OPPENHEIMER LIFESPAN BALANCED FUND
Proxy for Special Shareholders Meeting to be held June 9, 1998
YOUR SHAREHOLDER VOTE IS IMPORTANT!
YOUR PROMPT RESPONSE CAN SAVE YOUR FUND THE EXPENSE OF ANOTHER MAILING.
Please mark your proxy on the reverse side, date and sign it, and return it
promptly in the accompanying envelope which requires no postage if mailed in the
United States.
Please detach at perforation before mailing.
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OPPENHEIMER LIFESPAN BALANCED FUND
Proxy For Special Shareholders Meeting to be held June 9, 1998
THE UNDERSIGNED SHAREHOLDER OF OPPENHEIMER LIFESPAN BALANCED FUND (the "Fund"),
does hereby appoint Robert J. Bishop, George C. Bowen, Andrew J. Donohue and
Scott T. Farrar, and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to attend the Special Meeting of
the Shareholders of the Fund to be held on June 9, 1998, at 6803 SOUTH TUCSON
WAY, ENGLEWOOD, COLORADO 80112 at 10:00 A.M., Denver time, and at all
adjournments thereof, and to vote the shares held in the name of the undersigned
on the record date for said meeting on the Proposal specified on the reverse
side. Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS who recommends a vote FOR
the Proposal on the reverse side. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS INDICATED.
(Over)
315
<PAGE>
OPPENHEIMER LIFESPAN BALANCED FUND
Proxy for Special Shareholders Meeting to be held June 9, 1998
YOUR SHAREHOLDER VOTE IS IMPORTANT!
YOUR PROMPT RESPONSE CAN SAVE YOUR FUND MONEY. Please vote, sign and mail your
proxy ballot (this card) in the enclosed postage-paid envelope today, no matter
how many shares you own. A majority of the Fund's shares must be represented in
person or by proxy. Please vote your proxy so your Fund can avoid the expense of
another mailing.
Please detach at perforation before mailing.
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1. THE PROPOSAL: To approve an Agreement and Plan of Reorganization between the
Fund and Oppenheimer Disciplined Allocation Fund("Disciplined Allocation Fund"),
and the transactions contemplated thereby, including (a) the transfer of
substantially all the assets of the Fund in exchange for shares of Disciplined
Allocation Fund, (b) the distribution of such shares to the shareholders of the
Fund in complete liquidation of the Fund, and (c) the cancellation of the
outstanding shares of the Fund.
1. o FOR o AGAINST o ABSTAIN
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS PROXY. When signing as
custodian, attorney, executor, administrator, trustee, etc., please give your
full title as such. All joint owners should sign this proxy. If the account is
registered in the name of a corporation, partnership or other entity, a duly
authorized individual must sign on its behalf and give his or her title.
DATED: ___________________________, 1998
(Month) (Day)
_______________________________________
SIGNATURE(S)
_______________________________________
SIGNATURE(S)
Please read both sides of this ballot
(Over)
315
<PAGE>
BRIDGET A. MACASKILL
President and Chief Executive Officer
April 8, 1998
Dear Oppenheimer LifeSpan Balanced Fund Shareholder,
One of the things we pride ourselves on at OppenheimerFunds, Inc. is our
commitment to searching for new investment opportunities for our shareholders. I
am writing to you today to let you know about one of these opportunities - a
positive change that has been proposed for Oppenheimer LifeSpan Balanced Fund.
After careful consideration, the Board of Directors agreed that it would
be in the best interest of shareholders of Oppenheimer LifeSpan Balanced Fund to
reorganize into another Oppenheimer fund, Oppenheimer Disciplined Allocation
Fund. A shareholder meeting has been scheduled for June 9th, and all Oppenheimer
LifeSpan Balanced Fund shareholders of record on March 17th are being asked to
vote either in person or by proxy. You will find a notice of the meeting, a
ballot card, a proxy statement detailing the proposal, an Oppenheimer
Disciplined Allocation Fund prospectus and a postage-paid return envelope
enclosed for your use.
WHY DOES THE BOARD OF DIRECTORS RECOMMEND THIS CHANGE?
Oppenheimer LifeSpan Balanced Fund and Oppenheimer Disciplined Allocation
Fund have compatible objectives, as discussed in the enclosed proxy statement.
We believe that Oppenheimer Disciplined Allocation Fund's flexible management
approach allows that fund to respond more effectively to changing market and
economic conditions, and can offer shareholders even better investment
opportunities over the long term.
Another benefit for shareholders is the greater economy of scale resulting
from consolidation into a much larger fund. By merging into Oppenheimer
Disciplined Allocation Fund - which now has over $250 million in assets - former
shareholders of Oppenheimer LifeSpan Balanced Fund may benefit from a lower
expense ratio as costs are spread among a larger number of shares.
HOW DO YOU VOTE?
No matter how large or small your investment, your vote is important, so
please review the proxy statement carefully. To cast your vote, simply mark,
sign and date the enclosed proxy ballot and return it in the postage-paid
envelope today. Remember, it can be expensive for the Fund - and ultimately you
as a shareholder - to remail the ballots if not enough responses are received to
conduct the meeting.
(over, please)
<PAGE>
If you have any questions about the proposal, please feel free to contact
your financial advisor, or call us at 1-800-525-7048.
As always, we appreciate your confidence in OppenheimerFunds and look
forward to serving you for many years to come.
Sincerely,
/s/ Bridget A. Macaskill
Enclosures
<PAGE>
OPPENHEIMER LIFESPAN BALANCED FUND
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048-0203
1-800-525-7048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1998
TO THE SHAREHOLDERS OF OPPENHEIMER LIFESPAN BALANCED FUND:
Notice is hereby given that a Special Meeting of the Shareholders of Oppenheimer
LifeSpan Balanced Fund ("LifeSpan Balanced Fund"), a series of Oppenheimer
Series Fund, Inc., a registered management investment company, will be held at
6803 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112 at 10:00 A.M., Denver time, on
June 9, 1998, or any adjournments thereof (the "Meeting"), for the following
purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization between
LifeSpan Balanced Fund and Oppenheimer Disciplined Allocation Fund ("Disciplined
Allocation Fund") and the transactions contemplated thereby, including (a) the
transfer of substantially all the assets of LifeSpan Balanced Fund to
Disciplined Allocation Fund in exchange for Class A, Class B and Class C shares
of Disciplined Allocation Fund, (b) the distribution of such shares to the
corresponding Class A, Class B and Class C shareholders of LifeSpan Balanced
Fund in complete liquidation of LifeSpan Balanced Fund, and (c)the cancellation
of the outstanding shares of LifeSpan Balanced Fund(the "Proposal" or the
"Reorganization").
2. To act upon such other matters as may properly come before the Meeting.
Shareholders of record at the close of business on March 17, 1998 are entitled
to notice of, and to vote at, the Meeting. The Proposal is more fully discussed
in the Proxy Statement and Prospectus. Please read it carefully before telling
us, through your proxy or in person, how you wish your shares to be voted.
LifeSpan Balanced Fund's Board of Directors recommends a vote in favor of the
Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
April 6, 1998
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SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO INDICATE
VOTING INSTRUCTIONS ON THE ENCLOSED PROXY AND TO DATE, SIGN AND RETURN IT IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE. TO AVOID UNNECESSARY DUPLICATE MAILINGS, WE
ASK YOUR COOPERATION IN PROMPTLY MAILING YOUR PROXY NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE.
315
<PAGE>
OPPENHEIMER LIFESPAN BALANCED FUND
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048-0203
1-800-525-7048
PROXY STATEMENT
OPPENHEIMER DISCIPLINED ALLOCATION FUND
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048-0203
1-800-525-7048
PROSPECTUS
This Proxy Statement of Oppenheimer LifeSpan Balanced Fund ("LifeSpan Balanced
Fund") relates to the Agreement and Plan of Reorganization (the "Reorganization
Agreement")and the transactions contemplated thereby (the "Reorganization")
between Oppenheimer Series Fund, Inc. ("OSF" or the "Company")on behalf of its
series, LifeSpan Balanced Fund, and OSF on behalf of its series Oppenheimer
Disciplined Allocation Fund ("Disciplined Allocation Fund"). This Proxy
Statement also constitutes a Prospectus of Disciplined Allocation Fund included
in a Registration Statement on Form N-14 filed by the Company with the
Securities and Exchange Commission (the "SEC"). Such Registration Statement
relates to the registration of shares of Disciplined Allocation Fund to be
offered to the shareholders of LifeSpan Balanced Fund pursuant to the
Reorganization Agreement. The Company, Disciplined Allocation Fund and LifeSpan
Balanced Fund are located at Two World Trade Center, New York, New York
10048-0203 (telephone 1-800-525-7048).
This Proxy Statement and Prospectus sets forth information about Disciplined
Allocation Fund and the Reorganization that shareholders of LifeSpan Balanced
Fund should know before voting on the Reorganization. A copy of the Prospectus
for Disciplined Allocation Fund, dated February 19, 1998 is enclosed, and
incorporated herein by reference. The following documents have been filed with
the SEC and are available without charge upon written request to
OppenheimerFunds Services, the transfer and shareholder servicing agent for
Disciplined Allocation Fund and LifeSpan Balanced Fund, at P.O. Box 5270,
Denver, Colorado 80217, or by calling the toll-free number shown above: (i) a
Prospectus for LifeSpan Balanced Fund, dated February 19, 1998, as supplemented
February 24, 1998,(ii) a Statement of Additional Information for LifeSpan
Balanced Fund, dated February 19, 1998, and (iii) a Statement of Additional
Information for Disciplined Allocation Fund, dated February 19, 1998. A
Statement of Additional Information relating to the Reorganization, dated April
6, 1998 (the "Series Fund Additional Statement") which is incorporated herein by
reference and which contains more detailed information about Disciplined
Allocation Fund and its management, has been filed with the SEC as part of the
Company's Registration Statement on Form N-14 and is available by written
request to OppenheimerFunds Services at the same post office box address listed
above or by calling the toll-free number shown above.
Investors are advised to read and retain this Proxy Statement and Prospectus for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated April 6, 1998
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
PAGE
INTRODUCTION.............................................................
General..............................................................1
Record Date; Vote Required; Share Information........................2
Proxies..............................................................3
Costs of the Solicitation and the Reorganization.....................4
COMPARATIVE FEE TABLES..................................................5
SYNOPSIS................................................................8
Parties to the Reorganization........................................8
Shares to be Issued..................................................8
The Reorganization .............................................9
Reasons for the Reorganization.......................................9
Tax Consequences of the Reorganization..............................10
Investment Objectives and Policies..................................10
Investment Advisory and Distribution and Service Plan Fees............
Purchases, Exchanges and Redemptions................................12
PRINCIPAL RISK FACTORS.................................................12
APPROVAL OF THE REORGANIZATION (THE PROPOSAL)..........................16
Reasons for the Reorganization......................................16
The Reorganization..................................................17
Tax Aspects of the Reorganization...................................18
Capitalization Table (Unaudited)....................................20
COMPARISON BETWEEN LIFESPAN BALANCED FUND AND DISCIPLINED
ALLOCATION FUND
Investment Objectives and Policies..................................21
Permitted Investments...............................................23
Investment Restrictions.............................................32
Description of Brokerage Practices..................................35
Expense Ratios and Performance......................................36
Shareholder Services................................................36
Rights of Shareholders..............................................37
Organization and History............................................38
Management and Distribution Arrangements............................39
Purchase of Additional Shares.......................................41
Dividends and Distributions.........................................42
METHOD OF CARRYING OUT THE REORGANIZATION .............................42
ADDITIONAL INFORMATION.................................................44
Financial Information...............................................44
Public Information..................................................45
OTHER BUSINESS.........................................................46
EXHIBIT A - Agreement and Plan of Reorganization by and between
LifeSpan Balanced Fund and Disciplined Allocation Fund................A-1
EXHIBIT B - Average Annual Total Returns for the Period
Ended 12/31/97.......................................................B-1
<PAGE>
OPPENHEIMER LIFESPAN BALANCED FUND
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048-0203
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 9, 1998
INTRODUCTION
GENERAL
This Proxy Statement and Prospectus is being furnished to the shareholders of
Oppenheimer LifeSpan Balanced Fund ("LifeSpan Balanced Fund"), a series of
Oppenheimer Series Fund, Inc. (the "Company"), a registered management
investment company, in connection with the solicitation by the Company's Board
of Directors (the "Board") of proxies to be used at the Special Meeting of
Shareholders of LifeSpan Balanced Fund to be held at 6803 SOUTH TUCSON WAY,
ENGLEWOOD, COLORADO 80112, at 10:00 A.M., Denver time, on June 9, 1998, or any
adjournments thereof (the "Meeting"). It is expected that the mailing of this
Proxy Statement and Prospectus will commence on or about April 14, 1998.
At the Meeting, shareholders of LifeSpan Balanced Fund will be asked to approve
an Agreement and Plan of Reorganization (the "Reorganization Agreement") between
the Company on behalf of LifeSpan Balanced Fund and the Company on behalf of
Oppenheimer Disciplined Allocation Fund ("Disciplined Allocation Fund"), and the
transactions contemplated thereby including (a) the transfer of substantially
all the assets of LifeSpan Balanced Fund to Disciplined Allocation Fund in
exchange for Class A, Class B and Class C shares of Disciplined Allocation Fund,
(b) the distribution of such shares to the corresponding Class A, Class B and
Class C shareholders of LifeSpan Balanced Fund in complete liquidation of
LifeSpan Balanced Fund, and (c) the cancellation of the outstanding shares of
LifeSpan Balanced Fund(the "Proposal" or the "Reorganization").
Disciplined Allocation Fund currently offers Class A shares with a sales charge
imposed at the time of purchase. There is no initial sales charge on purchases
of Class B or Class C shares; however, a contingent deferred sales charge may be
imposed, depending on when the shares are sold. The Class A, Class B and Class C
shares issued pursuant to the Reorganization will be issued at net asset value
without a sales charge and no contingent deferred sales charge will be imposed
on any LifeSpan Balanced Fund shares exchanged in the Reorganization. However,
any contingent deferred sales charge which applies to LifeSpan Balanced Fund
shares will continue to apply to Disciplined Allocation Fund shares received in
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<PAGE>
the reorganization. Additional information with respect to these charges by
Disciplined Allocation Fund is set forth herein, in the Prospectus of
Disciplined Allocation Fund accompanying this Proxy Statement and Prospectus and
in the Disciplined Allocation Fund Statement of Additional Information, both of
which are incorporated
herein by reference.
RECORD DATE; VOTE REQUIRED; SHARE INFORMATION
The Board of the Company has fixed the close of business on March 17, 1998 as
the record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. An affirmative vote of the
holders of a "majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act") of all
of the Class A, Class B and Class C shares in the aggregate of LifeSpan Balanced
Fund is required to approve the Reorganization. That level of vote is defined in
the Investment Company Act as the vote of the holders of the lesser of: (i) 67%
or more of the voting securities present or represented by proxy at the
shareholders meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities. Each shareholder will be entitled to one vote for
each share and a fractional vote for each fractional share held of record at the
close of business on the Record Date. Only shareholders of LifeSpan Balanced
Fund will vote on the Reorganization. The vote of shareholders of Disciplined
Allocation Fund is not being solicited.
At the close of business on the Record Date, there were 5,712,574.689 shares of
LifeSpan Balanced Fund issued and outstanding, consisting of 5,206,572.236 Class
A shares, 415,107.952 Class B shares and 90,894.501 Class C shares. At the close
of business on the Record Date, there were 16,690,416.258 shares of Disciplined
Allocation Fund issued and outstanding, consisting of 15,871,847.214 Class A
shares, 693,915.921 Class B shares and 124,653.123 Class C shares. The presence
in person or by proxy of the holders of a majority of the shares of all classes
constitutes a quorum for the transaction of business at the Meeting. To the
knowledge of LifeSpan Balanced Fund, as of the Record Date, no person owned of
record or beneficially owned 5% or more of its outstanding shares except the
following: Massachusetts Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111-0001 which owned of record 3,994,015.346 Class
A shares (76.71% of the outstanding Class A shares); William R. Trimmer MD LTD
Profit Sharing Plan, 890 Mill Street, Reno, Nevada 89502 which owned of record
42,532.925 Class B shares (10.24% of the outstanding Class B shares); Margaret
B. Woodworth Trust, 2404 Loring Street, San Diego, California 92109-2347 which
owned of record 24,512.862 Class B shares (5.90% of the outstanding Class B
shares); Bank Boston Trustee Rollover IRA for the benefit of
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<PAGE>
Clayton C. Clammer, 5928 Los Alamos Street, Buena Park, California 90620-2706
which owned of record 11,203.186 Class C shares (12.32% of the outstanding Class
C shares); Bank Boston Trustee Rollover IRA for the benefit of Joanne Dickinson,
1071 Wade Lane, Oakmont, Pennsylvania 15139-1266 which owned of record 9,719.013
Class C shares (10.69% of the outstanding Class C shares); Merrill Lynch Pierce
Fenner & Smith Inc., 4800 Deer Lake Drive East, Jacksonville, Florida
32246-6484, which owned of record for the benefit of its customers 6,962.082
Class C shares (7.65% of the outstanding Class C shares). As of the Record Date,
to the knowledge of Disciplined Allocation Fund, no person owned of record or
beneficially owned 5% or more of its outstanding shares except for Bank Boston
Trustee Rollover IRA for the benefit of Barry Deutsch, 1919 19th Street, San
Francisco, California 94107-2716 which owned of record 8,480.552 Class C shares
(6.80% of the outstanding Class C shares of Disciplined Allocation Fund). In
addition, as of the Record Date, the Directors and officers of LifeSpan Balanced
Fund and Disciplined Allocation Fund owned less than 1% of the outstanding
shares of either LifeSpan Balanced Fund or Disciplined Allocation Fund,
respectively.
Massachusetts Mutual Life Insurance Company, the majority shareholder of the
Fund, intends to vote its shares in favor of the Reorganization.
PROXIES
The enclosed form of proxy, if properly executed and returned, will be voted (or
counted as an abstention or withheld from voting) in accordance with the choices
specified thereon, and will be included in determining whether there is quorum
to conduct the Meeting. The proxy will be voted in favor of the Proposal unless
a choice is indicated to vote against or to abstain from voting on the Proposal.
Shares owned of record by broker-dealers for the benefit of their customers
("street account shares") will be voted by the broker-dealer based on
instructions received from its customers. If no instructions are received, the
broker-dealer may (if permitted under applicable stock exchange rules), as
record holder, vote such shares on the Proposal in the same proportion as that
broker-dealer votes street account shares for which voting instructions were
received in time to be voted. Broker "non-votes" exist where a proxy received
from a broker indicates that the broker does not have discretionary authority to
vote the shares on the matter. Shares represented in person or by proxy
(including shares which abstain or do not vote on the Proposal, including broker
"non- votes") will be counted for purposes of determining the number of shares
that are present and are entitled to vote on the Proposal, but will not be
counted as a vote in favor of such Proposal. Accordingly, an abstention from
voting on the Proposal or a broker
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<PAGE>
"non-vote" will have the same legal effect as a vote against the Proposal. If a
shareholder executes and returns a proxy but fails to indicate how the votes
should be cast, the proxy will be voted in favor of the Proposal. The proxy may
be revoked at any time prior to the voting thereof by: (i) writing to the
Secretary of LifeSpan Balanced Fund at Two World Trade Center, New York, New
York 10048-0203 (if received in time to be acted upon); (ii) attending the
Meeting and voting in person; or (iii) signing and returning a new proxy (if
returned and received in time to be voted).
If at the time any session of the Meeting is called to order a quorum is not
present, in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of the Proposal
have not been received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. All such
adjournments will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Meeting to be adjourned. The
persons named as proxies will vote those proxies which they are entitled to vote
in favor of the Proposal, in favor of such an adjournment, and will vote those
proxies required to be voted against the Proposal, against any such adjournment.
A vote may be taken on the Proposal in this proxy statement prior to any such
adjournment if sufficient votes for its approval have been received and it is
otherwise appropriate. Any adjourned session or sessions may be held within 90
days after the date set for the original Meeting without the necessity of
further notice.
COSTS OF THE SOLICITATION AND THE REORGANIZATION
All expenses of this solicitation, including the cost of printing and mailing
this Proxy Statement and Prospectus, will be borne by LifeSpan Balanced Fund.
Any documents such as existing prospectuses or annual reports that are included
in that mailing will be a cost of the Fund issuing the document. In addition to
the solicitation of proxies by mail, proxies may be solicited by officers of
LifeSpan Balanced Fund or officers and employees of OppenheimerFunds Services,
personally or by telephone or telegraph; any expenses so incurred will be borne
by OppenheimerFunds Services. Proxies may also be solicited by a proxy
solicitation firm hired at LifeSpan Balanced Fund's expense for such purpose.
Brokerage houses, banks and other fiduciaries may be requested to forward
soliciting material to the beneficial owners of shares of LifeSpan Balanced Fund
and to obtain authorization for the execution of proxies. For those services, if
any, they will be reimbursed by LifeSpan Balanced Fund for their reasonable
out-of-pocket expenses.
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<PAGE>
With respect to the Reorganization, LifeSpan Balanced Fund and Disciplined
Allocation Fund will bear the cost of their respective tax opinions. Any other
out-of-pocket expenses of LifeSpan Balanced Fund and Disciplined Allocation Fund
associated with the Reorganization, including legal, accounting and transfer
agent expenses, will be borne by LifeSpan Balanced Fund and Disciplined
Allocation Fund, respectively, in the amounts so incurred by each.
COMPARATIVE FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES. LifeSpan Balanced Fund and Disciplined
Allocation Fund each pay a variety of expenses for management of their assets,
administration, distribution of their shares and other services, and those
expenses are reflected in each Fund's net asset value per share. Shareholders
pay other expenses directly, such as sales charges. The following table is
provided to help you compare the direct expenses of investing in each class of
either LifeSpan Balanced Fund, Disciplined Allocation Fund or Disciplined
Allocation Fund as surviving Fund after giving effect to the Reorganization.
LIFESPAN BALANCED FUND/DISCIPLINED ALLOCATION FUND/DISCIPLINED ALLOCATION FUND
AS THE SURVIVING FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
- -----------------------------------------------------------------------------
Maximum Sales Charge 5.75% None None
on Purchases
(as a % of offering price)
- -----------------------------------------------------------------------------
Maximum Deferred
Sales Charge (as None(1) 5% in the 1% if
a % of the original first year shares
offering price of the declining are
lower offering price or to 1% in redeemed
redemption proceeds) the sixth within 12
year and months of
eliminated purchase(2)
thereafter(2)
- ------------------------------------------------------------------------------
Maximum
Sales Charge on None None None
Reinvested Dividends
- ------------------------------------------------------------------------------
Exchange Fee None None None
- ------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
(1) If you invest more than $1 million ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" in
each Fund's Prospectus) in Class A shares, you may have to pay a sales charge of
up to 1% if you sell your shares within 12 calendar months (18 months for shares
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<PAGE>
purchased prior to May 1, 1997)from the end of the calendar month during which
you purchased those shares.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares -
Buying Class C Shares: in each Fund's Prospectus.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire, but not for redemptions paid by check or ACH wire transfer through
AccountLink.
