Fund may invest in. Other mortgage-related U.S.
Government Securities the Funds invest in that are issued or guaranteed by
federal agencies or government-sponsored entities are not supported by the full
faith and credit of the U.S. Government. Those securities include obligations
supported by the right of the issuer to borrow from the U.S. Treasury, such as
obligations of Federal Home Loan Mortgage Corporation ("Freddie Mac"),
obligations supported only by the credit of the instrumentality, such as Federal
National Mortgage Association ("Fannie Mae") or the Student Loan Marketing
Association and obligations supported by the discretionary authority of the U.S.
Government to repurchase certain obligations of U.S. Government agencies or
instrumentalities such as the Federal Land Banks and the Federal Home Loan
Banks. Other U.S. Government Securities a Fund may invest in are collateralized
mortgage obligations ("CMOs").
The value of U.S. Government Securities will fluctuate depending on
prevailing interest rates. Because the yields on U.S. Government Securities are
generally lower than on corporate debt securities, when a Fund holds U.S.
Government Securities it may attempt to increase the income it can earn from
them by writing covered call options against them, when market conditions are
appropriate. Writing covered calls is explained below, under "Hedging."
18
<PAGE>
/ / MORTGAGE-BACKED SECURITIES AND CMOS (ALL FUNDS). Certain
mortgage-backed securities, whether issued by the U.S. Government or by private
issuers, "pass-through" to investors the interest and principal payments
generated by a pool of mortgages assembled for sale by government agencies
including the Federal Housing Administration, the Farmers Home Administration
or the Veterans Administration. Pass-through mortgage-backed securities entail
the risk that principal may be repaid at any time because of prepayments on the
underlying mortgages. That may result in greater price and yield volatility
than traditional fixed-income securities that have a fixed maturity and interest
rate.
Each Fund (other than Liquid Fund) may also invest in CMOs, which generally
are obligations fully collateralized by a portfolio of mortgages or
mortgage-related securities. Payment of the interest and principal generated by
the pool of mortgages relating to the CMOs are passed through to the holders as
the payments are received. CMOs are issued with a variety of classes or series
which have different maturities. Certain CMOs may be more volatile and less
liquid than other types of mortgage-related securities, because of the
possibility of the prepayment of principal due to prepayments on the underlying
mortgage loans.
Each Fund (other than Liquid Fund) may also invest in CMOs that are
"stripped." That means that the security is divided into two parts, one of
which receives some or all of the principal payments (and is known as a "P/O")
and the other which receives some or all of the interest (and is known as an
"I/O"). P/Os and I/Os are generally referred to as "derivative investments,"
discussed further below.
The yield to maturity on the class that receives only interest is extremely
sensitive to the rate of payment of the principal on the underlying mortgages.
Principal prepayments increase that sensitivity. Stripped securities that pay
"interest only" are therefore subject to greater price volatility when interest
rates change, and they have the additional risk that if the underlying mortgages
are prepaid, a Fund will lose the anticipated cash flow from the interest on the
prepaid mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, a Fund might receive back less than
its investment.
The value of "principal only" securities generally increases as interest
rates decline and prepayment rates rise. The price of these securities is
typically more volatile than that of coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and sold by
institutional investors through investment banking firms. At present,
established trading markets have not yet developed for these securities.
Therefore, most private-issuer stripped securities may be deemed "illiquid." If
a Fund holds illiquid stripped securities, the amount it can hold will be
subject to the Fund's investment policy limiting investments in illiquid
securities to 10% of the Fund's net assets.
/ / ASSET-BACKED SECURITIES (INCOME FUND AND GOVERNMENT SECURITIES FUND).
Income Fund and Government Securities Fund may invest in "asset-backed"
securities. These represent interests in pools of consumer loans and other
trade receivables, similar to mortgage-backed securities. They are issued by
trusts and "special purpose corporations." They are backed by a pool of assets,
such as credit card or auto loan receivables, which are the obligations of a
number of different parties. The income from the underlying pool is passed
through to holders, such as one of the Funds. These securities may be supported
by a credit enhancement, such as a letter of credit, a guarantee or a preference
right. However, the extent of the credit enhancement may be different for
different securities and generally applies to only a fraction of the security's
value. These securities present special risks. For example, in the case of
credit card receivables, the issuer of the security may have no security
interest in the related collateral.
19
<PAGE>
/ / INVERSE FLOATING RATE INSTRUMENTS (INCOME FUND AND GOVERNMENT
SECURITIES FUND). Income Fund and Government Securities Fund 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 FUND AND GOVERNMENT SECURITIES FUND).
Income Fund and Government Securities Fund may each invest up to 20% of their
respective assets in mortgage dollar rolls. In a mortgage dollar roll, the Fund
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 Fund foregoes principal and interest paid on the mortgage-backed securities.
The Fund 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 Fund 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 Fund'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 Fund treats mortgage rolls as two separate transactions: one involving the
purchase of securities and a separate transaction involving a sale. The Funds
do not currently intend to enter into mortgage dollar roll transactions that are
accounted for as a financing.
/ / SHORT-TERM DEBT SECURITIES. Each Fund may in the judgment of the
Manager hold cash or invest without limit in money market instruments. Only the
Income Fund may invest in money market instruments denominated in foreign
currency. The high quality, short-term money market instruments in which a Fund
may invest include U.S. Treasury and agency obligations; commercial paper
(short-term, unsecured, negotiable promissory notes of a domestic or foreign
company); short-term obligations of corporate issuers; and certificates of
deposit and bankers' acceptances (time drafts drawn on commercial banks usually
in connection with international transactions) of domestic or foreign banks and
savings and loan associations. The Income Fund will only purchase money market
instruments denominated in a foreign currency within the limitations described
under "Foreign Securities" and whose issuers have at least one billion dollars
(U.S.) of assets.
The Funds 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 investment 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.
/ / LOANS OF PORTFOLIO SECURITIES (ALL FUNDS). Subject to its investment
policies and restrictions, each Fund may seek to increase its income by lending
portfolio securities. A Fund must receive collateral for a loan. These loans
are limited to not more than 33 1/3% of the Fund's total assets and are subject
to other conditions described in the Statement of Additional
20
<PAGE>
Information. See "Loans of Portfolio Securities" in the Statement of
Additional Information on securities loans.
/ / "WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS (ALL FUNDS EXCEPT
LIQUID FUND). Each Fund (other than Liquid Fund) may purchase securities on a
"when-issued" basis and may purchase or sell securities on a "delayed delivery"
basis. These terms refer to securities that have been created and for which a
market exists, but which are not available for immediate delivery. There may be
a risk of loss to a Fund if the value of the security declines prior to the
settlement date.
/ / REPURCHASE AGREEMENTS (ALL FUNDS). Each Fund may enter into
repurchase agreements. In a repurchase transaction, a Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date. Repurchase
agreements must be fully collateralized. However, if the vendor fails to pay
the resale price on the delivery date, a Fund may experience costs in disposing
of the collateral and may experience losses if there is any delay in doing so.
/ / ILLIQUID AND RESTRICTED SECURITIES (ALL FUNDS). Under the policies
established by each Fund's Board of Directors, the Manager determines the
liquidity of certain of the Fund's investments. Investments may be illiquid
because of the absence of an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted security
is one that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933. A Fund will
not invest more than 10% of its total assets in illiquid and restricted
securities.
/ / HEDGING (ALL FUNDS OTHER THAN LIQUID FUND). A Fund may write covered
call options on securities, bond indices and, in the case of Income Fund,
foreign currency and may purchase and sell certain kinds of futures contracts,
forward contracts and options on futures, broadly-based bond indices and, in the
case of Income Fund, foreign currencies, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments." A Fund may use
hedging instruments for hedging, and, in the case of covered calls, non-hedging
purposes as described below.
A Fund may write covered call options and buy and sell futures and, in the
case of Income Fund, buy and sell forward contracts for a number of purposes.
It may do so to try to manage its exposure to the possibility that the prices of
its portfolio securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing individual
securities. It may do so to try to manage its exposure to changing interest
rates. Some of these strategies, such as selling futures and writing covered
calls, hedge a Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures, tend to increase a Fund's
exposure to the securities market. Forward contracts are used by Income Fund to
try to manage foreign currency risks on Income Fund's foreign investments.
Foreign currency options are also used by Income Fund to try to protect against
declines in the dollar value of foreign securities Income Fund owns, or to
protect against an increase in the dollar cost of buying foreign securities.
Writing covered call options may also provide income to a Fund for liquidity
purposes, defensive reasons, or to raise cash to distribute to shareholders.
/ / FUTURES. A Fund may buy and sell futures contracts that relate to
(1) foreign currencies (Income Fund only), (2) financial indices, including, in
the case of Income Fund, foreign government securities indices (these are
referred to as Financial Futures), and (3) interest rates (these are referred to
as Interest Rate Futures). These types of Futures are described in "Hedging" in
the Statement of Additional Information.
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/ / COVERED CALL OPTIONS AND OPTIONS ON FUTURES. A Fund may write (that
is, sell) call options on securities, indices and, in the case of Income Fund,
foreign currencies for hedging purposes and write call options on Futures for
hedging and non-hedging purposes, but only if all such calls are "covered."
This means the Fund must own the security subject to the call while the call is
outstanding or segregate appropriate liquid assets. When a Fund writes a call,
it receives cash (called a premium). The call gives the buyer the ability to
buy the investment on which the call was written from the Fund at the call price
during the period in which the call may be exercised. If the value of the
investment does not rise above the call price, it is likely that the call will
lapse without being exercised, while the Fund keeps the cash premium (and the
investment). After the Fund writes a call, not more than 20% of the value of
its total assets may be subject to calls.
A Fund may sell covered call options that are traded on U.S. or, in the
case of Income Fund, foreign securities or commodity exchanges or which are used
by the Options Clearing Corporation. In the case of foreign currency options,
they may be quoted by major recognized dealers in those options.
/ / FORWARD CONTRACTS (INCOME FUND ONLY). Forward Contracts are foreign
currency exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. Income Fund uses them to try to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that the Fund
has purchased or sold, or to protect against possible losses from changes in the
relative value of the U.S. dollar and a foreign currency. Normally, Income Fund
will not engage in "cross hedging," where the Fund hedges against changes in
currencies other than the currency in which a security it holds is denominated.
Income Fund will not speculate in foreign exchange.
/ / INTEREST RATE SWAPS. A Fund may enter into interest rate swaps both
for hedging and to seek to increase total return. In an interest rate swap, a
Fund and another party exchange their right to receive, or their obligation to
pay, interest on a security. For example, they may swap a right to receive
floating rate interest payments for fixed rate payments. A Fund enters into
swaps only on a net basis, which means the two payment streams are netted out,
with the Fund receiving or paying, as the case may be, only the net amount of
the two payments. A Fund will segregate liquid assets (such as cash or U.S.
Government Securities) to cover any amounts it could owe under swaps that exceed
the amounts it is entitled to receive, and it will adjust that amount daily, as
needed.
/ / HEDGING INSTRUMENTS CAN BE VOLATILE INVESTMENTS AND MAY INVOLVE
SPECIAL RISKS. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is required for
normal portfolio management. If the Manager uses a hedging instrument at the
wrong time or judges market conditions incorrectly, hedging strategies may
reduce a Fund's return. A Fund could also experience losses if the prices of
its futures and options positions were not correlated with its other investments
or if it could not close out a position because of an illiquid market for the
future or option.
Options trading involves the payment of premiums, and options, futures and
forward contracts are subject to special tax rules that may affect the amount,
timing and character of a Fund's income and distributions. There are also
special risks in particular hedging strategies. For example, if a covered call
written by a Fund is exercised on an investment that has increased in value, the
Fund will be required to sell the investment at the call price and will not be
able to realize any profit if the investment has increased in value above the
call price. The use of Forward Contracts may reduce the gain that would
otherwise result from a change in the relationship between the U.S. dollar and a
foreign currency. Interest rate swaps are subject to the risk that the other
party will fail to meet its obligations (or that the underlying issuer will fail
to pay on time), as well as interest rate risks. A Fund could be obligated to
pay more under its swap agreements
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than it receives under them, as a result of interest rate changes. These
risks are described in greater detail in the Statement of Additional
Information.
/ / DERIVATIVE INVESTMENTS (OTHER THAN LIQUID FUND). In general, a
"derivative investment" is a specially designed investment whose performance is
linked to the performance of another investment or security, such as an option,
future, index, currency or commodity. A Fund may not purchase or sell physical
commodities; however, Income Fund may purchase and sell foreign currency in
hedging transactions. This shall not prevent a Fund from selling covered call
options and buying or selling futures contracts or from investing in securities
or other instruments backed by physical commodities.
Derivative investments used by a Fund are used in some cases for hedging
purposes and in other cases to seek income. In the broadest sense,
exchange-traded options and futures contracts (discussed in "Hedging," above)
may be considered "derivative investments."
A Fund may invest in different types of derivatives. "Index-linked" or
"commodity-linked" notes are debt securities of companies that call for interest
payments and/or payment on the maturity of the note in different terms than the
typical note where the borrower agrees to pay a fixed sum on the maturity of the
note. Principal and/or interest payments on an index-linked note depend on the
performance of one or more market indices, such as the S&P 500 Index or a
weighted index of commodity futures, such as crude oil, gasoline and natural
gas. A Fund may invest in "debt exchangeable for common stock" of an issuer or
"equity-linked" debt securities of an issuer. At maturity, the principal amount
of the debt security is exchanged for common stock of the issuer or is payable
in an amount based on the issuer's common stock price at the time of maturity.
In either case there is a risk that the amount payable at maturity will be less
than the expected principal amount of the debt.
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the maturity of
the instrument. Also, the underlying investment or security might not perform
the way the Manager expected it to perform. Markets, underlying securities and
indices may move in a direction not anticipated by the Manager. Performance of
derivative investments may also be influenced by interest rate and stock market
changes in the U.S. and abroad. All of this can mean that a Fund will realize
less principal or income from the investment than expected. Certain derivative
investments held by a Fund may be illiquid. Please refer to "Illiquid and
Restricted Securities."
OTHER INVESTMENT RESTRICTIONS. Each Fund has investment restrictions which are
"fundamental" policies. Among these fundamental policies, Income Fund cannot do
any of the following:
/ / Borrow amounts in excess of 10% of the Fund's total assets, taken at
market value at the time of the borrowing, and then only from banks as a
temporary measure for extraordinary or emergency purposes, or make investments
in portfolio securities while such outstanding borrowings exceed 5% of the
Fund's total assets.
/ / (a) Invest more than 5% of the Fund's 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% of the
Fund's total assets in the obligations of any one bank; and (b) purchase more
than either (i) 10% in principal amount of the outstanding debt securities of an
issuer, or (ii) 10% of the outstanding voting securities of an issuer, except
that such restrictions shall not apply to securities issued or guaranteed by the
United States Government or its agencies, bank money instruments or bank
repurchase agreements.
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/ / Invest more than 25% of its assets in securities of issuers in any
single industry, provided that this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
For the purpose of this restriction, each utility that provides a separate
service (e.g., gas, gas transmission, electric or telephone) shall be considered
a separate industry. This test shall be applied on a pro forma basis using the
market value of all assets immediately prior to making any investment.
/ / 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).
Liquid Fund and Government Securities Fund cannot do any of the following:
/ / Borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might otherwise require the
untimely disposition of securities, borrow in the aggregate more than 10% of the
value of its total assets, or invest in portfolio securities while outstanding
borrowings exceed 5% of the value of its total assets.
/ / Invest more than 15% of the value of its total assets in the
obligations of any one bank, or invest more than 5% of the value of its total
assets in the commercial paper of any one issuer.
/ / Invest more than 25% 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
bankers and domestic bankers' acceptances (excluding foreign branches of
domestic banks).
HOW THE FUNDS ARE MANAGED
ORGANIZATION AND HISTORY. The Company was organized in 1981 as a Maryland
corporation. The Company is an open-end management investment company.
Organized as a series fund, the Company presently has eight series, each of
which is diversified.
The Company is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors meet
periodically throughout the year to oversee each Fund's activities, review its
performance, and review the actions of the Manager. "Directors and Officers of
the Fund" in the Statement of Additional Information names the Directors and
officers of the Funds and provides more information about them. Although the
Funds are not required by law to hold annual meetings, they may hold shareholder
meetings from time to time on important matters, and shareholders have the right
to call a meeting to remove a Director or to take other action described in the
Company's Articles of Incorporation.
The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Company into two or more classes. With respect to
Income Fund and Government Securities Fund, the Board has done so, and each of
these Funds currently has two classes of shares, Class A and Class B. Liquid
Fund offers only a single class of shares. All classes of a Fund invest in the
same investment portfolio. Each class has its own dividends and distributions,
and pays certain expenses which may be different for the different classes.
Each class may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Shares of each class may have separate
voting rights on matters in which interests of one class are different from
interests of another class, and shares of a particular class vote as a class on
matters that affect that class alone.
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Shares are freely transferrable. Please refer to "How the Funds are Managed"
in the Statement of Additional Information for further information on voting
of shares.
THE MANAGER AND ITS AFFILIATES. The Funds are managed by the Manager,
OppenheimerFunds, Inc., which is responsible for each Fund's investments and
handles its day-to-day business. The Manager carries out its duties, subject to
the policies established by the Board of Directors, under separate Investment
Advisory Agreements for each Fund which state the Manager's responsibilities and
its fees. The Agreements set forth the fees paid by a Fund to the Manager, and
describes the expenses that a Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959. The Manager
and its affiliates currently manage investment companies, including other
Oppenheimer funds, with assets of more than $40 billion as of December 31, 1995,
and with more than 2.8 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
/ / PORTFOLIO MANAGERS. The Portfolio Manager of Government Securities
Fund and Income Fund is David A. Rosenberg. He is a Vice President of the
Manager and has been the person principally responsible for the day-to-day
management of the Funds' portfolio since March 1996. Mr. Rosenberg also serves
as a portfolio manager of other Oppenheimer funds. Previously he was an officer
and portfolio manager for Delaware Investment Advisors and for one of its mutual
funds. The Portfolio Manager of Liquid Fund is Carol E. Wolf. Ms. Wolf has
been the person principally responsible for the day-to-day management of Liquid
Fund's portfolio since March 1996. Ms. Wolf is also an officer of Centennial
Asset Management Corporation, an investment adviser subsidiary of the Manager,
and is an officer and portfolio manager of other Oppenheimer funds.
/ / FEES AND EXPENSES. Under separate Investment Advisory Agreements with
each Fund, each Fund pays the Manager a monthly fee equal to a percentage of the
Fund's average daily net assets as follows:
LIQUID FUND
NET ASSET VALUE ANNUAL RATE
--------------- -----------
First $200,000,000 .................... 0.50%
Next $100,000,000 ..................... 0.45%
Amount over $300,000,000 .............. 0.40%
GOVERNMENT SECURITIES FUND AND INCOME FUND
NET ASSET VALUE ANNUAL RATE
-------------- -----------
First $300,000,000 .................... 0.625%
Next $100,000,000 ..................... 0.500%
Amount over $400,000,000 .............. 0.450%
Each Fund pays expenses related to its daily operations, such as custodian
fees, Directors' fees, transfer agency fees, legal and auditing costs. Those
expenses are paid out of a Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of shares, and
therefore are indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreements and the other expenses paid
by the Funds is contained in the Statement of Additional Information.
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There is also information about the Funds' brokerage policies and practices
in "Brokerage Policies of the Funds" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Funds'
portfolio transactions. Because the Funds purchase most of their portfolio
securities directly from the sellers and not through brokers, the Funds
therefore incur relatively little expense for brokerage. From time to time the
Funds may use brokers when buying portfolio securities. When deciding which
brokers to use, the Manager is permitted by the Investment Advisory Agreements
to consider whether brokers have sold shares of the Funds or any other funds for
which the Manager serves as investment adviser.
/ / THE DISTRIBUTOR. A Fund's shares are sold through dealers and brokers
that have a sales agreement with OppenheimerFunds Distributor, Inc., a
subsidiary of the Manager that acts as each Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
/ / THE TRANSFER AGENT. Each Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for each Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for the other Oppenheimer funds. Shareholders should direct
inquiries about their accounts, to the Transfer Agent at the address and
toll-free number shown below in this Prospectus or on the back cover.
PERFORMANCE OF THE FUNDS
EXPLANATION OF PERFORMANCE TERMINOLOGY. Each Fund uses the terms "total return"
and "yield" to illustrate its performance. Liquid Fund also uses "compounded
effective yield" to illustrate its performance. The performance of each class
of shares of Income Fund and Government Securities Fund is shown separately,
because the performance of each class of shares will usually be different as a
result of the different kinds of expenses each class bears. These returns
measure the performance of a hypothetical account in a Fund over various
periods, and do not show the performance of each shareholder's account (which
will vary if dividends are received in cash, or shares are sold or purchased).
A Fund's performance data may help you see how well your investment has done
over time.
It is important to understand that a Fund's yields and total returns
represent past performance and should not be considered to be predictions of
future returns or performance. This performance data is described below, but
more detailed information about how total returns and yields are calculated is
contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare a Fund's performance. A
Fund's investment performance will vary over time, depending on market
conditions, the composition of the portfolio, expenses and, in the case of
Income Fund or Government Securities Fund, which class of shares you purchase.
/ / TOTAL RETURNS. There are different types of "total returns" used to
measure a Fund's performance. Total return is the change in value of a
hypothetical investment in a Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
a Fund's actual year-by-year performance.
In the case of Income Fund and Government Securities Fund, when total
returns are quoted for Class A shares, they include the payment of the current
maximum initial sales charge. When total returns are shown for Class B shares,
they include the effect of the contingent deferred sales charge that applies to
the period for which total return is shown. Total returns may also be quoted
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at "net asset value," without including the effect of either the front-end or
the contingent deferred sales charge, as applicable, and those returns would be
reduced if sales charges were deducted.
/ / YIELD FOR INCOME FUND AND GOVERNMENT SECURITIES FUND. Each class of
shares of Income Fund and Government Securities Fund calculates its yield by
dividing the annualized net investment income per share on the portfolio during
a 30-day period by the maximum offering price on the last day of the period.
The yield of each class will differ because of the different expenses of each
class of shares. The yield data represents a hypothetical investment return on
the portfolio, and does not measure an investment return based on dividends
actually paid to shareholders. To show that return, a dividend yield may be
calculated. Dividend yield is calculated by dividing the dividends of a class
derived from net investment income during a stated period by the maximum
offering price on the last day of the period. Yields and dividend yields for
Class A shares reflect the deduction of the maximum initial sales charge, but
may also be shown based on a Fund's net asset value per share. Yields for
Class B shares do not reflect the deduction of the contingent deferred sales
charge.
/ / YIELD FOR LIQUID FUND. The "yield" of Liquid Fund is the income
generated by an investment in the Fund over a seven-day period, which is then
"annualized." In annualizing, the amount of income generated by the investment
during that seven days is assumed to be generated each week over a 52-week
period, and is shown as a percentage of the investment.
The "compounded effective yield" is calculated similarly, but the
annualized income earned by an investment in Liquid Fund is assumed to be
reinvested in additional shares. The "compounded effective yield" will be
slightly higher than the yield because of the effect of the assumed
reinvestment.
A B O U T Y O U R A C C O U N T
HOW TO BUY SHARES
LIQUID FUND. Shares of Liquid Fund are sold at the share price next calculated
after receipt of your purchase order. There is no sales charge for direct
purchases of Liquid Fund shares.
INCOME FUND AND GOVERNMENT SECURITIES FUND. Income Fund and Government
Securities Fund each offer investors two different classes of shares. The
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
/ / CLASS A SHARES. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
OppenheimerFunds prototype 401(k) plans). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for OppenheimerFunds
prototype 401(k) plans) in shares of one or more Oppenheimer funds, you will not
pay an initial sales charge, but if you sell any of those shares within 18
months of buying them, you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you invested.
Sales charge rates are described in "Buying Class A Shares," below.
/ / CLASS B SHARES. If you buy Class B shares, you pay no sales charge at
the time of purchase, but if you sell your shares within five years of buying
them, you will normally pay a contingent deferred sales charge that varies
depending on how long you owned your shares, as described in "Buying Class B
Shares," below.
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WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that a Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. A Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your financial advisor
with a framework in which to choose a class, we have made some assumptions using
a hypothetical investment in a Fund. We used the sales charge rates that apply
to each class, and considered the effect of the asset-based sales charge on
Class B expenses (which, like all expenses, will affect your investment return).
For the sake of comparison, we have assumed that there is a 10% rate of
appreciation in your investment each year. Of course, the actual performance of
your investment cannot be predicted and will vary, based on a Fund's actual
investment returns, and the operating expenses borne by each class of shares,
and which class of shares you invest in.
The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one class of
shares and not a combination of shares of different classes.
/ / HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of shares.
Because of the effect of class-based expenses your choice will also depend on
how much you invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the effect of paying
an initial sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the effect
over time of higher class-based expenses on Class B shares for which no initial
sales charge is paid.
/ / INVESTING FOR THE SHORT TERM. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than five years),
you should probably consider purchasing Class A shares rather than Class B
shares, because of the effect of the Class B contingent deferred sales charge if
you redeem in less than six years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in the
short-term.
And for most investors who invest $500,000 or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you intend to
hold your shares. For that reason, the Distributor normally will not accept
purchase orders of $500,000 or more of Class B shares from a single investor.
/ / INVESTING FOR THE LONGER TERM. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to your
money for six years or more, Class B shares may be an appropriate consideration,
if you plan to invest less than $100,000. If you plan to invest more than
$100,000 over the long term, Class A shares will likely be more advantageous
than Class B shares, as discussed above, because of the effect of the expected
lower expenses for Class A shares and the reduced initial sales charge available
for larger investments in Class A shares under a Fund's Right of Accumulation.
Of course all of these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over time,
using the assumed annual performance return stated above, and you should analyze
your options carefully.
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/ / ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Because
some features (such as check writing) may not be available to Class B
shareholders, or other features (such as Automatic Withdrawal Plans) may not be
advisable (because of the effect of the contingent deferred sales charge in
non-retirement accounts) for Class B shareholders, you should carefully review
how you plan to use your investment account before deciding which class of
shares to buy. For example, share certificates are not available for Class B
shares and if you are considering using your shares as collateral for a loan,
this may be a factor to consider. Additionally, dividends payable to Class B
shareholders will be reduced by the additional expenses borne by those classes
that are not borne by Class A, such as the Class B asset-based sales charges
described below and in the Statement of Additional Information.
/ / HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares, may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the Class B contingent deferred sales charges and asset-based sales
charges are the same as the purpose of the front-end sales charge on sales of
Class A shares: to reimburse the Distributor for commissions it pays to dealers
and financial institutions for selling shares.
HOW MUCH MUST YOU INVEST? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25 can
be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement Accounts
(IRAs), you can make an initial investment of as little as $250 (if your IRA is
established under an Asset Builder Plan, the $25 minimum applies), and
subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from a Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your dealer
or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
/ / HOW ARE SHARES PURCHASED? You can buy shares several ways --through
any dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. WHEN YOU BUY SHARES OF INCOME FUND OR GOVERNMENT SECURITIES
FUND, BE SURE TO SPECIFY CLASS A OR CLASS B SHARES. IF YOU DO NOT CHOOSE, YOUR
INVESTMENT WILL BE MADE IN CLASS A SHARES.
/ / BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order
with the Distributor on your behalf.
/ / BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for you.
/ / PAYMENT BY FEDERAL FUNDS WIRE (LIQUID FUND ONLY). Shares of Liquid
Fund may be purchased by Federal Funds wire. The minimum investment is $2,500.
You must FIRST call the
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Distributor's Wire Department at 1-800-525-7041 to notify the Distributor of
the wire, and to receive further instructions.
/ / GUARANTEE PAYMENT (LIQUID FUND ONLY). Broker-dealers that have sales
agreements with the Distributor may place purchase orders for shares on a
regular business day with the Distributor before the close of The New York Stock
Exchange, which is normally 4:00 P.M., but may be earlier on some days, and the
order will be effected that day if the broker-dealer guarantees that the Fund's
custodian bank will receive Federal Funds to pay for the purchase by 2:00 P.M.
on the next regular business day. Dividends will begin to accrue on shares
purchased in this way on the regular business day the Federal Funds are received
by the required time.
/ / BUYING SHARES THROUGH OPPENHEIMERFUNDS ACCOUNTLINK. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member to
transmit funds electronically to PURCHASE SHARES, to have the Transfer Agent
SEND REDEMPTION PROCEEDS, or to TRANSMIT DIVIDENDS AND DISTRIBUTIONS.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH transfer
to buy shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions used to
establish your account. Please refer to "AccountLink," below for more details.
/ / ASSET BUILDER PLANS. You may purchase shares of a Fund (and up to four
other Oppenheimer funds) automatically each month from your account at a bank or
other financial institution under an Asset Builder Plan with AccountLink.
Details are on the Application and in the Statement of Additional Information.
/ / AT WHAT PRICES ARE SHARES SOLD? Shares are sold at the public offering
price based on the net asset value (and any initial sales charge that applies)
that is next determined after the Distributor receives the purchase order in
Denver, Colorado. In most cases, to enable you to receive that day's offering
price, the Distributor must receive your order by the time of day The New York
Stock Exchange closes, which is normally 4:00 P.M., New York time, but may be
earlier on some days (all references to time in this Prospectus mean "New York
time"). The net asset value of each class of shares is determined as of that
time on each day The New York Stock Exchange is open (which is a "regular
business day").
If you buy shares through a dealer, the dealer must receive your order by
the close of The New York Stock Exchange on a regular business day and transmit
it to the Distributor so that it is received before the Distributor's close of
business that day, which is normally 5:00 P.M. THE DISTRIBUTOR, IN ITS SOLE
DISCRETION, MAY REJECT ANY PURCHASE ORDER FOR FUND SHARES.
SPECIAL SALES CHARGE ARRANGEMENTS FOR CERTAIN PERSONS. Appendix C to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of Fund shares
(including purchases by exchange) by a person who was a shareholder of one of
the Former Quest for Value Funds and Former Connecticut Mutual Funds (each as
defined in that Appendix).
BUYING CLASS A SHARES. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in some
cases, described below, purchases are not subject to an initial sales charge,
and the offering price may be net asset value. In some cases, reduced sales
charges may be available, as described below. Out of the amount you invest, a
Fund receives the net asset value to invest for your account. The sales charge
varies depending on the
30
<PAGE>
amount of your purchase. A portion of the sales charge may be retained by
the Distributor and allocated to your dealer as commission. Different sales
charge rates and commissions applied to sales of Class A shares prior to
March 18, 1996. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
<TABLE>
<CAPTION>
FRONT-END SALES FRONT-END SALES COMMISSION AS
AMOUNT OF PURCHASE CHARGE AS PERCENTAGE CHARGE AS PERCENTAGE PERCENTAGE OF
OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED OFFERING PRICE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%
- ------------------------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.50% 4.71% 3.75%
- ------------------------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.50% 3.63% 2.75%
- ------------------------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- ------------------------------------------------------------------------------------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
/ / CLASS A CONTINGENT DEFERRED SALES CHARGE. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
/ / purchases aggregating $1 million or more, or
/ / purchases by an OppenheimerFunds prototype 401(k) plan that: (1) buys
shares costing $500,000 or more or (2) has, at the time of purchase, 100 or more
eligible participants, or (3) certifies that it projects to have annual plan
purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those purchases in an
amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50% of the
next $2.5 million, plus 0.25% of purchases over $5 million. That commission will
be paid only on the amount of those purchases in excess of $1 million ($500,000
for purchases by OppenheimerFunds 401(k) prototype plans) that were not
previously subject to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called the
"Class A contingent deferred sales charge") will be deducted from the redemption
proceeds. That sales charge will be equal to 1.0% either (1) of the aggregate
net asset value of the redeemed shares (not including shares purchased by
reinvestment of dividends or capital gain distributions) or (2) the original
cost of the shares, whichever is less. The Class A contingent deferred sales
charge will not exceed the aggregate commissions the Distributor paid to your
dealer on all Class A shares of all Oppenheimer funds you purchased subject to
the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, a
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
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<PAGE>
No Class A contingent deferred sales charge is charged on exchanges of
shares under a Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the sales charge will
apply.
/ / SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients. Dealers whose
sales of Class A shares of Oppenheimer funds (other than money market funds)
under OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5 million per
year (calculated per quarter), will receive monthly one-half of the
Distributor's retained commissions on those sales, and if those sales exceed $10
million per year, those dealers will receive the Distributor's entire retained
commission on those sales.
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES. You may be eligible to buy
Class A shares of Income Fund or Government Securities Fund at reduced sales
charge rates in one or more of the following ways:
/ / RIGHT OF ACCUMULATION. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual accounts,
or jointly, or for trust or custodial accounts on behalf of your children who
are minors. A fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and Class B
shares of a Fund and other Oppenheimer funds to reduce the sales charge rate for
current purchases of Class A shares. You can also include Class A and Class B
shares of Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate for current
purchases of Class A shares, provided that you still hold your investment in one
of the Oppenheimer funds. The value of those shares will be based on the
greater of the amount you paid for the shares or their current value (at
offering price). The Oppenheimer funds are listed in "Reduced Sales Charges" in
the Statement of Additional Information, or a list can be obtained from the
Distributor. The reduced sales charge will apply only to current purchases and
must be requested when you buy your shares.
/ / LETTER OF INTENT. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of a Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies to
your purchases of Class A shares. The total amount of your intended purchases
of both Class A and Class B shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. More information is
contained in the Application and in "Reduced Sales Charges" in the Statement of
Additional Information.
/ / WAIVERS OF CLASS A SALES CHARGES. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES FOR CERTAIN
PURCHASERS. Class A shares purchased by the following investors are not subject
to any Class A sales charges:
/ / the Manager or its affiliates;
/ / present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of a Fund, the Manager and its affiliates,
and retirement plans established by them for their employees;
32
<PAGE>
/ / registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
/ / dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for their
employees;
/ / employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered into
sales arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use of
shares of a Fund in particular investment products made available to their
clients (those clients may be charged a transaction fee by their dealer, broker
or advisor for the purchase or sale of Fund shares)
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares of defined contribution
employee retirement plans for which the dealer, broker or investment adviser
provides administrative services.
/ / directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit sharing or
other benefit plan which beneficially owns shares for those persons;
/ / accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;
/ / any unit investment trust that has entered into an appropriate
agreement with the Distributor;
/ / a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B shares of a Former Quest for Value Fund were exchanged
for Class A shares of that Fund due to the termination of the Class B TRAC-2000
program on November 24, 1995; or
/ / qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds at
net asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, provided that such arrangements are
consummated and share purchases commence by March 31, 1996.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES IN CERTAIN
TRANSACTIONS. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
/ / shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which a Fund is a party;
/ / shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or one of its affiliates
acts as sponsor;
/ / shares purchased by the reinvestment of dividends or other
distributions reinvested from a Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
33
<PAGE>
/ / shares purchased and paid for with the proceeds of shares redeemed in
the past 12 months from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid (this waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were purchased
and paid for in this manner); this waiver must be requested when the purchase
order is placed for your Fund shares, and the Distributor may require evidence
of your qualification for this waiver; and
/ / shares purchased with the proceeds of maturing principal of units of
any Qualified Unit Investment Liquid Trust Series.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN
REDEMPTIONS. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
/ / for retirement distributions or loans to participants or beneficiaries
from qualified retirement plans, deferred compensation plans or other employee
benefit plans, including OppenheimerFunds prototype 401(k) plans (these are all
referred to as "Retirement Plans");
/ / to return excess contributions made to Retirement Plans;
/ / to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
/ / involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
/ / if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales charge, the
dealer agrees in writing to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month (and
no further commission will be payable if the shares are redeemed within 18
months of purchase); or
/ / for distributions from OppenheimerFunds prototype 401(k) plans for any
of the following cases or purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or beneficiary (the
death or disability must occur after the participant's account was established);
(2) hardship withdrawals, as defined in the plan; (3) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (4) to meet the
minimum distribution requirements of the Internal Revenue Code; (5) to establish
"substantially equal periodic payments" as described in Section 72(t) of the
Internal Revenue Code, or (6) separation from service.
/ / SERVICE PLAN FOR CLASS A SHARES. Each of Income Fund and Government
Securities Fund has adopted a Service Plan for Class A shares to reimburse the
Distributor for a portion of its costs incurred in connection with the personal
service and maintenance of accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the average annual
net assets of Class A shares of a Fund. The Distributor uses all of those fees
to compensate dealers, brokers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their customers
that hold Class A shares and to reimburse itself (if a Fund's Board of Directors
authorizes such reimbursements, which no Fund Board has done as yet) for its
other expenditures under the Plan.
Services to be provided include, among others, answering customer inquiries
about a Fund, assisting in establishing and maintaining accounts in a Fund,
making a Fund's investment plans
34
<PAGE>
available and providing other services at the request of a Fund or the
Distributor. Payments are made by the Distributor quarterly at an annual rate
not to exceed 0.25% of the average annual net assets of Class A shares held
in accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within
six years of their purchase, a contingent deferred sales charge will be deducted
from the redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains distributions. The
charge will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent deferred
sales charge is not imposed on the amount of your account value represented by
the increase in net asset value over the initial purchase price (including
increases due to the reinvestment of dividends and capital gains distributions).
The Class B contingent deferred sales charge is paid to the Distributor to
compensate it for providing distribution-related services to a Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, a Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over five years, and (3) shares held the longest during the five-year
period. The contingent deferred sales charge is not imposed in the circumstances
described in "Waivers of Class B Sales Charges," below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
YEARS SINCE BEGINNING OF CONTINGENT DEFERRED SALES CHARGE
MONTH IN WHICH ON REDEMPTIONS IN THAT YEAR
PURCHASE ORDER WAS ACCEPTED (AS % OF AMOUNT SUBJECT TO CHARGE)
- --------------------------------------------------------------------
0-1 5.0%
- --------------------------------------------------------------------
1-2 4.0%
- --------------------------------------------------------------------
2-3 3.0%
- --------------------------------------------------------------------
3-4 3.0%
- --------------------------------------------------------------------
4-5 2.0%
- --------------------------------------------------------------------
5-6 1.0%
- --------------------------------------------------------------------
6 and following None
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to March 18, 1996.
/ / AUTOMATIC CONVERSION OF CLASS B SHARES. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative
35
<PAGE>
net asset value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative Sales
Arrangements - Class A and Class B Shares" in the Statement of Additional
Information.
/ / DISTRIBUTION AND SERVICE PLANS FOR CLASS B SHARES. Each of Income Fund
and Government Securities Fund has adopted Distribution and Service Plans for
Class B shares to compensate the Distributor for its costs in distributing
Class B shares and servicing accounts. Under the Plans, a Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less. The Distributor also receives
a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge allows
investors to buy Class B shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B shares. Those services are
similar to those provided under the Class A Service Plan, described above. The
Distributor pays the 0.25% service fees to dealers in advance for the first year
after Class B shares have been sold by the dealer and retains the service fee
paid by a Fund in that year. After the shares have been held for a year, the
Distributor pays the service fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 2.75% on the purchase
price of Class B shares to dealers from its own resources at the time of sale.
The total amount paid by the Distributor to the dealer at the time of sales of
Class B shares is therefore 3.00% of the purchase price. A Fund pays the
asset-based sales charge to the Distributor for its services rendered in
distributing Class B shares. Those payments, retained by the Distributor, are
at a fixed rate that is not related to the Distributor's expenses. The services
rendered by the Distributor include paying and financing the payment of sales
commissions, service fees and other costs of distributing and selling Class B
shares.
The Distributor's actual expenses in selling Class B shares may be more
than the payments it receives from contingent deferred sales charges collected
on redeemed shares and from a Fund under the Distribution and Service Plans for
Class B shares. Therefore, those expenses may be carried over and paid in
future years. If a Fund terminates its Plan, the Board of Directors may allow
the Fund to continue payments of the asset-based sales charge to the Distributor
for distributing shares before the Plan was terminated.
/ / WAIVERS OF CLASS B SALES CHARGES. The Class B contingent deferred
sales charges will not be applied to shares purchased in certain types of
transactions nor will it apply to Class B shares redeemed in certain
circumstances as described below. The reasons for this policy are in "Reduced
Sales Charges" in the Statement of Additional Information.
WAIVERS FOR REDEMPTIONS IN CERTAIN CASES. The Class B contingent deferred
sales charges will be waived for redemptions of shares in the following cases,
if the Transfer Agent is notified that these conditions apply to the redemption:
/ / distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59-1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent receives
the request), or (b) following the death or disability (as defined in the
36
<PAGE>
Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
/ / redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or disability
must have occurred after the account was established, and for disability you
must provide evidence of a determination of disability by the Social Security
Administration);
/ / returns of excess contributions to Retirement Plans;
/ / distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7) custodial
plans or pension or profit sharing plans before the participant is age 59-1/2
but only after the participant has separated from service, if the distributions
are made in substantially equal periodic payments over the life (or life
expectancy) of the participant or the joint lives (or joint life and last
survivor expectancy) of the participant and the participant's designated
beneficiary (and the distributions must comply with other requirements for such
distributions under the Internal Revenue Code and may not exceed 10% of the
account value annually, measured from the date the Transfer Agent receives the
request);
/ / shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
/ / distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as defined
in the Internal Revenue Code; (3) to meet minimum distribution requirements as
defined in the Internal Revenue Code; (4) to make "substantially equal periodic
payments" as described in Section 72(t) of the Internal Revenue Code; or (5) for
separation from service.
WAIVERS FOR SHARES SOLD OR ISSUED IN CERTAIN TRANSACTIONS. The contingent
deferred sales charge is also waived on Class B shares sold or issued in the
following cases:
/ / shares sold to the Manager or its affiliates;
/ / shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; and
/ / shares issued in plans of reorganization to which a Fund is a party.
SPECIAL INVESTOR SERVICES
ACCOUNTLINK. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please refer to the
Application for details or call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your shares
through your dealer. After your account is established, you can request
AccountLink privileges by sending signature-guaranteed
37
<PAGE>
instructions to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges. After
you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
/ / USING ACCOUNTLINK TO BUY SHARES. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts up
to $250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
/ / PHONELINK. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
/ / PURCHASING SHARES. You may purchase shares in amounts up to $100,000 by
phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with a Fund, to pay for these purchases.
/ / EXCHANGING SHARES. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer funds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares,"
below, for details.
/ / SELLING SHARES. You can redeem shares by telephone automatically by
calling the PhoneLink number and a Fund will send the proceeds directly to your
AccountLink bank account. Please refer to "How to Sell Shares," below for
details.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. Each Fund has several plans that
enable you to sell shares automatically or exchange them to another Oppenheimer
funds account on a regular basis:
/ / AUTOMATIC WITHDRAWAL PLANS. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks may
be sent to you or sent automatically to your bank account on AccountLink. You
may even set up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Application and Statement of Additional
Information for more details.
/ / AUTOMATIC EXCHANGE PLANS. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms of
the Exchange Privilege, described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares, you have up to 6 months to reinvest all or part of the redemption
proceeds in Class A shares of the same Fund or other Oppenheimer funds without
paying a sales charge. This privilege applies to Class A shares that you
purchased subject to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed them. You
must be sure to
38
<PAGE>
ask the Distributor for this privilege when you send your
payment. Please consult the Statement of Additional Information for more
details.
RETIREMENT PLANS. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer, the
plan trustee or administrator must make the purchase of shares for your
retirement plan account. The Distributor offers a number of different retirement
plans that can be used by individuals and employers:
/ / INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for individuals
and their spouses
/ / 403(b)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
/ / SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SARSEP-IRAs
/ / PENSION AND PROFIT-SHARING PLANS for self-employed persons and other
employers
/ / 401(k) PROTOTYPE RETIREMENT PLANS for businesses
Please call the Distributor for the OppenheimerFunds plan documents, which
contain important information and applications.
HOW TO SELL SHARES
You can arrange to take money out of your account by selling (redeeming)
some or all of your shares on any regular business day. Your shares will be
sold at the next net asset value calculated after your order is received and
accepted by the Transfer Agent. Each Fund offers you a number of ways to sell
your shares: in writing, or by using the Fund's check writing privilege, or by
telephone. You can also set up Automatic Withdrawal Plans to redeem shares on a
regular basis, as described above. If you sell shares of the Liquid Fund which
were acquired by an exchange from Class B shares or Class A shares subject to a
CDSC of any of the other Oppenheimer funds, such shares of Liquid Fund when
redeemed are subject to the CDSC rate of the original shares purchased.
IF YOU HAVE QUESTIONS ABOUT ANY OF THESE PROCEDURES, AND ESPECIALLY IF YOU
ARE REDEEMING SHARES IN A SPECIAL SITUATION, SUCH AS DUE TO THE DEATH OF THE
OWNER, OR FROM A RETIREMENT PLAN, PLEASE CALL THE TRANSFER AGENT FIRST, AT
1-800-525-7048, FOR ASSISTANCE.
/ / RETIREMENT ACCOUNTS. To sell shares in an OppenheimerFunds retirement
account in your name, call the Transfer Agent for a distribution request form.
There are special income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer,
you must arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement of
Additional Information.
/ / CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and the
Funds from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
/ / You wish to redeem more than $50,000 worth of shares and receive a
check
39
<PAGE>
/ / The redemption check is not payable to all shareholders listed on the
account statement
/ / The redemption check is not sent to the address of record on your
account statement
/ / Shares are being transferred to a Fund account with a different owner
or name
/ / Shares are redeemed by someone other than the owners (such as an
Executor)
/ / WHERE CAN I HAVE MY SIGNATURE GUARANTEED? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association, or
by a foreign bank that has a U.S. correspondent bank, or by a U.S. registered
dealer or broker in securities, municipal securities or government securities,
or by a U.S. national securities exchange, a registered securities association
or a clearing agency. IF YOU ARE SIGNING AS A FIDUCIARY OR ON BEHALF OF A
CORPORATION, PARTNERSHIP OR OTHER BUSINESS, OR AS A FIDUCIARY YOU MUST ALSO
INCLUDE YOUR TITLE IN THE SIGNATURE.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
/ / Your name
/ / Your Fund's name
/ / Your Fund account number (from your account statement)
/ / The dollar amount or number of shares to be redeemed
/ / Any special payment instructions
/ / Any share certificates for the shares you are selling
/ / The signatures of all registered owners exactly as the account is
registered, and
/ / Any special requirements or documents requested by the Transfer Agent
to assure proper authorization of the person asking to sell shares.
USE THE FOLLOWING ADDRESS FOR REQUESTS BY MAIL:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
SEND COURIER OR EXPRESS MAIL REQUESTS TO:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
SELLING SHARES BY TELEPHONE. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. YOU MAY NOT REDEEM SHARES HELD IN AN OPPENHEIMERFUNDS
RETIREMENT PLAN OR UNDER A SHARE CERTIFICATE BY TELEPHONE.
/ / To redeem shares through a service representative, call 1-800-852-8457
/ / To redeem shares automatically on PhoneLink, call 1-800-533-3310
40
<PAGE>
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
/ / TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone, in any seven-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account statement.
This service is not available within 30 days of changing the address on an
account.
/ / TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK OR WIRE. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated when
you establish AccountLink. Normally the ACH transfer to your bank is initiated
on the business day after the redemption. You do not receive dividends on the
proceeds of the shares you redeemed while they are waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account if
the bank is a member of the Federal Reserve wire system. There is a $10 fee for
each Federal Funds wire. To place a wire redemption request, call the Transfer
Agent at 1-800-852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that the wire
may be delayed up to seven days to enable a Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of shares
that have been redeemed and are awaiting transmittal by wire. To establish wire
redemption privileges on an account that is already established, please contact
the Transfer Agent for instructions.
CHECK WRITING. To be able to write checks against your Fund account, you may
request that privilege on your account Application or you can contact the
Transfer Agent for signature cards, which must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner.
/ / Checks can be written to the order of whomever you wish, but may not be
cashed at a Fund's bank or custodian.
/ / CHECK WRITING PRIVILEGES ARE NOT AVAILABLE FOR ACCOUNTS HOLDING CLASS B
SHARES, OR CLASS A SHARES THAT ARE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE.
/ / Checks must be written for at least $100.
/ / Checks cannot be paid if they are written for more than your account
value. REMEMBER: YOUR SHARES FLUCTUATE IN VALUE AND YOU SHOULD NOT WRITE A
CHECK CLOSE TO THE TOTAL ACCOUNT VALUE.
/ / You may not write a check that would require your Fund to redeem shares
that were purchased by check or Asset Builder Plan payments within the prior 10
days.
/ / Don't use your checks if you changed your Fund account number.
SELLING SHARES THROUGH YOUR DEALER. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
41
<PAGE>
SELLING SHARES BY WIRE (LIQUID FUND ONLY). You may request that redemption
proceeds of Liquid Fund of $2,500 or more be wired to a previously designated
account at a commercial bank that is a member of the Federal Reserve wire
system. The wire will normally be transmitted on the next bank business day
after the redemption of shares. To place a wire redemption request, call the
Transfer Agent at 1-800-525-7048. There is a $10 fee for each wire.
HOW TO EXCHANGE SHARES
Shares of a Fund may be exchanged for shares of certain Oppenheimer funds
at net asset value per share at the time of exchange, without sales charge. To
exchange shares, you must meet several conditions:
/ / Shares of the fund selected for exchange must be available for sale in
your state of residence.
/ / The prospectuses of your Fund and the fund whose shares you want to buy
must offer the exchange privilege.
/ / You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day.
/ / You must meet the minimum purchase requirements for the fund you
purchase by exchange.
/ / BEFORE EXCHANGING INTO A FUND, YOU SHOULD OBTAIN AND READ ITS
PROSPECTUS.
SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME
CLASS IN THE OTHER OPPENHEIMER FUNDS. For example, you can exchange Class A
shares of a Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases, sales charges
may be imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
/ / WRITTEN EXCHANGE REQUESTS. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
/ / TELEPHONE EXCHANGE REQUESTS. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
names and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for exchanges
in the Statement of Additional Information or obtain one by calling a service
representative at 1-800-525-7048. That list can change from time to time.
There are certain exchange policies you should be aware of:
/ / Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an
42
<PAGE>
exchange request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier on some
days. However, either fund may delay the purchase of shares of the fund you
are exchanging into up to seven days if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For
example, the receipt of multiple exchange requests from a dealer in a
"market-timing" strategy might require the disposition of securities at a
time or price disadvantageous to a Fund.
/ / Because excessive trading can hurt fund performance and harm
shareholders, a Fund reserves the right to refuse any exchange request that will
disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
/ / A Fund may amend, suspend or terminate the exchange privilege at any
time. Although a Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
/ / For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund, which
may result in a taxable gain or a loss. For more information about taxes
affecting exchanges, please refer to "How to Exchange Shares" in the Statement
of Additional Information.
/ / If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange will
be exchanged.
SHAREHOLDER ACCOUNT RULES AND POLICIES
/ / NET ASSET VALUE PER SHARE is determined for each class of shares as of
the close of The New York Stock Exchange which is normally 4:00 P.M., but may be
earlier on some days, on each day the Exchange is open by dividing the value of
a Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. Each Fund's Board of Directors has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.
/ / THE OFFERING OF SHARES may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Directors at any time the Board believes it is in a Fund's best
interest to do so.
/ / TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or
exchanges may be modified, suspended or terminated by a Fund at any time. If an
account has more than one owner, a Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of the
account and the dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner of the
account.
/ / THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor a Fund will be liable
for losses or expenses arising out of telephone instructions reasonably believed
to be genuine. If you are unable to reach the Transfer Agent during periods of
unusual market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
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<PAGE>
/ / REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL THE TRANSFER
AGENT RECEIVES ALL REQUIRED DOCUMENTS IN PROPER FORM. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
/ / DEALERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS BY
PARTICIPATING IN NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Funds if the dealer performs any transaction erroneously.
/ / THE REDEMPTION PRICE FOR SHARES WILL VARY from day to day because the
value of the securities in a Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A and Class B shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
/ / PAYMENT FOR REDEEMED SHARES is made ordinarily in cash and forwarded by
check or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within 7 days after the Transfer Agent receives
redemption instructions in proper form, except under unusual circumstances
determined by the Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer, payment will
be forwarded within 3 business days. THE TRANSFER AGENT MAY DELAY FORWARDING A
CHECK OR PROCESSING A PAYMENT VIA ACCOUNTLINK FOR RECENTLY PURCHASED SHARES, BUT
ONLY UNTIL THE PURCHASE PAYMENT HAS CLEARED. THAT DELAY MAY BE AS MUCH AS 10
DAYS FROM THE DATE THE SHARES WERE PURCHASED. THAT DELAY MAY BE AVOIDED IF YOU
PURCHASE SHARES BY CERTIFIED CHECK OR ARRANGE WITH YOUR BANK TO PROVIDE
TELEPHONE OR WRITTEN ASSURANCE TO THE TRANSFER AGENT THAT YOUR PURCHASE PAYMENT
HAS CLEARED.
/ / INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by a Fund if the
account has fewer than 100 shares.
/ / UNDER UNUSUAL CIRCUMSTANCES, shares of a Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from a Fund's portfolio. Please refer to "How to Sell Shares" in the Statement
of Additional Information for more details.
/ / "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish a Fund your correct certified Social Security
or Employer Identification Number and any other certifications required by the
Internal Revenue Service ("IRS") when you sign your application, or if you
violate IRS regulations on tax reporting of income.
/ / A FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charge when redeeming certain Class A and Class B
shares.
/ / TO AVOID SENDING DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS, a Fund
will mail only one copy of each annual and semi-annual report to shareholders
having the same last name and address on the Fund's records. However, each
shareholder may call the Transfer Agent at 1-800-525-7048 to ask that copies of
those materials be sent personally to that shareholder.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS. Government Securities Fund and Income Fund each declares and pays
dividends separately for Class A and Class B shares from net investment income
monthly. Liquid Fund
44
<PAGE>
declares and accrues dividends daily and pays such dividends monthly.
Normally, dividends are paid on the last business day every dividend period,
but the Board of Directors can change that date. Dividends for the Liquid
Fund are not paid on shares until the day following the date on which the
shares are issued. Dividends paid on Class A shares generally are expected
to be higher than for Class B shares because expenses allocable to Class B
shares will generally be higher.
CAPITAL GAINS. Each Fund may make distributions annually in December out of any
net short-term or long-term capital gains. Long-term capital gains will be
separately identified in the tax information your Fund sends you after the end
of the year. Distributions of short-term capital gains are treated as ordinary
income for tax purposes. There can be no assurance that your Fund will pay any
capital gains distributions in a particular year.
DISTRIBUTION OPTIONS. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:
/ / REINVEST ALL DISTRIBUTIONS IN YOUR FUND. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of your
Fund.
/ / REINVEST CAPITAL GAINS ONLY. You can elect to reinvest long-term
capital gains in your Fund while receiving dividends by check or sent to your
bank account on AccountLink.
/ / RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.
/ / REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMER FUNDS ACCOUNT. You
can reinvest all distributions in another Oppenheimer funds account you have
established.
TAXES. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in a Fund. A Fund's
distributions from long-term capital gains are taxable to shareholders as
long-term capital gains, no matter how long you held your shares. It is not
anticipated that Liquid Fund will generally realize or distribute any long-term
capital gains. Dividends paid by a Fund from short-term capital gains and net
investment income, including certain net realized foreign exchange gains, are
taxable as ordinary income. These dividends and distributions are subject to
Federal income tax and may be subject to state or local taxes. Your
distributions are taxable as described above, whether you reinvest them in
additional shares or take them in cash. The Funds' distributions are not
expected to qualify for the corporate dividends received deduction under the
Internal Revenue Code. Every year your Fund will send you and the IRS a
statement showing the aggregate amount and character of the dividends and other
distributions you received for the previous year.
/ / "BUYING A DIVIDEND". When a Fund goes ex-dividend, its share price is
reduced by the amount of the distribution (except in the case of Liquid Fund's
daily dividends). If you buy shares of a Fund other than Liquid Fund on or just
before the ex-dividend date, or just before your Fund declares a capital gains
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
/ / TAXES ON TRANSACTIONS. Share redemptions and repurchases, including
redemptions for exchanges, may produce a taxable gain or a loss, which generally
will be a capital gain or loss for shareholders who hold their Fund shares as
capital assets. Such a gain or loss is the difference between your tax basis,
which is usually the price you paid for the shares, and the proceeds you
received when you sold them. No gain or loss will generally result for such
redemptions and other transactions in Liquid Fund's shares provided that it
successfully maintains a constant net asset value per share, although a loss
could result to the extent any sales charge is imposed. Special tax
45
<PAGE>
rules may apply to certain redemptions preceded or followed by investments in
the same Fund or another Oppenheimer fund.
/ / RETURNS OF CAPITAL. In certain cases distributions made by your Fund
may be considered a return of capital to shareholders. If that occurs, it will
be identified in notices to shareholders. A return of capital will reduce your
tax basis in your Fund shares but will not be taxable except to the extent it
exceeds such tax basis.
/ / FOREIGN TAXES (INCOME FUND ONLY). Income Fund may be subject to
foreign withholding taxes or other foreign taxes on income (possibly including
capital gains) on certain of its foreign investments, if any. These taxes may
be reduced or eliminated pursuant to an income tax treaty in some cases. The
Fund does not expect to qualify to pass such foreign taxes and any related tax
deductions or credits through to its shareholders.
/ / STATE AND LOCAL TAXES. A state income (and possibly local income
and/or intangible property) tax exemption is generally available to the extent
(if any) a Fund'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. The
Funds will not necessarily satisfy any such threshold or other requirement .
The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code. Provided that a Fund so
qualifies, it will not be required to pay any federal income tax on its net
investment income and net realized capital gains that it distributes to its
shareholders in accordance with certain timing requirements.
This information is only a summary of certain federal tax information about
your investment. Tax-exempt or tax-deferred investors, foreign investors, and
investors subject to special tax rules (such as certain banks and securities
dealers) may have different tax consequences not described above. More tax
information is contained in the Statement of Additional Information, and in
addition you should consult with your tax adviser about the effect of an
investment in a Fund on your particular tax situation.
46
<PAGE>
APPENDIX A: DESCRIPTION OF RATINGS CATEGORIES OF RATING SERVICES
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as
"high-grade" bonds. They are rated lower than the best bonds because margins of
protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than those of
"Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that is,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Bonds rated "B" generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or there
may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S BOND RATINGS
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal
A-1
<PAGE>
in accordance with the terms of the obligation. "BB" indicates the lowest
degree of speculation and "CC" the highest degree. While such bonds will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds rated
"D" are in default and payment of interest and/or repayment of principal is in
arrears.
A-2
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APPENDIX B
CREDIT QUALITY DISTRIBUTION
The average quality distribution of the portfolio of Income Fund
during the year ended December 31, 1995 was as follows:
QUALITY DISTRIBUTION % OF
AS ASSIGNED BY SERVICE AVERAGE VALUE PORTFOLIO
- ---------------------- ------------- ---------
Government Securities $ 6,721,109.48 15.71%
AAA 1,812,140.34 4.24
AA 1,570,196.43 3.67
A 16,191,176.37 37.84
BBB 10,362,040.19 24.22
BB 2,838,024.71 6.63
B 356,759.38 0.83
Unrated 1,596,304.63 3.73
Bonds 41,447,751.51 96.87
Short Term 1,339,674.79 3.13
-------------- ------
Total Portfolio 42,787,426.30 100.00%
-------------- ------
-------------- ------
B-1
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APPENDIX C
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER QUEST FOR VALUE FUNDS
The initial and contingent sales charge rates and waivers for Class A
and Class B shares of the Fund described elsewhere in this Prospectus are
modified as described below for those shareholders of (i) Quest for Value
Fund, Inc., Quest for Value Growth and Income Fund, Quest for Value Opportunity
Fund, Quest for Value Small Capitalization Fund and Quest for Value Global
Equity Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment adviser to those funds, and (ii) Quest for Value U.S. Government
Income Fund, Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax-Exempt Fund when
those funds merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds or (ii) received by such
shareholder pursuant to the merger of any of the Former Quest for Value
Funds into an Oppenheimer fund on November 24, 1995.
CLASS A SALES CHARGES
/ / REDUCED CLASS A INITIAL SALES CHARGE RATES FOR CERTAIN FORMER
QUEST SHAREHOLDERS
/ / PURCHASES BY GROUPS, ASSOCIATIONS AND CERTAIN QUALIFIED RETIREMENT
PLANS. The following table sets forth the initial sales charge rates for Class A
shares purchased by a "Qualified Retirement Plan" through a single broker,
dealer or financial institution, or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified Retirement Plan
or that Association purchased shares of any of the Former Quest for Value Funds
or received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan"
includes any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of
a single employer.