ANNUAL FUND OPERATING EXPENSES. The following tables are the operating expenses
of Class A, Class B and Class C shares of LifeSpan Balanced Fund and the
operating expenses of Class A, Class B and Class C shares of Disciplined
Allocation Fund. These tables are based on expenses for the twelve month period
ended October 31, 1997. The pro forma information is an estimate of the business
expenses of the surviving Disciplined Allocation Fund after giving effect to the
Reorganization. All amounts shown are a percentage of net assets of each class
of each of the Funds.
<TABLE>
<CAPTION>
LIFE SPAN BALANCED FUND DISCIPLINED ALLOCATION FUND
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.85% 0.85% 0.85% 0.62% 0.62% 0.62%
12b-1 Plan Fees 0.25% 1.00% 1.00% 0.25% 1.00% 1.00%
Other Expenses 0.32% 0.33% 0.31% 0.24% 0.27% 0.30%
Total Fund
Operating Expenses 1.42% 2.18% 2.16% 1.11% 1.89% 1.92%
</TABLE>
PRO FORMA SURVIVING DISCIPLINED ALLOCATION FUND
CLASS A CLASS B CLASS C
Management Fees 0.62% 0.62% 0.62%
12b-1 Plan Fees 0.25% 1.00% 1.00%
Other Expenses 0.24% 0.27% 0.28%
Total Fund
Operating Expenses 1.11% 1.89% 1.90%
The 12b-1 fees for Class A shares of LifeSpan Balanced Fund and Disciplined
Allocation Fund are service plan fees. The service plan fees are a maximum of
0.25% of average annual net assets of Class A shares of each Fund. The 12b-1
fees for Class B and Class C shares of each of the Funds are Distribution and
Service Plan fees which include a service fee of 0.25% and an asset-based sales
charge of 0.75%.
EXAMPLES. To try and show the effect of the expenses on an investment over time,
the hypothetical examples shown below have
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<PAGE>
been created. Assume that you make a $1,000 investment in Class A, Class B and
Class C shares of LifeSpan Balanced Fund, or Class A, Class B and Class C shares
of Disciplined Allocation Fund, or Class A, Class B and Class C shares of the
pro forma surviving Disciplined Allocation Fund and that the annual return is 5%
and that the operating expenses for each Fund are the ones shown in the chart
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.
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
LifeSpan Balanced Fund
Class A Shares $71 $100 $131 $218
Class B Shares $72 $ 98 $137 $214
Class C Shares $32 $ 68 $116 $249
Disciplined Allocation Fund
Class A Shares $68 $91 $115 $185
Class B Shares $69 $89 $122 $182
Class C Shares $30 $60 $104 $224
Pro Forma Surviving
Disciplined Allocation Fund
Class A Shares $68 $91 $115 $185
Class B Shares $69 $89 $122 $182
Class C Shares $29 $60 $103 $222
If you did not redeem your investment, it would incur the following expenses:
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
LifeSpan Balanced Fund
Class A Shares $71 $100 $131 $218
Class B Shares $22 $ 68 $117 $214
Class C Shares $22 $ 68 $116 $249
Disciplined Allocation Fund
Class A Shares $68 $ 91 $115 $185
Class B Shares $19 $ 59 $102 $182
Class C Shares $20 $ 60 $104 $224
Pro Forma Surviving
Disciplined Allocation Fund
Class A Shares $68 $ 91 $115 $185
Class B Shares $19 $ 59 $102 $182
Class C Shares $19 $ 60 $103 $222
* In the first example, expenses include the Class A initial sales charge and
the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales charges. The Class
B expenses in years 7 through 10 are based on the Class A expenses shown above,
because each of the Funds automatically converts your Class B
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shares into Class A shares after 6 years. Long term Class B and C shareholders
could pay the economic equivalent of more than the maximum front-end sales
charge allowed under applicable regulations, because of the effect of the
asset-based sales charge and contingent deferred sales charge. The automatic
conversion of Class B shares to Class A shares is designed to minimize the
likelihood that this will occur.
The 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,
all of which may be more or less than the amounts shown.
SYNOPSIS
The following is a synopsis of certain information contained in or incorporated
by reference in this Proxy Statement and Prospectus and presents key
considerations for shareholders of LifeSpan Balanced Fund to assist them in
determining whether to approve the Reorganization. This synopsis is only a
summary and is qualified in its entirety by the more detailed information
contained in or incorporated by reference in this Proxy Statement and Prospectus
and by the Reorganization Agreement, a copy of which is attached as Exhibit A
hereto. Shareholders should carefully review this Proxy Statement and Prospectus
and the Reorganization Agreement in their entirety and, in particular, the
current Prospectus of Disciplined Allocation Fund which accompanies this Proxy
Statement and Prospectus and is incorporated herein by reference.
PARTIES TO THE REORGANIZATION
Oppenheimer Series Fund, Inc. (defined above as the Company) was organized in
1981 as a multi-series Maryland corporation which currently has five series.
Both LifeSpan Balanced Fund and Disciplined Allocation Fund are diversified
series of the Company. The Company is governed by Articles of Incorporation and
By-laws and is managed under the direction of a Board of Directors. The Company
is governed by applicable Maryland law and applicable federal law. The Company
is an open-end, diversified management investment company. Both LifeSpan
Balanced Fund and Disciplined Allocation Fund are located at Two World Trade
Center, New York, New York 10048-0203. The Company, including the two Funds, is
governed by a Board of Directors ( defined above as the Board).
OppenheimerFunds, Inc. (the "Manager") whose address is Two World Trade Center,
New York, New York 10048-0203, acts as investment adviser to LifeSpan Balanced
Fund and Disciplined Allocation Fund (collectively referred to herein as the
"Funds"). Additional information about the parties is set forth below.
SHARES TO BE ISSUED
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All shareholders of LifeSpan Balanced Fund who own Class A shares will receive
Class A shares of Disciplined Allocation Fund in exchange for their Class A
shares of LifeSpan Balanced Fund. Shareholders of LifeSpan Balanced Fund who own
Class B shares will receive Class B shares of Disciplined Allocation Fund in
exchange for their Class B shares of LifeSpan Balanced Fund. Shareholders of
LifeSpan Balanced Fund who own Class C shares will receive Class C shares of
Disciplined Allocation Fund in exchange for their Class C shares of LifeSpan
Balanced Fund. The voting rights of shares of each Fund are substantially the
same. See "Rights of Shareholders" below for more information.
THE REORGANIZATION
The Reorganization Agreement provides for the transfer of substantially all the
assets of LifeSpan Balanced Fund to Disciplined Allocation Fund in exchange for
Class A, Class B and Class C shares of Disciplined Allocation Fund. The net
asset value of Disciplined Allocation Fund Class A, Class B and Class C shares
issued in the exchange will equal the value of the assets of LifeSpan Balanced
Fund received by Disciplined Allocation Fund. In conjunction with the Closing of
the Reorganization, presently scheduled for June 12, 1998, LifeSpan Balanced
Fund will distribute the Class A, Class B and Class C shares of Disciplined
Allocation Fund received by LifeSpan Balanced Fund on the Closing Date to
holders of Class A, Class B and Class C shares of LifeSpan Balanced Fund,
respectively. As a result of the Reorganization, each Class A, Class B and Class
C LifeSpan Balanced Fund shareholder will receive the number of full and
fractional Disciplined Allocation Fund Class A, Class B and Class C shares that
equals in value such shareholder's pro rata interest in the assets transferred
to Disciplined Allocation Fund as of the Valuation Date. The Board has
determined that the interests of existing LifeSpan Balanced Fund shareholders
will not be diluted as a result of the Reorganization. For the reasons set forth
below under "The Reorganization - Reasons for the Reorganization," the Board,
including the directors who are not "interested persons" of Oppenheimer Series
Fund, Inc. as that term is defined in the Investment Company Act (the
"Independent Directors"), has concluded that the Reorganization is in the best
interests of LifeSpan Balanced Fund and its shareholders and recommends approval
of the Reorganization by LifeSpan Balanced Fund shareholders. If the
Reorganization is not approved, LifeSpan Balanced Fund will continue in
existence and the Board will determine whether to pursue alternative actions.
REASONS FOR THE REORGANIZATION
The Manager proposed to the Board a reorganization of LifeSpan Balanced Fund
into Disciplined Allocation Fund so that shareholders of LifeSpan Balanced Fund
may become shareholders of a larger but
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similar Fund, which after such Reorganization is anticipated to have lower
expenses. The Board considered pro forma information which indicated the expense
ratio of a combined Fund would be lower than that of LifeSpan Balanced Fund, as
shown above under "Comparative Fee Table." In addition, the Board also
considered information with respect to the historical performance of LifeSpan
Balanced Fund (since its inception in May, 1995) and Disciplined Allocation Fund
(for the ten year period ending October 31, 1997). For the one year period ended
October 31, 1997, the average annual total returns were higher for each class of
Disciplined Allocation Fund than for LifeSpan Balanced Fund.
The Board also considered that the Reorganization would be a tax free
reorganization, and there would be no sales charge imposed in effecting the
Reorganization. The Board concluded that the Reorganization would not result in
dilution to shareholders of LifeSpan Balanced Fund.
TAX CONSEQUENCES OF THE REORGANIZATION
In the opinion of KPMG Peat Marwick LLP, tax adviser to LifeSpan Balanced Fund,
the Reorganization will qualify as a tax-free reorganization for Federal income
tax purposes. As a result, it is expected that no gain or loss will be
recognized by either Fund, or by the shareholders of either Fund for Federal
income tax purposes as a result of the Reorganization. For further information
about the tax consequences of the Reorganization, see "Approval of the
Reorganization - Tax Aspects" below.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Funds are substantially the same. Each Fund
seeks to maximize total return including both capital appreciation and income.
Each Fund allocates its assets among stocks and bonds. LifeSpan Balanced Fund is
an asset allocation fund whereas Disciplined Allocation Fund invests in
securities utilizing quantitative asset allocation tools, which measure the
relationship among stocks, bonds and money market instruments in combination
with the judgement of the Manager concerning current market dynamics. The
investment policies of each Fund are substantially similar, the only major
differences being that LifeSpan Balanced Fund may invest in real estate mortgage
conduits and small, unseasoned companies and Disciplined Allocation Fund may
invest in mortgage dollar rolls and index-linked notes. See "Comparison Between
LifeSpan Balanced Fund and Disciplined Allocation Fund - Investment Objectives
and Policies" below.
INVESTMENT ADVISORY AND DISTRIBUTION AND SERVICE PLAN FEES
INVESTMENT ADVISORY FEES. The terms and conditions of the Investment Advisory
Agreement of each Fund are similar. Both Funds
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obtain investment management services from the Manager. The management fee is
computed on the net asset value of each Fund as of the close of business each
day and payable monthly at the following annual rates: LifeSpan Balanced Fund
pays 0.85% of the average daily net assets up to $250 million and 0.75% of
average daily net assets over $250 million. Disciplined Allocation Fund pays
0.625% of the first $300 million of average annual net assets, 0.50% of the next
$100 million of average annual net assets and 0.45% of average annual net assets
in excess of $400 million.
For LifeSpan Balanced Fund, the Manager employs three Subadvisers:
Babson-Stewart Ivory International ("Babson-Stewart") which provides services to
the international component of the Fund, BEA Associates ("BEA") which provides
services to the high yield/high risk bond component of the Fund and Pilgrim
Baxter & Associates Ltd. ("Pilgrim Baxter") which provides services to the small
cap component of the Fund (the "Subadvisers"). Pursuant to the Sub- Advisory
Agreements, the Manager pays these Subadvisers the following fees: (a) monthly
payments to Babson-Stewart at the annual rates of 0.75% of the first $10 million
of the Fund's 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; (b) quarterly payments to BEA at the annual rates of
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 assets in excess of $100 million; (c) monthly payments to Pilgrim Baxter
equal to 0.60% of the Fund's average daily net assets allocated to Pilgrim
Baxter. For purposes of calculation of the fees payable to BEA and Pilgrim
Baxter, the net asset value of those portions of the assets of each Fund
subadvised by BEA and Pilgrim Baxter are aggregated with those portions of the
net assets of Panorama Series Fund, Inc. managed by such Subadvisers.
DISTRIBUTION AND SERVICE FEES. LifeSpan Balanced Fund and Disciplined Allocation
Fund have both adopted Service Plans for their respective Class A shares. Both
Service Plans provide for reimbursement to the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Under each plan, payment 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.
LifeSpan Balanced Fund and Disciplined Allocation Fund have each adopted
Distribution and Service Plans (the "Plans") for Class B and Class C shares
under which each Fund pays the Distributor for its services in connection with
distributing Class B and Class C shares and servicing accounts. Under each Plan,
the Fund pays the Distributor an asset-based sales charge of 0.75% per year of
Class B shares outstanding for six years or less and on Class C shares. The
Funds also each pay the Distributor a service fee of 0.25% per
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year, each of which is computed on the average annual net assets of Class B and
Class C shares determined as of the close of each regular business day of each
Fund. The Distribution and Service Plans for Class B and Class C shares of
LifeSpan Balanced Fund and Class B and Class C shares of Disciplined Allocation
Fund are compensation plans whereby payments by the Funds are made at a fixed
rate as specified above and the Funds' payments are not limited to reimbursing
the Distributor's costs. The terms of the respective Plans for each Fund are
substantially the same.
PURCHASES, EXCHANGES AND REDEMPTIONS
Both LifeSpan Balanced Fund and Disciplined Allocation Fund are part of the
OppenheimerFunds complex of mutual funds. The procedures for purchases,
exchanges and redemptions of shares of the Funds are substantially the same.
Shares of either Fund may be exchanged for shares of the same class of other
Oppenheimer Funds offering such shares.
Both LifeSpan Balanced Fund and Disciplined Allocation Fund have a maximum
initial sales charge of 5.75% on Class A shares. Investors who purchase more
than $1 million ($500,000 or more for purchases by "Retirement Plans" as defined
in "Class A Contingent Deferred Sales Charge" in each Fund's Prospectus) in
Class A shares pay no initial sales charge but may have to pay a sales charge of
up to 1% if shares are sold within 12 calendar months (18 months for shares
purchased prior to May 1, 1997) from the end of the calendar month during which
shares are purchased. Each of the Funds has a contingent deferred sales charge
imposed on the proceeds of Class B shares redeemed within six years of buying
them. The contingent deferred sales charge ("CDSC") varies depending on how long
you hold your shares. Each of the Funds has a contingent deferred sales charge
of 1% imposed on the proceeds of Class C shares if redeemed within twelve months
of their purchase. Class A, Class B and Class C shares of Disciplined Allocation
Fund received in the Reorganization will be issued at net asset value, without a
sales charge and no CDSC will be imposed on any LifeSpan Balanced Fund shares
exchanged for Disciplined Allocation Fund shares as a result of the
Reorganization. However, any CDSC which applies to LifeSpan Balanced Fund shares
will continue to apply to Disciplined Allocation Fund shares received in the
Reorganization. Services available to shareholders of both Funds include
purchase and redemption of shares through OppenheimerFunds AccountLink and
PhoneLink (an automated telephone system), telephone redemptions, and exchanges
by telephone to other Oppenheimer funds which offer Class A, Class B and Class C
shares, and reinvestment privileges. Please see "Shareholder Services" below and
each Fund's Prospectus for further information.
PRINCIPAL RISK FACTORS
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In evaluating whether to approve the Reorganization and invest in Disciplined
Allocation Fund, shareholders should carefully consider the following risk
factors, the information set forth in this Proxy Statement and Prospectus and
the more complete description of risk factors set forth in the documents
incorporated by reference herein, including the Prospectuses of the Funds and
their respective Statements of Additional Information.
STOCK INVESTMENT RISKS. All investments carry risks to some degree, whether they
are risks that market prices of the investment will fluctuate (this is known as
"market risk") or that the underlying issuer will experience financial
difficulties and may default on its obligation under a fixed-income investment
to pay interest and repay principal (this is referred to as "credit risk").
These general investment risks affect the value of both Funds' investments,
their investment performance, and the prices of their shares. Because both Funds
usually invest a portion of their assets in stocks, the value of each Fund's
portfolio will be affected by changes in the stock markets. This market risk
will affect each 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, and other factors can affect a particular stock's
price (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. Changes in
the overall market conditions and prices can occur at any time. Because of the
types of companies each Fund invests in and the investment techniques used, some
of which may be speculative, both Funds are designed for those investors who are
investing for the long-term and who are willing to accept greater risks of loss
of their capital in the hope of achieving capital appreciation. Investing for
capital appreciation entails the risk of loss of all or part of your principal.
INTEREST RATE RISKS. 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. Each 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. Each Fund has the ability to
invest its assets in high-yield securities. If the Funds were to invest in
high-yield securities, those securities may be subject to greater market
fluctuation and risk of loss of income and principal than lower yielding,
investment grade securities. There are additional risks of investing in lower
grade securities that are described in the prospectus for each Fund.
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FOREIGN SECURITIES RISKS. There are risks of foreign investing that increase the
risk of investing in both LifeSpan Balanced Fund and in Disciplined Allocation
Fund and also increase the operating costs of both Funds. For example, foreign
issuers are not required to use generally-accepted accounting principles. 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 of
U.S. laws, which are generally more stringent than foreign laws. The values of
foreign securities investments will be affected by other factors, including
exchange control regulations or currency blockage and possible expropriation or
nationalization of assets. There are risks of changes in foreign currency
values. Because LifeSpan Balanced Fund and Disciplined Allocation Fund may
purchase securities denominated in foreign currencies, a change in value of a
foreign currency against the U.S. dollar will result in a change in the U.S.
dollar value of securities of that Fund denominated in that currency. There may
also be changes in governmental administration or economic or monetary policy in
the U.S. or abroad that can affect foreign investing. In addition, it is
generally more difficult to obtain court judgments outside the United States if
that Fund has to sue a foreign broker or issuer. Additional costs may be
incurred because foreign broker 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 is contained in the Statement of Additional
Information of each Fund.
DERIVATIVE INVESTMENTS RISKS. Both Funds may 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. The company issuing the instrument may fail to
pay the amount due on the maturity of the instrument. Also, the underlying
investment or security on which the derivative is based, and the derivative
itself, may not perform the way the Manager expected it to perform. The
performance of derivative investments may also be influenced by stock market and
interest rate changes in the U.S. and abroad. All of this can mean that the Fund
may realize less principal or income from the investment than expected. Certain
derivative investments held by the Funds may trade in the over-the counter
market and may be illiquid.
HEDGING INSTRUMENTS RISKS. Each Fund may use certain hedging instruments. The
use of hedging instruments requires special skills and knowledge of investment
techniques that are different than 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.
Losses could also be experienced if the prices of its futures and options
positions were not correlated with its
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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 has special tax effects on the Funds. There are also special risks
in particular hedging strategies. For example, if a covered call written by the
Fund is exercised on a security that has increased in value, the Fund will be
required to sell the security at the call price and will not be able to realize
any profit if the security 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. To
limit its exposure in foreign currency exchange contracts, the Funds limit their
exposure to the amount of its assets denominated in foreign currency. Interest
rate swaps are subject to 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 received under them, as a result of interest rate changes.
LOWER-GRADE SECURITIES RISKS. The Funds can invest in high-yield, below
investment grade debt securities (including both rated and unrated securities).
These "lower-grade" securities are commonly known as "junk bonds". 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 and principal due on the bonds. The issuer's low
creditworthiness may increase the potential for its insolvency. During an
economic downturn, lower-grade securities might decline in value more than
investment grade securities. For foreign lower-grade debt securities, these
risks are in addition to the risks of investing in foreign securities, described
above. 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.
EMERGING MARKETS RISKS. 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, and a
Fund might not receive principal and/or income on a timely basis. Its net asset
values could be affected. Emerging market countries may have smaller, less
well-developed markets and exchanges; there may be a
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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.
APPROVAL OF THE REORGANIZATION
(THE PROPOSAL)
REASONS FOR THE REORGANIZATION
At a meeting of the Board of Directors of the Company held on December 11, 1997,
the Directors reviewed and discussed materials relevant to the proposed
Reorganization. The Board, including the Independent Directors, unanimously
approved the Reorganization and recommended to shareholders of LifeSpan Balanced
Fund that they approve the Reorganization. Both Funds offer Class A, Class B and
Class C shares and the terms and conditions of their offer, sale, redemption and
exchange, distribution arrangements, expenses borne separately by each class and
other related matters are essentially the same. The Board considered that this
will facilitate an exchange. In the reorganization, Class A, Class B and Class C
shareholders of LifeSpan Balanced Fund will receive Class A, Class B and Class C
shares, respectively, of Disciplined Allocation Fund.
In considering the proposed Reorganization, the Board reviewed information which
demonstrated that LifeSpan Balanced Fund is a smaller fund. It is not
anticipated that LifeSpan Balanced Fund will increase substantially in size in
the near future. After the Reorganization, the shareholders of LifeSpan Balanced
Fund will be shareholders of a larger fund and will likely incur lower
operating, transfer agency and other expenses. Thus economies of scale may
benefit shareholders of LifeSpan Balanced Fund. LifeSpan Balanced Fund had $67.7
million in net assets as of the end of the Fund's October 31, 1997 fiscal year.
In comparison, Disciplined Allocation Fund had $253.5 million in net assets as
of October 31, 1997.
Among several other factors, the Board focused on the investment objectives of
the two Funds. Oppenheimer LifeSpan Balanced Fund seeks a blend of capital
appreciation and income. Disciplined Allocation Fund seeks to maximize the total
investment return (including both capital appreciation and income). The
investment techniques and strategies of the Funds are similar with respect to
purchasing equity securities, debt securities, warrants and rights, convertible
securities, foreign securities, lower-grade debt securities, U. S. Government
securities, mortgage-backed securities and CMOs, stripped securities,
asset-backed securities, inverse floating rate instruments, structured notes,
short-term debt securities, when-issued and delayed delivery transactions,
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Eurodollars and Yankee Dollar Bank transactions, repurchase agreements, illiquid
and restricted securities, hedging instruments and derivative instruments. The
only major differences between the Funds regarding permitted investments is that
LifeSpan Balanced Fund may invest in real estate mortgage investment conduits
and small, unseasoned companies. Disciplined Allocation Fund has the ability to
invest in mortgage dollar rolls and index-linked notes, although it does not
intend on investing more than 5% of its net assets in such securities.
Accordingly, the Board determined that the investment objectives and techniques
were comparable.
The Board, in reviewing financial information, considered the investment
advisory fee rate of both Funds (also known as the "management fee rate"). The
management fee rate for each Fund is discussed under "Synopsis - Investment
Advisory and Distribution and Service Plan Fees" above. LifeSpan Balanced Fund's
management fee for its fiscal year ended October 31, 1997 was 0.85% of average
annual net assets for Class A, Class B and Class C shares. Disciplined
Allocation Fund's management fee for the fiscal year ended October 31, 1997 was
0.62% of the average annual net assets for Class A, Class B and Class C shares.