C-1
<PAGE>
<TABLE>
<CAPTION>
FRONT-END SALES FRONT-END SALES
CHARGE AS A CHARGE AS A COMMISSION AS
NUMBER OF ELIGIBLE PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
EMPLOYEES OR MEMBERS OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations having 50
or more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages to of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
/ / SPECIAL CLASS A CONTINGENT DEFERRED SALES CHARGE RATES
Class A shares of the Fund purchased by exchange of shares of other Oppenheimer
funds that were acquired as a result of the merger of Former Quest for Value
Funds into those Oppenheimer funds, and which shares were subject to a Class A
contingent deferred sales charge prior to November 24, 1995 will be subject to a
contingent deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they were purchased,
at a rate equal to 1.0% if the redemption occurs within 12 months of their
initial purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales charge
in effect as of that date as set forth in the then-current prospectus for such
fund.
/ / WAIVER OF CLASS A SALES CHARGES FOR CERTAIN SHAREHOLDERS
Class A shares of the Fund purchased by the following investors are not subject
to any Class A initial or contingent deferred sales charges:
/ / Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
C-2
<PAGE>
/ / Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified Funds.
/ / WAIVER OF CLASS A CONTINGENT DEFERRED SALES CHARGE IN CERTAIN
TRANSACTIONS
The Class A contingent deferred sales charge will not apply to redemptions of
Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
/ / Investors who purchased Class A shares from a dealer that is or
was not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted under
that law.
/ / Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special "strategic
alliance" with the distributor of those funds. The Fund's Distributor will pay
a commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
CLASS A AND CLASS B CONTINGENT DEFERRED SALES CHARGE WAIVERS
/ / WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED PRIOR TO MARCH 6,
1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A or B shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans qualified under
Section 401(a) of the Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts, deferred
compensation plans under Section 457 of the Code, and other employee benefit
plans, and returns of excess contributions made to each type of plan,
(ii) withdrawals under an automatic withdrawal plan holding only Class B shares
if the annual withdrawal does not exceed 10% of the initial value of the
account, and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required minimum
value of such accounts.
/ / WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED ON OR AFTER MARCH 6,
1995 BUT PRIOR TO NOVEMBER 24, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A or B shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to November 24, 1995:
(1) distributions to participants or beneficiaries from Individual Retirement
Accounts under Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those distributions
are made either (a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans following the
death or disability of the shareholder(s) (as evidenced by a determination of
total disability by the
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U.S. Social Security Administration); (4) withdrawals under an automatic
withdrawal plan (but only for Class B shares) where the annual withdrawals do
not exceed 10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the required minimum account value. A shareholder's
account will be credited with the amount of any contingent deferred sales charge
paid on the redemption of any Class A or B shares of the Fund described in this
section if within 90 days after that redemption, the proceeds are invested in
the same Class of shares in the Fund or another Oppenheimer fund.
SPECIAL DEALER ARRANGEMENTS.
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and that were transferred to an OppenheimerFunds prototype 401(k) plan
shall be eligible for an additional one-time payment by the Distributor of 1% of
the value of the plan assets transferred, but that payment may not exceed $5,000
as to any one plan.
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND
WHO WERE SHAREHOLDERS OF THE FORMER CONNECTICUT MUTUAL FUNDS
Certain of the sales charge waivers for Class A and Class B shares of
the Fund described elsewhere in this Prospectus are modified as described below
for those shareholders of Connecticut Mutual Liquid Account, Connecticut Mutual
Government Securities Account, Connecticut Mutual Income Account, Connecticut
Mutual Growth Account, Connecticut Mutual Total Return Account, CMIA LifeSpan
Diversified Income Account, CMIA LifeSpan Capital Appreciation Account and CMIA
LifeSpan Balanced Account (the "Former Connecticut Mutual Funds") on March 1,
1996, when OppenheimerFunds, Inc. became the investment adviser to the Former
Connecticut Mutual Funds.
CLASS A SALES CHARGE WAIVERS
Additional Class A shares of the Fund may be purchased without a sales
charge, provided that the Class A shares of the Fund were acquired prior to
March 1, 1996, by:
(1) any purchaser, provided the total initial amount invested in the
Fund or any one or more of the Former Connecticut Mutual Funds totaled $500,000
or more, including investments made pursuant to the Combined Purchases,
Statement of Intention and Rights of Accumulation features available at the time
of the initial purchase; (2) any participant in a qualified plan, provided that
the total initial amount invested by the plan in the Fund or any one or more of
the Former Connecticut Mutual Funds totaled $500,000 or more; (3) Directors of
the Fund or any one or more of the Former Connecticut Mutual Funds 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 Connecticut Mutual
Financial Services, L.L.C. ("CMFS"), the Fund's prior distributor, 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 Life Insurance Company
through the Panorama Separate Account which was beyond the applicable surrender
charge period
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and which was used to fund a qualified plan, who exchanged the variable annuity
contract for Class A shares of the Fund; and (8) an institution acting as a
fiduciary on behalf of an individual or individuals, where such institution was
directly compensated by the individual(s) for recommending the purchase of the
shares of the Fund or any one or more of the Former Connecticut Mutual Funds,
provided the institution had an agreement with CMFS. Purchases of Class A
shares made pursuant to (1) and (2) above may be subject to a CDSC.
CLASS A AND CLASS B CONTINGENT DEFERRED SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of the Fund and exchanges of Class A or Class B
shares of the Fund into Class A or Class B shares of a Former Connecticut Mutual
Fund provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 1, 1996 or (ii) were acquired by
exchange from an Oppenheimer Fund that was a Former Connecticut Mutual Fund and
the shares of such Former Connecticut Mutual Fund were purchased prior to
March 1, 1996:
(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 Fund due to a combination with another investment company by virtue of a
merger, acquisition or similar reorganization transaction; (7) in connection
with the Fund's right to involuntarily redeem or liquidate the Fund; (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 Fund's Articles of Incorporation, or as adopted by the Board of
Directors of the Fund.
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CONNECTICUT MUTUAL LIQUID ACCOUNT
CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT
CONNECTICUT MUTUAL INCOME ACCOUNT
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUNDS, OPPENHEIMERFUNDS, INC., OPPENHEIMERFUNDS
DISTRIBUTOR, INC. OR ANY AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH STATE.
____________________ *PRINTED ON RECYCLED PAPER
<PAGE>
OPPENHEIMER SERIES FUND, INC.
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996
OPPENHEIMER SERIES FUND, INC. (the "Company") is an investment company
consisting of eight separate series (the "Funds"):
CONNECTICUT MUTUAL LIQUID ACCOUNT ("LIQUID FUND")
CONNECTICUT MUTUAL INCOME ACCOUNT ("INCOME FUND")
CONNECTICUT MUTUAL GOVERNMENT SECURITIES ACCOUNT ("GOVERNMENT
SECURITIES FUND")
OPPENHEIMER DISCIPLINED ALLOCATION FUND ("ALLOCATION FUND")
OPPENHEIMER DISCIPLINED VALUE FUND ("VALUE FUND")
AND
OPPENHEIMER LIFESPAN BALANCED FUND ("LIFESPAN BALANCED FUND")
OPPENHEIMER LIFESPAN GROWTH FUND ("LIFESPAN GROWTH FUND")
OPPENHEIMER LIFESPAN INCOME FUND ("LIFESPAN INCOME FUND")
(COLLECTIVELY, THE "LIFESPAN FUNDS")
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Funds and supplements
information in each Fund's Prospectus dated May 1, 1996 (individually, a
"Prospectus" and collectively, the "Prospectuses"). It should be read together
with the Prospectuses which may be obtained by writing to the Funds' Transfer
Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217 or by
calling the Transfer Agent at the toll-free number shown above.
The Funds' investment adviser is OppenheimerFunds, Inc. (the "Manager").
In the case of the LifeSpan Funds, the Manager has engaged Babson-Stewart Ivory
International ("Babson-Stewart"), BEA Associates and Pilgrim, Baxter & Assoc.
Ltd. ("Pilgrim") as subadvisers to assist in the management of the LifeSpan
Funds. Babson-Stewart, BEA Associates and Pilgrim are sometimes referred to
herein individually as a "Subadviser" and collectively as the "Subadvisers."
<PAGE>
CONTENTS
Page
ABOUT THE FUNDS
Investment Objectives and Policies. . . . . . . . . . . . . . . .
Other Investment Techniques and Strategies . . . . . . . . . .
Other Investment Restrictions. . . . . . . . . . . . . . . . .
How the Funds are Managed . . . . . . . . . . . . . . . . . . . .
Organization and History . . . . . . . . . . . . . . . . . . .
Directors and Officers of the Funds. . . . . . . . . . . . . .
The Manager and Its Affiliates . . . . . . . . . . . . . . . .
Brokerage Policies of the Funds . . . . . . . . . . . . . . . . .
Performance of the Funds. . . . . . . . . . . . . . . . . . . . .
Distribution and Service Plans. . . . . . . . . . . . . . . . . .
ABOUT YOUR ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . .
How to Buy Shares . . . . . . . . . . . . . . . . . . . . . . . .
How to Sell Shares. . . . . . . . . . . . . . . . . . . . . . . .
How to Exchange Shares. . . . . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes. . . . . . . . . . . . . . . .
Additional Information About the Funds. . . . . . . . . . . . . .
FINANCIAL INFORMATION ABOUT THE FUNDS . . . . . . . . . . . . . .
Independent Auditors' Report. . . . . . . . . . . . . . . . . . .
Financial Statements. . . . . . . . . . . . . . . . . . . . . . .
Appendix: Industry Classifications. . . . . . . . . . . . . . . .
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ABOUT THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES AND STRATEGIES. The investment objectives and policies of
each Fund are described in its Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Funds
may invest, as well as the strategies the Funds may use to try to achieve their
objective. Certain capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the Prospectuses.
FOREIGN SECURITIES (ALL FUNDS EXCEPT LIQUID FUND AND GOVERNMENT
SECURITIES FUND). Consistent with the limitations on foreign investing set
forth in the relevant Fund's Prospectus, each Fund (other than Liquid Fund
and Government Securities Fund) may invest in foreign securities. Each Fund
(other than Liquid Fund and Government Securities Fund) may also invest in
debt and equity securities of corporate and governmental issuers of countries
with emerging economies or securities markets. Investing in foreign
securities offers potential benefits not available from investing solely in
securities of domestic issuers, such as the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign countries with
economic policies or business cycles different from those of the U.S., or to
reduce fluctuations in portfolio value by taking advantage of foreign stock
or bond markets that do not move in a manner parallel to U.S. markets. If a
Fund's portfolio securities are held abroad, the countries in which such
securities may be held and the sub-custodians holding them must be approved
by the Fund's Board of Directors under applicable rules of the Securities and
Exchange Commission ("SEC"). In buying foreign securities, a Fund may
convert U.S. dollars into foreign currency, but only to effect securities
transactions on foreign securities exchanges and not to hold such currency as
an investment.
"Foreign securities" include equity and debt securities of companies
organized under the laws of countries other than the United States and debt
securities of foreign governments, that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American depository receipts, or that are listed
on a U.S. securities exchange, or are traded in the U.S. over-the-counter market
are not considered "foreign securities" for purposes of a Fund's investment
allocations, because they are not subject to many of the special considerations
and risks (discussed below) that apply to foreign securities traded and held
abroad.
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<PAGE>
Investing in foreign securities, and in particular in securities in
emerging countries, involves special additional risks and considerations not
typically associated with investing in securities of issuers traded in the U.S.
These include: reduction of income by foreign taxes; fluctuation in value of
foreign portfolio investments due to changes in currency rates and control
regulations (e.g., currency blockage); transaction charges for currency
exchange; lack of public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers; less volume on foreign exchanges than on U.S.
exchanges; greater volatility and less liquidity in foreign markets than in the
U.S.; less regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits against foreign issuers;
higher brokerage commission rates than in the U.S.; increased risks of delays in
settlement of portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries, and in particular emerging
countries, of expropriation or nationalization of assets, confiscatory taxation,
political, financial or social instability or adverse diplomatic developments;
and unfavorable differences between the U.S. economy and foreign economies. In
the past, U.S. Government policies have discouraged certain investments abroad
by U.S. investors, through taxation or other restrictions, and it is possible
that such restrictions could be re-imposed.
A Fund's investment income or, in some cases, capital gains from foreign
issuers may be subject to foreign withholding or other foreign taxes, thereby
reducing a Fund's net investment income and/or net realized capital gains. See
"Dividends, Capital Gains and Taxes."
DEBT SECURITIES (ALL FUNDS). All debt securities are subject to two types
of risks: credit risk and interest rate risk (these are in addition to other
investment risks that may affect a particular security).
CREDIT RISK. Credit risk relates to the ability of the issuer to meet
interest or principal payments or both as they become due. Generally, higher
yielding bonds are subject to credit risk to a greater extent than higher
quality bonds.
INTEREST RATE RISK. Interest rate risk refers to the fluctuations in value
of fixed-income securities resulting solely from the inverse relationship
between the market value of outstanding fixed-income securities and changes in
interest rates. An increase in interest rates will generally reduce the market
value of fixed-income investments, and a decline in interest rates will tend to
increase their value. In addition, debt securities with longer maturities,
which tend to produce higher yields, are subject to potentially greater capital
appreciation and
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<PAGE>
depreciation than obligations with shorter maturities. Fluctuations in the
market value of fixed-income securities subsequent to their acquisition will
not affect the interest payable on those securities, and thus the cash income
from such securities, but will be reflected in the valuations of those
securities used to compute a Fund's net asset values.
HIGH YIELD SECURITIES. Each Fund (other than Liquid Fund and Government
Securities Fund) may invest in high-yield/high risk securities (commonly called
junk bonds).
The Manager does not rely on credit ratings assigned by rating agencies in
assessing investment opportunities in debt securities. Ratings by credit
agencies assess safety of principal and interest payments and do not reflect
market risks. In addition, ratings by credit agencies may not be changed by the
agencies in a timely manner to reflect subsequent economic events. By carefully
selecting individual issues and diversifying portfolio holdings by industry
sector and issuer, the Manager believes that the risk of the Fund holding
defaulted lower grade securities can be reduced. Emphasis on credit risk
management involves the Manager's own internal analysis to determine the debt
service capability, financial flexibility and liquidity of an issuer, as well as
the fundamental trends and outlook for the issuer and its industry. The
Manager's rating helps it determine the attractiveness of specific issues
relative to the valuation by the market place of similarly rated credits.
Risks of high yield securities include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility resulting
from changes in prevailing interest rates, (iii) subordination to the prior
claims of banks and other senior lenders, (iv) the operation of mandatory
sinking fund or call/redemption provisions during periods of declining interest
rates which may cause the Fund to invest premature redemption proceeds in lower
yielding portfolio securities, (v) the possibility that earnings of the issuer
may be insufficient to meet its debt service, and (vi) the issuer's low
creditworthiness and potential for insolvency during periods of rising interest
rates and economic downturn. As a result of the limited liquidity of high yield
securities, their prices have at times experienced significant and rapid decline
when a substantial number of holders decided to sell. A decline is also likely
in the high yield bond market during an economic downturn. An economic downturn
or an increase in interest rates could severely disrupt the market for high
yield bonds and adversely affect the value of outstanding bonds and the ability
of the issuers to repay principal and interest. In addition, there have been
several Congressional attempts to limit the use of tax and other advantages of
high yield bonds which, if enacted, could adversely affect the value of
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<PAGE>
these securities and the net asset value of a Fund. For example,
federally-insured savings and loan associations have been required to divest
their investments in high yield bonds.
U.S. GOVERNMENT SECURITIES (ALL FUNDS). U.S. Government Securities are
debt obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities, and include "zero coupon" Treasury securities.
U.S. TREASURY OBLIGATIONS. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which have
maturities generally greater than ten years when issued). U.S. Treasury
obligations are backed by the full faith and credit of the United States.
U.S. GOVERNMENT AND AGENCY. U.S. Government Securities are debt
obligations issued by or guaranteed by the United States government or any of
its agencies or instrumentalities. Some of these obligations, including U.S.
Treasury notes and bonds, and mortgage-backed securities (referred to as
"Ginnie Maes") guaranteed by the Government National Mortgage Association,
are supported by the full faith and credit of the United States, which means
that the government pledges to use its taxing power to repay the debt. Other
U.S. Government Securities issued or guaranteed by Federal agencies or
government-sponsored enterprises are not supported by the full faith and
credit of the United States. They may include obligations supported by the
ability of the issuer to borrow from the U.S. Treasury. However, the
Treasury is not under a legal obligation to make a loan. Examples of these
are obligations of Federal Home Loan Mortgage Corporation (those securities
are often called "Freddie Macs"). Other obligations are supported by the
credit of the instrumentality, such as Federal National Mortgage Association
bonds (these securities are often called "Fannie Maes").
GNMA CERTIFICATES. Certificates of Government National Mortgage
Association ("GNMA") are mortgaged-backed securities of GNMA that evidence an
undivided interest in a pool or pools of mortgages ("GNMA Certificates"). The
GNMA Certificates that a Fund may purchase may be of the "modified pass-through"
type, which entitle the holder to receive timely payment of all interest and
principal payments due on the mortgage pool, net of fees paid to the "issuer"
and GNMA, regardless of whether the mortgagor actually makes the payments.
The National Housing Act authorizes GNMA to guarantee the timely payment of
principal and interest on securities backed by a pool of mortgages insured by
the Federal Housing Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full faith and
credit of the U.S.
-6-
<PAGE>
Government. GNMA is also empowered to borrow without limitation from
the U.S. Treasury if necessary to make any payments required under its
guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the principal investment long before the maturity of the
mortgages in the pool. Foreclosures impose no risk to principal investment
because of the GNMA guarantee, except to the extent that a Fund has purchased
the certificates at a premium in the secondary market.
FNMA SECURITIES. The Federal National Mortgage Association ("FNMA") was
established to create a secondary market in mortgages insured by the FHA. FNMA
issues guaranteed mortgage pass-through certificates ("FNMA Certificates").
FNMA Certificates resemble GNMA Certificates in that each FNMA Certificate
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool. FNMA guarantees timely payment of interest and
principal on FNMA Certificates. The FNMA guarantee is not backed by the full
faith and credit of the U.S. Government.
FHLMC SECURITIES. The Federal Home Loan Mortgage Corporation ("FHLMC")
was created to promote development of a nationwide secondary market for
conventional residential mortgages. FHLMC issues two types of mortgage
pass-through certificates ("FHLMC Certificates"): mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). PCs
resemble GNMA Certificates in that each PC represents a pro rata share of all
interest and principal payments made and owed on the underlying pool. FHLMC
guarantees timely monthly payment of interest on PCs and the ultimate payment
of principal. The FHLMC guarantee is not backed by the full faith and credit
of the U.S. Government.
GMCs also represent a pro rata interest in a pool of mortgages. However,
these instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. The expected average life of these securities is
approximately ten years. The FHLMC guarantee is not backed by the full faith
and credit of the U.S. Government.
MORTGAGE-BACKED SECURITY ROLLS. The Income Fund, Government Securities
Fund and Allocation Fund may enter into "forward roll" transactions with respect
to mortgage-backed securities issued by GNMA, FNMA or FHLMC. In a forward roll
transaction, which is considered to be a borrowing by a Fund, a Fund will sell a
mortgage security to a bank or other permitted entity and simultaneously agree
to repurchase a similar security from the institution at a later date at an
agreed upon price. The mortgage
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<PAGE>
securities that are repurchased will bear the same interest rate as those
sold, but generally will be collateralized by different pools of mortgages
with different prepayment histories than those sold. Risks of
mortgage-backed security rolls include: (i) the risk of prepayment prior to
maturity, (ii) the possibility that the proceeds of the sale may have to be
invested in money market instruments (typically repurchase agreements)
maturing not later than the expiration of the roll, and (iii) the possibility
that the market value of the securities sold by a Fund may decline below the
price at which the Fund is obligated to purchase the securities. Upon
entering into a mortgage-backed security roll, a Fund will be required to
place cash, U.S. Government Securities or other high-grade debt securities in
a segregated account with its Custodian in an amount equal to its obligation
under the roll.
ZERO COUPON SECURITIES AND DEFERRED INTEREST BONDS. The Funds may invest
in zero coupon securities and deferred interest bonds issued by the U.S.
Treasury or by private issuers such as domestic or foreign corporations. Zero
coupon U.S. Treasury securities include: (1) U.S. Treasury bills without
interest coupons, (2) U.S. Treasury notes and bonds that have been stripped of
their unmatured interest coupons and (3) receipts or certificates representing
interests in such stripped debt obligations or coupons. Zero coupon securities
and deferred interest bonds usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations in market value in
response to changing interest rates than debt obligations of comparable
maturities that make current payments of interest. An additional risk of
private-issuer zero coupon securities and deferred interest bonds is the credit
risk that the issuer will be unable to make payment at maturity of the
obligation.
While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds generally provide for a period of delay before the
regular payment of interest begins. Although this period of delay is different
for each deferred interest bond, a typical period is approximately one-third of
the bond's term to maturity. Such investments benefit the issuer by mitigating
its initial need for cash to meet debt service, but some also provide a higher
rate of return to attract investors who are willing to defer receipt of such
cash. With zero coupon securities, however, the lack of periodic interest
payments means that the interest rate is "locked in" and the investor avoids the
risk of having to reinvest periodic interest payments in securities having lower
rates.
Because a Fund accrues taxable income from zero coupon and deferred
interest securities without receiving cash, a Fund may be required to sell
portfolio securities in order to pay dividends or redemption proceeds for its
shares, which require the payment of cash. This will depend on several factors:
the proportion of
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<PAGE>
shareholders who elect to receive dividends in cash rather than reinvesting
dividends in additional shares of a Fund, and the amount of cash income a
Fund receives from other investments and the sale of shares. In either case,
cash distributed or held by a Fund that is not reinvested by investors in
additional Fund shares will hinder a Fund from seeking current income.
MORTGAGE-BACKED SECURITIES (ALL FUNDS). These securities represent
participation interests in pools of residential mortgage loans which are
guaranteed by agencies or instrumentalities of the U.S. Government. Such
securities differ from conventional debt securities which generally provide
for periodic payment of interest in fixed or determinable amounts (usually
semi-annually) with principal payments at maturity or specified call dates.
Some mortgage-backed securities in which the Funds may invest may be backed
by the full faith and credit of the U.S. Treasury (e.g., direct pass-through
certificates of Government National Mortgage Association); some are supported
by the right of the issuer to borrower from the U.S. Government (e.g.,
obligations of Federal Home Loan Mortgage Corporation); and some are backed
by only the credit of the issuer itself. Those guarantees do not extend to
the value of or yield of the mortgage-backed securities themselves or to the
net asset value of a Fund's shares.
Mortgage-backed securities may also be issued by trusts or other entities
formed or sponsored by private originators of and institutional investors in
mortgage loans and other foreign or domestic non-governmental entities (or
represent custodial arrangements administered by such institutions). These
private originators and institutions include domestic and foreign savings and
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
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provided through guarantees, insurance policies or letters of credit, though
various means of structuring the transaction or through a combination of such
approaches.
The yield on mortgage-backed securities is based on the average expected
life of the underlying pool of mortgage loans. The actual life of any
particular pool will be shortened by any unscheduled or early payments of
principal and interest. Principal prepayments generally result from the sale of
the underlying property or the refinancing or foreclosure of underlying
mortgages. The occurrence of prepayments is affected by a wide range of
economic, demographic and social factors and, accordingly, it is not possible to
predict accurately the average life of a particular pool. Yield on such pools
is usually computed by using the historical record of prepayments for that pool,
or, in the case of newly issued mortgages, the prepayment history of similar
pools. The actual prepayment experience of a pool of mortgage loans may cause
the yield realized by a Fund to differ from the yield calculated on the basis of
the expected average life of the pool.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates prepayments will most likely
decline. When prevailing interest rates rise, the value of a pass-through
security may decrease as do the values of other debt securities, but, when
prevailing interest rates decline, the value of a pass-through security is
not likely to rise to the extent that the value of other debt securities
rise, because of the prepayment feature of pass-through securities. A Fund's
reinvestment of scheduled principal payments and unscheduled prepayments it
receives may occur at times when available investments offer higher or lower
rates than the original investment, thus affecting the yield of such Fund.
Monthly interest payments received by a Fund have a compounding effect which
may increase the yield to the Fund more than debt obligations that pay
interest semi-annually. Because of those factors, mortgage-backed securities
may be less effective than Treasury bonds of similar maturity at maintaining
yields during periods of declining interest rates. A Fund may purchase
mortgage-backed securities at par, at a premium or at a discount.
Accelerated prepayments adversely affect yields for pass-through securities
purchased at a premium (i.e., at a price in excess of their principal amount)
and may involve additional risk of loss of principal because the premium may
not have been fully amortized at the time the obligation is repaid. The
opposite is true for pass-through securities purchased at a discount.
Mortgage-backed securities may be less effective than debt obligations of
similar maturity at maintaining yields during periods of declining interest
rates. As new types of mortgage-related securities are developed and offered to
investors, the
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Manager will, subject to the direction of the Board of Directors and
consistent with a Fund's investment objective and policies, consider making
investments in such new types of mortgage-related securities.
"STRIPPED" MORTGAGE-BACKED SECURITIES. The Government Securities Fund,
Income Fund, Allocation Fund and each LifeSpan Fund may invest in "stripped"
mortgage-backed securities, in which the principal and interest portions of the
security are separated and sold. Stripped mortgage-backed securities usually
have at least two classes each of which receives different proportions of
interest and principal distributions on the underlying pool of mortgage assets.
One common variety of stripped mortgage-backed security has one class that
receives some of the interest and most of the principal, while the other class
receives most of the interest and remainder of the principal. In some cases,
one class will receive all of the interest (the "interest-only" or "IO" class),
while the other class will receive all of the principal (the "principal-only" or
"PO" class). Interest only securities are extremely sensitive to interest rate
changes, and prepayments of principal on the underlying mortgage assets. An
increase in principal payments or prepayments will reduce the income available
to the IO security. In accordance with a requirement imposed by the staff of
the SEC, the Manager or the relevant Subadviser will consider privately-issued
fixed rate IOs and POs to be illiquid securities for purposes of a Fund's
limitation on investments in illiquid securities. Unless the Manager or the
relevant Subadviser, acting pursuant to guidelines and standards established by
the Board of Directors, determines that a particular government-issued fixed
rate IO or PO is liquid, management will also consider these IOs and POs to be
illiquid. In other types of CMOs, the underlying principal payments may apply
to various classes in a particular order, and therefore the value of certain
classes or "tranches" of such securities may be more volatile than the value of
the pool as a whole, and losses may be more severe than on other classes.
CUSTODIAL RECEIPTS. Each of the Funds 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
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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 Funds.
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 Funds. The Company is not aware of any binding legislative,
judicial or administrative authority on this issue.
COLLATERALIZED MORTGAGE-BACKED OBLIGATIONS ("CMOS"). Government Securities
Fund, Income Fund, Allocation Fund and each of the LifeSpan Funds may invest in
collateralized mortgage obligations ("CMOs"). CMOs are fully-collateralized
bonds that are the general obligations of the issuer thereof, either the U.S.
Government, a U.S. Government instrumentality, or a private issuer, which may be
a domestic or foreign corporation. Such bonds generally are secured by an
assignment to a trustee (under the indenture pursuant to which the bonds are
issued) of collateral consisting of a pool of mortgages. Payments with respect
to the underlying mortgages generally are made to the trustee under the
indenture. Payments of principal and interest on the underlying mortgages are
not passed through to the holders of the CMOs as such (i.e., the character of
payments of principal and interest is not passed through, and therefore payments
to holders of CMOs attributable to interest paid and principal repaid on the
underlying mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to payment of
interest on and repayment of principal of the CMOs. CMOs often are issued in
two or more classes with different characteristics such as varying maturities
and stated rates of interest. Because interest and principal payments on the
underlying mortgages are not passed through to holders of CMOs, CMOs of varying
maturities may be secured by the same pool of mortgages, the payments on which
are used to pay interest on each class and to retire successive maturities in
sequence. Unlike other mortgage-backed securities (discussed above), CMOs are
designed to be retired as the underlying mortgages are repaid. In the event of
prepayment on such mortgages, the class of CMO first to mature generally will be
paid down. Therefore, although in most cases the issuer of CMOs will
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not supply additional collateral in the event of such prepayment, there will
be sufficient collateral to secure CMOs that remain outstanding.
ASSET-BACKED SECURITIES. Income Fund, Government Securities Fund,
Allocation Fund and each Life Span Fund may purchase asset-back securities. The
value of an asset-backed security is affected by changes in the market's
perception of the asset backing the security, the creditworthiness of the
servicing agent for the loan pool, the originator of the loans, or the financial
institution providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. The risks of investing in asset-backed
securities are ultimately dependent upon payment of consumer loans by the
individual borrowers. As a purchaser of an asset-backed security, a Fund would
generally have no recourse to the entity that originated the loans in the event
of default by a borrower. The underlying loans are subject to prepayments,
which shorten the weighted average life of asset-backed securities and may lower
their return, in the same manner as described above for the prepayments of a
pool of mortgage loans underlying mortgage-backed securities.
COMMERCIAL PAPER (ALL FUNDS). Each Fund may purchase commercial paper for
temporary defensive purposes as described in its Prospectus. In addition, a
Fund may invest in variable amount master demand notes and floating rate notes
as follows:
VARIABLE AMOUNT MASTER DEMAND NOTES. Master demand notes are corporate
obligations which permit the investment of fluctuating amounts by a Fund at
varying rates of interest pursuant to direct arrangements between a Fund, as
lender, and the borrower. They permit daily changes in the amounts borrowed. A
Fund has the right to increase the amount under the note at any time up to the
full amount provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty. These
notes may or may not be backed by bank letters of credit. Because these notes
are direct lending arrangements between the lender and borrower, it is not
generally contemplated that they will be traded. There is no secondary market
for these notes, although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any time.
Accordingly, a Fund's right to redeem such notes is dependent upon the ability
of the borrower to pay principal and interest on demand. A Fund has no
limitations on the type of issuer from whom these notes will be purchased;
however, in connection with such purchases and on an ongoing basis, the Manager
will consider the earning power, cash flow and other liquidity ratios of the
issuer, and its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand simultaneously.
Investments in master demand notes are subject to the limitation on
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investments by a Fund in illiquid securities, described in the Fund's
Prospectus. The Manager and relevant Subadviser will consider the earning
power, cash flow and other liquidity ratios of issuers of demand notes and
continually will monitor their financial ability to meet payment on demand.
FLOATING RATE/VARIABLE RATE NOTES. Some of the notes a Fund may purchase
may have variable or floating interest rates. Variable rates are adjustable at
stated periodic intervals; floating rates are automatically adjusted according
to a specified market rate for such investments, such as the percentage of the
prime rate of a bank, or the 91-day U.S. Treasury Bill rate. Such obligations
may be secured by bank letters of credit or other support arrangements. Any
bank providing such a bank letter, line of credit, guarantee or loan commitment
will meet a Fund's investment quality standards relating to investments in bank
obligations. A Fund will invest in variable and floating rate instruments only
when the Manager or relevant Subadviser deems the investment to meet the
investment guidelines applicable to a Fund. The Manager or relevant Subadviser
will also continuously monitor the creditworthiness of issuers of such
instruments to determine whether a Fund should continue to hold the investments.
The absence of an active secondary market for certain variable and floating
rate notes could make it difficult to dispose of the instruments, and a Fund
could suffer a loss if the issuer defaults or during periods in which the Fund
is not entitled to exercise its demand rights.
Variable and floating rate instruments held by a Fund will be subject to
the Fund's limitation on investments in illiquid securities when a reliable
trading market for the instruments does not exist and the Fund may not demand
payment of the principal amount of such instruments within seven days.
BANK OBLIGATIONS AND INSTRUMENTS SECURED THEREBY (ALL FUNDS). The bank
obligations a Fund may invest in include time deposits, certificates of deposit,
and bankers' acceptances if they are: (i) obligations of a domestic bank with
total assets of at least $1 billion or (ii) obligations of a foreign bank with
total assets of at least U.S. $1 billion. A Fund may also invest in instruments
secured by such obligations (e.g., debt which is guaranteed by the bank). For
purposes of this section, the term "bank" includes commercial banks, savings
banks, and savings and loan associations which may or may not be members of the
Federal Deposit Insurance Corporation.
Time deposits are non-negotiable deposits in a bank for a specified period
of time at a stated interest rate, whether or not subject to withdrawal
penalties. However, time deposits that are subject to withdrawal penalties,
other than those maturing in
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seven days or less, are subject to the limitation on investments by a Fund in
illiquid investments, set forth in the Fund's Prospectus under "Illiquid and
Restricted Securities."
Banker's acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.
EQUITY SECURITIES (ALL FUNDS EXCEPT LIQUID FUND). Additional information
about some of the types of equity securities a Fund may invest in is provided
below.
CONVERTIBLE SECURITIES. Each Fund (other than Liquid Fund, Government
Securities Fund and Income Fund) may invest in convertible securities. While
convertible securities are a form of debt security in many cases, their
conversion feature (allowing conversion into equity securities) causes them
to be regarded more as "equity equivalents." As a result, any rating
assigned to the security has less impact on the Manager's or relevant
Subadviser's investment decision with respect to convertible securities than
in the case of non-convertible debt securities. To determine whether
convertible securities should be regarded as "equity equivalents," the
Manager or relevant Subadviser examines the following factors: (1) whether,
at the option of the investor, the convertible security can be exchanged for
a fixed number of shares of common stock of the issuer, (2) whether the
issuer of the convertible securities has restated its earnings per share of
common stock on a fully diluted basis (considering the effect of converting
the convertible securities), and (3) the extent to which the convertible
security may be a defensive "equity substitute," providing the ability to
participate in any appreciation in the price of the issuer's common stock.
WARRANTS AND RIGHTS. Each Fund (other than Liquid Fund and Government
Securities Fund) may purchase warrants. Warrants are options to purchase equity
securities at set prices valid for a specified period of time. The prices of
warrants do not necessarily move in a manner parallel to the prices of the
underlying securities. The price a Fund pays for a warrant will be lost unless
the warrant is exercised prior to its expiration. Rights are similar to
warrants, but normally have a short duration and are distributed directly by the
issuer to its shareholders. Rights and warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the issuer.
PREFERRED STOCK (ALL FUNDS EXCEPT LIQUID FUND AND GOVERNMENT SECURITIES
FUND). Each of the Funds (other than the Liquid Fund and the Government
Securities Fund), subject to its investment objective, may purchase preferred
stock. Preferred stocks are equity securities, but possess certain attributes
of debt securities and are generally considered fixed income securities.
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Holders of preferred stocks normally have the right to receive dividends at a
fixed rate when and as declared by the issuer's board of directors, but do not
participate in other amounts available for distribution by the issuing
corporation. Dividends on the preferred stock may be cumulative, and all
cumulative dividends usually must be paid prior to dividend payments to common
stockholders. Because of this preference, preferred stocks generally entail
less risk than common stocks. Upon liquidation, preferred stocks are entitled
to a specified liquidation preference, which is generally the same as the par or
stated value, and are senior in right of payment to common stocks. However,
preferred stocks are equity securities in that they do not represent a liability
of the issuer and therefore do not offer as great a degree of protection of
capital or assurance of continued income as investments in corporate debt
securities. In addition, preferred stocks are subordinated in right of payment
to all debt obligations and creditors of the issuer, and convertible preferred
stocks may be subordinated to other preferred stock of the same issuer.
HEDGING (ALL FUNDS EXCEPT LIQUID FUND). Consistent with the limitations
set forth in its Prospectus and below, each Fund may employ one or more of the
types of hedging instruments described below. Additional information about
the hedging instruments a Fund may use is provided below. In the future, a
Fund may employ hedging instruments and strategies that are not presently
contemplated but which may be developed, to the extent such investment
methods are consistent with the Fund's investment objective, legally
permissible and adequately disclosed.
COVERED CALL OPTIONS ON SECURITIES, SECURITIES INDICES AND FOREIGN
CURRENCIES (ALL FUNDS EXCEPT LIQUID FUND). Each Fund may write covered call
options. Each LifeSpan Fund 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 Funds may
purchase and write, as the case my be, call options which are issued by the
Options Clearing Corporation (OCC) or which are traded on U.S. and non-U.S.
exchanges. LifeSpan Growth Fund and LifeSpan Balanced Fund (with respect to
the international component) may purchase options on currency in the
over-the-counter (OTC) markets.
WRITING COVERED CALLS. When a Fund writes a call on a security, it
receives a premium and agrees to sell the callable investment to a purchaser
of a corresponding call on the same security during the call period (usually
not more than 9 months) at a fixed exercise price (which may differ from the
market price of the underlying security), regardless of market price changes
during the call period. A Fund retains the risk of loss should the price of
the underlying security decline during the call period, which may be offset
to some extent by the premium.
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To terminate its obligation on a call it has written, a Fund may purchase a
corresponding call in a "closing purchase transaction." A profit or loss will
be realized, depending upon whether the net of the amount of the option
transaction costs and the premium received on the call written was more or less
than the price of the call subsequently purchased. A profit may also be
realized if the call expires unexercised, because a Fund retains the underlying
investment and the premium received. Any such profits are considered short-term
capital gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. If a Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the callable
investments until the call lapsed or was exercised.
No Fund 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 Fund.
PURCHASING COVERED CALLS. When a Fund purchases a call (other than in a
closing purchase transaction), it pays a premium and, except as to calls on
indices or futures, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the call period
at a fixed exercise price. When a Fund purchases a call on a securities
index or future, it pays a premium, but settlement is in cash rather than by
delivery of the underlying investment to the Fund. In purchasing a call, a
Fund benefits only if the call is sold at a profit or if, during the call
period, the market price of the underlying investment is above the sum of the
exercise price, transaction costs and the premium paid, and the call is
exercised. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Fund will
lose its premium payment and the right to purchase the underlying investment.
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Calls on broadly-based indices or futures are similar to calls on
securities or futures contracts except that all settlements are in cash and gain
or loss depends on changes in the index in question (and thus on price movements
in the stock market generally) rather than on price movements in individual
securities or futures contracts. When a Fund buys a call on an index or future,
it pays a premium. During the call period, upon exercise of a call by a Fund, a
seller of a corresponding call on the same investment will pay the Fund an
amount of cash to settle the call if the closing level of the index or future
upon which the call is based is greater than the exercise price of the call.
That cash payment is equal to the difference between the closing price of the
index and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of
difference. That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no assurance that
a liquid secondary market will exist for any particular option. A Fund's option
activities may affect its turnover rate and brokerage commissions. A Fund may
pay a brokerage commission each time it buys a call, sells a call, or buys or
sells an underlying investment in connection with the exercise of a call. Such
commissions may be higher than those which would apply to direct purchases or
sales of such underlying investments. Premiums paid for options are small in
relation to the market value of the related investments, and consequently, call
options offer large amounts of leverage. The leverage offered by trading in
options could result in a Fund's net asset value being more sensitive to changes
in the value of the underlying investments.
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FUTURES CONTRACTS AND RELATED OPTIONS. To hedge against changes in
interest rates, securities prices or currency exchange rates or for certain
non-hedging purposes, each Fund (other than the Liquid Fund) 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. A Fund 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 Value Fund and Allocation Fund may purchase and sell
futures contracts on stock indices and sell options on such futures. Income
Fund and Allocation Fund may purchase and sell interest rate futures and sell
options on such futures. In addition, each Fund 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. A Fund 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 Funds are traded on U.S. exchanges
or boards of trade that are licensed and regulated by the CFTC or on foreign
exchanges approved by the CFTC.
A Fund may buy and sell futures contracts on interest rates ("Interest Rate
Futures"). No price is paid or received upon the purchase or sale of an
Interest Rate Future. An Interest Rate Future obligates the seller to deliver
and the purchaser to take a specific type of debt security at a specific future
date for a fixed price. That obligation may be satisfied by actual delivery of
the debt security or by entering into an offsetting contract.
The Fund may buy and sell futures contracts related to financial indices (a
"Financial Future"). A financial index assigns relative values to the
securities included in the index and fluctuates with the changes in the market
value of those securities. Financial indices cannot be purchased or sold
directly. The contracts obligate the seller to deliver, and the purchaser to
take, cash to settle the futures transaction or to enter into an offsetting
contract. No physical delivery of the securities underlying the index is made
on settling the futures obligation. No monetary amount is paid or received by a
Fund on the purchase or sale of a Financial Future.
Upon entering into a futures transaction, a Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin will be
deposited with a Fund's Custodian in an account registered in the futures
broker's name;
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however the futures broker can gain access to that account only under
specified conditions. As the Future is marked to market to reflect changes
in its market value, subsequent margin payments, called variation margin,
will be made to or by the futures broker on a daily basis. Prior to
expiration of the Future, if a Fund elects to close out its position by
taking an opposite position, a final determination of variation margin is
made, additional cash is required to be paid by or released to the Fund, and
any loss or gain is realized for tax purposes. Although Financial Futures
and Interest Rate Futures by their terms call for settlement by delivery cash
or securities, respectively, in most cases the obligation is fulfilled by
entering into an offsetting position. All futures transactions are effected
through a clearinghouse associated with the exchange on which the contracts
are traded.
OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options
on futures contracts will give the Funds 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, a Fund 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 a Fund's assets. By
writing a call option, a Fund becomes obligated, in exchange for the premium,
to sell a futures contract (if the option is exercised), which may have a
value higher than the exercise price. Conversely, the writing of a put option
on a futures contract generates a premium which may partially offset an
increase in the price of securities that a Fund intends to purchase. However,
a Fund becomes obligated to purchase a futures contract (if the option is
exercised) which may have a value lower than the exercise price. Thus, the
loss incurred by a Fund in writing options on futures is potentially
unlimited and may exceed the amount of the premium received. The Funds 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 Fund's ability to establish and close out positions on such options will
be subject to the development and maintenance of a liquid market.
The Funds may use options on futures contracts solely for bona fide
hedging or other non-hedging purposes as described below under ""Regulatory
Aspects of Hedging Instruments.''
FORWARD CONTRACTS. Each Fund (other than the Liquid Fund and the
Government Securities Fund) may enter into foreign currency exchange contracts
("Forward Contracts") for hedging and non-hedging purposes. A forward currency
exchange contract generally has no deposit requirement, and no commissions are
generally charged at any stage for trades. A Forward Contract involves
bilateral obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number of days from
the date of the contract agreed upon by the parties), at a price set at the time
the contract is entered into. A Fund generally will not enter into a forward
currency exchange contract with a term of greater than one year. These
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers.
A Fund may use Forward Contracts to protect against uncertainty in the
level of future exchange rates. The use of Forward Contracts does not eliminate
fluctuations in the prices of the underlying securities a Fund owns or intends
to acquire, but it does fix a rate of exchange in advance. In addition,
although Forward Contracts limit the risk of loss due to a decline in the value
of the hedged currencies, at the same time they limit any potential gain that
might result should the value of the currencies increase.
A Fund may enter into Forward Contracts with respect to specific
transactions. For example, when a Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, or when it anticipates
receipt of dividend payments in a foreign currency, a Fund may desire to
"lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of
such payment by entering into a Forward Contract, for a fixed amount of U.S.
dollars per unit of foreign currency, for the purchase or sale of the amount of
foreign currency involved in the underlying transaction ("transaction hedge").
A Fund will thereby
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be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are made
or received.
A Fund may also use Forward Contracts to lock in the U.S. dollar value of
portfolio positions ("position hedge"). In a position hedge, for example, when
a Fund believes that foreign currency may suffer a substantial decline against
the U.S. dollar, it may enter into a forward sale contract to sell an amount of
that foreign currency approximating the value of some or all of a Fund's
portfolio securities denominated in such foreign currency, or when it believes
that the U.S. dollar may suffer a substantial decline against a foreign
currency, it may enter into a forward purchase contract to buy that foreign
currency for a fixed dollar amount. In this situation a Fund may, in the
alternative, enter into a Forward Contract to sell a different foreign currency
for a fixed U.S. dollar amount where the Fund believes that the U.S. dollar
value of the currency to be sold pursuant to the Forward Contract will fall
whenever there is a decline in the U.S. dollar value of the currency in which
portfolio securities of the Fund is denominated ("cross hedge").
A Fund will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate a fund to deliver an amount of foreign currency in excess of the value
of the Fund's portfolio securities or other assets denominated in that currency.
A Fund, however, in order to avoid excess transactions and transaction costs,
may maintain a net exposure to Forward Contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in that currency
provided the excess amount is "covered" by liquid, high-grade debt securities,
denominated in any currency, at least equal at all times to the amount of such
excess. As an alternative, a LifeSpan Fund may purchase a call option
permitting the Fund to purchase the amount of foreign currency being hedged by a
forward sale contract at a price no higher than the forward contract price or a
LifeSpan Fund may purchase a put option permitting the Fund to sell the amount
of foreign currency subject to a forward purchase contract at a price as high or
higher than the forward contract price. Unanticipated changes in currency
prices may result in poorer overall performance for a Fund than if it had not
entered into such contracts.
The precise matching of the Forward Contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of
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these securities between the date the Forward Contract is entered into and
the date it is sold. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase), if the market value of the security is less than
the amount of foreign currency a Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency a Fund is obligated to
deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing a Fund to
sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, a Fund, may either sell a portfolio security and use the sale proceeds
to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which a Fund will obtain, on the same maturity date, the same amount
of the currency that it is obligated to deliver. Similarly, a Fund may close
out a Forward Contract requiring it to purchase a specified currency by entering
into a second contract entitling it to sell the same amount of the same currency
on the maturity date of the first contract. A The Income Fund would realize a
gain or loss as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
offsetting contract.
The cost to a Fund of engaging in Forward Contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. Because
such contracts are not traded on an exchange, a Fund must evaluate the credit
and performance risk of each particular counterparty under a Forward Contract.
Although a Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. A Fund may convert foreign currency from time to time, and
investors should be aware of the costs of currency conversion. Foreign exchange
dealers do not charge a fee for conversion, but they do seek to realize a profit
based on the difference between the prices at which they
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buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of exchange
should a Fund desire to resell that currency to the dealer.
INTEREST RATE SWAP TRANSACTIONS. All Funds may enter into swap
transactions. Swap agreements entail both interest rate risk and credit risk.
There is a risk that, based on movements of interest rates in the future, the
payments made by a Fund under a swap agreement will have been greater than those
received by them. Credit risk arises from the possibility that the counterparty
will default. If the counterparty to an interest rate swap defaults, a Fund's
loss will consist of the net amount of contractual interest payments that the
Fund has not yet received. The Manager or relevant Subadviser will monitor the
creditworthiness of counterparties to the Fund's interest rate swap transactions
on an ongoing basis.
A Fund will enter into swap transactions with appropriate counterparties
pursuant to master netting agreements. A master netting agreement provides that
all swaps done between a Fund and that counterparty under that master agreement
shall be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions, the
net amount payable on that date in that currency shall be paid. In addition,
the master netting agreement may provide that if one party defaults generally or
on one swap, the counterparty may terminate the swaps with that party. Under
such agreements, if there is a default resulting in a loss to one party, the
measure of that party's damages is calculated by reference to the average cost
of a replacement swap with respect to each swap (i.e., the mark-to-market value
at the time of the termination of each swap). The gains and losses on all swaps
are then netted, and the result is the counterparty's gain or loss on
termination. The termination of all swaps and the netting of gains and losses
on termination is generally referred to as "aggregation." The swap market has
grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid
in comparison with the markets for other similar instruments which are traded in
the interbank market. However, the staff of the SEC takes the position that
swaps, caps and floors are illiquid investments that are subject to a limitation
on such investments.
ADDITIONAL INFORMATION ABOUT HEDGING INSTRUMENTS AND THEIR USE. A Fund's
Custodian, or a securities depository acting for the Custodian, will act as a
Fund's escrow agent, through the facilities of the Options Clearing Corporation
("OCC"), as to the investments on which a Fund has written options traded on
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exchanges or as to other acceptable escrow securities, so that no margin will be
required for such transactions. OCC will release the securities covering a call
on the expiration of the option or upon a Fund entering into a closing purchase
transaction. An option position may be closed out only on a market which
provides secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular option.
When LifeSpan Growth Fund or LifeSpan Balanced Fund writes an
over-the-counter ("OTC") option, it will enter into an arrangement with a
primary U.S. Government securities dealer, which would establish a formula
price at which the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple of the
premium received for the option, plus the amount by which the option is
exercisable below the market price of the underlying security (that is, the
extent to which the option "is in-the-money"). When LifeSpan Growth Fund or
LifeSpan Balanced Fund writes an OTC option, it will treat as illiquid (for
purposes of the limit on its assets that may be invested in illiquid
securities, stated in its Prospectus) the mark-to-market value of any OTC
option held by them. The SEC is evaluating whether OTC options should be
considered liquid securities, and the procedure described above could be
affected by the outcome of that evaluation.
REGULATORY ASPECTS OF HEDGING INSTRUMENTS. The Funds are required to
operate within certain guidelines and restrictions with respect to their use of
futures and options thereon as established by the Commodities Futures Trading
Commission ("CFTC"). In particular, the Funds are excluded from registration as
a "commodity pool operator" if they comply with the requirements of Rule 4.5
adopted by the CFTC. The Rule does not limit the percentage of the Funds'
assets that may be used for Futures margin and related options premiums for a
bona fide hedging position. However, under the Rule a Fund must limit its
aggregate initial futures margin and related option premiums to no more than 5%
of the Funds' net assets for hedging strategies that are not considered bona
fide hedging strategies under the Rule.
Transactions in options by the Funds are subject to limitations established
by each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
regardless of whether the options were written or purchased on the same or
different exchanges or are held in one or more accounts or through one or more
different exchanges through one or more or brokers. Thus, the number of options
which the Funds may write or hold may be affected by options written or held by
other entities, including
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other investment companies having the same or an affiliated investment
adviser. Position limits also apply to Futures. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions. Due to requirements under the Investment
Company Act of 1940 (the "Investment Company Act"), when the Funds purchase a
Future, the Funds will maintain, in a segregated account or accounts with
their Custodian, cash or readily-marketable, short-term (maturing in one year
or less) debt instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit applicable to it.
TAX ASPECTS OF COVERED CALLS AND HEDGING INSTRUMENTS. Each Fund intends to
qualify as a "regulated investment company" under the Internal Revenue Code.
That qualification enables a Fund to "pass through" its income and realized
capital gains to shareholders without the Fund having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since shareholders will
be taxed on the dividends and capital gains they receive from the Fund. One of
the tests for a Fund's qualification is that less than 30% of its gross income
(irrespective of losses) must be derived from gains realized on the sale of
securities held for less than three months. To comply with that 30% cap, a Fund
will limit the extent to which it engages in the following activities, but will
not be precluded from them: (i) selling investments, including Futures, held for
less than three months, whether or not they were purchased on the exercise of a
call held by the Fund; (ii) purchasing calls or puts which expire in less than
three months; (iii) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv) exercising puts or
calls held by a Fund for less than three months; or (v) writing calls on
investments held for less than three months.
RISKS OF HEDGING WITH OPTIONS AND FUTURES. In addition to the risks with
respect to hedging discussed in each Fund's Prospectus and above, there is a
risk in using short hedging by selling Futures to attempt to protect against a
decline in value of a Fund's portfolio securities (due to an increase in
interest rates) that the prices of such Futures will correlate imperfectly with
the behavior of the cash (i.e., market value) prices of a Fund's securities.
The ordinary spreads between prices in the cash and futures markets are subject
to distortions due to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than making or taking
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delivery. To the extent participants decide to make or take delivery, liquidity
in the futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures markets may
cause temporary price distortions.
PORTFOLIO TURNOVER. Each Fund'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 Fund'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 Funds 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 Fund and do not generally reflect trading for short-term profits.
OTHER INVESTMENT RESTRICTIONS
A. FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment restrictions.
Each Fund's most significant investment restrictions are also set forth in
its Prospectus. Fundamental policies cannot be changed without the vote of a
"majority" of a Fund's outstanding voting securities. Under the Investment
Company Act, such a "majority" vote is defined as the vote of the holders of
the lesser of (i) 67% or more of the shares present or represented by proxy
at a shareholder meeting, if the holders of more than 50% of the outstanding
shares are present, or (ii) more than 50% of the outstanding shares.
The Liquid Fund 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 Fund's investment policies, and
the pledge, mortgage or hypothecation of the Fund's assets are not deemed to be
senior securities.
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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 emergency 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 Fund 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 Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3 percent of the
Fund'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.
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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.
The Income, Value and Allocation Funds 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 Fund's investment policies, and
the pledge, mortgage or hypothecation of the Fund'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)
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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 Fund 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 Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets taken at market value, (2)
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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 Fund 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 Fund's total assets, taken at market value at the time thereof.
In order to comply with certain state statutes, such Fund 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 Fund'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
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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 Fund 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 Fund's investment policies, and
the pledge, mortgage or hypothecation of the Fund'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 emergency 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 Fund of initial or maintenance margin in connection with
futures contracts or related options transactions is not considered the purchase
of a security on margin.
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6. Write or purchase put or call options, except that the Fund 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
Fund 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 Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3 percent of the
Fund'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.
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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).
Each of the LifeSpan Funds 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 Fund'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 Fund of initial or maintenance
margin in connection with futures contracts or related options transactions is
not considered the purchase of a security on margin.
3. Borrow money, except for emergency or extraordinary purposes including
(i) from banks for temporary or short-term purposes or for the clearance of
transactions in amounts not to exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed) taken at market value, (ii) in connection
with the redemption of Fund 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 Fund may be deemed to be an
underwriter for purposes of the 1933 Act.
5. Purchase or sell real estate except that the Fund 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
Fund as a result of the ownership of securities.
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6. Invest in commodities, except the Fund 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 Fund's
investment policies.
7. Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund'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 Fund'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 Fund.
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 the Funds'
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 Fund and Liquid Fund of the
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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.
For purposes of a Funds' policy not to concentrate their assets, described
in the above restrictions, the Funds have adopted the industry classifications
set forth in the Appendix to this Statement of Additional Information. This is
not a fundamental policy.
The percentage restrictions described above and in each Fund's Prospectus
are applicable only at the time of investment and require no action by a Fund as
a result of subsequent changes in value of the investments or the size of a
Fund.
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 Funds 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 Fund's total assets taken at
market value. Collateral arrangements with respect to margin, option and
other risk management and when-issued and forward commitment transactions are
not deemed to be pledges or other encumbrances for purposes of this
restriction.
(2) Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of the
Manager or the 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 Fund'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 Fund or (iii) more than 5%
of
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<PAGE>
the Fund's assets would be invested in any one such investment company. The
Fund 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 Fund 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
Fund'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 Fund'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 Fund 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 Fund 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
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<PAGE>
aggregate value of premiums paid on all options, other than protective put
options, held by the Fund at any time will not exceed 20% of the Fund's total
assets.
(13) Invest for the purpose of exercising control over or management of any
company.
In order to permit the sale of shares of the Funds in certain states,
the Board of Directors may, in its sole discretion, adopt restrictions on
investment policy more restrictive than those described above. Should the Board
of Directors determine that any such more restrictive policy is no longer in
the best interest of a Fund and its shareholders, the Fund may cease offering
shares in the state involved and the Board of Directors may revoke such
restrictive policy. Moreover, if the states involved shall no longer require
any such restrictive policy, the Board of Directors may, in its sole
discretion, revoke such policy.
HOW THE FUNDS ARE MANAGED
ORGANIZATION AND HISTORY. The Company was incorporated in Maryland on
December 9, 1981. Prior to March 18, 1996, the Company was named Connecticut
Mutual Investment Accounts, Inc. On March 18, 1996 the Funds listed below
changed their names as follows:
Fund Name Prior to
Fund March 18, 1996
- ------------------- ----------------------
Allocation Fund Connecticut Mutual Balanced Account
Value Fund Connecticut Mutual Growth Account
LifeSpan Balanced Fund CMIA LifeSpan Balanced Account
LifeSpan Growth Fund CMIA LifeSpan Capital Appreciation
Account
LifeSpan Income Fund CMIA LifeSpan Income Account
As a Maryland corporation, the Funds are not required to hold, and do not
plan to hold, regular annual meetings of shareholders. The Funds will hold
meetings when required to do so by the Investment Company Act or other
applicable law, or when a shareholder meeting is called by the Directors or upon
proper request of the shareholders. The Directors will call a meeting of
shareholders to vote on the removal of a Director upon the written request of
the record holders of 10% of its outstanding shares. In addition, if the
Directors receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Company valued at
$25,000 or more or holding at least 1% of the Company's outstanding shares,
whichever is less, stating that they wish to communicate with other shareholders
to request a meeting to remove a Director, the Directors will then either make
each Fund's shareholder list available to the applicants or mail their
communication to all other shareholders at the applicants' expense, or the
Directors may take such other action as set forth under Section 16(c) of the
Investment Company Act.
DIRECTORS AND OFFICERS OF THE COMPANY. The Company's Directors and officers and
their principal occupations and business affiliations during the past five years
are listed below. The address of each Director and officer is Two World Trade
Center, New York, New York 10048-0203, unless another address is listed below.
All of the Directors are directors of Oppenheimer Target
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<PAGE>
Fund, Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Time Fund,
Oppenheimer Growth Fund, Oppenheimer Discovery Fund, Oppenheimer Global
Growth & Income Fund, Oppenheimer Global Emerging Growth Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer New
York Tax-Exempt Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer
Multi-State Tax-Exempt Trust, Oppenheimer Asset Allocation Fund, Oppenheimer
Mortgage Income Fund, Oppenheimer U.S. Government Trust, Oppenheimer
Multi-Sector Income Trust and Oppenheimer Multi-Government Trust (the "New
York-based OppenheimerFunds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar
and Zack, who are officers of the Company, hold the same offices with the
other New York-based OppenheimerFunds as with the Company.
LEON LEVY, CHAIRMAN OF THE BOARD OF DIRECTORS; AGE: 70
General Partner of Odyssey Partners, L.P. (investment partnership) and Chairman
of Avatar Holdings, Inc. (real estate development).
ROBERT G. GALLI, DIRECTOR*; AGE: 62
Vice Chairman of the Manager and Vice President and Counsel of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company; formerly he
held the following positions: a director of the Manager and OppenheimerFunds
Distributor, Inc. (the "Distributor"), Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and Centennial Asset
Management Corporation ("Centennial"), investment advisory subsidiaries of the
Manager, a director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of the Manager,
an officer of other Oppenheimer funds and Executive Vice President and General
Counsel of the Manager and the Distributor.
BENJAMIN LIPSTEIN, DIRECTOR; AGE: 72
91 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex Publishers, Inc.
(Publishers of PSYCHOLOGY TODAY on MOTHER EARTH NEWS) and a director of Spy
Magazine, L.P.
BRIDGET A. MACASKILL, PRESIDENT AND DIRECTOR; AGE: 47
President, Chief Executive Officer and a Director of the Manager; Chairman and a
Director of SSI, Vice President and a Director of OAC; a Director of HarbourView
and of Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of
the Manager; formerly an Executive Vice President of the Manager.
- -------------------
* A Director who is an "interested person" of the Company as
defined in the Investment Company Act.
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<PAGE>
ELIZABETH B. MOYNIHAN, DIRECTOR; AGE: 66
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York University),
National Building Museum; a member of the Trustees Council, Preservation League
of New York State; a member of the Indo-U.S. Sub-Commission on Education and
Culture.
KENNETH A. RANDALL, DIRECTOR; AGE: 68
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Enron-Dominion
Cogen Corp. (cogeneration company), Kemper Corporation (insurance and financial
services company), Fidelity Life Association (mutual life insurance company);
formerly Chairman of the Board of ICL, Inc. (information systems), and President
and Chief Executive Officer of The Conference Board, Inc. (international
economic and business research).
EDWARD V. REGAN, DIRECTOR; AGE: 65
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; President
of Jerome Levy Economics Institute; a member of the U.S. Competitiveness Policy
Council; a director of GranCare, Inc. (healthcare provider); formerly New York
State Comptroller and a trustee of the New York State and Local Retirement Fund.
RUSSELL S. REYNOLDS, JR., DIRECTOR; AGE: 63
200 Park Avenue, New York, New York 10166
Founder and Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House, Greenwich
Historical Society and Greenwich Hospital.
SIDNEY M. ROBINS, DIRECTOR; AGE: 83
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate School of
Business, Columbia University; Visiting Professor of Finance, University of
Hawaii; and a director of The Korea Fund, Inc. (closed-end investment company);
a member of the Board of Advisors, Olympus Private Placement Fund, L.P.;
Professor Emeritus of Finance, Adelphi University.
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<PAGE>
DONALD W. SPIRO, DIRECTOR*; AGE: 69
Chairman Emeritus and a director of the Manager; formerly Chairman of the
Manager and the Distributor.
PAULINE TRIGERE, DIRECTOR; AGE: 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
CLAYTON K. YEUTTER, DIRECTOR; AGE: 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T. Industries,
Ltd. (tobacco and financial services), Caterpillar, Inc. (machinery), ConAgra,
Inc. (food and agricultural products), Farmers Insurance Company (Insurance);
FMC Corp. (chemicals and machinery), Lindsay Manufacturing Co. (irrigation
equipment), Texas Instruments, Inc. (electronics), and The Virgo Corporation
(fertilizer manufacturer); formerly (in descending chronological order)
Counsellor to the President (Bush) for Domestic Policy, Chairman of the
Republican National Committee, Secretary of the U.S. Department of Agriculture,
and U.S. Trade Representative.
ANDREW J. DONOHUE, SECRETARY; AGE: 45
Executive Vice President and General Counsel of the Manager and the Distributor;
an officer of other Oppenheimer funds; formerly Senior Vice President and
Associate General Counsel of the Manager and the Distributor; prior to which he
was a Partner in Kraft & McManimon (a law firm), an officer of First Investors
Corporation (a broker-dealer) and First Investors Management Company, Inc.
(broker-dealer and investment adviser), and a director and an officer of First
Investors Family of Funds and First Investors Life Insurance Company.
ROBERT DOLL, JR., VICE PRESIDENT; AGE: 41
Executive Vice President of the Manager; an officer of other Oppenheimer funds.
GEORGE C. BOWEN, TREASURER; AGE: 59
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and Treasurer
of the Distributor and HarbourView; Senior Vice President, Treasurer, Assistant
Secretary and a director of Centennial; Vice President, Treasurer and Secretary
of SSI and SFSI; an officer of other Oppenheimer funds.
- -------------------------
* A Director who is an "interested person" of the Company as
defined in the Investment Company Act.
-40-
<PAGE>
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE: 47
Senior Vice President and Associate General Counsel of the Manager; Assistant
Secretary of SSI and SFSI; and officer of other Oppenheimer funds.
ROBERT BISHOP, ASSISTANT TREASURER; AGE: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the Manager, prior to
which he was an Accountant for Yale & Seffinger, P.C., an accounting firm, and
previously an Accountant and Commissions Supervisor for Stuart James Company
Inc., a broker-dealer.
SCOTT FARRAR, ASSISTANT TREASURER; AGE: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the Manager, prior to
which he was an International Mutual Fund Supervisor for Brown Brothers Harriman
Co., a bank, and previously a Senior Fund Accountant for State Street Bank &
Trust Company, before which he was a sales representative for Central Colorado
Planning.
REMUNERATION OF DIRECTORS. The officers of the Funds are affiliated with
the Manager; they and the Directors of the Funds who are affiliated with the
Manager receive no salary or fee from the Funds. The chart below sets forth the
fees paid by each Fund to its Directors and certain other information for the
fiscal year ended December 31, 1995*:
- -------------------
* Effective May 31, 1996, each of the individuals listed below
resigned their position as a Director of the Company.
-41-
<PAGE>
<TABLE>
<CAPTION>
RICHARD M. DONALD E. A. RICHARD W. BEVERLY L. DONALD H. DAVID E.
AYERS CARSON GREENE HAMILTON POND, JR. SAMS, JR.
---------- ------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
COMPENSATION RECEIVED FROM
EACH FUND
LIQUID FUND $974 $1,034 $1,180 $1,003 $-0- $-0-
GOVERNMENT
SECURITIES
FUND 850 894 1,021 872 -0- -0-
INCOME FUND 751 787 898 768 -0- -0-
ALLOCATION FUND 2,328 2,512 2,851 2,420 -0- -0-
VALUE FUND 1,309 1,404 1,597 1,357 -0- -0-
LIFESPAN INCOME
FUND 128 148 169 138 -0- -0-
LIFESPAN
BALANCED FUND 221 255 289 238 -0- -0-
LIFESPAN GROWTH
FUND 172 199 226 187 -0- -0-
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
RICHARD M. DONALD E. A. RICHARD W. BEVERLY L. DONALD H. DAVID E.
AYERS CARSON GREENE HAMILTON POND, JR. SAMS, JR.
---------- ------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PENSION OR RETIREMENT
BENEFITS ACCRUED AS
A FUND EXPENSE
LIQUID FUND -0- -0- -0- -0- -0- -0-
GOVERNMENT
SECURITIES
FUND -0- -0- -0- -0- -0- -0-
INCOME FUND -0- -0- -0- -0- -0- -0-
TOTAL RETURN
FUND -0- -0- -0- -0- -0- -0-
VALUE FUND -0- -0- -0- -0- -0- -0-
LIFESPAN
INCOME FUND -0- -0- -0- -0- -0- -0-
LIFESPAN
BALANCED FUND -0- -0- -0- -0- -0- -0-
LIFESPAN GROWTH
FUND -0- -0- -0- -0- -0- -0-
TOTAL COMPENSATION
FROM COMPANY AND
COMPLEX PAID TO THE
DIRECTORS** 13,500 14,500 16,500 14,000 -0- -0-
</TABLE>
As of December 31, 1995, the Directors and officers of the Company as a
group owned of record or beneficially less than 1% of the outstanding shares of
the Company.
MAJOR SHAREHOLDERS. As of January 31, 1995, Connecticut Mutual Life
Insurance Company ("CML") and its affiliates owned shares of the Funds as
follows: Value Fund (1,980,906 shares) (29% of shares outstanding); Liquid
Fund (36,099,906 shares) (46% of shares.
- -------------------
* As of the calendar year ended December 31, 1995, there were 22 investment
companies in the Complex (including the Funds).
-43-
<PAGE>
outstanding); LifeSpan Growth Fund (2,590,448 shares) (83% of shares
outstanding); LifeSpan Balanced Fund (3,485,974 shares) (89% of shares
outstanding); LifeSpan Income Fund (2,086,830 shares) (89% 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 Fund 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. Effective March
1, 1996, Massachusetts Mutual Life Insurance Company, a Massachusetts
corporation, acquired CML's interests in the Funds.
As of January 31, 1996, no person owned of record or was known by the
Company to own beneficially 5% or more of the outstanding shares of any Fund.
THE MANAGER, THE SUBADVISERS AND THEIR AFFILIATES. The Manager is wholly-owned
by Oppenheimer Acquisition Corporation ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part by
certain of the Manager's directors and officers, some of whom also serve as
officers of the Funds, and two of whom (Mr. Jon S. Fossel and Mr. James C.
Swain) serve as Directors of the Funds.
The Manager and the Funds have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of a Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
THE INVESTMENT ADVISORY AGREEMENTS. Each Fund has entered into an
Investment Advisory Agreement with the Manager. The investment advisory
agreement between the Manager and each Fund requires the Manager, at its
expense, to provide each Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all administrative and
clerical personnel required to provide effective corporate administration for
each Fund, including the compilation and maintenance of records with respect to
its operations, the preparation and filing of specified reports, and composition
of proxy materials and registration statements for the continuous public sale of
shares of each Fund.
Expenses not expressly assumed by the Manager under an advisory agreement
or by the Distributor under a Distribution Agreement (defined below) are paid by
the relevant Fund. The advisory agreement lists examples of expenses to be paid
by a Fund, the major categories of which relate to interest, taxes, brokerage
commissions, fees to certain Directors, legal, and audit
-44-
<PAGE>
expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses, including
litigation.
The advisory fees paid by the Funds to G.R. Phelps & Co., the Funds' prior
investment advisor, for the last three fiscal years were:
<TABLE>
<CAPTION>
1993 1994 1995
--------- ---------- ----------
<S> <C> <C> <C>
Liquid Fund $357,506 $ 385,774 $ 349,609
Government Securities Fund $465,806 $ 460,523 $ 342,325
Income Fund $277,291 $ 304,391 $ 274,057
Allocation Fund $867,544 $1,173,401 $1,251,666
Value Fund $264,629 $ 342,082 $ 613,378
LifeSpan Balanced Fund $ 0 $ 0 $ 214,011
LifeSpan Growth Fund $ 0 $ 0 $ 166,212
LifeSpan Income Fund $ 0 $ 0 $ 111,599
Total All Funds $232,776 $ 666,171 $3,322,857
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
Under each advisory agreement, the Manager has undertaken that if the total
expenses of a Fund in any fiscal year should exceed the most stringent state
regulatory requirements on expense limitations applicable to a Fund, the
Manager's compensation under the advisory agreement will be reduced by the
amount of such excess. For the purpose of such calculation, there shall be
excluded any expense borne directly or indirectly by a Fund which is permitted
to be excluded from the computation of such limitation by such statute or state
regulatory authority. At present, that limitation is imposed by California, and
limits expenses (with specific exclusions) to 2.5% of the first $30 million of
average net assets, 2% of the next $70 million of average net assets and 1.5% of
average net assets in excess of $100 million. Any assumption of a Fund's
expenses under this limitation would lower a Fund's overall expense ratio and
increase its total return during any period in which expenses are limited.
The advisory agreement provides that in the absence of willful misfeasance,
bad faith, gross negligence in the performance of its duties, or reckless
disregard of its obligations and duties under the advisory agreement, the
Manager is not liable for any loss resulting from any good faith errors or
omissions in connection with any matters to which the Agreement relates. Each
advisory agreement permits the Manager to act as
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<PAGE>
investment adviser for any other person, firm or corporation and to use the
name "Oppenheimer" in connection with its other investment activities. If
the Manager shall no longer act as investment adviser to the Funds, the right
of the Funds to use the name "Oppenheimer" as part of their corporate names
may be withdrawn.
Babson-Stewart, One Memorial Drive, Cambridge, Massachusetts 02142, is a
Massachusetts general partnership and a registered investment adviser and was
originally established in 1987. The general partners of Babson-Stewart are
David L. Babson & Co., which is an indirect subsidiary of Massachusetts Life
Insurance Company, and Stewart Ivory & Co. (International), Ltd. As of
September 30, 1995, Babson-Stewart had approximately $917 million in assets
under management. BEA Associates, Citicorp Center, 153 E. 53rd Street, 57th
Floor, New York, NY 10022, is a partnership between Credit Suisse Capital
Corporation and BEA Associate's employee shareholders. BEA Associates has been
providing domestic and global fixed income and equity investment management
services for institutional clients and mutual funds since 1984 and, together
with its global affiliate, had $28.9 billion in assets under management as of
June 30, 1995. Pilgrim, 1255 Drummers Lane, Wayne, Pennsylvania 19087, was
established in 1982 to provide specialized equity management for institutional
investors. Pilgrim is a Delaware corporation and a wholly owned subsidiary of
United Asset Management Corporation. As of May 31, 1995, Pilgrim had over $4
billion in assets under management.
THE INVESTMENT SUBADVISORY AGREEMENTS. With respect to the international
Component for LifeSpan Growth Fund and LifeSpan Balanced Fund, the Manager has
entered into investment subadvisory agreements with Babson-Stewart. With
respect to the small cap Component of each LifeSpan Fund, the Manager has
entered into investment subadvisory agreements with Pilgrim. With respect to
the high yield/high risk bond Component for each LifeSpan Fund, the Manager has
entered into investment subadvisory agreements with BEA Associates. Under the
respective investment subadvisory agreement, the corresponding Subadviser,
subject to the review of the Board of Directors and the overall supervision of
the Manager, is responsible for managing the investment operations of the
corresponding LifeSpan Fund Component and the composition of the Component's
portfolio and furnishing the LifeSpan Fund with advice and recommendations with
respect to investments and the purchase and sale of securities for the
respective Component.
The investment subadvisory agreements with Babson-Stewart provide that in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard with respect to its obligations and duties under the agreements,
Babson-Stewart will
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<PAGE>
not be subject to liability for any loss sustained by reason of its good
faith errors of omissions in connection with any matters to which the
agreements relate.
The investment subadvisory agreements with Pilgrim provide that in the
absence of willful misfeasance, bad faith, negligence, or reckless disregard of
the performance of its duties under the agreements, Pilgrim is not subject to
liability for any error of judgment or mistake of law or for any other action or
omission in the course of, or connected with, rendering services or for any
losses that may be sustained in the purchase, holding or sale of any security,
or otherwise.
The investment subadvisory agreement with BEA Associates provides that in
the absence of willful misfeasance, bad faith, negligence, or reckless disregard
of the performance of its duties under the agreement, BEA Associates is not
subject to liability for losses as a result of its activities in connection with
the adoption of any investment policy or the purchase, sale or retention of
securities on behalf of the LifeSpan Funds subadvised by BEA Associates if such
activities were made with due care and in good faith.
THE DISTRIBUTOR. Under its Distribution Agreements with each Fund, the
Distributor acts as each Fund's principal underwriter in the continuous public
offering of the Fund's shares, but is not obligated to sell a specific number of
shares. Expenses normally attributable to sales (other than those paid under
the Distribution and Service Plans, but including advertising and the cost of
printing and mailing prospectuses other than those furnished to existing
shareholders), are borne by the Distributor.
The compensation paid by the Funds to G.R. Phelps & Co., the prior
distributor of the Funds' shares, for distribution fees for the last three
fiscal years was:
<TABLE>
<CAPTION>
1993 1994 1995
--------- ---------- ----------
<S> <C> <C> <C>
Liquid Fund 0 0 0
Government Securities Fund $ 365,583 $ 189,799 $ 77,366
Income Fund $ 203,149 $ 127,640 $102,642
Allocation Fund $1,790,711 $1,671,181 $902,663
Value Fund $ 416,056 $ 513,544 $559,650
LifeSpan Income Fund $ 0 $ 0 $ 75,262
--------
LifeSpan Balanced Fund $ 0 $ 0 $123,711
--------
LifeSpan Growth Fund $ 0 $ 0 $151,750
--------
</TABLE>
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<PAGE>
For additional information about distribution of the Funds' shares and the
expenses connected with such activities, please refer to "Distribution and
Service Plans," below.
THE TRANSFER AGENT. OppenheimerFunds Services, each Fund's transfer agent,
is responsible for maintaining each Fund's shareholder registry and shareholder
accounting records, and for shareholder servicing and administrative functions.
BROKERAGE POLICIES OF THE FUNDS
BROKERAGE PROVISIONS OF THE INVESTMENT ADVISORY AGREEMENTS. One of the duties
of the Manager under each advisory agreement is to arrange the portfolio
transactions for each Fund. Each advisory agreement contains provisions
relating to the employment of broker-dealers ("brokers") to effect a Fund's
portfolio transactions. In doing so, the Manager is authorized by the advisory
agreement to employ such broker-dealers, including "affiliated" brokers, as that
term is defined in the Investment Company Act, as may, in its best judgment
based on all relevant factors, implement the policy of a Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable execution at the
most favorable price obtainable) of such transactions. The Manager need not
seek competitive commission bidding, but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of a Fund as
established by its Board of Directors.
Under each advisory agreement, the Manager is authorized to select brokers
that provide brokerage and/or research services for a Fund and/or the other
accounts over which the Manager or its affiliates have investment discretion.
The commissions paid to such brokers may be higher than another qualified broker
would have charged, if a good faith determination is made by the Manager and the
commission is fair and reasonable in relation to the services provided. Subject
to the foregoing considerations, the Manager may also consider sales of shares
of a Fund and other investment companies managed by the Manager or its
affiliates as a factor in the selection of brokers for a Fund's portfolio
transactions.
DESCRIPTION OF BROKERAGE PRACTICES FOLLOWED BY THE MANAGER. Most purchases made
by the Funds are principal transactions at net prices, and the Funds incur
little or no brokerage costs. Subject to the provisions of the advisory
agreement, the procedures and rules described above, allocations of brokerage
are generally made by the Manager's portfolio traders based upon recommendations
from the Manager's portfolio managers. In certain instances, portfolio managers
may directly place trades and allocate brokerage, also subject to the provisions
of the advisory agreements and the
-48-
<PAGE>
procedures and rules described above. In either case, brokerage is allocated
under the supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market are
generally done with principals or market makers. Brokerage commissions are
paid primarily for effecting transactions in listed securities or for
certain fixed income agency transactions in the secondary market and
otherwise only if it appears likely that a better price or execution can be
obtained.
When the Funds engage in an option transaction, ordinarily the same broker
will be used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders to
purchase or sell the same security by more than one of the accounts managed by
the Manager and its affiliates are combined. The transactions effected pursuant
to such combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates,
and investment research received for the commissions of those other accounts
may be useful both to the Funds and one or more of such other accounts. Such
research, which may be supplied by a third party at the instance of a broker,
includes information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt of market
quotations for portfolio evaluations, information systems, computer hardware
and similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process
may be paid in commission dollars. The Board of Directors has permitted the
Manager to use concessions on fixed price offerings to obtain research, in
the same manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
trades to obtain research where the broker has represented to the Manager
that (i) the trade is not from the broker's own inventory, (ii) the trade was
executed by the broker on an agency basis at the stated commission, and (iii)
the trade is not a riskless principal transaction.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the Manager to
obtain market information for the valuation of securities held in a Fund's
portfolio or being considered for purchase. The Board of Directors, including
the
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<PAGE>
"independent" Directors of the Funds (those Directors of the Funds who are
not "interested persons" as defined in the Investment Company Act, and who have
no direct or indirect financial interest in the operation of the advisory
agreement or the Distribution Plans described below) annually reviews
information furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the amount of
such commissions was reasonably related to the value or benefit of such
services.
LIQUID FUND, INCOME FUND AND GOVERNMENT SECURITIES FUND. As most purchases
made by Liquid Fund, Income Fund and Government Securities Fund are principal
transactions at net prices, these Funds incur little or no brokerage costs.
Purchases of securities from underwriters include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers include a
spread between the bid and asked price. No principal transactions and, except
under unusual circumstances, no agency transactions for these Funds will be
handled by any affiliated securities dealer. In the unusual circumstance when
these Funds pay brokerage commissions, the above-described brokerage
practices and policies are followed. Liquid Fund's policy of investing in
short-term debt securities with maturities of less than 397 days results in
high portfolio turnover. However, since brokerage commissions, if any, are
small, high portfolio turnover does not have an appreciable adverse effect
upon net asset value of the Fund.
Brokerage commissions for the most recent three year period for the
Fund's listed below were as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ ------
Brokerage Brokerage Brokerage
Fund Commissions Commissions Commissions
---- ----------- ----------- -----------
<S> <C> <C> <C>
Value Fund $187,654 $249,665 $233,480
Allocation Fund $297,403 $379,734 $211,491
LifeSpan Income Fund $0 $0 $12,083
LifeSpan Balanced Fund $0 $0 $58,577
LifeSpan Growth Fund $0 $0 $62,173
</TABLE>
PERFORMANCE OF THE FUNDS
YIELD (LIQUID FUND ONLY). Liquid Fund's current yield is determined in
accordance with regulations adopted under the Investment Company Act. Yield
is calculated for a seven-day period of time as follows. First, a base
period return is calculated for the seven-day period by determining the net
change in the value of a hypothetical pre-existing account having one share
at the beginning of the seven-day period. The change includes dividends
declared on the original share and dividends declared on any shares purchased
with dividends on that share, but such dividends are adjusted to exclude any
realized or unrealized capital gains or losses affecting the dividends
declared. Next, the base period return is multiplied by 365/7 to obtain the
current yield to the nearest hundredth of one percent. The compounded
effective yield for a seven-day period is calculated by (a) adding 1 to the
base period return (obtained as described above), (b) raising the sum to a
power equal to 365 divided by 7, and (c) subtracting 1 from the result.
Liquid Fund's "current yield" for the seven days ended December 31, 1995, was
4.73% and its "compounded effective yield" was 4.84%.
The yield as calculated above may vary for accounts less than approximately
$100 in value due to the effect of rounding off each daily dividend to the
nearest full cent. Since the calculation of yield under either procedure
described above does not take into consideration any realized or unrealized
gains or losses on Liquid Fund's portfolio securities which may affect
dividends, the return on dividends declared during a period may not be the same
on an annualized basis as the yield for that period.
YIELD AND TOTAL RETURN INFORMATION (ALL FUNDS OTHER THAN LIQUID FUND). From
time to time, as set forth in a Fund's Prospectus, the "standardized yield,"
"dividend yield," "average annual total return," "total return," or "total
return at net asset value", as the case may be, of an investment in a class of
a Fund may be advertised. An explanation of how yields and total returns are
calculated for each class and the components of those calculations is set forth
below. A Fund's maximum sales charge rate on Class A shares was lower prior to
March 18, 1996, and actual investment performance would be affected by that
change.
-50-
<PAGE>
A Fund's advertisement of its performance must, under applicable rules of
the SEC, include the average annual total returns for each class of shares of a
Fund for the 1, 5 and 10-year periods (or the life of the class, if less) as of
the most recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare a Fund's performance to the
performance of other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for comparison
with other investments. An investment in a Fund is not insured; its yields and
total returns and share prices are not guaranteed and normally will fluctuate on
a daily basis. When redeemed, an investor's shares may be worth more or less
than their original cost. Yields and total returns for any given past period
are not a prediction or representation by a Fund of future yields or rates of
return on its shares. The yields and total returns of Class A, Class B or Class
C shares of a Fund, as the case may be, are affected by portfolio quality, the
type of investments the Fund holds and its operating expenses allocated to a
particular class.
STANDARDIZED YIELDS
YIELD. A Fund's "yields" (referred to as "standardized yield") for a given
30-day period for a class of shares are calculated using the following formula
set forth in rules adopted by the SEC that apply to all funds that quote yields:
6
2 [( a-b + 1) - 1]
Standardized Yield = ( cd )
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares of that class outstanding during the
30-day period that were entitled to receive dividends.
d = the maximum offering price per share of the class on the last day of the
period, using the current maximum sales charge rate adjusted for
undistributed net investment income.
The standardized yield of a class of shares for a 30-day period may differ
from its yield for any other period. The SEC formula assumes that the
standardized yield for a 30-day period occurs at a constant rate for a six-month
period and is annualized at the end of the six-month period. This standardized
yield is not based on actual distributions paid by a Fund to shareholders in the
30-day period, but is a hypothetical yield based upon the net investment income
from a Fund's portfolio investments calculated for that period. The
standardized yield may differ
-51-
<PAGE>
from the "dividend yield" of that class, described below. Additionally,
because each class of shares is subject to different expenses, it is likely
that the standardized yields of a Fund's classes of shares will differ.
DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time a Fund may quote
a "dividend yield" or a "distribution return" for each class. Dividend yield is
based on the dividends paid on shares of a class from dividends derived from net
investment income during a stated period. Distribution return includes
dividends derived from net investment income and from realized capital gains
declared during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class) on the last day of the period. When the
result is annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
Dividend Yield of the Class =
Dividends of the Class DIVIDED BY Number of days (accrual
- -------------------------------- period) x 365
Max. Offering Price of the Class
(last day of period)
The maximum offering price for Class A shares includes the current maximum
front-end sales charge. For Class B or Class C shares, as the case may be, the
maximum offering price is the net asset value per share, without considering the
effect of contingent deferred sales charges. From time to time similar yield or
distribution return calculations may also be made using the Class A net asset
value (instead of its respective maximum offering price) at the end of the
period.
TOTAL RETURN INFORMATION
AVERAGE ANNUAL TOTAL RETURNS. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in
value of a hypothetical initial investment of $1,000 ("P" in the formula below)
held for a number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment according to the following formula:
1/n
(ERV) - 1 = AVERAGE ANNUAL TOTAL RETURN
---
P
CUMULATIVE TOTAL RETURNS. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its
-52-
<PAGE>
calculation uses some of the same factors as average annual total return,
but it does not average the rate of return on an annual basis. Cumulative
total return is determined as follows:
ERV-P = TOTAL RETURN
-----
P
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% for Allocation, Value, LifeSpan Balanced, LifeSpan Growth and
LifeSpan Income Fund (the "Equity Funds") and 4.75% for Government Securities
and Income Fund (the "Bond Funds") (as a percentage of the offering price) is
deducted from the initial investment ("P") (unless the return is shown at net
asset value, as discussed below). For Class B shares of an Equity Fund, the
payment of the current contingent deferred sales charge (5.0% for the first
year, 4.0% for the second year, 3.0% for the third and fourth years, 2.0% in the
fifth year, 1.0% in the sixth year and none thereafter) is applied to the
investment result for the time period shown (unless the total return is shown at
the net asset value, as described below). For Class B shares of a Bond Fund,
the payment of the current contingent deferred sales charge (4.0% for the first
year, 3.0% for the second year, 2.0% for the third and fourth years, 1.0% in the
fifth year and none thereafter) is applied to the investment result for the time
period shown (unless the total return is shown at net asset value, as described
below). For Class C shares, the 1.0% contingent deferred sales charge is
applied to the investment results for the one-year period (or less). Total
returns also assume that all dividends and capital gains distributions during
the period are reinvested to buy additional shares at net asset value per share,
and that the investment is redeemed at the end of the period. Total returns
also assume that all dividends and capital gains distributions during the period
are reinvested to buy additional shares at net asset value per share, and that
the investment is redeemed at the end of the period.
TOTAL RETURNS AT NET ASSET VALUE. From time to time a Fund may also quote
an "average annual total return at net asset value" or a cumulative "total
return at net asset value" for Class A, Class B or Class C shares, as the case
may be. Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that class
of shares (without considering front-end or contingent deferred sales charges)
and takes into consideration the reinvestment of dividends and capital gains
distributions.
-53-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE GOVERNMENT
SECURITIES FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 4% (including 4%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
10 Years Ended 12/31/85 8.92% 8.44%
12/31/95
5 Years Ended 12/31/90 8.59% 7.71%
12/31/95
1 Year Ended 12/31/94 17.90% 13.18%
12/31/95
</TABLE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE GOVERNMENT
SECURITIES FUND:
<TABLE>
<CAPTION>
Total Return
Annualized Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/01/95* 4.20% -1.01%
to 12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE INCOME FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 4% (including 4%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
10 Years Ended 12/31/85 7.74% 4.30%
12/31/95
5 Years Ended 12/31/90 7.91% 7.03%
12/31/95
1 Year Ended 12/31/94 11.77% 7.29%
12/31/95
</TABLE>
-54-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE INCOME FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/01/95* 2.41% -2.71%
12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE ALLOCATION FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 5% (including 5%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
10 Years Ended 12/31/85 12.02% 11.45%
12/31/95
5 Years Ended 12/31/90 14.65% 13.48%
12/31/95
1 Year Ended 12/31/94 23.95% 17.75%
12/31/95
</TABLE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE ALLOCATION FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/01/95* 4.93% -0.31%
to 12/31/95
</TABLE>
*Date of Inception
-55-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE VALUE FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 5% (including 5%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
10 Years Ended 12/31/85 14.84% 14.25%
12/31/95
5 Years Ended 12/31/90 20.23% 19.00%
12/31/95
1 Year Ended 12/31/94 36.40% 29.58%
12/31/95
</TABLE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE VALUE FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/01/95* 8.04% 2.63%
to 12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE LIFESPAN GROWTH
FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 5% (including 5%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
Life of Fund 5/1/95* 18.02% 12.12%
to 12/31/95
</TABLE>
-56-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE LIFESPAN GROWTH
FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/01/95* 5.34% 0.07%
to 12/31/95
</TABLE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE LIFESPAN BALANCED
FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 5% (including 5%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
Life of Fund 5/1/95* 15.33% 9.56%
to 12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE LIFESPAN BALANCED
FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/1/95* 4.49% -0.73%
to 12/31/95
</TABLE>
*Date of Inception
VALUE OF A $1,000 INVESTMENT IN THE CLASS A SHARES OF THE LIFESPAN INCOME
FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Annualized Annualized
Investment Investment (excluding 5% (including 5%
Period Date sales charge) sales charge)
<S> <C> <C> <C>
Life of Fund 5/1/95* 11.22% 5.66%
to 12/31/95
</TABLE>
*Date of Inception
-57-
<PAGE>
VALUE OF A $1,000 INVESTMENT IN THE CLASS B SHARES OF THE LIFESPAN INCOME
FUND:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment (excluding 5% (including 5%
Period Date CDSC) CDSC)
<S> <C> <C> <C>
Life of Fund 10/01/95* 4.30% -0.92%
to 12/31/95
</TABLE>
*Date of Inception
OTHER PERFORMANCE COMPARISONS. From time to time a Fund may also include
in its advertisements and sales literature performance information about a
Fund or rankings of a Fund's performance cited in newspapers or periodicals,
such as The New York Times. These articles may include quotations of
performance from other sources, such as Lipper Analytical Services, Inc. or
Morningstar, Inc.
-58-
<PAGE>
From time to time, a Fund's Manager may publish rankings or ratings of the
Manager (or the Transfer Agent), by independent third-parties, on the investor
services provided by them to shareholders of the Oppenheimer funds, other than
the performance rankings of the Oppenheimer funds themselves. These ratings or
rankings of shareholder/investor services by third parties may compare the
Oppenheimer funds services to those of other mutual fund families selected by
the rating or ranking services, and may be based upon the opinions of the rating
or ranking service itself, using its own research or judgment, or based upon
surveys of investors, brokers, shareholders or others.
When comparing yield, total return and investment risk of an investment in
Class A, Class B or Class C shares, as the case may be, of a Fund with other
investments, investors should understand that certain other investments have
different risk characteristics than an investment in shares of a Fund. For
example, certificates of deposit may have fixed rates of return and may be
insured as to principal and interest by the FDIC, while a Fund's returns will
fluctuate and its share values and returns are not guaranteed. U.S. Treasury
securities are guaranteed as to principal and interest by the full faith and
credit of the U.S. government.
DISTRIBUTION AND SERVICE PLANS (NOT APPLICABLE TO LIQUID FUND)
Each Fund (other than Liquid Fund) has adopted a Service Plan for Class A
Shares and a Distribution and Service Plan for Class B
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<PAGE>
shares of the Fund under Rule 12b-1 of the Investment Company Act. Each of
Allocation Fund, Value Fund and each LifeSpan Fund has adopted a Distribution
and Service Plan for Class C shares of such Fund under Rule 12b-1 of the
Investment Company Act. Pursuant to such Plans, each Fund will reimburse the
Distributor for all or a portion of its costs incurred in connection with the
distribution and/or servicing of the shares of that class, as described in
the Prospectuses. Each Plan has been approved by a vote of (i) the Board of
Directors of the effected Funds, including a majority of the Independent
Directors, cast in person at a meeting called for the purpose of voting on
that Plan, and (ii) the holders of a "majority" (as defined in the Investment
Company Act) of the shares of each class. For the Distribution and Service
Plans for the Class C shares, the votes were cast by the Manager as the
then-sole initial holder of Class C shares of the effected Funds.
In addition, under the Plans, the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in the
case of the Manager, may include profits from the advisory fee it receives from
a Fund) to make payments to brokers, dealers or other financial institutions
(each is referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to a Fund. The Distributor and
the Manager may, in their sole discretion, increase or decrease the amount of
payments they make to Recipients from their own resources.
Unless terminated as described below, each Plan continues in effect from
year to year but only as long as such continuance is specifically approved at
least annually by the effected Fund's Board of Directors including its
Independent Directors by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any time
by the vote of a majority of the Independent Directors or by the vote of the
holders of a "majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. No Plan may be amended to increase materially
the amount of payments to be made unless such amendment is approved by
shareholders of the class affected by the amendment. In addition, because Class
B shares of each Fund automatically convert into Class A shares after six years,
a Fund is required to obtain the approval of Class B as well as Class A
shareholders for a proposed amendment to a Class A Plan that would materially
increase payments under the Class A Plan. Such approval must be by a "majority"
of the Class A and Class B shares (as defined in the Investment Company Act),
voting separately by class. All material amendments must be approved by the
Board and the Independent Directors.
While the Plans are in effect, the Treasurer of the Funds shall provide
separate written reports to the Board of Directors at least quarterly for its
review, detailing the amount of all
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<PAGE>
payments made pursuant to each Plan, the purpose for which the payments were
made and the identity of each Recipient that received any such payment and
the purpose of the payments. The report for the Class B Plan shall also
include the Distributor's distribution costs for that quarter, and such costs
for previous fiscal periods that are carried forward, as explained in the
Prospectuses and below. Those reports, including the allocations on which
they are based, will be subject to the review and approval of the Independent
Directors in the exercise of their fiduciary duty. Each Plan further
provides that while it is in effect, the selection and nomination of those
Directors who are not "interested persons" of the Funds are committed to the
discretion of the Independent Directors. This does not prevent the
involvement of others in such selection and nomination if the final decision
on any such selection or nomination is approved by a majority of the
Independent Directors.
Under the Plans, no payment will be made to any Recipient in any quarter if
the aggregate net asset value of all shares of a Fund held by the Recipient for
itself and its customers did not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Fund's Independent Directors.
Initially, the Board of Directors has set the fee at the maximum rate and set no
minimum amount. Any unreimbursed expenses incurred by the Distributor with
respect to Class A shares for any fiscal quarter by the Distributor may not be
recovered under the Class A Plan in subsequent fiscal quarters. Payments
received by the Distributor under the Plan for Class A shares will not be used
to pay any interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor.
The Class B and Class C Plans allow the service fee payments to be paid by
the Distributor to Recipients in advance for the first year Class B and Class C
shares are outstanding, and thereafter on a quarterly basis, as described in the
Prospectuses. The advance payment is based on the net asset value of the Class
B and Class C shares sold. An exchange of shares does not entitle the Recipient
to an advance payment of the service fee. In the event Class B or Class C
shares are redeemed during the first year such shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance of the
service fee payment to the Distributor.
Although the Class B and the Class C Plans permit the Distributor to retain
both the asset-based sales charges and the service fee, or to pay Recipients the
service fee on a quarterly basis, without payment in advance, the Distributor
presently intends to pay the service fee to Recipients in the manner described
above. A minimum holding period may be established from time to time under the
Class B Plan and the Class C Plan by the Board. Initially, the Board has set no
minimum holding period.
-61-
<PAGE>
All payments under the Class B Plan and the Class C Plan are subject to the
limitations imposed by the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. The Distributor anticipates that it will take a
number of years for it to recoup (from a Fund's payments to the Distributor
under the Class B or Class C Plan and from contingent deferred sales charges
collected on redeemed Class B or Class C shares) the sales commissions paid
to authorized brokers or dealers.
For the fiscal year ended December 31, 1995, each Fund paid the Distributor
the following amounts under its respective Class A and Class B Plans:
<TABLE>
<CAPTION>
Class A Class B
----------- -----------
<S> <C> <C>
Liquid Fund $ 0* N/A
Government Securities Fund $ 0 $ 75
Income Fund $ 0 $ 112
Allocation Fund $ 348,698 $ 917
Value Fund $ 176,158 $ 742
LifeSpan Growth Fund $ 48,745 $ 563
LifeSpan Balanced Fund $ 62,792 $ 608
LifeSpan Income Fund $ 37,134 $ 264
</TABLE>
During this period, no Class C Plans were in effect for the Funds and no
Class C shares were outstanding.
- ---------------
* Liquid Fund terminated its 12b-1 Plan in March 1996.
Asset-based sales charge payments are designed to permit an investor to
purchase shares of a Fund without the assessment of a front-end sales load and
at the same time permit the Distributor to compensate brokers and dealers in
connection with the sale of Class B and Class C shares of a Fund. The Class B
and Class C Plans provide for the Distributor to be compensated at a flat rate
whether the Distributor's distribution expenses are more than the amounts paid
by a Fund during that period. Such payments are made in recognition that the
Distributor (i) pays sales commissions to authorized brokers and dealers at the
time of sale, (ii) may finance such commissions and/or the advance of the
service fee payment to Recipients under those Plans or provide such financing
from its own resources, or from an affiliate, (iii) employs personnel to support
distribution of shares, and (iv) costs of
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<PAGE>
sales literature, advertising and prospectuses (other than those furnished to
current shareholders) and state "blue sky" registration fees and certain
other distribution expenses.
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
ALTERNATIVE SALES ARRANGEMENTS - CLASS A, CLASS B AND CLASS C SHARES (NOT
APPLICABLE TO LIQUID FUND). Income Fund and Government Securities Fund offer
two classes of shares, Class A and Class B shares. Value Fund, Allocation Fund
and each LifeSpan Fund offer three classes of shares, Class A, Class B and Class
C shares. The availability of multiple classes of shares permits an investor to
choose the method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor expects
to hold shares and other relevant circumstances. Investors should understand
that the purpose and function of the deferred sales charge and asset-based sales
charge with respect to Class B and Class C shares are the same as those of the
initial sales charge with respect to Class A shares. Any salesperson or other
person entitled to receive compensation for selling Fund shares may receive
different compensation with respect to one class of shares than the other. The
Distributor will not accept any order for $500,000 or $1 million or more of
Class B or Class C shares, respectively, on behalf of a single investor (not
including dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of a Fund
instead.
A Fund's classes of shares each represent an interest in the same portfolio
investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B and Class C
shares and the dividends payable on Class B and Class C shares will be reduced
by incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B and Class C shares are subject.
The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the effect
that the conversion of Class B shares does not constitute a taxable event for
the holder under Federal income tax law. If such a revenue ruling or opinion is
no longer available, the automatic conversion feature may be suspended, in which
event no further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
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imposition of a sales charge or fee, such exchange could constitute a taxable
event for the holder, and absent such exchange, Class B shares might continue to
be subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of a Fund's Class A, Class B and Class C shares recognizes two
types of expenses. General expenses that do not pertain specifically to any
class are allocated pro rata to the shares of each class, based on the
percentage of the net assets of such class to a Fund's total net assets, and
then equally to each outstanding share within a given class. Such general
expenses include (i) management fees, (ii) legal, bookkeeping and audit fees,
(iii) printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, (iv) fees to unaffiliated Trustees, (v) custodian expenses, (vi)
share issuance costs, (vii) organization and start-up costs, (viii) interest,
taxes and brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to a class are
allocated equally to each outstanding share within that class. Such expenses
include (i) Distribution and/or Service Plan fees, (ii) incremental transfer and
shareholder servicing agent fees and expenses, (iii) registration fees and (iv)
shareholder meeting expenses, to the extent that such expenses pertain to a
specific class rather than to a Fund as a whole.
DETERMINATION OF NET ASSET VALUES PER SHARE (ALL FUNDS OTHER THAN LIQUID FUND).
The net asset values per share of Class A, Class B and, in some cases, Class C
shares of a Fund are determined as of the close of business of The New York
Stock Exchange on each day the Exchange is open by dividing the value of a
Fund's net assets attributable to that class by the number of shares of that
class outstanding. The Exchange normally closes at 4:00 P.M., New York time,
but may close earlier on some days (for example, in case of weather emergencies
or on days falling before a holiday). The Exchange's most recent annual holiday
schedule (which is subject to change) states that it will close New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day; it may close on other days. Trading may
occur at times when the Exchange is closed (including weekends and holidays or
after 4:00 P.M., on a regular business day). Because the net asset values of a
Fund will not be calculated at such times, if securities held in a Fund's
portfolio are traded at such time, the net asset values per share of Class A,
Class B or Class C shares of a Fund may be significantly affected on such days
when shareholders do not have the ability to purchase or redeem shares.
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The Funds' Board of Trustees has established procedures for the valuation
of a Fund's securities, generally as follows: (i) equity securities traded on a
securities exchange or on NASDAQ for which last sale information is regularly
reported are valued at the last reported sale prices on their primary exchange
or NASDAQ that day (or, in the absence of sales that day, at values based on the
last sales prices of the preceding trading day, or closing bid and asked
prices); (ii) securities actively traded on a foreign securities exchange are
valued at the last sales price available to the pricing service approved by a
Fund's Board of Directors or to the Manager as reported by the principal
exchange on which the security is traded; (iii) unlisted foreign securities or
listed foreign securities not actively traded are valued as in (i) above, if
available, or at the mean between "bid" and "asked" prices obtained from active
market makers in the security on the basis of reasonable inquiry; (iv) long-term
debt securities having a remaining maturity in excess of 60 days are valued at
the mean between the "bid" and "asked" prices determined by a portfolio pricing
service approved by a Fund's Board of Directors or obtained from active market
makers in the security on the basis of reasonable inquiry; (v) debt instruments
having a maturity of more than one year when issued, and non-money market type
instruments having a maturity of one year or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by a Fund's Board of
Directors or obtained from active market makers in the security on the basis of
reasonable inquiry; (vi) money market-type debt securities having a maturity of
less than one year when issued that have a remaining maturity of 60 days or less
are valued at cost, adjusted for amortization of premiums and accretion of
discounts; and (vii) securities (including restricted securities) not having
readily-available market quotations are valued at fair value under the Board's
procedures.
In the case of U.S. Government Securities and mortgage-backed securities,
when last sale information is not generally available, such pricing procedures
may include "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity, and other special factors involved. A Funds'
Board of Directors has authorized the Manager to employ a pricing service to
price U.S. Government Securities for which last sale information is not
generally available. The Directors will monitor the accuracy of such pricing
services by comparing prices used for portfolio evaluation to actual sales
prices of selected securities.
Trading in securities on European and Asian exchanges and over-the-counter
markets is normally completed before the close of The New York Stock Exchange.
Events affecting the values of foreign securities traded in stock markets that
occur between the
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time their prices are determined and the close of the Exchange will not be
reflected in a Fund's calculation of net asset value unless the Board of
Directors or the Manager, under procedures established by the Board of
Directors, determines that the particular event would materially affect a
Fund's net asset value, in which case an adjustment would be made. Foreign
currency, including forward contracts, will be valued at the closing price in
the London foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in foreign
currency will be converted to U.S. dollars at the closing price in the London
foreign exchange market that day as provided by a reliable bank, dealer or
pricing service.
Calls, puts and Futures held by a Fund are valued at the last sale prices
on the principal exchanges on which they are traded, or on NASDAQ, as
applicable, or, if there are no sales that day, in accordance with (i) above.
When a Fund writes an option, an amount equal to the premium received by the
Fund is included in the Fund's Statement of Assets and Liabilities as an asset,
and an equivalent deferred credit is included in the liability section. The
deferred credit is "marked-to-market" to reflect the current market value of the
option. In determining a Fund's gain on investments, if a call written by a
Fund is exercised, the proceeds are increased by the premium received. If a
call written by a Fund expires, the Fund has a gain in the amount of the
premium; if the Fund enters into a closing purchase transaction, it will have a
gain or loss depending on whether the premium was more or less than the cost of
the closing transaction.
AMORTIZED COST METHOD (LIQUID FUND ONLY). Liquid Fund will seek to
maintain a net asset value of $1.00 per share for purchases and redemptions.
There can be no assurance that it will do so. Under Rule 2a-7, Liquid Fund may
use the amortized cost method of valuing its shares. Under the amortized cost
method, a security is valued initially at its cost and its valuation assumes a
constant amortization of any premium or accretion of a discount, regardless of
the impact of fluctuating interest rates on the market value of the security.
The method does not take into account unrealized capital gains or losses.
Liquid Fund's Board of Directors has established procedures intended to
stabilize the Fund's net asset value at $1.00 per share. If Liquid Fund's net
asset value per share were to deviate from $1.00 by more than 0.5%, Rule 2a-7
requires the Board promptly to consider what action, if any, should be taken.
If the Directors find that the extent of any such deviation may result in
material dilution or other unfair effects on shareholders, the Board will take
whatever steps it considers appropriate to eliminate or reduce such dilution or
unfair effects, including, without limitation, selling portfolio securities
prior to
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maturity, shortening the average portfolio maturity, withholding or
reducing dividends, reducing the outstanding number of Fund shares without
monetary consideration, or calculating net asset value per share by using
available market quotations.
As long as it uses Rule 2a-7, Liquid Fund must abide by certain conditions
described in the prospectus. Some of those conditions relate to portfolio
management and require Liquid Fund to: (i) maintain a dollar-weighted average
portfolio maturity not in excess of 90 days; (ii) limit its investments,
including repurchase agreements, to those instruments which are denominated in
U.S. dollars, and which are rated in one of the two highest short-term rating
categories by at least two "nationally-recognized statistical rating
organizations" ("NRSROs"), as defined in Rule 2a-7, or by only one NRSRO if only
one NRSRO has rated the security; an instrument that is not rated must be of
comparable quality as determined by the Board; and (iii) not purchase any
instruments with a remaining maturity of more than 397 days. Under Rule 2a-7,
the maturity of an instrument is generally considered to be its stated maturity
(or in the case of an instrument called for redemption, the date on which the
redemption payment must be made), with special exceptions for certain variable
rate demand and floating rate instruments. Repurchase agreements and securities
loan agreements are, in general, treated as having a maturity equal to the
period scheduled until repurchase or return, or if subject to demand, equal to
the notice period.
While the amortized cost method provides certainty in valuation, there may
be periods during which the value of an instrument as determined by the
amortized cost method is higher or lower than the price Liquid Fund would
receive if it sold the instrument. During periods of declining interest rates,
the daily yield on shares of Liquid Fund may tend to be lower (and net
investment income and daily dividends higher) than a like computation made by a
fund with identical investments utilizing a method of valuation based upon
market prices or estimates of market prices for its portfolio. Thus, if the use
of amortized cost by Liquid Fund resulted in a lower aggregate portfolio value
on a particular day, a prospective investor in Liquid Fund would be able to
obtain a somewhat higher yield than would result from investment in a fund
utilizing only market values, and existing shareholders in Liquid Fund would
receive less investment income than if the Fund were priced at market value.
Conversely, during periods of rising interest rates, the daily yield on Fund
shares will tend to be higher and its aggregate value lower than that of a
portfolio priced at market value. A prospective investor would receive a lower
yield than from an investment in a portfolio priced at market value, while
existing investors in Liquid Fund would receive more investment income than if
the Fund were priced at market value.
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ACCOUNTLINK. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy the shares. Dividends will begin to accrue on shares purchased by the
proceeds of ACH transfers on the business day a Fund receives Federal Funds for
such purchase through the ACH system before the close of The New York Stock
Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier on
certain days. If the Federal Funds are received on a business day after the
close of the Exchange, the shares will be purchased and dividends will begin to
accrue on the next regular business day. The proceeds of ACH transfers are
normally received by a Fund three days after the transfers are initiated. The
Distributor and the Funds are not responsible for any delays in purchasing
shares resulting from delays in ACH transmissions.
REDUCED SALES CHARGES (NOT APPLICABLE TO LIQUID FUND). A reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in each Fund's
Prospectus because the Distributor or broker-dealer incurs little or no selling
expenses. The term "immediate family" refers to one's spouse, children,
grandchildren, grandparents, parents, parents-in-law, siblings, sons- and
daughters-in-law, a sibling's spouse and a spouse's siblings.
THE OPPENHEIMERFUNDS. The OppenheimerFunds are those mutual funds for
which the Distributor acts as the distributor or the sub-Distributor and include
the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
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Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Connecticut Mutual Income Account
Connecticut Mutual Government Securities Account
the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
Connecticut Mutual Liquid Account
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be
subject to a CDSC).
LETTERS OF INTENT. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares of a Fund (and Class A and Class B shares of other Oppenheimer
funds) during a 13-month period (the "Letter of Intent period"), which may, at
the
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investor's request, include purchases made up to 90 days prior to the date of
the Letter. The Letter states the investor's intention to make the aggregate
amount of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the
Letter. Purchases made by reinvestment of dividends or distributions of
capital gains and purchases made at net asset value without sales charge do
not count toward satisfying the amount of the Letter. A Letter enables an
investor to count the Class A and Class B shares purchased under the Letter
to obtain the reduced sales charge rate on purchases of Class A shares of a
Fund (and other Oppenheimer funds) that applies under the Right of
Accumulation to current purchases of Class A shares. Each purchase of Class
A shares under the Letter will be made at the public offering price
(including the sales charge) that applies to a single lump-sum purchase of
shares in the amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of his or her Fund's Prospectus, this Statement
of Additional Information and the Application used for such Letter of Intent,
and if such terms are amended, as they may be from time to time by a Fund, that
those amendments will apply automatically to existing Letters of Intent.
For purchases of shares of a Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
total purchases. If total eligible purchases during the Letter of Intent period
exceed the intended amount and exceed the amount
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needed to qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to the lower
rate, but only if and when the dealer returns to the Distributor the excess
of the amount of commissions allowed or paid to the dealer over the amount of
commissions that apply to the actual amount of purchases. The excess
commissions returned to the Distributor will be used to purchase additional
shares for the investor's account at the net asset value per share in effect
on the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of a Fund equal in value to 5% of the intended
purchase amount specified in the Letter shall be held in escrow by the Transfer
Agent. For example, if the intended purchase amount is $50,000, the escrow
shall be shares valued in the amount of $2,500 (computed at the public offering
price adjusted for a $50,000 purchase). Any dividends and capital gains
distributions on the escrowed shares will be credited to the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed shares
will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended amount specified in
the Letter, the investor must remit to the Distributor an amount equal to the
difference between the dollar amount of sales charges actually paid and the
amount of sales charges which would have been paid if the total amount purchased
had been made at a single time. Such sales charge adjustment will apply to any
shares redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released
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from escrow. If a request is received to redeem escrowed shares prior
to the payment of such additional sales charge, the sales charge will be
withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption any
or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include (a) Class A shares
sold with a front-end sales charge or subject to a Class A contingent deferred
sales charge, (b) Class B shares of other Oppenheimer funds acquired subject to
a contingent deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other Oppenheimer
funds that were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectuses entitled "How to Exchange Shares," and the escrow
will be transferred to that other fund.
ASSET BUILDER PLANS. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectuses. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds.
There is a front-end sales charge on the purchase of Class A shares of
certain OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be obtained
from the Transfer Agent, completed and returned, and a prospectus of the
selected fund(s) should be obtained from the Distributor or your financial
advisor before initiating Asset Builder payments. The amount of the Asset
Builder investment may be changed or the automatic investments may be terminated
at any time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's receipt of such
instructions to implement them. Each Fund reserves the right to amend, suspend,
or discontinue offering such plans at any time without prior notice.
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CANCELLATION OF PURCHASE ORDERS. Cancellation of purchase orders for a
Fund's shares (for example, when a purchase check is returned to a Fund
unpaid) causes a loss to be incurred when the net asset value of the Fund's
shares on the cancellation date is less than on the purchase date. That loss
is equal to the amount of the decline in the net asset value per share
multiplied by the number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate a Fund for
the loss, the Distributor will do so. A Fund may reimburse the Distributor
for that amount by redeeming shares from any account registered in that
investor's name, or the Fund or the Distributor may seek other redress.
HOW TO SELL SHARES
Information on how to sell shares of the Funds is stated in the
Prospectuses. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
CHECK WRITING (NOT APPLICABLE TO VALUE, ALLOCATION OR ANY LIFESPAN FUND).
When a check is presented to the Bank for clearance, the Bank will ask the
effected Fund to redeem a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. This enables the
shareholder to continue receiving dividends on those shares until the check is
presented to the Fund. Checks may not be presented for payment at the offices
of the Bank or a Fund's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. A Fund
reserves the right to amend, suspend or discontinue offering check writing
privileges at any time without prior notice.
INVOLUNTARY REDEMPTIONS. A Fund's Board of Directors has the right to
cause the involuntary redemption of the shares held in any account if the number
of shares is less than 1,000. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the requirements
for any notice to be given to the shareholders in question (not less than 30
days), or the Board may set requirements for granting permission to the
shareholder to increase the investment, and set other terms and conditions so
that the shares would not be involuntarily redeemed.
SELLING SHARES BY WIRE. The wire of redemption proceeds may be delayed if
a Fund's Custodian bank is not open for business on a day when the Fund would
normally authorize the wire to be made, which is usually the Fund's next regular
business day following the redemption. In those circumstances, the wire will
not be transmitted until the next bank business day on which the Fund is open
for business. No dividends will be paid on the proceeds of redeemed shares
awaiting transfer by wire.
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PAYMENTS "IN KIND". Each Fund's Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, if the Board of
Directors of a Fund determines that it would be detrimental to the best
interests of the remaining shareholders of a Fund to make payment of a
redemption order wholly or partly in cash, the Fund may pay the redemption
proceeds in whole or in part by a distribution "in kind" of securities from the
portfolio of the Fund, in lieu of cash, in conformity with applicable rules of
the SEC. Each Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other costs in selling
the securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method a Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share" and such valuation will be made as of the time the redemption price
is determined.
REINVESTMENT PRIVILEGE (NOT APPLICABLE TO LIQUID FUND). Within six months of a
redemption, a shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares, or (ii) Class B shares or (iii) Class C shares that were
subject to the Class C contingent deferred sales charge when redeemed. The
reinvestment may be made without sales charge only in Class A shares of a Fund
or any of the other Oppenheimer funds into which shares of a Fund are
exchangeable as described in "How to Exchange Shares" below, at the net asset
value next computed after receipt by the Transfer Agent of the reinvestment
order. The shareholder must ask the Distributor for such privilege at the time
of reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption, some
or all of the loss may not be tax deductible, depending on the timing and amount
of the reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are reinvested in
shares of a Fund or another of the Oppenheimer funds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That would reduce
the loss or increase the gain recognized from the redemption. However, in that
case, the sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds. A Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.
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TRANSFERS OF SHARES (NOT APPLICABLE TO LIQUID FUND). Shares are not subject to
the payment of a contingent deferred sales charge of either class at the time of
transfer to the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or indirectly, a
public sale). The transferred shares will remain subject to the contingent
deferred sales charge, calculated as if the transferee shareholder had acquired
the transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an account are
transferred, and some but not all shares in the account would be subject to a
contingent deferred sales charge if redeemed at the time of transfer, the
priorities described in a Fund's Prospectus under "How to Buy Shares" for the
imposition of the Class B and Class C contingent deferred sales charge will be
followed in determining the order in which shares are transferred.
DISTRIBUTIONS FROM RETIREMENT PLANS. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the relevant Fund's Prospectus or on the
back cover of this Statement of Additional Information. The request must:
(i) state the reason for the distribution; (ii) state the owner's awareness
of tax penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and a Fund's other redemption requirements.
Participants (other than self-employed persons maintaining a plan account in
their own name) in OppenheimerFunds-sponsored prototype pension or
profit-sharing or 401(k) plans may not directly redeem or exchange shares
held for their account under those plans. The employer or plan administrator
must sign the request. Distributions from pension and profit sharing plans
are subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be completed
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the
Transfer Agent with the distribution request, or the distribution may be
delayed. Unless the shareholder has provided the Transfer Agent with a
certified tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder elects not to
have tax withheld. The Funds, the Manager, the Distributor, the Trustee and
the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.
-75-
<PAGE>
SPECIAL ARRANGEMENTS FOR REPURCHASE OF SHARES FROM DEALERS AND BROKERS. The
Distributor is the Funds' agent to repurchase their shares from authorized
dealers or brokers. The repurchase price per share will be the net asset value
next computed after the Distributor receives the order placed by the dealer or
broker, except that if the Distributor receives a repurchase order from a dealer
or broker after the close of The New York Stock Exchange on a regular business
day, it will be processed at that day's net asset value if the order was
received by the dealer or broker from its customer prior to the time the
Exchange closes (normally, that is 4:00 P.M., but may be earlier on some days)
and the order was transmitted to and received by the Distributor prior to its
close of business that day (normally 5:00 P.M.). Ordinarily, for accounts
redeemed by a broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the Distributor's
receipt of the required redemption documents in proper form, with the
signature(s) of the registered owners guaranteed on the redemption document as
described in the Prospectuses.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. Investors owning shares of a Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the OppenheimerFunds
New Account Application or signature-guaranteed instructions. A Fund cannot
guarantee receipt of the payment on the date requested and reserves the right to
amend, suspend or discontinue offering such plans at any time without prior
notice. Because of the sales charge assessed on Class A share purchases,
shareholders should not make regular additional Class A share purchases while
participating in an Automatic Withdrawal Plan. Class B and Class C shareholders
should not establish withdrawal plans, because of the imposition of the Class B
and Class C contingent deferred sales charges on such withdrawals (except where
the Class B and Class C contingent deferred sales charge is waived as described
in the Prospectuses under "Class B Contingent Deferred Sales Charge" or in
"Class C Contingent Deferred Sales Charge").
-76-
<PAGE>
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below and
in the provisions of the OppenheimerFunds Application relating to such Plans, as
well as the Prospectuses. These provisions may be amended from time to time by
a Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
AUTOMATIC EXCHANGE PLANS. Shareholders can authorize the Transfer Agent
(on the OppenheimerFunds Application or signature-guaranteed instructions) to
exchange a pre-determined amount of shares of a Fund for shares (of the same
class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum
amount that may be exchanged to each other fund account is $25. Exchanges
made under these plans are subject to the restrictions that apply to
exchanges as set forth in "How to Exchange Shares" in the Prospectus and
below in this Statement of Additional Information.
AUTOMATIC WITHDRAWAL PLANS. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and thereafter shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares acquired
with a sales charge, to the extent necessary to make withdrawal payments.
Depending upon the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a yield or
income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal Plan
(the "Plan") as agent for the investor (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. The Transfer
Agent and the effected Fund shall incur no liability to the Planholder for any
action taken or omitted by the Transfer Agent and the Fund in good faith to
administer the Plan. Certificates will not be issued for shares of a Fund
purchased for and held under the Plan, but the Transfer Agent will credit all
such shares to the account of the Planholder on the records of such Fund. Any
share certificates held by a Planholder may be surrendered unendorsed to the
Transfer Agent with the Plan application so that the shares represented by the
certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of a Fund, which will be done at net
asset value without a sales charge. Dividends on shares held in the account may
be paid in cash or reinvested.
-77-
<PAGE>
Redemptions of shares needed to make withdrawal payments will be made at
the net asset value per share determined on the redemption date. Checks or
AccountLink payments of the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment (receipt of payment on the date selected cannot be guaranteed),
according to the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time in mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice (in proper form in accordance with
the requirements of the then-current Prospectus of a Fund) to redeem all, or any
part of, the shares held under the Plan. In that case, the Transfer Agent will
redeem the number of shares requested at the net asset value per share in effect
in accordance with such Fund's usual redemption procedures and will mail a check
for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to the
Transfer Agent. A Plan may also be terminated at any time by the Transfer Agent
upon receiving directions to that effect from a Fund. The Transfer Agent will
also terminate a Plan upon receipt of evidence satisfactory to it of the death
or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or a Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend-reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for a Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
-78-
<PAGE>
HOW TO EXCHANGE SHARES. As stated in the Prospectuses, shares of a particular
class of OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of the
OppenheimerFunds that have a single class without a class designation are deemed
"Class A" shares for this purpose. All of the Oppenheimer funds offer Class A,
B and C shares except Oppenheimer Money Market Fund, Inc., Centennial Tax Exempt
Trust, Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust, Centennial America Fund, L.P., Daily
Cash Accumulation Fund Inc. and Connecticut Mutual Liquid Account, which only
offer Class A shares and Oppenheimer Main Street California Tax Exempt Fund,
Connecticut Mutual Government Securities Account and Connecticut Mutual Income
Account which only offers Class A and Class B shares (Class B and Class C shares
of Oppenheimer Cash reserves are generally available only by exchange from the
same class of shares of other Oppenheimer funds or through OppenheimerFunds
sponsored 401 (k) plans).
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge).
Shares of a Fund acquired by reinvestment of dividends or distributions
from any other of the Oppenheimer funds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may be
exchanged at net asset value for shares of any of the Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge. However,
shares of Oppenheimer Money Market Fund, Inc. purchased with the redemption
proceeds of shares of other mutual funds (other than funds managed by the
Manager or its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege. The
Class C contingent deferred sales charge is imposed on Class C shares acquired
by exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
-79-
<PAGE>
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectuses for the
imposition of the Class B and Class C contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to exchange Class
A, Class B or Class C shares.
A Fund reserves the right to reject telephone or written exchange requests
submitted in bulk by anyone on behalf of 10 or more accounts. A Fund may accept
requests for exchanges of up to 50 accounts per day from representatives of
authorized dealers that qualify for this privilege. In connection with any
exchange request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include shares subject
to a restriction cited in the relevant Fund's Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares
available for exchange without restriction will be exchanged.
When exchanging shares by telephone, the shareholder must either have an
existing account in, or obtain acknowledge receipt of a prospectus of, the fund
to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed otherwise.