If the two Funds were combined, the shareholders of LifeSpan Balanced Fund would
have a management fee of approximately 0.62% for Class A, Class B and Class C
shares. The Board considered pro forma information which indicated that the
expense ratio of a combined Fund would therefore be lower than that of LifeSpan
Balanced Fund.
In addition to the above, the Board also considered information with respect to
the historical performance of LifeSpan Balanced Fund and Disciplined Allocation
Fund, including the performance information contained in Exhibit B to this Proxy
Statement. During the time period that LifeSpan Balanced Fund has been in
existence, its performance has been well below the performance of Disciplined
Allocation Fund.
The Board also considered that the Reorganization is expected to be a tax free
reorganization, and there would be no sales charge imposed in effecting the
Reorganization. The Board concluded that the Reorganization would not result in
dilution of the interests of existing shareholders of LifeSpan Balanced Fund.
THE REORGANIZATION
The Reorganization Agreement (a copy of which is set forth in full as Exhibit A
to this Proxy Statement and Prospectus) contemplates a reorganization under
which (i) all of the assets of LifeSpan Balanced Fund other than the cash
reserve described below (the "Cash Reserve") will be transferred to Disciplined
Allocation Fund in exchange for Class A, Class B and Class C shares of
Disciplined Allocation Fund, (ii) these shares will be distributed among the
shareholders of LifeSpan Balanced Fund in complete liquidation of
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LifeSpan Balanced Fund, and (iii) the outstanding shares of LifeSpan Balanced
Fund will be canceled. Disciplined Allocation Fund will not assume any of
LifeSpan Balanced Fund's liabilities except for portfolio securities purchased
which have not settled and outstanding shareholder redemption and dividend
checks.
The result of effectuating the Reorganization would be that: (i) Disciplined
Allocation Fund will add to its gross assets all of the assets (net of any
liability for portfolio securities purchased but not settled and outstanding
shareholder redemption and dividend checks) of LifeSpan Balanced Fund other than
its Cash Reserve; and (ii) the shareholders of LifeSpan Balanced Fund as of the
close of business on the Closing Date will become shareholders of either Class
A, Class B or Class C shares of Disciplined Allocation Fund.
Shareholders of LifeSpan Balanced Fund who vote their Class A, Class B and Class
C shares in favor of the Reorganization, will be electing in effect to redeem
their shares of LifeSpan Balanced Fund(at net asset value on the Valuation Date
referred to below under "Method of Carrying Out the Reorganization Plan,"
calculated after subtracting the Cash Reserve) and reinvest the proceeds in
Class A, Class B or Class C shares of Disciplined Allocation Fund at net asset
value without sales charge and without recognition of taxable gain or loss for
Federal income tax purposes (see "Tax Aspects of the Reorganization" below). The
Cash Reserve is that amount retained by LifeSpan Balanced Fund which is deemed
sufficient in the discretion of the Board for the payment of: (a) LifeSpan
Balanced Fund's expenses of liquidation, and (b) its liabilities, other than
those assumed by Disciplined Allocation Fund. LifeSpan Balanced Fund and
Disciplined Allocation Fund will bear all of their respective expenses
associated with the Reorganization, as set forth under "Costs of the
Solicitation and the Reorganization" above. Management estimates that such
expenses associated with the Reorganization to be borne by LifeSpan Balanced
Fund will not exceed $28,700. Liabilities as of the date of the transfer of
assets will consist primarily of accrued but unpaid normal operating expenses of
LifeSpan Balanced Fund, excluding the cost of any portfolio securities purchased
but not yet settled, and outstanding shareholder redemption and dividend checks.
See "Method of Carrying Out the Reorganization Plan" below.
The Reorganization Agreement provides for coordination between the Funds as to
their respective portfolios so that, after the Closing, Disciplined Allocation
Fund will be in compliance with all of its investment policies and restrictions.
In that regard, the Manager does not anticipate selling more than 50% of the
existing securities in the LifeSpan Balanced Fund portfolio. LifeSpan Balanced
Fund will recognize capital gain or loss on any sales made prior to the
Reorganization pursuant to this paragraph.
TAX ASPECTS OF THE REORGANIZATION
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Immediately prior to the Valuation Date referred to in the Reorganization
Agreement, LifeSpan Balanced Fund will pay a dividend or dividends which,
together with all previous dividends, will have the effect of distributing to
LifeSpan Balanced Fund's shareholders all of LifeSpan Balanced Fund's investment
company taxable income for taxable years ending on or prior to the Closing Date
(computed without regard to any deduction for dividends paid) and all of its net
capital gain, if any, realized in taxable years ending on or prior to the
Closing Date (after reduction for any available capital loss carry-forward).
Such dividends will be included in the taxable income of LifeSpan Balanced
Fund's shareholders as ordinary income and capital gain, respectively.
The exchange of the assets of LifeSpan Balanced Fund for Class A, Class B and
Class C shares of Disciplined Allocation Fund and the assumption by Disciplined
Allocation Fund of certain liabilities of LifeSpan Balanced Fund is intended to
qualify for Federal income tax purposes as a tax-free reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
LifeSpan Balanced Fund has represented to KPMG Peat Marwick LLP, tax adviser to
LifeSpan Balanced Fund, that there is no plan or intention by any Fund
shareholder who owns 5% or more of LifeSpan Balanced Fund's outstanding shares,
and, to LifeSpan Balanced Fund's best knowledge, there is no plan or intention
on the part of the remaining LifeSpan Balanced Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Disciplined Allocation Fund
Class A, Class B or Class C shares received in the transaction that would reduce
LifeSpan Balanced Fund shareholders' ownership of Disciplined Allocation Fund
shares to a number of shares having a value, as of the Closing Date, of less
than 50% of the value of all the formerly outstanding LifeSpan Balanced Fund
shares as of the same date. Disciplined Allocation Fund and LifeSpan Balanced
Fund have each represented to KPMG Peat Marwick LLP, that, as of the Closing
Date, it will qualify as a regulated investment company or will meet the
diversification test of Section 368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Disciplined Allocation Fund
and LifeSpan Balanced Fund will receive the opinion of KPMG Peat Marwick LLP to
the effect that, based on the Reorganization Agreement, the above
representations, existing provisions of the Code, Treasury Regulations issued
thereunder, current Revenue Rulings, Revenue Procedures and court decisions, for
Federal income tax purposes:
1. The transactions contemplated by the Reorganization Agreement will
qualify as a tax-free "reorganization" within the meaning of Section
368(a)(1)(c) of the Code.
2. LifeSpan Balanced Fund and Disciplined Allocation Fund will each
qualify as "a party to a reorganization" within the
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meaning of Section 368(b) of the Code.
3. No gain or loss will be recognized by the shareholders of LifeSpan
Balanced Fund upon the distribution of Class A, Class B or Class C shares of
beneficial interest in Disciplined Allocation Fund to the shareholders of
LifeSpan Balanced Fund pursuant to Section 354(a)(1) of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized by
LifeSpan Balanced Fund by reason of the transfer of its assets solely in
exchange for Class A, Class B or Class C shares of Disciplined Allocation Fund.
5. Under Section 1032(a) of the Code no gain or loss will be recognized by
Disciplined Allocation Fund by reason of the transfer of LifeSpan Balanced
Fund's assets solely in exchange for Class A, Class B or Class C shares of
Disciplined Allocation Fund.
6. The shareholders of LifeSpan Balanced Fund will have the same tax basis
and holding period for the shares of beneficial interest in Disciplined
Allocation Fund that they receive as they had for LifeSpan Balanced Fund stock
that they previously held, pursuant to Sections 358(a)(1) and 1223(1) of the
Code, respectively.
7. The securities transferred by LifeSpan Balanced Fund to Disciplined
Allocation Fund will have the same tax basis and holding period in the hands of
Disciplined Allocation Fund as they had for LifeSpan Balanced Fund, pursuant to
Sections 362(b) and 1223(2) of the Code, respectively.
Shareholders of LifeSpan Balanced Fund should consult their tax advisors
regarding the effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion relates only to the Federal income
tax consequences of the Reorganization, shareholders of LifeSpan Balanced Fund
should also consult their tax advisors as to state and local tax consequences,
if any, of the Reorganization.
CAPITALIZATION TABLE (UNAUDITED)
The table below sets forth the capitalization of LifeSpan Balanced Fund and
Disciplined Allocation Fund and indicates the pro forma combined capitalization
as of October 31, 1997 as if the Reorganization had occurred on that date.
OCTOBER 31, 1997
NET ASSET
SHARES VALUE
NET ASSETS OUTSTANDING PER SHARE
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LifeSpan Balanced Fund
Class A $62,261,972 4,919,634 $12.66
Class B $ 4,761,973 374,239 $12.72
Class C $ 682,811 54,094 $12.62
Disciplined Allocation Fund
Class A $243,267,192 14,469,482 $16.81
Class B $ 8,720,474 513,404 $16.99
Class C $ 1,473,475 88,237 $16.70
Disciplined Allocation Fund
(Pro Forma Surviving Fund)
Class A $305,529,164 18,173,347 $16.81
Class B $ 13,482,447 793,757 $16.99
Class C $ 2,156,286 129,124 $16.70
Reflects issuance of 3,703,865 of Class A shares, 280,353 of Class B shares and
40,887 of Class C shares of Disciplined Allocation Fund in a tax-free exchange
for the net assets of LifeSpan Balanced Fund, aggregating $67,706,756.
The pro forma ratio of expenses to average annual net assets of the Class A
shares at October 31, 1997 would have been 1.11%. The pro forma ratio of
expenses to average annual net assets of Class B shares at October 31, 1997
would have been 1.89%. The pro forma ratio of expenses to average annual net
assets of Class C shares at October 31, 1997 would have been 1.90%.
COMPARISON BETWEEN
LIFESPAN BALANCED FUND AND
DISCIPLINED ALLOCATION FUND
Information about LifeSpan Balanced Fund and Disciplined Allocation Fund is
presented below. Additional information about Disciplined Allocation Fund is set
forth in its Prospectus which accompanies this Proxy Statement and Prospectus.
More information about both Funds is set forth in documents that may be obtained
upon request of the transfer agent or upon review at the offices of the SEC. See
"Additional Information- Public Information."
INVESTMENT OBJECTIVES AND POLICIES
DISCIPLINED ALLOCATION FUND. In deciding whether this Fund should invest in
stocks, bonds or money market instruments, the Manager 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
this Fund to take advantage of opportunities in different segments of the
securities markets, but also subjects this Fund to the risks of
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those market segments.
In selecting stocks for this Fund's portfolio, the Manager searches for stocks
with low price-earnings ratios (for example, below the price-earnings ratio of
the S&P 500 Index) which in many cases may indicate a stock is out-of-favor.
When a company then demonstrates better earnings than what most analysts were
expecting, this is referred to as a favorable earnings surprise. This may cause
investors and analysts to re-evaluate the company's earnings expectations and
price-earnings multiple, which in turn may cause the company's stock to increase
in value. This Fund may invest in a variety of equity securities including
foreign and domestic common stocks, preferred securities, convertible securities
and warrants, which are further described below.
This Fund may invest in a variety of bonds and other debt securities including
corporate debt obligations, U.S. Government securities, foreign 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. This Fund's
debt securities are expected to have weighted average maturity of 6 to 14 years.
At least 25% of this Fund's total assets will be invested in fixed income senior
securities. Otherwise, this Fund is not required to invest a fixed amount in any
asset class, and the amounts invested in each class will vary over time.
This Fund may invest up to 20% 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. However, the Manager does not intend to invest more
than 10% of this Fund's assets in below investment grade securities in the
current year. These securities are subject to special risks, described below.
This Fund will not invest in securities rated below B at the time of purchase.
Unrated debt securities will not exceed 10% of this Fund's total assets.
This Fund may invest up to 10% of its total assets in mortgage dollar rolls.
This 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, this Fund may invest to a limited degree in securities of
foreign issuers. All of these types of securities are described below. Subject
to its investment policies and restrictions, this Fund may seek to increase its
income by lending portfolio securities to brokers, dealers and financial
institutions in transactions other than repurchase agreements.
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Under normal market conditions, this Fund may invest up to 40% of its total
assets in short-term debt securities, such as money market instruments and U.S.
Government securities. When market conditions are unstable, this Fund may invest
substantial amounts of its assets in short-term debt securities for temporary
defensive purposes. This Fund's portfolio managers may employ special investment
techniques in selecting investments for this Fund. These are also described
below. Additional Information about them may be found under the same headings in
the Fund's Statement of Additional Information.
LIFESPAN BALANCED FUND. This Fund is an asset allocation fund which 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 many types. The bond class includes several varieties of
fixed-income instruments. Allocating assets among different types of investments
allows this Fund to take advantage of a greater variety of investment
opportunities than funds that invest in only one asset class, but also subjects
the Fund to the risks of those types of investments. The general risks of stock
and bond investments are discussed in "Principal Risk Factors" below.
The Manager has the ability to allocate the Fund's assets within specified
ranges. This 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 this Fund remain distinct and this
Fund's investment objective is preserved. The Manager will review normal
allocations between the stock and bond classes quarterly and, if necessary, will
rebalance the investment allocation at that time. Additional adjustments may be
made if an asset allocation shift of 5% or more is warranted.
PERMITTED INVESTMENTS BY BOTH LIFESPAN BALANCED FUND AND DISCIPLINED ALLOCATION
FUND
STOCK INVESTMENTS. Both Disciplined Allocation Fund and LifeSpan Balanced Fund
each normally invest a substantial portion of their assets in stocks. Therefore,
the value of each 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 each Fund's net asset values
per share, which will fluctuate as the values of each Fund's portfolio
securities change. The types of securities each Fund purchases are described
below. 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 the Fund's assets in any one company,
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industry or group or industries.
Because of the types of securities each Fund invests in and the investment
techniques each Fund uses, some of which may be speculative, both Disciplined
Allocation Fund and LifeSpan Balanced Fund are designed for investors who are
investing for the long-term and who are willing to accept greater risks of loss
of their investment in the hope of achieving capital appreciation. Neither Fund
is 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. Because changes in securities market prices can occur at any
time, there is no assurance that either 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.
FOREIGN SECURITIES. Both Funds may purchase equity securities issued by foreign
companies and debt securities issued or guaranteed by foreign governments or
their agencies. Both Funds may purchase securities of companies located 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, Disciplined Allocation
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. Disciplined Allocation Fund
will hold foreign currency only in connection with the purchase or sale of
foreign securities.
LifeSpan Balanced Fund may invest a portion of its assets in companies located
in emerging markets. Both Funds also may invest in ADRs, EDRs and GDRs. These
are receipts issued by a U.S. bank or trust company which evidence ownership of
underlying securities of foreign companies, obligations of foreign branches of
U. S. banks (denominated in Eurodollars) and U. S. branches of foreign banks
(Yankee dollars) as well as foreign branches of foreign banks.
There are special risks in investing in foreign securities. More information
about the risks and potential rewards of investing in foreign securities is
described above in the section entitled "Principal Risk Factors" and is
contained in each Fund's respective Statement of Additional Information.
CONVERTIBLE SECURITIES. Both Funds may invest in convertible
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securities. Convertible securities are bonds, preferred stocks and other
securities that normally pay a fixed rate of interest or dividend and give the
owner the option to convert the security into common stock. While the value of
convertible securities depends in part on interest rate changes and the credit
quality of the issuer, the price will also change based on the price of the
underlying stock. While convertible securities generally have less potential for
gain than common stock, their income provides a cushion against the stock
price's declines. They generally pay less income than non-convertible bonds. The
Manager generally analyzes these investments from the perspective of the growth
potential of the underlying stock and treats them as "equity substitutes."
PORTFOLIO TURNOVER. "Portfolio turnover" describes the rate at which a fund
traded its portfolio securities during its last fiscal year. For example, if a
fund sold all of its securities during the year, its portfolio turnover rate
would have been 100%. Portfolio turnover affects brokerage costs a fund pays.
The Funds ordinarily do not engage in short-term trading to try to achieve their
objectives. The Financial Highlights table in each of the Fund's prospectus
shows the Fund's portfolio turnover rates during prior fiscal years.
HEDGING. Both Funds may write covered call options on securities, stock or bond
indices and foreign currency. Each Fund 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." While each Fund
currently does not engage extensively in hedging, each Fund may use these
instruments for hedging purposes and, in the case of covered calls, non-hedging
purposes. The hedging instruments the Funds may use are described below and in
greater detail in "Other Investment Techniques and Strategies" section in each
Fund's respective Statement of Additional Information.
The Funds may use hedging instruments for a number of purposes. Each Fund 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. Each Fund
may do so to try to manage its exposure to changing interest rates. Some of
these strategies, such as selling futures, buying puts and writing covered
calls, hedge the Fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to increase the Funds'
exposure to the securities market.
Forward Contracts. Forward contracts are used by both Funds to try to manage
foreign currency risks on foreign investments. Foreign currency options are used
to try to protect against declines in the
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dollar value of foreign securities the Funds own, or to protect against an
increase in the dollar cost of buying foreign securities. Writing covered call
options may also provide income to the Funds for liquidity purposes or to raise
cash to distribute to shareholders.
Futures. Both Funds 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 of each Fund.
Covered Call Options and Options on Futures. Both Funds may write (that is,
sell) covered 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. Each call the Funds write must be "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 either 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).
LifeSpan Balanced Fund may purchase and sell put options on Futures. Buying a
put on an investment gives the Fund the right to sell the investment at a set
price to a seller of a put on that investment. LifeSpan may sell a put on
Futures only if the puts are covered by segregated liquid assets.
Each Fund may sell covered call options that are traded on U.S. or foreign
securities or commodity exchanges as well as over-the-counter markets. In the
case of foreign currency options, they may be quoted by major recognized dealers
in those options.
Hedging instruments can be volatile investments and may involve special risks
which are described above in the section entitled "Principal Risk Factors."
Options trading involves the payment of premiums and has special tax effects on
either Fund. There are also special risks in particular hedging strategies. If a
covered call written by either Fund is exercised on an investment that has
increased in value, either Fund will be required to sell the
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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 a put, there
is a risk that either 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. These risks are described in greater detail in each
Fund's respective Statement of Additional Information.
LOANS OF PORTFOLIO SECURITIES. To raise cash for liquidity purposes, both Funds
may lend their portfolio securities to brokers, dealers and other financial
institutions. Both Disciplined Allocation Fund and LifeSpan Balanced Fund
restrict loans of securities wherein the value of the securities loaned exceeds
33 1/3% of the value of that Fund's total assets. These loans are subject to the
conditions in each Fund's Statements of Additional Information. Neither Fund
presently intends to lend its portfolio securities, but if they do the value of
the securities loaned is not expected to exceed 5% of each Fund's total assets
in the coming year.
ILLIQUID AND RESTRICTED SECURITIES. Both of the Funds may invest in illiquid and
restricted securities. 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. Disciplined Allocation Fund will
not invest more than 10% of its total assets in illiquid and restricted
securities (the Board may increase that limit to 15% of net assets). LifeSpan
Balanced Fund will not invest more than 15% of its net assets in illiquid and
restricted securities. The percentage limitation on these investments does not
apply to certain restricted securities that are eligible for resale to qualified
institutional purchasers. The Manager monitors holdings of such securities on an
ongoing basis and at times a Fund may be required to sell some holdings to
maintain adequate liquidity.
DERIVATIVE INVESTMENTS. Both Funds can invest in a number of different kinds of
"derivative investments." Each Fund may use some types of derivatives for
hedging purposes, and may invest in others to seek income. 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. LifeSpan Balanced Fund may not purchase or
sell physical commodities. The Funds may purchase and sell foreign currency in
hedging transactions. This policy also does not prevent the Funds from buying or
selling options and futures contracts or from investing in securities or other
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instruments backed by physical commodities. In the broadest sense, derivative
investments include exchange-traded options and futures contracts (please refer
to "Hedging" above). Investing in derivative investments involves certain risks
which are described above in the section entitled "Principal Risk Factors."
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements.
Both Funds will not enter into repurchase agreements that will cause more than
10% of its net assets to be invested in illiquid and restricted securities which
include repurchase agreements having a maturity beyond 7 days. However, if the
vendor fails to pay the resale price on the delivery date, the Funds may
experience costs in disposing of the collateral and losses if there is any delay
in doing so.
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. Both Funds may invest up to 5% of their total assets
in warrants or rights. That 5% limitation does not apply to warrants acquired as
part of units with other securities or that are attached to other securities. No
more than 2% of either 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.
"WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS. Both Funds 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.
U.S. GOVERNMENT SECURITIES. Both Funds may invest in U.S. Government Securities
which include debt securities issued or guaranteed by the U.S. Government or its
agencies and instrumentalities. 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 Funds may invest in. The Funds may also invest in other
mortgage-related U.S. Government Securities that are issued or guaranteed by
federal agencies or government-sponsored entities but which are not supported by
the full faith and credit of the U.S. Government. Those securities
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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
Funds 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 Funds
hold U.S. Government Securities each 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 above, under
"Hedging."
LOWER-GRADE DEBT SECURITIES. Both Funds may invest in "lower-grade" debt
securities which generally offer higher income potential than investment grade
securities. "Lower-grade" securities are those rated below "BBB" by Standard &
Poor's Ratings Group ("Standard & Poor's") or "Baa" by Moody's Investors
Services, Inc. ("Moody's") or similar ratings given by other domestic or foreign
rating organizations, or securities that are not rated by a
nationally-recognized rating organization but the Manager judges them to be
comparable to lower-rated securities. Disciplined Allocation Fund will not
purchase securities rated below B by Moody's or Standard & Poor's. LifeSpan
Balanced Fund may purchase securities rated as low as D by Standard & Poor's or
C by Moody's. Disciplined Allocation 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 Fund's best interest.
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. As a result, these securities may be
subject to greater price and yield volatility than traditional fixed-income
securities that have a fixed maturity and interest rate.
Both Funds may invest in collateralized mortgage obligations ("CMOs"), which
generally are obligations fully collateralized by a portfolio of mortgages or
mortgage-related securities. LifeSpan
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Balanced Fund may also invest in real estate mortgage investment conduits
(REMICS)but does not intend to acquire "residual" interests in them. Payments of
the interest and principal generated by the pool of mortgages relating to the
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 early repayment of principal due to prepayments on the
underlying mortgage loans. Prepayments on fixed rate mortgage loans generally
increase during periods of falling interest rates and decrease during periods of
rising interest rates. If prepayments of mortgages underlying a short-term or
intermediate-term CMO occur more slowly than anticipated, the CMO effectively
may become a long-term security. The prices of long-term securities generally
fluctuate more widely in response to changes in interest rates.
"STRIPPED" SECURITIES. Both Funds may also invest in CMOs that are "stripped."
LifeSpan Balanced Fund may also invest in 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 "principal-only" security, or
"P/O") and the other which receives some or all of the interest (and is known as
an "interest-only" security, or "I/O"). P/Os and I/Os are generally referred to
as "derivative investments" discussed further above.
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
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 described in "Illiquid and Restricted Securities" above.
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ASSET-BACKED SECURITIES. Both Funds 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 a 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. Both 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.