If all telephone lines are busy (which might occur, for example, during periods
of substantial market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the "Redemption
Date"). Normally, shares of the fund to be acquired are purchased on the
Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate
transfer of the redemption proceeds. A Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it (for
example, if the receipt of multiple exchange requests from a dealer might
require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to a Fund).
-80-
<PAGE>
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure that
the funds selected are appropriate for his or her investment and should be aware
of the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Funds, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Dividends will be payable on shares held of record
at the time of the previous determination of net asset value, or as otherwise
described in "How to Buy Shares." Daily dividends on newly purchased shares
will not be declared or paid until such time as Federal Funds (funds credited to
a member bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. Dividends
will be declared on shares repurchased by a dealer or broker for three business
days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid
together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.,
as promptly as possible after the return of such checks to the Transfer Agent,
to enable the investor to earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to time depending
on market conditions, the composition of a Fund's portfolio, and expenses borne
by the Fund or borne separately by a class, as described in "Alternative Sales
Arrangements -- Class A, Class B and Class C shares" above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B and Class C shares are expected to
be lower than dividends on Class A shares as a result of the asset-based sales
charges on Class B and Class C shares, and will also differ in amount as a
consequence of any difference in net asset value between the classes.
If prior distributions must be re-characterized at the end of the fiscal
year as a result of the effect of a Fund's investment policies, shareholders may
have a non-taxable return of capital,
-81-
<PAGE>
which will be identified in notices to shareholders. There is no fixed
dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.
If a Fund qualifies as a "regulated investment company" under the Internal
Revenue Code, they will not be liable for Federal income taxes on amounts paid
by them as dividends and distributions. Each Fund qualified as a regulated
investment company in its last fiscal year and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue Code
contains a number of complex tests to determine whether a Fund will qualify, and
a Fund might not meet those tests in a particular year. For example, if a Fund
derives 30% or more of its gross income from the sale of securities held less
than three months, it may fail to qualify (see "Tax Aspects of Covered Calls and
Hedging Instruments," above). If it does not qualify, a Fund will be treated
for tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year each Fund must
distribute 98% of its taxable investment income earned from January 1 through
December 31 of that year and 98% of its capital gains realized in the period
from November 1 of the prior year through October 31 of the current year, or
else a Fund must pay an excise tax on the amounts not distributed. While it is
presently anticipated that each Fund will meet those requirements, a Fund's
Board and the Manager might determine in a particular year that it would be in
the best interest of shareholders for a Fund not to make such distributions at
the required levels and to pay the excise tax on the undistributed amounts.
That would reduce the amount of income or capital gains available for
distribution to shareholders.
DIVIDEND REINVESTMENT IN ANOTHER FUND. Shareholders of a Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed in "Reduced Sales Charges"
above, at net asset value without sales charge. To elect this option, the
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Transfer Agent to establish
an account. The investment will be made at net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer funds may be
invested in shares of a Fund on the same basis.
-82-
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUNDS
THE CUSTODIAN. State Street Bank and Trust Company is the Custodian of the
Funds' assets. The Custodian's responsibilities include safeguarding and
controlling the Funds' portfolio securities, collecting income on the portfolio
securities and handling the delivery of such securities to and from the Funds.
INDEPENDENT AUDITORS. The independent auditors of the Funds audit the Funds'
financial statements and perform other related audit services. They also act as
auditors for certain other funds advised by the Manager and its affiliates.
FINANCIAL INFORMATION ABOUT THE FUNDS
INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS
The Funds' financial statements for the year ended December 31, 1995 are
attached to and incorporated by reference from the Company's Annual Report
into this Statement of Additional Information. The financial statements are
so attached and incorporated in reliance upon the report of Arthur Andersen
LLP, independent public accountants, as experts in accounting and auditing.
-83-
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense Food
Air Transportation Gas Utilities*
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Insurance
Building Materials Leasing & Factoring
Cable Television Leisure
Chemicals Manufacturing
Commercial Finance Metals/Mining
Computer Hardware Nondurable Household Goods
Computer Software Oil - Integrated
Conglomerates Paper
Consumer Finance Publishing/Printing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Stores Specialty Retailing
Drug Wholesalers Steel
Durable Household Goods Supermarkets
Education Telecommunications - Technology
Electric Utilities Telephone - Utility
Electrical Equipment Textile/Apparel
Electronics Tobacco
Energy Services & Producers Toys
Entertainment/Film Trucking
Environmental
- ------------------
*For purposes of a Fund's investment policy not to concentrate in securities of
issuers in the same industry, utilities are divided into "industries" according
to their services (e.g., gas utilities, gas transmission utilities, electric
utilities and telephone utilities are each considered a separate industry).
A-1
<PAGE>
OPPENHEIMER SERIES FUND, INC.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
LEGAL COUNSEL
<PAGE>
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
PART C -- OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements.
(1) Included in Part A:
Financial Highlights for Connecticut Mutual Liquid
Account, Connecticut Mutual Government Securities
Account, Connecticut Mutual Income Account,
Connecticut Mutual Growth Account, Connecticut
Mutual Total Return Account, CMIA LifeSpan
Diversified Income Account, CMIA LifeSpan Balanced
Account and CMIA LifeSpan Capital Appreciation
Account, each for the period ended December 31,
1995 (audited).
(2) Incorporated by reference into Part B from the
Registrant's Annual Report to Shareholders for Liquid
Account, Government Securities Account, Income Account,
Growth Account and Balanced Account and Annual Report
to Shareholders for the Lifespan Accounts each for the
year ended December 31, 1995 (filed electronically on
February 29, 1996; file no. 2-75276; accession numbers
0000912057-96-003353 and 000091205-003639, respectively):
Financial Statements for each of Connecticut
Mutual Liquid Account, Connecticut Mutual
Government Securities Account, Connecticut Mutual
Income Account, Connecticut Mutual Total Return
Account, Connecticut Mutual Growth Account, CMIA
LifeSpan Diversified Income Account, CMIA LifeSpan
Balanced Account and CMIA LifeSpan Capital
Appreciation Account:
Statement of Net Assets as of December 31, 1995
Statement of Operations for the year ended
December 31, 1995
Statement of Changes in Net Assets for the years
ended December 31, 1994 and 1995
Notes to Financial Statements as of
December 31, 1995
Auditors' Report
(b) Exhibits
1. Amended and Restated Articles of
Incorporation dated January 6, 1995+
1.1 Articles Supplementary dated September, 1995+
1.2 Articles Supplementary dated May, 1995+
2. By-Laws+
<PAGE>
3. Not Applicable
4. Not Applicable
5. Amendment to Investment Advisory Agreement
between the Registrant, on behalf of each of
CMIA LifeSpan Diversified Income Account, CMIA
LifeSpan Balanced Account and CMIA LifeSpan
Capital Appreciation Account (the "LifeSpan
Accounts"), and G.R. Phelps & Co., Inc.****
5.1. Subadvisory Agreement among the Registrant, on
behalf of the respective LifeSpan Fund, G.R.
Phelps & Co., Inc. and the respective Subadvisor
and schedule of omitted substantially similar
documents****
5.2. Form of Investment Advisory Agreement between
the Registrant, on behalf of Connecticut Mutual
Total Return Account and OppenheimerFunds, Inc.
and schedule of omitted substantially similar
documents+
5.3 Form of Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Pilgrim, Baxter &
Associates, Ltd. (for CMIA LifeSpan Balanced
Account) and schedule of omitted substantially
similar documents+
5.4 Form of Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and BEA Associates (for
CMIA LifeSpan Balanced Account) and schedule of
omitted substantially similar documents+
5.5 Form of Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Babson-Stewart Ivory
International (for CMIA LifeSpan Balanced
Account) and schedule of omitted substantially
similar documents+
6. Underwriting Agreement between Registrant and
G.R. Phelps & Co., Inc.*
6.1. Amendment (Municipal Funds) to Amended
Underwriting Agreement between Registrant and
G.R. Phelps & Co., Inc.***
6.2. Amendment (LifeSpan Accounts) to Amended
Underwriting Agreement between Registrant and
G.R. Phelps & Co., Inc.****
6.3. Dealer Agreement with G.R. Phelps & Co., Inc.*
6.4. Underwriting Agreement between Registrant and
Connecticut Mutual Financial Services,
L.L.C.*****
C-2
<PAGE>
6.5 Form of General Distributor's Agreement between
Registrant on behalf of Oppenheimer Disciplined
Allocation Fund and OppenheimerFunds
Distributor, Inc. and schedule of omitted
substantially similar documents+
7. Not Applicable
8. Form of Master Custodian Agreement between
Registrant and Investors' Bank & Trust Company***
8.1. Master Custodian Agreement between Registrant,
on behalf of each series of the Registrant
(except the Municipal Accounts), and State
Street Bank and Trust Company+
8.2. Amendment (LifeSpan Funds) to Custodian
Agreement between Registrant and State Street
Bank and Trust Company+
9. Transfer Agency and Service Agreement between
Registrant and State Street Bank and Trust Co.*
9.1. Amendment (Municipal Accounts) to Transfer
Agency and Service Agreement between Registrant
and State Street Bank and Trust Co.***
9.2. Amendment (LifeSpan Funds) to Transfer Agency
and Service Agreement between Registrant and
State Street Bank and Trust Co.****
9.3. 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***
9.4. 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***
9.5. 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***
9.6. 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***
9.7. 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***
9.8. Form of Administrative Services Agreement
between Registrant, on behalf of CMIA National
Municipals Account, and G.R. Phelps & Co.,
Inc.***
C-3
<PAGE>
9.9. Form of Administrative Services Agreement
between the Registrant, on behalf of CMIA
California Municipals Account, and G.R. Phelps &
Co., Inc.***
9.10. Form of Administrative Services Agreement
between the Registrant, on behalf of CMIA
Massachusetts Municipals Account, and G.R.
Phelps & Co., Inc.***
9.11. Form of Administrative Services Agreement
between the Registrant, on behalf of CMIA New
York Municipals Account, and G.R. Phelps & Co.,
Inc.***
9.12. Form of Administrative Services Agreement
between the Registrant, on behalf of CMIA Ohio
Municipals Account, and G.R. Phelps & Co.,
Inc.***
9.13 Form of Service Contract between Registrant and
OppenheimerFunds Services+
10. Opinion and Consent of Counsel**
10.1. Consent of Counsel in California and New York***
10.2. Consent of Counsel in Ohio***
11.1. Consent of Independent Public Accountants+
12. Incorporated by reference to the filing on
Form 30D-1 filed on February 29, 1996; file
number 2-75276; accession numbers 0000912057-
96-003353 and 000091205-003639, respectively.
.
13. Not Applicable
14. Not Applicable
15. Form of CMIA National Municipals Account
Rule 12b-1 Plan***
15.1. Form of CMIA California Municipals Account
Rule 12b-1 Plan***
15.2. Form of CMIA Massachusetts Municipals Account
Rule 12b-1 Plan***
15.3. Form of CMIA New York Municipals Account
Rule 12b-1 Plan***
15.4. Form of CMIA Ohio Municipals Account Rule 12b-1
Plan***
15.5. Class A Rule 12b-1 Distribution Plans for the
respective Funds and schedule of substantially
similar omitted documents****
15.6. Class B Rule 12b-1 Distribution Plan for the
respective Funds and schedule of substantially
similar omitted documents*****
C-4
<PAGE>
15.7 Form of Service Plan and Agreement between
Oppenheimer Disciplined Allocation Fund and
OppenheimerFunds Distributor, Inc. for Class A
Shares and schedule of substantially similar
omitted documents+
15.8 Form of Distribution and Service Plan and
Agreement with OppenheimerFunds Distributor,
Inc. for Class B Shares of Oppenheimer
Disciplined Allocation Fund and schedule of
substantially similar omitted documents+
15.9 Form of Distribution and Service Plan and
Agreement with OppenheimerFunds Distributor,
Inc. for Class C Shares of Oppenheimer
Disciplined Allocation Fund and schedule of
substantially similar omitted documents+
16. Schedule of Computation for Performance
Quotations (Municipal Accounts)***
17. Financial Data Schedule+
18. Rule 18f-3 Multiple Class Plan (Class A and
Class B shares) for the respective Funds and
schedule of substantially similar omitted
documents*****
18.1 Rule 18f-3 Multiple Class Plan (Class A, B and C
shares) for Oppenheimer Disciplined Allocation
Fund, Oppenheimer Disciplined Value Fund,
Oppenheimer LifeSpan Growth Fund, Oppenheimer
LifeSpan Balanced Fund and Oppenheimer LifeSpan
Income Fund+
____________
+ Filed herewith.
* 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.
***** Previously filed with post-effective amendment
no. 23 to the Registration Statement on July 27,
1995 and incorporated by reference herein.
****** Previously filed with post-effective amendment
no. 24 on September 29, 1995 and incorporated by
reference herein.
ITEM 25. Persons Controlled by or Under Common Control with
Registrant.
(1) The chart that follows indicates those entities owned
directly or indirectly by Connecticut Mutual Life Insurance
Company at December 31, 1995.
C-5
<PAGE>
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
SUBSIDIARIES
AS OF 12/31/95
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.
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.
C-6
<PAGE>
CONNECTICUT MUTUAL FINANCIAL SERVICES, LLC: A Connecticut limited liability
corporation formed November 10, 1994. It is a registered broker-dealer.
Connecticut Mutual has a 99% ownership interest and CM Strategic Ventures,
Inc. has a 1% ownership interest.
CM LIFE INSURANCE COMPANY: A Connecticut corporation incorporated April 25,
1980. Its business is the sale of life insurance, endowments, annuities,
accident, disability and accident and health insurance. Connecticut Mutual
owns all the common stock.
CM PROPERTY MANAGEMENT, INC.: A Connecticut corporation incorporated
December 27, 1976 as URBCO, Inc., and renamed CM Property Management, Inc. on
October 7, 1991. Type of business -Real estate holding company. DHC, Inc.
owns all the stock.
CM STRATEGIC VENTURES, INC.: A Connecticut corporation incorporated October
26, 1987. It acts as general partner in limited partnerships. All
outstanding stock is held by G.R. Phelps & Co., Inc.
CM TRANSNATIONAL S.A.: A Luxembourg corporation incorporated July 8, 1987.
Type of business - life insurance endowments and annuity contracts.
Connecticut Mutual owns 99.7% and DHC, Inc. owns the remaining 0.3% of
outstanding stock.
CML INVESTMENTS I CORP.: A Delaware corporation incorporated December 26,
1991. This Company is organized to authorize, co-issue, sell and deliver
jointly with CML Investments I L.P. bonds, notes or other obligations secured
by primarily non-investment grade corporate debt obligations and other
collateral. CML Investments I L.P. owns all of the outstanding stock (State
House I Corp. is the General Partner of CML Investments I L.P.).
DHC, INC.: A Connecticut corporation incorporated December 27, 1976. Type
of business - holding company. Connecticut Mutual owns all the stock.
DIVERSIFIED INSURANCE SERVICES AGENCY OF AMERICA, INC. (DISA OHIO): An Ohio
corporation incorporated March 18, 1982. Type of business - the sale of,
solicitation for, or procurement or making of insurance or annuity contracts
and any other type of contract sold by insurance companies. CM Insurance
Services, Inc. holds 100 shares (100%) of the issued and outstanding Class B
(non-voting) common. In addition, it controls 1 share (100%) of the issued
and outstanding Class A (voting) common through a voting trust.
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.
C-7
<PAGE>
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.
(2) Upon effectiveness of this post-effective amendment No. 28 to the
Registration Statement ("PEA No. 28"), there will be no persons controlled by
or under common control with the Registrant.
C-8
<PAGE>
ITEM 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of December 31, 1995
-------------- ------------------------
<S> <C>
Connecticut Mutual Liquid Account 4,887
Connecticut Mutual Government 2,704
Securities Account
Connecticut Mutual Income Account 1,829
Connecticut Mutual Total Return Account 14,131
Connecticut Mutual Growth Account 7,408
CMIA National Municipals Account 130
CMIA California Municipals Account 12
CMIA Massachusetts Municipals Account 8
CMIA New York Municipals Account 25
CMIA Ohio Municipals Account 33
CMIA LifeSpan Capital Appreciation Account 529
CMIA LifeSpan Balanced Account 332
CMIA LifeSpan Diversified Income Account 104
------
Total Holders of Securities 32,132
------
------
</TABLE>
ITEM 27. Indemnification.
Reference is made to Article VI of Registrant's By-laws filed with
Post-Effective Amendment Number 13.
ITEM 28. Business and Other Connections of Investment Adviser.
(a) With respect to G.R. Phelps & Co. Inc.: Not applicable.
(b) Upon effectiveness of PEA No. 28, the business and other
connections of Oppenheimer Funds, Inc., the investment adviser as of March 1,
1996, are as follows:
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts A and
B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
officer and director of OppenheimerFunds, Inc. is, or at any time during the
past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
C-9
<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer Funds
(listed below); previously a Fund
Controller for OppenheimerFunds,
Inc. (the "Manager").
Bruce Bartlett,
Vice President Vice President and Portfolio
Manager of Oppenheimer Total Return
Fund, Inc., Oppenheimer Main Street
Funds, Inc. and Oppenheimer
Variable Account Funds; formerly a
Vice President and Senior Portfolio
Manager at First of America
Investment Corp.
George Bowen,
Senior Vice President
& Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Secretary and Treasurer of the
Denver-based Oppenheimer Funds.
Vice President and Treasurer of
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of
the Manager; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent
subsidiaries of the Manager;
President, Treasurer and Director
of Centennial Capital Corporation;
Vice President and Treasurer of
Main Street Advisers.
C-10
<PAGE>
Michael A. Carbuto,
Vice President Vice President and Portfolio
Manager of Centennial California
Tax Exempt Trust, Centennial New
York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice
President of Centennial.
William Colbourne,
Assistant Vice President Formerly, Director of Alternative
Staffing Resources, and Vice
President of Human Resources,
American Cancer Society.
Lynn Coluccy,
Vice President Formerly Vice President / Director
of Internal Audit of the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio
Manager of Oppenheimer Growth Fund,
Oppenheimer Variable Account Funds;
Senior Vice President and Portfolio
Manager of Oppenheimer Strategic
Income & Growth Fund; Vice
President of Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest
Officers Value Fund, Oppen-heimer
Quest For Value Funds and
Oppenheimer Quest Global Value
Fund, Inc.
John Doney,
Vice President Vice President and Portfolio
Manager of Oppenheimer Equity
Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-based
Oppenheimer Funds; Vice President
of the Denver-based Oppenheimer
Funds; Executive Vice President,
Director and General Counsel of the
Distributor; President and a
director of Centennial; formerly
Senior Vice President and Associate
General Counsel of the Manager and
the Distributor.
C-11
<PAGE>
Kenneth C. Eich,
Executive Vice President/
Chief Financial Officer Treasurer of Oppenheimer
Acquisition Corporation ("OAC").
George Evans,
Vice President Vice President and Portfolio
Manager of Oppenheimer Global
Emerging Growth Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the
Oppenheimer Funds; previously a
Fund Controller for the Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView, Main
Street Advisers, Inc. and
Centennial; Secretary, Vice
President and Director of
Centennial Capital Corp.
Ronald H. Fielding,
Senior Vice President Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"); President and
Director of Fielding Management
Company, Inc. ("FMC"); President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"); President
and Director of Rochester Fund
Services, Inc. ("RFS"); President
and Director of Rochester Tax
Managed Fund, Inc.; Vice President
and Portfolio Manager of Rochester
Fund Municipals and Rochester
Portfolio Series - Limited Term New
York Municipal Fund.
Jon S. Fossel,
Chairman of the Board
and Director Director of OAC (the Manager's
parent holding company); President,
CEO and a director of HarbourView;
a director of SSI and SFSI;
Director, Trustee, and Managing
General Partner of the Denver-based
Oppenheimer Funds; President and
Chairman of the Board of Main
Street Advisers, Inc.; formerly
Chief Executive Officer of the
Manager.
C-12
<PAGE>
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: a
director of the Distributor, Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer Funds
and Executive Vice President &
General Counsel of the Manager and
the Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez,
Vice President Formerly 1st Vice President /
Director of Creative Services for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht,
Vice President Vice President and Portfolio
Manager of Oppenheimer Insured Tax-
Exempt Fund and Oppenheimer
Intermediate Tax Exempt Fund; an
officer of other Oppenheimer Funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Barbara Hennigar,
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the
Manager President and Director of SFSI.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
C-13
<PAGE>
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus &
Company, an advertising agency.
Frank Jennings,
Vice President Portfolio Manager of Oppenheimer
Global Growth & Income Fund.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe,
Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of Oppenheimer
Variable Account Funds and
Oppenheimer Variable Account Funds;
Associate Portfolio Manager of
Oppenheimer Discovery Fund.
Formerly a Securities Analyst for
Columbus Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Senior Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer and Director President, Director and Trustee of
the Oppenheimer Funds; President
and a Director of OAC and
HarbourView; Director of Main
Street Advisers, Inc.; Chairman and
a Director of SSI.
Sally Marzouk,
Vice President None.
C-14
<PAGE>
Marilyn Miller,
Vice President Formerly a Director of marketing
for TransAmerica Fund Management
Company.
Robert J. Milnamow,
Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Asset
Allocation Fund, Oppenheimer
Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund; an
officer of other Oppenheimer Funds.
Barbara Niederbrach,
Assistant Vice President None.
Stuart Novek,
Vice President Formerly a Director Account
Supervisor for J. Walter Thompson.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc., Oppenheimer Multi-
State Tax-Exempt Trust, Oppenheimer
Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond
Fund; Vice President of The New
York Tax-Exempt Income Fund, Inc.;
Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
C-15
<PAGE>
Jane Putnam,
Vice President Associate Portfolio Manager of
Oppenheimer Growth Fund; Vice
President and Portfolio Manager of
Oppenheimer Target Fund and
Oppenheimer Variable Account Funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Formerly an International Finance
Consultant for Dow Chemical.
Thomas Reedy,
Vice President Vice President of Oppenheimer
Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust;
an officer of other Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Assistant Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President Vice President of RFS; President
and Director of RFD; Vice President
and Director of FMC; Vice President
and director of RCAI; General
Partner of RCA; Vice President and
Director of Rochester Tax Managed
Fund Inc.; Vice President and
Portfolio Manager of Rochester Fund
Series - The Bond Fund For Growth.
David Rosenberg,
Vice President Vice President and Portfolio
Manager of Oppenheimer Limited-Term
Government Fund, Oppenheimer U.S.
Government Trust and Oppenheimer
Integrity Funds. Formerly Vice
President and Senior Portfolio
Manager for Delaware Investment
Advisors.
Rhonda Rosenberg,
Vice President Formerly a Vice President and
Manager of municipal portfolio
strategy for Lehman Brothers.
C-16
<PAGE>
Richard H. Rubinstein,
Vice President Vice President and Portfolio
Manager of Oppenheimer Asset
Allocation Fund, Oppenheimer Fund
and Oppenheimer Variable Account
Funds; an officer of other
Oppenheimer Funds; formerly Vice
President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin,
Vice President Vice President and Portfolio
Manager of Oppenheimer Gold &
Special Minerals Fund, Oppenheimer
Total Return Fund, Inc. Oppenheimer
Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and
Senior Portfolio Manager for Dean
Witter InterCapital, Inc.
Nancy Sperte,
Senior Vice President None.
Donald W. Spiro,
Chairman Emeritus and
Director Trustee of the New York-based
Oppenheimer Funds; formerly
Chairman of the Manager and
the Distributor.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Strategic
Income Fund, Oppenheimer Strategic
Income & Growth Fund; an officer of
other Oppenheimer Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Champion
Income Fund and Oppenheimer High
Yield Fund; an officer of other
Oppenheimer Funds.
John Stoma,
Vice President Formerly Vice President of Pension
Marketing with Manulife Financial.
C-17
<PAGE>
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director of Centennial;
formerly President and Director of
OAMC, and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant
Treasurer Assistant Treasurer of the
Distributor and SFSI.
Jeffrey Van Giesen,
Vice President Formerly employed by Kidder Peabody
Asset Management.
Ashwin Vasan,
Vice President Vice President and Portfolio
Manager of Oppenheimer Multi-Sector
Income Trust, Oppenheimer Multi-
Government Trust and Oppenheimer
International Bond Fund; an officer
of other Oppenheimer Funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President Vice President and Portfolio
Manager of Daily Cash Accumulation
Fund, Inc., Oppenheimer Cash
Reserves, Centennial America Fund,
L.P., Centennial Government Trust
and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells,
Vice President None.
C-18
<PAGE>
William L. Wilby,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Global
Fund and Oppenheimer Global Growth
& Income Fund; Vice President of
HarbourView; an officer of other
Oppenheimer Funds.
Susan Wilson-Perez,
Vice President None.
Carol Wolf,
Vice President Vice President and Portfolio
Manager of Oppenheimer Money Market
Fund, Inc., Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
Arthur J. Zimmer,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial; an officer of other
Oppenheimer Funds.
C-19
<PAGE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds and the
Denver-based Oppenheimer Funds set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
C-20
<PAGE>
Rochester-based Funds
- ---------------------
Rochester Fund Municipals
Rochester Fund Series - The Bond Fund For
Growth
Rochester Portfolio Series -- Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
OppenheimerFunds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and Main
Street Advisers, Inc. is 3410 South Galena Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester,
New York 14625-2807.
ITEM 29. Principal Underwriters.
(1) Registrant's distributor, Connecticut Mutual Financial Services,
L.L.C. ("CMFS") is a wholly owned subsidiary of DHC, Inc. which in turn is a
wholly owned subsidiary of Connecticut Mutual Life Insurance Company ("CML").
CMFS is the principal underwriter for Panaroma Separate Account, a
registered investment company which is a separate account of CML and for
Panorama Plus Separate Account, a registered investment company which is a
separate account of CML each offering individual variable annuity contracts
and the investment adviser to Connecticut Mutual Financial Services Series
Fund I, Inc., a registered open-end investment company whose shares are
offered to Panorama Separate Account and Panorama Plus Separate Account and
not to the public. CMFS also serves as a broker/dealer in the sales of
limited partnership interests, mutual fund shares and other investment
vehicles for which it is not the principal underwriter.
C-21
<PAGE>
The Directors and principal officers of CMFS and their principal
occupations during the last two years are as follows:
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME CMFS (AND OTHER POSITIONS)
---- ------------- ---------------------
<S> <C> <C>
J. Brinke Marcucilli* Director Senior Vice President and
Chief Financial Officer,
CML; Vice President and
Chief Financial Officer,
Agency Group of the Providian
Corporation (1987-1994)
Donald H. Pond, Jr.* Director and
President Executive Vice President, CML
David E. Sams, Jr.* Director President and Chief
Executive Officer, CML
(1993-Present); President
and Chief Executive Officer -
Agency Group Capital
Holdings Corporation,
Louisville, KY (1987-1993)
Emilia Bruno* Treasurer Assistant Vice President, CML
Ann F. Lomeli* Secretary Counsel and Secretary, CML
</TABLE>
* Principal Business Address is 140 Garden Street, Hartford Connecticut 06154.
(2) At the time of effectiveness of PEA No. 28, Oppenheimer Funds
Distributor, Inc. will serve as the Registrant's principal underwriter.
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc. is
the investment adviser, as described in Part A and B of this Registration
Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
C-22
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
NAME & PRINCIPAL POSITIONS & OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
- ---------------- ---------------- ----------
<S> <C> <C>
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the NY-based
Oppenheimer funds / Vice
President, Secretary and
Treasurer of the Denver-based
Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
1400 Laurel Avenue
Apt. W710
Minneapolis, MN 55403
Mary Crooks+ Vice President None
Paul Delli-Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
</TABLE>
C-23
<PAGE>
<TABLE>
<S> <C> <C>
Andrew John Donohue* Executive Vice Secretary of
President & Director the New York-based
Oppenheimer funds / Vice
President of the Denver-
based Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President None
Reed F. Finley Vice President - None
1657 Graefield Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
</TABLE>
C-24
<PAGE>
<TABLE>
<S> <C> <C>
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
</TABLE>
C-25
<PAGE>
<TABLE>
<S> <C> <C>
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
19 Spinnaker Way
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
Michael S. Rosen++ Vice President None
James Ruff* President None
</TABLE>
C-26
<PAGE>
<TABLE>
<S> <C> <C>
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
</TABLE>
C-27
<PAGE>
<TABLE>
<S> <C> <C>
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
William Harvey Young+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
(a) 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, 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.
(b) Upon the effectiveness of PEA No. 28, the accounts, books and
other documents required to be maintained by Registrant pursuant to Section
31(a) of the Investment Company Act of 1940 and rules promulgated thereunder
are in the possession of Oppenheimer Management Corporation at its offices at
3410 South Galena Street, Denver, Colorado 80231.
C-28
<PAGE>
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.
C-29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 ("1933 Act")
and the Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 28 to the Registration Statement ("PEA No. 28")
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Hartford, State of Connecticut, on the 28th day of February,
1996.
CONNECTICUT MUTUAL 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.
28 has been signed below by the following persons in the capacities and on
the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
*Donald H. Pond, Jr. President and Director
- ------------------------------- (Principal Executive
Donald H. Pond, Jr. Officer)
*Richard Hixon Ayers Director
- -------------------------------
Richard Hixon Ayers
*David Ellis Adams Carson Director
- -------------------------------
David Ellis Adams Carson
*Richard Warren Greene Director
- -------------------------------
Richard Warren Greene
*Beverly Lannquist Hamilton Director
- -------------------------------
Beverly Lannquist Hamilton
*David E. Sams, Jr. Director
- -------------------------------
David E. Sams, Jr.
*Linda M. Napoli Treasurer
- ------------------------------- (Principal Financial
Linda M. Napoli and Accounting Officer)
*By:/s/ Michael A. Chong Attorney-in-fact February 28, 1996
--------------------
Michael A. Chong
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
1. Amended and Restated Articles of Incorporation dated January 6, 1995
1.1. Articles Supplementary dated September, 1995
1.2. Articles Supplementary dated May, 1995
2. By-Laws
5.2. Form of Investment Advisory Agreement between Connecticut Mutual Total
Return Account and OppenheimerFunds, Inc. and schedule of omitted
substantially similar documents
5.3. Form of Investment Subadvisory Agreement between OppenheimerFunds,
Inc. and Pilgrim, Baxter & Associates, Ltd. (for CMIA Lifespan
Balanced Account) and schedule of omitted substantially similar
documents
5.4. Form of Investment Subadvisory Agreement between OppenheimerFunds,
Inc. and BEA Associates (for CMIA Lifespan Balanced Account) and
schedule of omitted substantially similar documents
5.5. Form of Investment Subadvisory Agreement between OppenheimerFunds,
Inc. and Babson-Stewart Ivory International (for CMIA Lifespan
Balanced Account) and schedule of omitted substantially similar
documents
6.5. Form of General Distributor's Agreement between Registrant and
OppenheimerFunds Distributor, Inc. on behalf of Oppenheimer
Disciplined Allocation Fund and schedule of omitted substantially
similar documents
<PAGE>
8.1. Master Custodian Agreement between Registrant, on behalf of each
series of the Registrant (except the Municipal Accounts), and State
Street Bank and Trust Company
8.2. Amendment (LifeSpan Funds) to Custodian Agreement between Registrant
and State Street Bank and Trust Company
9.13. Form of Service Agreement between Registrant and OppenheimerFunds
Services
11.1. Consent of Independent Public Accountants
15.7. Form of Service Plan and Agreement between OppenheimerFunds
Distributor, Inc. for Class A Shares of Oppenheimer Disciplined
Allocation Fund and schedule of substantially similar omitted
documents
15.8. Form of Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class B Shares of Oppenheimer
Disciplined Allocation Fund and schedule of substantially similar
omitted documents
15.9. Form of Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class C Shares of Oppenheimer
Disciplined Allocation Fund and schedule of substantially similar
omitted documents
17. Financial Data Schedule
18.1. Rule 18f-3 Multiple Class Plan (Class A, B and C shares) for the
respective series of the Registrant
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Connecticut Mutual Investment Accounts, Inc., a Maryland corporation
having its principal place of business in Maryland in Baltimore City, Maryland
(which is hereinafter called the "Corporation") hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of Common Stock (par value
$0.10 per share) of the Corporation which is issued and outstanding as of the
close of business on the effective date of this amendment into one share of
Common Stock (par value $0.001 per share) and by transferring from the account
designated "common stock" to the account designated "capital surplus" $0.99
for each share of common stock outstanding immediately after the change and
reclassification.
SECOND: The Charter of the Corporation is hereby further amended and
completely restated so that the same shall read as follows:
ARTICLE I
NAME
The name of the corporation (which is hereinafter called the
"Corporation") is:
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
ARTICLE II
PURPOSES AND POWERS
(a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
(1) To engage generally in the business of investing,
reinvesting, owning, holding or trading in securities, as defined in the
Investment Company Act of 1940, as from time to time amended (hereinafter
referred to as the "Investment Company Act"), as an investment company
classified under the Investment Company Act as a management company.
(2) To engage in any one or more businesses or
transactions, or to acquire all or any portion of any entity engaged in any
one or more businesses or transactions, which the Board of Directors may from
time to time authorize or approve, whether or not related to the business
described elsewhere in this Article or to any other business at the time or
theretofore engaged in by the Corporation.
(3) To hold, invest and reinvest its assets in securities,
including securities of other investment companies and other instruments and
obligations, and in connection therewith, to hold part or all of its assets in
cash.
(4) To subscribe for, invest in, purchase or otherwise
acquire, own, hold, sell, exchange, pledge or otherwise dispose of, securities
of every nature and kind, including, without limitation, all types of stocks,
bonds, debentures, notes, other securities or obligations or evidences or
indebtedness or ownership issued or created by any and all persons,
associations, agencies, trusts or corporations, public or private, whether
created, established or organized under the laws of the United States, any of
the States, or any territory or district or colony or possession thereof, or
under the laws of any foreign country, and also foreign and domestic
government and municipal obligations, bank acceptances and commercial paper,
to pay for the same in cash or by the issue of stock, bonds, or notes of this
Corporation or otherwise; and while owning and holding any such securities, to
<PAGE>
exercise all the rights, powers and privileges of a stockholder or owner,
including, and without limitation, the right to delete and assign to one or
more persons, firms, associations, or corporations the power to exercise any
of said rights, powers and privileges in respect of any such securities; to
borrow money or otherwise obtain credit and, if required, to secure the same
by mortgaging, pledging or otherwise encumbering as security the assets of
this Corporation.
(5) To issue and sell shares of its own capital stock in
such amounts and on such terms and conditions, for such purposes and for such
amount or kind of consideration now or hereafter permitted by the Maryland
General Corporation Law and by this charter, as its Board of Directors may
determine, provided, however, that the value of the consideration per share to
be received by the Corporation upon the sale or other disposition of any
shares of its capital stock shall be not less than the par value per share of
such capital stock outstanding at the time of such event.
(6) To redeem, purchase or otherwise acquire, hold,
dispose of, resell, transfer, reissue or cancel (all without the vote or
consent of the stockholders of the Corporation) shares of its capital stock,
in any manner and to the extent now or hereafter permitted by the General
Corporation Law of the State of Maryland and by the Corporation's charter.
(7) To do any and all such further acts or things and to
exercise any and all such further powers or rights as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of any of the foregoing purposes or
objects.
(b) The foregoing enumerated purposes and objects shall be in no
way limited or restricted by reference to, or inference from, the terms of any
other clause of this or any other Article of the charter of the Corporation,
and each shall be regarded as independent; and they are intended to be and
shall be construed as powers as well as purposes and objects of the
Corporation and shall be in addition to and not in limitation of the general
powers of corporations under the General Laws of the State of Maryland.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The present address of the principal office of the Corporation in this
State is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The name and address of the resident agent of the Corporation
in this State are The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
ARTICLE IV
CAPITAL STOCK
(a) The total number of shares of stock of all classes and
series which the Corporation initially has authority to issue is Three Billion
(3,000,000,000) shares of capital stock (par value $0.001 per share),
amounting in aggregate par value to $3,000,000. All of such shares are
initially classified as "Common Stock". The Board of Directors may classify
or reclassify any unissued shares of capital stock (whether or not such shares
have been previously classified or reclassified) from time to time by setting
or changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of such shares of stock.
(b) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end company under the Investment Company
Act, the Board of Directors shall have the power and authority, without the
approval of the holders of any outstanding shares, to increase or decrease the
number of shares of capital stock or the number of shares of capital stock of
<PAGE>
any class or series that the Corporation has authority to issue.
(c) The authorized shares of Common Stock shall be classified
into the following series of Common Stock, each series comprising the number
of shares indicated, subject to the authority of the Board of Directors to
classify or reclassify any unissued shares of capital stock and to the
authority of the Board of Directors to increase or decrease the number of
shares of capital stock or the number of shares of capital stock of any class
or series that the Corporation has the authority to issue:
<TABLE>
<CAPTION>
SERIES NUMBER OF SHARES IN SERIES
<S> <C>
Connecticut Mutual Government
Account Common Stock 300,000,000
Connecticut Mutual Income Account|
Common Stock 300,000,000
Connecticut Mutual Total Return Account|
Common Stock 300,000,000
Connecticut Mutual Growth Account|
Common Stock 300,000,000
Connecticut Mutual Liquid Account|
Common Stock 800,000,000
CMIA National Municipals Account Common|
Stock 200,000,000
CMIA California Municipals Account
Common Stock | 200,000,000
CMIA Massachusetts Municipals Account
Common Stock | 200,000,000
CMIA New York Municipals Account Common|
Stock 200,000,000
CMIA Ohio Account Municipals Common|
Stock 200,000,000
</TABLE>
Any series of Common Stock shall be referred to herein individually as a
"Series" and collectively, together with any further series from time to time
established, as the "Series".
(d) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the
shares of Common Stock classified into the Series listed above and any
additional Series of Common Stock of the Corporation (unless provided
otherwise by the Board of Directors with respect to any such additional Series
at the time it is established and designated):
(1) ASSETS BELONGING TO SERIES. All consideration
received by the Corporation from the issue or sale of shares of a particular
Series, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any investment or reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to that
Series for all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Corporation. Such consideration,
assets, income, earnings, profits and proceeds, together with any General
Items (as defined below) allocated to that Series as provided in the following
sentence, are herein referred to collectively as "assets belong to" that
Series. In the event that there are any assets,
<PAGE>
income, earnings, profits or proceeds which are not readily identifiable as
belonging to any particular Series (collectively, "General Items"), such
General Items shall be allocated by or under the supervision of the Board of
Directors to and among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Board of Directors, in
its sole discretion, deems fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series. Each such
allocation by the Board of Directors shall be conclusive and binding for all
purposes.
(2) LIABILITIES OF SERIES. The assets belonging to each
particular Series shall be charged with the liabilities of the Corporation in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities, expenses, costs,
charges or reserves of the Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and charged by or
under the supervision of the Board of Directors to and among any one or more
of the Series established and designated from time to time in such manner and
on such basis as the Board of Directors, in its sole discretion, deems fair
and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Series are herein referred to collectively as
"liabilities of" that Series. Each allocation of liabilities, expenses,
costs, charges and reserves by or under the supervision of the Board of
Directors shall be conclusive and binding for all purposes.
(3) DIVIDENDS AND DISTRIBUTIONS. Dividends and capital
gains distributions on shares of a particular Series may be paid with such
frequency, in such form and in such amount as the Board of Directors may
determine by resolution adopted from time to time, or pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Board of Directors may determine, after providing for actual and accrued
liabilities of that Series. All dividends on shares of a particular Series
shall be paid only out of the income belonging to that Series and all capital
gains distributions on shares of a particular Series shall be paid only out of
the capital gains belonging to that Series. All dividends and distributions
on shares of a particular Series shall be distributed pro rata to the holders
of that Series in proportion to the number of shares of that Series held by
such holders at the date and time of record established for the payment of
such dividends or distributions, except that in connection with any dividend
or distribution program or procedure, the Board of Directors may determine
that no dividend or distribution shall be payable on shares as to which the
stockholder's purchase order and/or payment have not been received by the time
or times established by the Board of Directors under such program or
procedure.
Dividends and distributions may be paid in cash,
property or additional shares of the same or another Series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program
that the Board of Directors may have in effect at the time for the election by
stockholders of the form in which dividends or distributions are to be paid.
Any such dividend or distribution paid in shares shall be paid at the current
net asset value thereof.
(4) VOTING. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one vote for each
share standing in his name on the books of the Corporation, irrespective of
the Series thereof, and all shares of all Series shall vote as a single class
("Single Class Voting"); provided, however, that (i) as to any matter with
respect to which a separate vote of any Series is required by the Investment
Company Act or by the Maryland General Corporation Law, such requirement as to
a separate vote by that Series shall apply in lieu of Single Class Voting,
(ii) in the event that the separate vote requirement referred to in clause (i)
above applies with respect to one or more Series, then, subject to clause
(iii) below, the shares of all other Series shall vote as a single class; and
(iii) as to any matter which does not affect the interest of a particular
Series, including liquidation of another Series as described in subsection (7)
below, only the holders of shares of the one or more affected Series will be
<PAGE>
entitled to vote.
(5) REDEMPTION BY STOCKHOLDERS. Each holder of shares of
a particular Series shall have the right at such times as may be permitted by
the Corporation to require the Corporation to redeem all or any part of his
shares of that Series, at a redemption price per share equal to the net asset
value per share of that Series next determined after the shares are properly
tendered for redemption, less such redemption fee or sales
charges, if any, as may established by the Board of Directors in its sole
discretion in accordance with any applicable provisions of the Investment
Company Act. Payment of the redemption price shall be in cash; provided,
however, that if the Board of Directors determines, which determination shall
be conclusive, that conditions exist which may payment wholly in cash unwise
or undesirable, the Corporation may, to the extent and in the manner permitted
by the Investment Company Act,make payment wholly or partly in securities or
other assets belonging to the Series of which the shares being redeemed are a
part, at the value of such securities or assets used in such determination of
net asset value.
Notwithstanding the foregoing, the Corporation may
postpone payment of the redemption price and may suspend the right of the
holders of shares of any Series to require the Corporation to redeem shares of
that Series during any period or at any time when and to the extent
permissible under the Investment Company Act.
(6) REDEMPTION BY CORPORATION. The Board of Directors may
cause the Corporation to redeem at their net asset value the shares of any
Series held in an account (i) if the redemption is, in the opinion of the
Board of Directors of the Corporation, desirable in order to prevent the
Corporation from being deemed a "personal holding company" within the meaning
of the Internal Revenue Code of 1986, as from time to time amended, (ii) if
the number of shares in the account maintained by the Corporation or its
transfer agent for any stockholder is less than a specified number determined
by the Board of Directors of the Corporation, from time to time, but in no
event more than one hundred (100) shares, and the stockholder has been given
at least thirty (30) days' written notice of the redemption and has failed to
make additional purchases of shares in an amount sufficient to bring the
number of shares in his account to the specified number of shares or more
before the redemption is effected by the Corporation or (iii) if the
stockholder has failed to furnish a correct certified social security or tax
identification number required by the Corporation to be obtained.
(7) LIQUIDATION. In the event of the liquidation of a
particular Series, the stockholders of the Series that is being liquidated
shall be entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets belonging to that Series over the
liabilities of that Series. The holders of shares of any particular Series
shall not be entitled thereby to any distribution upon liquidation of any
other Series. The assets so distributable to the stockholders of any
particular Series shall be distributed among such stockholders in proportion
to the number of shares of that Series held by them and recorded on the books
of the Corporation. The liquidation of any particular Series in which there
are shares then outstanding may be authorized by vote of a majority of the
Board of Directors then in office, and, if required under Maryland or other
applicable law, subject to the approval of a majority of the outstanding
voting securities of that Series, as defined in the Investment Company Act,
and without the vote of the holders of shares of any other Series. The
liquidation of a particular Series may be accomplished, in whole or in part,
by the transfer of assets of such Series another Series or by the exchange of
shares of such Series for the shares of another Series.
(8) NET ASSET VALUE PER SHARE. The net asset value per
share of any Series shall be the quotient obtained by dividing the value of
the net assets of that Series (being the value of the assets belonging to that
Series less the liabilities of that Series) by the total number of shares of
<PAGE>
that Series outstanding, all as determined by or under the direction of the
Board of Directors in accordance with generally accepted accounting principles
and the Investment Company Act. Subject to the applicable provisions of the
Investment Company Act, the Board of Directors, in its sold discretion, may
prescribe and shall set forth in the By-Laws of the Corporation or in a duly
adopted resolution of the Board of Directors such bases and times for
determining the value of the assets belonging to, and the net asset value per
share of outstanding shares of, each Series, or the net income attributable to
such shares, as the Board of Directors deems necessary or desirable. The
Board of Directors shall have full discretion, to the extent not inconsistent
with the Maryland General Corporation Law and the Investment Company Act, to
determine which items shall be treated as income and which items as capital
and whether any item of expense shall be charged to income or capital. Each
such determination and allocation shall be conclusive and binding for all
purposes.
The Board of Directors may determine to maintain the net
asset value per share of any Series at a designated constant dollar amount and
in connection therewith may adopt procedures not inconsistent with the
Investment Company Act for the continuing declaration of income attributable to
that Series as dividends and for the handling of any losses attributable to that
Series. Such procedures may provide that in the event of any loss, each
stockholder shall be deemed to have contributed to the capital of the
Corporation attributable to that Series his pro rata portion of the total
number of shares required to be canceled in order to permit the net asset
value per share of that Series to be maintained, after reflecting such loss,
at the designated constant dollar amount. Each stockholder of the Corporation
shall be deemed to have agreed, by his investment in any Series with respect
to which the Board of Directors shall have adopted any such procedure, to make
the contribution referred to in the preceding sentence in the event of any
such loss.
(9) CONVERSION OF EXCHANGE RIGHTS. Subject to compliance
with the requirements of the Investment Company Act, the Board of Directors
shall have the authority to provide that holders of shares of any Series shall
have the right to convert or exchange said shares into shares of one or more
other Series of shares in accordance with such requirements and procedures as
may be established by the Board of Directors.
(e) The Series identified in paragraph (c) of this Article IV and
any additional Series of Common Stock (unless otherwise specified in the
articles supplementary designating such Series) shall each initially have
three classes of shares, which shall be designated Class A, Class B and Class
C, each consisting, until further changed, of the lesser of (x) the total
number of shares of each such Series designated and specified in Paragraph (c)
above or (y) the number of shares that could be issued by issuing all of the
shares of that Series currently or hereafter classified less the total number
of shares of all other classes of such Series then issued and outstanding.
Any class of a Series of Common Stock shall be referred to herein individually
as a "Class" and collectively, together with any further class or classes of
such Series from time to time established, as the "Classes". For each of the
Series listed above, all of the shares of such Series that are currently
issued and outstanding shall be referred to as Class A shares.
(f) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation, and other rights with any other
shares of Common Stock of that Series; provided, however, that notwithstanding
anything in the charter of the Corporation to the contrary:
(1) The Class A shares are subject to such front-end sales
loads as are currently in effect for such shares and may be
subject to such front-end sales loads and fees and expenses under
a Rule 12b-1 plan, established by the Board of Directors in
accordance with the Investment Company Act and applicable rules
<PAGE>
and regulations of the National Association of Securities Dealers,
Inc., as may be approved by the stockholders of such Class from
time to time to the extent required by applicable Maryland law and
the Investment Company Act. The Class A shares are also subject
to such contingent deferred sales charges as are currently in
effect for such shares or as may be established by the Board of
Directors in accordance with the Investment Company Act and
applicable rules and regulations of the National Association of
Securities Dealers, Inc., as may be approved by the stockholders
of such Class from time to time to the extent required by
applicable Maryland law and the Investment Company Act.
(2) The Class B and Class C shares shall be subject to such
fees and expenses under a Rule 12b-1 plan as may be established
from time to time by the Board of Directors and such contingent
deferred sales charges as may be established from time to time by
the Board of Directors in accordance with the Investment Company
Act and applicable rules and regulations of the National
Association of Securities Dealers, Inc.
(3) Expenses related solely to a particular Class of a
Series (including, without limitation, distribution expenses under
a Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other arrangement,
however designated) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Class.
(4) At such time as may be determined by the Board of
Directors in accordance with the Investment Company Act and
applicable rules and regulations of the National Association of
Securities Dealers, Inc. and reflected in the current registration
statement relating to a Series, shares of a particular Class of a
Series may be automatically converted into shares of another
Class; provided, however, that such conversion shall be subject,
at the election of the Board of Directors, to the continuing
availability of a private letter ruling of the Internal Revenue
Service or an opinion of counsel to the effect that such
conversion does not constitute a taxable event under federal
income tax law and shall otherwise be in accordance with the
Investment Company Act. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is
no longer available.
(5) As to any matter with respect to which a separate vote
of any Class of a Series is required by the Investment Company Act
or by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in subsection (3) above), such requirement as to a
separate vote by that Class shall apply in lieu of Single Class
Voting, and if permitted by the Investment Company Act or the
Maryland General Corporation Law, the Classes of more than one
Series shall vote together as a single class on any such matter
which shall have the same effect on each such Class. As to any
matter which does not affect the interest of a particular Class of
a Series, only the holders of shares of the affected Classes of
that Series shall be entitled to vote.
(g) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including,
without limitation, the right to vote and to receive dividends, and whereever
the words "share" or "shares" are used in the charter or By-Laws of the
Corporation, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.
<PAGE>
(h) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(a) The number of directors of the Corporation may be increased
or decreased pursuant to the By-Laws of the Corporation, but shall never be
less than the minimum number permitted by the General Laws of the State of
Maryland now or hereafter in force.
(b) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its stock of any class or series,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or series, whether now of hereafter authorized, for
such consideration as may be deemed advisable by the Board of Directors and
without any action by the stockholders.
(c) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any preemptive
right to subscribe for or purchase any stock or any other securities of the
Corporation other than such, if any, as the Board of Directors, in its sole
discretion, may determine and at such price or prices and upon such other
terms as the Board of Directors, in its sole discretion, may fix; and any
stock or other securities which the Board of Directors may determine to offer
for subscription may, as the Board of Directors in its sole discretion shall
determine, be offered to the holders of any class, series or type of stock or
other securities at the time outstanding to the exclusion of the holders of
any or all other classes, series or types of stock or other securities at the
time outstanding.
(d) The Board of Directors of the Corporation shall, consistent
with applicable law, power in its sole discretion to determine from time to
time in accordance with sound accounting practice or other reasonable
valuation methods what constitutes annual or other net profits, earnings,
surplus, or net assets in excess of capital; to determine the that retained
earnings or surplus shall remain in the hands of the Corporation; to set apart
out of any funds of the Corporation such reserve or reserves in such amount or
amounts and for such proper purpose or purposes as it shall determine and to
abolish any such reserve or any part thereof; to distribute and pay
distributions or dividends in stock, cash or other securities or property, out
of surplus or any other funds or amounts legally available therefor, at such
times and to the stockholders of record on such dates as it may, from time to
time, determine; and to determine whether and to what extent and at what times
and places and under what conditions and regulations the books, accounts and
documents of the Corporation, or any of them, shall be open to the inspection
of stockholders, except as otherwise provided by statute or by the By-Laws,
and, except as so provided, no stockholder shall have any right to inspect any
book, account or document of the Corporation unless authorized so to do by
resolution of the Board of Directors.
(e) Notwithstanding any provision of Maryland law requiring the
authorization of any action by a greater proportion than a majority of the
total number of shares of all classes and series of capital stock or of the
total number of shares of any class or series of capital stock entitled to
vote as a separate class, such action shall be valid and effective if
authorized by the affirmative vote of the holders of a majority of the total
number of shares of all classes and series outstanding and entitled to vote
thereon, or of the class or series entitled to vote thereon as a separate
class, as the case may be, except as otherwise provided in the charter of the
<PAGE>
Corporation.
(f) The Corporation shall indemnify (i) its directors and
officers, whether serving the Corporation or at its request any other entity,
to the full extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of expenses under
the procedures and to the full extent permitted by law, and (ii) other
employees and agents to such extent as shall be authorized by the Board of
Directors or the By-Laws and as permitted by law. Nothing contained herein
shall be construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. The foregoing rights of indemnification shall not be exclusive of any
other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing
such provisions or such further indemnification arrangements as may be
permitted by law. No amendment of the charter of the Corporation or repeal of
any of its provisions shall limit or eliminate the right of indemnification
provided hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
(g) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act, no
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office. No amendment of the charter of the Corporation or
repeal of any of its provisions shall limit or eliminate the limitation of
liability provided to directors and officers hereunder with respect to any act
or omission occurring prior to such amendment or repeal.
(h) The Corporation reserves the right from time to time to make
any amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly
set forth in its charter, of any of its outstanding stock by classification,
reclassification or otherwise.
(i) The enumeration and definition of particular powers of the
Board of Directors included in the foregoing shall in no way be limited or
restricted by reference to or inference from the terms of any other clause of
this or any other Article of the charter of the Corporation, or construed as
or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred upon the
Board of Directors under the General Laws of the State of Maryland now or
hereafter in force.
ARTICLE VI
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
THIRD: The provisions hereinabove set forth are all the provisions of
the Charter of the Corporation currently in effect.
FOURTH: The amendment does not increase the authorized stock of the
Corporation.
FIFTH: In accordance with the provisions of Section 2-607 of the
Maryland General Corporation Law, the foregoing amendment was advised by the
<PAGE>
Board of Directors and approved by the stockholders of the Corporation.
SIXTH: The current address of the principal office of the Corporation
in Maryland and the name and address of the Corporation's current resident
agent are as set forth in the amended and restated Charter of the Corporation.
There are six directors currently in office, whose names are as follows:
Donald H. Pond
David E. Sams, Jr.
Richard H. Ayers
David E. A. Carson
Richard W. Gleen
Beverly L. Hamilton
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary on this 6th day of January, 1995.
CONNECTICUT MUTUAL INVESTMENT
ACCOUNTS, INC.
/S/ DONALD H. POND
Name: Donald H. Pond
Title: President
ATTEST:
/S/ ANN F. LOMELI
Name: Ann F. Lomeli
Title: Secretary
THE UNDERSIGNED, the President of Connecticut Mutual Investment
Accounts, Inc. who executed on behalf of the Corporation the foregoing
Articles of Amendment and Restatement of which this certificate is made a
part, hereby acknowledges in the name and on behalf of the Corporation the
foregoing Articles of Amendment and Restatement to be the corporate act of the
Corporation and hereby certifies to the best of his knowledge, information and
belief the matters and facts set forth therein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/S/DONALD H. POND
Name: Donald H. Pond
Title: President
<PAGE>
EXHIBIT 1.1
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:
<TABLE>
<CAPTION>
Number of Number of
Series Class A Shares Class B Shares
- ------ -------------- --------------
<S> <C> <C>
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
</TABLE>
-1-
<PAGE>
SECOND: The terms of the Common Stock of each Class 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
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
-2-
<PAGE>
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 authorized and unissued shares of
the Connecticut Mutual Investment Accounts, Inc. into the
following new and existing classes and has provided for the
issuance of such classes:
<TABLE>
<CAPTION>
CLASS NUMBER OF
SHARES
<S> <C>
Liquid Account 600,000,000
Government Securities Account 200,000,000
Income Account 200,000,000
Total Return Account 200,000,000
Growth Account 200,000,000
CMIA National Municipals Account 200,000,000
CMIA California Municipals Account 200,000,000
CMIA Massachusetts Municipals Account 200,000,000
CMIA New York Municipals Account 200,000,000
CMIA Ohio Municipals Account 200,000,000
CMIA LifeSpan Capital Appreciation
Account 200,000,000
CMIA LifeSpan Balanced Account 200,000,000
CMIA LifeSpan Diversified Income
Account 200,000,000
</TABLE>
SECOND: The terms of the Common Stock in each such classes
are as set forth in Article IV of the Company's Articles of
Incorporation.
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
this May 8, 1995
WITNESS: CONNECTICUT MUTUAL
INVESTMENT ACCOUNTS, INC.
/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
<PAGE>
Supplementary to be the corporate act of said Corporation and
hereby certifies that the matters and fact 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
<PAGE>
BYLAWS
OF
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
AS AMENDED BY RESOLUTIONS
OF THE BOARD OF DIRECTORS
AND BY THE ACTION OF SHAREHOLDERS
THROUGH APRIL 30, 1993
AS FURTHER AMENDED
JANUARY 29, 1996
<PAGE>
CERTIFIED COPY
BYLAWS
OF
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
ARTICLE I OFFICES................................. 1
Section 1. Principal Executive Office.............. 1
Section 2. Other Offices........................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS................ 2
Section 1. Meetings................................ 1
Section 2. Place of Meetings....................... 2
Section 3. Notice of Meetings; Waiver of Notice.... 2
Section 4. Quorum.................................. 3
Section 5. Organization............................ 4
Section 6. Order of Business....................... 4
Section 7. Voting.................................. 4
Section 8. Fixing of Record Date................... 5
Section 9. Inspectors.............................. 5
Section 10. Consent of Stockholders in Lieu of
meeting................................ 6
ARTICLE III BOARD OF DIRECTORS...................... 7
Section 1. General Powers.......................... 7
Section 2. Number of Directors..................... 7
Section 3. Election and Term of Directors.......... 7
Section 4. Resignation............................. 8
Section 5. Removal of Directors.................... 8
Section 6. Vacancies............................... 8
Section 7. Place of Meetings....................... 9
Section 8. Manner of Acting........................ 9
Section 9. Regular Meetings........................ 9
Section 10. Special Meetings........................ 9
Section 11. Annual Meeting.......................... 9
Section 12. Notice of Special Meetings.............. 10
Section 13. Waiver of Notice of Meetings..,,....... 10
Section 14. Quorum and Voting....................... 10
Section 15. Organization............................ 11
Section 16. Written Consent of Directors in Lieu of
Meeting................................. 11
Section 17. Compensation............................ 12
Section 18 Investment Policies..................... 12
<PAGE>
ARTICLE IV. COMMITTEES............................... 13
Section 1. Executive Committee...................... 13
Section 2. Other Committees of the Board............ 14
Section 3. General.................................. 14
ARTICLE V OFFICERS, AGENTS, and EMPLOYEES.......... 15
Section 1. Number and Qualifications................ 15
Section 2. Resignations............................. 15
Section 3. Removal of Officer, Agent, or Employee... 16
Section 4. Vacancies................................ 16
Section 5. Compensation............................. 16
Section 6. Bonds or other Security.................. 16
Section 7. President................................ 16
Section 8. Vice President........................... 17
Section 9. Treasurer................................ 17
Section 10. Secretary................................ 17
Section 11. Delegation of Duties..................... 18
ARTICLE VI INDEMNIFICATION.......................... 18
Section 1. Right of Indemnification................. 18
Section 2. Disabling Conduct........................ 19
Section 3. Directors' Standards of Conduct.......... 20
Section 4. Expenses Prior to Determination.......... 20
Section 5. Provisions Not Exclusive................. 21
Section 6. General.................................. 21
ARTICLE VII CAPITAL STOCK............................ 21
Section 1. Stock Certificates....................... 21
Section 2. Books of Account and Record
of Stockholders.......................... 22
Section 3. Transfers of Shares...................... 22
Section 4. Rules and regulations.................... 23
Section 5. Lost, Destroyed, or Mutilated
Certificates............................. 23
Section 6. Fixing of a Record Date for Dividends
and Distributions........................ 23
Section 7. Registered Owner of Shares............... 24
Section 8. Information to Stockholders and Others... 24
Section 9. Involuntary Redemption of Shares......... 24
ARTICLE VIII SEAL..................................... 25
ARTICLE IX FISCAL YEAR.............................. 25
ARTICLE X DEPOSITORIES and CUSTODIANS.............. 25
Section 1. Depositories............................. 25
Section 2. Custodians............................... 25
<PAGE>
ARTICLE XI EXECUTION OF INSTRUMENTS................. 25
Section 1. Checks, Notes, Drafts, etc............... 25
Section 2. Sale or Transfer of Securities.......... 26
Section 3. Loans................................... 26
Section 4. Voting as Securityholder................ 26
Section 5. Expenses................................ 27
ARTICLE XII INDEPENDENT PUBLIC ACCOUNTANTS (deleted) 27
ARTICLE XIII ANNUAL STATEMENT........................ 27
ARTICLE XIV AMENDMENTS.............................. 28
<PAGE>
BYLAWS
OF
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office
of the Corporation shall be at 140 Garden Street, City of Hartford, State of
Connecticut.
Section 2. OTHER OFFICES. The Corporation may have such other offices
in such places as the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. MEETINGS. Meetings of the stockholders of the Corporation
for the election of directors and for the transaction of such other business as
may be brought before the meeting may, but are not required to be held
annually; specifically, the Corporation shall not be required to hold a meeting
in any year in which none of the following is required to be acted on by
stockholders under the Investment Company Act of 1940: (1) the election of
directors; (2) the approval of the Corporation's investment advisory agreement;
(3) ratification of the selection of independent public accountants; and (4)
approval of the Corporation's distribution agreement. Any business of the
Corporation may be transacted at the meeting without being specifically
<PAGE>
designated in the notice, except such business as is specifically required by
statute to be stated in the notice.
Meetings of the stockholders, unless otherwise provided by law or by the
Articles of Incorporation, may be called for any purpose or purposes by a
majority of the Board of Directors, by the President, or upon the written
request of the holder of at least 25% of the outstanding capital stock of the
Corporation entitled to vote at such meeting.
Section 2. PLACE OF MEETINGS. Meetings of the stockholders shall be
held at such place within the United States as the Board of Directors may from
time to time determine.
Section 3. NOTICE OF MEETINGS; WAIVER OF NOTICE. Notice of the place,
date, and time of the holding of each meeting of the stockholders and the
purpose or purposes of each meeting shall be given personally or by mail, not
less than ten nor more than ninety days before the date of such meeting, to
each stockholder entitled to vote at such meeting and to each other stockholder
entitled to notice of the meeting. Notice by mail shall be deemed to be duly
given when deposited in the United States mail addressed to the stockholder at
his address as it appears on the records of the Corporation with postage
thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice that is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless the Board of Directors, after the adjournment, shall fix
a new record date for an adjourned meeting, or unless the adjournment is for
more than thirty days, notice of such adjourned meeting need not be given if
the time and place to which the meeting shall be adjourned were announced at
<PAGE>
the meeting at which the adjournment is taken.
Section 4. QUORUM. At all meetings of the stockholders, the holders of
a majority of the shares of stock of the Corporation entitled to vote at the
meeting, or a majority of the holders of any class of stock with respect to
matters on which holders of such class of stock are entitled to vote
separately, who are present in person or by proxy shall constitute a quorum for
the transaction of any business, except as otherwise provided by statute or by
the Articles of Incorporation or these Bylaws. In the absence of quorum no
business may be transacted, except that the holders of a majority of the shares
of stock who are present in person or by proxy and who are entitled to vote may
adjourn the meeting from time to time without notice other than announcement
thereat except as otherwise required by these Bylaws, until the holders of the
requisite amount of shares of stock shall be so present. At any such adjourned
meeting at which a quorum may be present, any business may have been transacted
that might have been transacted at the meeting as originally called. The
absence from any meeting, in person or by proxy, of holders of the number of
shares of stock of the Corporation in excess of a majority thereof that may be
required by the laws of the State of Maryland, the Investment Company Act of
1940, as amended, or other applicable statute, the Articles of Incorporation,
or these Bylaws for action upon any given matter shall not prevent action at
such meeting upon any other matter or matters that may properly come before
the meeting, if there shall be present thereat, in person or by proxy,holders
of the number of shares of stock of the Corporation required for Action in
respect of such other matter or matters.
<PAGE>
Section 5. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board, if one has been designated by the Board, or in his
absence or inability to act, the President, or in the absence or inability to
act of both the Chairman of the Board and the President, a Vice-President,
shall act as chairman of the meeting. The Secretary, or in his absence or
inability to act, any person appointed by the chairman of the meeting, shall
act as secretary of the meeting and keep the minutes thereof.
Section 6. ORDER OF BUSINESS. The order of business at all meetings
of the stockholders shall be determined by the chairman of the meeting.
Section 7. VOTING. Except as otherwise provided by statute or the
Articles of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for each full share, and a fractional vote for each
fractional share, standing in his name on the record of stockholders of the
Corporation as of the record date determined pursuant to Section 8 of this
Article II or, if such record date shall not have been so fixed, then at the
later of (i) the close of business on the day on which notice of the meeting is
mailed or (ii) the thirtieth day before the meeting; provided that stockholders
of each class shall not be entitled to vote on matters that do not affect that
class and that only affect another class or classes.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
<PAGE>
irrevocable and where an irrevocable proxy is permitted by law.
Except as otherwise provided by statute, the Articles of Incorporation,
or these Bylaws, any corporate action to be taken by vote of the stockholders
shall be authorized by a majority of the total votes cast at a meeting of
stockholders by the holders of shares present in person or represented by proxy
and entitled to vote on such action; provided that, to the extent required by
the Investment Company Act of 1940, as now in existence or hereinafter amended,
if any action is required to be taken by the vote of a majority of the
outstanding shares of all the stock or of any class of stock, then such action
shall be taken if approved by the lesser of (i) 67 percent or more of the
shares present at a meeting in person or represented by proxy, at which more
than 50 percent of the outstanding shares are represented or (ii) more than 50
percent of the outstanding shares.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these Bylaws, or determined by the chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, such ballot shall be
signed by the stockholder voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
Section 8. FIXING OF RECORD DATE. The Board of Directors may fix, in
advance, a record date not more than ninety nor less than ten days before the
date then fixed for the holding of any meeting of the stockholders. All
persons who were holders of record of shares at such time, and no others, shall
be entitled to vote at such meeting and any adjournment thereof.
Section 9. INSPECTORS. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
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adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take
and sign an oath to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors shall determine the number of shares outstanding and entitled to
vote; the number of shares represented at the meeting; the existence of a
quorum; the validity and effect of proxies; and shall receive votes, ballots,
or consents; hear and determine all challenges and questions rising in
connection with the right to vote; count and tabulate all votes, ballots or
consents; determine the result; and do such acts as are proper to conduct the
election or vote in fairness to all stockholders. On request of the chairman
of the meeting or of any stockholder entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, request, or matter determined
by them and shall execute a certificate of any fact found by them. No director
or candidate for the office of director shall act as inspector of an election
of director. Inspectors need not be stockholders.
Section 10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by statute or the Articles of Incorporation, any action
required to be taken at any meeting of stockholders, or any action that may be
taken at any meeting of such stockholders, may be taken without a meeting,
without prior notice, and without a vote, if the following are filed with the
records of stockholders' meetings: (i) a unanimous written consent that sets
forth the action and is signed by each stockholder entitled to vote on the
<PAGE>
matter and (ii) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote thereat.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. Except as otherwise provided in the Articles
of Incorporation, the business and affairs of the Corporation shall be managed
by the Board of Directors. The Board may exercise all the powers of the
Corporation and do all such lawful acts and things as are not by statute or the
Article of Incorporation directed or required to be exercised or done by the
stockholders.
Section 2. NUMBER OF DIRECTORS. The number of directors may be changed
from time to time by resolution of the Board of Directors adopted by a majority
of the Directors then in office; provided, however, that the number of
directors shall in no event be less than three (3). Any vacancy created by an
increase in directors may be filled in accordance with Section 6 of this
Article III. No reduction in the number of directors shall have the effect of
removing any director from office before the expiration of his term unless such
director is specifically removed pursuant to Section 5 of this Article III at
the time of such reduction. Directors need not be stockholders.
Section 3. ELECTION AND TERM OF DIRECTORS. Each director shall serve
indefinitely and until his successor is duly elected and qualified (or, if
earlier, the death, resignation, or removal of such director as hereinafter
provided in these Bylaws or as otherwise provided by statute or the Articles of
Incorporation), except that the Board of Directors may determine a shorter
tenure of office for any of its members so long as such shorter period is
stated in the notice for the meeting of stockholders at which such election
<PAGE>
takes place. Elections of Directors shall be by written ballot at a
stockholders' meeting held for that purpose.
Section 4. RESIGNATION. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board, to the Chairman
of the Board, to the President, or to the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective is not specified therein, immediately upon its receipt and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 5. REMOVAL OF DIRECTORS. A director of the Corporation may be
removed by the stockholders by a vote of a majority of the votes entitled to be
cast on the matter at any meeting of stockholders, duly called, and at which a
quorum is present.
Section 6. VACANCIES. Any vacancies in the Board, whether arising from
death, resignation, removal, an increase in the number of directors, or from
any other cause, shall be filled by a vote of the majority of the Board of
directors then in office even if such majority is less than a quorum, provided
that no vacancies shall be filled by action of the remaining directors, if
after the filling of said vacancy or vacancies, less than two-thirds of the
directors then holding office shall have been elected by the stockholders of
the Corporation. In the event that at any time less than a majority of the
directors shall have been elected by the stockholders, a meeting of the
stockholders shall be held as promptly as possible and, in any event within
sixty days, for the purpose of electing additional directors. Any directors
elected or appointed to fill a vacancy shall hold office indefinitely and until
a successor shall have been chosen and shall have qualified (unless elected for
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a definite term) or, if earlier, until the death, resignation, or removal, as
hereinafter provided in these Bylaws, or as otherwise provided by statute or
the Articles of Incorporation, of such director.
Section 7. PLACE OF MEETINGS. Meetings of the Board may be held at such
place as the Board may from time to time determine or as shall be specified in
the notice of such a meeting.
Section 8. MANNER OF ACTING. Any member of the Board of Directors or of
any committee designated by the Board, may participate in a meeting of the
Board, or any such committee, as the case may be, by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting
by these means constitutes presence in person at the meeting. This paragraph
shall not be applicable to meetings held for the purpose of voting in respect
of approval of (1) contracts or agreements whereby a person undertakes to serve
or act as investment adviser for or principal underwriter for the Corporation
or (2) a plan for the distribution of the Corporation's securities pursuant to
Rule 12b-1 of the Investment Company Act of 1940.
Section 9. REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.
Section 10. SPECIAL MEETINGS. Special meetings of the Board may be
called by two or more directors of the Corporation, by the Chairman of the
Board, or by the President.
Section 11. ANNUAL MEETING. The annual meeting of each newly elected
Board of Directors may be held as soon as practicable after the meeting of
<PAGE>
stockholders at which the directors were elected. No notice of such annual
meeting shall be necessary if held immediately after the adjournment, and at
the site, of the meeting of stockholders and only if at least a majority of the
Board of Directors were elected or re-elected at such meeting. If not so held,
notice shall be given as hereinafter provided for special meetings of the Board
of Directors.
Section 12. NOTICE OF SPECIAL MEETINGS. Notice of each special meeting
of the Board shall be given by the Secretary as hereinafter provided, which
notice shall state the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by telephone,
cable, or wireless, at least twenty-four hours before the time at which such
meeting is to be held, or by first-class mail, postage prepaid, addressed to
him at his residence or usual place of business, at least three days before the
day on which such meeting is to be held.
Section 13. WAIVER OF NOTICE OF MEETING. Notice of any special meeting
need not be given to any director who shall, either before or after the
meeting, sign a written waiver of notice or who shall attend such meeting.
Except as otherwise specifically required by these Bylaws, a notice or waiver
of notice of any meeting need not state the purpose of such meeting.
Section 14. QUORUM AND VOTING. One-third, but not less than two, of the
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and, except as otherwise expressly required by the Articles of
Incorporation, these Bylaws, the Investment Company Act of 1940, as amended, or
other applicable statute, the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board; provided,
<PAGE>
however, that the approval of any contract with an investment adviser or
principal underwriter, as such terms are defined in the Investment Company Act
of 1940, as amended, that the Corporation enters into or any renewal or
amendment thereof, the approval of the fidelity bond required by the Investment
Company Act of 1940, as amended, and the selection of the Corporation's
independent public accountant shall each require the affirmative vote of a
majority of the directors who are not parties to any such contract or
"interested persons" of any such party, as defined in the Investment Company
Act of 1940 and the Rules thereunder), so long as the Corporation is subject to
such Act and such Act so requires. In the absence of a quorum at any meeting
of the Board, a majority of the directors present thereat may adjourn such
meeting to another time and place until a quorum shall be present thereat.
Notice of the time and place of any such adjourned meeting shall be given to
the directors who were not present at the time of the adjournment and, unless
such time and place were announced at the meeting at which the adjournment was
taken, to the other directors. Any such notice shall be given as provided for
in Section 12 hereof. At any adjourned meeting which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 15. ORGANIZATION. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President, or, in his
absence or inability to act, another director chosen by a majority of the
directors present, shall act as chairman of the meeting and preside thereat.
<PAGE>
The Secretary (or, in his absence or inability to act, any person appointed by
the chairman) shall act as secretary of the meeting and keep the minutes
thereof.
Section 16. WRITTEN CONSENT OF DIRECTORS IN LIEU OF A MEETING. Except
as otherwise required by the Investment Company Act of 1940, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if all members of the
Board or of the committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of the proceedings of the
Board or committee.
Section 17. COMPENSATION. Directors may receive compensation for
services to the Corporation in their capacities as director or otherwise in
such manner and in such amount as may be fixed from time to time by the Board.
Section 18. INVESTMENT POLICIES. It shall be the duty of the Board of
Directors to ensure that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Corporation are
at all times consistent with the investment policies and restrictions with
respect to securities investment and otherwise of the Corporation (or if the
stock is issued in classes or series, the policies and restrictions applicable
to such class or series) as recited in these Bylaws and the current
Registration Statement of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the Investment Company
Act of 1940, as amended. The Board, however, may delegate the duty of
management of the assets and the administration of its day-to-day operations to
an individual or corporate management company and/or investment adviser
pursuant to written contract or contracts which have obtained the requisite
<PAGE>
approval, including the requisite approval of renewals thereof, of the Board of
Directors and/or the stockholders of the Corporation in accordance with the
provisions of the Investment Company Act of 1940, as amended.
ARTICLE IV
COMMITTEES
Section 1. EXECUTIVE COMMITTEE. The Board may, by resolution adopted by
a majority of the entire Board, designate an Executive Committee consisting of
two or more of the directors of the Corporation, which committee shall have and
may exercise all the powers and authority of the Board with respect to all
matters other than:
(a) the submission to stockholders of any action requiring authorization
of stockholders pursuant to regulation or statute or the Articles of
Incorporation;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving on the Board
or on any committee of the Board, including the Executive Committee;
(d) the approval or termination of any contract with an investment
adviser or principal underwriter, as such terms are defined in the Investment
Company Act of 1940, as amended, or the taking of any other action required to
be taken by the Board of Directors or a portion thereof by the Investment
Company Act of 1940, as amended;
(e) the amendment or repeal of these Bylaws or the adoption of new
Bylaws;
(f) the amendment or repeal of any resolution of the Board that by its
terms may be amended or repealed only by the Board; and
<PAGE>
(9) the declaration of dividends and the issuance of capital stock of
the Corporation.
The Executive Committee shall keep written minutes of its proceedings and shall
report such minutes to the Board. All such proceedings shall be subject to
revision or alteration by the Board; provided, however, that third parties
shall not be prejudiced by such revision or alteration.
Section 2. OTHER COMMITTEES OF THE BOARD. The Board of Directors may
from time to time, by resolution adopted by a majority of the whole Board,
designate one or more other committees of the Board, each such committee to
consist of such number of directors and to have such powers and duties as the
Board of Directors may, by resolution, prescribe.
Section 3. GENERAL. One-third, but not less than two, of the members of
any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting
and the act of a majority present shall be the act of such committee. The
Board may designate a chairman of any committee and such chairman or any two
members of any committee may fix the time and place of its meeting unless the
Board shall otherwise provide. In the absence or disqualification of any
member of any committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. The
Board shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace
any absent or disqualified member, or to dissolve any such committee. Nothing
herein shall be deemed to prevent the Board from appointing one or more
<PAGE>
committee consisting wholly or in part of persons who are not directors of the
Corporation; provided, however, that no such committee shall have or may
exercise any authority or power of the Board in the management of the business
or affairs of the Corporation.
ARTICLE V
OFFICERS, AGENTS, AND EMPLOYEES
Section 1. NUMBER AND QUALIFICATIONS. Three officers of the Corporation
shall be a President, who shall be a director of the Corporation, a Secretary,
and a Treasurer, each of whom shall be elected by the Board of Directors. The
Board of Directors may elect or appoint one or more Vice Presidents and may
also appoint such other officers, agents and employees as it may deem necessary
or proper. Any two or more offices may be held by the same person, except the
offices of President and Vice President, but no officer shall execute,
acknowledge, or verify any instrument in more than one capacity. Such officers
shall be elected annually by the Board of Directors for a one year term, each
to hold office until his successor shall have been duly elected and shall have
qualified or, if earlier, until the death, resignation, or removal of such
officer, as hereinafter provided in these Bylaws or as otherwise provided by
statute or the Article of Incorporation. The Board may from time to time
elect, or delegate to the President the power to appoint, such officers
(including one or more Assistant Vice Presidents, one or more Assistant
Treasurers, and one or more Assistant Secretaries) and such agents as may be
necessary or desirable for the business of the Corporation. Such other
officers and agents shall have such duties and shall hold their offices for
such terms as may be prescribed by the Board or by the appointing authority.
<PAGE>
Section 2. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board, the Chairman
of the Board, the President, or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt, and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 3. REMOVAL OF OFFICER, AGENT, OR EMPLOYEE. Any officer, agent,
or employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract rights, if
any, but the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
Section 4. VACANCIES. A vacancy in any office, whether arising from
death, resignation, removal, or from any other cause, may be filled for the
unexpired portion of the term of the office which shall be vacant, in the
manner prescribed in these Bylaws for the regular election or appointment to
such office.
Section 5. COMPENSATION. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.
Section 6. BONDS OR OTHER SECURITY. If required by the Board, any
officer, agent, or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
such surety or sureties as the Board may require.
<PAGE>
Section 7. PRESIDENT. The President shall be the chief executive
officer of the Corporation. Only members of the Board of Directors are
eligible to be President. In the absence of the Chairman of the Board (or if
there be none), he shall preside at all meetings of the stockholders and of the
Board of Directors. He shall have, subject to the control of the Board of
Directors, general charge of the business and affairs of the Corporation. He
may employ and discharge employees and agents of the Corporation, except such
as shall be appointed by the Board, and he may delegate these powers.
Section 8. VICE PRESIDENT. Each Vice President shall have such powers
and perform such duties as the Board of Directors or the President may from
time to time prescribe.
Section 9. TREASURER. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation, except those that the Corporation has placed in
the custody of a bank or trust company or member of a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934)
pursuant to written agreement designating such bank or trust company or member
of a national securities exchange as custodian of the property of the
Corporation;
(b) keep full and accurate account of receipts and disbursements in books
belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the credit of
the Corporation;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source;
<PAGE>
(e) disburse the funds of the Corporation and supervise the investment of
its funds as ordered or authorized by the Board, taking proper vouchers
therefor; and
(f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the Board or the President.
Section 10. SECRETARY. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, of the committees of the
Board, and of the stockholders;
(b) see that all notices are duly given in accordance with the provisions
of these Bylaws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix
and attest the seal to all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a facsimile as
hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept
and filed; and,
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of the President.
Section 11. DELEGATION OF DUTIES. In case of the absence of any officer
of the Corporation, or for any other reason that the Board may seem sufficient,
the Board may confer for the time being the powers or duties, or any of them,
<PAGE>
of such officer upon any other officer or upon any director.
ARTICLE VI
INDEMNIFICATION
Section 1. RIGHT OF INDEMNIFICATION. Every person who is or was an
officer, director, employee, or agent of the Corporation shall have a right to
be indemnified by the Corporation to the fullest extent permitted by applicable
law against all liability, judgments, fines, penalties, settlements and
reasonable expenses incurred by him in connection with or resulting from any
threatened or actual claim, action, suit or proceeding, whether criminal,
civil, or administrative, in which he may become involved as a party or
otherwise by reason of his being or having been a director, officer or
employee, except as provided in Sections 2 and 3 of these Bylaws.
Section 2. DISABLING CONDUCT. No such person shall be indemnified for
any liabilities or expenses arising by means of "disabling conduct," whether or
not there is an adjudication of liability. "Disabling conduct" means willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of office.
Whether any such liability arose out of disabling conduct shall be
determined: (a) by a final decision on the merits (including, but not limited
to, a dismissal for insufficient evidence of any disabling conduct) by a court
or other body before which the proceeding was brought that the person seeking
indemnification ("indemnitee") was not liable by reason of such disabling
conduct; or (b) in the absence of such a decision, by a reasonable
determination, based upon the review of the facts, that such person was not
liable by reason of disabling conduct, (i) by the vote of a majority of a
<PAGE>
quorum of directors who are neither "interested persons" of the Corporation (as
defined in the Investment Company Act of 1940) nor parties to the action, suit
or proceeding in question ("disinterested, non-party directors"), or (ii) by
independent legal counsel in a written opinion if a quorum of disinterested,
non-party directors so directs or if such quorum is not obtainable; or (iii)
by a majority vote of the shareholders, or (iv) by any other reasonable and
fair means not inconsistent with any of the above.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that any liability or expense arose
by reason of disabling conduct.
Section 3. DIRECTORS' STANDARDS OF CONDUCT. No person who is or was a
director shall be indemnified under this Article VI for any liabilities or
expenses incurred by reason of advice in that capacity if it is proved that (1)
the act or omission of the person was material to the cause of action
adjudicated in the proceeding, and (a) was committed in bad faith or (b) was
the result of active and deliberate dishonesty; or (2) the person actually
received an improper personal benefit in money, property, or services; or (3)
in the case of any criminal proceeding, the director had reasonable cause to
believe that the act or omission was unlawful.
Section 4. EXPENSES PRIOR TO DETERMINATION. Any liabilities or expenses
of the type described in Section 1 may be paid by the Corporation in advance of
the final disposition of the claim, action, suit or proceeding, as authorized
by the directors in a specific case, (a) upon receipt of a written undertaking
by or on behalf of the indemnitee to repay the advance, unless it shall be
<PAGE>
ultimately determined that such person is entitled to indemnification; and (b)
provided that (i) the indemnitee shall provide security for that undertaking,
or (ii) the Corporation shall be insured against losses arising by reason of
any lawful advance, or (iii) a majority of a quorum of disinterested, non-party
directors, or independent legal counsel in a written option, shall determine,
based on a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe the indemnitee ultimately will be
found entitled to indemnification.
A determination pursuant to subparagraph (c)(iii) of this Section 4 shall
not prevent the recovery from any indemnitee of any amount advanced to such
person as indemnification if such person is subsequently determined not to be
entitled to indemnification; nor shall a determination pursuant to said
paragraph prevent the payment of indemnification if such person is subsequently
found to be entitled to indemnification.
Section 5. PROVISIONS NOT EXCLUSIVE. The indemnification provided by
this Article VI shall not be deemed exclusive of any rights to which those
seeking indemnification may be entitled under any law, agreement, vote of
shareholders, or otherwise.
Section 6. GENERAL. No indemnification provided by this Article shall
be inconsistent with the Investment Company Act of 1940, the Securities Act of
1933 or the Maryland Corporations and Associations Code.
Any indemnification provided by this Article shall continue as to a
person who has ceased to be a director, officer, or employee, and shall inure
to the benefit of the heirs, executors and administrators of such person.
<PAGE>
ARTICLE VII
CAPITAL STOCK
Section 1. STOCK CERTIFICATES. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him; provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent, or registrar were
still in office at the date of issue.
Section 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. There shall be
kept at the principal executive office of the Corporation correct and complete
books and records of account of all the business and transactions of the
Corporation. There shall be made available upon request of any
stockholder, in accordance with Maryland law, a record containing the number of
shares of stock issued during a specified period not more than twelve months
before the date of the request and the consideration received by the
Corporation for each such share.
Section 3. TRANSFERS OF SHARES. Transfers of shares of stock of the
<PAGE>
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for such shares properly endorsed or accompanied by a duly executed stock
transfer power and on the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purpose including,
without limitation, the right to receive dividends or other distributions and
to vote as such owner and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person.
Section 4. RULES AND REGULATIONS. The Board may make such additional
rules and regulations, not inconsistent with these Bylaws, as it may deem
expedient concerning the issue, transfer, and registration of certificates for
shares of stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more transfer
clerks and one or more registrars and may require all certificates for shares
of stock to bear the signature or signatures of any of them.
Section 5. LOST, DESTROYED, OR MUTILATED CERTIFICATES. Upon
notification by the holder of any certificate representing shares of stock of
the Corporation of any loss, destruction, or mutilation of such certificate,
the Corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by it that the owner thereof shall allege to
<PAGE>
have been lost or destroyed or which shall have been mutilated, and the Board
may, in its discretion, require such owner or his legal representative to give
to the Corporation bond in such sum as the Board may determine to be
sufficient, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any such certificate, or issuance of a new certificate.
Anything herein to the contrary notwithstanding, the Board, in its absolute
discretion, may refuse to issue any such new certificate, except pursuant to
legal proceedings under the laws of the State of Maryland.
Section 6. FIXING OF A RECORD DATE FOR DIVIDENDS AND DISTRIBUTIONS. The
Board may fix, in advance, a date not more than sixty days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the Corporation, or for
the delivery of evidence of rights or evidences of interests arising out of any
change, conversion, or exchange of common stock or other securities, as the
record date for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights, or interests, and in such case
only the stockholders on record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights, or interests.
Section 7. REGISTERED OWNER OF SHARES. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
<PAGE>
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
Section 8. INFORMATION TO STOCKHOLDERS AND OTHERS. Any stockholder of
the Corporation or his agent may inspect and copy during usual business hours
the Corporation's Bylaws, minutes of the proceedings of its stockholders,
annual statements of its affairs, and voting trust agreements on file at its
principal office.
Section 9. INVOLUNTARY REDEMPTION OF SHARES. Subject to policies
established by the Board of Directors, the Corporation shall have the right to
involuntarily redeem shares of its common stock if at any time the value of a
stockholder's investment in the Corporation is less than $500.
ARTICLE VIII
SEAL
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "Maryland." Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE IX
FISCAL YEAR
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of December each year.
<PAGE>
ARTICLE X
DEPOSITORIES AND CUSTODIANS
Section 1. DEPOSITORIES. The funds of the Corporation shall be
deposited with such banks or other depositories as the Board of Directors of
the Corporation may from time to time determine.
Section 2. CUSTODIANS. All securities and other investments shall be
deposited in the safekeeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every
arrangement entered into with any bank or other company for the safekeeping of
the securities and investments of the Corporation shall contain provisions
complying with the Investment Company Act of 1940, as amended, and the general
rules and regulations thereunder.
ARTICLE XI
EXECUTION OF INSTRUMENTS
Section 1. CHECKS, NOTES, DRAFTS, ETC. Checks, notes, drafts,
acceptances, bills of exchange, and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as
the Board of Directors by resolution shall from time to time designate.
Section 2. SALE OR TRANSFER OF SECURITIES. Stock certificates, bonds,
or other securities at any time owned by the Corporation may be held on behalf
of the Corporation or sold, transferred, or otherwise disposed of pursuant to
authorization by the Board and, when so authorized to be held on behalf of the
Corporation or sold, transferred or otherwise disposed of, may be transferred
from the name of the Corporation by the signature of the President, a Vice
President, the Treasurer, the Assistant Treasurer, the Secretary, or the
<PAGE>
Assistant Secretary.
Section 3. LOANS. No loan or advance shall be contracted on behalf of
the Corporation, and no note, bond or other evidence of indebtedness shall be
executed or delivered in its name, except as may be authorized by the Board of
Directors. Any such authorization may be general or limited to specific loans
or advances, or notes, bonds or other evidences of indebtedness. Any officer
or agent of the Corporation so authorized may effect loans and advances on
behalf of the Corporation and in return for any such loans or advances may
execute and deliver notes, bonds or other evidences of indebtedness of the
Corporation.
Section 4. VOTING AS SECURITYHOLDER. The President and such other
person or persons as the Board of Directors may from time to time authorize,
shall each have full power and authority on behalf of the Corporation, to
attend any meeting of securityholders of any corporation in which the
Corporation may hold securities, and to act, vote (or execute proxies to vote)
and exercise in person or by proxy all other rights, powers and privileges
incident to the ownership of such securities, and to execute any instrument
expressing consent to or dissent from any action of any such corporation
without a meeting, subject to such restrictions or limitations as the Board of
Directors may from time to time impose.
Section 5. EXPENSES. Each class of shares of the Corporation shall be
charged with all the expenses, costs, charges, reserves or other liabilities
directly attributable to that class and with that proportion of the other
expenses of the Corporation, including general administrative expenses and fees
of the investment advisor, accountants and attorneys, which the total net
assets of each class of shares bears to the total net assets of all classes of
<PAGE>
shares. The foregoing charges when determined in the manner prescribed by the
Board of Directors shall be conclusive and binding for all purposes.
ARTICLE XII
INDEPENDENT PUBLIC ACCOUNTS (DELETED)
ARTICLE XIII
ANNUAL STATEMENT
The books of account of the Corporation shall be examined by an
independent firm of public accountants at the close of each annual period of
the Corporation and at such other times as may be directed by the Board. (The
firm of independent public accountants that shall sign or certify the financial
statements of the Corporation that are filed with the Securities and Exchange
Commission shall be selected annually by the Board of Directors in accordance
with the provisions of the Investment Company Act of 1940, as amended.) A
report to the stockholders based upon each such examination shall be mailed to
each stockholder of the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the same appears on
the books of the Corporation. Such annual statement shall also be available at
the annual meeting of stockholders and be placed on file at the Corporation's
principal office in the State of Maryland. Each such report shall show the
assets and liabilities of the Corporation as of the close of the annual or
quarterly period covered by the report and the securities in which the funds of
the Corporation were then invested. Such report shall also show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or quarterly
<PAGE>
period covered by the report and any other information required by the
Investment Company Act of 1940, as amended, and shall set forth such other
matters as the Board or such firm of independent public accountants shall
determine.
ARTICLE XIV
AMENDMENTS
These Bylaws or any of them may be amended, altered, or repealed at any
meeting of the stockholders at which a quorum is present or represented,
provided that notice of the proposed amendment, alteration, or repeal be
contained in the notice of such meeting. These Bylaws, or any of them, may
also be amended, altered, or repealed by the affirmative vote of a majority of
the Board of Directors at any regular or special meeting of the Board of
Directors. A certified copy of these Bylaws, as they may be amended from time
to time, shall be kept at the principal office of the Corporation.
<PAGE>
AMENDMENT TO THE BY-LAWS OF
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
Article II, Section 7 of the By-Laws is amended by adding the following
provision to the second paragraph:
"A proxy with respect to shares held in the name of two or more persons
shall be valid if executed by or on behalf of any one of them unless at
or prior to exercise of the proxy the Corporation receives a specific
written notice to the contrary from any one of them. A proxy purporting to
be executed by or on behalf of a stockholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. The placing of a stockholder's
name on a proxy pursuant to telephonic or electronically transmitted
instructions obtained pursuant to procedures reasonably designed to verify
that such instructions have been authorized by such shareholder shall
constitute execution of such proxy by or on behalf of such stockholder."
Authorized by vote of the Board of Directors on January 29, 1996
<PAGE>
EXHIBIT 5.2
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of _________, 1996, by and
between Connecticut Mutual Investment Accounts, Inc. on behalf of Connecticut
Mutual Total Return Account (the "Fund") and OppenheimerFunds, Inc. ("OFI").
WHEREAS, the Fund is a series of Connecticut Mutual Investment Accounts,
Inc. (the "Company"), an open-end, diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OFI is a registered investment adviser;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISION.
The Fund hereby employs OFI and OFI hereby undertakes to act as the
investment adviser of the Fund and to perform for the Fund such other
duties and functions as are hereinafter set forth. OFI shall, in all
matters, give to the Fund and its Board of Directors the benefit of its
best judgment, effort, advice and recommendations and shall, at all times
conform to, and use its best efforts to enable the Fund to conform to (i)
the provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state or federal law;
(iii) the provisions of the Company's Articles of Incorporation and By-Laws
as amended from time to time; (iv) policies and determinations of the Board
of Directors of the Company; (v) the fundamental policies and investment
restrictions of the Fund as reflected its registration statement under the
Investment Company Act or as such policies may, from time to time, be
amended by the Fund's shareholders; and (vi) the Prospectus and Statement
of Additional Information of the Fund in effect from time to time. The
appropriate officers and employees of OFI shall be available upon
reasonable notice for consultation with any of the Directors and officers
of the Company with respect to any matters dealing with the business and
affairs of the Fund including the valuation of any of the Fund's portfolio
securities which are either not registered for public sale or not being
traded on any securities market.
2. INVESTMENT MANAGEMENT.
(a) OFI shall, subject to the direction and control by the Company's Board
of Directors, (i) regularly provide, alone or in consultation with any
subadvisor or subadvisors appointed pursuant to this Agreement and
subject to the provisions of any investment subadvisory agreement
respecting the responsibilities of such subadvisor or subadvisors,
investment advice and recommendations to the Fund with respect to its
investments, investment policies and the purchase and sale of
securities; (ii) supervise continuously the investment program of the
Fund and the composition of its portfolio and determine what
securities shall be purchased or sold by the Fund; and (iii) arrange,
subject to the provisions of paragraph "7" hereof, for the purchase of
securities and other investments for the Fund and the sale of
securities and other investments held in the portfolio of the Fund.
<PAGE>
(b) Provided that the Fund shall not be required to pay any compensation
other than as provided by the terms of this Agreement and subject to
the provisions of paragraph "7" hereof, OFI may obtain investment
information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its investment
management services.
(c) Provided that nothing herein shall be deemed to protect OFI from
willful misfeasance, bad faith or gross negligence in the performance
of its duties, or reckless disregard of its obligations and duties
under the Agreement, OFI shall not be liable for any loss sustained by
reason of good faith errors or omissions in connection with any
matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OFI or any officer thereof
from acting as investment adviser for any other person, firm or
corporation and shall not in any way limit or restrict OFI or any of
its directors, officers or employees from buying, selling or trading
any securities for its own account or for the account of others for
whom it or they may be acting, provided that such activities will not
adversely affect or otherwise impair the performance by OFI of its
duties and obligations under this Agreement and under the Investment
Advisers Act of 1940.
3. OTHER DUTIES OF OFI.
OFI shall, at its own expense, employ, and supervise the activities of, all
administrative and clerical personnel or other firms, agents or
contractors, as shall be required to provide effective corporate
administration for the Fund, including the compilation and maintenance of
such records with respect to its operations as may reasonably be required
(other than those the Fund's custodian or transfer agent is contractually
obligated to compile and maintain); the preparation and filing of such
reports with respect thereto as shall be required by the Commission;
composition of periodic reports with respect to its operations for the
shareholders of the Fund; composition of proxy materials for meetings of
the Fund's shareholders and the composition of such registration statements
as may be required by federal securities laws for continuous public sale of
shares of the Fund. OFI shall, at its own cost and expense, also provide
the Fund with adequate office space, facilities and equipment.
4. ALLOCATION OF EXPENSES.
All other costs and expenses not expressly assumed by OFI under this
Agreement, or to be paid by the principal distributor of the shares of the
Fund, shall be paid by the Fund, including, but not limited to: (i)
interest and taxes; (ii) brokerage commissions; (iii) premiums for fidelity
and other insurance coverage requisite to its operations; (iv) the fees and
expenses of its Directors; (v) legal and audit expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the redemption
of its shares; (viii) expenses incident to the issuance of its shares
against payment therefor by or on behalf of the subscribers thereto; (ix)
fees and expenses, other than as hereinabove provided, incident to the
registration under federal securities laws of shares of the Fund for public
sale; (x) expenses of printing and mailing reports, notices and proxy
materials to shareholders of the Fund; (xi) except as noted above, all
other expenses incidental to holding meetings of the Fund's shareholders;
and (xii) such extraordinary non-recurring expenses as may arise, including
litigation, affecting the Fund and any obligation which
<PAGE>
the Fund may have to indemnify its officers and Directors with respect
thereto. Any officers or employees of OFI or any entity controlling,
controlled by or under common control with OFI, who may also serve as
officers, Directors or employees of the Fund shall not receive any
compensation from the Fund for their services.
5. COMPENSATION OF OFI.
The Fund agrees to pay OFI and OFI agrees to accept as full compensation
for the performance of all functions and duties on its part to be performed
pursuant to the provisions hereof, a fee computed on the aggregate net
assets value of the Fund as of the close of each business day and payable
monthly at the annual rates set for the in Appendix A.
6. USE OF NAME "OPPENHEIMER."
OFI hereby grants to the Fund a royalty-free, non-exclusive license to use
the name "Oppenheimer" in the name of the Fund for the duration of this
Agreement and any extensions or renewals thereof. To the extent necessary
to protect OFI's rights to the name "Oppenheimer" under applicable law,
such license shall allow OFI to inspect, and subject to control by the
Fund's Board of Directors, control the name and quality of services offered
by the Fund under such name. Such license may, upon termination of this
Agreement, be terminated by OFI, in which event the Fund shall promptly
take whatever action may be necessary to change its name and discontinue
any further use of the name "Oppenheimer" in the name of the Fund or
otherwise. The name "Oppenheimer" may be used or licensed by OFI in
connection with any of its activities, or licensed by OFI to any other
party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) OFI is authorized, in arranging the Fund's portfolio transactions, to
employ or deal with such members of securities or commodities
exchanges, brokers or dealers including "affiliated" broker dealers
(as that term is defined in the Investment Company Act) (hereinafter
"broker-dealers"), as may, in its best judgment, implement the policy
of the Fund to obtain, at reasonable expense, the "best execution"
(prompt and reliable execution at the most favorable security price
obtainable) of the Fund's portfolio transactions as well as to obtain,
consistent with the provisions of subparagraph "(c)" of this paragraph
"7," the benefit of such investment information or research as may be
of significant assistance to the performance by OFI of its investment
management functions.
(b) OFI shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The
abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by OFI on the basis of all
relevant factors and considerations including, insofar as feasible,
the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein
for its own account; the importance to the Fund of speed, efficiency
or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters
<PAGE>
relevant to the selection of a broker-dealer for particular and
related transactions of the Fund.
(c) OFI shall have discretion, in the interests of the Fund, to allocate
brokerage on the Funds portfolio transactions to broker-dealers (other
than affiliated broker-dealers) qualified to obtain best execution of
such transactions who provide brokerage and/or research services (as
such services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) for the Fund and/or other accounts for which OFI
and its affiliates exercise "investment discretion" (as that term is
defined in Section 3(a)(35) of the Securities Exchange Act of 1934)
and to cause the Fund to pay such broker-dealers a commission for
effecting a portfolio transaction for the Fund that is in excess of
the amount of commission another broker-dealer adequately qualified to
effect such transaction would have charged for effecting that
transaction, if OFI determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research
services provided by such broker-dealer, viewed in terms of either
that particular transaction or the overall responsibilities of OFI and
its investment advisory affiliates with respect to the accounts as to
which they exercise investment discretion. In reaching such
determination, OFI will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services
provided or being provided by such broker-dealer. In demonstrating
that such determinations were made in good faith, OFI shall be
prepared to show that all commissions were allocated for the purposes
contemplated by this Agreement and that the total commissions paid by
the Fund over a representative period selected by the Fund's Directors
were reasonable in relation to the benefits to the Fund.
(d) OFI shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker-dealer on
the basis of its purported or "posted" commission rate but will, to
the best of its ability, endeavor to be aware of the current level of
the charges of eligible broker-dealers and to minimize the expense
incurred by the Fund for effecting its portfolio transactions to the
extent consistent with the interests and policies of the Fund as
established by the determinations of the Board of Directors and the
provisions of this paragraph "7."
(e) The Fund recognizes that an affiliated broker-dealer (i) may act as
one of the Fund's regular brokers so long as it is lawful for it so to
act; (ii) may be a major recipient of brokerage commissions paid by
the Fund; and (iii) may effect portfolio transactions for the Fund
only if the commissions, fees or other remuneration received or to be
received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
(f) Subject to the foregoing provisions of this paragraph "7," OFI may
also consider sales of Fund shares and shares of the other investment
companies managed by OFI or its affiliates as a factor in the
selection of broker-dealers for the Fund's portfolio transactions.
<PAGE>
8. DURATION.
This Agreement will take effect on the date first set forth above and will
continue in effect until December 31, 1997, and thereafter, from year to
year, so long as such continuance shall be approved at least annually in
the manner contemplated by Section 15 of the Investment Company Act.
9. TERMINATION.
This Agreement may be terminated (i) by OFI at any time without penalty
upon giving the Fund sixty days' written notice (which notice may be waived
by the Fund); or (ii) by the Fund at any time without penalty upon sixty
days' written notice to OFI (which notice may be waived by OFI) provided
that such termination by the Fund shall be directed or approved by the vote
of a majority of all of the Directors of the Fund then in office or by the
vote of the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding voting securities of the Fund.
10. ASSIGNMENT OR AMENDMENT.
This Agreement may not be amended without the affirmative vote or written
consent of the holders of the "majority" of the outstanding voting
securities of the Fund and shall automatically and immediately terminate in
the event of its "assignment," as defined in the Investment Company Act.
11. DISCLAIMER OF SHAREHOLDER LIABILITY.
OFI understands that the obligations of the Fund under this Agreement are
not binding upon any Director or shareholder of the Fund personally, but
bind only the Fund and the Fund's property. OFI represents that it has
notice of the provisions of the Company's Articles of Incorporation
disclaiming shareholder liability for acts or obligations of the Fund.
12. DEFINITIONS.
The terms and provisions of this Agreement shall be interpreted and defined
in a manner consistent with the provisions and definitions of the
Investment Company Act.
CONNECTICUT MUTUAL INVESTMENT
ACCOUNTS, INC.
on behalf of Connecticut Mutual
Total Return Account
By:
--------------------------------
OppenheimerFunds, Inc.
By:
--------------------------------
<PAGE>
APPENDIX A
The Fund agrees to pay OFI and OFI agrees to accept as full compensation
for the performance of all functions and duties on its part to be performed
pursuant to the provisions hereof, a fee computed on the aggregate net assets
of the Fund as of the close of each business day payable monthly at the
following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $300,000,000 0.625%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
<PAGE>
SCHEDULE OF OMITTED INVESTMENT ADVISORY AGREEMENTS
Due to the substantial similarity of the investment
agreements among OppenheimerFunds, Inc. ("OFI") and the
Registrant, on behalf of the respective series of the Registrant,
the following form of investment advisory agreement on behalf of
Connecticut Mutual Total Return Account and this schedule of
omitted documents is filed in accordance with the requirements of
Rule 8b-31 under the Investment Company Act of 1940.
1. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Connecticut Mutual Liquid Account.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $200,000,000 0.50%
Next $100,000,000 0.45%
Amount over $300,000,000 0.40%
2. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Connecticut Mutual Income Account.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $300,000,000 0.625%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
3. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Connecticut Mutual Government
Securities Account.
<PAGE>
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $300,000,000 0.625%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
4. Investment Advisory Agreement among OFI and the
Registrant, on behalf of Connecticut Mutual Growth Account.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $300,000,000 0.625%
Next $100,000,000 0.500%
Amount over $400,000,000 0.450%
5. Investment Advisory Agreement among OFI and the
Registrant, on behalf of CMIA LifeSpan Balanced Account.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $250,000,000 0.85%
Amount over $250,000,000 0.75%
-2-
<PAGE>
6. Investment Advisory Agreement among OFI and the
Registrant, on behalf of CMIA LifeSpan Capital Appreciation
Account.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $250,000,000 0.85%
Amount over $250,000,000 0.75%
7. Investment Advisory Agreement among OFI and the
Registrant, on behalf of CMIA LifeSpan Diversified Income Account.
Advisory Fee (Appendix A):
The Fund agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions
and duties on its part to be performed pursuant to the
provisions hereof, a fee computed on the aggregate net
assets of the Fund as of the close of each business day
payable monthly at the following annual rates:
Net Asset Value Annual Rate
--------------- -----------
First $250,000,000 0.75%
Amount over $250,000,000 0.65%
-3-
<PAGE>
Exhibit 5.3
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
FORM OF
INVESTMENT ADVISORY AGREEMENT FOR SUBADVISER
AGREEMENT made as of the ____ day of _______________, 1996, by and among
OppenheimerFunds, Inc. (the "Investment Adviser") and Pilgrim Baxter &
Associates, Ltd. (the "Subadviser").
Connecticut Mutual Investment Accounts, Inc., a Maryland corporation (the
"Company"), is an open-end, management investment company, registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The CMIA LifeSpan
Balanced Account (the "Account") is a series of the Company. The Investment
Adviser and the Subadviser are investment advisers registered under the
Investment Advisers Act of 1940 (the "Advisers Act").
Pursuant to authority granted the Investment Adviser by the Company's Board
of Directors and pursuant to the provisions of the Investment Advisory Agreement
between the Investment Adviser and Company, on behalf of the Account, the
Investment Adviser has selected the Subadviser to act as an investment
subadviser of the Account and to provide certain other services, as more fully
set forth below, and the Subadviser is willing to act as such sub-investment
adviser and to perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Investment Adviser and the Subadviser agree as
follows:
1. The Subadviser will regularly provide the Account with advice
concerning the investment management of the Small Capitalization U.S. equity
portfolio of the Account (the "Sub-Account"), designated by the Investment
Adviser. Such advice shall be consistent with the investment objectives and
policies of the Account as set forth in the Account's Prospectus and Statement
of Additional Information, and any investment guidelines or other instructions
received in writing from the Investment Adviser. The Subadviser will determine
what securities shall be purchased for the Sub-Account, and what securities
shall be held or sold by the Sub-Account, subject always to the provisions of
Section 9 hereof.
The Investment Adviser shall oversee the management of the Sub-Account by
the Subadviser. The Investment Adviser shall manage directly, or by engaging
other subadvisers, and the Subadviser shall not be responsible for the
management of, any portion of the Account not designated as part of the
Sub-Account. The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Account, except as
otherwise provided herein, as required by the Advisers Act as may be necessary
for the Subadviser to supply to the Investment Adviser, the Company or the
Company's Board of Directors the information required to be supplied under this
Agreement. Any records required to be maintained shall be the property of the
Company and shall be surrendered promptly to the Company upon request.
In the performance of the Subadviser's duties hereunder, the Subadviser is
and shall be an independent contractor and unless otherwise expressly provided
herein or otherwise authorized in writing, shall have no authority to act for or
represent the Company, the Account or the Investment Adviser in any way or
otherwise be deemed to be an agent of the Company, the Account or the Investment
Adviser. The Subadviser will make its officers and employees available to meet
with the Company's officers and Board of Directors at least quarterly on due
<PAGE>
notice to review the investments and investment program of the Account in the
light of current and prospective economic and market conditions.
2. The Subadviser will bear its own costs of providing services hereunder.
Other than as herein specifically indicated, the Subadviser shall not be
responsible for the Account's expenses, including brokerage and other expenses
incurred in placing orders for the purchase and sale of securities.
Specifically, the Subadviser will not be responsible for expenses of the Account
including, but not limited to, the following: legal expenses; auditing and
accounting expenses; expenses of maintenance of the Account's books and records
relating to the Account, including computation of the Account's daily net asset
value per share and dividends; interest, taxes, governmental fees and membership
dues; fees of custodians, transfer agents, registrars or other agents; expenses
of preparing share certificates; expenses relating to the redemption or
repurchase of the Account's shares; expenses of registering and qualifying
Account shares for sale under applicable federal and state law; expenses of
preparing, setting in print, printing and distributing prospectuses, reports,
notices and dividends to Account shareholders; cost of stationery; costs of
shareholders and other meetings of the Account; traveling expenses of officers,
Directors and employees of the Company or Account, if any; fees of the Company's
Directors and salaries of any officers or employees of the Company or Account;
and the Account's pro rata portion of premiums on any fidelity bond and other
insurance covering the Company, the Account and their officers and Directors.
The Account shall reimburse the Subadviser for any such expenses or other
expenses of the Account, as may be reasonably incurred by such Subadviser on the
Account's behalf. The Subadviser shall keep and supply to the Account and the
Investment Adviser adequate records of all such expenses.
3. For all investment management services to be rendered hereunder, the
Investment Adviser will pay the Subadviser an annual fee, payable quarterly, as
described in Schedule A hereto. For any period less than a full fiscal quarter
during which this Agreement is in effect, the fee shall be prorated according to
the proportion which such period bears to a full fiscal quarter. The Account
shall have no responsibility for any fee payable to the Subadviser.
In the event that the advisory fee payable by the Account to the Investment
Adviser shall be reduced as required by the securities laws or regulations of
any jurisdiction in which the Account's shares are offered for sale, the amount
payable by the Investment Adviser to the Subadviser shall be likewise reduced by
a proportionate amount.
4. In connection with purchases or sales of securities for the
Account, neither the Subadviser nor any of its partners, directors, officers
or employees will act as a principal or agent or receive directly or
indirectly any compensation in connection with the purchase or sale of
investment securities by the Sub-Account, other than as provided in this
Agreement. The Subadviser, or its agent, shall arrange for the placing of all
orders for the purchase and sale of securities for the Sub-Account with
brokers or dealers selected by the Subadviser, provided that the Subadviser
shall not be responsible for payment of brokerage commissions. In the
selection of such brokers or dealers and the placing of such orders, the
Subadviser is directed at all times to seek for the Account the best
execution available. Neither the Subadviser nor any affiliate of the
Subadviser will act as principal or receive directly or indirectly any
compensation in connection with the purchase or sale of investment securities
by the Account, other than compensation provided for in this Agreement or in
the Investment Advisory Agreement of the Account and such brokerage
commissions as are permitted by the 1940 Act. If and to the extent authorized
to act as
<PAGE>
broker in the relevant jurisdiction, the Subadviser or any of its affiliates may
act as broker for the Account in the purchase and sale of securities. The
Subadviser agrees that all transactions effected through the Subadviser or
brokers affiliated with the Subadviser shall be effected in compliance with
Section 17(e) of the 1940 Act and written procedures established from time to
time by the Board of Directors of the Company pursuant to Rule 17e-1 under the
1940 Act, as amended, copies of which shall be provided to the Subadviser by the
Investment Adviser.
5. It is also understood that it is desirable for the Account that the
Subadviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at higher commissions to the Account than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities for the Account with such certain
brokers, subject to review by the Company's Board of Directors from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to the Subadviser in
connection with its services to other clients. If any occasion should arise in
which the Subadviser gives any advice to its clients concerning the shares of
the Account, the Subadviser will act solely as investment counsel for such
clients and not in any way on behalf of the Account. The Subadviser's services
to the Account pursuant to this Agreement are not to be deemed to be exclusive
and it is understood that the Subadviser may render investment advice,
management and other services to others.
Provided the investment objectives of the Account are adhered to, and such
aggregation is in the best interests of the Account, the Subadviser may
aggregate sales and purchase orders of securities held for the Account with
similar orders being made simultaneously for other accounts managed by the
Subadviser, if in the Subadviser's reasonable judgment, such aggregation is
equitable and consistent with the Subadviser's fiduciary obligation to the
Account and shall result in an overall economic benefit to the Account, taking
into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. In accounting for such aggregated order price,
commission and other expenses shall be averaged on a per bond or share basis
daily.
The Subadviser will advise the Account's custodian and the Investment
Adviser on a prompt basis of each purchase and sale of a portfolio security,
specifying the name of the issuer, the description and amount or number of
shares of the security purchased, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required. From time to
time as the Board of Directors of the Company or the Investment Adviser may
reasonably request, the Subadviser will furnish to the Company's officers and to
each of its Directors, at the Subadviser's expense, reports on portfolio
transactions and reports on issues of securities held in the portfolio, all in
such detail as the Account or the Investment Adviser may reasonably request.
6. In the absence of willful misfeasance, bad faith, negligence, or
reckless disregard of the performance of the duties of the Subadviser to the
Account, the Subadviser shall not be subject to liabilities to the Account, the
Investment Adviser, the Company, or to any shareholder of the Account for any
error of judgment or mistake of law or for any other action or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security, or
otherwise.
Notwithstanding the above, the Subadviser will indemnify and hold harmless
the Investment Adviser from, against, for and in respect to losses, damages,
costs and expenses
<PAGE>
incurred by the Investment Adviser, including attorneys' fees reasonably
incurred, in the event of the Subadviser's willful misfeasance, bad faith or
negligence in the performance of its duties or obligations hereunder or by
reason of its reckless disregard of such duties or obligations; provided,
however, that the Investment Adviser shall not be so indemnified for such
losses, damages, costs and expenses, including such attorneys' fees, to the
extent they result from the Investment Adviser's willful misfeasance, bad faith
or negligence. The Investment Adviser shall indemnify and hold harmless the
Subadviser to the same extent and subject to the same limitations as the
Subadviser shall indemnify the Investment Adviser pursuant to the previous
sentence.
7. This Agreement shall remain in force until December 31, 1997, and from
year to year thereafter, but only so long as such continuance, and the
continuance of the Investment Adviser as investment adviser of the Account, is
specifically approved at least annually by the vote of a majority of the
Directors of the Company who are not interested persons of the Subadviser, the
Investment Adviser or the Account, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Directors or of
a majority of the outstanding voting securities of the Account. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules, regulations and interpretations thereunder. This Agreement may be
terminated at any time without the payment of any penalty, (a) by the Company,
by the Board of Directors, or by vote of a majority of the outstanding voting
securities of the Account, upon 60 days' written notice to the Investment
Adviser and Subadviser, (b) by the Investment Adviser, upon 60 days' written
notice to the Account and the Subadviser, or (c) by the Subadviser, upon 90
days' written notice to the Account and Investment Adviser. This Agreement shall
automatically terminate in the event of its assignment. In interpreting the
provisions of this Agreement, the definitions contained in Section 2(a) of the
1940 Act (particularly the definitions of "interested person," "assignment" and
"majority of the outstanding voting securities"), as from time to time amended,
shall be applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
8. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of the holders of a majority of the outstanding voting securities of the
Account and by the Board of Directors, including a majority of the Directors who
are not interested persons of the Investment Adviser, the Subadviser or the
Account, cast in person at a meeting called for the purpose of voting on such
approval.
It shall be the responsibility of the Subadviser to furnish to the Board
of Directors of the Company such information as may reasonably be necessary
in order for such Directors to evaluate this Agreement or any proposed
amendments thereto for the purposes of casting a vote pursuant to paragraphs
7 or 8 hereof.
9. The Subadviser will conform its conduct in accordance with and will
ensure that the Sub-Account conforms with the Company's Articles of
Incorporation and By-laws, each as amended from time to time, and the 1940 Act,
as amended, other applicable laws, and to the investment objectives, policies
and restrictions of the Account as each of the same shall be from time to time
in effect as set forth in the Account's Prospectus and Statement of Additional
Information, or any investment guidelines or other instructions received in
writing from the Investment Adviser, and subject, further, to such policies and
instructions as the Board of
<PAGE>
Directors or the Investment Adviser may from time to time establish and deliver
to the Subadviser.
In addition, the Subadviser, taking into account only income and gains
realized with respect to the Sub-Account, will cause the Sub-Account to comply
with the requirements of: (a) Section 851(b)(2) of the Internal Revenue Code
(the "Code") regarding derivation of income from specified investment
activities; (b) Section 851(b)(3) of the Code limiting gains from the
disposition of securities and certain other investments held less than three
months, in each case as if the Sub-Account were a "regulated investment company"
as defined in Section 851(a) of the Code; and the regulations pertaining
thereto. The Subadviser shall not without the prior express written consent of
the Investment Adviser: (a) invest Sub-Account assets having a value exceeding
five percent of the Account's total (gross) assets in securities of one issuer;
or (b) cause the Sub-Account to acquire more than ten percent of the outstanding
voting securities of any one issuer; or (c) invest Sub-Account assets in
investments that are not cash, cash items (including receivables), Government
securities, securities of other regulated investment companies, or other
securities within the meaning of Section 851(b)(4) of the Code. For purposes of
clauses (a) and (b) of the foregoing sentence the term "securities" shall
exclude "Government securities" and "securities of other regulated investment
companies" as each such term is used in Section 851(b)(4) of the Code.
10. The Subadviser represents that it has reviewed the Registration
Statement of the Company as filed with the Securities and Exchange Commission
and represents and warrants that with respect to disclosure about the Subadviser
or information relating directly or indirectly to the Subadviser, such
Registration Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. The Subadviser further represents and warrants that it
is an investment adviser registered under the Advisers Act.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Any notice given to the Subadviser by the Investment Adviser
pursuant to the terms of this Agreement shall be deemed to have been given if
provided in writing (including by telecopy or similar hard copy reproduction)
and delivered or mailed, postpaid, to: Pilgrim Baxter & Associates, Ltd.,
1255 Drummers Lane, Suite 300, Wayne, PS 29087-1549, Attn: Mr. Brian
Bereznak. Any notice given to the Investment Adviser by the Subadviser,
pursuant to the terms of this Agreement shall be deemed to have been given if
provided in writing (including by telecopy or similar hard copy reproduction)
and delivered to OppenheimerFunds, Inc., Two World Trade Center, New York, NY
10048, attention: General Counsel.
14. It is understood and expressly stipulated that the Subadviser must
look solely to the property of the Account for the enforcement of any claims
against the Account and shall not look to or have recourse to the assets of the
Company generally or any other series of the Company.
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above, and effective as of
_________________, 1996.
OppenheimerFunds, Inc.
By: ________________________________
Its: ________________________________
PILGRIM BAXTER & ASSOCIATES, LTD.
By: ________________________________
Its: ________________________________
<PAGE>
SCHEDULE OF OMITTED INVESTMENT SUBADVISORY AGREEMENT
Due to the substantial similarity of the investment
subadvisory agreements among OppenheimerFunds, Inc. ("OFI") and
Pilgrim, Baxter & Associates, Ltd. ("Pilgrim") for the respective
series of the Registrant, the following form of investment
subadvisory agreement for CMIA LifeSpan Balanced Account and this
schedule of omitted documents is filed in accordance with the
requirements of Rule 8b-31 under the Investment Company Act of
1940.
1. Investment Subadvisory Agreement among OFI and
Pilgrim for CMIA LifeSpan Capital Appreciation Account.
<PAGE>
Exhibit 5.4
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
FORM OF
SUBADVISORY AGREEMENT
AGREEMENT made as of the _____ day of _______________, 1996 by and among
OppenheimerFunds, Inc., a Colorado corporation, (the "Investment Adviser"),
and BEA Associates, a New York General Partnership (the "Subadviser").
Connecticut Mutual Investment Accounts, Inc., a Maryland corporation (the
"Company"), is an open-end, management investment company, registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The CMIA LifeSpan
Balanced Account (the "Account") is a series of the Company. The Investment
Adviser and the Subadviser are investment advisers registered under the
Investment Advisers Act of 1940 (the "Advisers Act").
Pursuant to authority granted the investment Adviser by the Company's
Board of Directors and pursuant to the provisions of the Investment Advisory
Agreement dated ______________, 1996, between the Investment Adviser and
Company, on behalf of the Account, the Investment Adviser has selected the
Subadviser to act as an investment subadviser of the Account and to provide
certain other services, as more fully set forth below, and the Subadviser is
willing to act as such investment subadviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Investment
Adviser and the Company, on behalf of the Account agree with the Subadviser as
follows:
1. The Subadviser will regularly provide the Account with advice
concerning the investment management of the High Yield Fixed Income portion of
the Account (the "Sub-Account"), designated by the Investment Adviser. Such
advice shall be consistent with the investment objectives and policies of the
Account as set forth in the Account's Prospectus and Statement of Additional
Information, and any investment guidelines or other instructions received in
writing from the Investment Adviser. The Subadviser will determine what
securities shall be purchased for the Sub-Account, and what securities shall be
held or sold by the Sub-Account, subject always to the provisions of Section 9
hereof.
The Investment Adviser shall oversee the management of the Sub-Account by
the Subadviser. The Investment Adviser shall manage directly, or by engaging
other subadvisers, and the Subadviser shall not be responsible for the
management of, any portion of the Account not designated as part of the
Sub-Account. The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Account, except as
otherwise provided herein, as required by the Advisers Act as may be necessary
for the Subadviser to supply to the Investment Adviser, the Company or the
Company's Board of Directors the information required to be supplied under this
Agreement. Any records required to be maintained shall be the property of the
Company and shall be surrendered promptly to the Company upon request.
In the performance of the Subadviser's duties hereunder, the Subadviser is
and shall be an independent contractor and unless otherwise expressly provided
herein or otherwise authorized in writing, shall have no authority to act for or
represent the Company, Account or the Investment Adviser in any way or otherwise
be deemed to be an agent of the Company, Account or the Investment Adviser. The
Subadviser will make its officers and employees available to meet with the
Company's officers and Board of Directors at least quarterly on due
<PAGE>
notice to review the investments and investment program of the Sub-Account in
the light of current and prospective economic and market conditions.
2. The Subadviser will bear its own costs of providing services
hereunder. Other than as herein specifically indicated, the Subadviser shall
not be responsible for the Account's expenses, including brokerage and other
expenses incurred in placing orders for the purchase and sale of securities.