STRUCTURED NOTES. Both Funds may invest in structured notes. A structured note
is a debt security having an interest rate or principal repayment requirement
based on the performance of a benchmark asset or market, such as stock prices,
currency exchange rates or commodity prices. They provide exposure to the
benchmark market while fixing the maximum loss if that market does not perform
as expected. Depending on the terms of the note, a Fund could forego all or part
of the interest and principal that would be payable on a comparable conventional
note, and the Fund's loss could not exceed that amount.
SHORT-TERM DEBT SECURITIES. Under normal market conditions, both Funds may
invest in short-term debt securities, such as money market instruments and U.S.
Government securities. When the Manager believes it is appropriate (for example,
for temporary defensive purposes during unstable market conditions), a Fund can
hold cash or invest without limit in money market instruments. A 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
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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. A
Fund will purchase money market instruments denominated in a foreign currency
only within the limitations described under "Foreign Securities." The issuers of
foreign money market instruments purchased by Disciplined Allocation Fund must
have at least $1 billion (U.S.)
of assets.
EURODOLLAR AND YANKEE DOLLAR BANK OBLIGATIONS. Both Funds may invest in
obligations of foreign branches of U.S. banks (referred to as Eurodollar
obligations) and U.S. branches of foreign banks (referred to as Yankee Dollars)
as well as foreign branches of foreign banks. These investments entail risks
that are different from investment in securities of U.S. banks.
SMALL, UNSEASONED COMPANIES. LifeSpan Balanced 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 the Fund may
have difficulty selling them at an acceptable price when it wants to) and the
price of these securities may be volatile.
INVESTMENT RESTRICTIONS
LifeSpan Balanced Fund and Disciplined Allocation Fund have certain investment
restrictions that, together with their investment objectives, are fundamental
policies, changeable only by shareholder approval. Set forth below is a summary
of the investment restrictions which are different for each Fund. Other
investment restrictions for each Fund are substantially the same. Unless the
Prospectus of the Fund states that a percentage restriction applies on an
ongoing basis, it applies only at the time that Fund makes an investment and the
Fund need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund.
DISCIPLINED ALLOCATION FUND - INVESTMENT RESTRICTIONS. The Fund
cannot do the following:
1.(a) Invest more than 5 % 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 % of its
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,
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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.
2. Alone, or together with any other portfolio or portfolios, make
investments for the purpose of exercising control over, or management of, any
issuer. The Fund has undertaken as a matter of non-fundamental policy to apply
this restriction to 25% or more of its total assets.
3. 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 % of
the Fund's total assets, taken at market value, would be invested in such
securities.
4. 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.
5. Borrow amounts in excess of 10 % 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 % of its total
assets.
6. 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).
7. Mortgage, pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Fund except as may be
necessary in connection with borrowings as mentioned in investment restriction
(5) above, and then such mortgaging, pledging or hypothecating may not exceed 10
% of the Fund's total assets, taken at market value at the time thereof. In
order to comply with certain state statutes, the 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 % of the value of the Fund's shares
at the maximum offering price. The deposit of cash, cash equivalents and liquid
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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.
8. Write, purchase or sell puts, calls or combinations thereof, except that
covered call options may be written.
9. Invest in securities of foreign issuers if at the time of acquisition
more than 10 % of its total assets, taken at market value at the time of the
investment, would be invested in such securities. However, up to 25 % of the
total assets of such portfolio may be invested in the aggregate in such
securities (i) issued, assumed or guaranteed by foreign governments, or
political subdivisions or instrumentalities thereof, (ii) assumed or guaranteed
by domestic issuers, including Eurodollar securities, or (iii) issued, assumed
or guaranteed by foreign issuers having a class of securities listed for trading
on the New York Stock Exchange.
10. Invest more than 10 % 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.
LIFESPAN BALANCED FUND - INVESTMENT RESTRICTIONS. The Fund cannot do the
following:
1. 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.
2. 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
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securities and (v) hold and sell real estate acquired by the Fund as a result of
the ownership of securities.
3. 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.
4. 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.
DESCRIPTION OF BROKERAGE PRACTICES
The brokerage practices of the Funds are the same. One of the duties of the
Manager under each Investment Advisory Agreement is to arrange the portfolio
transactions for each Fund. Each Investment 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
Investment 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 Investment 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 the Fund's
portfolio transactions.
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Subject to the provisions of each Fund's Investment 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
each Fund's Investment Advisory Agreement and the procedures and rules described
above. In either case, brokerage is allocated under the supervision of the
Manager's executive officers and the Manager. 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 are otherwise paid only if it appears
likely that a better price or execution can be obtained.
Please refer to the Statement of Additional Information for each Fund for
further information on each Fund's brokerage practices.
EXPENSE RATIOS AND PERFORMANCE
The ratio of expenses to average annual net assets for LifeSpan Balanced Fund
for the fiscal year ended October 31, 1997 for its Class A, Class B and Class C
shares was 1.42%, 2.18% and 2.16%, respectively. The ratio of expenses to
average annual net assets for Disciplined Allocation Fund for the fiscal year
ended October 31, 1997 for its Class A, Class B and Class C shares were 1.11%,
1.89% and 1.92%, respectively. Further details are set forth above under
"Comparative Fee Tables", and in LifeSpan Balanced Fund's Annual Report as of
October 31, 1997, and Disciplined Allocation Fund's Annual Report as of October
31, 1997, which are included in the Statement of Additional Information. The
performance of Disciplined Allocation Fund for the 1,3,5 and 10 year period
ended October 31, 1997 and the performance of the LifeSpan Balanced Fund for the
1 year and life-of-class as of October 31,1997 is set forth in Exhibit B.
SHAREHOLDER SERVICES
The policies of LifeSpan Balanced Fund and Disciplined Allocation Fund with
respect to minimum initial investments and subsequent investments by its
shareholders are the same. Both LifeSpan Balanced Fund and Disciplined
Allocation Fund offer the following privileges: (i) Right of Accumulation, (ii)
Letter of Intent, (iii) reinvestment of dividends and distributions at net asset
value, (iv) net asset value purchases by certain individuals and entities, (v)
Asset Builder (automatic investment) Plans, (vi) Automatic Withdrawal and
Exchange Plans for shareholders who own shares of the Fund valued at $5,000 or
more, (vii) AccountLink and PhoneLink
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arrangements, (viii) exchanges of shares for shares of the same class of certain
other Funds at net asset value, and (ix) telephone redemption and exchange
privileges.
Shareholders may purchase shares through OppenheimerFunds AccountLink, which
links a shareholder account to an account at a bank or financial institution and
enables shareholders to send money electronically between those accounts to
perform a number of types of account transactions. This includes the purchase of
shares through the automated telephone system (PhoneLink). Exchanges can also be
made by telephone, or automatically through PhoneLink. After AccountLink
privileges have been established with a bank account, shares may be purchased by
telephone in an amount up to $100,000. Shares of either Fund may be exchanged
for shares of certain Oppenheimer funds at net asset value per share; however,
shares of a particular class may be exchanged only for shares of the same class
of other Oppenheimer funds. Shareholders of the Funds may redeem their shares by
written request or by telephone request in an amount up to $50,000 in any
seven-day period. Shareholders may arrange to have share redemption proceeds
wired to a pre-designated account at a U.S. bank or other financial institution
that is an ACH member, through AccountLink. There is no dollar limit on
telephone redemption proceeds sent to a bank account when AccountLink has been
established. Shareholders may also redeem shares automatically by telephone by
using PhoneLink. Shareholders of both the Funds may also have the Transfer Agent
send redemption proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank which is a member of the Federal Reserve wire system.
Shareholders of the Funds have up to six months to reinvest redemption proceeds
of their Class A shares which they purchase subject to a sales charge or their
Class B shares on which they paid a contingent deferred sales charge in Class A
shares of the Funds or other Oppenheimer funds without paying a sales charge.
Both Funds may redeem accounts with less than 100 shares if the account has
fallen below such stated amount for reasons other than market value
fluctuations. Both Funds offer Automatic Withdrawal and Automatic Exchange Plans
under certain conditions.
RIGHTS OF SHAREHOLDERS
The shares of each Fund, including shares of each class, entitle the holder to
one vote per share on the election of directors of the Company and all other
matters submitted to shareholders of the Fund. Each share of the Fund represents
an interest in the Fund proportionately equal to the interest of each other
share of the same class and entitle the holder to one vote per share (and a
fractional vote for a fractional share) on matters submitted to their vote at
shareholders' meetings. Shareholders of each Fund vote together with the
shareholders of other series of the Company in the aggregate on certain matters
at shareholders' meetings, such as the election of Directors and ratification of
appointment of
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auditors. Shareholders of a particular series or class vote separately on
proposals which affect that series or class, and shareholders of a series or
class which is not affected by that matter are not entitled to vote on the
proposal. For example, only shareholders of a series, such as the Funds, vote
exclusively on any material amendment to the Investment Advisory Agreement with
respect to the series. Only shareholders of a class of a series vote on certain
amendments to the Distribution and/or Service Plans if the amendments affect
only that class. The Board of the Company is authorized to create new series and
classes of series. The Board may reclassify unissued shares of the Funds into
additional series or classes of shares. The Board may also divide or combine the
shares of a class into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest of a shareholder in each Fund.
Shares do not have cumulative voting rights or preemptive or subscription
rights. Shares may be voted in person or by proxy. Each share has one vote at
shareholder meetings, with fractional shares voting proportionately. Shares of a
particular class vote together on matters that affect that class. Most
amendments to the Articles of Incorporation governing the Funds require the
approval of a "majority" of the outstanding voting securities (as defined in the
Investment Company Act) of the Company's shares without regard to series or
class.
Class A, Class B and Class C shares of LifeSpan Balanced Fund and the Class A,
Class B and Class C shares of Disciplined Allocation Fund which LifeSpan
Balanced Fund shareholders will receive in the Reorganization participate
equally in the Funds' dividends and distributions and in the Funds' net assets
upon liquidation, after taking into account the different expenses paid by each
class. Distributions and dividends for each class will be different and Class B
and Class C dividends and distributions will be lower than Class A dividends.
It is not contemplated that the Company will hold regular annual meetings of
shareholders. Under the Investment Company Act, shareholders of LifeSpan
Balanced Fund do not have rights of appraisal as a result of the transactions
contemplated by the Reorganization Agreement. However, they have the right at
any time prior to the consummation of such transaction to redeem their shares at
net asset value, less any applicable contingent deferred sales charge.
Shareholders of both of the Funds have the right, under certain circumstances,
to remove a Director and will be assisted in communicating with other
shareholders for such purpose.
Each Fund is a series of the Company, which is a corporation organized under the
laws of the state of Maryland. As a general matter, shareholders of a
corporation will not be liable to the corporation or its creditors with respect
to their interests in the corporation as long as their shares have been paid for
and the requisite corporate formalities have been observed, both in the
organization of the corporation and in the conduct of its business.
ORGANIZATION AND HISTORY
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Oppenheimer Series Fund, Inc. was organized in 1981 as a multi- series Maryland
corporation. Both LifeSpan Balanced Fund and Disciplined Allocation Fund are
series of that Company. Oppenheimer Series Fund, Inc. is an open-end,
diversified management investment company. Oppenheimer Series Fund, Inc.
presently has five series, including the Funds. Oppenheimer Series Fund, Inc. is
governed by a Board of Directors.
MANAGEMENT AND DISTRIBUTION ARRANGEMENTS
The Manager, located at Two World Trade Center, New York, New York 10048-0203,
acts as the investment adviser for both LifeSpan Balanced Fund and Disciplined
Allocation Fund. The terms and conditions of the Investment Advisory Agreement
for each Fund are substantially the same. The monthly management fee payable to
the Manager by each Fund is set forth under "Synopsis - Investment Advisory and
Distribution and Service Plan Fees" along with the fees paid by the Manager to
the Subadvisers for LifeSpan Balanced Fund. The 12b-1 Distribution and Service
Plan fees paid by each Fund with respect to Class A, Class B and Class C shares
are set forth above under "Synopsis - Investment Advisory and Distribution and
Service Plan Fees."
Pursuant to each Investment Advisory Agreement, the Manager supervises the
investment operations of the Funds and the composition of their portfolios, and
furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities. Both Investment Advisory
Agreements require the Manager to provide LifeSpan Balanced Fund and Disciplined
Allocation 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 administration for the Funds, including
the compilation and maintenance of records with respect to their operations, the
preparation and filing of specified reports, and composition of proxy materials
and registration statements for continuous public sale of shares of each Fund.
Babson-Stewart, BEA and Pilgrim Baxter each act as Subadviser to LifeSpan
Balanced Fund. The Subadvisers are responsible for choosing the Fund's
investments and their duties and responsibilities are set forth in their
agreements with the Manager. The Manager, not LifeSpan Balanced Fund, pays the
Subadvisers. Babson-Stewart, One Memorial Drive, Cambridge, MA 02142, the
Subadviser to the international component, began managing equity assets in 1987.
The general partners of Babson- Stewart are David L. Babson & Co., which is an
indirect subsidiary of Massachusetts Mutual Life Insurance Company and Stewart
Ivory & Co. Ltd. It advises other mutual funds and institutional clients. BEA,
One Citicorp Center, 153 East 53rd Street, 5th Floor, New York, NY 10022, the
Subadviser to the high yield/high risk
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component, began providing management services to institutional clients in 1984.
BEA is a partnership between Credit Suisse Capital Corporation and CS Advisors
Corp. Pilgrim Baxter, 1255 Drummers Lane, Wayne, PA 19087, the Subadvisor to the
small cap component, was established in 1982. It specializes in equity
management for institutional investors including other investment companies.
Pilgrim Baxter is a wholly-owned subsidiary of United Asset Management
Corporation.
Expenses not expressly assumed by the Manager under each Fund's Investment
Advisory Agreement or by OppenheimerFunds Distributor, Inc., the Funds'
distributor (the "Distributor"), under the General Distributor's Agreement are
paid by the Funds. The Investment Advisory Agreements list examples of expenses
paid by the Funds, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Directors, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs.
The management fee paid by LifeSpan Balanced Fund for the fiscal year ended
October 31, 1997 was $527,770. For the fiscal year ended October 31, 1997, the
management fee paid by Disciplined Allocation Fund was $1,535,343. The Funds'
Investment Advisory Agreements contain no expense limitation.
The Manager is controlled by Oppenheimer Acquisition Corp., a holding company
owned in part by senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance company
that also advises pension plans and investment companies. The Manager has
operated as an investment company adviser since 1959. The Manager and its
affiliates currently advise investment companies with combined net assets
aggregating over $75 billion as of December 31, 1997, with more than 3.5 million
shareholder accounts. OppenheimerFunds Services, a division of the Manager, acts
as transfer and shareholder servicing agent on an at-cost basis for LifeSpan
Balanced Fund and Disciplined Allocation Fund and for certain other open-end
Funds managed by the Manager and its affiliates.
The Distributor, under a General Distributor's Agreement for each of the Funds,
acts as the principal underwriter in the continuous public offering of Class A,
Class B and Class C shares of each Fund. During LifeSpan Balanced Fund's fiscal
year ended October 31, 1997, the aggregate sales charges on sales of LifeSpan
Balanced Fund's Class A shares were $100,461, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $67,205. During LifeSpan
Balanced Fund's fiscal year ended October 31,1997, no contingent deferred sales
charges were collected on LifeSpan Balanced Fund's Class B and Class C shares.
For the fiscal year ended October 31, 1997, the aggregate amount of sales
charges on sales of Disciplined Allocation Fund's Class A shares was $468,073,
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of which $456,768 was retained by the Distributor and an affiliated
broker-dealer. Contingent deferred sales charges collected by the Distributor on
the redemption of Class B and Class C shares for the fiscal year ended October
31, 1997 totaled $14,973 and $0, respectively, all of which was retained by the
Distributor. For additional information about distribution of the Funds' shares
and the payments made by the Funds to the Distributor in connection with such
activities, please refer to "Distribution and Service Plans" in each Fund's
Statement of Addition Information.
PURCHASE OF ADDITIONAL SHARES
Class A shares of LifeSpan Balanced Fund and Class A shares of Disciplined
Allocation Fund may be purchased with an initial sales charge of 5.75% for
purchases of less than $25,000. The sales charge of 5.75% is reduced for
purchases of either Fund's Class A shares of $25,000 or more. For purchases of
$1 million or more ($500,000 or more for purchases by "Retirement Plans", as
defined in each Fund's prospectus) if those shares are redeemed within 12
calendar months (18 months for shares purchased prior to May 1, 1997) of the end
of the calendar month of their purchase, a contingent deferred sales charge may
be deducted from the redemption proceeds. Class B shares of LifeSpan Balanced
Fund and Disciplined Allocation Fund are sold at net asset value without an
initial sales charge, however, if Class B shares of either Fund are redeemed
within six years of the end of the calendar month of their purchase, a
contingent deferred sales charge may be deducted of up to 5%, depending upon how
long such shares had been held. Class C shares of either Fund may be purchased
without an initial sales charge, but if sold within 12 months of buying them, a
contingent deferred sales charge of 1% may be deducted.
The initial sales charge and contingent deferred sales charge on Class A shares,
Class B shares and Class C shares of Disciplined Allocation Fund will only
affect shareholders of LifeSpan Balanced Fund to the extent that they desire to
make additional purchases of shares of Disciplined Allocation Fund in addition
to the shares which they will receive as a result of the Reorganization. The
Class A, Class B and Class C shares to be issued under the Reorganization
Agreement will be issued by Disciplined Allocation Fund at net asset value.
Future dividends and capital gain distributions of Disciplined Allocation Fund,
if any, may be reinvested without sales charge. The contingent deferred sales
charge for each class of shares for both Funds is the same. If Class A, Class B
or Class C shares of LifeSpan Balanced Fund are currently subject to a
contingent deferred sales change, the Disciplined Allocation Fund shares issued
in the Reorganization will continue to be subject to the same contingent
deferred sales charge. Any LifeSpan Balanced Fund shareholder who is entitled to
a reduced sales charge on additional purchases by reason of a
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Letter of Intent or Right of Accumulation based upon holdings of shares of
LifeSpan Balanced Fund will continue to be entitled to a reduced sales charge on
any future purchase of shares of Disciplined Allocation Fund.
DIVIDENDS AND DISTRIBUTIONS
LifeSpan Balanced Fund declares dividends from net investment income and pays
such dividends to shareholders quarterly. LifeSpan Balanced Fund may also make
distributions annually in December out of any net short-term or long-term
capital gains. Disciplined Allocation Fund declares and pays dividends and
capital gains distributions, if any, quarterly. Dividends are paid separately
for each class of shares and normally the dividends on Class A shares are
generally expected to be higher than for Class B and Class C shares because the
expenses allocable to Class B and Class C shares will generally be higher than
for Class A shares. There is no fixed dividend rate for either Fund and there
can be no assurance that either Fund will pay any dividends or distributions.
METHOD OF CARRYING OUT THE REORGANIZATION
The consummation of the transactions contemplated by the Reorganization
Agreement is contingent upon the receipt of an order from the Securities and
Exchange Commission exempting the Funds from the provisions of Section 17(a) of
the Investment Company Act, the approval of the Reorganization by the
shareholders of LifeSpan Balanced Fund and the receipt of the opinions and
certificates set forth in Sections 10 and 11 of the Reorganization Agreement and
the occurrence of the events described in those Sections. Under the
Reorganization Agreement, all the assets of LifeSpan Balanced Fund, excluding
the Cash Reserve, will be delivered to Disciplined Allocation Fund in exchange
for Class A, Class B and Class C shares of Disciplined Allocation Fund. The Cash
Reserve to be retained by LifeSpan Balanced Fund will be an amount deemed
sufficient in the discretion of the Board for the payment of LifeSpan Balanced
Fund's liabilities, and LifeSpan Balanced Fund's expenses of liquidation.
Assuming the shareholders of LifeSpan Balanced Fund approve the Reorganization,
the actual exchange of assets is expected to take place on June 12, 1998, or as
soon thereafter as is practicable (the "Closing Date") on the basis of net asset
values as of the close of business on the business day preceding the Closing
Date (the "Valuation Date"). Under the Reorganization Agreement, all redemptions
of shares of LifeSpan Balanced Fund shall be permanently suspended at the close
of business on the Valuation Date; only redemption requests received in proper
form on or prior to the close of business on that date shall be fulfilled by it;
redemption requests received by LifeSpan Balanced Fund after that date will be
treated as requests for redemptions of Class A, Class B or Class C shares of
Disciplined Allocation Fund to be
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distributed to the shareholders requesting redemption. The exchange of assets
for shares will be done on the basis of the per share net asset value of the
Class A, Class B and Class C shares of Disciplined Allocation Fund, and the
value of the assets of LifeSpan Balanced Fund to be transferred as of the close
of business on the Valuation Date, valued in the manner used by Disciplined
Allocation Fund in the valuation of assets. Disciplined Allocation Fund is not
assuming any of the liabilities of LifeSpan Balanced Fund, except for portfolio
securities purchased which have not settled and outstanding shareholder
redemption and dividend checks.
The net asset value of the shares transferred by Disciplined Allocation Fund to
LifeSpan Balanced Fund will be the same as the value of the assets received by
Disciplined Allocation Fund. For example, if, on the Valuation Date, LifeSpan
Balanced Fund were to have securities with a market value of $95,000 and cash in
the amount of $10,000 (of which $5,000 was to be retained by it as the Cash
Reserve), the value of the assets which would be transferred to Disciplined
Allocation Fund would be $100,000. If the net asset value per share of
Disciplined Allocation Fund were $10 per share at the close of business on the
Valuation Date, the number of shares to be issued would be 10,000 ($100,000 /
$10). These 10,000 shares of Disciplined Allocation Fund would be distributed to
the former shareholders of LifeSpan Balanced Fund. This example is given for
illustration purposes only and does not bear any relationship to the dollar
amounts or shares expected to be involved in the Reorganization.
Following the Closing Date, LifeSpan Balanced Fund will distribute on a pro rata
basis to its shareholders of record on the Valuation Date the Class A, Class B
and Class C shares of Disciplined Allocation Fund received by LifeSpan Balanced
Fund at the Closing, in liquidation of the outstanding shares of LifeSpan
Balanced Fund, and the outstanding shares of LifeSpan Balanced Fund will be
canceled. To assist LifeSpan Balanced Fund in this distribution, Disciplined
Allocation Fund will, in accordance with a shareholder list supplied by LifeSpan
Balanced Fund, cause its transfer agent to credit and confirm an appropriate
number of shares of Disciplined Allocation Fund to each shareholder of LifeSpan
Balanced Fund. Certificates for Class A shares of Disciplined Allocation Fund
will be issued upon written request of a former shareholder of LifeSpan Balanced
Fund but only for whole shares with fractional shares credited to the name of
the shareholder on the books of Disciplined Allocation Fund and only if shares
represented by certificates are delivered for cancellation. Former Class A
shareholders of LifeSpan Balanced Fund who wish certificates representing their
shares of Disciplined Allocation Fund must, after receipt of their
confirmations, make a written request to OppenheimerFunds Services, P.O. Box
5270, Denver, Colorado 80217. Shareholders of LifeSpan Balanced Fund holding
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certificates representing their shares will not be required to surrender their
certificates to anyone in connection with the Reorganization. After the
Reorganization, however, it will be necessary for such shareholders to surrender
such certificates in order to redeem, transfer, pledge or exchange any shares of
Disciplined Allocation Fund.