Specifically, the Subadviser will not be responsible for expenses of the Account
including, but not limited to, the following: legal expenses; auditing and
accounting expenses; expenses of maintenance of the Account's books and records
relating to the Account, including computation of the Account's daily net asset
value per share and dividends; interest, taxes, governmental fees and membership
dues; fees of custodians, transfer agents, registrars or other agents; expenses
of preparing share certificates; expenses relating to the redemption or
repurchase of the Account's shares; expenses of registering and qualifying
Account shares for sale under applicable federal and state law; expenses of
preparing, setting in print, printing and distributing prospectuses, reports,
notices and dividends to Account shareholders; cost of stationery; costs of
shareholders and other meetings of the Account; traveling expenses of officers,
Directors and employees of the Company or Account, if any; fees of the Company's
Directors and salaries of any officers or employees of the Company or Account;
and the Account's pro rata portion of premiums on any fidelity bond and other
insurance covering the Company, the Account and their officers and Directors.
The Account shall reimburse the Subadviser for any such expenses or other
expenses of the Account, as may be reasonably incurred by such Subadviser on the
Account's behalf. The Subadviser shall keep and supply to the Account and the
Investment Adviser adequate records of all such expenses.
3. For all investment management services to be rendered hereunder, the
Investment Adviser will pay the Subadviser an annual fee, payable quarterly, as
described in SCHEDULE A hereto. For any period less than a full fiscal quarter
during which this Agreement is in effect, the fee shall be prorated according to
the proportion which such period bears to a full fiscal quarter. The Account
shall have no responsibility for any fee payable to the Subadviser.
In the event that the advisory fee payable by the Account to the Investment
Adviser shall be reduced as required by the securities laws or regulations of
any jurisdiction in which the Account's shares are offered for sale, the amount
payable by the Adviser to the Subadviser shall be likewise reduced by a
proportionate amount.
4. In connection with the purchases or sales of portfolio securities on
behalf of the Account, neither the Subadviser nor any of its partners,
directors, officers or employees will act as a principal or agent or receive
directly or indirectly any compensation in connection with the purchase or sale
of investment securities by the Account, other than as provided in this
Agreement. The Subadviser, or its agent, shall arrange for the placing of all
orders for the purchase and sale of securities for the Sub-Account with brokers
or dealers selected by the Subadviser, provided that the Subadviser shall not be
responsible for payment of brokerage commissions. In the selection of such
brokers or dealers and the placing of such orders, the Subadviser is directed at
all times to seek for the Account the best execution available. Neither the
Subadviser nor any affiliate of the Subadviser will act as principal or receive
directly or indirectly any compensation in connection with the purchase or sale
of investment securities by the Sub-Account, other than compensation provided
for in this Agreement or in the Investment
-2-
<PAGE>
Advisory Agreement of the Account and such brokerage commissions as are
permitted by the 1940 Act. If and to the extent authorized to act as broker in
the relevant jurisdiction, the Subadviser or any of its affiliates may act as
broker for the Sub-Account in the purchase and sale of securities. The
Subadviser agrees that all transactions effected through the Subadviser or
brokers affiliated with the Subadviser shall be effected in compliance with
Section 17(e) of the 1940 Act and written procedures established from time to
time by the Board of Directors of the Company pursuant to Rule 17e-1 under the
1940 Act, as amended, copies of which shall be provided to the Subadviser by the
Investment Adviser.
5. It is also understood that it is desirable for the Account that the
Subadviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at higher commissions to the Account than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Subadviser is authorized to
place orders for the purchase and sale of securities for the Sub-Account with
such certain brokers, subject to review by the Company's Board of Directors from
time to time with respect to the extent and continuation of this practice. It
is understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients. If any occasion
should arise in which the Subadviser gives any advice to its clients concerning
the shares of the Sub-Account, the Subadviser will act solely as investment
counsel for such clients and not in any way on behalf of the Account. The
Subadviser's services to the Account pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that the Subadviser may render
investment advice, management and other services to others.
Provided the investment objectives of the Account are adhered to, and such
aggregation is in the best interests of the Account, the Subadviser may
aggregate sales and purchase orders of securities held for the Sub-Account with
similar orders being made simultaneously for other funds managed by the
Subadviser, if in the Subadviser's reasonable judgment, such aggregation is
equitable and consistent with the Subadviser's fiduciary obligation to the
Account and shall result in an overall economic benefit to the Account, taking
into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. In accounting for such aggregated order price,
commission and other expenses shall be averaged on a per bond or share basis
daily.
The Subadviser will advise the Account's custodian and the Investment
Adviser on a prompt basis of each purchase and sale of a portfolio security,
specifying the name of the issuer, the description and amount or number of
shares of the security purchases, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required. From time to
time as the Board of Directors of the Company or the Investment Adviser may
reasonably request, the Subadviser will furnish the Company's officers and to
each of its Directors, at the Subadviser's expense, reports on portfolio
transactions and reports on issues of securities held in the Sub-Account, all in
such detail as the Account or the Investment Adviser may reasonably request.
Subject to any other written instructions of the Investment Adviser, the
Subadviser is hereby appointed the Investment Adviser's agent and
attorney-in-fact on behalf of the Sub-Account in its discretion to vote, tender
or convert any securities in the Sub-Account; to execute proxies, waivers,
consents, account documentation, agreements, contracts and other instruments
with respect to such securities and the assets of the Sub-Account; to endorse,
transfer or deliver
-3-
<PAGE>
such securities and to participate in or consent to any class action, plan of
reorganization, merger, combination, consolidation, liquidation or similar plan
with reference to such securities; and the Sub-Adviser shall not incur any
liability to the Investment Adviser or the Sub-Account by reason of any exercise
of, or failure to exercise, any such discretion in the absence of wilful
misfeasance, bad faith, or gross negligence.
6. The Subadviser will not be liable for any loss sustained by reason of
the adoption of any investment policy or the purchase, sale, or retention of
any security on the recommendation of the Subadviser whether or not such
recommendation shall have been based upon its own investigation and research or
upon investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been made and such other
individual, firm, or corporation shall have been selected, with due care and in
good faith; but nothing herein contained will be construed to protect the
Subadviser against any liability to the Investment Adviser, the Company, the
Account or its shareholders by reason of: (a) the Subadviser negligently
causing the Sub-Account to be in violation of any federal or state law, rule or
regulation or any investment policy or restriction set forth in the Account's
prospectus or Statement of Additional Information or any written guidelines or
instruction provided in writing by the Company's Board of Directors or the
Investment Adviser, (b) the Subadviser negligently causing the Sub-Account to
fail to satisfy the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") due to the Subadviser's failure to comply with
the requirements set forth in the second paragraph of Section 9; or (c) the
Subadviser's willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement; provided that, with respect to (a)
and (b) above, the Subadviser shall be deemed not to have been negligent if it
acts in reliance upon written reports provided by the Investment Adviser, the
Company, the Account, or any of their respective authorized agents.
The Subadviser will indemnify the Investment Adviser to the fullest extent
permitted by law against any and all loss, damage, judgment, fines, amounts paid
in settlement and attorneys fees incurred by the Investment Adviser to the
extent resulting, in whole or in part, from any of the Subadviser's acts or
omissions specified in (a), (b) or (c) above or otherwise from the Subadviser's
willful misfeasance, bad faith, or gross negligence, provided, however, that
nothing herein contained will provide indemnity to the Investment Adviser for
liability resulting from its own willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of such
duties.
7. This Agreement shall remain in force until ______________, 1998, and
from year to year thereafter, but only so long as such continuance, and the
continuance of the Investment Adviser as investment adviser of the Account, is
specifically approved at least annually by the vote of a majority of the
Directors of the Company who are not interested persons of the Subadviser, the
Investment Adviser or the Account, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Directors or of
a majority of the outstanding votingsecurities of the Account. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules, regulations and interpretations thereunder. This Agreement may be
terminated at any time without the payment of any penalty, (a) by the Company,
by the Board of Directors, or by vote of a majority of the outstanding voting
securities of the Account, upon 60 days' written notice to the Adviser and
Subadviser, (b) by the Investment Adviser, upon 60 days' written notice to the
Account and the Subadviser, or (c) by
-4-
<PAGE>
the Subadviser, upon 90 days' written notice to the Account and Investment
Adviser. This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"interested person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order.
8. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of the holders of a majority of the outstanding voting securities of the
Account and by the Board of Directors, including a majority of the Directors who
are not interested persons of the Investment Adviser, the Subadviser or the
Account cast in person at a meeting called for the purpose of voting on such
approval.
It shall be the responsibility of the Subadviser to furnish to the Board of
Directors of the Company such information as may reasonably be necessary in
order for such Directors to evaluate this Agreement or any proposed amendments
thereto for the purposes of casting a vote pursuant to paragraphs 7 or 8 hereof.
9. The Subadviser will conform its conduct in accordance with and will
ensure that the Sub-Account conforms with the Company's Articles of
Incorporation and By-laws, each as amended from time to time, and the 1940 Act,
as amended, other applicable laws, and to the investment objectives, policies
and restrictions of the Account as each of the same shall be from time to time
in effect as set forth in the Account's Prospectus and Statement of Additional
Information, or any investment guidelines or other instructions received in
writing from the Investment Adviser, and subject, further, to such policies and
instructions as the Board of Directors or the Investment Adviser may from time
to time establish and deliver to the Subadviser.
In addition, the Subadviser, taking into account only income and gains
realized with respect to the Sub-Account, will cause the Sub-Account to comply
with the requirements of: (a) Section 851(b)(2) of the Code regarding derivation
of income from specified investment activities; (b) Section 851(b)(3) of the
Code limiting gains from the disposition of securities and certain other
investments held less than three months, in each case as if the Sub-Account were
a "regulated investment company" as defined in Section 851(a) of the Code and
the regulations pertaining thereto. The Subadviser shall not without the prior
express written consent of the Investment Adviser: (a) invest Sub-Account assets
having a value exceeding five percent of the Account's total (gross) assets in
securities of one issuer; or (b) cause the Sub-Account to acquire more than ten
percent of the outstanding voting securities of any one issuer; or (c) invest
Sub-Account assets in investments that are not cash, cash items (including
receivables), Government securities, securities of other regulated investment
companies, or other securities within the meaning of Section 851(b)(4) of the
Code. For purposes of clauses (a) and (b) of the foregoing sentence the term
"securities" shall exclude "Government securities" and "securities of other
regulated investment companies" as each such term is used in Section 851(b)(4)
of the Code.
10. The Subadviser represents that it has reviewed the Registration
Statement of the Company as filed with the Securities and Exchange Commission
and represents and warrants that with respect to disclosure about the Subadviser
or information relating directly or indirectly
-5-
<PAGE>
to the Subadviser, such Registration Statement contains, as of the date hereof,
no untrue statement of any material fact and does not omit any statement of
material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Subadviser further represents
and warrants that it is an investment adviser registered under the Advisers Act.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. Any notice given to the Subadviser by the Investment Adviser pursuant
to the terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
or mailed, postpaid, to: BEA Associates, One Citicorp Center, 153 East 53rd
Street, 57th Floor, New York, NY 10022.
Any notice given to the Investment Adviser by the Subadviser, pursuant to
the terms of this Agreement shall be deemed to have been given if provided in
writing (including by telecopy or similar hard copy reproduction) and delivered
to OppenheimerFunds, Inc., Two World Trade Center, New York, NY 10048-0203,
Attention: General Counsel.
14. It is understood and expressly stipulated that the Subadviser must
look solely to the property of the Account for the enforcement of any claims
against the Account and shall not look to or have recourse to the assets of the
Company generally or any other series of the Company.
-6-
<PAGE>
15. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above, and effective as of
______________, 1996.
OPPENHEIMERFUNDS, INC.
By: __________________________
Its: Secretary
BEA ASSOCIATES, A General Partnership
By: __________________________
Its: _________________________
-7-
<PAGE>
SCHEDULE A
TO
SUBADVISORY AGREEMENT
The fee payable by the Investment Adviser to the Subadviser shall be at an
annual rate equal to a percentage of the average daily Net Assets Under
Management (as defined below) as follows:
Annual Rate
-----------
.45% of the first $25 Million of such assets,
.40% of the next $25 Millon of such assets,
.35% of the next $50 Million of such assets, and
.25% of such assets over $100 Million.
For purposes of this Schedule A, Net Assets Under Management shall consist
of the aggregated net assets of each Sub-Account as follows:
(a) the High Yield Sub-Account of the CMIA LifeSpan Diversified Income
Account; (b) the High Yield Sub-Account of the Series Fund I LifeSpan
Diversified Income Portfolio; (c) the High Yield Sub-Account of the CMIA
LifeSpan Balanced Account; (d) the High Yield Sub-Account of the Series Fund I
LifeSpan Balanced Portfolio; (e) the High Yield Sub-Account of the CMIA LifeSpan
Capital Appreciation Account; and (f) the High Yield Sub-Account of the Series
Fund I LifeSpan Capital Appreciation Portfolio, in each case to the extent and
for so long as the Subadviser also manages such assets.
For purposes hereof, the value of net assets of the foregoing Sub-Accounts
and Portfolios shall be computed in the manner specified in the applicable
Prospectuses and Statements of Additional Information for the computation of the
value of the net assets in connection with the determination of net asset value
of their shares. On any day that the net asset value determination is suspended
as specified in the Prospectuses, the net asset value for purposes of
calculating the subadvisory fee with respect to each of the aforementioned shall
be calculated as of the date last determined.
-8-
<PAGE>
SCHEDULE OF OMITTED INVESTMENT SUBADVISORY AGREEMENTS
Due to the substantial similarity of the investment
subadvisory agreements among OppenheimerFunds, Inc. ("OFI") and
BEA Associates ("BEA") for the respective series of the
Registrant, the following form of investment subadvisory agreement
for CMIA LifeSpan Balanced Account and this schedule of omitted
documents is filed in accordance with the requirements of Rule 8b-
31 under the Investment Company Act of 1940.
1. Investment Subadvisory Agreement among OFI and BEA
for CMIA LifeSpan Capital Appreciation Account.
2. Investment Subadvisory Agreement among OFI and BEA
for CMIA LifeSpan Diversified Income Account.
<PAGE>
Exhibit 5.5
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is by and between Babson-Stewart
Ivory International, a partnership organized under the laws of the Commonwealth
of Massachusetts (the "Sub-Adviser"), and OppenheimerFunds, Inc., a Colorado
corporation ("OFI"), effective ____________, 199___.
WHEREAS, CMIA LifeSpan Balanced Account (the "Fund") is a series of
Connecticut Mutual Investment Accounts, Inc. (the "Company"), a Maryland
corporation which is an open-end diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"1940 Act"), and the Company has appointed OFI as the investment adviser for the
Fund, pursuant to the terms of an Investment Advisory Agreement (the "Advisory
Agreement");
WHEREAS, the Advisory Agreement provides that OFI may, at its option,
subject to approval by the Board of Directors of the Company, and, to the extent
necessary, shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of OFI under the Advisory Agreement;
WHEREAS, OFI and the Sub-Adviser are investment advisers registered as such
with the Commission, and OFI desires to appoint the Sub-Adviser as a sub-adviser
for the Fund and the Sub-Adviser is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, OFI and the Sub-Adviser, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. GENERAL PROVISION.
OFI hereby employs the Sub-Adviser and the Sub-Adviser hereby undertakes
to act as the investment sub-adviser of the international portion of the
portfolio of the Fund designated by OFI (the "Sub-Account") and to
provide investment advice and to perform for the Fund such other duties
and functions as are hereinafter set forth. The Sub-Adviser shall, in
all matters, give to the Fund and the Company's Board of Directors,
directly or through OFI, the benefit of the Sub-Adviser's best judgment,
effort, advice and recommendations and shall, at all times conform to,
and use its best efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations
thereunder;
(b) the provisions of Subchapter M of the Internal Revenue Code, as it
may be amended from time to time;
(c) any other applicable provisions of state or federal law;
(d) the provisions of the Articles of Incorporation and By-Laws of the
Company as amended from time to time;
(e) policies and determinations of the Board of Directors of the Company
and OFI;
<PAGE>
(f) the fundamental policies and investment restrictions of the Fund as
reflected in the Company's registration statement under the 1940 Act
or as such fundamental policies and investment restrictions may,
from time to time, be amended by the Fund's shareholders;
(g) the Prospectus and Statement of Additional Information of the Fund
in effect from time to time; and
(h) any investment guidelines or other instructions received in writing
from OFI.
The appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the
Directors and officers of the Company and OFI with respect to any
matters dealing with the business and affairs of the Fund including
without limitation the valuation of portfolio securities of the Sub-
Account that are either not registered for public sale or not traded on
any securities market.
In the performance of its duties hereunder, the Sub-Adviser is and shall
be an independent contractor and unless otherwise expressly provided
herein or otherwise authorized in writing, shall have no authority to
act for or represent the Company, the Fund or OFI in any way or
otherwise be deemed to be an agent of the Company, the Fund or OFI.
2. DUTIES OF THE SUB-ADVISER.
(a) The Sub-Adviser shall, subject to the direction and control by the
Company's Board of Directors or OFI, to the extent OFI's direction
is not inconsistent with that of the Board of Directors, (i)
regularly provide investment advice and recommendations to the
Fund, directly or through OFI, with respect to the Sub-Account's
investments, investment policies and the purchase and sale of
securities; (ii) supervise and monitor continuously the investment
program of the Fund with respect to the Sub-Account and the
portfolio composition of the Sub-Account and determine what
securities shall be purchased or sold for the Sub-Account of the
Fund; (iii) arrange, subject to the provisions of paragraph 5
hereof, for the purchase of securities and other investments for the
Sub-Account of the Fund and the sale of securities and other
portfolio investments held in the Sub-Account of the Fund; and (iv)
provide reports on the foregoing to the Board of Directors at each
Board meeting.
(b) Provided that neither OFI nor the Fund or the Company shall be
required to pay any compensation other than as provided by the terms
of this Agreement and subject to the provisions of paragraph 5
hereof, the Sub-Adviser may obtain investment information, research
or assistance from any other person, firm or corporation to
supplement, update or otherwise improve its investment
management services.
<PAGE>
(c) Provided that nothing herein shall be deemed to protect the
Sub-Adviser from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, the Sub-Adviser shall
not be liable for any loss sustained by reason of good faith errors
or omissions inconnection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OFI or the Sub-Adviser or
any officer thereof from acting as investment adviser or sub-adviser
for any other person, firm or corporation and shall not in any way
limit or restrict OFI or the Sub-Adviser or any of their respective
directors, officers, stockholders, partners or employees from
buying, selling or trading any securities for its or their own
account or for the account of others for whom it or they may be
acting, provided that such activities will not adversely affect or
otherwise impair the performance by any party of its duties and
obligations under this Agreement.
(e) The Sub-Adviser shall cooperate with OFI by providing OFI with any
information in the Sub-Adviser's possession necessary for
supervising the activities of all administrative and clerical
personnel as shall be required to provide effective corporate
administration for the Fund, including the compilation and
maintenance of such records with respect to its operations as may
reasonably be required. Any records required to be maintained shall
be the property of the Company and shall be surrendered promptly to
the Company on request. The Sub-Adviser shall, at its own expense,
provide such officers for the Company as its Board may request.
3. DUTIES OF OFI.
OFI shall provide (or cause to be provided to) the Sub-Adviser
the following information about the Sub-Account:
(a) cash flow estimates on request;
(b) notice of the Sub-Account's "investable funds" by 11:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in subparagraphs (d), (e), (f),
(g) and (h) of paragraph 1 above.
4. COMPENSATION OF THE SUB-ADVISER.
The Sub-Adviser will bear its own costs of providing services hereunder.
The Sub-Adviser shall not be responsible for the Fund's expenses. OFI
agrees to pay the Sub-Adviser and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a fee computed
on the net asset value of the Sub-Account of the Fund as of the close of
each business day and payable monthly by the tenth business day of the
following month, at the following annual rates:
<PAGE>
.75% of the first $10 million of average net assets in the
Sub-Account;
.625% of the next $15 million of average net assets in the
Sub-Account;
.50% of the next $25 million of average net assets in the
Sub-Account; and
.375% of the average net assets in excess of $50 million in the
Sub-Account.
For any period less than a full month during which this Agreement is in
effect, the fee shall be pro-rated according to the proportion which
such period bears to a full month (a month being the calendar month of
which such period is part). The Fund shall have no responsibility for
any fee payable to the Sub-Adviser.
5. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) In connection with purchases or sales of portfolio securities on
behalf of the Fund, neither the Sub-Adviser nor any of its partners,
directors, officers or employees will act as a principal or agent or
receive directly or indirectly any compensation in connection with
the purchase or sale of securities by the Fund, other than as
provided herein. The Sub-Adviser is authorized, in arranging the
purchase and sale of the Sub-Account's portfolio securities, to
employ or deal with such members of securities exchanges, brokers
or dealers (hereinafter "broker-dealers"), including broker-dealers
that are "affiliated" broker-dealers (as that term is defined in the
1940 Act), as may, in the Sub-Adviser's best judgment, implement the
policy of the Fund to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions.
All transactions effected through any affiliated brokers shall be
effected in compliance with Section 17(e) of the 1940 Act and any
written procedures established from time to time by the Board of
Directors of the Company pursuant to Rule 17e-1 under the 1940 Act,
as it may be amended from time to time, copies of which procedures
shall be provided to the Sub-Adviser by OFI.
(b) The Sub-Adviser may effect the purchase and sale of securities
(which are otherwise publicly traded) in private transactions on
such terms and conditions as are customary in such transactions, may
use a broker to effect said transactions, and may enter into a
contract in which the broker acts either as principal or as
agent.
(c) The Sub-Adviser shall select broker-dealers to effect the
Sub-Account's portfolio transactions on the basis of its estimate of
their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain
best execution of particular portfolio transaction(s) will be judged
by the Sub-Adviser on the basis of all relevant factors and
considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the
Sub-Account's portfolio transactions by participating therein for
its own account; the importance to the Fund of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
<PAGE>
(d) The Sub-Adviser shall not be responsible for payment of brokerage
commissions.
(e) Provided that such aggregation is in the best interests of the Fund,
the Sub-Adviser may aggregate orders for the purchase and sale of
securities for the Sub-Account with similar orders being made
simultaneously for other funds managed by the Sub-Adviser, if, in
the Sub-Adviser's reasonable judgment, such aggregation is equitable
and consistent with the Sub-Adviser's fiduciary obligation to the
Fund and shall result in an overall economic benefit to the Fund,
taking into consideration the advantageous sale or purchase price,
brokerage commissions or other expenses.
(f) The Sub-Adviser will advise OFI and the Fund's Custodian promptly of
each purchase and sale of a portfolio security, specifying the name
of the issuer, the description and amount or number of shares of the
security purchased or sold, the market price, commissions and gross
or net price, trade date, settlement date and identity of the
effecting broker or dealer, and such other information as may be
reasonably required. From time to time as the Board of Directors of
the Company or OFI may reasonably request, the Sub-Adviser will
furnish to the Company's officers and to its Directors, at the
Sub-Adviser's expense, reports on portfolio transactions and reports
on issuers of securities held in the Sub-Account, all in such detail
as the Fund or OFI shall reasonably request.
6. DURATION.
This Agreement will take effect on __________________, 1996, and unless
earlier terminated pursuant to paragraph 7 shall remain in effect until
December 31, 1998. Thereafter it shall continue in effect from year to
year, so long as such continuance and the continuance of OFI as Adviser
to the Fund shall be approved at least annually by the Company's Board
of Directors, including the vote of the majority of the Directors of the
Company who are not parties to this Agreement or "interested persons"
(as defined in the 1940 Act) of any such party cast in person at a
meeting called for the purpose of voting on such approval, or by the
holders of a "majority" (as defined in the 1940 Act) of the outstanding
voting securities of the Fund and by such a vote of the Company's Board
of Directors.
7. TERMINATION.
This Agreement shall terminate automatically upon its assignment or in
the event of the Company's termination of the Advisory Agreement; it may
also be terminated: (i) by-the Sub-Adviser at any time without penalty
upon ninety days' written notice to OFI and the Company; or (ii) by the
Company at any time without penalty upon sixty days' written notice to
OFI and the Sub-Adviser provided that such termination by the Company
shall be directed or approved by a vote of a majority of all of the
Directors of the Company then in office or by the vote of the holders of
a "majority" of the outstanding voting securities of the Fund (as
defined in the 1940 Act); or (iii) by OFI, upon 60 days' written notice
to the Fund and the Sub-Adviser.
<PAGE>
8. NOTICE.
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to
the Company, at the addresses below or such other address as such other
party may designate for the receipt of such notice.
If to OFI:
OppenheimerFunds, Inc.
Two World Trade Center, 34th Floor
New York, NY 10048-0203
Attention: Andrew J. Donohue, Esq.
If to the Sub-Adviser:
Babson-Stewart Ivory International
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Attention:______________________
If to either party, copy to:
CMIA LifeSpan Balanced Fund
Two World Trade Center, 34th Floor
New York, New York 10048-0203
Attention: Chairman
9. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be
effective until its approval by vote of the holders of a majority of the
outstanding voting securities of the Fund and by the Board of Directors
of the Company, including a majority of the Directors who are not
interested persons of OFI, the Sub-Adviser or the Fund, cast in person
at a meeting called for the purpose of voting on such approval.
10. The Sub-Adviser represents that it has reviewed the Registration
Statement of the Company, including any amendments or supplements
thereto, and any Proxy Statement relating to the approval of this
Agreement, as filed with the Securities and Exchange Commission and
represents and warrants that with respect to disclosure about the
Sub-Adviser or information relating directly or indirectly to the Sub-
Adviser, such Registration Statement or Proxy Statement contains, as of
the date hereof, no untrue statement of any material fact and does not
omit any statement of material fact which was required to be stated
therein or necessary to make the statements contained therein not
misleading. The Sub-Adviser further represents and warrants that it is
an investment adviser registered under the Investment Advisers Act of
1940, as amended, and under the laws of all jurisdictions in which the
conduct of its business hereunder requires such registration.
<PAGE>
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
12. It is expressly understood and stipulated that the Sub-Adviser must look
solely to the property of the Fund for the enforcement of any claims
against the Fund and shall not look to or have recourse to the assets of
the Company generally or any other series of the Company.
13. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, OFI and the Sub-Adviser have caused this Agreement to be
executed on the day and year first above written.
OPPENHEIMERFUNDS, INC.
By:______________________________
(Name) (Title)
BABSON-STEWART IVORY INTERNATIONAL,
a Partnership
By:______________________________
(Name) (Title)
<PAGE>
SCHEDULE OF OMITTED INVESTMENT SUBADVISORY AGREEMENT
Due to the substantial similarity of the investment subadvisory agreements
among OppenheimerFunds, Inc. ("OFI") and Babson-Stewart Ivory International
("Babson") for the respective series of the Registrant, the following form of
investment subadvisory agreement for CMIA LifeSpan Balanced Account and this
schedule of omitted documents is filed in accordance with the requirements of
Rule 8b-31 under the Investment Company Act of 1940.
1. Investment Subadvisory Agreement among OFI and Babson for CMIA
LifeSpan Capital Appreciation Account.
<PAGE>
EXHIBIT 6.5
FORM OF
GENERAL DISTRIBUTOR'S AGREEMENT
Between
OPPENHEIMER SERIES FUND, INC.
on behalf of Oppenheimer Disciplined Allocation Fund
AND
OppenheimerFunds Distributor, Inc.
Date: March 18, 1996
OppenheimerFunds Distributor, Inc.
Two World Trade Center, Suite 3400
New York, NY 10048
Dear Sirs:
Oppenheimer Series Fund, Inc., a Maryland corporation (the "Company"), is
registered as an investment company under the Investment Company Act of 1940
(the "1940 Act"), and an indefinite number of one or more series or classes of
its shares of stock have been registered under the Securities Act of 1933 (the
"1933 Act") including shares ("Shares") of its series, Oppenheimer Disciplined
Allocation Fund (the "Fund") to be offered for sale to the public in a
continuous public offering in accordance with the terms and conditions set forth
in the Fund's Prospectus and Statement of Additional Information ("SAI")
included in the Company's Registration Statement as it may be amended from time
to time (the "current Prospectus and/or SAI").
In this connection, the Company desires that your firm (the "General
Distributor") act in a principal capacity as General Distributor for the sale
and distribution of Shares of the Fund which have been registered as described
above and of any additional Shares which may become registered during the term
of this Agreement. You have advised the Company that you are willing to act as
such General Distributor, and it is accordingly agreed by and between us as
follows:
1. APPOINTMENT OF THE DISTRIBUTOR. The Company hereby appoints you as
the sole General Distributor of shares of the Fund, pursuant to the aforesaid
continuous public offering of Shares, and the Company further agrees from and
after the date of this Agreement, that neither it nor the Fund will, without
your
<PAGE>
consent, sell or agree to sell any Shares otherwise than through you, except (a)
the Fund may itself sell shares without sales charge as an investment to the
officers, trustees or directors and bona fide present and former full-time
employees of the Company or the Fund, the Fund's Investment Adviser and
affiliates thereof, and to other investors who are identified in the current
Prospectus and/or SAI as having the privilege to buy Shares at net asset value;
(b) the Company may cause the Fund to issue shares in connection with a merger,
consolidation or acquisition of assets on such basis as may be authorized or
permitted under the 1940 Act; (c) the Company may cause the Fund to issue shares
for the reinvestment of dividends and other distributions of the Fund or of any
other fund if permitted by the current Prospectus and/or SAI; and (d) the
Company may cause the Fund to issue shares as underlying securities of a unit
investment trust if such unit investment trust has elected to use Shares as an
underlying investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-existing net
asset value.
2. SALE OF SHARES. You hereby accept such appointment and agree to use
your best efforts to sell Shares, provided, however, that when requested by the
Company or the Fund at any time because of market or other economic
considerations or abnormal circumstances of any kind, or when agreed to by
mutual consent of you and the Company or the Fund, you will suspend such
efforts. The Company or the Fund may also withdraw the offering of Shares at
any time when required by the provisions of any statute, order, rule or
regulation of any governmental body having jurisdiction. It is understood that
you do not undertake to sell all or any specific number of Shares.
3. SALES CHARGE. Shares shall be sold by you at net asset value plus a
front-end sales charge not in excess of 8.5% of the offering price, but which
front-end sales charge shall be proportionately reduced or eliminated for larger
sales and under other circumstances, in each case on the basis set forth in the
Fund's current Prospectus and/or SAI. The redemption proceeds of shares offered
and sold at net asset value with or without a front-end sales charge may be
subject to a contingent deferred sales charge ("CDSC") under the circumstances
described in the current Prospectus and/or SAI. You may reallow such portion
of the front-end sales charge to dealers or cause payment (which may exceed the
front-end sales charge, if any) of commissions to brokers through which sales
are made, as you may determine, and you may pay such amounts to dealers and
brokers on sales of shares from your own resources (such dealers and brokers
shall collectively include all domestic or foreign institutions eligible to
offer and sell the Shares), and in the event the Fund has more
-2-
<PAGE>
than one class of Shares outstanding, then you may impose a front-end sales
charge and/or a CDSC on Shares of one class that is different from the charges
imposed on Shares of the Fund's other class(es), in each case as set forth in
the current Prospectus and/or SAI, provided the front-end sales charge and CDSC
to the ultimate purchaser do not exceed the respective levels set forth for such
category of purchaser in the Fund's current Prospectus and/or SAI.
4. PURCHASE OF SHARES.
(a) As General Distributor, you shall have the right to accept or
reject orders for the purchase of Shares at your discretion.
Any consideration which you may receive in connection with a
rejected purchase order will be returned promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to issue as
your agent confirmations of all accepted purchase orders and to
transmit a copy of such confirmations to the Fund. The net asset
value of all Shares which are the subject of such confirmations,
computed in accordance with the applicable rules under the 1940
Act, shall be a liability of the General Distributor to the
Company on behalf of the Fund to be paid promptly after receipt
of payment from the originating dealer or broker (or investor,
in the case of direct purchases) and not later than eleven
business days after such confirmation even if you have not
actually received payment from the originating dealer or broker
or investor. In no event shall the General Distributor make
payment to the Fund later than permitted by applicable rules
of the National Association of Securities Dealers, Inc.
(c) If the originating dealer or broker shall fail to make timely
settlement of its purchase order in accordance with applicable
rules of the National Association of Securities Dealers, Inc.,
or if a direct purchaser shall fail to make good payment for
shares in a timely manner, you shall have the right to cancel
such purchase order and, at your account and risk, to hold
responsible the originating dealer or broker, or investor. You
agree promptly to reimburse the Fund for losses suffered by it
that are attributable to any such cancellation, or to errors on
your part in relation to the effective date of accepted purchase
orders,
-3-
<PAGE>
limited to the amount that such losses exceed contemporaneous
gains realized by the Fund for either of such reasons with
respect to other purchase orders.
(d) In the case of a canceled purchase for the account of a directly
purchasing shareholder, the Company on behalf of the Fund agrees
that if such investor fails to make you whole for any loss you
pay to the Fund on such canceled purchase order, the Fund will
reimburse you for such loss to the extent of the aggregate
redemption proceeds of any other shares of the Fund owned by such
investor, on your demand that the Fund exercise its right to
claim such redemption proceeds. The Company on behalf of the
Fund shall register or cause to be registered all Shares sold to
you pursuant to the provisions hereof in such names and amounts
as you may request from time to time and the Company on behalf of
the Fund shall issue or cause to be issued certificates
evidencing such Shares for delivery to you or pursuant to your
direction if and to the extent that the shareholder account in
question contemplates the issuance of such certificates. All
Shares when so issued and paid for, shall be fully paid and
non-assessable by the Company on behalf of the Fund (which shall
not prevent the imposition of any CDSC that may apply) to the
extent set forth in the current Prospectus and/or SAI.
5. REPURCHASE OF SHARES.
(a) In connection with the repurchase of Shares, you are
appointed and shall act as Agent of the Fund. You are
authorized, for so long as you act as General Distributor of
the Shares of the Fund, to repurchase, from authorized
dealers, certificated or uncertificated Shares of the Fund
on the basis of orders received from each dealer with which
you have a dealer agreement for the sale of Shares
("authorized dealer") and permitting resales of Shares to
you, provided that such authorized dealer, at the time of
placing such resale order, shall represent (i) if such
Shares are represented by certificate(s), that
certificate(s) for the Shares to be repurchased have been
delivered to it by the registered owner with a request for
the redemption of such Shares executed in the manner and
with the signature guarantee required by the
-4-
<PAGE>
then-currently effective prospectus of the Fund, or (ii) if
such Shares are uncertificated, that the registered owner(s)
has delivered to the dealer a request for the redemption of
such Shares executed in the manner and with the signature
guarantee required by the then-currently effective
prospectus of the Fund.
(b) You shall (a) have the right in your discretion to accept
or reject orders for the repurchase of Shares; (b) promptly
transmit confirmations of all accepted repurchase orders;
and (c) transmit a copy of such confirmation to the Fund,
or, if so directed, to any duly appointed transfer or
shareholder servicing agent of the Fund. In your
discretion, you may accept repurchase requests made by a
financially responsible dealer which provides you with
indemnification in form satisfactory to you in consideration
of your acceptance of such dealer's request in lieu of the
written redemption request of the owner of the account; you
agree that the Company shall be a third party beneficiary of
such indemnification on behalf of the Fund.
(c) Upon receipt by the Fund or its duly appointed transfer or
shareholder servicing agent of any certificate(s) (if any
has been issued) for repurchased Shares and a written
redemption request of the registered owner(s) of such Shares
executed in the manner and bearing the signature guarantee
required by the then-currently effective Prospectus or SAI
of the Fund, the Fund will pay or cause its duly appointed
transfer or shareholder servicing agent promptly to pay to
the originating authorized dealer the redemption price of
the repurchased Shares (other than repurchased Shares
subject to the provisions of part (d) of Section 5 of this
Agreement) next determined after your receipt of the
dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of Section 5 of
this Agreement, repurchase orders received from an
authorized dealer after the determination of the Fund's
redemption price on a regular business day will receive that
day's redemption price if the request to the dealer by its
customer to arrange such repurchase prior to the
determination of the Fund's redemption price
-5-
<PAGE>
that day complies with the requirements governing such
requests as stated in the current Prospectus and/or SAI.
(e) You will make every reasonable effort and take all
reasonably available measures to assure the accurate
performance of all services to be performed by you hereunder
within the requirements of any statute, rule or regulation
pertaining to the redemption of shares of a regulated
investment company and any requirements set forth in the
then-current Prospectus and/or SAI of the Fund. You shall
correct any error or omission made by you in the performance
of your duties hereunder of which you shall have received
notice in writing and any necessary substantiating data; and
you shall hold the Company and the Fund harmless from the
effect of any errors or omissions which might cause an over-
or under-redemption of the Fund's Shares and/or an excess or
non-payment of dividends, capital gains distributions, or
other distributions.
(f) In the event an authorized dealer initiating a repurchase
order shall fail to make delivery or otherwise settle such
order in accordance with the rules of the National
Association of Securities Dealers, Inc., you shall have the
right to cancel such repurchase order and, at your
account and risk, to hold responsible the originating
dealer. In the event that any cancellation of a Share
repurchase order or any error in the timing of the
acceptance of a Share repurchase order shall result in a
gain or loss to the Fund, you agree promptly to reimburse
the Fund for any amount by which any loss shall exceed
then-existing gains so arising.
6. 1933 ACT REGISTRATION. The Company has delivered to you a copy of the
Fund's current Prospectus and SAI. The Company agrees that it will use its
best efforts to continue the effectiveness of its Registration Statement under
the 1933 Act as to the Shares of the Fund. The Company further agrees to
prepare and file any amendments to its Registration Statement as may be
necessary and any supplemental data in order to comply with the 1933 Act. The
Fund will furnish you at your expense with a reasonable number of copies of the
Prospectus and SAI and any amendments thereto for use in connection with the
sale of Shares.
7. 1940 ACT REGISTRATION. The Company has already registered under the
1940 Act as an investment company, and it will use its best efforts to maintain
such registration and to
-6-
<PAGE>
comply with the requirements of the 1940 Act as to the Shares of the Fund.
8. STATE BLUE SKY QUALIFICATION. At your request, the Company will take
such steps as may be necessary and feasible to qualify Shares of the Fund for
sale in states, territories or dependencies of the United States, the District
of Columbia, the Commonwealth of Puerto Rico and in foreign countries, in
accordance with the laws thereof, and to renew or extend any such qualification;
provided, however, that the Company shall not be required to qualify Shares of
the Fund or to maintain the qualification of shares in any jurisdiction where it
shall deem such qualification disadvantageous to the Company or the Fund.
9. DUTIES OF DISTRIBUTOR. You agree that:
(a) Neither you nor any of your officers will take any long or short
position in the Shares, but this provision shall not prevent you
or your officers from acquiring Shares for investment purposes
only; and
(b) You shall furnish to the Company on behalf of the Fund any
pertinent information required to be inserted with respect to you
as General Distributor within the purview of the Securities Act
of 1933 in any reports or registration statement required to be
filedwith any governmental authority; and
(c) You will not make any representations inconsistent with the
information contained in the current Prospectus and/or SAI; and
(d) You shall maintain such records as may be reasonably required for
the Fund or its transfer or shareholder servicing agent to
respond to shareholder requests or complaints, and to permit
the Company and the Fund to maintain proper accounting
records, and you shall make such records available to the Fund
and its transfer agent or shareholder servicing agent upon
request; and
(e) In performing under this Agreement, you shall comply with all
requirements of the Fund's current Prospectus and/or SAI and all
applicable laws, rules and regulations with respect to the
purchase, sale and distribution of Shares.
10. ALLOCATION OF COSTS. The Company shall cause the Fund to pay the cost
of composition and printing of sufficient copies of its Prospectus and SAI as
shall be required for periodic
-7-
<PAGE>
distribution to its shareholders and the expense of registering Shares for sale
under federal securities laws. You shall pay the expenses normally attributable
to the sale of Shares, other than as paid under the Fund's Distribution Plan or
Plans under Rule 12b-1 of the 1940 Act, including the cost of printing and
mailing of the Prospectus (other than those furnished to existing shareholders)
and any sales literature used by you in the public sale of the Shares and for
registering such shares under state blue sky laws pursuant to paragraph 8.
11. DURATION. This Agreement shall take effect on the date first written
above, and shall supersede any and all prior General Distributor's Agreements by
and among you and the Company on behalf of the Fund. Unless earlier terminated
pursuant to paragraph 12 hereof, this Agreement shall remain in effect until
September 30, 1997. This Agreement shall continue in effect from year to year
thereafter, provided that such continuance shall be specifically approved at
least annually: (a) by the Company's Board of Directors or by vote of a
majority of the voting securities of the Fund; and (b) by the vote of a majority
of the Directors, who are not parties to this Agreement or "interested persons"
(as defined the 1940 Act) of any such person, cast in person at a meeting called
for the purpose of voting on such approval.
12. TERMINATION. This Agreement may be terminated (a) by the General
Distributor at any time without penalty by giving sixty days' written notice
(which notice may be waived by the Company or the Fund); (b) by the Company on
behalf of the Fund at any time without penalty upon sixty days' written notice
to the General Distributor (which notice may be waived by the General
Distributor); or (c) by mutual consent of the Company on behalf of the Fund and
the General Distributor, provided that such termination on behalf of the Fund
shall be directed or approved by the Board of Directors of the Fund or by the
vote of the holders of a "majority" of the outstanding voting securities of the
Fund. In the event this Agreement is terminated on behalf of the Fund, the
General Distributor shall be entitled to be paid the CDSC under paragraph 3
hereof on the redemption proceeds of Shares sold prior to the effective date of
such termination.
13. ASSIGNMENT. This Agreement may not be amended or changed except in
writing and shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors; however, this Agreement
shall not be assigned by either party and shall automatically terminate upon
assignment.
14. LIMITATION OF LIABILITY. The General Distributor understands and
agrees that the obligations of the Company under
-8-
<PAGE>
this Agreement relate only to the shares and the property of the Fund as a
series of the Company.
15. SECTION HEADINGS. The heading of each section is for descriptive
purposes only, and such headings are not to be construed or interpreted as part
of this Agreement.
If the foregoing is in accordance with your understanding, so indicate by
signing in the space provided below.
Oppenheimer Series Fund, Inc.
on behalf of Oppenheimer Disciplined
Allocation Fund
By: ________________________________
Accepted:
OppenheimerFunds Distributor, Inc.
By: _______________________________
-9-
<PAGE>
SCHEDULE OF OMITTED GENERAL DISTRIBUTOR'S AGREEMENTS
Due to the substantial similarity of the General
Distributor's Agreements among OppenheimerFunds Distributor, Inc.
("ODI") and the Registrant, on behalf of the respective series of
the Registrant, the following form of Agreement on behalf of
Oppenheimer Disciplined Allocation Fund and this schedule of
omitted documents is filed in accordance with the requirements of
Rule 8b-31 under the Investment Company Act of 1940.
1. General Distributor's Agreement between ODI, on
behalf of Connecticut Mutual Liquid Account.
2. General Distributor's Agreement between ODI, on
behalf of Connecticut Mutual Government Securities
Account.
3. General Distributor's Agreement between ODI, on
behalf of Connecticut Mutual Income Account.
4. General Distributor's Agreement between ODI, on
behalf of Oppenheimer Disciplined Value Fund.
5. General Distributor's Agreement between ODI, on
behalf of Oppenheimer LifeSpan Growth Fund.
6. General Distributor's Agreement between ODI, on
behalf of Oppenheimer LifeSpan Balanced Fund.
7. General Distributor's Agreement between ODI, on
behalf of Oppenheimer LifeSpan Income Fund.
<PAGE>
EXHIBIT 8.1
CUSTODIAN CONTRACT
Between
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By
It.........................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States.....3
2.1 Holding Securities..................................3
2.2 Delivery of Securities..............................3
2.3 Registration of Securities..........................8
2.4 Bank Accounts.......................................9
2.5 Availability of Federal Funds......................10
2.6 Collection of Income...............................10
2.7 Payment of Fund Moneys.............................11
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased....................14
2.9 Appointment of Agents..............................15
2.10 Deposit of Fund Assets in Securities System........l5
2.10A Fund Assets Held in the Custodian's Direct
Paper System.......................................18
2.11 Segregated Account.................................20
2.12 Ownership Certificates for Tax Purposes............21
2.13 Proxies............................................22
2.14 Communications Relating to Portfolio
Securities.........................................22
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States................23
3.1 Appointment of Foreign Sub-Custodians..............23
3.2 Assets to be Held..................................23
3.3 Foreign Securities Depositories....................24
3.4 Segregation of Securities..........................24
3.5 Agreements with Foreign Banking Institutions.......25
3.6 Access of Independent Accountants of the Fund......25
3.7 Reports by Custodian...............................26
3.8 Transactions in Foreign Custody Account............26
3.9 Liability of Foreign Sub-Custodians................27
3.10 Liability of Custodian.............................28
3.11 Reimbursement for Advances.........................29
3.12 Monitoring Responsibilities........................29
3.13 Branches of U.S. Banks.............................30
3.14 Tax Law............................................30
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund.....................................31
5. Proper Instructions.......................................32
6. Actions Permitted Without Express Authority...............33
7. Evidence of Authority.....................................34
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net
Income....................................................34
<PAGE>
9. Records...................................................35
10. Opinion of Fund's Independent Accountants.................35
11. Reports to Fund by Independent Public Accountants.........36
12. Compensation of Custodian.................................36
13. Responsibility of Custodian...............................37
14. Effective Period, Termination and Amendment...............39
15. Successor Custodian.......................................41
16. Interpretive and Additional Provisions....................43
17. Additional Funds..........................................43
18. Massachusetts Law to Apply................................43
19. Prior Contracts...........................................44
CUSTODIAN CONTRACT
This Contract between Connecticut Mutual Investment Accounts, Inc., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at 140 Garden Street, Hartford, Connecticut 06154
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts 02110, hereinafter called the
"Custodian".
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
<PAGE>
WHEREAS, the Fund intends to initially offer shares in five series,
the Government Securities Account, Growth Account, Income Account, Liquid
Account and Total Return Account (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Fund, including securities which the Fund, on behalf
of the applicable Portfolio desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside
the United States ("foreign securities") pursuant to the provisions of the
Articles of Incorporation. The Fund on behalf of the Portfolio(s) agrees to
deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received
by it with respect to all securities owned by the Portfolio(s) from time to
time, and the cash consideration received by it for such new or treasury
shares of capital stock of the Fund representing interests in the Portfolios,
("Shares") as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of a Portfolio held or received by the
Portfolio and
<PAGE>
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only
in accordance with an applicable vote by the Board of Directors of the Fund
on behalf of the applicable Portfolio(s), and provided that the Custodian
shall have no more or less responsibility or liability to the Fund on account
of any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s)
the foreign banking institutions and foreign securities depositories
designated in Schedule A hereto but only in accordance with the provisions of
Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and
physically segregate for the account of each Portfolio
all non-cash property, to be held by it in the United
States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained
pursuant to Section 2.10 in a clearing agency which acts
as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury,
<PAGE>
collectively referred to herein as "Securities System"
and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian
pursuant to Section 2.10A.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by
the Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of
the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities for the account
of the Portfolio and receipt of payment
therefor;
2) Upon the receipt of payment in connection
with any repurchase agreement related to such
securities entered into by the Portfolio;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.10 hereof;
4) To the depository agent in connection with
tender or other similar offers for securities
<PAGE>
of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in
any such case, the cash or other
consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for
transfer into the name of the Portfolio or
into the name of any nominee or nominees of
the Custodian or into the name or nominee
name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name
of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different
number of bonds, certificates or other
evidence representing the same aggregate face
amount or number of units; provided that, in
any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the
account of the Portfolio, to the broker or
its clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
<PAGE>
case, the Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such
securities except as may arise from the
Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the issuer
of such securities, or pursuant to provisions
for conversion contained in such securities,
or pursuant to any deposit agreement;
provided that, in any such case, the new
securities and cash, if any, are to be
delivered to the Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of
<PAGE>
securities made by the Portfolio, but only
against receipt of adequate collateral as
agreed upon from time to time by the
Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash
or obligations issued by the United States
government, its agencies or instrumental-
ities, except that in connection with any
loans for which collateral is to be credited
to the Custodian's account in the book-entry
system authorized by the U.S. Department of
the Treasury, the Custodian will not be held
liable or responsible for the delivery of
securities owned by the Portfolio prior to
the receipt of such collateral;
11) For delivery as security in connection with
any borrowings by the Fund on behalf of the
Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the
provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and
<PAGE>
a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options
Clearing Corporation and of any registered
national securities exchange, or of any
similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Portfolio
of the Fund;
13) For delivery in accordance with the
provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under
the Commodity Exchange Act, relating to
compliance with the rules of the Commodity
Futures Trading Commission and/or any
Contract Market, or any similar organization
or organizations, regarding account deposits
in connection with transactions by the
Portfolio of the Fund;
14) Upon receipt of instructions from the
transfer agent ("Transfer Agent") for the
Fund, for delivery to such Transfer Agent or
to the holders of shares in connection with
distributions in kind, as may be described
from time to time in the currently effective
<PAGE>
prospectus and statement of additional
information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, BUT
only upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of
the Executive Committee signed by an officer
of the Fund and certified by the Secretary or
an Assistant Secretary, specifying the
securities of the Portfolio to be delivered,
setting forth the purpose for which such
delivery is to be made, declaring such
purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery
of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by
the Custodian (other than bearer securities) shall be
registered in the name of the Portfolio or in the name of
any nominee of the Fund on behalf of the Portfolio or of
any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund
has authorized in writing the appointment of a nominee to
<PAGE>
be used in common with other registered investment
companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on
behalf of the Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form.
If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize
its best efforts only to timely collect income due the
Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions
including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in
the name of each Portfolio of the Fund, subject only to
draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio,
other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for a Portfolio may be deposited by
<PAGE>
it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or
desirable; PROVIDED, however, that every such bank or
trust company shall be qualified to act as a custodian
under the Investment Company Act of 1940 and that each
such bank or trust company and the funds to be deposited
with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a
majority of the Board of Directors of the Fund. Such
funds shall be deposited by the Custodian in its capacity
as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund on behalf of each applicable Portfolio
and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio
as of specified times agreed upon from time to time by
the Fund and the Custodian in the amount of checks
received in payment for Shares of such Portfolio which
are deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely
basis all income and other payments with respect to
registered domestic securities held hereunder to which
<PAGE>
each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments
with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held
by the Custodian or its agent thereof and shall credit
such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall
collect interest when due on securities held hereunder.
Income due each Portfolio on securities loaned pursuant
to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no
duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as
may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which
the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONEYS. Upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
<PAGE>
1) Upon the purchase of domestic securities,
options, futures contracts or options on
futures contracts for the account of the
Portfolio but only (a) against the delivery
of such securities or evidence of title to
such options, futures contracts or options on
futures contracts to the Custodian (or any
bank, banking firm or trust company doing
business in the United States or abroad which
is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian
and has been designated by the Custodian as
its agent for this purpose) registered in the
name of the Portfolio or in the name of a
nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase
effected through a Securities System, in
accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System,
in accordance with the conditions set forth
in Section 2.10A; (d) in the case of
repurchase agreements entered into between
the Fund on behalf of the Portfolio and the
Custodian, or another bank, or a
<PAGE>
broker-dealer which is a member of NASD, (i)
against delivery of the securities either in
certificate form or through an entry
crediting the Custodian's account at the
Federal Reserve Bank with such securities or
(ii) against delivery of the receipt
evidencing purchase by the Portfolio of
securities owned by the Custodian along with
written evidence of the agreement by the
Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank,
whether domestic or foreign; such transfer
may be effected prior to receipt of a
confirmation from a broker and/or the
applicable bank pursuant to Proper
Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or
surrender of securities owned by the
Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Portfolio as set forth in
Article 4 hereof;
4) For the payment of any expense or liability
<PAGE>
incurred by the Portfolio, including but not
limited to the following payments for the
account of the Portfolio: interest, taxes,
management, accounting, transfer agent and
legal fees, and operating expenses of the
Fund whether or not such expenses are to be
in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares of
the Portfolio declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends
received in respect of securities sold short;
7) For any other proper purpose, but only upon
receipt of, in addition to Proper
Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution
of the Board of Directors or of the Executive
Committee of the Fund signed by an officer of
the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for
which such payment is to be made, declaring
such purpose to be a proper purpose, and
naming the person or persons to whom such
payment is to be made.
<PAGE>
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. Except as specifically stated otherwise in
this Contract, in any and every case where payment for
purchase of domestic securities for the account of a
Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such
Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian
of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by
a Portfolio in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a
<PAGE>
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein
as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to
the following provisions:
1) The Custodian may keep securities of the
Portfolio in a Securities System provided
that such securities are represented in an
account ("Account") of the Custodian in the
Securities System which shall not include any
assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise
for customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Portfolio;
3) The Custodian shall pay for securities
purchased for the account of the Portfolio
upon (i) receipt of advice from the
Securities System that such securities have
been transferred to the Account, and (ii) the
making of an entry on the records of the
<PAGE>
Custodian to reflect such payment and
transfer for the account of the Portfolio.
The Custodian shall transfer securities sold
for the account of the Portfolio upon (i)
receipt of advice from the Securities System
that payment for such securities has been
transferred to the Account, and (ii) the
making of an entry on the records of the
Custodian to reflect such transfer and
payment for the account of the Portfolio.
Copies of all advices from the Securities
System of transfers of securities for the
account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by
the Custodian and be provided to the Fund at
its request. Upon request, the Custodian
shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or
from the account of the Portfolio in the form
of a written advice or notice and shall
furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets
reflecting each day's transactions in the
Securities System for the account of the
Portfolio.
<PAGE>
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the
Custodian on the Securities System's
accounting system, internal accounting
control and procedures for safeguarding
securities deposited in the Securities System;
5) The Custodian shall have received from the
Fund on behalf of the Portfolio the initial
or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be
liable to the Fund for the benefit of the
Portfolio for any loss or damage to the
Portfolio resulting from use of the
Securities System by reason of any
negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of
its or their employees or from failure of the
Custodian or any such agent to enforce
effectively such rights as it may have
against the Securities System; at the
election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian
with respect to any claim against the
Securities System or any other person which
<PAGE>
the Custodian may have as a consequence of
any such loss or damage if and to the extent
that the Portfolio has not been made whole
for any such loss or damage.
2.10A FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities
owned by a Portfolio in the Direct Paper System of the
Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Custodian may keep securities of the
Portfolio in the Direct Paper System only if
such securities are represented in an account
("Account") of the Custodian in the Direct
Paper System which shall not include any
assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are
maintained in the Direct Paper System shall
identify by book-entry those securities
belonging to the Portfolio;
<PAGE>
4) The Custodian shall pay for securities
purchased for the account of the Portfolio
upon the making of an entry on the records of
the Custodian to reflect such payment and
transfer of securities to the account of the
Portfolio. The Custodian shall transfer
securities sold for the account of the
Portfolio upon the making of an entry on the
records of the Custodian to reflect such
transfer and receipt of payment for the
account of the Portfolio;
5) The Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each
transfer to or from the account of the
Portfolio, in the form of a written advice or
notice, of Direct Paper on the next business
day following such transfer and shall furnish
to the Fund on behalf of the Portfolio copies
of daily transaction sheets reflecting each
day's transaction in the Securities System
for the account of the Portfolio;
6) The Custodian shall provide the Fund on
behalf of the Portfolio with any report on
its system of internal accounting control as
the Fund may reasonably request from time to
time.
<PAGE>
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated
account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of
segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio
or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No.
<PAGE>
10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper
corporate purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.13 PROXIES. The Custodian shall, with respect to the
domestic securities held hereunder, cause to be promptly
executed by the registered holder of such securities, if
the securities are registered otherwise than in the name
of the Portfolio or a nominee of the Portfolio, all
proxies, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to
<PAGE>
the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.
Subject to the provisions of Section 2.3, the Custodian
shall transmit promptly to the Fund for each Portfolio
all written information (including, without limitation,
pendency of calls and maturities of domestic securities
and expirations of rights in connection therewith and
notices of exercise of call and put options written by
the Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three
business days prior to the date on which the Custodian is
to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES.
<PAGE>
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS.
The Fund hereby authorizes and instructs the Custodian to
employ as sub-custodians for the Portfolio's securities
and other assets maintained outside the United States the
foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions",
as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Directors,
the Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign
banking institutions and foreign securities depositories
to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to
cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's
assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the
securities and other assets maintained in the custody of
the foreign sub-custodians to: (a) "foreign securities",
as defined in paragraph (c)(l) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund
may determine to be reasonably necessary to effect the
Portfolio's foreign securities transactions.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise
<PAGE>
be agreed upon in writing by the Custodian and the Fund,
assets of the Portfolios shall be maintained in foreign
securities depositories only through arrangements
implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section
3.5 hereof.
3.4 SEGREGATION OF SECURITIES. The Custodian shall identify
on its books as belonging to each applicable Portfolio of
the Fund, the foreign securities of such Portfolios held
by each foreign sub-custodian. Each agreement pursuant
to which the Custodian employs a foreign banking
institution shall require that such institution establish
a custody account for the Custodian on behalf of the Fund
for each applicable Portfolio of the Fund and physically
segregate in each account, securities and other assets of
the Portfolios, and, in the event that such institution
deposits the securities of one or more of the Portfolios
in a foreign securities depository, that it shall
identify on its books as belonging to the Custodian, as
agent for each applicable Portfolio, the securities so
deposited.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each
agreement with a foreign banking institution shall be
<PAGE>
substantially in the form set forth in Exhibit 1 hereto
and shall provide that: (a) the assets of each Portfolio
will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the
foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets
of each Portfolio will be freely transferable without the
payment of money or value other than for custody or
administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or
other representatives of the Custodian, including to the
extent permitted under applicable law the independent
public accountants for the Fund, will be given access to
the books and records of the foreign banking institution
relating to its actions under its agreement with the
Custodian; and (e) assets of the Portfolios held by the
foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon
request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of the
Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to
<PAGE>
the performance of such foreign banking institution under
its agreement with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the
Fund from time to time, as mutually agreed upon,
statements in respect of the securities and other assets
of the Portfolio(s) held by foreign sub-custodians,
including but not limited to an identification of
entities having possession of the Portfolio(s) securities
and other assets and advice or notifications of any
transfers of securities to or from each custodial account
maintained by a foreign banking institution for the
Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio,
the identity of the entity having physical possession of
such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
(a) Except as otherwise provided in paragraph (b) of this
Section 3.8, the provision of Sections 2.2 and 2.7 of
this Contract shall apply, MUTATIS MUTANDIS to the
foreign securities of the Fund held outside the United
States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received
for the account of each applicable Portfolio and delivery
of securities maintained for the account of each
applicable Portfolio may be effected in accordance with
<PAGE>
the customary established securities trading or
securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to
the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such
securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such
entity's nominee to the same extent as set forth in
Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder
of record of such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement
pursuant to which the Custodian employs a foreign banking
institution as a foreign sub-custodian shall require the
institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold
harmless, the Custodian and each Fund from and against
any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's
performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such
<PAGE>
loss, damage, cost, expense, liability or claim if and to
the extent that the Fund has not been made whole for any
such loss, damage, cost, expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable
for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect
to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the
custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian
shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in
delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any responsibility
to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk
(including, but not limited to, exchange control
restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed
hostilities) or (b) other losses (excluding a bankruptcy
or insolvency of State Street London Ltd. not caused by
<PAGE>
political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the
Custodian to advance cash or securities for any purpose
for the benefit of a Portfolio including the purchase or
sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct,
any property at any time held for the account of the
applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and
to dispose of such Portfolios assets to the extent
necessary to obtain reimbursement.
3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish
annually to the Fund, during the month of June,
information concerning the foreign sub-custodians
employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund
in connection with the initial approval of this
<PAGE>
Contract. In addition, the Custodian will promptly
inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a
foreign sub-custodian or any material loss of the assets
of the Fund or in the case of any foreign sub-custodian
not the subject of an exemptive order from the Securities
and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline
below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined
below $200 million (in each case computed in accordance
with generally accepted U.S. accounting principles).
3.13 BRANCHES OF U.S. BANKS.
(a) Except as otherwise set forth in this Contract, the
provisions hereof shall not apply where the custody of
the Portfolios assets are maintained in a foreign branch
of a banking institution which is a "bank" as defined by
Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of
said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this
Contract.