Under the Reorganization Agreement, within one year after the Closing Date,
LifeSpan Balanced Fund shall: (a) either pay or make provision for all of its
debts and taxes; and (b) either (i) transfer any remaining amount of the Cash
Reserve to Disciplined Allocation Fund, if such remaining amount is not material
(as defined below) or (ii) distribute such remaining amount to the shareholders
of LifeSpan Balanced Fund who were such on the Valuation Date. Such remaining
amount shall be deemed to be material if the amount to be distributed, after
deducting the estimated expenses of the distribution, equals or exceeds one cent
per share of the number of LifeSpan Balanced Fund shares outstanding on the
Valuation Date. Within one year after the Closing Date, LifeSpan Balanced Fund
will complete its liquidation.
The obligations of either LifeSpan Balanced Fund or Disciplined Allocation Fund
under the Agreement shall be subject to obtaining the necessary relief from the
Securities and Exchange Commission and to the right of either Fund to abandon
and terminate the Reorganization Agreement for any reason and without liability
provided, however, that if a Fund should terminate the Agreement without
reasonable cause, the terminating Fund shall, upon demand, reimburse the other
Fund for all expenses, including reasonable out-of-pocket expenses and fees
incurred in connection with the Agreement.
In the event that the Reorganization Agreement is not consummated for any
reason, the Board will consider and may submit to the shareholders other
alternatives.
ADDITIONAL INFORMATION
FINANCIAL INFORMATION
The Reorganization will be accounted for by the surviving Fund in its financial
statements similar to a pooling without restatement. Further financial
information as to LifeSpan Balanced Fund is contained in its current Prospectus,
which is available without charge from OppenheimerFunds Services, the Transfer
Agent, P.O. Box 5270, Denver, Colorado 80217, and is incorporated herein by
reference, and in its Annual Report as of October 31, 1997, which are included
in its Statement of Additional Information. Financial information for
Disciplined Allocation Fund is contained in its current Prospectus accompanying
this Proxy Statement and Prospectus and incorporated herein by reference, and in
its Annual Report as
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of October 31, 1997 which is included in its Statement of Additional
Information.
PUBLIC INFORMATION
Additional information about LifeSpan Balanced Fund and Disciplined Allocation
Fund is available, as applicable, in the following documents which are
incorporated herein by reference: (i) Disciplined Allocation Fund's Prospectus
dated February 19, 1998, accompanying this Proxy Statement and incorporated
herein; (ii) LifeSpan Balanced Fund's Prospectus dated February 19,1998, as
supplemented February 24,1998 which may be obtained without charge by writing to
OppenheimerFunds Services, P.O. Box 5270, Denver, Colorado 80217; (iii)
Disciplined Allocation Fund's Annual Report as of October 31, 1997, which may be
obtained without charge by writing to OppenheimerFunds Services at the address
indicated above; and (iv) LifeSpan Balanced Fund's Annual Report as of October
31, 1997, which may be obtained without charge by writing to OppenheimerFunds
Services at the address indicated above. All of the foregoing documents may be
obtained by calling the toll-free number on the cover of this Proxy Statement
and Prospectus.
Additional information about the following matters is contained in the Statement
of Additional Information relating to this Reorganization, which incorporates by
reference the Disciplined Allocation Fund Statement of Additional Information
dated February 19, 1998, and LifeSpan Balanced Fund's Prospectus dated February
19, 1998, as supplemented February 24, 1998 and Statement of Additional
Information dated February 19, 1998; the organization and operation of
Disciplined Allocation Fund and LifeSpan Balanced Fund; more information on
investment policies, practices and risks; information about the Company's Board
and its responsibilities; a further description of the services provided by
Disciplined Allocation Fund's and LifeSpan Balanced Fund's Manager, Distributor,
and transfer and shareholder servicing agent; dividend policies; tax matters; an
explanation of the method of determining the offering price of the shares and/or
contingent deferred sales charges, as applicable of Class A, Class B and Class C
shares of Disciplined Allocation Fund and LifeSpan Balanced Fund; purchase,
redemption and exchange programs; the different expenses paid by each class of
shares; and distribution arrangements.
The Company on behalf of Disciplined Allocation Fund and LifeSpan Balanced Fund
is subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith, file reports and other
information with the SEC. Proxy material, reports and other information about
LifeSpan Balanced Fund and Disciplined Allocation Fund which are of public
record can be inspected and copied at public reference facilities maintained by
the SEC in Washington, D.C. and certain of its regional offices, and copies of
such materials can be obtained at prescribed
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<PAGE>
rates from the Public Reference Branch, Office of Consumer Affairs and
Information Services, SEC, Washington, D.C. 20549.
OTHER BUSINESS
Management of LifeSpan Balanced Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not known
at the time of the solicitation may come before the Meeting, the proxy as
solicited confers discretionary authority with respect to such matters as
properly come before the Meeting, including any adjournment or adjournments
thereof, and it is the intention of the persons named as attorneys-in-fact in
the proxy to vote this proxy in accordance with their judgment on such matters.
By Order of the Board of Directors
Andrew J. Donohue, Secretary
April 6, 1998 315
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<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
___________ by and between Oppenheimer Series Fund, Inc., a Maryland corporation
(the "Company"), on behalf of its series, Oppenheimer LifeSpan Balanced
Fund("LifeSpan Balanced Fund"),and Oppenheimer Disciplined Allocation Fund
("Disciplined Allocation
Fund").
W I T N E S S E T H:
WHEREAS, the parties are each a series of an open-end investment company of
the management type; and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as amended
(the "Code"), of LifeSpan Balanced Fund through the acquisition by Disciplined
Allocation Fund of substantially all of the assets of LifeSpan Balanced Fund in
exchange for the voting shares of beneficial interest ("shares") of Class A,
Class B and Class C shares of Disciplined Allocation Fund and the assumption by
Disciplined Allocation Fund of certain liabilities of LifeSpan Balanced Fund,
which Class A, Class B and Class C shares of Disciplined Allocation Fund are to
be distributed by LifeSpan Balanced Fund pro rata to its shareholders in
complete liquidation of LifeSpan Balanced Fund and complete cancellation of its
shares;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. The parties hereto hereby adopt this Agreement and Plan of
Reorganization (the "Agreement") pursuant to Section 368(a)(1) of the Code as
follows: The reorganization will be comprised of the acquisition by Disciplined
Allocation Fund of substantially all of the properties and assets of LifeSpan
Balanced Fund in exchange for Class A, Class B and Class C shares of Disciplined
Allocation Fund and the assumption by Disciplined Allocation Fund of certain
liabilities of LifeSpan Balanced Fund, followed by the distribution of such
Class A, Class B and Class C shares of Disciplined Allocation Fund shares to the
Class A, Class B and Class C shareholders of LifeSpan Balanced Fund in exchange
for their Class A, Class B and Class C shares of LifeSpan Balanced Fund, all
upon and subject to the terms of the Agreement hereinafter set forth.
The share transfer books of LifeSpan Balanced Fund will be
permanently closed at the close of business on the Valuation Date (as
hereinafter defined) and only redemption requests received
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in proper form on or prior to the close of business on the Valuation Date shall
be fulfilled by LifeSpan Balanced Fund; redemption requests received by LifeSpan
Balanced Fund after that date shall be treated as requests for the redemption of
the shares of Disciplined Allocation Fund to be distributed to the shareholder
in question as provided in Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets of
LifeSpan Balanced Fund on that date, excluding a cash reserve (the "Cash
Reserve") to be retained by LifeSpan Balanced Fund sufficient in its discretion
for the payment of the expenses of LifeSpan Balanced Fund's dissolution and its
liabilities, but not in excess of the amount contemplated by Section 10E, shall
be delivered as provided in Section 8 to Disciplined Allocation Fund, in
exchange for and against delivery to LifeSpan Balanced Fund on the Closing Date
of a number of Class A, Class B and Class C shares of Disciplined Allocation
Fund, having an aggregate net asset value equal to the value of the assets of
LifeSpan Balanced Fund so transferred and delivered.
3. The net asset value of Class A, Class B and Class C shares of
Disciplined Allocation Fund and the value of the assets of LifeSpan Balanced
Fund to be transferred shall in each case be determined as of the close of
business of the New York Stock Exchange on the Valuation Date. The computation
of the net asset value of the Class A, Class B and Class C shares of Disciplined
Allocation Fund and the Class A, Class B and Class C shares of LifeSpan Balanced
Fund shall be done in the manner used by Disciplined Allocation Fund and
LifeSpan Balanced Fund, respectively, in the computation of such net asset value
per share as set forth in their respective prospectuses. The methods used by
Disciplined Allocation Fund in such computation shall be applied to the
valuation of the assets of LifeSpan Balanced Fund to be transferred to
Disciplined Allocation Fund.
LifeSpan Balanced Fund shall declare and pay, immediately prior to
the Valuation Date, a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to LifeSpan Balanced
Fund's shareholders all of LifeSpan Balanced Fund's investment company taxable
income for taxable years ending on or prior to the Closing Date (computed
without regard to any dividends paid) and all of its net capital gain, if any,
realized in taxable years ending on or prior to the Closing Date (after
reduction for any capital loss carry-forward).
4. The closing (the "Closing") shall be at the offices of
OppenheimerFunds, Inc. (the "Agent"), Two World Trade Center, 34th Floor, New
York, New York 10048, at 4:00 P.M. New York time on June 12,1998 or at such
other time or place as the parties may designate or as provided below (the
"Closing Date"). The business day preceding the Closing Date is hereinafter
referred to as the
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"Valuation Date."
In the event that on the Valuation Date either party has, pursuant
to the Investment Company Act of 1940, as amended (the "Act"), or any rule,
regulation or order thereunder, suspended the redemption of its shares or
postponed payment therefore, the Closing Date shall be postponed until the first
business day after the date when both parties have ceased such suspension or
postponement; provided, however, that if such suspension shall continue for a
period of 60 days beyond the Valuation Date, then the other party to the
Agreement shall be permitted to terminate the Agreement without liability to
either party for such termination.
5. In conjunction with the Closing, LifeSpan Balanced Fund shall
distribute on a pro rata basis to the shareholders of LifeSpan Balanced Fund on
the Valuation Date the Class A, Class B and Class C shares of Disciplined
Allocation Fund received by LifeSpan Balanced Fund on the Closing Date in
exchange for the assets of LifeSpan Balanced Fund in complete liquidation of
LifeSpan Balanced Fund; for the purpose of the distribution by LifeSpan Balanced
Fund of Class A, Class B and Class C shares of Disciplined Allocation Fund to
its shareholders, Disciplined Allocation Fund will promptly cause its transfer
agent to: (a) credit an appropriate number of Class A, Class B and Class C
shares of Disciplined Allocation Fund on the books of Disciplined Allocation
Fund to each Class A, Class B and Class C shareholder, respectively of LifeSpan
Balanced Fund in accordance with a list (the "Shareholder List") of its
shareholders received from LifeSpan Balanced Fund; and (b) confirm an
appropriate number of Class A, Class B and Class C shares of Disciplined
Allocation Fund to each shareholder of LifeSpan Balanced Fund; certificates for
Class A, Class B and Class C shares of Disciplined Allocation Fund will be
issued upon written request of a former shareholder of LifeSpan Balanced Fund
but only for whole shares, with fractional shares credited to the name of the
shareholder on the books of Disciplined Allocation Fund.
The Shareholder List shall indicate, as of the close of business on
the Valuation Date, the name and address of each shareholder of LifeSpan
Balanced Fund, indicating his or her share balance. LifeSpan Balanced Fund
agrees to supply the Shareholder List to Disciplined Allocation Fund not later
than the Closing Date. Shareholders of LifeSpan Balanced Fund holding
certificates representing their shares shall not be required to surrender their
certificates to anyone in connection with the reorganization. After the Closing
Date, however, it will be necessary for such shareholders to surrender their
certificates in order to redeem, transfer or pledge the shares of Disciplined
Allocation Fund which they received.
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6. Within one year after the Closing Date, LifeSpan Balanced Fund shall
(a) either pay or make provision for payment of all of its liabilities and
taxes, and (b) either (i) transfer any remaining amount of the Cash Reserve to
Disciplined Allocation Fund, if such remaining amount (as reduced by the
estimated cost of distributing it to shareholders) is not material (as defined
below) or (ii) distribute such remaining amount to the shareholders of LifeSpan
Balanced Fund on the Valuation Date. Such remaining amount shall be deemed to be
material if the amount to be distributed, after deduction of the estimated
expenses of the distribution, equals or exceeds one cent per share of LifeSpan
Balanced Fund outstanding on the Valuation Date.
7. Prior to the Closing Date, there shall be coordination between the
parties as to their respective portfolios so that, after the Closing,
Disciplined Allocation Fund will be in compliance with all of its investment
policies and restrictions. Promptly after the Closing, LifeSpan Balanced Fund
shall deliver to Disciplined Allocation Fund two copies of a list setting forth
the securities then owned by LifeSpan Balanced Fund. Promptly after the Closing,
LifeSpan Balanced Fund shall provide Disciplined Allocation Fund a list setting
forth the respective federal income tax bases thereof.
8. Portfolio securities or written evidence acceptable to Disciplined
Allocation Fund of record ownership thereof by The Depository Trust Company or
through the Federal Reserve Book Entry System or any other depository approved
by LifeSpan Balanced Fund pursuant to Rule 17f-4 and Rule 17f-5 under the Act
shall be endorsed and delivered, or transferred by appropriate transfer or
assignment documents, by LifeSpan Balanced Fund on the Closing Date to
Disciplined Allocation Fund, or at its direction, to its custodian bank, in
proper form for transfer in such condition as to constitute good delivery
thereof in accordance with the custom of brokers and shall be accompanied by all
necessary state transfer stamps, if any. The cash delivered shall be in the form
of certified or bank cashiers' checks or by bank wire or intra-bank transfer
payable to the order of Disciplined Allocation Fund for the account of
Disciplined Allocation Fund. Shares of Disciplined Allocation Fund representing
the number of shares of Disciplined Allocation Fund being delivered against the
assets of LifeSpan Balanced Fund, registered in the name of LifeSpan Balanced
Fund, shall be transferred to LifeSpan Balanced Fund on the Closing Date. Such
shares shall thereupon be assigned by LifeSpan Balanced Fund to its shareholders
so that the shares of Disciplined Allocation Fund may be distributed as provided
in Section 5.
If, at the Closing Date, LifeSpan Balanced Fund is unable in the
ordinary course of business to make delivery under this Section 8 to Disciplined
Allocation Fund of any of its portfolio securities or cash for the reason that
any of such securities
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<PAGE>
purchased by LifeSpan Balanced Fund, or the cash proceeds of a sale of portfolio
securities, prior to the Closing Date have not yet been delivered to it or
LifeSpan Balanced Fund's custodian, then the delivery requirements of this
Section 8 with respect to said undelivered securities or cash will be waived and
Balanced Fund will deliver to Disciplined Allocation Fund by or on the Closing
Date and with respect to said undelivered securities or cash executed copies of
an agreement or agreements of assignment in a form reasonably satisfactory to
Disciplined Allocation Fund, together with such other documents, including a due
bill or due bills and brokers' confirmation slips as may reasonably be required
by Disciplined Allocation Fund.
9. Disciplined Allocation Fund shall not assume the liabilities (except
for portfolio securities purchased which have not settled and for shareholder
redemption and dividend checks outstanding) of LifeSpan Balanced Fund, but
LifeSpan Balanced Fund will, nevertheless, use its best efforts to discharge all
known liabilities, so far as may be possible, prior to the Closing Date. The
cost of printing and mailing the proxies and proxy statements will be borne by
LifeSpan Balanced Fund. LifeSpan Balanced Fund and Disciplined Allocation Fund
will bear the cost of their respective tax opinion. Any documents such as
existing prospectuses or annual reports that are included in that mailing will
be a cost of the Fund issuing the document. Any other out-of-pocket expenses of
Disciplined Allocation Fund and LifeSpan Balanced Fund associated with this
reorganization, including legal, accounting and transfer agent expenses, will be
borne by LifeSpan Balanced Fund and Disciplined Allocation Fund, respectively,
in the amounts so incurred by each.
10. The obligations of Disciplined Allocation Fund hereunder shall be
subject to the following conditions:
A. The Board of Directors of the Company shall have authorized the
execution of the Agreement, and the shareholders of LifeSpan Balanced Fund shall
have approved the Agreement and the transactions contemplated thereby, and
LifeSpan Balanced Fund shall have furnished to Disciplined Allocation Fund
copies of resolutions to that effect certified by the Secretary or an Assistant
Secretary of the Company; such shareholder approval shall have been by the
affirmative vote of "a majority of the outstanding voting securities" (as
defined in the Act) of LifeSpan Balanced Fund at a meeting for which proxies
have been solicited by the Proxy Statement and Prospectus (as hereinafter
defined).
B. Disciplined Allocation Fund shall have received an opinion of
counsel dated the Closing Date to LifeSpan Balanced Fund, to the effect that (i)
LifeSpan Balanced Fund is a series of the Company which is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland with
A-5
<PAGE>
full powers to carry on its business as then being conducted and to enter into
and perform the Agreement (Maryland counsel may be relied upon for this
opinion); and (ii) that all action necessary to make the Agreement, according to
its terms, valid, binding and enforceable on LifeSpan Balanced Fund and to
authorize effectively the transactions contemplated by the Agreement have been
taken by LifeSpan Balanced Fund.
C. The representations and warranties of LifeSpan Balanced Fund
contained herein shall be true and correct at and as of the Closing Date, and
Disciplined Allocation Fund shall have been furnished with a certificate of the
President, or a Vice President, or the Secretary or the Assistant Secretary or
the Treasurer of the Company, dated the Closing Date, to that effect.
D. On the Closing Date, LifeSpan Balanced Fund shall have furnished
to Disciplined Allocation Fund a certificate of the Treasurer or Assistant
Treasurer of the Company as to the amount of the capital loss carry-over and net
unrealized appreciation or depreciation, if any, with respect to LifeSpan
Balanced Fund as of the Closing Date.
E. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of LifeSpan Balanced Fund at the
close of business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by the Company under
the Securities Act of 1933, as amended (the "1933 Act"), containing a
preliminary form of the Proxy Statement and Prospectus, shall have become
effective under the 1933 Act not later than July 15, 1998.
G. On the Closing Date, Disciplined Allocation Fund shall have
received a letter from Andrew J. Donohue or other senior executive officer of
OppenheimerFunds, Inc. acceptable to Disciplined Allocation Fund, stating that
nothing has come to his or her attention which in his or her judgment would
indicate that as of the Closing Date there were any material actual or
contingent liabilities of LifeSpan Balanced Fund arising out of litigation
brought against LifeSpan Balanced Fund or claims asserted against it, or pending
or to the best of his or her knowledge threatened claims or litigation not
reflected in or apparent from the most recent audited financial statements and
footnotes thereto of LifeSpan Balanced Fund delivered to Disciplined Allocation
Fund. Such letter may also include such additional statements relating to the
scope of the review conducted by such person and his or her responsibilities and
liabilities as are not unreasonable under the circumstances.
H. Disciplined Allocation Fund shall have received an
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<PAGE>
opinion, dated the Closing Date, of KPMG Peat Marwick LLP, to the same effect as
the opinion contemplated by Section 11.E of this Agreement.
I. Disciplined Allocation Fund shall have received at the closing
all of the assets of LifeSpan Balanced Fund to be conveyed hereunder, which
assets shall be free and clear of all liens, encumbrances, security interests,
restrictions and limitations whatsoever.
11. The obligations of LifeSpan Balanced Fund hereunder shall be subject
to the following conditions:
A. The Board of Directors of the Company shall have authorized the
execution of the Agreement, and the transactions contemplated thereby, and
Disciplined Allocation Fund shall have furnished to LifeSpan Balanced Fund
copies of resolutions to that effect certified by the Secretary or an Assistant
Secretary of the Company.
B. LifeSpan Balanced Fund's shareholders shall have approved the
Agreement and the transactions contemplated hereby, by an affirmative vote of "a
majority of the outstanding voting securities" (as defined in the Act) of
LifeSpan Balanced Fund, and LifeSpan Balanced Fund shall have furnished
Disciplined Allocation Fund copies of resolutions to that effect certified by
the Secretary or an Assistant Secretary of the Company.
C. LifeSpan Balanced Fund shall have received an opinion dated the
Closing Date of counsel to Disciplined Allocation Fund, to the effect that (i)
Disciplined Allocation Fund is a series of the Company and is duly organized,
validly existing and in good standing under the laws of the state of Maryland
with full powers to carry on its business as then being conducted and to enter
into and perform the Agreement (Maryland counsel may be relied upon for this
opinion); (ii) all action necessary to make the Agreement, according to its
terms, valid, binding and enforceable upon Disciplined Allocation Fund and to
authorize effectively the transactions contemplated by the Agreement have been
taken by Disciplined Allocation Fund, and (iii) the shares of Disciplined
Allocation Fund to be issued hereunder are duly authorized and when issued will
be validly issued, fully-paid and non-assessable.
D. The representations and warranties of Disciplined Allocation Fund
contained herein shall be true and correct at and as of the Closing Date, and
LifeSpan Balanced Fund shall have been furnished with a certificate of the
President, a Vice President or the Secretary or an Assistant Secretary or the
Treasurer of the Company to that effect dated the Closing Date.
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<PAGE>
E. LifeSpan Balanced Fund shall have received an opinion of KPMG
Peat Marwick LLP to the effect that the Federal tax consequences of the
transaction, if carried out in the manner outlined in this Plan of
Reorganization and in accordance with (i) LifeSpan Balanced Fund's
representation that there is no plan or intention by any Fund shareholder who
owns 5% or more of LifeSpan Balanced Fund's outstanding shares, and, to LifeSpan
Balanced Fund's best knowledge, there is no plan or intention on the part of the
remaining Fund shareholders, to redeem, sell, exchange or otherwise dispose of a
number of Disciplined Allocation Fund shares received in the transaction that
would reduce LifeSpan Balanced Fund shareholders' ownership of Disciplined
Allocation Fund shares to a number of shares having a value, as of the Closing
Date, of less than 50% of the value of all of the formerly outstanding Fund
shares as of the same date, and (ii) the representation by each of LifeSpan
Balanced Fund and Disciplined Allocation Fund that, as of the Closing Date,
LifeSpan Balanced Fund and Disciplined Allocation Fund will meet the
diversification test of Section 368(a)(2)(F)(ii) of the Code, will be as
follows:
1. The transactions contemplated by the Agreement will qualify
as a tax-free "reorganization" within the meaning of Section 368(a)(1) of the
Code, and under the regulations promulgated thereunder.
2. LifeSpan Balanced Fund and Disciplined Allocation Fund will
each qualify as a "party to a reorganization" within the meaning of Section
368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of
LifeSpan Balanced Fund upon the distribution of shares of beneficial interest in
Disciplined Allocation Fund to the shareholders of LifeSpan Balanced Fund
pursuant to Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by LifeSpan Balanced Fund by reason of the transfer of substantially
all its assets in exchange for shares of Disciplined Allocation Fund.