(b) Cash held for each Portfolio of the Fund in the
United Kingdom shall be maintained in an interest bearing
account established for the Fund with the Custodian's
<PAGE>
London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or
both.
3.14 TAX LAW.
The Custodian shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund
or the Custodian as custodian of the Fund by the tax law
of the United States of America or any state or political
subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of jurisdictions other than those
mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other
governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts
to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions
for which the Fund has provided such information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE
FUND.
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are
<PAGE>
received for Shares of that Portfolio issued or sold from time to time by the
Fund. The Custodian will provide timely notification to the Fund on behalf of
each such Portfolio and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to
the limitations of the Articles of Incorporation and any applicable votes of
the Board of Directors of the Fund pursuant thereto, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares of a Portfolio, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire funds
to or through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund and the Custodian.
5. PROPER INSTRUCTIONS.
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of
Directors shall have from time to time
<PAGE>
authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose
for which such action is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes them to have been
given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the
Board of Directors, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of Directors and the Custodian are satisfied that such procedures
afford adequate safeguards for the Portfolios' assets. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three - party agreement which requires a segregated
asset account in accordance with Section 2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY.
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such
<PAGE>
payments shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of the Portfolio except as otherwise
directed by the Board of Directors of the Fund.
7. EVIDENCE OF AUTHORITY.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed
by it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Directors of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Directors pursuant to the Articles of
Incorporation as described in such vote, and such vote may be considered as
in full force and effect until receipt by the Custodian of written notice to
the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME.
The Custodian shall cooperate with and supply necessary
<PAGE>
information to the entity or entities appointed by the Board of Directors of
the Fund to keep the books of account of each Portfolio and/or compute the
net asset value per share of the outstanding shares of each Portfolio or, if
directed in writing to do so by the Fund on behalf of the Portfolio, shall
itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net
income of the Portfolio as described in the Fund's currently effective
prospectus related to such Portfolio and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if
instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described
from time to time in the Fund's currently effective prospectus related to
such Portfolio.
9. RECORDS.
The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the Fund and shall at all times during the regular business hours
of the Custodian be open for inspection by duly authorized
<PAGE>
officers, employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and
the Custodian, include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT.
The Custodian shall take all reasonable action, as the Fund on
behalf of each applicable Portfolio may from time to time request, to obtain
from year to year favorable opinions from the Fund's independent accountants
with respect to its activities hereunder in connection with the preparation
of the Fund's Form N-1A, and Form N-SAR or other annual reports to the
Securities and Exchange Commission and with respect to any other requirements
of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS.
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or
maintained in a Securities System, relating to the services provided by the
Custodian under this Contract; such reports, shall be of
<PAGE>
sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. COMPENSATION OF CUSTODIAN.
12.1 The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian.
Specific fees and charges are contained in the Fee
Schedule attached hereto.
12.2 The fees and charges stated in the Fee Schedule shall be
fixed for a period of five years from the date of this
Agreement. Thereafter the fees and charges shall be
renegotiated each year, but will not exceed the previous
year's fees and charges adjusted for increases in the
Consumer Price Index of the previous year in the Greater
Boston Area as published by the Federal Reserve Bank of
Boston, or such other index as the parties may agree.
12.3 In no event shall State Street charge fees and charges
stated herein that exceeds the fees and charges charged
other mutual funds that have the same or less amount of
Fund Net Assets maintained by State Street. In no event
shall this provision allow the Fund to review the fees
and charges of State Street's other customers or the
books and records of State Street.
12.4 State Street shall dedicate a full time project manager
<PAGE>
for the process of the conversion of the Funds and shall
waive all costs associated with the conversion of the
Funds to State Street.
12.5 The fees and charges shall be subject to a performance
standard as set out in the Performance Standard Schedule
attached hereto.
13. RESPONSIBILITY OF CUSTODIAN.
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received
by it or delivered by it pursuant to this Contract and shall be held harmless
in acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant acting pursuant to the
terms of a three-party futures or options agreement. The Custodian shall be
held to the exercise of reasonable care in carrying out the provisions of
this Contract, but shall be kept indemnified by and shall be without
liability to the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and may act upon advice
of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
The Custodian shall be liable for the acts or omissions
<PAGE>
of a foreign banking institution appointed pursuant to the provisions of
Article 3 to the same extent as set forth in Article 1 hereof with respect to
sub-custodians located in the United States (except as specifically provided
in Article 3.10) and, regardless of whether assets are maintained in the
custody of a foreign banking institution, a foreign securities depository or
a branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense, liability
or claim resulting from, or caused by, the direction of or authorization by
the Fund to maintain custody of any securities or cash of the Fund in a
foreign country including, but not limited to, losses resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism.
If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable
for the payment of money or incurring liability of some other form, the Fund
on behalf of the Portfolio, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and
form satisfactory to it.
If the Fund requires the Custodian, its affiliates,
subsidiaries or agents, to advance cash or securities for any
purpose (including but not limited to securities settlements,
<PAGE>
foreign exchange contracts and assumed settlement) for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of contracts
for foreign exchange or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except such
as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held for the
account of the applicable Portfolio shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of such Portfolio's assets to the
extent necessary to obtain reimbursement.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT.
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect
not sooner than one hundred twenty (120) days after the date of such delivery
or mailing by the Custodian and sixty (60) days after the date of such
delivery or mailing by the Fund; PROVIDED, however that the Custodian shall
not with respect to a Portfolio act under Section 2.10 hereof in the absence
of receipt of an
<PAGE>
initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Fund has approved the initial use of a particular
Securities System by such Portfolio and the receipt of an annual certificate
of the Secretary or an Assistant Secretary that the Board of Directors has
reviewed the use by such Portfolio of such Securities System, as required in
each case by Rule 17f-4 under the Investment Company Act of 1940, as amended
and that the Custodian shall not with respect to a Portfolio act under
Section 2.10A hereof in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Directors has
approved the initial use of the Direct Paper System by such Portfolio and the
receipt of an annual certificate of the Secretary or an Assistant Secretary
that the Board of Directors has reviewed the use by such Portfolio of the
Direct Paper System; provided further, however, that the Fund shall not amend
or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund on behalf of one or more of the Portfolios
may at any time by action of its Board of Directors (i) substitute another
bank or trust company for the Custodian by giving notice as described above
to the Custodian, or (ii) immediately terminate this Contract in the event of
the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of
<PAGE>
competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be
due as of the date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements.
15. SUCCESSOR CUSTODIAN.
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Directors of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of
each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Directors of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a
bank or trust
<PAGE>
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian on behalf of each applicable Portfolio
and all instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of each applicable
Portfolio and to transfer to an account of such successor custodian all of
the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may
<PAGE>
from time to time agree on such provisions interpretive of or in addition to
the provisions of this Contract as may in their joint opinion be consistent
with the general tenor of this Contract. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be
an amendment of this Contract.
17. ADDITIONAL FUNDS.
In the event that the Fund establishes one or more series of Shares
in addition to the Government Securities Account, Growth Account, Income
Account, Liquid Account and Total Return Account with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian
agrees in writing to provide such services, such series of Shares shall
become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. PRIOR CONTRACTS.
<PAGE>
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its duly authorized representative
and its seal to be hereunder affixed as of the 28th day of January, 1993.
ATTEST CONNECTICUT MUTUAL INVESTMENT
ACCOUNTS, INC.
_________________________ By___________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
_________________________ By____________________________
Assistant Secretary Executive Vice President
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Connecticut
Mutual Investment Accounts, Inc. for use as sub-custodians for the Fund's
securities and other assets:
COUNTRY BANK
Australia Australia and New Zealand Banking Group Limited
Austria Girozentrale und Bank de oesterreichischen
Sparkhassen AG
Belgium Banque Bruxelles Lambert
Canada Canada Trust Company
Denmark Den Danske Bank
Finland Kansallis-Osake-Pankki
France Credit Commercial De France
Germany Berliner Handels-und Frankfurter Bank
Hong Kong Standard Chartered Bank
Italy Credito Italiano
<PAGE>
Japan Sumitomo Trust & Banking Co., Ltd.
Netherlands Bank Mees S( Hope N.V.
New Zealand Westpac Banking Corporation
Norway Christiania Bank OG Kreditkasse
Singapore The Development Bank of Singapore Ltd.
Spain Banco Hispano Americano
Sweden Skandinaviska Enskilda Banken
Switzerland Union Bank of Switzerland
United Kingdom State Street London Limited
Certified:
_____________________________
Fund's Authorized Officer
Date:________________________
Exhibit 1
SUBCUSTODIAN AGREEMENT
AGREEMENT made this__________________________; between
State Street Bank and Trust Company, A Massachusetts Trust
Company (hereinafter referred to as the "Custodian"), having
its principal place of business at 225 Franklin Street,
Boston, MA, and ______________________________(hereinafter
referred to as the "Subcustodian"), a bank organized under
the laws of ________________________________ and having its
registered office at ______________________________________
____________________________________________________________.
WHEREAS, Custodian has been appointed to act as
Trustee, Custodian or Subcustodian of securities and monies
on behalf of certain of its customers including, without
limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of
1940, as amended, and employee benefit plans subject to the
U.S. Employee Retirement Income Security Act of 1974, as
amended;
WHEREAS, Custodian wishes to establish Accounts (the
"Accounts") with the Subcustodian to hold and maintain
certain property for which Custodian is responsible as
custodian; and
WHEREAS, Subcustodian agrees to establish the Accounts
<PAGE>
and to hold and maintain all Property in the Accounts in
accordance with the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the mutual covenants
and agreements hereinafter contained, the Custodian and the
Subcustodian agree as follows:
I. THE ACCOUNT
A. ESTABLISHMENT OF THE ACCOUNT
Custodian hereby requests that Subcustodian establish
for each client of the Custodian an Account which shall be
composed of:
1. A Custody Account for any and all Securities
(as hereinafter defined) from time to time received by
Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as
hereinafter defined) from time to time received by
Subcustodian therefor.
B. USE OF THE ACCOUNT
The Account shall be used exclusively to hold, acquire,
transfer or otherwise care for, on behalf of Custodian as
custodian and the customers of Custodian and not for
Custodian's own interest, Securities, and such Cash or cash
equivalents as are transferred to Subcustodian or as are
received in payment of any transfer of, or as payment on, or
interest on, or dividend from, any such Securities (herein
collectively called "Cash").
C. TRANSFER OF PROPERTY IN THE ACCOUNT
Beneficial ownership of the Securities and Cash in the
Account shall be freely transferable without payment of
money or value other than for safe custody and
administration.
D. OWNERSHIP AND SEGREGATION OF PROPERTY IN ACCOUNT
The ownership of the property in the Account, whether
Securities, Cash or both, and whether any such property is
held by Subcustodian in an Eligible Depository, shall be
clearly recorded on Subcustodian's books as belonging to
Custodian on behalf of Custodian's customers, and not for
Custodian's own interest and, to the extent that Securities
are physically held in the Account, such Securities shall
also be physically segregated from the general assets of
Subcustodian, the assets of Custodian in its individual
capacity and the assets of Subcustodian other customers.
In addition, Subcustodian shall maintain such other records
as may be necessary to identify the property hereunder as
belonging to each Account.
<PAGE>
E. REGISTRATION OF SECURITIES IN THE ACCOUNT
Securities which are eligible for deposit in a
depository as provided for in Paragraph III may be
maintained with the depository in an account for
Subcustodian's customers. Securities which are not held in
a depository and that are ordinarily held in registered form
will be registered in the name of the Sub-custodian or in
the name of Sub-custodian's nominee, unless alternate
Instructions are furnished by Custodian.
II. SERVICES TO BE PROVIDED BY THE SUBCUSTODIAN
The Services Subcustodian will provide to Custodian and
the manner in which such services will be performed will be
as set forth below in this Agreement.
A. SERVICES PERFORMED PURSUANT TO INSTRUCTIONS
All transactions involving the Securities and Cash in
the Account shall be executed solely in accordance with
Custodian's Instructions as that term is defined in
Paragraph IV hereof, except those described in Paragraph B
below.
B. SERVICES TO BE PERFORMED WITHOUT INSTRUCTIONS
Subcustodian will, unless it receives Instructions from
Custodian to the contrary:
1. COLLECT CASH
Promptly collect and receive all dividends, income,
principal, proceeds from transfer and other payments with
respect to property held in the Account, and present for
payment all Securities held in the Account which are called,
redeemed or retired or otherwise become payable and all
coupons and other income items which call for payment upon
presentation, and credit Cash receipts therefrom to the
Deposit Account.
2. EXCHANGE SECURITIES
Promptly exchange Securities where the exchange is
purely ministerial including, without limitation, the
exchange of temporary Securities for those in definitive
form and the exchange of warrants, or other documents of
entitlement to Securities, for the Securities themselves.
3. SALE OF RIGHTS AND FRACTIONAL INTERESTS
Whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such
rights entitlement or fractional interest bears an
expiration date, Subcustodian will promptly endeavor to
obtain Custodian's Instructions, but should these not be
<PAGE>
received in time for Subcustodian to take timely action,
Subcustodian is authorized to sell such rights entitlement
or fractional interest and to credit the Account.
4. EXECUTE CERTIFICATES
Execute in Custodian's name for the Account, whenever
Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Securities held in the Account.
5. PAY TAXES AND RECEIVE REFUNDS
To pay or cause to be paid from the Account any and all
taxes and levies in the nature of taxes imposed on the
property in the Account by any governmental authority, and
to take all steps necessary to obtain all tax exemptions,
privileges or other benefits, including reclaiming and
recovering any withholding tax, relating to the Account and
to execute any declarations, affidavits, or certificates of
ownership which may be necessary in connection therewith.
6. PREVENT LOSSES
Take such steps as may be reasonably necessary to
secure, or otherwise prevent the loss of, entitlements
attached to or otherwise relating to property held in the
Account.
C. ADDITIONAL SERVICES
1. TRANSMISSION OF NOTICES OF CORPORATE ACTION
By such means as will permit Custodian to take timely
action with respect thereto, Subcustodian will promptly
notify Custodian upon receiving notices or reports, or
otherwise becoming aware, of corporate actions affecting
Securities held in the Account (including, but not limited
to, calls for redemption, mergers, consolidations,
reorganizations, recapitalizations, tender offers, rights
offerings, exchanges, subscriptions and other offerings) and
dividend, interest and other income payments relating to
such Securities.
2. COMMUNICATIONS REGARDING THE EXERCISE
OF ENTITLEMENTS
Upon request by Custodian, Subcustodian will promptly
deliver, or cause any Eligible Depository authorized and
acting hereunder to deliver, to Custodian all notices,
proxies, proxy soliciting materials and other communications
that call for voting or the exercise of rights or other
specific action (including material relative to legal
proceedings intended to be transmitted to security holders)
relating to Securities held in the Account to the extent
received by Subcustodian or said Eligible Depository, such
proxies or any voting instruments to be executed by the
<PAGE>
registered holder of the Securities, but without indicating
the manner in which such Securities are to be voted.
3. MONITOR FINANCIAL SERVICE
In furtherance of its obligations under this
Agreement, Subcustodian will monitor a leading financial
service with respect to announcements and other information
respecting property held in the Account, including
announcements and other information with respect to
corporate actions and dividend, interest and other income
payments.
III. USE OF SECURITIES DEPOSITORY
Subcustodian may, with the prior written approval of
custodian, maintain all or any part of the Securities in the
Account with a securities depository or clearing agency
which is incorporated or organized under the laws of a
country other than the United States of America and is
supervised or regulated by a government agency or regulatory
authority in the foreign jurisdiction having authority over
such depositories or agencies, and which operates (a) the
central system for handling of designated securities or
equivalent book entries in_______________________________
or (b) a transnational system for the central handling
securities or equivalent book entries (herein called
"Eligible Depository"), provided however, that, while so
maintained, such Securities shall be subject only to the
directions of Subcustodian, and that Subcustodian duties,
obligations and responsibilities with regard to such
Securities shall be the same as if such Securities were held
by Subcustodian on its premises.
IV. CLAIMS AGAINST PROPERTY IN THE ACCOUNT
The property in the account shall not be subject to any
right, charge, security interest, lien or claim of any kind
(collectively "Charges") in favor of Subcustodian or any
Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment by
Subcustodian for such property's safe custody or
administration in accordance with the terms of this
Agreement. Subcustodian will immediately notify Custodian
of any attempt by any party to assert any Charge against the
property held in the Account and shall take all lawful
actions to protect such property from such Charges until
Custodian has had reasonable time to respond to such notice.
V. SUBCUSTODIAN'S WARRANTY
SUBCUSTODIAN REPRESENTS AND WARRANTS THAT:
(A) It is a branch of a "qualified U.S. bank" or it is
an "eligible foreign custodian" as those terms are defined
<PAGE>
in Rule 17f-5 of the Investment Company Act of 1940, a copy
of which is attached hereto as Attachment A (the "Rule"),
and Subcustodian shall immediately notify Custodian, in
writing or by other authorized means, in the event that
there appears to be a substantial likelihood that
Subcustodian will cease to qualify under the Rule as
currently in effect or as hereafter amended, or
(B) It is the subject of an exemptive order issued by
the United States Securities and Exchange Commission which
order permits Custodian to employ Subcustodian
notwithstanding the fact that Subcustodian fails to qualify
under the terms of the Rule, and Subcustodian shall
immediately notify Custodian, in writing or by other
authorized means, if for any reason it is no longer covered
by such exemptive order.
Upon receipt of any such notification required
under (A) or (B) of this section, Custodian may terminate
this Agreement immediately without prior notice to
Subcustodian.
VI. DEFINITIONS
A. INSTRUCTIONS
The term "instructions" means
1. instructions in writing signed by authorized
individuals designated as such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable
form as shall customarily be used for the transmission of
like information, and
4. such other forms of communication as from time to
time may be agreed upon by Custodian and Subcustodian, which
Subcustodian believes in good faith to have been given by
Custodian or which are transmitted with proper testing or
authentication pursuant to terms and conditions which
custodian may specify.
Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until canceled or
superseded. Subcustodian shall act in accordance with
Instructions and shall not be liable for any act or omission
in respect of any Instruction except in the case of willful
default negligence, fraud, bad faith, willful misconduct,
or reckless disregard of duties on the part of Subcustodian.
Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry
practice and local settlement practices.
B. ACCOUNT
The term "Account" means collectively the Custody
Account, and the Deposit Account.
<PAGE>
C. SECURITIES
The term "Securities" includes, without limitation,
stocks, shares, bonds, debentures, debt securities
(convertible or non-convertible), notes, or other
obligations or securities and any certificates, receipts,
futures contracts, foreign exchange contracts, options,
warrants, scrip or other instruments representing rights to
receive, purchase or subscribe for the same, or evidencing
or representing any other rights or interests therein, or in
any property or assets.
VII. MISCELLANEOUS PROVISIONS
A. STATEMENTS REGARDING THE ACCOUNT
Subcustodian will supply Custodian with such statements
regarding the Account as Custodian may request, including
the identity and location of any Eligible Depository
authorized and acting hereunder. In addition, Subcustodian
will supply custodian an advice or notification of any
transfers of Securities to or from the Account indicating,
as to Securities acquired for the Account, if applicable,
the Eligible Depository having physical possession of such
securities.
B. EXAMINATION OF BOOKS AND RECORDS
Subcustodian agrees that its books and records relating
to the Account and Sub-custodian's actions under this
agreement shall be open to the physical, on-premises
inspection and audit at reasonable times by officers of,
auditors employed by, or other representatives of Custodian
including (to the extent permitted under the laws of
___________________) the independent public accountants for
any customer of Custodian whose property is being held
hereunder) and such books and records shall be retained for
such period as shall be agreed upon by Custodian and
Subcustodian.
As Custodian may reasonably request from time to time,
Subcustodian will furnish its auditor's reports on its
system of internal controls, and Subcustodian will use its
best efforts to obtain and furnish similar reports of any
Eligible Depository authorized and acting hereunder.
C. STANDARD OF CARE
In holding, maintaining, servicing and disposing of
Property under this Agreement, and in fulfilling any other
obligations hereunder, Subcustodian shall exercise the same
standard of care that it exercises over its own assets,
provided that Subcustodian shall exercise at least the
degree of care and maintain adequate insurance as expected
of a prudent professional Subcustodian for hire and shall
<PAGE>
assume the burden of proving that it has exercised such care
in its maintenance of Property held by Subcustodian in its
Accounts. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care,
and Subcustodian will remain as fully responsible for any
loss or damage to such securities as if it had itself
retained physical possession of them. Subcustodian shall
indemnify and hold harmless Custodian and each of
Custodian's customers from and against any loss, damage,
cost, expense, liability or claim (including reasonable
attorney's fees) arising out of or in connection with the
improper or negligent performance or the nonperformance of
the duties of Subcustodian.
Subcustodian shall be responsible for complying with
all provisions of the laws of _________________________, or
any other law, applicable to Subcustodian in connection with
its duties hereunder, including (but not limited to) the
payment of all transfer taxes or other taxes and compliance
with any currency restrictions and securities laws in
connection with its duties as Subcustodian.
D. LOSS OF CASH OR SECURITIES
Subcustodian agrees that, in the event of any loss of
Securities or Cash in the Account, Subcustodian will use its
best efforts to ascertain the circumstances relating to such
loss and will promptly report the same to Custodian and
shall use every legal means available to it to effect the
quickest possible recovery.
E. COMPENSATION OF SUBCUSTODIAN
Custodian agrees to pay to Subcustodian from time to
time such compensation for its services and such out-of-
pocket or incidental expenses of Subcustodian pursuant to
this Agreement as may be mutually agreed upon in writing
from time to time.
F. OPERATING REQUIREMENTS
The Subcustodian agrees to follow such Operating
Requirements as the Custodian may establish from time to
time. A copy of the current Custodian Operating
Reguirements is attached as Attachment B to this Agreement.
G. TERMINATION
This Agreement may be terminated by Subcustodian or
Custodian on 60 days' written notice to the other party,
sent by registered mail, provided that any such notice,
whether given by Subcustodian or Custodian, shall be
followed within 60 days by Instructions specifying the names
of the persons to whom Subcustodian shall deliver the
Securities in the Account and to whom the Cash in the
<PAGE>
Account shall be paid. If within 60 days following the
giving of such notice of termination, Subcustodian does not
receive such Instructions, Subcustodian shall continue to
hold such Securities and Cash subject to this Agreement
until such Instructions are given. The obligations of the
parties under this Agreement shall survive the termination
of this Agreement.
H. NOTICES
Unless otherwise specified in this Agreement, all
notices and communications with respect to matters
contemplated by this Agreement shall be in writing, and
delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following
addresses (or to such other address as either party hereto
may from time to time designate by notice duly given in
accordance with this paragraph):
To Subcustodian:
To Custodian: State Street Bank and Trust Company
Securities Operations
Network Administration
P.O. Box 1631
Boston, Massachusetts 02105
I. CONFIDENTIALITY
Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in
the Account and the beneficial owners thereof, subject,
however, to the provisions of any laws requiring disclosure.
In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which
Custodian shall make available to it. The Subcustodian
further agrees it will not disclose the existence of this
Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has
secured the Custodians written consent.
J. ASSIGNMENT
This Agreement shall not be assignable by either party
but shall bind any successor in interest of Custodian and
Subcustodian respectively.
K. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of _______________________________
_________________. To the extent inconsistent with this
<PAGE>
Agreement or Custodian's Operating Requirements as attached
hereto, Subcustodian's rules and conditions regarding
accounts generally or custody accounts specifically shall
not apply.
CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By:_______________________
Date______________________
AGREED TO BY SUBCUSTODIAN:
By :_________________________ __________________________
Date:________________________
STATE STREET BANK AND TRUST COMPANY
Consolidated Custodian Fee Schedule
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS, INC.
I. ADMINISTRATION
The following schedule represents the consolidated fee schedule for all assets
in:
Connecticut Mutual Investment Accounts, Inc.
Connecticut Mutual Financial Services Series Fund I, Inc.
Separate Accounts
A. CUSTODY
INCLUDES: Maintaining custody of fund assets. Settling portfolio
purchases and sales. Reporting buy and sell fails. Determining and
collecting portfolio incomes. Making cash disbursements and reporting
cash transactions. Monitoring corporate actions. Withholding foreign
taxes. Filing foreign tax reclaims.
FUND NET ASSETS ANNUAL FEE
First $l Billion .005 of 1%
Excess of $1 Billion .0025 of 1%
B. PORTFOLIO AND FUND ACCOUNTING
Includes: Maintaining investment ledgers, providing selected
portfolio transactions, position and income reports. Maintaining general
<PAGE>
ledger and capital stock accounts. Preparing daily trial balance.
Calculating net asset value daily, calculating fund 7 day yield.
Providing selected general ledger reports. Securities yield or market
value quotations will be provided to State Street by the fund or via
State Street's pricing services.
THERE WILL BE AN ANNUAL CHARGE OF $15,000 PER DOMESTIC PORTFOLIO.
II. GLOBAL CUSTODY
Includes: Maintaining custody of fund assets. Settling portfolio
purchases and sales. Reporting buy and sell fails. Determining and
collecting portfolio income. Making cash disbursements and reporting
cash transactions. Monitoring corporate actions. Withholding foreign taxes.
Filing foreign tax reclaims.
*GROUP I *GROUP II *GROUP III *GROUP IV *GROUP V
Euroclear Australia Austria Finland Argentina
Germany Canada Belgium Philippines Brazil
Japan Denmark Italy Korea Chile
France Norway Mexico Taiwan
Ireland HongKong Portugal Venezuela
Netherlands Indonesia Singapore
NewZealand Spain
Sweden Thailand
Switzerland Turkey
U.K. Malaysia
A. HOLDING FEES (BASIS POINTS PER PORTFOLIO PER ANNUM):
GROUP I GROUP II GROUP III GROUP IV GROUP V
First $ 50 Million 5.0 11.0 15.0 22.0 35.0
Next $ 50 Million 4.0 10.0 14.0 20.0 30.0
Over $100 Million 3.0 8.0 3.0 18.0 25.0
B. TRADING FEES (PER TRADE):
GROUP I GROUP II GROUP III GROUP IV GROUP V
Trades $25 $40 $55 $60 $100
*Exclude Agent, depository and local auditing fees, stamp duties and
registration fees.
III. PORTFOLIO TRADES
FOR EACH LINE ITEM PROCESSED:
State Street Bank Repos $ 7.00
<PAGE>
Boston Commercial Paper $16.00
DTC or Fed Book Entry $12.00
Physical Settlements/Foreign Trade/PT $25.00
Maturity Collections $ 8.00
IV. OPTIONS
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
V. LENDING OF SECURITIES
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt
of loaned securities $25.00
Loan administration market to market per day, per loan $ 3.00
VI. INTEREST RATE FUTURES
Transactions no security movement $ 8.00
VII. DIVIDEND CHARGES
(For items held at the Request of Traders over record
date in street form) $50.00
VIII. SEC YIELD CALCULATION
Yield calculation per fund, per month $250.00
<PAGE>
IX. SPECIAL SERVICES
Fees for activities of a nonrecurring nature such as fund
consolidations or reorganizations, extraordinary security
shipments and the preparation of special reports will be
subject to negotiation.
X. OUT-OF-POCKET EXPENSES
This charge will be levied on foreign account assets only.
A billing for the recovery of applicable out-of-pocket expenses
will be made as of the end of each month. Out-of-pocket expenses
include, but are not limited to the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer $8.00 Each
Transfer Fees
Subcustodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 $4.25
GNMA Transfer $15 each
CONNECTICUT MUTUAL INVESTMENT ACCOUNTS STATE STREET BANK AND TRUST CO.
By:_____________________________ By:____________________________
TITLE:__________________________ TITLE:__________________________
DATE:___________________________ DATE:___________________________
<PAGE>
PERFORMANCE STANDARDS
CONNECTICUT MUTUAL - CMIA
PERFORMANCE OBJECTIVE STANDARD
Accurate computation of the NAV per share and Submission to 99.5%
Transfer Agent.
Accurate reporting of the NAV per share to NASDAQ 99%
The collection and crediting of interest and dividends 99.95%
FED Credited same day as receipt
PTC Credited same day as receipt
DTC Credited same day as receipt
Physical Credited same day as receipt
Defaulted Security Payments Upon receipt
Timely settlement of trades 99.5%
Timely and accurate receipt of reports by agreed upon delivery date 95%
Accurate computation of SEC Yield calculations 99%
Delivery of Cash Availability by 10:00 AM 99.5%
This assumes capital stock activity is received by 9:30 AM
PERFORMANCE FEE ADJUSTMENT
If standards are not met then a 1% fee reduction will be applied to the fund
complex. The standards will be measured on an annual basis and the
adjustment will occur as a reduction in following year's fees.
<PAGE>
EXHIBIT 8.2
February 8, 1995
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This letter is to advise you that Connecticut Mutual Investment Accounts,
Inc. (the "Fund") intends to register, qualify, and offer additional shares
in the following new Portfolios to the general public: CMIA LifeSpan Capital
Appreciation Account, CMIA LifeSpan Balanced Account, and CMIA LifeSpan
Diversified Income Account (collectively, the "New Accounts").
In accordance with the Additional Funds provision in Section 17 of the
Custodial Contract dated January 28, 1993, and Article 10 of the Transfer
Agency and Service Agreement dated April 19, 1994 between the Fund and State
Street Bank and Trust Company, the Fund hereby requests that you act as
Custodian and Transfer Agent for the New Accounts under the terms of the
respective contracts.
Please indicate your acceptance of the foregoing by executing two copies
of this Letter Agreement, returning one to the Fund and retaining one copy
for your records.
By: /s/ Ann F. Lomeli
---------------------------------
Ann F. Lomeli, Secretary
Agreed to this 8th day of February, 1995.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Vice President
---------------------------------
Vice President
<PAGE>
Exhibit 9.13
FORM OF SERVICE CONTRACT
THIS AGREEMENT is made effective the _th day of ________, 1996,
between OPPENHEIMER SERIES FUND, INC. (hereinafter referred to as the
"Company"), a Maryland corporation, having its principal place of business
at Two World Trade Center, New York, New York 10048, on behalf of each series
of the Company designated by the Company to OFS on Exhibit 1 to this
Agreement (each series is hereinafter referred to as a "Fund") as such
Exhibit may be amended from time to time to add additional series
of the Company, and OPPENHEIMERFUNDS SERVICES, a division of
OPPENHEIMERFUNDS, INC. -- a Colorado corporation ("hereinafter referred to
as "OFS") having its principal place of business at 3410 South Galena
Street, Denver, Colorado 80231.
WITNESSETH:
WHEREAS, the Company desires that OFS perform certain registrar and
transfer agency services for the Fund, as more specifically set forth in
Schedule A to this Agreement. THEREFORE, the parties hereto agree as follows:
1. SERVICES TO BE PERFORMED BY OFS.
The services to be performed for the Funds by OFS are set forth in
Schedule A to this Agreement, which Schedule is incorporated as part of this
Agreement. OFS shall perform such services as registrar, transfer agent,
dividend and distribution disbursing agent, redemption agent, clearing
agent and exchange agent or as service agent for the Funds. OFS
hereby represents to the Company that it is, and during the term of this
Agreement and any renewals hereof will continue to be, an owner or authorized
licensee for the computer data processing systems used by OFS in the
rendition of services hereunder.
<PAGE>
2. ADDITIONAL SERVICES.
OFS also agrees to perform such additional services within its data
processing and shareholder services capacities as may be requested from time
to time by a Fund, provided that such services are the subject of an
amendment to Schedule A hereof executed by the parties hereto in the manner
provided herein for amendments to this Agreement.
3. FEES.
A. METHOD OF CALCULATING FEES PAID BY THE FUND. OFS will render
the services it agrees hereunder to provide to each Fund on a cost basis, to
be determined as hereinafter provided. Each Fund will pay OFS an amount (the
"Fund's Share") of OFS's "Reimbursable Expenses," as defined in subparagraph
B of this section, as frequently as requested by OFS, such amounts to be paid
by the Fund when billed by OFS for expenses incurred, or to be prepaid based
on estimates by OFS if such prepayment arrangement is approved by the Board
of Directors of the Company. Any such estimates upon which prepayments are
made shall be verified and adjusted monthly thereafter in accordance
with OFS's allocated costs, as described in subparagraph E below. All
servicing and transaction fees or charges, required by a Fund's then-current
prospectus to be paid by an investor in the Fund's shares, will be collected
by OFS and credited against the Fund's Share of Reimbursable Expenses except
that any amounts representing fees payable by an investor directly to any
bank as custodian and director fees with regard to and pursuant to the terms
of any Individual Retirement Accounts, Self-Employed Retirement Plans, Profit
Sharing and Pension Plans, or similar plans invested in the Fund and for
which such bank acts as custodian or director may be paid directly to such
bank or, if said bank has agreed to permit OFS to retain all or a portion of
said fees, such amount shall be credited against the Fund's share of
Reimbursable Expenses. Any credit for fees payable for an investor's
purchase of, or exchange for, the shares of any other investment company for
which OFS, or any subsidiary or affiliate of OFS acts as a general
distributor, will be shared equally between the applicable Fund and such
other investment company.
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<PAGE>
B. DESCRIPTION OF "REIMBURSABLE EXPENSES." For the
purposes of this Agreement, the "Reimbursable Expenses" of OFS shall
include, in addition to the expenses described in subparagraphs (1), (2) and
(3) of this subparagraph B, any operating and overhead expenses as may be
paid or incurred by OFS to provide such personnel, equipment, telephone
lines, consulting services, account collection services, supplies, space and
facilities, including without limitation computer tape transmission
facilities and services and computer time, as shall in the good faith
judgment of OFS be necessary or desirable for the effective performance of
shareholder account servicing, redemption, receipt and processing of the
purchase of a Fund's shares, dividend or distribution disbursing and transfer
agency services for (a) all investment companies (including each Fund) with
which OFS or a subsidiary has entered into a Service Contract and for which
OFS, or asubsidiary or affiliate of OFS, acts in the capacity of investment
adviser, (b) the related unit investment trusts, if any, of the foregoing
investment companies, other than unit investment trusts which operate as a
separate account of an insurance company, and (c) the principal underwriters
of any such investment companies or unit investment trust (hereinafter the
entities described in (a), (b), and (c) are jointly and severally referred to
as "Participants") as well as for the performance of such data processing and
administrative functions or services as may be required by OFS or any
subsidiary to perform the services required hereunder. Reimbursable
Expenses of OFS shall also include without limitation:
(1) The cost, including without limitation the personnel costs,
of any computer modifications, amendments, testing or monitoring of the
computer data processing system used by OFS for the performance of services
for the Participants which may be deemed by OFS to be necessary or desirable
for the maintenance or improvement of such data processing system;
(2) Such general executive, internal audit and administrative
expenses of OFS as are properly apportioned, on a basis capable of reasonable
substantiation, to the
-3-
<PAGE>
functions set forth above in this subparagraph B to be performed by OFS.
Such costs are costs of OFS which are allocated in accordance with
subparagraph C below; and
(3) Amounts paid by OFS to sub-transfer agents, third
party administrators and other similar clearing firms pursuant to written
agreements which permit OFS to maintain an omnibus account in the name of the
shareholder of record with the individual beneficial owners of the account
being serviced by, and the account records for the beneficial owners
maintained by, such sub-transfer agent, third party administrator or other
similar clearing firm.
C. DETERMINATION OF FUND'S SHARE OF REIMBURSABLE EXPENSES. Each
Fund's Share of the Reimbursable Expenses of OFS for all participants will be
determined by the use of allocation formulae set forth in subparagraph D
below, which allocation formulae shall be:
(1) No more or less advantageous to a Fund than to any of the
other of such Participants;
(2) Consistent with and governed by the provisions of the
Distributor's Agreement in effect, from time to time, between a Fund and its
general distributor relating to the allocation of costs between that Fund and
its general distributor;
(3) With the full cooperation of OFS, reviewed at least annually
by the auditors of the Company to determine the appropriateness of the
Reimbursable Expenses of OFS and the allocation formulae used to determine
each Fund's Share of such Reimbursable Expenses; and
(4) In no event shall a Fund's Share include any expense for
services in connection with the distribution of that Fund's shares which are
or may hereafter be provided by broker-dealers or financial institutions with
respect to accounts for their customers owning shares of any investment
company.
D. COST ALLOCATION. Subject to the foregoing, each Fund's
Share of the Reimbursable Expenses of OFS shall be computed in accordance
with the allocation formulae and
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<PAGE>
procedures set forth in OFS's "Cost Accounting Manual and Job Procedures,"
compiled and maintained by OFS, as such document may be amended from time to
time by OFS, provided that OFS shall notify that Fund of any material changes
which shall change the method of allocation of that Fund's Share of
Reimbursable Expenses, and such changes shall be approved by the Board of the
Company. Such Manual shall be reviewed periodically by the
Company's auditors in connection with the annual review described in
subparagraph 2(C)(3) above.
E. EXPENSE REPORTS. OFS shall submit to each Fund a monthly
report setting forth in reasonable detail the Reimbursable Expenses that OFS
has paid or incurred during such month (and on a year-to date basis) together
with a statement of the Fund's Share of such Reimbursable Expenses.
4. REIMBURSEMENT OF OTHER EXPENSES.
In addition to paying its Share of Reimbursable Expenses, each Fund
also will promptly reimburse OFS or prepay OFS based on estimates by
OFS if such prepayment arrangement is approved by the Company's Board
(such estimates to be verified and adjusted monthly thereafter in accordance
with actual allocated costs), for the following:
(a) Out-of-pocket expenses, including without limitation expenses
for postage, the procurement and/or printing of share certificates;
shareholder statements; envelopes; labels; dividend, distribution or
redemption checks; notices; reports; tax forms; letters; and all other forms
or printed material which may be required for the performance by OFS of the
functions and services for each Fund pursuant to the provisions of this
Agreement;
(b) All direct telephone, telegraph, telecopier or other
communications expenses necessarily incurred by OFS in connection with OFS's
communications with each Fund's custodian, investment adviser, shareholders
or others which may be required for the performance by OFS of the functions
and services for that Fund pursuant to the provisions of this Agreement;
-5-
<PAGE>
(c) Delivery and bonding charges incurred by OFS in the
transmission of materials to and from a Fund and in delivering certificates
to shareholders;
(d) Premiums for insurance coverage as may be required by Section
11 of this Agreement and for other coverage as may be required to
be maintained by OFS or OppenheimerFunds, Inc. for the benefit of itself
and each Fund with respect to services performed, or the equipment or
facilities utilized by OFS in fulfilling its obligations under this
Agreement; and
(e) The fees and costs of retaining auditors and legal counsel for
OFS in connection with its performance of transfer agency functions.
5. EFFECTIVE DATE AND TERM.
This Agreement shall become effective on the date set
forth in the heading paragraph of this Agreement, shall supersede any
prior agreements among the parties hereto relating to the subject matter
hereof, and shall continue in full force and effect until terminated by any
party upon six months' prior written notice of termination addressed to all
other parties.
6. STANDARD OF CARE.
OFS will make every reasonable effort and take all reasonably
available measures to assure the adequacy of its personnel and facilities as
well as the accurate performance of all services to be performed by it
hereunder within, at a minimum, the time requirements of any statute, rule or
regulation pertaining to investment companies and any time requirements set
forth in the then-current prospectus of each Fund. OFS shall promptly
correct any error or omission made by it in the performance of its duties
hereunder provided that it shall have received notice in writing of such
error or omission and any necessary substantiating data. In effecting any
such corrections, OFS shall take all reasonable steps necessary to trace and
to correct any related errors or omissions, including, without limitation,
those which might cause an over-issue of a Fund's shares and/or the excess
payment of dividends or distributions. The allocable costs of corrections
-6-
<PAGE>
shall be charged to the applicable Fund and the liability of OFS under this
Section shall be subject to the limitations provided in Section 12 hereof.
7. RECORDS RETENTION AND CONFIDENTIALITY.
OFS shall keep and maintain on behalf of each Fund all records
which that Fund or its transfer agent is, or may be required, to keep and
maintain pursuant to any applicable statutes, rules and regulations relating
to the maintenance of records in connection with the services to be performed
hereunder. OFS also shall maintain, for a period of at least 6 years, all
records and documents which may be needed or required to support or document
the actions taken by OFS in its performance of services hereunder. OFS
recognizes and agrees that all such records and documents (but not the
computer data processing programs and any related documentation used or
prepared by, or on behalf of, OFS for the performance of its services
hereunder) are the property of the applicable Fund; shall be open to audit or
inspection by the Fund or its agents during OFS's normal business hours;
shall be maintained in such fashion as to preserve the confidentiality
thereof and to comply with applicable federal and/or state laws and
regulations; and shall, in whole or any specified part, be surrendered and
turned over to the Fund or its duly authorized agents at any time upon OFS's
receipt of an appropriate written request.
8. CLEARING ACCOUNTS.
Each Fund shall open and/or maintain such bank account or accounts
as shall reasonably be required by OFS for controlling payments, the
disbursement of dividends, capital gains distributions and share redemption
payments pursuant to the provisions hereof, and any other accounts deemed
necessary by OFS or a Fund to carry out the provisions of this Agreement,
with a bank or banks selected by OFS with the prior approval of the Company's
Board. Such account may be an omnibus account used for all funds for which
OFS or one of its subsidiaries acts as transfer agent. The Company shall
authorize officers or employees of the Company to act as authorized
signatories to disburse funds held in such accounts. OFS shall be
accountable to the
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<PAGE>
Company and the applicable Fund for the management of such accounts by OFS
(and the funds at any time on deposit therein).
9. REPORTS.
OFS will furnish to each Fund, at the Fund's cost, and to such
other persons or parties as are designated herein or shall be designated in
writing by an authorized officer of the Fund, such reports at such times as
are required for the performance of the services referred to in Schedule A.
10. INDEMNIFICATION.
The Company shall indemnify OFS and OppenheimerFunds, Inc. and hold
OFS and OppenheimerFunds, their officers, directors, employees and agents
harmless from and against any and all claims, demands, actions and suits,
whether groundless or otherwise, and from and against all judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses
arising from or relating to any action taken or omitted to be taken by OFS or
by any sub-transfer agents, third-party administrators or other similar
clearing firms which maintain account records for individual beneficial
owners pursuant to agreement with OFS, in good faith or as a result of
ordinary negligence in reliance upon:
(A) The authenticity of any letter or any other instrument or
communication reasonably believed by it to be genuine and to have been
properly made or signed by an authorized officer or agent of a Fund or the
Company or by a shareholder or the authorized agent of a shareholder, as the
case may be and which complies with the terms of this Agreement which pertain
thereto;
(B) The accuracy of any records or information provided to it by a
Fund or the Company except to the extent the same may contain patently
obvious errors or omissions;
(C) Any certificate by an authorized officer of a Fund or the
Company or any other person authorized by the Company's Board as conclusive
proof of any fact or matter required to be ascertained by OFS hereunder;
-8-
<PAGE>
(D) Instructions at any time given by an authorized officer of a
Fund or the Company with respect to OFS's duties and responsibilities
hereunder, including, as to legal matters pertaining to the performance of
its duties hereunder, such advice or instructions as may be given to OFS by a
Fund's or the Company's general counsel or any legal counsel appointed by
such counsel or by any authorized officer of the Fund or the Company;
(E) Instructions regarding redemptions, exchanges or other
treatment of the shares of a Fund, together with all dividends and capital
gain distributions thereon and any reinvestment thereof, held or shown to the
credit of any shareholder account, if such instructions satisfy the
requirements of the Fund as contained in its then current prospectus, or the
Fund's policies or as communicated in writing to OFS by the Fund; or
(F) The advice or opinion of legal counsel furnished to OFS
pursuant to Section 13 hereof.
11. INSURANCE.
Unless otherwise obtained by the Fund, OFS or OppenheimerFunds,
Inc. shall use its best efforts to obtain and keep in effect pursuant to
binders with underwriters authorized to do business in the State of Colorado
or New York, or approved by the Company's Board, certificates or policies
naming itself and the Company and each Fund as assureds and
providing for cancellation or termination only upon 30 days' prior written
notice to the Fund, as follows:
(i) A broad form of fidelity bond coverage in the minimum
amount of $1,000,000 covering theft, embezzlement, forgery and other
specified acts of malfeasance and misfeasance by OFS, its agents and
employees, with aggregate coverage for counterfeit or stolen securities and
forged signatures in the minimum amount of $1 million and at least $300,000
for each loss;
(ii) A lost instrument bond permitting the replacement of a share
certificate which has been lost, stolen or destroyed, for a stated percentage
of the then-current net asset value thereof to be paid by the shareholder or
party seeking replacement thereof;
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<PAGE>
(iii) Coverage of up to $5 million against loss of securities
transmitted by first class, certified or registered mail and express or air
express throughout the United States and of up to $1 million against loss of
securities transmitted by registered mail or registered air mail, and express
or air express mail anywhere in the world; and
(iv) Data Processors' Professional Liability Insurance
against errors and omissions having aggregate coverage of at least $1
million and a limitation of liability for each claim of not less than
$500,000.
The Board of the Company, from time to time may change the amounts of
any of the foregoing coverage or prescribe additional coverage. In the event
that OFS shall be unable to obtain or keep in effect any of the insurance
coverage herein referred to, it shall promptly notify the Company in writing
of such inability and shall use its best efforts to obtain and keep in effect
such other insurance coverage as the Company shall reasonably require in lieu
of the coverage described above.
12. LIMITATIONS OF LIABILITY.
In addition to the limitations on OFS's and OppenheimerFunds,
Inc.'s liability stated in Sections 10 and 13 hereof, OFS and
OppenheimerFunds, Inc. assumes no liability hereunder and shall not be liable
hereunder for any damage, loss of data, delay or other loss caused by
circumstances or events beyond its control which it could not reasonably have
anticipated. OFS and OppenheimerFunds, Inc. shall not have any liability
beyond the insurance coverage referred to in Section 11 hereof for loss or
damage arising from its own errors or omissions or the errors or omissions of
sub-transfer agents, third-party administrators or other similar clearing
firms which maintain account records for individual beneficial owners
pursuant to an agreement with OFS ("Recordkeepers") except to the extent such
errors or omissions are attributable to gross negligence or purposeful fault
on the part of OFS or the Recordkeepers, their officers, directors, agents
and/or employees; and in no event will OFS and OppenheimerFunds, Inc. be
liable to the
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<PAGE>
Company or a Fund for punitive damages. The Company and each Fund shall
indemnify and hold OFS and OppenheimerFunds, Inc. harmless from and against
any liabilities and defense expenses arising by reason of claims of third
parties, based on errors or omissions of OFS, which are greater in amount
than the limitations of liability described above, except to the extent such
errors or omissions are attributable to gross negligence or purposeful fault
on the part of OFS, or the Recordkeepers, or their respective officers,
directors, agents and/or employees.
13. LEGAL ADVICE AND INSTRUCTIONS.
OFS at any time may request instructions from any authorized
officer of the Company or a Fund with respect to the performance of its
duties and responsibilities hereunder and may consult with counsel for the
Company or a Fund relative to any such matter and shall not be liable
hereunder for any action taken or omitted by it in good faith in accordance
with such instructions or with an opinion of such counsel or of counsel
appointed by an authorized officer of the Company or a Fund to deal with
inquiries or requests for instructions by OFS.
14. DOCUMENTS AND INFORMATION.
As soon as feasible prior to the effective date of the Agreement,
and if not heretofore provided, the Company will supply to OFS a statement,
certified by the treasurer of the Company, stating the number of shares of
each Fund authorized, issued, held in treasury, outstanding and reserved as
of such date, together with copies of specimen signatures of the Company's or
the Fund'sofficers and such other documents and information, including
without limitation the then-current prospectus of the Fund, which OFS may
determine in its reasonable discretion to be necessary or appropriate to
enable it to perform the services to be performed hereunder, and the Company
or the Fund thereafter will supply all amendments or supplemental documents
with respect thereto as soon as the same shall be effective or available for
distribution. The Company and each Fund assumes full responsibility for the
preparation, accuracy, content and clearance of its prospectus under federal
and/or state securities laws and any rules or regulations thereunder. If a
Fund shall make any change in its prospectus affecting the services and
functions to be
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<PAGE>
performed by OFS hereunder, such additional services and functions shall be
deemed to be incorporated in Schedule A.
15. TERMINATION.
This Agreement may be terminated by any party only upon written
notice as provided in Section 5 hereof, except that the Company may terminate
this Agreement without prior notice to preserve the integrity of its
shareholder records from material and continuing errors and omissions on the
part of OFS. In the event of any termination, OFS will provide full
cooperation, assistance and documentation within its capabilities as shall be
necessary or desirable, in the reasonable judgment of the Company, to ensure
that any transfer of the duties and responsibilities of OFS is accomplished
with maximum efficiency and with minimum cost and disruption to the Company's
activities. Such cooperation will include the delivery of all files,
documents and records used, kept or maintained by OFS in the performance of
its services hereunder (except records or documents destroyed when consistent
with the provisions hereof or with the approval of a Fund or the Company or
which relate solely to the documentation of the computer data processing
programs of OFS) together with, in machine-readable form, such of a Fund's
records as may be maintained by OFS in a form other than written form, as
well as such summary and/or control data relating thereto used by or
available to OFS as may be requested by the Fund. The cost of all such
termination services on the part of OFS shall be paid by the applicable Fund
without prejudice, however, to the rights of the Fund to recover any amounts
so paid in the event that OFS shall be liable to the Fund under Section 12
hereof. In the course of its performance of the services set forth in
Schedule A hereto, as such services may from time to time be modified or
amended, OFS will enter into leases for equipment. If this Agreement is
terminated by the Company, and if, as a result of such termination, such
equipment specifically leased by OFS to perform such services can no longer
be utilized economically by OFS in its performance of services for any other
entities with which OFS has continuing transfer agency or other service
contracts, OFS may in its discretion cancel such leases. However, the
Company shall not have any responsibility for
-12-
<PAGE>
termination penalties, if any, which may be payable under the terms of such
equipment leases, unless otherwise agreed by the Company prior to the time
such lease is entered into.
16. AVAILABILITY OF CONTINUED USE OF DATA PROCESSING SYSTEM.
In the event that the Company ceases to employ OFS hereunder or
after termination of this Agreement, the Company shall have the right to use
the computer data processing systems, operating systems, computer programs,
software and supporting documentation then used by OFS for providing the
services to the Company contemplated hereby.
17. NOTICES.
Any notice hereunder shall be sufficiently given when sent by
registered or certified mail, return receipt requested, to any party hereto
at the address of such party set forth above or at such other address as such
party may from time to time specify in writing to the other parties.
18. CONSTRUCTION; GOVERNING LAW.
The headings used in this Agreement are for convenience only and
shall not be deemed to constitute a part hereof. This Agreement, and the
rights and obligations of the parties hereunder, shall be governed by and
construed and interpreted under and in accordance with the laws of the State
of Colorado applicable to contracts made and to be performed in that state.
19. ASSIGNMENT; DELEGATION.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their successors and assigns, including without
limitation, any successor to any party resulting by reason of corporate
merger or consolidation; provided however that this Agreement and the rights
and duties hereunder shall not be assigned by any of the parties hereto
except upon the specific prior written consent of all parties hereto.
With the prior written consent of the Company, OFS may delegate to
others all or any portion of the services to be rendered under this Agreement.
OFS may enter into written agreements with sub-transfer agents,
third-party administrators and other similar clearing firms which permit OFS
to maintain an omnibus account
-13-
<PAGE>
in the name of the shareholder of record with the individual beneficial
owners of the account being serviced by, and the account records for the
beneficial owners maintained by, such sub-transfer agent, third party
administrator or other similar clearing firm. Such agreements shall comply
with the criteria and parameters approved and adopted from time to time by
OFS and by the Board of the Company. In connection with such arrangements,
the Company hereby appoints such sub-transfer agents, third-party
administrators or other similar clearing firms as agent for the Company for
the limited purpose of accepting purchase, exchange and redemption orders
from the individual beneficial owners.
20. INTERPRETIVE PROVISIONS.
OFS and a Fund or the Company may agree from time to time in
writing on provisions interpretative of, or supplemental to, the provisions
of this Agreement.
21. OTHER AGREEMENTS.
This Agreement shall not preclude the Fund from entering into
transfer agency agreements or sub-transfer agency agreements with others.
22. SEVERABILITY.
If any clause or provision of this Agreement is determined to be
illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, then such clause or provision shall be
considered severed herefrom, and the remainder of this Agreement shall
continue in full force and effect.
23. ENTIRE AGREEMENT.
Except as otherwise provided herein, this Agreement, including
Schedule A annexed hereto, constitutes the entire and complete Agreement
between the parties hereto relating to the subject matter hereof; supersedes
and merges all prior contracts and discussions between the parties hereto;
and may not be modified or amended except by written document signed by all
parties hereto against whom such modification or amendment is to be enforced.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
OPPENHEIMERFUNDS SERVICES, a division of
OppenheimerFunds, Inc.
ATTEST:
_________________________________ By: _____________________________________
Barbara Hennigar, President
OPPENHEIMER SERIES FUND, INC.
on behalf of its designated Series
ATTEST:
_________________________________ By: _____________________________________
Name: ____________________________
Title: ____________________________
-15-
<PAGE>
EXHIBIT 1
LIST OF FUNDS FOR WHICH OFS IS DESIGNATED TO ACT AS TRANSFER AGENT
Oppenheimer Disciplined Allocation Fund Oppenheimer Life Span Income Fund
Oppenheimer Disciplined Value Fund Connecticut Mutual Liquid Account
Oppenheimer Life Span Growth Fund Connecticut Mutual Government
Oppenheimer Life Span Balanced Fund Securities Account
Oppenheimer Life Span Balanced Fund Connecticut Mutual Income Account
-16-
<PAGE>
SCHEDULE A
SERVICE CONTRACT
SCHEDULE OF SERVICES
To the extent that a Fund's then-current Prospectus requires the
following services, and to the extent that such services are not, or may not
hereafter be, provided by broker-dealers or other financial institutions with
respect to accounts for which such broker-dealer or financial institution
provides services in connection with the distribution of that Fund's shares,
OppenheimerFunds Services, ("OFS") shall do the following:
I. Registrar of Fund Shares
1. Register and control the issuance of full and/or fractional shares of
each Class of Shares of the Fund either for payment of applicable net asset
value or upon surrender of an equivalent number of shares for transfer, or
for reinvestment of dividends or capital gains distributions and, in
connection therewith, maintain appropriate records (which may include
the shareholder accounts referred to below) recording the issuance, transfer
and redemption of all outstanding shares of each Class of Shares of the Fund,
showing all shares of each Class of Shares of the Fund issued and represented
by outstanding certificates, and showing issuance of all uncertificated
shares of the Fund; prepare entries to transfer redeemed or repurchased
shares to the Fund's treasury share account or, if applicable, cancel such
shares for retirement; retain records of issuance of new certificates for
lost or stolen certificates or for cancellation of lost or stolen
certificates, and the indemnity bonds furnished by shareholders in connection
therewith.
2. Maintain daily balance controls for the issuance and redemption of
shares as well as all cash receipts and disbursements handled on behalf of
the Fund.
3. Furnish to the Fund such information as it may request for preparation
of filings with federal and state authorities.
II. Shareholder Accounts
1. Open new accounts upon receipt of properly executed instructions from a
dealer or the Fund's Distributor, a properly completed and signed account
application, exchange application or request for transfer of an existing
account, or properly authorized telephone exchange or redemption
instructions, and maintain current records for all new and existing
categories of shareholder accounts described in the then-current Prospectus
of the Fund, showing as to each registered owner (to the extent such
information is available or obtainable):
a. Name(s) and address(es), with zip code;
b. Category of account and taxpayer identification number;
c. Dealer and/or any representative affiliated with the account;
d. Number of shares currently registered;
A-1
<PAGE>
e. Account transaction history, including records of
initial and additional purchases, transfers and redemptions, surrender of
certificates, dividends and other distributions, and related tax information;
f. Identification of any certificate(s) issued and the
number of shares evidenced by each such certificate;
g. Shares held in escrow against performance of any obligation;
and
h. Identification of account using the broker's identification.
2. Maintain files containing account applications, requests or other
correspondence from or on behalf of shareholders, as well as copies of all
responses thereto.
3. Process all changes or corrections to a shareholder's registration and
address records authorized orally or in writing by or on behalf of the
shareholder.
4. Process such reinvestments of the proceeds of a redemption of Fund
shares as may properly have been elected by a shareholder pursuant to a
privilege described in the then-current Prospectus of the Fund.
5. Process investments in shares of the Fund at its then-current net asset
value as may properly be requested by a shareholder of any of the other
investment companies having such privilege as described in the then-current
Prospectus of the Fund or information supplied to OFS by the Fund.
6. Prepare and transmit by mail to the affected shareholder a
statement/confirmation of all transactions affecting the account of such
shareholder including initial and additional purchases, reinvestments of
dividends and distributions, adjustments, exchanges, transfers to and from
the account and redemptions of all kinds.
7. Maintain records when made available to OFS according to
properly executed and authorized instructions relating to rights of
accumulation, letters of intent and other special pricing provisions
including, without limitation, group purchase plans and minimum account sizes.
8. Record and maintain the amount of pre-authorized or automatic
investments, including the shareholder's bank account number and time
periods for such investments; and draw the authorized investment amount
from the shareholder's bank account at the specified time periods and issue
shares with respect to such investments.
9. Maintain records of special account instructions such as wire/telephone
redemption or exchange authorizations.
10. Retain records and amounts of payment items (including interest,
dividends, distributions and redemption proceeds) that are returned
undelivered and undeliverable from investors' addresses and maintain such
records in accordance with applicable regulations; and invest such amounts,
in accordance with the terms of the Fund's then-current Prospectus, for the
benefit of the shareholder(s) of record.
A-2
<PAGE>
11. Reconcile account data for account information transmitted by magnetic
tape by broker-dealers maintaining shareholder accounts in nominee name and
perform other services enumerated hereunder to the extent required for such
accounts.
12. Process new and additional payments made by shareholders for investment
at their current offering price.
13. Maintain records required under Rule 17Ad-10(e) under the Securities
Exchange Act of 1934.
III. Redemptions and Automatic Withdrawals
1. Receive and ascertain the adequacy of all redemption requests
on the basis of the requirements set forth in the then-current Prospectus
of the Fund and the Fund's policies to the extent applicable from time to
time and otherwise in accordance with the generally accepted practices of
transfer agents.
2. Adjust a shareholder's account to reflect the number of shares redeemed.
3. Requisition from the Fund's custodian and remit the properly-computed
amount of the proceeds of each redemption to, or as directed by,
individual shareholders pursuant to appropriately-executed written
instructions or appropriately-submitted redemption requests by wire or
telephone in the case of shareholder accounts having appropriate
authorization on file (including payment to one or more of the other
investment companies with which the Fund permits exchanges in the case of an
exchange of investments).
4. On accounts for which periodic withdrawals are specified in a
properly-executed account application:
a. Redeem shares sufficient for the amounts of the specified
withdrawals at the specified time period; and
b. Receive and remit the proceeds of such redemption in like
manner to other redemptions.
IV. Payment of Interest, Dividends and Distributions
1. Upon receipt of properly-executed instructions from the Fund upon
declaration of any dividend and/or distribution, compute and credit the
accounts of all shareholders electing to reinvest dividends and/or
distributions with the proper number of whole and fractional shares, computed
as of the reinvestment date and price specified by the relevant resolution of
the Fund's trustees for such dividend or distribution; and compute for all
other shareholders of record, on the ex-dividend date specified by such
resolution, the dollar amount payable in cash in respect of such dividend or
distribution.
2. Requisition from the Fund's custodian and remit the properly-computed
amounts of dividends or distributions payable in cash to shareholders
electing such payment or as directed by individual shareholders pursuant to
appropriately-executed written instructions; and prepare and mail share
certificates for reinvested amounts to shareholders electing to receive
certificates for shares.
A-3
<PAGE>
3. Adjust the amount of dividend or distribution payments for accounts
having unsettled investments or repurchases as of the record date with
appropriate accounting adjustments to the Fund's distributionaccounts and
remittances to its custodian.
4. Reconcile dividends and distributions with the Fund.
V. Issuing and Accounting for Certificates
1. Safekeep and account for blank certificate forms.
2. Prepare, issue and mail certificates for full shares on request or
according to permanent account instructions as provided in the Fund's
then-current Prospectus, provided that sufficient deposit shares are
available in the shareholder's account and proper authorization is received.
3. Receive certificates properly endorsed for transfer which are returned
for deposit to a shareholder's account and, provided there is no
stop-transfer or cancellation order pending relative to the specific
certificate, make appropriate adjustments to the shareholder's account.