5. Under Section 1032 of the Code no gain or loss will be
recognized by Disciplined Allocation Fund by reason of the transfer of
substantially all LifeSpan Balanced Fund's assets in exchange for Class A, Class
B and Class C shares of Disciplined Allocation Fund and Disciplined Allocation
Fund's assumption of
certain liabilities of LifeSpan Balanced Fund.
6. The shareholders of LifeSpan Balanced Fund will have the
same tax basis and holding period for the Class A, Class B or Class C shares of
beneficial interest in Disciplined Allocation Fund that they receive as they had
for LifeSpan Balanced
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Fund shares that they previously held, pursuant to Section 358(a) and 1223(1),
respectively, of the Code.
7. The securities transferred by LifeSpan Balanced Fund to
Disciplined Allocation Fund will have the same tax basis and holding period in
the hands of Disciplined Allocation Fund as they had for LifeSpan Balanced Fund,
pursuant to Section 362(b) and 1223(1), respectively, of the Code.
F. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of LifeSpan Balanced Fund at the
close of business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by the Company under
the 1933 Act, containing a preliminary form of the Proxy Statement and
Prospectus, shall have become effective under the 1933 Act not later than July
15, 1998.
H. On the Closing Date, LifeSpan Balanced Fund shall have received a
letter from Andrew J. Donohue or other senior executive officer of
OppenheimerFunds, Inc. acceptable to LifeSpan Balanced Fund, stating that
nothing has come to his or her attention which in his or her judgment would
indicate that as of the Closing Date there were any material actual or
contingent liabilities of Disciplined Allocation Fund arising out of litigation
brought against Disciplined Allocation Fund or claims asserted against it, or
pending or, to the best of his or her knowledge, threatened claims or litigation
not reflected in or apparent by the most recent audited financial statements and
footnotes thereto of Disciplined Allocation Fund delivered to LifeSpan Balanced
Fund. Such letter may also include such additional statements relating to the
scope of the review conducted by such person and his or her responsibilities and
liabilities as are not unreasonable under the circumstances.
I. LifeSpan Balanced Fund shall acknowledge receipt of the shares of
Disciplined Allocation Fund.
12. The Company on behalf of LifeSpan Balanced Fund hereby represents and
warrants that:
A. The financial statements of LifeSpan Balanced Fund as at October
31, 1997(audited) heretofore furnished to Disciplined Allocation Fund, present
fairly the financial position, results of operations, and changes in net assets
of LifeSpan Balanced Fund as of that date, in conformity with generally accepted
accounting principles applied on a basis consistent with the preceding year; and
that from October 31, 1997 through the date hereof there have not been, and
through the Closing Date there will not be, any material adverse change in the
business or financial condition of
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LifeSpan Balanced Fund, it being agreed that a decrease in the size of LifeSpan
Balanced Fund due to a diminution in the value of its portfolio and/or
redemption of its shares shall not be considered a material adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated thereby by LifeSpan Balanced Fund's shareholders, LifeSpan Balanced
Fund has authority to transfer all of the assets of LifeSpan Balanced Fund to be
conveyed hereunder free and clear of all liens, encumbrances, security
interests, restrictions and limitations whatsoever;
C. The Prospectus, as amended and supplemented, contained in
LifeSpan Balanced Fund's Registration Statement under the 1933 Act, as amended,
is true, correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Registration Statement, as amended, was, as of the
date of the filing of the last Post-Effective Amendment, true, correct and
complete, conformed to the requirements of the 1933 Act and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
D. There is no material contingent liability of LifeSpan Balanced
Fund and no material claim and no material legal, administrative or other
proceedings pending or, to the knowledge of LifeSpan Balanced Fund, threatened
against LifeSpan Balanced Fund, not reflected in such Prospectus;
E. Except for this Agreement, there are no material contracts
outstanding to which LifeSpan Balanced Fund is a party other than those ordinary
in the conduct of its business;
F. LifeSpan Balanced Fund is a series of the Company which is a
Maryland corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland; and has all necessary and material Federal
and state authorizations to own all of its assets and to carry on its business
as now being conducted; and the Company is duly registered under the Act and
such registration has not been rescinded or revoked and is in full force and
effect;
G. All Federal and other tax returns and reports of LifeSpan
Balanced Fund required by law to be filed have been filed, and all Federal and
other taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the knowledge of
LifeSpan Balanced Fund no such return is currently under audit and no
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assessment has been asserted with respect to such returns and to the extent such
tax returns with respect to the taxable year of LifeSpan Balanced Fund ended
October 31, 1997 have not been filed, such returns will be filed when required
and the amount of tax shown as due thereon shall be paid when due; and
H. LifeSpan Balanced Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations, LifeSpan
Balanced Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and LifeSpan
Balanced Fund intends to meet such requirements with respect to its current
taxable year.
13. The Company on behalf of Disciplined Allocation Fund hereby represents
and warrants that:
A. The financial statements of Disciplined Allocation Fund as at
October 31, 1997 (audited) heretofore furnished to LifeSpan Balanced Fund,
present fairly the financial position, results of operations, and changes in net
assets of Disciplined Allocation Fund, as of that date, in conformity with
generally accepted accounting principles applied on a basis consistent with the
preceding year; and that from October 31, 1997 through the date hereof there
have not been, and through the Closing Date there will not be, any material
adverse changes in the business or financial condition of Disciplined Allocation
Fund, it being understood that a decrease in the size of Disciplined Allocation
Fund due to a diminution in the value of its portfolio and/or redemption of its
shares shall not be considered a material or adverse change;
B. The Prospectus, as amended and supplemented, contained in the
Company's Registration Statement under the 1933 Act, is true, correct and
complete, conforms to the requirements of the 1933 Act and does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Registration Statement, as amended, was, as of the date of the filing of the
last Post-Effective Amendment, true, correct and complete, conformed to the
requirements of the 1933 Act and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
C. Except for this Agreement, there is no material contingent
liability of Disciplined Allocation Fund and no material claim and no material
legal, administrative or other proceedings pending or, to the knowledge of
Disciplined Allocation Fund, threatened against Disciplined Allocation Fund, not
reflected in such Prospectus;
D. There are no material contracts outstanding to which
A-11
<PAGE>
Disciplined Allocation Fund is a party other than those ordinary in the conduct
of its business;
E. Disciplined Allocation Fund is a series of the Company which is a
Maryland corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland; has all necessary and material Federal and
state authorizations to own all its properties and assets and to carry on its
business as now being conducted; the shares of Disciplined Allocation Fund which
it issues to LifeSpan Balanced Fund pursuant to the Agreement will be duly
authorized, validly issued, fully-paid and non-assessable; and will conform to
the description thereof contained in Disciplined Allocation Fund's Registration
Statement, will be duly registered under the 1933 Act and in the states where
registration is required; and Disciplined Allocation Fund is duly registered
under the Act and such registration has not been revoked or rescinded and is in
full force and effect;
F. All Federal and other tax returns and reports of Disciplined
Allocation Fund required by law to be filed have been filed, and all Federal and
other taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the knowledge of
Disciplined Allocation Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the extent such
tax returns with respect to the taxable year of Disciplined Allocation Fund
ended October 31, 1997 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when due;
G. Disciplined Allocation Fund has elected to be treated as a
regulated investment company and, for each fiscal year of its operations,
Disciplined Allocation Fund has met the requirements of Subchapter M of the Code
for qualification and treatment as a regulated investment company and
Disciplined Allocation Fund intends to meet such requirements with respect to
its current taxable year;
H. Disciplined Allocation Fund has no plan or intention (i) to
dispose of any of the assets transferred by LifeSpan Balanced Fund, other than
in the ordinary course of business, or (ii) to redeem or reacquire any of the
shares issued by it in the reorganization other than pursuant to valid requests
of shareholders; and
I. After consummation of the transactions contemplated by the
Agreement, Disciplined Allocation Fund intends to operate its business in a
substantially unchanged manner.
14. Each party hereby represents to the other that no broker or finder has
been employed by it with respect to the Agreement or
A-12
<PAGE>
the transactions contemplated hereby. Each party also represents and warrants to
the other that the information concerning it in the Proxy Statement and
Prospectus will not as of its date contain any untrue statement of a material
fact or omit to state a fact necessary to make the statements concerning it
therein not misleading and that the financial statements concerning it will
present the information shown fairly in accordance with generally accepted
accounting principles applied on a basis consistent with the preceding year.
Each party also represents and warrants to the other that the Agreement is
valid, binding and enforceable in accordance with its terms and that the
execution, delivery and performance of the Agreement will not result in any
violation of, or be in conflict with, any provision of any charter, by-laws,
contract, agreement, judgment, decree or order to which it is subject or to
which it is a party. Disciplined Allocation Fund hereby represents to and
covenants with LifeSpan Balanced Fund that, if the reorganization becomes
effective, Disciplined Allocation Fund will treat each shareholder of LifeSpan
Balanced Fund who received any of Disciplined Allocation Fund's shares as a
result of the reorganization as having made the minimum initial purchase of
shares of Disciplined Allocation Fund received by such shareholder for the
purpose of making additional investments in shares of Disciplined Allocation
Fund, regardless of the value of the shares of Disciplined Allocation Fund
received.
15. Disciplined Allocation Fund agrees that it will prepare and file a
Registration Statement on Form N-14 under the 1933 Act which shall contain a
preliminary form of proxy statement and prospectus contemplated by Rule 145
under the 1933 Act. The final form of such proxy statement and prospectus is
referred to in the Agreement as the "Proxy Statement and Prospectus." Each party
agrees that it will use its best efforts to have such Registration Statement
declared effective and to supply such information concerning itself for
inclusion in the Proxy Statement and Prospectus as may be necessary or desirable
in this connection. Oppenheimer LifeSpan Balanced Fund covenants and agrees, as
soon as practicable and, upon closing, to cause the cancellation of its
outstanding shares.
16. The obligations of the parties, their respective directors, officers,
agents or others acting on their behalf under the Agreement shall be subject to
obtaining an exemptive order from the Securities and Exchange Commission under
Section 17(a) of the Act and to the right of either party to abandon and
terminate the Agreement for any reason and there shall be no liability for
damages or other recourse available to a party not so terminating this
Agreement, provided, however, that in the event that a party shall terminate
this Agreement without reasonable cause, the party so terminating shall, upon
demand, reimburse the party not so terminating for all expenses, including
reasonable out-of-pocket expenses and fees incurred in connection with this
Agreement.
A-13
<PAGE>
17. The Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
Agreement. The rights and obligations of each party pursuant to the Agreement
shall not be assignable.
18. All prior or contemporaneous agreements and representations are merged
into the Agreement, which constitutes the entire contract between the parties
hereto. No amendment or modification hereof shall be of any force and effect
unless in writing and signed by the parties and no party shall be deemed to have
waived any provision herein for its benefit unless it executes a written
acknowledgment of such waiver.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to be
executed and attested by its officers thereunto duly authorized on the date
first set forth above.
OPPENHEIMER SERIES FUND, INC.,
on behalf of
OPPENHEIMER DISCIPLINED ALLOCATION
FUND
By:__________________________________
Andrew J. Donohue, Secretary
OPPENHEIMER SERIES FUND, INC.
on behalf of
OPPENHEIMER LIFESPAN BALANCED FUND
By:_________________________________
Andrew J. Donohue, Secretary
A-14
<PAGE>
EXHIBIT B
Average Annual Total Returns
for the Periods Ended 10/31/97
1-YEAR 3-YEAR 5-YEAR 10-YEAR
Disciplined Allocation Fund Class A Shares(1) 11.99% 13.40% 11.78% 12.38%
LifeSpan Balanced Fund Class A Shares (1) 6.18%
Disciplined Allocation Fund Class B Shares(2) 12.96%
LifeSpan Balanced Fund Class B Shares (2) 6.70%
Disciplined Allocation Fund Class C Shares(3) 16.93%
LifeSpan Balanced Fund Class C Shares (3) 10.73%
Total Returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
An explanation of the different performance calculations is in each Fund's
Prospectus.
(1) Class A returns include the current maximum initial sales charge of 5.75%.
Disciplined Allocation Fund's maximum sales charge rate for Class A shares was
higher during a portion of some of the periods shown, so that actual results
would have been lower.
(2) Class B returns include the applicable contingent deferred sales charge of
5% (1-year). Class B shares are subject to an annual 0.75% asset-based sales
charge.
(3) Class C returns for the one year period reflects the 1% contingent deferred
sales charge. Class C shares are subject to an annual 0.75% asset-based sales
charge.
B-1
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
Proxy for Special Shareholders Meeting to be held June 9, 1998
YOUR SHAREHOLDER VOTE IS IMPORTANT!
YOUR PROMPT RESPONSE CAN SAVE YOUR FUND THE EXPENSE OF ANOTHER MAILING.
Please mark your proxy on the reverse side, date and sign it, and return it
promptly in the accompanying envelope which requires no postage if mailed in the
United States.
Please detach at perforation before mailing.
-------------------------------------------------------------------
OPPENHEIMER LIFESPAN GROWTH FUND
Proxy For Special Shareholders Meeting to be held June 9, 1998
THE UNDERSIGNED SHAREHOLDER OF OPPENHEIMER LIFESPAN GROWTH FUND(the "Fund"),
does hereby appoint Robert J. Bishop, George C. Bowen, Andrew J. Donohue and
Scott T. Farrar, and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to attend the Special Meeting of
the Shareholders of the Fund to be held on June 9, 1998, at 6803 SOUTH TUCSON
WAY, ENGLEWOOD, COLORADO 80112 at 10:00 A.M., Denver time, and at all
adjournments thereof, and to vote the shares held in the name of the undersigned
on the record date for said meeting on the Proposal specified on the reverse
side. Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS who recommends a vote FOR
the proposal on the reverse side. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS INDICATED.
(Over)
335
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
Proxy for Special Shareholders Meeting to be held June 9, 1998
YOUR SHAREHOLDER VOTE IS IMPORTANT!
YOUR PROMPT RESPONSE CAN SAVE YOUR FUND MONEY. Please vote, sign and mail your
proxy ballot (this card) in the enclosed postage-paid envelope today, no matter
how many shares you own. A majority of the Fund's shares must be represented in
person or by proxy. Please vote your proxy so your Fund can avoid the expense of
another mailing.
Please detach at perforation before mailing.
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1. THE PROPOSAL: To approve an Agreement and Plan of Reorganization between the
Fund and Oppenheimer Disciplined Value Fund ("Disciplined Value Fund"), and the
transactions contemplated thereby, including (a) the transfer of substantially
all the assets of the Fund in exchange for shares of Disciplined Value Fund, (b)
the distribution of such shares to the shareholders of the Fund in complete
liquidation of the Fund, and (c) the cancellation of the outstanding shares of
the Fund.
1. o FOR o AGAINST o ABSTAIN
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS PROXY. When signing as
custodian, attorney, executor, administrator, trustee, etc., please give your
full title as such. All joint owners should sign this proxy. If the account is
registered in the name of a corporation, partnership or other entity, a duly
authorized individual must sign on its behalf and give his or her title.
DATED: _______________________, 1998
(Month) (Day)
___________________________________
SIGNATURE(S)
___________________________________
SIGNATURE(S)
Please read both sides of this ballot
(Over)
335
<PAGE>
BRIDGET A. MACASKILL
President and Chief Executive Officer
April 8, 1998
Dear Oppenheimer LifeSpan Growth Fund Shareholder,
One of the things we pride ourselves on at OppenheimerFunds, Inc. is our
commitment to searching for new investment opportunities for our shareholders. I
am writing to you today to let you know about one of these opportunities - a
positive change that has been proposed for Oppenheimer LifeSpan Growth Fund.
After careful consideration, the Board of Directors agreed that it would
be in the best interest of shareholders of Oppenheimer LifeSpan Growth Fund to
reorganize into another Oppenheimer fund, Oppenheimer Disciplined Value Fund. A
shareholder meeting has been scheduled for June 9th, and all Oppenheimer
LifeSpan Growth Fund shareholders of record on March 17th are being asked to
vote either in person or by proxy. You will find a notice of the meeting, a
ballot card, a proxy statement detailing the proposal, an Oppenheimer
Disciplined Value Fund prospectus and a postage-paid return envelope enclosed
for your use.
WHY DOES THE BOARD OF DIRECTORS RECOMMEND THIS CHANGE?
Oppenheimer LifeSpan Growth Fund and Oppenheimer Disciplined Value Fund,
Inc. have compatible objectives, as discussed in the enclosed proxy statement.
We believe that Oppenheimer Disciplined Value Fund's flexible management
approach allows that fund to respond more effectively to changing market and
economic conditions, and can offer shareholders even better investment
opportunities over the long term.
Another benefit for shareholders is the greater economy of scale resulting
from consolidation into a much larger fund. By merging into Oppenheimer
Disciplined Value Fund - which now has over $420 million in assets - former
shareholders of Oppenheimer LifeSpan Growth Fund may benefit from a lower
expense ratio as costs are spread among a larger number of shares.
HOW DO YOU VOTE?
No matter how large or small your investment, your vote is important, so
please review the proxy statement carefully. To cast your vote, simply mark,
sign and date the enclosed proxy ballot and return it in the postage-paid
envelope today. Remember, it can be expensive for the Fund - and ultimately you
as a shareholder - to remail the ballots if not enough responses are received to
conduct the meeting.
(over, please)
<PAGE>
If you have any questions about the proposal, please feel free to contact
your financial advisor, or call us at 1-800-525-7048.
As always, we appreciate your confidence in OppenheimerFunds and look
forward to serving you for many years to come.
Sincerely,
/s/ Bridget A. Macaskill
Enclosures
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
TWO WORLD TRADE CENTER, NEW YORK, NY 10048-0203
1-800-525-7048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1998
TO THE SHAREHOLDERS OF OPPENHEIMER LIFESPAN GROWTH FUND:
Notice is hereby given that a Special Meeting of the Shareholders of Oppenheimer
LifeSpan Growth Fund ("LifeSpan Growth Fund"), a series of Oppenheimer Series
Fund, Inc., a registered management investment company, will be held at 6803
SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112 at 10:00 A.M., Denver time, on June
9, 1998, or any adjournments thereof (the "Meeting"), for the following
purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization between
LifeSpan Growth Fund and Oppenheimer Disciplined Value Fund ("Disciplined Value
Fund"), and the transactions contemplated thereby, including (a) the transfer of
substantially all the assets of LifeSpan Growth Fund in exchange for Class A,
Class B and Class C shares of Disciplined Value Fund, (b) the distribution of
such shares to the corresponding Class A, Class B and Class C shareholders of
LifeSpan Growth Fund in complete liquidation of LifeSpan Growth Fund and (c) the
cancellation of the outstanding shares of LifeSpan Growth Fund (the "Proposal").
2. To act upon such other matters as may properly come before the Meeting.
Shareholders of record at the close of business on March 17, 1998 are entitled
to notice of, and to vote at, the Meeting. The Proposal is more fully discussed
in the Proxy Statement and Prospectus. Please read it carefully before telling
us, through your proxy or in person, how you wish your shares to be voted.
LifeSpan Growth Fund's Board of Directors recommends a vote in favor of the
Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
April 6, 1998
- ------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO INDICATE
VOTING INSTRUCTIONS ON THE ENCLOSED PROXY AND TO DATE, SIGN AND RETURN IT IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE. TO AVOID UNNECESSARY DUPLICATE MAILINGS, WE
ASK YOUR COOPERATION IN PROMPTLY MAILING YOUR PROXY NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE.
335
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
TWO WORLD TRADE CENTER, NEW YORK, NY 10048-0203
1-800-525-7048
PROXY STATEMENT
OPPENHEIMER DISCIPLINED VALUE FUND
TWO WORLD TRADE CENTER, NEW YORK, NY 10048-0203
1-800-525-7048
PROSPECTUS
This Proxy Statement of Oppenheimer LifeSpan Growth Fund ("LifeSpan Growth
Fund") relates to the Agreement and Plan of Reorganization (the "Reorganization
Agreement")and the transactions contemplated thereby (the "Reorganization")
between Oppenheimer Series Fund, Inc. on behalf of its series, Oppenheimer
LifeSpan Growth Fund and its series, Oppenheimer Disciplined Value Fund
("Disciplined Value Fund"). This Proxy Statement also constitutes a Prospectus
of Disciplined Value Fund included in a Registration Statement on Form N-14
filed by Disciplined Value Fund with the Securities and Exchange Commission (the
"SEC"). Such Registration Statement relates to the registration of shares of
Disciplined Value Fund to be offered to the shareholders of LifeSpan Growth Fund
pursuant to the Reorganization Agreement. LifeSpan Growth Fund is located at Two
World Trade Center, New York, NY 10048-0203 (telephone 1-800- 525-7048).
This Proxy Statement and Prospectus sets forth information about Disciplined
Value Fund and the Reorganization that shareholders of LifeSpan Growth Fund
should know before voting on the Reorganization. A copy of the Prospectus for
Disciplined Value Fund, dated February 19, 1998, is enclosed, and incorporated
herein by reference. The following documents have been filed with the SEC and
are available without charge upon written request to OppenheimerFunds Services,
the transfer and shareholder servicing agent for Disciplined Value Fund and
LifeSpan Growth Fund, at P.O. Box 5270, Denver, Colorado 80217, or by calling
the toll-free number shown above: (i) a Prospectus for LifeSpan Growth Fund,
dated February 19, 1998, as supplemented February 24, 1998, (ii) a Statement of
Additional Information about LifeSpan Growth Fund, dated February 19, 1998 and
(iii) a Statement of Additional Information about Disciplined Value Fund, dated
February 19, 1998 (the "Disciplined Value Fund Additional Statement"). The
Disciplined Value Fund Additional Statement, which is incorporated herein by
reference, contains more detailed information about Disciplined Value Fund and
its management. A Statement of Additional Information relating to the
Reorganization, dated April 6, 1998, has been filed with the SEC as part of the
Disciplined Value Fund Registration Statement on Form N-14 and is incorporated
herein by reference, and is available by written request to OppenheimerFunds
Services at the same address listed above or by calling the toll-free number
shown above.
INVESTORS ARE ADVISED TO READ AND RETAIN THIS PROXY STATEMENT AND PROSPECTUS FOR
FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated April 6, 1998.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
PAGE
INTRODUCTION.............................................................
General..............................................................1
Record Date; Vote Required; Share Information........................2
Proxies..............................................................3
Costs of the Solicitation and the Reorganization.....................4
COMPARATIVE FEE TABLE...................................................5
SYNOPSIS................................................................8
Parties to the Reorganization........................................9
Shares to be Issued..................................................9
The Reorganization .............................................9
Reasons for the Reorganization......................................10
Tax Consequences of the Reorganization..............................10
Investment Objectives and Policies..................................11
Investment Advisory and Distribution and Service Plan Fees............
Purchases, Exchanges and Redemptions................................12
PRINCIPAL RISK FACTORS.................................................13
APPROVAL OF THE REORGANIZATION (THE PROPOSAL)..........................16
Reasons for the Reorganization......................................16
The Reorganization..................................................18
Tax Aspects of the Reorganization...................................19
Capitalization Table (Unaudited)....................................21
COMPARISON BETWEEN LIFESPAN GROWTH FUND AND OPPENHEIMER DISCIPLINED
VALUE FUND
Investment Objectives and Policies..................................22
Permitted Investments by Oppenheimer LifeSpan Growth Fund and
Oppenheimer Disciplined Value Fund................................24
Investment Restrictions.............................................33
Description of Brokerage Practices..................................37
Expense Ratios and Performance......................................39
Shareholder Services................................................39
Rights of Shareholders..............................................40
Management and Distribution Arrangements............................42
Purchase of Additional Shares.......................................44
METHOD OF CARRYING OUT THE REORGANIZATION .............................45
ADDITIONAL INFORMATION.................................................47
Financial Information...............................................47
Public Information..................................................47
OTHER BUSINESS.........................................................48
EXHIBIT A - Agreement and Plan of Reorganization by and between
Oppenheimer LifeSpan Growth Fund and
Oppenheimer Disciplined Value Fund....................................... A-1
EXHIBIT B - Average Annual Total Returns for the Periods
Ended 12/31/97........................................................... B-1
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
TWO WORLD TRADE CENTER, NEW YORK, NY 10048-0203
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 9, 1998
INTRODUCTION
GENERAL
This Proxy Statement and Prospectus is being furnished to the shareholders of
Oppenheimer LifeSpan Growth Fund ("LifeSpan Growth Fund"), a series of
Oppenheimer Series Fund, Inc. (the "Company"), a registered management
investment company, in connection with the solicitation by the Board of
Directors (the "Board") of proxies to be used at the Special Meeting of
Shareholders of LifeSpan Growth Fund to be held at 6803 SOUTH TUCSON WAY,
ENGLEWOOD, COLORADO 80112, at 10:00 A.M., Denver time, on June 9, 1998, or any
adjournments thereof (the "Meeting"). It is expected that the mailing of this
Proxy Statement and Prospectus will commence on or about April 14, 1998.
At the Meeting, shareholders of LifeSpan Growth Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Reorganization Agreement") between
the Company on behalf of LifeSpan Growth Fund and the Company on behalf of
Oppenheimer Disciplined Value Fund ("Disciplined Value Fund"), and the
transactions contemplated thereby, including (a) the transfer of substantially
all the assets of LifeSpan Growth Fund in exchange for Class A, Class B and
Class C shares of Disciplined Value Fund, (b) the distribution of such shares to
the corresponding Class A, Class B and Class C shareholders of LifeSpan Growth
Fund in complete liquidation of LifeSpan Growth Fund, and (c) the cancellation
of the outstanding shares of LifeSpan Growth Fund (the "Reorganization").
Disciplined Value Fund currently offers Class A shares with a sales charge
imposed at the time of purchase. There is no initial sales charge on purchases
of Class B or Class C shares; however, a contingent deferred sales charge may be
imposed, depending on when the shares are sold. The Class A, Class B and Class C
shares issued pursuant to the Reorganization will be issued at net asset value
without a sales charge and no contingent deferred sales charge will be imposed
on any LifeSpan Growth Fund shares exchanged in the Reorganization. However, any
contingent deferred sales charge which applies to LifeSpan Growth Fund shares
will continue to apply to Disciplined Value Fund shares received in the
Reorganization. Additional information with respect to these charges by
Disciplined Value Fund is set forth herein, in the
-1-
<PAGE>
Prospectus of Disciplined Value Fund accompanying this Proxy Statement and
Prospectus and in the Disciplined Value Fund Statement of Additional Information
("Disciplined Value Fund Additional Statement"), both of which are incorporated
herein by reference.
RECORD DATE; VOTE REQUIRED; SHARE INFORMATION
The Board of Directors of the Company has fixed the close of business on March
17, 1998 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of, and to vote at, the Meeting. An affirmative
vote of the holders of a "majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act") of all of the Class A, Class B and Class C shares in the aggregate
of LifeSpan Growth Fund is required to approve the Reorganization. That level of
vote is defined in the Investment Company Act of 1940 as the vote of the holders
of the lesser of: (i) 67% or more of the voting securities present or
represented by proxy at the shareholders meeting, if the holders of more than
50% of the outstanding voting securities are present or represented by proxy, or
(ii) more than 50% of the outstanding voting securities. Each shareholder will
be entitled to one vote for each share and a fractional vote for each fractional
share held of record at the close of business on the Record Date. Only
shareholders of LifeSpan Growth Fund will vote on the Reorganization. The vote
of shareholders of Disciplined Value Fund is not being solicited.
At the close of business on the Record Date, there were approximately
4,746,503.554 shares of LifeSpan Growth Fund issued and outstanding, consisting
of 4,154,307.592 Class A shares, 476,740.532 Class B shares and 115,455.430
Class C shares. At the close of business on the Record Date, there were
29,554,045.391 shares of Disciplined Value Fund issued and outstanding,
consisting of 19,225,376.265 Class A shares, 4,703,433.160 Class B shares,
671,323.753 Class C shares and 4,953,912.213 Class Y shares. The presence in
person or by proxy of the holders of a majority of the shares of all classes
constitutes a quorum for the transaction of business at the Meeting. To the
knowledge of LifeSpan Growth Fund, as of the Record Date, no person owned of
record or beneficially owned 5% or more of its outstanding shares except for MML
Securities Corporation, 1414 Main Street, Springfield, MA 01144, which owned of
record 2,986,502.938 Class A shares of LifeSpan Growth Fund as of such date
(which represented 71.88% of the outstanding Class A shares of LifeSpan Growth
Fund); Frank Casey TR, U/A May 11, 1988, Frank R. Casey Trust, 1866 W. Tweed
Road, Iverness, IL 60067-4251, which of record owned 35,013.975 Class B shares
of LifeSpan Growth Fund (7.34% of the outstanding Class B shares of LifeSpan
Growth Fund as of such date) and Merrill Lynch Pierce Fenner & Smith Inc.
("Merrill Lynch"), 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL
32246-6484, which of record
-2-
<PAGE>
owned 24,459.237 Class C shares of LifeSpan Growth Fund (21.18% of the
outstanding Class C shares of LifeSpan Growth Fund as of such date) and
Donaldson Lufkin Jenrette Securities Corporation, Inc., P.O. Box 2052, Jersey
City, NJ 07303-9998, which of record owned 8,137.010 Class C shares of LifeSpan
Growth Fund (7.14% of the outstanding Class C shares of LifeSpan Growth Fund as
of such date).] The Manager has been advised that such shares were held by
Merrill Lynch for the benefit of their respective customers. As of the Record
Date, to the knowledge of Disciplined Value Fund, no person owned of record or
beneficially owned 5% or more of its outstanding shares except for MML
Securities Corporation, 1414 Main Street, Springfield, MA 01144-1008, which
owned of record 2,021,084.058 Class A shares of Disciplined Value Fund as of
such date (10.51% of the outstanding Class A shares of Disciplined Value Fund as
of such date) and MassMutual Life Insurance Company which owned of record
1,311,665.574 Class A shares of Disciplined Value Fund as of such date (6.82% of
the outstanding Class A shares of Disciplined Value Fund as of such date) and
Merrill Lynch, Pierce, Fenner & Smith For the Benefit of its Customers, 4800
Deer Lake Drive E. Fl 3, Jacksonville, FL 32246-6484, which owned of record
41,721.432 Class C shares of Disciplined Value Fund as of such date (6.21% of
the outstanding Class C shares of Disciplined Value Fund as of such date). In
addition, as of the record date, the Directors and officers of LifeSpan Growth
Fund and Disciplined Value Fund owned less than 1% of the outstanding shares of
either LifeSpan Growth Fund or Disciplined Value Fund, respectively.
Massachusetts Mutual Life Insurance Company, the majority shareholder of the
Fund, intends to vote its shares in favor of the Reorganization.
PROXIES
The enclosed form of proxy, if properly executed and returned, will be voted (or
counted as an abstention or withheld from voting) in accordance with the choices
specified thereon, and will be included in determining whether there is quorum
to conduct the Meeting. The proxy will be voted in favor of the Proposal unless
a choice is indicated to vote against or to abstain from voting on the Proposal.
Shares owned of record by broker-dealers for the benefit of their customers
("street account shares") will be voted by the broker-dealer based on
instructions received from its customers. If no instructions are received, the
broker-dealer may (if permitted under applicable stock exchange rules), as
record holder, vote such shares on the Proposal in the same proportion as that
broker-dealer votes street account shares for which voting instructions were
received in time to be voted. Broker "non-votes" exist where a proxy received
from a broker indicates that the broker does not have discretionary authority to
vote the shares on the matter.
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<PAGE>
Shares represented in person or by proxy (including shares which abstain or do
not vote on the Proposal, including broker "non- votes") will be counted for
purposes of determining the number of shares that are present and are entitled
to vote on the Proposal, but will not be counted as a vote in favor of such
Proposal. Accordingly, an abstention from voting on the Proposal or a broker
"non-vote" will have the same legal effect as a vote against the Proposal. If a
shareholder executes and returns a proxy but fails to indicate how the votes
should be cast, the proxy will be voted in favor of the Proposal. The proxy may
be revoked at any time prior to the voting thereof by: (i) writing to the
Secretary of LifeSpan Growth Fund at Two World Trade Center, New York, NY 10048-
0203 (if received in time to be acted upon); (ii) attending the Meeting and
voting in person; or (iii) signing and returning a new proxy (if returned and
received in time to be voted).
If at the time any session of the Meeting is called to order a quorum is not
present, in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of the Proposal
have not been received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. All such
adjournments will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Meeting to be adjourned. The
persons named as proxies will vote those proxies which they are entitled to vote
in favor of the Proposal, in favor of such an adjournment, and will vote those
proxies required to be voted against the Proposal, against any such adjournment.
A vote may be taken on the Proposal in this proxy statement prior to any such
adjournment if sufficient votes for its approval have been received and it is
otherwise appropriate. Any adjourned session or sessions may be held within 90
days after the date set for the original Meeting without the necessity of
further notice.
COSTS OF THE SOLICITATION AND THE REORGANIZATION
All expenses of this solicitation, including the cost of printing and mailing
this Proxy Statement and Prospectus, will be borne by LifeSpan Growth Fund. Any
documents such as existing prospectuses or annual reports that are included in
that mailing will be a cost of the fund issuing the document. In addition to the
solicitation of proxies by mail, proxies may be solicited by officers of
LifeSpan Growth Fund or officers and employees of OppenheimerFunds Services,
personally or by telephone or telegraph; any expenses so incurred will be borne
by OppenheimerFunds Services. Proxies may also be solicited by a proxy
solicitation firm hired at LifeSpan Growth Fund's expense for such purpose.
Brokerage houses, banks and other fiduciaries may be requested to forward
soliciting material to the beneficial owners of shares of LifeSpan Growth Fund
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and to obtain authorization for the execution of proxies. For those services, if
any, they will be reimbursed by LifeSpan Growth Fund for their reasonable
out-of-pocket expenses.
With respect to the Reorganization, LifeSpan Growth Fund and Disciplined Value
Fund will bear the cost of their respective tax opinions. Any other
out-of-pocket expenses of LifeSpan Growth Fund and Disciplined Value Fund
associated with the Reorganization, including legal, accounting and transfer
agent expenses, will be borne by LifeSpan Growth Fund and Disciplined Value
Fund, respectively, in the amounts so incurred by each.
COMPARATIVE FEE TABLE
LifeSpan Growth Fund and Disciplined Value Fund each pay a variety of expenses
for management of their assets, administration, distribution of their shares and
other services, and those expenses are reflected in each fund's net asset value
per share. Shareholders pay other expenses directly, such as sales charges. The
following table is provided to help you compare the direct expenses of investing
in each class of LifeSpan Growth Fund with the direct expenses of investing in
each class of Disciplined Value Fund and the pro forma expenses of the surviving
fund after giving effect to the reorganization.
LIFESPAN GROWTH FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION EXPENSES
- -----------------------------------------------------------------------------
Maximum Sales Charge 5.75% None None
on Purchases (as a %
of offering price)
- -----------------------------------------------------------------------------
Maximum
Deferred Sales None(1) 5% in the(2) 1% if(2)
Charge (as a % first year shares
of the lower declining are
of the original to 1% in redeemed
purchase price the sixth within 12
or redemption year and months of
proceeds) eliminated purchase
thereafter
- -----------------------------------------------------------------------------
Maximum
Sales Charge on None None None
Reinvested Dividends
- -----------------------------------------------------------------------------
Exchange Fee None None None
- -----------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
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DISCIPLINED VALUE FUND AND DISCIPLINED VALUE FUND AS SURVIVING FUND
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION EXPENSES
- ----------------------------------------------------------------------------
Maximum Sales Charge 5.75% None None
on Purchases (as a %
of offering price)
- ----------------------------------------------------------------------------
Maximum
Deferred Sales None(1) 5% in the(2) 1% if(2)
Charge (as a % first year shares
of the lower declining are
of the original to 1% in redeemed
purchase price the sixth within 12
or redemption year and months of
proceeds) eliminated purchase
thereafter
- ----------------------------------------------------------------------------
Maximum
Sales Charge on None None None
Reinvested Dividends
- ----------------------------------------------------------------------------
Exchange Fee None None None
- ----------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
(1) If you invest more than $1 million ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" in
each fund's Prospectus) in Class A shares, you may have to pay a sales charge of
up to 1% if you sell your shares within 12 calendar months (18 months for shares
purchased prior to May 1, 1997) from the end of the calendar month during which
you purchased those shares.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares -
Buying Class C Shares" in each Fund's Prospectus.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire, but not for redemptions paid by check or ACH wire transfer through
AccountLink.
ANNUAL FUND OPERATING EXPENSES. The following tables are the operating expenses
of Class A, Class B and Class C shares of LifeSpan Growth Fund and the operating
expenses of Class A, Class B, Class C and Class Y shares of Disciplined Value
Fund. These tables are based on expenses for the twelve month period ended
October 31, 1997. The pro forma information is an estimate of the business
expenses of the surviving Disciplined Value Fund after giving effect to the
reorganization. All amounts shown are a percentage of net assets of each class
of each of the funds.
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<PAGE>
<TABLE>
<CAPTION>
LIFESPAN GROWTH FUND DISCIPLINED VALUE FUND
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS Y
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.85% 0.85% 0.85% 0.58% 0.58% 0.58% 0.58%
12b-1 Plan Fees 0.25% 1.00% 1.00% 0.25% 0.99% 0.99% 0.00%
Other Expenses 0.40% 0.42% 0.44% 0.24% 0.27% 0.29% 0.20%
Total Fund Operating
Expenses 1.50% 2.27% 2.29% 1.07% 1.84% 1.86% 0.78%
</TABLE>
PRO FORMA SURVIVING DISCIPLINED VALUE FUND
CLASS A CLASS B CLASS C CLASS Y
Management Fees 0.57% 0.57% 0.57% 0.57%
12b-1 Plan Fees 0.25% 0.99% 0.99% 0.00%
Other Expenses 0.24% 0.28% 0.29% 0.18%
Total Fund Operating
Expenses 1.06% 1.84% 1.85% 0.75%
The 12b-1 fees for Class A shares of LifeSpan Growth Fund and Disciplined Value
Fund are service plan fees. The service plan fees are a maximum of 0.25% of
average annual net assets of Class A shares of each fund. The 12b-1 fees for
Class B and Class C shares of each of the funds are Distribution and Service
Plan fees which include a service fee of 0.25% and an asset-based sales charge
of 0.75%.
EXAMPLES
To try and show the effect of the expenses on an investment over time, the
hypothetical examples shown below have been created. Assume that you make a
$1,000 investment in Class A, Class B and Class C shares of LifeSpan Growth
Fund, or Class A, Class B, Class C and Class Y shares of Disciplined Value Fund,
or Class A, Class B, Class C and Class Y of the pro forma surviving Disciplined
Value Fund and that the annual return is 5% and that the operating expenses for
each fund are the ones shown in the chart 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.
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
Oppenheimer LifeSpan Growth Fund
Class A Shares $72 $102 $135 $226
Class B Shares $73 $101 $142 $223
Class C Shares $33 $ 72 $123 $263
Oppenheimer Disciplined Value Fund
Class A Shares $68 $90 $113 $181
Class B Shares $69 $88 $120 $177
Class C Shares $29 $58 $101 $218
Class Y Shares $ 8 $25 $ 43 $ 97
Pro Forma Surviving
Oppenheimer Disciplined Value Fund
Class A Shares $68 $89 $113 $179
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Class B Shares $69 $88 $120 $177
Class C Shares $29 $58 $100 $217
Class Y Shares $ 8 $24 $ 42 $ 93
If you did not redeem your investment, it would incur the following expenses:
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
Oppenheimer LifeSpan Growth Fund
Class A Shares $72 $102 $135 $226
Class B Shares $23 $ 71 $122 $223
Class C Shares $23 $ 72 $123 $263
Oppenheimer Disciplined Value Fund
Class A Shares $68 $90 $113 $181
Class B Shares $19 $58 $100 $177
Class C Shares $19 $58 $101 $218
Class Y Shares $ 8 $25 $ 43 $ 97
Pro Forma Surviving
Oppenheimer Disciplined Value Fund
Class A Shares $68 $89 $113 $179
Class B Shares $19 $58 $100 $177
Class C Shares $19 $58 $100 $217
Class Y Shares $ 8 $24 $ 42 $ 93
* In the first example, expenses include the Class A initial sales charge and
the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales charges. The Class
B expenses in years 7 through 10 are based on the Class A expenses shown above,
because each of the funds automatically converts your Class B shares into Class
A shares after 6 years. Long term Class B and C shareholders could pay the
economic equivalent of more than the maximum front-end sales charge allowed
under applicable regulations, because of the effect of the asset-based sales
charge and contingent deferred sales charge. The automatic conversion of Class B
shares to Class A Shares is designed to minimize the likelihood that this will
occur.
The 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,
all of which may be more or less than the amounts shown.
SYNOPSIS
The following is a synopsis of certain information contained in or incorporated
by reference in this Proxy Statement and Prospectus and presents key
considerations for shareholders of LifeSpan Growth Fund to assist them in
determining whether to approve the
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<PAGE>
Reorganization. This synopsis is only a summary and is qualified in its entirety
by the more detailed information contained in or incorporated by reference in
this Proxy Statement and Prospectus and by the Reorganization Agreement, a copy
of which is attached as Exhibit A hereto. Shareholders should carefully review
this Proxy Statement and Prospectus and the Reorganization Agreement in their
entirety and, in particular, the current Prospectus of Disciplined Value Fund
which accompanies this Proxy Statement and Prospectus and is incorporated herein
by reference.
PARTIES TO THE REORGANIZATION
LifeSpan Growth Fund and Disciplined Value Fund (collectively referred to herein
as the "funds") are diversified series of Oppenheimer Series Fund, Inc. (the
"Company") which was organized in 1981 as a Maryland corporation and is an
open-end management investment company. Organized as a series fund, Oppenheimer
Series Fund, Inc. presently has five series, including LifeSpan Growth Fund and
Disciplined Value Fund. Both LifeSpan Growth Fund and Disciplined Value Fund are
located at Two World Trade Center, New York, NY 10048-0203. The Company,
including the two Funds, is governed by Articles of Incorporation and By-Laws
and is managed under the direction of a Board of Directors. The Company is
governed by applicable Maryland law and applicable federal law.
OppenheimerFunds, Inc. (the "Manager") whose address is Two World Trade Center,
New York, New York 10048-0203, acts as investment advisor to LifeSpan Growth
Fund and Disciplined Value Fund. Additional information about the parties is set
forth below.
SHARES TO BE ISSUED. All shareholders of LifeSpan Growth Fund who own Class A
shares will receive Class A shares of Disciplined Value Fund in exchange for
their Class A shares of LifeSpan Growth Fund. Shareholders of LifeSpan Growth
Fund who own Class B shares will receive Class B shares of Disciplined Value
Fund in exchange for their Class B shares of LifeSpan Growth Fund. Shareholders
of LifeSpan Growth Fund who own Class C shares will receive Class C shares of
Disciplined Value Fund in exchange for their Class C shares of LifeSpan Growth
Fund. The voting rights of shares of each fund are substantially the same. See
Rights of Shareholders below for more information.
THE REORGANIZATION
The Reorganization Agreement provides for the transfer of substantially all the
assets of LifeSpan Growth Fund to Disciplined Value Fund in exchange for Class
A, Class B and Class C shares of Disciplined Value Fund. The net asset value of
Disciplined Value Fund Class A, Class B and Class C shares issued in the
exchange will equal the value of the assets of LifeSpan Growth Fund received by
Disciplined Value Fund. In conjunction with the Closing of the Reorganization,
presently scheduled for June 12, 1998, LifeSpan
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<PAGE>
Growth Fund will distribute the Class A, Class B and Class C shares of
Disciplined Value Fund received by LifeSpan Growth Fund on the Closing Date to
holders of Class A, Class B and Class C shares of LifeSpan Growth Fund,
respectively. As a result of the Reorganization, each Class A, Class B and Class
C LifeSpan Growth Fund shareholder will receive the number of full and
fractional Disciplined Value Fund Class A, Class B and Class C shares that
equals in value such shareholder's pro rata interest in the assets transferred
to Disciplined Value Fund as of the Valuation Date. The Board has determined
that the interests of existing LifeSpan Growth Fund shareholders will not be
diluted as a result of the Reorganization. For the reasons set forth below under
"The Reorganization - Reasons for the Reorganization," the Board, including the
directors who are not "interested persons" of Oppenheimer Series Fund, Inc., as
that term is defined in the Investment Company Act, (the "Independent
Directors"), has concluded that the Reorganization is in the best interests of
LifeSpan Growth Fund and its shareholders and recommends approval of the
Reorganization by LifeSpan Growth Fund shareholders. If the Reorganization is
not approved, LifeSpan Growth Fund will continue in existence and the Board will
determine whether to pursue alternative actions.
REASONS FOR THE REORGANIZATION
The Manager proposed to the Board a reorganization of LifeSpan Growth Fund into
Disciplined Value Fund so that shareholders of LifeSpan Growth Fund may become
shareholders of a larger but similar fund, which after such reorganization is
anticipated to have lower expenses. The Board considered pro forma information
which indicated the expense ratio of a combined fund would be lower than that of
LifeSpan Growth Fund, as shown above under "Comparative Fee Table." In addition,
the Board also considered information with respect to the historical performance
of LifeSpan Growth Fund (since its inception in May, 1995) and Disciplined Value
Fund (for the ten year period ending October 31, 1997). For the one year period
ended October 31, 1997, the average annual returns for all classes were higher
for Disciplined Value Fund than for LifeSpan Growth Fund.
The Board also considered that the Reorganization would be a tax free
reorganization, and there would be no sales charge imposed in effecting the
Reorganization. The Board concluded that the Reorganization would not result in
dilution to shareholders of LifeSpan Growth Fund.