4. Physically cancel and otherwise account for certificates returned and
deposited.
5. Keep and maintain certificate transcript records reflecting the issuance
and holder of all outstanding certificates as well as all stop-transfers,
cancellations and deposits of certificates.
6. Handle the replacement of lost certificates upon applications meeting
the requirements of the Fund's then-current insurance coverage or, in the
event such insurance is not obtainable, the instructions of the officers of
the Fund or its counsel.
7. Receive and deal with stop-transfer instructions in accord with the
generally-accepted practices of transfer agents.
VI. Recapitalization or Capital Adjustment
1. In the case of any negative share split, recapitalization or
other capital adjustment requiring a change in the form of share
certificates of any Class, OFS will, in the case of accounts represented by
uncertificated shares, cause the account records to be adjusted, as
necessary, to reflect the number of shares held for the account of each such
shareholder as a result of such change, or, in the case of shares represented
by certificates, will issue share certificates in the new form in exchange
for, or upon transfer of, outstanding share certificates in the old form, in
either case upon receiving:
a. A Certificate authorizing the issuance of share certificates
in the new form;
b. A certified copy of any amendment to the Company's Articles of
Incorporation with respect to the change;
c. Specimen share certificates for each class of shares in the
new form approved by the Board of the Company, with a Certificate signed by
the Secretary of the Company as to such approval; and
A-4
<PAGE>
d. An opinion of counsel for the Fund or the Company with respect
to the matters set forth in Section 13 of the Service Contract as to such
shares.
2. The Company shall furnish OFS with a sufficient supply of blank share
certificates in the new form, and from time to time will replenish such
supply upon the request of OFS. Such blank share certificates shall be
properly signed by Officers of the Company authorized by law or the By-Laws
to sign share certificates and, if required, shall bear the Company's seal or
facsimile thereof.
VII. Escrowing of Shares
1. Earmark and hold escrowed shares in a shareholder's account to secure
compliance with executed letters of intent or for other purposes as provided
in authorization instructions.
2. Pay dividends and distributions to the registered owner, or reinvest
such dividends and distributions, on shares held in escrow.
3. Release or redeem shares held in escrow in accordance with appropriate
instructions.
VIII. Transfers
1. Respond to or process transfer instructions received by or on behalf of
the registered owners of shares in accordance with the generally-accepted
practices of transfer agents and any requirements set forth in the Fund's
then-current Prospectus.
2. Pass upon the adequacy of documents submitted, prepare any documents
required, and effect the transfer of shares to a shareholder account for the
transferee, including the establishment of the new account.
IX. Exchanges
1. Receive and process exchanges in accordance with duly-executed or
telephonic exchange authorizations which comply with the provisions of the
Fund's then-current Prospectus.
2. Establish, if necessary, a shareholder's account and register the new
shares in accordance with duly executed or telephonic exchange instructions.
X. Shareholder Communications
1. Maintain appropriate logs and other controls of all shareholder
communications reflecting the promptness with which they are handled and the
number of unresolved questions, inquiries and complaints outstanding at any
time.
2. Receive and answer promptly all correspondence, telephone calls, or
other inquiries from or on behalf of shareholders concerning the
administration of their accounts. In the case of individual inquiries with
respect to shares held in broker "street-name" accounts for the broker's
customer, refer such inquiry to the appropriate broker for response,
providing such information to such broker as OFS may reasonably ascertain
from its records with respect thereto.
A-5
<PAGE>
3. Refer to the Company's investment adviser or Distributor questions or
matters related to their functions.
4. Prepare such reports and summaries of shareholder communications as may
be requested by the Company's officers for the preparation of reports to the
Company's Board and appropriate regulatory authorities.
5. Attempt to collect or engage other agents or attorneys to collect on
behalf of the Fund or the Company the amount of any over-payment or erroneous
payment to a shareholder or other person by the Fund.
XI. Handling of Proxies
1. In accordance with instructions by an officer of the Company, prepare
proxy cards for each shareholder of record as of the date specified by a
resolution of the Company's Board providing for a meeting of its shareholders.
2. Mail to each shareholder of record, at the address shown in the
shareholder records of the Fund kept pursuant hereto (or as directed by the
respective broker as to broker transmission accounts), a completed proxy card
together with such other written material, including notices of the meeting
and proxy statements, as may be supplied for that purpose by the Fund.
3. Furnish to the Fund a list of shareholders eligible to vote at the
meeting, showing address of record and shares held together with an affidavit
or other appropriate certificate of the mailing referred to above.
4. Receive and tabulate proxies, furnishing the Fund with a
properly-certified report of such tabulation.
XII. Annual and Other Reports
1. Process the mailing of such prospectuses and annual, semi-annual, or
quarterly reports as shall be received from the Fund for that purpose and
coordinate such mailings to appropriate categories of shareholders.
2. Prepare and mail to shareholders appropriate periodic statements of
their accounts as contemplated by this Agreement.
3. Insert such other material with regular shareholder mailings as may be
requested and furnished by the Fund.
4. Prepare and forward to the Fund such daily, periodic or
special reports concerning shareholder records and any other functions
performed pursuant to this schedule of services as may be requested by an
officer of the Fund.
A-6
<PAGE>
XIII. Tax Matters
1. Prepare and file with the I.R.S. such Federal information returns with
respect to Fund shareholdersas may be specified by the I.R.S. from time to
time and mail copies thereof to shareholders.
2. Prepare and file appropriate Federal information returns and pay Federal
income taxes withheld from distributions made to non-resident aliens.
3. Prepare magnetic tapes for brokers to determine taxable accruals as to
broker transmission accounts to enable brokers to prepare appropriate
information returns.
4. Pay Federal income taxes withheld from dividends, distributions and
redemptions made to shareholders; process and retain records of
withholding exemption certificates filed by shareholders.
5. Comply with backup withholding and taxpayer identification requirements
issued by the I.R.S. which are applicable to transfer agents.
A-7
<PAGE>
ARTHUR ANDERSEN LLP LETTERHEAD
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement (Registration Statement File No. 2-75276) for the
following series of Connecticut Mutual Investment Accounts, Inc.: Liquid
Account, Government Securities Account, Income Account, Total Return Account
and Growth Account.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 29, 1996
<PAGE>
ARTHUR ANDERSEN LLP LETTERHEAD
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement (Registration Statement File No. 2-75276) for the
following series of Connecticut Mutual Investment Accounts, Inc.: LifeSpan
Diversified Income Account, LifeSpan Balanced Account and LifeSpan Capital
Appreciation Account.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 29, 1996
<PAGE>
Exhibit 15.7
FORM OF
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER DISCIPLINED ALLOCATION FUND AND
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT dated the 18th day of March, 1996, by and between
Oppenheimer Series Fund, Inc., on behalf of its series, Oppenheimer
Disciplined Allocation Fund (the "Fund"), and OppenheimerFunds Distributor,
Inc. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written service plan for its Class A
Shares described in the Fund's registration statement as of the date this
Plan takes effect, contemplated by and to comply with Article III, Section 26
of the Rules of Fair Practice of the National Association of Securities
Dealers, pursuant to which the Fund will reimburse the Distributor for a
portion of its costs incurred in connection with the personal service and the
maintenance of shareholder accounts ("Accounts") that hold Class A Shares
(the "Shares") of such series and class of the Fund. The Fund may be deemed
to be acting as distributor of securities of which it is the issuer, pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"),
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering services
and for the maintenance of Accounts. Such Recipients are intended to
have certain rights as third-party beneficiaries under this Plan.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
financial institution which: (i) has rendered services in connection
with the personal service and maintenance of Accounts; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning such service; and (iii) has
been selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Fund's Board of
Directors (the "Board") who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest
in the operation of this Plan or in any agreements relating to this
Plan (the "Independent Directors") may remove any broker, dealer,
bank or other institution as a Recipient, whereupon such entity's
rights as a third party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
brokerage or other customers, or investment advisory or other clients
of such Recipient and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian
(collectively, the "Customers"), but in no event shall any such
Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that two
<PAGE>
entities would otherwise qualify as Recipients as to the same
Shares, the Recipient which is the dealer of recordon the Fund's
books shall be deemed the Recipient as to such Shares for purposes
of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE.
(a) Under the Plan, the Fund will make payments to the Distributor,
within forty-five (45) days of the end of each calendar quarter, in
the amount of the lesser of: (i) .0625% (.25% on an annual basis) of
the average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business
day, or (ii) the Distributor's actual expenses under the Plan for
that quarter of the type approved by the Board. The Distributor will
use such fee received from the Fund in its entirety to reimburse
itself for payments to Recipients and for its other expenditures and
costs of the type approved by the Board incurred in connection
with the personal service and maintenance of Accounts including, but
not limited to, the services described in the following paragraph.
The Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such affiliated
person qualifies as a Recipient.
The services to be rendered by the Distributor and Recipients in
connection with the personal service and the maintenance of Accounts
may include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the
Fund, providing such customers with information on their investment
in shares, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund, making the Fund's investment plans and
dividend payment options available, and providing such other
information and customer liaison services and the maintenance of
Accounts as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided services qualifying
for compensation under the Plan if it has Qualified Holdings of
Shares to entitle it to payments under the Plan. In the event that
either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient
may not be rendering appropriate services, then the Distributor, at
the request of the Board, shall require the Recipient to provide a
written report or other information to verify that said Recipient
is providing appropriate services in this regard. If the
Distributor still is not satisfied, it may take appropriate steps
to terminate the Recipient's status as such under the Plan,
whereupon such entity's rights as a third-party beneficiary hereunder
shall terminate.
Payments received by the Distributor from the Fund under the Plan will
not be used to pay any interest expense, carrying charge or other
financial costs, or allocation of overhead of the Distributor, or
for any other purpose other than for the payments described in this
Section 3. The amount payable to the Distributor each quarter will
be reduced to the extent that reimbursement payments otherwise
permissible under the Plan have not been authorized by the Board for
that quarter. Any unreimbursed expenses incurred for any quarter by
the Distributor may not be recovered in later periods.
(b) The Distributor shall make payments to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at
a rate not to exceed .0625% (.25% on an annual basis) of the average
during the calendar quarter of the aggregate net
<PAGE>
asset value of the Shares computed as of the close of each business
day of Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers.
However, no such payments shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed,
at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Directors. A majority of the Independent Directors may
at any time or from time to time increase or decrease and thereafter
adjust the rate of fees to be paid to the Distributor or to any
Recipient, but not to exceed the rate set forth above, and/or
increase or decrease the number of shares constituting Minimum
Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings and the rate of payments hereunder
applicable to Recipients, and shall provide each such Recipient with
written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall be sufficient
notice.
(c) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OFI), from its
own resources.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect, the
selection or replacement of Independent Directors and the nomination of those
persons to be Directors of the Fund who are not "interested persons" of the
Fund shall be committed to the discretion of the Independent Directors.
Nothing herein shall prevent the Independent Directors from soliciting the
views or the involvement of others in such selection or nomination if the
final decision on any such selection and nomination is approved by a majority
of the incumbent Independent Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the Fund shall
provide at least quarterly a written report to the Fund's Board for its
review, detailing the amount of all payments made pursuant to this Plan, the
identity of the Recipient of each such payment, and the purposes for which
the payments were made. The report shall state whether all provisions of
Section 3 of this Plan have been complied with. The Distributor shall
annually certify to the Board the amount of its total expenses incurred that
year with respect to the personal service and maintenance of Accounts in
conjunction with the Board's annual review of the continuation of the Plan.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of the
Independent Directors or by a vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Shares of the Class, on not more
than sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a
vote of the Board and its Independent Directors cast in person at a meeting
called for the purpose of voting on such agreement; and (iv) it shall, unless
terminated as herein provided, continue in effect from year to year only so
long as such continuance is specifically approved at least annually by the
Board and its Independent Directors cast in person at a meeting called for
the purpose of voting on such continuance.
<PAGE>
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Plan has
been approved by a vote of the Independent Directors cast in person at a
meeting called on November 17, 1995 for the purpose of voting on this Plan,
and shall take effect on the date first noted above. Unless terminated as
hereinafter provided, it shall continue in effect until December 31, 1997 and
from year to year thereafter or as the Board may otherwise
determine only so long as such continuance is specifically approved at
least annually by the Board and its Independent Directors cast in person at a
meeting called for the purpose of voting on such continuance. This Plan may
be terminated at any time by vote of a majority of the Independent Directors
or by the vote of the holders of a "majority" (as defined in the 1940 Act) of
the Fund's outstanding voting securities of the Class. This Plan may not be
amended to increase materially the amount of payments to be made without
approval of the Class A Shareholders, in the manner described above, and all
material amendments must be approved by a vote of the Board and of the
Independent Directors.
OPPENHEIMER SERIES FUND, INC.
on behalf of Oppenheimer
Disciplined Allocation Fund
By: ___________________________
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: ___________________________
<PAGE>
SCHEDULE OF SERVICE PLANS FOR CLASS A SHARES
Due to the substantial similarity of the Service Plan and Agreement
("Service Plan") with OppenheimerFunds Distributor, Inc. for Class A Shares
of the respective series of the Registrant, the following form of Service
Plan for Class A Shares on behalf of Oppenheimer Disciplined Allocation Fund
and this schedule of omitted documents is filed in accordance with the
requirements of Rule 8b-31 under the Investment Company Act of 1940.
1. Service Plan for Class A Shares for Connecticut Mutual
Government Securities Accout.
2. Service Plan for Class A Shares for Connecticut Mutual
Income Account.
3. Service Plan for Class A Shares for Oppenheimer Disciplined
Value Fund.
4. Service Plan for Class A Shares for Oppenheimer LifeSpan
Growth Fund.
5. Service Plan for Class A Shares for Oppenheimer LifeSpan
Balanced Fund.
6. Service Plan for Class A Shares for Oppenheimer LifeSpan
Income Fund.
<PAGE>
Exhibit 15.8
FORM OF
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER DISCIPLINED ALLOCATION FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 18th day
of March, 1996, by and between Oppenheimer Series Fund, Inc. (the
"Company"), on behalf of its series, Oppenheimer Disciplined
Allocation Fund (the "Fund"), and OppenheimerFunds Distributor, Inc. (the
"Distributor").
1. THE PLAN. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 (the
"1940 Act"), pursuant to which the Fund will compensate the Distributor for
its services in connection with the distribution of Shares, and the
personal service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it is
the issuer, pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as hereinafter
defined, for rendering (1) distribution assistance in connection with the
sale of Shares and/or (2) administrative support services with respect to
Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with the
provisions and definitions contained in (i) the 1940 Act, (ii) the Rule,
(iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions pertaining
either to distribution-related expenses or to a plan of distribution, to
which the Fund is subject under any order on which the Fund relies,
issued at any time by the Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares
<PAGE>
or has provided administrative support services with respect
to Shares held by Customers (defined below) of the Recipient;
(ii) shall furnish the Distributor (on behalf of the Fund)
with such information as the Distributor shall reasonably
request to answer such questions as may arise concerning the
sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Company's
Board of Directors (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of this Plan
or in any agreements relating to this Plan (the "Independent
Directors") may remove any broker, dealer, bank or other person
or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient,
all Shares owned beneficially or of record by: (i) such
Recipient, or (ii) such brokerage or other customers, or
investment advisory or other clients of such Recipient and/or
accounts as to which such Recipient is a fiduciary or
custodian or co-fiduciary or co-custodian (collectively, the
"Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan.
In the event that more than one person or entity would
otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books
as determined by the Distributor shall be deemed the
Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE
SUPPORT SERVICES.
(a) The Fund will make payments to the Distributor, (i)
within forty-five (45) days of the end of each calendar
quarter, in the aggregate amount of 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of
the close of each business day (the "Service Fee"), plus (ii)
within ten (10) days of the end of each month, in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of
Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less
(the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
-2-
<PAGE>
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in
connection with the sale of Shares.
The administrative support services in connection with
the Accounts to be rendered by Recipients may include, but
shall not be limited to, the following: answering routine
inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's
investment plans and dividend payment options available, and
providing such other information and services in connection
with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale
of Shares to be rendered by the Distributor and Recipients
may include, but shall not be limited to, the following:
distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares
("Shareholders"), and providing such other information and
services in connection with the distribution of Shares as the
Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided
distribution assistance or administrative support services
qualifying for payment under the Plan if it has Qualified
Holdings of Shares to entitle it to payments under the Plan.
In the event that either the Distributor or the Board should
have reason to believe that, notwithstanding the level of
Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the
sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board,
shall require the Recipient to provide a written report or
other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this
regard. If the Distributor or the Board still is not
satisfied, either may take appropriate steps to terminate the
Recipient's status as such under the Plan, whereupon such
Recipient's rights as a third-party beneficiary hereunder
shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end
of each calendar quarter, at a rate not to exceed 0.0625%
(0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed
as of the close of each business day, constituting Qualified
-3-
<PAGE>
Holdings owned beneficially or of record by the Recipient or
by its Customers for a period of more than the minimum period
(the "Minimum Holding Period"), if any, to be set from time
to time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option,
make service fee payments ("Advance Service Fee Payments") to
any Recipient quarterly, within forty-five (45) days of the
end of each calendar quarter, at a rate not to exceed (i)
0.25% of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close
of business on the day such Shares are sold, constituting
Qualified Holdings sold by the Recipient during that quarter
and owned beneficially or of record by the Recipient or by
its Customers, plus (ii) 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each
business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its
Customers for a period of more than one (1) year, subject to
reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients
that are, or may be, imposed by Article III, Section 26, of
the NASD Rules of Fair Practice. In the event Shares are
redeemed less than one year after the date such Shares were
sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such
shares were held to one (1) year.
The Advance Service Fee Payments described in part (i)
of this paragraph (b) may, at the Distributor's sole option,
be made more often than quarterly, and sooner than the end of
the calendar quarter. However, no such payments shall be
made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of
such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority
of the Independent Directors.
A majority of the Independent Directors may at any time
or from time to time decrease and thereafter adjust the rate
of fees to be paid to the Distributor or to any Recipient,
but not to exceed the rate set forth above, and/or direct the
Distributor to increase or decrease the Minimum Holding
Period or the Minimum Qualified Holdings. The Distributor
shall notify all Recipients of the Minimum Qualified
Holdings, Maximum Holding Period and Minimum Holding Period,
if any, and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written
-4-
<PAGE>
notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute
sufficient notice. The Distributor may make Plan payments to
any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such
amounts under the limits to which the Distributor is, or may
become, subject under Article III, Section 26, of the NASD
Rules of Fair Practice. The distribution assistance and
administrative support services to be rendered by the
Distributor in connection with the Shares may include, but
shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or
entity that sells Shares, and/or paying such persons Advance
Service Fee Payments in advance of, and/or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Recipients;
(iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for the interest and
other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying
other direct distribution costs, including without limitation
the costs of sales literature, advertising and prospectuses
(other than those furnished to current Shareholders) and
state "blue sky" registration expenses; and (v) any service
rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase,
(ii) in exchange for shares of another investment company for
which the Distributor serves as distributor or sub-
distributor, or (ii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board
should have reason to believe that the Distributor may not be
rendering appropriate distribution assistance or
administrative support services in connection with the sale
of Shares, then the Distributor, at the request of the Board,
shall provide the Board with a written report or other
information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by OppenheimerFunds, Inc. ("OFI") from its own resources
(which may include profits derived from the advisory fee it
-5-
<PAGE>
receives from the Fund), or (ii) by the Distributor (a
subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to
make any payment whatsoever to any person or entity other
than directly to the Distributor. In no event shall the
amounts to be paid to the Distributor exceed the rate of fees
to be paid by the Fund to the Distributor set forth in
paragraph (a) of this section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in
effect, the selection and nomination of those persons to be
Directors of the Fund who are not "interested persons" of the Fund
("Disinterested Directors") shall be committed to the discretion
of such Disinterested Directors. Nothing herein shall prevent the
Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the
Fund shall provide written reports to the Fund's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and
the purpose for which the payments were made. The reports shall
be provided quarterly, and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Directors or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Directors cast in person
at a meeting called for the purpose of voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This
Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on November 17, 1995,
-6-
<PAGE>
for the purpose of voting on this Plan, and shall take effect on
the date first written above. Unless terminated as hereinafter
provided, it shall continue in effect until December 31, 1997 and
from year to year thereafter or as the Board may otherwise
determine only so long as such continuance is specifically
approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may not be
amended to increase materially the amount of payments to be made
without approval of the Class B Shareholders, in the manner
described above, and all material amendments must be approved by a
vote of the Board and of the Independent Directors. This Plan may
be terminated at any time by vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class. In the event of such termination, the
Board and its Independent Directors shall determine whether the
Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in
respect of Shares sold prior to the effective date of such
termination.
OPPENHEIMER SERIES FUND, INC.,
on behalf of Oppenheimer Disciplined
Allocation Fund
By: ________________________________
OPPENHEIMER FUNDSDISTRIBUTOR, INC.
By: ________________________________
- -7-
<PAGE>
SCHEDULE OF DISTRIBUTION AND SERVICE PLANS FOR CLASS B SHARES
Due to the substantial similarity of the Distribution and
Service Plan and Agreement ("Distribution and Service Plan") with
OppenheimerFunds Distributor, Inc. for Class B Shares of the
respective series of the Registrant, the following form of
Distribution and Service Plan for Class B Shares on behalf of
Oppenheimer Disciplined Allocation Fund and this schedule of
omitted documents is filed in accordance with the requirements of
Rule 8b-31 under the Investment Company Act of 1940.
1. Distribution and Service Plan for Class B Shares for
Connecticut Mutual Government Securities Account.
2. Distribution and Service Plan for Class B Shares for
Connecticut Mutual Income Account.
3. Distribution and Service Plan for Class B Shares for
Oppenheimer Disciplined Value Fund.
4. Distribution and Service Plan for Class B Shares for
Oppenheimer LifeSpan Growth Fund.
5. Distribution and Service Plan for Class B Shares for
Oppenheimer LifeSpan Balanced Fund.
6. Distribution and Service Plan for Class B Shares for
Oppenheimer LifeSpan Income Fund.
<PAGE>
EXHIBIT 15.9
FORM OF
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
FOR CLASS C SHARES OF
OPPENHEIMER DISCIPLINED ALLOCATION FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the
1st day of May, 1996, by and between Oppenheimer Series Fund, Inc.
(the "Company") on behalf of Oppenheimer Disciplined Allocation
Fund (the "Fund") and OppenheimerFunds Distributor, Inc. (the
"Distributor").
1. THE PLAN. This Plan is the Fund's written distribution plan
for Class C shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for a portion of its costs incurred in connection with
the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts").
The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients,"
as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule,
(iii) Article III, Section 26, of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., or its
successor (the "NASD Rules of Fair Practice") and (iv) any
conditions pertaining either to distribution related expenses or
to a plan of distribution, to which the Fund is subject under any
order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall
have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares
or has provided administrative support services with respect
<PAGE>
to Shares held by Customers (defined below) of the Recipient;
(ii) shall furnish the Distributor (on behalf of the Fund)
with such information as the Distributor shall reasonably
request to answer such questions as may arise concerning the
sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Company's
Board of Directors (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of this Plan
or in any agreements relating to this Plan (the "Independent
Directors") may remove any broker, dealer, bank orother
person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall
terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient,
all Shares owned beneficially or of record by: (i) such
Recipient, or (ii) such brokerage or other customers, or
investment advisory or other clients of such Recipient and/or
accounts as to which such Recipient is a fiduciary or
custodian or co-fiduciary or co-custodian (collectively, the
"Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan.
In the event that more than one person or entity would
otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books
as determined by the Distributor shall be deemed the
Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE
SUPPORT SERVICES.
(a) The Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in
the aggregate amount (i) of 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the
close of each business day (the "Service Fee"), plus (ii)
0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the
"Asset Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in
connection with the sale of Shares.
<PAGE>
The administrative support services in connection with
the Accounts to be rendered by Recipients may include, but
shall not be limited to, the following: answering routine
inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's
investment plans and dividend payment options available, and
providing such other information and services in connection
with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by Recipients may include, but shall
not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection
with the distribution of Shares as the Distributor or the
Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares
to entitle it to payments under the Plan. In the event that
either the Distributor or the Board should have reason to
believe that, notwithstanding the level of Qualified
Holdings, a Recipient may not be rendering appropriate
distribution assistance in connection with the sale of Shares
or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the
Recipient to provide a written report or other information to
verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If
the Distributor or the Board still is not satisfied, either
may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such Recipient's
rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end
of each calendar quarter, at a rate not to exceed 0.0625%
(0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed
as of the close of each business day constituting Qualified
Holdings owned beneficially or of record by the Recipient or
by its Customers for a period of more than the minimum period
(the "Minimum Holding Period"), if any, to be set from time
to time by a majority of the Independent Directors.
<PAGE>
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end
of each calendar quarter, at a rate not to exceed (i) 0.25%
of the average during the calendar quarter of the aggregate
net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting
Qualified Holdings sold by the Recipient during that quarter
and owned beneficially or of record by the Recipient or by
its Customers, plus (ii) 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each
business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its
Customers for a period of more than one (1) year, subject to
reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients
that are, or may be, imposed by Article III, Section 26, of
the NASD Rules of Fair Practice. In the event Shares are
redeemed less than one year after the date such Shares were
sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such
shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be
made more often than quarterly, and sooner than the end of
the calendar quarter. In addition, the Distributor shall
make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.1875% (0.75% on
an annual basis) of the average during the calendar quarter
of the aggregate net asset value of Shares computed as of the
close of each business day constituting Qualified Holdings
owned beneficially or of record by the Recipient or its
Customers for a period of more than one (1) year. However, no
such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified
Holdings do not equal or exceed, at the end of such quarter,
the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent
Directors.
A majority of the Independent Directors may at any time or
from time to time decrease and thereafter adjust the rate of
fees to be paid to the Distributor or to any Recipient, but
not to exceed the rates set forth above, and/or direct the
Distributor to increase or decrease the Minimum Holding
<PAGE>
Period or the Minimum Qualified Holdings. The Distributor
shall notify all Recipients of the Minimum Qualified Holdings
or Minimum Holding Period, if any, and the rates of Recipient
Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30)
days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised
current prospectus shall constitute sufficient notice. The
Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such
affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such
amounts under the limits to which the Distributor is, or may
become, subject under Article III, Section 26, of the NASD
Rules of Fair Practice. The distribution assistance and
administrative support services in connection with the sale
of Shares to be rendered by the Distributor may include, but
shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or
entity that sell Shares, and/or paying such persons Advance
Service Fee Payments in advance of, and/or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the
Distributor who support distribution of Shares by Recipients;
(iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for the interest and
other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying
other direct distribution costs of the type approved by the
Board, including without limitation the costs of sales
literature, advertising and prospectuses (other than those
furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) providing any service rendered
by the Distributor that a Recipient may render pursuant to
part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase,
(ii) in exchange for shares of another investment company for
which the Distributor serves as distributor or sub-
distributor, or (iii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board
should have reason to believe that the Distributor may not be
rendering appropriate distribution assistance or
administrative support services in connection with the sale
of Shares, then the Distributor, at the request of the Board,
shall provide the Board with a written report or other
<PAGE>
information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by OppenheimerFunds, Inc. ("OFI") from its own resources
(which may include profits derived from the advisory fee it
receives from the Fund), or (ii) by the Distributor (a
subsidiary of OFI), from its own resources, from Asset Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to
make any payment whatsoever to any person or entity other
than directly to the Distributor. In no event shall the
amounts to be paid to the Distributor exceed the rate of fees
to be paid by the Fund to the Distributor set forth in
paragraph (a) of this section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in
effect, the selection and nomination of those persons to be
Directors of the Company who are not "interested persons" of the
Fund ("Disinterested Directors") shall be committed to the
discretion of such Disinterested Directors. Nothing herein shall
prevent the Disinterested Directors from soliciting the views or
the involvement of others in such selection or nomination if the
final decision on any such selection and nomination is approved by
a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the
Fund shall provide written reports to the Fund's Board for its
review, detailing services rendered in connection with the
distribution of Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Directors or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
<PAGE>
a vote of the Board and its Independent Directors cast in person
at a meeting called for the purpose of voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This
Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on February 26, 1996,
for the purpose of voting on this Plan, and takes effect as of the
date first set forth above. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as theBoard may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Directors cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class C
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Directors. This Plan may be terminated at any time by
vote of a majority of the Independent Directors or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event
of such termination, the Board and its Independent Directors shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
Oppenheimer Series Fund, Inc.
(on behalf of Oppenheimer Disciplined
Allocation Fund)
By:____________________________________
OppenheimerFunds Distributor, Inc.
By:____________________________________
<PAGE>
SCHEDULE OF DISTRIBUTION AND SERVICE PLANS FOR CLASS C SHARES
Due to the substantial similarity of the Distribution and
Service Plan and Agreement ("Distribution and Service Plan") with
OppenheimerFunds Distributor, Inc. for Class C Shares of the
respective series of the Registrant, the following form of
Distribution and Service Plan for Class C Shares on behalf of
Oppenheimer Disciplined Allocation Fund and this schedule of
omitted documents is filed in accordance with the requirements of
Rule 8b-31 under the Investment Company Act of 1940.
1. Distribution and Service Plan for Class C Shares for
Connecticut Mutual Government Securities Account.
2. Distribution and Service Plan for Class C Shares for
Connecticut Mutual Income Account.
3. Distribution and Service Plan for Class C Shares for
Oppenheimer Disciplined Value Fund.
4. Distribution and Service Plan for Class C Shares for
Oppenheimer LifeSpan Growth Fund.
5. Distribution and Service Plan for Class C Shares for
Oppenheimer LifeSpan Balanced Fund.
6. Distribution and Service Plan for Class C Shares for
Oppenheimer LifeSpan Income Fund.
<PAGE>
EXHIBIT 18.1
OPPENHEIMER FUNDS MULTIPLE CLASS PLAN
MARCH 18, 1996
1. THE PLAN. This Plan is the written multiple class plan for each of the
open-end management investment companies (individually the "Fund" and
collectively the "Funds") named on Exhibit A hereto, which exhibit may be
revised from time to time, for OppenheimerFunds Distributor, Inc. (the
"Distributor"), the general distributor of shares of the Funds and for
OppenheimerFunds, Inc. (the "Advisor"), the investment advisor ofthe Funds. In
instances where such investment companies issueshares representing interests in
different portfolios ("Series"), the term "Fund" and "Funds" shall separately
refer to each Series. It is the written plan contemplated by Rule 18f-3 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"),pursuant to
which the Funds may issue multiple classes of shares. The terms and provisions
of this Plan shall be interpreted and defined in a manner consistent with the
provisions and definitions contained in the Rule.
2. SIMILARITIES AND DIFFERENCES AMONG CLASSES. Each Fund offering shares of
more than one class agrees that each class of that Fund:
(1)(i) shall have a separate service plan or distribution and service plan
("12b-1 Plan"), and shall pay all of the expenses incurred pursuant to that
arrangement; and (ii) may pay a different share of expenses ("Class
Expenses") if such expenses
<PAGE>
are actually incurred in a different amount by that class, or if the class
receives services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically attributable to
the particular class of shares, namely (a) 12b-1 Plan fees, (b) transfer and
shareholder servicing agent fees and administrative service fees, (c)
shareholder meeting expenses, (d) blue sky and SEC registration fees and (e) any
other incremental expenses subsequently identified that should be allocated to
one class which shall be approved by a vote of that Fund's Board of Directors,
Trustees or Managing General Partners(the "Directors"). Expenses identified in
Items (c) through (e) may involve issues relating either to a specific class or
to the entire Fund; such expenses constitute Class Expenses only when they are
attributable to a specific class. Because Class Expenses may be accrued at
different rates for each class of a single Fund, dividends distributable to
shareholders and net asset values per share may differ for shares of different
classes of the same Fund.
(2) shall have exclusive voting rights on any matters that relate solely to that
class's arrangements, including without limitation voting with respect to a
12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other class;
-2-
<PAGE>
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption features,
exchange privileges, loan privileges, the availability of certificated shares
and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as each
other class.
3. ALLOCATIONS OF INCOME, CAPITAL GAINS AND LOSSES AND EXPENSES. The
methodologies and procedures for allocating expenses, as set forth in
"Methodology for Net Asset Value (NAV) and Dividend and Distribution
Determinations for Oppenheimer Funds with Multiple Classes of Shares" are
re-approved. Income, realized and unrealized capital gains and losses, and
expenses of each Fund other than Class Expenses allocated to a particular class
shall be allocated to each class on the basis of the net asset value of that
class in relation to the net asset value of that Fund, except as follows: For
Funds operating under 1940 Act Rule 2a-7, such allocations shall be made on the
basis of relative net assets (settled shares) [net assets valued in accordance
with generally accepted accounting principles but excluding the value of
subscriptions receivable] in relation to the net assets of that Fund.
4. EXPENSE WAIVERS AND REIMBURSEMENTS. From time to time the Advisor may
voluntarily undertake to (i) waive any portion of the management fee charged to
a Fund, and/or (ii) reimburse any
-3-
<PAGE>
portion of the expenses of a Fund or of one or more of its classes, but is not
required to do so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements shall
disclose any reimbursements that are not equal for all classes of the same Fund.
5. CONVERSIONS OF SHARES. Any Fund may offer a conversion feature whereby
shares of one class ("Purchase Class Shares") will convert automatically to
shares of another class ("Target Class Shares") of that Fund, after being held
for a requisite period ("Matured Purchase Class Shares"), pursuant to the terms
and conditions of that Fund's Prospectus and/or Statement of Additional
Information. Upon conversion of Matured Purchase Class Shares, all Purchase
Class Shares of that Fund acquired by reinvestment of dividends or distributions
of such Matured Purchase Class Shares shall also be converted at that time.
Purchase Class Shares will convert into Target Class Shares of that Fund on the
basis of the relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The conversion feature shall
be offered for so long as (i) the expenses to which Target Class Shares of a
Fund are subject, including payments authorized under that Fund's Target Class
12b-1 plan, are not higher than the expenses of Purchase Class Shares of that
Fund, including payments authorized under that Fund's Purchase Class 12b-1 plan;
(ii) there continues to be
-4-
<PAGE>
available a ruling from the Internal Revenue Service, or of an opinion of
counsel or of an opinion of an auditing firm serving as tax adviser, to the
effect that the conversion of Purchase Class Shares to Target Class Shares does
not constitute a taxable event for the holder; and (iii) if the amount of
expenses to which Target Class Shares of a Fund are subject, including payments
authorized under that Fund's Target Class 12b-1 plan, is increased materially
without approval ofthe shareholders of Purchase Class Shares of that Fund, that
Fund will establish a new class of shares ("New Target Class Shares") and shall
take such other action as is necessary to provide that existing Purchase Class
Shares are exchanged or converted into New Target Class Shares, identical in all
material respects to Target Class Shares as they existed prior to implementation
of the proposal to increase expenses, no later than the date such shares
previously were scheduled to convert into Target Class Shares.
6. DISCLOSURE. The classes of shares to be offered by each Fund, and the
initial, asset-based or contingent deferred sales charges and other material
distribution arrangements with respect to such classes, shall be disclosed in
the prospectus and/or statement of additional information used to offer that
class of shares. Such prospectus or statement of additional information shall be
supplemented or amended to reflect any change(s) in classes of shares to be
offered or in the material distribution arrangements with respect to such
classes.
-5-
<PAGE>
7. INDEPENDENT AUDIT. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed by an
independent auditing firm (the "Expert"). At least annually, the Expert, or an
appropriate substitute expert, will render a report to the Funds on policies and
procedures placed in operation and tests of operating effectiveness as defined
and described in SAS 70 of the AICPA.
8. OFFERS AND SALES OF SHARES. The Distributor will maintain compliance
standards as to when each class of shares may appropriately be sold to
particular investors, and will require all persons selling shares of the Funds
to agree to conform to such standards.
9. RULE 12b-1 PAYMENTS. The Treasurer of each Fund shall provide to the
Directors of that Fund, and the Directors shall review, at least quarterly, the
written report required by that Fund's 12b-1 Plan, if any. The report shall
include information on (i) the amounts expended pursuant tothe 12b-1 Plan, (ii)
the purposes for which such expenditures were made and (iii) the amount of the
Distributor's unreimbursed distribution costs (if recovery of such costs in
future periods is permitted by that 12b- 1 Plan), taking into account 12b-1 Plan
payments and contingent deferred sales charges paid to the Distributor.
10. CONFLICTS. On an ongoing basis, the Directors of the Funds, pursuant to
their fiduciary responsibilities under the 1940 Act and otherwise, will monitor
the Funds for the existence of any
-6-
<PAGE>
material conflicts among the interests of the classes. The Advisor and the
Distributor will be responsible for reporting any potential or existing
conflicts to the Directors. In the event a conflict arises, the Directors shall
take such action as they deem appropriate.
11. EFFECTIVENESS AND AMENDMENT. This Plan takes effect for each Fund as of the
date of adoption shown below for that Fund, whereupon the Funds are released
from the terms and conditions contained in their respective exemptive
applications pursuant to which orders were issued exempting the respective Funds
from the provisions of Sections 2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c)
and 22(d) of the 1940 Act and Rule 22c-1 thereunder, or from their respective
previous multiple class plan.(1) This Plan has been approved by a majority vote
of the Board of each Fund and of each Fund's Board members who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
_________________
(1) Oppenheimer Management Corp. ET AL., Release IC-19821, 10/28/93 (notice) and
Release IC-19894, 11/23/93 (order), and Quest for Value Fund, Inc. ET AL.,
Release IC-19605, 7/30/93 (notice) and Release IC-19656, 8/25/93 (order);
Rochester Funds Multiple Class Plan; Connecticut Mutual Funds Multiple Class
Plan.
-7-
<PAGE>
relating to the Plan (the "Independent Trustees") of each Fund at meetings
called for (i) the Denver Oppenheimer Funds listed on Exhibit A on October 24,
1995, (ii) the New York Oppenheimer Funds listed on Exhibit A on October 5,
1995, (iii) the Quest Oppenheimer Funds listed on Exhibit A on November 28,
1995, (iv) the Rochester Oppenheimer Funds listed on Exhibit A on January 10,
1996, and (v) the Connecticut Mutual Oppenheimer Funds listed in Exhibit A on
February 26, 1996, in each case for the purpose of voting on this Plan. Prior to
that vote, (i) each Board was furnished by the methodology used for net asset
value and dividend and distribution determinations for the Funds, and (ii) a
majority of each Board and its Independent Trustees determined that the Plan as
proposed to be adopted, including the expense allocation, is in the best
interests of each Fund as a whole and to each class of each Fund individually.
Prior to any material amendment to the Plan, each Board shall request and
evaluate, and OFDI shall furnish, such information as may be reasonably
necessary to evaluate such amendment, and a majority of each Board and its
Independent Trustees shall find that the Plan as proposed to be amended,
including the expense allocation, is in the best interest of each class, each
Fund as a whole and each class of each Fund individually.
12. DISCLAIMER OF SHAREHOLDER AND TRUSTEE LIABILITY. The Distributor
understands that the obligations under this Plan of each Fund that is organized
as a Massachusetts business trust are
-8-
<PAGE>
not binding upon any Trustee or shareholder of such Fund personally, but bind
only that Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declarations of Trust of such Funds disclaiming
shareholder and Trustee liability for acts or obligations of the Funds.
Adopted by the Boards of the Denver Oppenheimer Funds on October 24, 1995.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Vice President
Denver Oppenheimer Funds
Adopted by the Boards of the New York Oppenheimer Funds on October 5, 1995.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
New York Oppenheimer Funds
Adopted by the Boards of the Quest Oppenheimer Funds on November 28, 1995.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
Quest Oppenheimer Funds
-9-
<PAGE>
Adopted by the Boards of the Rochester Oppenheimer Funds on January 10,
1996.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
Rochester Oppenheimer Funds
Adopted by the Board of the Connecticut Mutual Oppenheimer Funds on
February 26, 1996.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
Connecticut Mutual Oppenheimer Funds
-10-
<PAGE>
EXHIBIT A
1. DENVER OPPENHEIMER FUNDS
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Integrity Funds (consisting of the
following 2 series):
Oppenheimer Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer High Yield Fund
Oppenheimer Main Street Funds, Inc.
(consisting of the following 2 series):
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Strategic Funds Trust
(consisting of the following series):
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
(consisting of the following 2 series):
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
2. NEW YORK OPPENHEIMER FUNDS
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Fund
Oppenheimer International Equity Fund
Oppenheimer Multi-State Tax-Exempt Trust
(consisting of the following 3 series):
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
A-1
<PAGE>
3. QUEST OPPENHEIMER FUNDS
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
(consisting of the following 4 series:)
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Growth & Income Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
4. ROCHESTER OPPENHEIMER FUNDS
Rochester Fund Series - The Bond Fund For Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term New York
Municipal Fund
5. CONNECTICUT MUTUAL OPPENHEIMER FUNDS
Oppenheimer Series Fund, Inc.
(consisting of the following series:)
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Growth Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Connecticut Mutual Income Account
Connecticut Mutual Government
Securities Account
A-2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> DIVERSIFIED INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 23,032,521
<INVESTMENTS-AT-VALUE> 24,444,631
<RECEIVABLES> 357,417
<ASSETS-OTHER> 43,601
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,845,649
<PAYABLE-FOR-SECURITIES> 680
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,434
<TOTAL-LIABILITIES> 34,114
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,327,617
<SHARES-COMMON-STOCK> 2,318,786<F1>
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 12,342
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 59,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,412,110
<NET-ASSETS> 24,811,535
<DIVIDEND-INCOME> 168,991
<INTEREST-INCOME> 847,638
<OTHER-INCOME> 0
<EXPENSES-NET> 223,397
<NET-INVESTMENT-INCOME> 793,232
<REALIZED-GAINS-CURRENT> 159,534
<APPREC-INCREASE-CURRENT> 1,412,110
<NET-CHANGE-FROM-OPS> 2,364,876
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 780,890<F2>
<DISTRIBUTIONS-OF-GAINS> 100,068<F3>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,236,410<F4>
<NUMBER-OF-SHARES-REDEEMED> 204<F5>
<SHARES-REINVESTED> 82,580<F6>
<NET-CHANGE-IN-ASSETS> 24,811,535
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 111,599
<INTEREST-EXPENSE> 111,798
<GROSS-EXPENSE> 223,397
<AVERAGE-NET-ASSETS> 22,258,909
<PER-SHARE-NAV-BEGIN> 10.00<F7>
<PER-SHARE-NII> .37<F8>
<PER-SHARE-GAIN-APPREC> .73<F9>
<PER-SHARE-DIVIDEND> (.36)<F10>
<PER-SHARE-DISTRIBUTIONS> (.04)<F11>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.70<F12>
<EXPENSE-RATIO> 1.50<F13>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 2,300,898
class b - 17,888
<F2>distributions of income per class:
class a - 779,588
class b - 1,302
<F3>distirbutions of gains per class:
class a - 99,296
class b - 772
<F4>number of shares sold per class:
class a - 2,218,682
class b - 17,728
<F5>number of shares redeemed per class:
class a - 170
class b - 34
<F6>shares reinvested per class:
class a - 82,386
class b - 194
<F7>Represents figure for Class A shares,
Class B share figure is: 10.45
<F8>Represents figure for Class A shares,
Class B share figure is: .12
<F9>Represents figure for Class A shares,
Class B share figure is: .32
<F10>Represents figure for Class A shares,
Class B share figure is: (.11)
<F11>Represents figure for Class A shares,
Class B share figure is: (.04)
<F12>Represents figure for Class A shares,
Class B share figure is: 10.74
<F13>Represents figure for Class A shares,
Class B share figure is: 2.25
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> BALANCED
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 38,500,754
<INVESTMENTS-AT-VALUE> 42,008,714
<RECEIVABLES> 450,734
<ASSETS-OTHER> 63,154
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,522,602
<PAYABLE-FOR-SECURITIES> 132,460
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 88,450
<TOTAL-LIABILITIES> 220,910
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,679,189
<SHARES-COMMON-STOCK> 3,826,749<F1>
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (24,131)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90,126
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,556,508
<NET-ASSETS> 42,301,692
<DIVIDEND-INCOME> 345,473
<INTEREST-INCOME> 914,578
<OTHER-INCOME> 0
<EXPENSES-NET> 391,114
<NET-INVESTMENT-INCOME> 868,937
<REALIZED-GAINS-CURRENT> 923,770
<APPREC-INCREASE-CURRENT> 3,556,508
<NET-CHANGE-FROM-OPS> 5,349,215
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 893,068<F2>
<DISTRIBUTIONS-OF-GAINS> 82,498,286<F3>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,673,833<F4>
<NUMBER-OF-SHARES-REDEEMED> 4,954<F5>
<SHARES-REINVESTED> 157,870<F6>
<NET-CHANGE-IN-ASSETS> 42,301,692
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214,011
<INTEREST-EXPENSE> 177,103
<GROSS-EXPENSE> 391,114
<AVERAGE-NET-ASSETS> 37,663,377
<PER-SHARE-NAV-BEGIN> 10.00<F7>
<PER-SHARE-NII> .24<F8>
<PER-SHARE-GAIN-APPREC> 1.29<F9>
<PER-SHARE-DIVIDEND> (.25)<F10>
<PER-SHARE-DISTRIBUTIONS> (.23)<F11>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.05<F12>
<EXPENSE-RATIO> 1.55<F13>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 3,787,271
class b - 39,478
<F2>distributions of income per class:
class a - 890,951
class b - 2,117
<F3>distributions of gains per class:
class a - 824,982
class b - 8,662
<F4>number of shares sold per class:
class a - 3,635,283
class b - 38,550
<F5>number of shares redeemed per class:
class a - 4,943
class b - 11
<F6>shares reinvested per class:
class a - 156,931
class b - 939
<F7>Represents figure for Class A shares;
figure for Class B shares is: 10.00
<F8>Represents figure for Class A shares;
figure for Class B shares is; .24
<F9>Represents figure for Class A shares;
figure for Class B shares is: 1.29
<F10>Represents figure for Class A shares;
figure for Class B shares is: (.25)
<F11>Represents figure for Class A shares;
figure for Class B shares is: (.23)
<F12>Represents figure for Class A shares;
figure for Class B shares is: 11.05
<F13>Represents figure for Class A shares;
figure for Class B shares is: 1.55
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 31,351,719
<INVESTMENTS-AT-VALUE> 34,893,384
<RECEIVABLES> 234,399
<ASSETS-OTHER> 7,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,135,282
<PAYABLE-FOR-SECURITIES> 162,649
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,108
<TOTAL-LIABILITIES> 206,757
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,288,972
<SHARES-COMMON-STOCK> 3,067,575<F1>
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (29,003)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 78,195
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,590,361
<NET-ASSETS> 34,928,525
<DIVIDEND-INCOME> 345,890
<INTEREST-INCOME> 408,733
<OTHER-INCOME> 0
<EXPENSES-NET> 303,969
<NET-INVESTMENT-INCOME> 450,654
<REALIZED-GAINS-CURRENT> 770,151
<APPREC-INCREASE-CURRENT> 3,590,361
<NET-CHANGE-FROM-OPS> 4,811,166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 479,657<F2>
<DISTRIBUTIONS-OF-GAINS> 691,956<F3>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,993,629<F4>
<NUMBER-OF-SHARES-REDEEMED> 30,516<F5>
<SHARES-REINVESTED> 104,462<F6>
<NET-CHANGE-IN-ASSETS> 34,928,525
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 166,212
<INTEREST-EXPENSE> 137,757
<GROSS-EXPENSE> 303,969
<AVERAGE-NET-ASSETS> 29,251,434
<PER-SHARE-NAV-BEGIN> 10.00<F7>
<PER-SHARE-NII> .16<F8>
<PER-SHARE-GAIN-APPREC> 1.63<F9>
<PER-SHARE-DIVIDEND> (.17)<F10>
<PER-SHARE-DISTRIBUTIONS> (.23)<F11>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.39<F12>
<EXPENSE-RATIO> 1.55<F13>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 3,018,681
class b - 48,894
<F2>distributions of income per class:
class a - 478,706
class b - 951
<F3>distributions of gains per class:
class a - 680,837
class b - 11,119
<F4>number of shares sold per class:
class a - 2,945,839
class b - 47,790
<F5>number of shares redeemed per class:
class a - 30,516
class b - 0
<F6>shares reinvested per class:
class a - 103,358
class b - 1,104
<F7>Represents figure for Class A shares;
figure for Class B shares is: 11.14
<F8>Represents figure for Class A shares;
figure for Class B shares is: .03
<F9>Represents figure for Class A shares;
figure for Class B shares is: .56
<F10>Represents figure for Class A shares;
figure for Class B shares is: (.03)
<F11>Represents figure for Class A shares;
figure for Class B shares is: (.23)
<F12>Represents figure for Class A shares;
figure for Class B shares is: 11.47
<F13>Represents figure for Class A shares;
figure for Class B shares is: 2.30
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LIQUID ACCOUNT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 75,707,513
<INVESTMENTS-AT-VALUE> 75,707,513
<RECEIVABLES> 216,006
<ASSETS-OTHER> 12,344
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 75,935,863
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 128,112
<TOTAL-LIABILITIES> 128,112
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,807,751
<SHARES-COMMON-STOCK> 75,807,751
<SHARES-COMMON-PRIOR> 63,945,870
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 75,807,751
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,162,889
<OTHER-INCOME> 0
<EXPENSES-NET> 674,660
<NET-INVESTMENT-INCOME> 3,488,229
<REALIZED-GAINS-CURRENT> 2
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,488,231
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,488,229)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 184,452,934
<NUMBER-OF-SHARES-REDEEMED> 176,015,712
<SHARES-REINVESTED> 3,424,659
<NET-CHANGE-IN-ASSETS> 11,861,881
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 349,609
<INTEREST-EXPENSE> 325,051
<GROSS-EXPENSE> 674,660
<AVERAGE-NET-ASSETS> 69,921,800
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .049
<PER-SHARE-DISTRIBUTIONS> .049
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> (.96)
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> GOVERNMENT SECURITIES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 46,839,748
<INVESTMENTS-AT-VALUE> 48,961,256
<RECEIVABLES> 1,064,748
<ASSETS-OTHER> 107
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50,026,111
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 123,228
<TOTAL-LIABILITIES> 123,228
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,220,513
<SHARES-COMMON-STOCK> 4,651,720<F1>
<SHARES-COMMON-PRIOR> 6,163,339
<ACCUMULATED-NII-CURRENT> 32,873
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,472,011)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,121,508
<NET-ASSETS> 49,902,883
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,326,765
<OTHER-INCOME> 0
<EXPENSES-NET> 534,877
<NET-INVESTMENT-INCOME> 3,791,888
<REALIZED-GAINS-CURRENT> (618,861)
<APPREC-INCREASE-CURRENT> 6,078,046
<NET-CHANGE-FROM-OPS> 9,251,073
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,790,993<F2>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 311,783<F3>
<NUMBER-OF-SHARES-REDEEMED> 2,147,472<F4>
<SHARES-REINVESTED> 324,143<F5>
<NET-CHANGE-IN-ASSETS> (10,259,456)
<ACCUMULATED-NII-PRIOR> 31,978
<ACCUMULATED-GAINS-PRIOR> (2,853,150)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 342,325
<INTEREST-EXPENSE> 192,552
<GROSS-EXPENSE> 534,877
<AVERAGE-NET-ASSETS> 54,824,326
<PER-SHARE-NAV-BEGIN> 9.76<F6>
<PER-SHARE-NII> .72<F7>
<PER-SHARE-GAIN-APPREC> .97<F8>
<PER-SHARE-DIVIDEND> (.72)<F9>
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.73<F10>
<EXPENSE-RATIO> .98<F11>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 4,644,816
class b - 6,904
<F2>distributions of income per class:
class a - (3,790,617)
class b - (376)
<F3>number of shares hold per class:
class a - 304,895
class b - 6,888
<F4>number of shares redeemed per class:
class a - 2,147,453
class b - 19
<F5>shares reinvested per class:
class a - 324,108
class b - 35
<F6>Represents figure for Class A shares:
class b - 10.45
<F7>Represents figure for Class A shares:
class b - .12
<F8>Represents figure for Class A shares:
class b - .32
<F9>Represents figure for Class A shares:
class b - (.12)
<F10>Represents figure for Class A shares:
class b - 10.77
<F11>Represents figure for Class A shares:
class b - 1.98
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> INCOME ACCOUNT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 32,577,590
<INVESTMENTS-AT-VALUE> 32,548,568
<RECEIVABLES> 658,896
<ASSETS-OTHER> 13,220
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,220,684
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34,323
<TOTAL-LIABILITIES> 34,323
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,612,380
<SHARES-COMMON-STOCK> 3,484,188<F1>
<SHARES-COMMON-PRIOR> 5,094,374
<ACCUMULATED-NII-CURRENT> 19,045
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,416,042)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (29,022)
<NET-ASSETS> 33,186,361
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,327,978
<OTHER-INCOME> 0
<EXPENSES-NET> 274,169
<NET-INVESTMENT-INCOME> 3,053,809
<REALIZED-GAINS-CURRENT> (717,369)
<APPREC-INCREASE-CURRENT> 2,639,614
<NET-CHANGE-FROM-OPS> 4,976,054
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,052,123)<F2>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 770,413<F3>
<NUMBER-OF-SHARES-REDEEMED> 2,654,709<F4>
<SHARES-REINVESTED> 274,100<F5>
<NET-CHANGE-IN-ASSETS> (13,360,603)
<ACCUMULATED-NII-PRIOR> 17,359
<ACCUMULATED-GAINS-PRIOR> (1,698,673)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 274,057
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 274,057
<AVERAGE-NET-ASSETS> 43,867,447
<PER-SHARE-NAV-BEGIN> 9.14<F6>
<PER-SHARE-NII> .67<F7>
<PER-SHARE-GAIN-APPREC> .37<F8>
<PER-SHARE-DIVIDEND> (.66)<F9>
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.52<F10>
<EXPENSE-RATIO> .63<F11>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 3,478,038
class b - 6,150
<F2>distributions of income per class:
class a - (3,051,490)
class b - (633)
<F3>number of shares sold per class:
class a - 764,273
class b - 6,140
<F4>number of shares redeemed per class:
class a - 2,654,709
class b - 0
<F5>shares reinvested per class:
class a - 274,100
class b - 10
<F6>Represents figure for Class A shares,
Class B figure is 9.46
<F7>Represents figure for Class A shares,
Class B figure is .13
<F8>Represents figure for Class A shares,
Class B figure is .10
<F9>Represents figure for Class A shares,
Class B figure is (.13)
<F10>Represents figure for Class A shares,
Class B figure is 9.56
<F11>Represents figure for Class A shares,
Class B figure is 1.63
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> TOTAL RETURN
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 192,516,346
<INVESTMENTS-AT-VALUE> 219,198,594
<RECEIVABLES> 1,562,380
<ASSETS-OTHER> 6,632
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 220,767,606
<PAYABLE-FOR-SECURITIES> 1,640,712
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 377,614
<TOTAL-LIABILITIES> 2,018,326
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 191,347,357
<SHARES-COMMON-STOCK> 14,149,588<F1>
<SHARES-COMMON-PRIOR> 13,232,562
<ACCUMULATED-NII-CURRENT> 68,633
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 651,042
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26,682,248
<NET-ASSETS> 218,749,280
<DIVIDEND-INCOME> 1,826,407
<INTEREST-INCOME> 8,376,038
<OTHER-INCOME> 0
<EXPENSES-NET> 2,198,075
<NET-INVESTMENT-INCOME> 8,004,370
<REALIZED-GAINS-CURRENT> 7,754,106
<APPREC-INCREASE-CURRENT> 26,965,439
<NET-CHANGE-FROM-OPS> 42,723,915
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,980,308)<F2>
<DISTRIBUTIONS-OF-GAINS> (7,635,758)<F3>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,038,116<F4>
<NUMBER-OF-SHARES-REDEEMED> 2,126,335<F5>
<SHARES-REINVESTED> 1,005,245<F6>
<NET-CHANGE-IN-ASSETS> 40,845,273
<ACCUMULATED-NII-PRIOR> 44,571
<ACCUMULATED-GAINS-PRIOR> 532,694
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,251,666
<INTEREST-EXPENSE> 946,409
<GROSS-EXPENSE> 2,198,075
<AVERAGE-NET-ASSETS> 200,103,359
<PER-SHARE-NAV-BEGIN> 13.44<F7>
<PER-SHARE-NII> .60<F8>
<PER-SHARE-GAIN-APPREC> 2.59<F9>
<PER-SHARE-DIVIDEND> (.60)<F10>
<PER-SHARE-DISTRIBUTIONS> (.57)<F11>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.46<F12>
<EXPENSE-RATIO> 1.17<F13>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 14,108,084
class b - 41,504
<F2>distributions of income per class:
class a - (7,977,727)
class b - (2,581)
<F3>distributions of gains per class:
class a - (7,615,071)
class b - (20,682)
<F4>number of shares sold per class:
class a - 1,998,083
class b - 40,033
<F5>number of shares redeemed per class:
class a - 2,126,335
class b - 0
<F6>shares reinvested per class:
class a - 1,003,774
class b - 1,471
<F7>Represents figure for Class A shares;
Class B shares figure is 15.48
<F8>Represents figure for Class A shares;
Class B shares figure is .07
<F9>Represents figure for Class A shares;
Class B shares figure is (.70)
<F10>Represents figure for Class A shares;
Class B shares figure is (.07)
<F11>Represents figure for Class A shares;
Class B shares figure is (.52)
<F12>Represents figure for Class A shares;
Class B shares figure is 15.66
<F13>Represents figure for Class A shares;
Class B shares figure is 1.92
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> GROWTH ACCOUNT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 95,069,282
<INVESTMENTS-AT-VALUE> 120,793,328
<RECEIVABLES> 419,278
<ASSETS-OTHER> 21,967
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121,234,573
<PAYABLE-FOR-SECURITIES> 2,200,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 199,744
<TOTAL-LIABILITIES> 2,400,041
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,323,812
<SHARES-COMMON-STOCK> 6,658,761<F1>
<SHARES-COMMON-PRIOR> 5,520,444
<ACCUMULATED-NII-CURRENT> 11,438
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 775,236
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,724,046
<NET-ASSETS> 118,834,532
<DIVIDEND-INCOME> 2,035,451
<INTEREST-INCOME> 598,872
<OTHER-INCOME> 0
<EXPENSES-NET> 1,132,616
<NET-INVESTMENT-INCOME> 1,501,707
<REALIZED-GAINS-CURRENT> 7,939,891
<APPREC-INCREASE-CURRENT> 20,902,301
<NET-CHANGE-FROM-OPS> 30,343,899
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,491,662)<F2>
<DISTRIBUTIONS-OF-GAINS> (7,692,786)<F3>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,279,842<F4>
<NUMBER-OF-SHARES-REDEEMED> 657,261<F5>
<SHARES-REINVESTED> 515,736<F6>
<NET-CHANGE-IN-ASSETS> 40,444,694
<ACCUMULATED-NII-PRIOR> 1,393
<ACCUMULATED-GAINS-PRIOR> 528,131
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 613,378
<INTEREST-EXPENSE> 519,238
<GROSS-EXPENSE> 1,132,616
<AVERAGE-NET-ASSETS> 98,113,176
<PER-SHARE-NAV-BEGIN> 14.20<F7>
<PER-SHARE-NII> .25<F8>
<PER-SHARE-GAIN-APPREC> 4.88<F9>
<PER-SHARE-DIVIDEND> (.25)<F10>
<PER-SHARE-DISTRIBUTIONS> (1.24)<F11>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.84<F12>
<EXPENSE-RATIO> 1.22<F13>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>shares common stock per class:
class a - 6,619,121
class b - 39,640
<F2>distributions of income per class:
class a - (1,491,101)
class b - 1,561
<F3>distributions of gains per class:
class a - 7,649,952
class b - (42,834)
<F4>number of shares sold per class:
class a - 1,242,427
class b - 30,415
<F5>number of shares redeemed per class:
class a - 657,052
class b - 209
<F6>shares reinvested per class:
class a - 513,302
class b - 2,434
<F7>Represents figure for Class A shares;
Class B share figure is 17.83
<F8>Represents figure for Class A shares;
Class B share figure is .02
<F9>Represents figure for Class A shares;
Class B share figure is 1.40
<F10>Represents figure for Class A shares;
Class B share figure is .02
<F11>Represents figure for Class A shares;
Class B share figure is (1.15)
<F12>Represents figure for Class A shares;
Class B share figure is 18.08
<F13>Represents figure for Class A shares;
Class B share figure is 1.97
</FN>
</TABLE>