TAX CONSEQUENCES OF THE REORGANIZATION
In the opinion of KPMG Peat Marwick LLP, tax adviser to LifeSpan Growth Fund,
the Reorganization will qualify as a tax-free reorganization for Federal income
tax purposes. As a result, it is
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<PAGE>
expected that no gain or loss will be recognized by either fund, or by the
shareholders of either fund for Federal income tax purposes as a result of the
Reorganization. For further information about the tax consequences of the
Reorganization, see "Approval of the Reorganization - Tax Aspects" below.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Funds are substantially the same. Each Fund
seeks long-term capital appreciation. LifeSpan Growth Fund is an asset
allocation fund, investing its assets among two broad classes of investments,
stocks and bonds. Disciplined Value Fund will invest primarily in stocks under
normal market conditions, using a quantitative value oriented investment
discipline in combination with fundamental securities analysis. The investment
policies of each Fund are substantially similar. The only major differences are
that LifeSpan Growth Fund may lend its portfolio securities for the purpose of
increasing income or raising cash for liquidity purposes. LifeSpan Growth Fund
may invest up to 20% of its assets in debt securities, whereas Disciplined Value
Fund may invest up to 10% of its assets in debt securities. Disciplined Value
Fund may not purchase securities rated below B by Moody's or Standard & Poor's,
whereas LifeSpan Growth Fund may invest in securities rated as low as C by
Moody's or D by Standard & Poor's, and LifeSpan Growth Fund may invest in
emerging market countries, CMOs and REMICs, stripped securities, asset-backed
securities, structured notes, inverse floating rate instruments and small,
unseasoned companies.
INVESTMENT ADVISORY AND DISTRIBUTION AND SERVICE PLAN FEES
INVESTMENT ADVISORY FEES. The terms and conditions of the investment advisory
agreement of each Fund are similar. Both funds obtain investment management
services from the Manager. The management fee is computed on the net asset value
of each fund as of the close of business each day and payable monthly at the
following annual rates: LifeSpan Growth Fund pays 0.85% of the average annual
net assets up to $250 million and 0.75% of average annual net assets in excess
of $250 million. Disciplined Value Fund pays 0.625% of the first $300 million of
average annual net assets, 0.50% of the next $100 million of average annual net
assets and 0.45% of average annual net assets in excess of $400 million. For
LifeSpan Growth Fund, the Manager employs Sub-Advisers, Babson- Stewart, BEA
Associates ("BEA") and Pilgrim Baxter & Associates, Ltd. ("Pilgrim-Baxter").
Under its Investment Subadvisory Agreements with Babson-Stewart the Manager pays
Babson-Stewart a monthly fee, at the following annual rates, which decline as
the average annual net assets of that portion of the respective Fund's component
allocated to Babson-Stewart grow: 0.75% of the first $10 million of average
daily net assets allocated to Babson-Stewart,
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<PAGE>
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. Under its Investment Subadvisory Agreements
with BEA, the Manager pays BEA a quarterly fee at the following annual rates,
which decline as the combined average daily net assets of the 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 assets in excess of $100 million. Under its Investment
Subadvisory Agreements with Pilgrim Baxter, the Manager pays Pilgrim Baxter a
monthly fee equal to 0.60% of the combined average daily net assets of the Fund
allocated to Pilgrim Baxter.
DISTRIBUTION AND SERVICE FEES. LifeSpan Growth Fund and Disciplined Value Fund
have both adopted Service Plans for their respective Class A shares. Both
Service Plans provide for reimbursement to the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Under each plan, payment is made at an annual
rate that may not exceed 0.25% of the average annual net assets of Class A
shares of each of the funds.
LifeSpan Growth Fund and Disciplined Value Fund have adopted Distribution and
Service Plans (the "Plans") for Class B and Class C shares under which each fund
pays the Distributor for its services in connection with distributing Class B
and Class C shares and servicing accounts. Under each Plan, the funds pay the
Distributor an asset-based sales charge of 0.75% per annum of Class B shares
outstanding for six years or less and on Class C shares. The funds also pay the
Distributor a service fee of 0.25% per annum, each of which is computed on the
average annual net assets of Class B and Class C shares determined as of the
close of each regular business day of each fund. The Distribution and Service
Plans for Class B and Class C shares of LifeSpan Growth Fund and Class B and
Class C shares of Disciplined Value Fund are compensation plans whereby payments
by the funds are made at a fixed rate as specified above and the funds' payments
are not limited to reimbursing the Distributor's costs. The terms of the
respective Plans for each Fund are substantially the same.
PURCHASES, EXCHANGES AND REDEMPTIONS
Both LifeSpan Growth Fund and Disciplined Value Fund are part of the
OppenheimerFunds complex of mutual funds. The procedures for purchases,
exchanges and redemptions of shares of the funds are substantially the same.
Shares of either fund may be exchanged for shares of the same class of other
Oppenheimer funds offering such shares.
Both LifeSpan Growth Fund and Disciplined Value Fund have a maximum initial
sales charge of 5.75% on Class A shares. Investors who purchase more than $1
million ($500,000 or more for purchases by "Retirement Plans" as defined in
"Class A Contingent Deferred Sales Charge" in each fund's Prospectus) in Class A
shares pay no initial
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sales charge but may have to pay a sales charge of up to 1% if shares are sold
within 12 calendar months (18 months for shares purchased prior to May 1, 1997)
from the end of the calendar month during which shares are purchased. Each of
the funds has a contingent deferred sales charge imposed on the proceeds of
Class B shares redeemed within six years of buying them. The contingent deferred
sales charge ("CDSC") varies depending on how long you hold your shares. Each of
the funds has a contingent deferred sales charge of 1% imposed on the proceeds
of Class C shares if redeemed within twelve months of their purchase. Class A,
Class B and Class C shares of Disciplined Value Fund received in the
Reorganization will be issued at net asset value, without a sales charge and no
CDSC will be imposed on any LifeSpan Growth Fund shares exchanged for
Disciplined Value Fund shares as a result of the Reorganization. However, any
CDSC which applies to LifeSpan Growth Fund shares will continue to apply to
Disciplined Value Fund shares received in the Reorganization. Services available
to shareholders of both funds include purchase and redemption of shares through
OppenheimerFunds AccountLink and PhoneLink (an automated telephone system),
telephone redemptions, and exchanges by telephone to other Oppenheimer funds
which offer Class A, Class B and Class C shares, and reinvestment privileges.
Please see "Shareholder Services," below and each fund's Prospectus for further
information.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in Disciplined
Value Fund, shareholders should carefully consider the following risk factors,
the information set forth in this Proxy Statement and Prospectus and the more
complete description of risk factors set forth in the documents incorporated by
reference herein, including the Prospectuses of the funds and their respective
Statements of Additional Information.
STOCK INVESTMENT RISKS. All investments carry risks to some degree, whether they
are risks that market prices of the investment will fluctuate (this is known as
"market risk") or that the underlying issuer will experience financial
difficulties and may default on its obligation under a fixed-income investment
to pay interest and repay principal (this is referred to as "credit risk").
These general investment risks affect the value of both funds' investments,
their investment performance, and the prices of their shares. Because both funds
usually invest a substantial portion of their assets in stocks, the value of
each fund's portfolio will be affected by changes in the stock markets. This
market risk will affect each 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, and other factors can affect a
particular stock's price (for example, poor earnings reports by an issuer, loss
of major customers, major
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litigation against an issuer, or changes in government regulations affecting an
industry). Not all of these factors can be predicted. Changes in the overall
market conditions and prices can occur at any time. Because of the types of
companies each fund invests in and the investment techniques used, some of which
may be speculative, both funds are designed for those investors who are
investing for the long-term and who are willing to accept greater risks of loss
of their capital in the hope of achieving capital appreciation. Investing for
capital appreciation entails the risk of loss of all or part of your principal.
INTEREST RATE RISKS. 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. Each 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. Like LifeSpan Growth Fund,
Disciplined Value Fund has the ability to invest up to 10% of it assets in
high-yield securities however, as of its fiscal year ended October 31, 1997,
Disciplined Value Fund held [no] high-yield securities. If Disciplined Value
Fund were to invest in high-yield securities, those securities may be subject to
greater market fluctuation and risk of loss of income and principal than lower
yielding, investment grade securities. There are additional risks of investing
in lower grade securities that are described in the prospectus for Disciplined
Value Fund.
FOREIGN SECURITIES RISKS. There are risks of foreign investing that increase the
risk of investing in both LifeSpan Growth Fund and in Disciplined Value Fund and
also increase the operating costs of both funds. For example, foreign issuers
are not required to use generally-accepted accounting principles. 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 of U.S.
laws, which are generally more stringent than foreign laws. The values of
foreign securities investments will be affected by other factors, including
exchange control regulations or currency blockage and possible expropriation or
nationalization of assets. There are risks of changes in foreign currency
values. Because LifeSpan Growth Fund and Disciplined Value Fund may purchase
securities denominated in foreign currencies, a change in value of a foreign
currency against the U.S. dollar will result in a change in the U.S. dollar
value of securities of that Fund denominated in that currency. There may also be
changes in governmental administration or economic or monetary policy in the
U.S. or abroad that can affect foreign investing. In addition, it is generally
more difficult to obtain
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court judgments outside the United States if that Fund has to sue a foreign
broker or issuer. Additional costs may be incurred because foreign broker
commissions are generally higher than U.S. rates, and there are additional
custodial costs associated with holding securities abroad. If assets of LifeSpan
Growth Fund or Disciplined Value Fund are held abroad, the countries in which
they are held and the sub-custodians holding them must be approved by the Fund's
Board of Directors if such approval is required under SEC regulations. More
information about the risks and potential rewards of investing in foreign
securities is contained in the Statement of Additional Information of both
funds.
DERIVATIVE INVESTMENTS RISKS. Both funds may 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. The company issuing the instrument may fail to
pay the amount due on the maturity of the instrument. Also, the underlying
investment or security on which the derivative is based, and the derivative
itself, may not perform the way the Manager expected it to perform. The
performance of derivative investments may also be influenced by stock market and
interest rate changes in the U.S. and abroad. All of this can mean that the fund
may realize less principal or income from the investment than expected. Certain
derivative investments held by the funds may trade in the over-the counter
market and may be illiquid.
HEDGING INSTRUMENTS RISKS. Each fund may use certain hedging instruments. The
use of hedging instruments requires special skills and knowledge of investment
techniques that are different than 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.
Losses could also be experienced 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 has special tax effects on
the funds. There are also special risks in particular hedging strategies. If a
covered call written by the fund is exercised on a security that has increased
in value, the fund will be required to sell the security at the call price and
will not be able to realize any profit if the security 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. To limit its exposure in foreign currency exchange
contracts, each Fund limits its exposure to the amount of its assets denominated
in foreign currency. Interest rate swaps are subject to 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
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be obligated to pay more under its swap agreements than it received under them,
as a result of interest rate changes.
LOWER-GRADE SECURITIES RISKS. The Funds can invest in high-yield, below
investment grade debt securities (including both rated and unrated securities).
These "lower-grade" securities are commonly known as "junk bonds". 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 and principal due on the bonds. The issuer's low
creditworthiness may increase the potential for its insolvency. During an
economic downturn, lower-grade securities might decline in value more than
investment grade securities. For foreign lower-grade debt securities, these
risks are in addition to the risks of investing in foreign securities, described
above. 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.
EMERGING MARKETS RISKS. 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, and a
Fund might not receive principal and/or income on a timely basis. 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.
APPROVAL OF THE REORGANIZATION
(THE PROPOSAL)
REASONS FOR THE REORGANIZATION
At a meeting of the Board of Directors of Oppenheimer Series Fund, Inc. (the
"Board") held December 11, 1997, the Directors reviewed and discussed materials
relevant to the proposed Reorganization. The Board, including the Independent
Directors, unanimously
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approved the Reorganization and recommended to shareholders of LifeSpan Growth
Fund that they approve the Reorganization. Both funds offer Class A, Class B and
Class C shares and the terms and conditions of their offer, sale, redemption and
exchange, distribution arrangements, expenses borne separately by each class and
other related matters are essentially the same. The Board considered that this
will facilitate an exchange. In the reorganization, Class A, Class B and Class C
shareholders of LifeSpan Growth Fund will receive Class A, Class B and Class C
shares, respectively, of Disciplined Value Fund.
In considering the proposed Reorganization, the Board reviewed information which
demonstrated that LifeSpan Growth Fund is a much smaller fund, with $59.9
million in net assets as of October 31, 1997. In comparison, Disciplined Value
Fund had $556.3 million of net assets as of October 31, 1997. It is not
anticipated that LifeSpan Growth Fund will increase substantially in size in the
near future. After the reorganization, the shareholders of LifeSpan Growth Fund
will be shareholders of a larger fund and will likely incur lower operating,
transfer agency and other expenses. Thus economies of scale may benefit
shareholders of LifeSpan Growth Fund.
Among several other factors, the Board focused on the investment objectives of
the two funds. Oppenheimer LifeSpan Growth Fund seeks long-term capital
appreciation. It invests in strategically allocated portfolio consisting
primarily of stocks. Current income is not a primary consideration. Disciplined
Value 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 for Disciplined Value
Fund. Both funds are expected to invest a substantial portion of their assets in
stocks. The investment techniques and strategies for the funds are similar with
respect to purchasing equity securities, debt securities, derivatives, hedging
instruments, illiquid securities, convertible securities, and warrants and
rights. The only major differences between the Funds regarding permitted
investments is LifeSpan Growth Fund has the ability to invest in mortgage-backed
securities, collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs") (including CMOs and REMICs that are
stripped); asset-backed securities; structural notes and inverse floating rate
instruments and small, unseasoned companies. LifeSpan Growth Fund may also lend
its portfolio securities for the purpose of increasing income or raising cash
for liquidity purposes. Accordingly, the Board determined that investment
objectives and techniques were comparable.
The Board, in reviewing financial information, considered the investment
advisory fee rate of both funds (also known as the "management fee rate").
LifeSpan Growth Fund's management fee for
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its fiscal year ended October 31, 1997 was 0.85% of average annual net assets
for Class A, Class B and Class C shares. The management fee rates of Disciplined
Value Fund are 0.625% of the first $300 million of average annual net assets;
0.50% of the next $100 million and 0.45% of average annual net assets in excess
of $400 million. Disciplined Value Fund's management fee for the fiscal year
ended October 31, 1997 was 0.58% of the average annual net assets for Class A,
Class B and Class C shares. The management fee rate for each Fund is discussed
under "Investment Advisory and Distribution and Service Plan Fees," above. If
the two funds were combined, shareholders of Disciplined Value Fund would have a
reduced management fee of approximately 0.57% for Class A, Class B and Class C
shares. The Board considered pro forma information which indicated that the
expense ratio of a combined fund would therefore be lower than that of LifeSpan
Growth Fund.
In addition to the above, the Board also considered information with respect to
the historical performance of LifeSpan Growth Fund and Disciplined Value Fund,
including the performance information contained in Exhibit B to this Proxy
Statement. During the time period that LifeSpan Growth Fund has been in
existence, its performance has been well below the performance of Disciplined
Value Fund.
The Board also considered that the Reorganization is expected to be a tax free
reorganization, and there would be no sales charge imposed in effecting the
Reorganization. The Board concluded that the Reorganization would not result in
a dilution of the interests of existing shareholders of LifeSpan Growth Fund.
THE REORGANIZATION
The Reorganization Agreement (a copy of which is set forth in full as Exhibit A
to this Proxy Statement and Prospectus) contemplates a reorganization under
which (i) all of the assets of LifeSpan Growth Fund (other than the cash reserve
described below (the "Cash Reserve") will be transferred to Disciplined Value
Fund in exchange for Class A, Class B and Class C shares of Disciplined Value
Fund, (ii) these shares will be distributed among the shareholders of LifeSpan
Growth Fund in complete liquidation of LifeSpan Growth Fund, (iii) the
outstanding shares of LifeSpan Growth Fund will be canceled. Disciplined Value
Fund will not assume any of LifeSpan Growth Fund's liabilities except for
portfolio securities purchased which have not settled and outstanding
shareholder redemption and dividend checks.
The result of effectuating the Reorganization would be that: (i) Disciplined
Value Fund will add to its gross assets all of the assets (net of any liability
for portfolio securities purchased but not settled and outstanding shareholder
redemption and dividend checks) of LifeSpan Growth Fund other than its Cash
Reserve; and
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(ii) the shareholders of LifeSpan Growth Fund as of the close of business on the
Closing Date will become shareholders of either Class A, Class B or Class C
shares of Disciplined Value Fund.
Shareholders of LifeSpan Growth Fund who vote their Class A, Class B and Class C
shares in favor of the Reorganization will be electing in effect to redeem their
shares of LifeSpan Growth Fund (at net asset value on the Valuation Date
referred to below under "Method of Carrying Out the Reorganization Plan,"
calculated after subtracting the Cash Reserve) and reinvest the proceeds in
Class A, Class B or Class C shares of Disciplined Value Fund at net asset value
without sales charge and without recognition of taxable gain or loss for Federal
income tax purposes (see "Tax Aspects of the Reorganization" below). The Cash
Reserve is that amount retained by LifeSpan Growth Fund which is deemed
sufficient in the discretion of the Board for the payment of: (a) LifeSpan
Growth Fund's expenses of liquidation, and (b) its liabilities, other than those
assumed by Disciplined Value Fund. LifeSpan Growth Fund and Disciplined Value
Fund will bear all of their respective expenses associated with the
Reorganization, as set forth under "Costs of the Solicitation and the
Reorganization" above. Management estimates that such expenses associated with
the Reorganization to be borne by LifeSpan Growth Fund will not exceed
$32,217.00. Liabilities as of the date of the transfer of assets will consist
primarily of accrued but unpaid normal operating expenses of LifeSpan Growth
Fund, excluding the cost of any portfolio securities purchased but not yet
settled and outstanding shareholder redemption and dividend checks. See "Method
of Carrying Out the Reorganization Plan" below.
The Reorganization Agreement provides for coordination between the funds as to
their respective portfolios so that, after the closing, Disciplined Value Fund
will be in compliance with all of its investment policies and restrictions. In
that regard, the Manager does not anticipate selling more than 50% of the
existing securities in the LifeSpan Growth Fund portfolio. LifeSpan Growth Fund
will recognize capital gain or loss on any sales made prior to the
Reorganization pursuant to this paragraph.
TAX ASPECTS OF THE REORGANIZATION
Immediately prior to the Valuation Date referred to in the Reorganization
Agreement, LifeSpan Growth Fund will pay a dividend or dividends which, together
with all previous dividends, will have the effect of distributing to LifeSpan
Growth Fund's shareholders all of LifeSpan Growth Fund's investment company
taxable income for taxable years ending on or prior to the Closing Date
(computed without regard to any deduction for dividends paid) and all of its net
capital gain, if any, realized in taxable years ending on or prior to the
Closing Date (after reduction for any available capital loss carry-forward).
Such dividends will be included in
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the taxable income of LifeSpan Growth Fund's shareholders as ordinary income and
capital gain, respectively.
The exchange of the assets of LifeSpan Growth Fund for Class A, Class B and
Class C shares of Disciplined Value Fund and the assumption by Disciplined Value
Fund of certain liabilities of LifeSpan Growth Fund is intended to qualify for
Federal income tax purposes as a tax-free reorganization under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"). LifeSpan Growth
Fund has represented to KPMG Peat Marwick LLP, tax adviser to LifeSpan Growth
Fund, that there is no plan or intention by any Fund shareholder who owns 5% or
more of LifeSpan Growth Fund's outstanding shares, and, to LifeSpan Growth
Fund's best knowledge, there is no plan or intention on the part of the
remaining LifeSpan Growth Fund shareholders, to redeem, sell, exchange or
otherwise dispose of a number of Disciplined Value Fund Class A, Class B or
Class C shares received in the transaction that would reduce LifeSpan Growth
Fund shareholders' ownership of Disciplined Value Fund shares to a number of
shares having a value, as of the Closing Date, of less than 50% of the value of
all the formerly outstanding LifeSpan Growth Fund shares as of the same date.
Disciplined Value Fund and LifeSpan Growth Fund have each represented to KPMG
Peat Marwick LLP, that, as of the Closing Date, it will qualify as a regulated
investment company or will meet the diversification test of Section
368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Disciplined Value Fund and
LifeSpan Growth Fund will receive the opinion of KPMG Peat Marwick LLP to the
effect that, based on the Reorganization Agreement, the above representations,
existing provisions of the Code, Treasury Regulations issued thereunder, current
Revenue Rulings, Revenue Procedures and court decisions, for Federal income tax
purposes:
1. The transactions contemplated by the Reorganization Agreement will qualify
as a tax-free "reorganization" within the meaning of Section 368(a)(1)(c)
of the Code.
2. LifeSpan Growth Fund and Disciplined Value Fund will each qualify as "a
party to a reorganization" within the meaning of Section 368(b) of the
Code.
3. No gain or loss will be recognized by the shareholders of LifeSpan Growth
Fund upon the distribution of Class A, Class B or Class C shares of
beneficial interest in Disciplined Value Fund to the shareholders of
LifeSpan Growth Fund pursuant to Section 354(a)(1) of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized by
LifeSpan Growth Fund by reason of the transfer of its assets solely in
exchange for Class A, Class B or Class C
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shares of Disciplined Value Fund.
5. Under Section 1032(a) of the Code no gain or loss will be recognized by
Disciplined Value Fund by reason of the transfer of LifeSpan Growth Fund's
assets solely in exchange for Class A, Class B or Class C shares of
Disciplined Value Fund.
6. The shareholders of LifeSpan Growth Fund will have the same tax basis and
holding period for the shares of beneficial interest in Disciplined Value
Fund that they receive as they had for LifeSpan Growth Fund stock that they
previously held, pursuant to Sections 358(a)(1) and 1223(1) of the Code,
respectively.
7. The securities transferred by LifeSpan Growth Fund to Disciplined Value
Fund will have the same tax basis and holding period in the hands of
Disciplined Value Fund as they had for LifeSpan Growth Fund, pursuant to
Sections 362(b) and 1223(2) of the Code, respectively.
Shareholders of LifeSpan Growth Fund should consult their tax advisors regarding
the effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion relates only to the Federal income
tax consequences of the Reorganization, shareholders of LifeSpan Growth Fund
should also consult their tax advisors as to state and local tax consequences,
if any, of the Reorganization.
CAPITALIZATION TABLE (UNAUDITED)
The table below sets forth the capitalization of LifeSpan Growth Fund and
Disciplined Value Fund and indicates the pro forma combined capitalization as of
October 31, 1997 as if the Reorganization had occurred on that date.
OCTOBER 31, 1997
NET ASSET
SHARES VALUE
NET ASSETS OUTSTANDING PER SHARE
Oppenheimer LifeSpan Growth Fund
Class A $53,318,387 3,900,030 $13.67
Class B $ 5,390,939 395,745 $13.62
Class C $ 1,209,468 89,402 $13.53
Oppenheimer Disciplined Value Fund
Class A $371,809,526 15,948,062 $23.31
Class B $ 83,290,683 3,572,324 $23.32
Class C $ 10,243,102 444,018 $23.07
Class Y $ 90,993,681 3,898,705 $23.34
Oppenheimer Disciplined Value Fund
(Pro Forma Surviving Fund)
Class A $425,127,913 18,235,423 $23.31
Class B $ 88,681,622 3,803,496 $23.32
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Class C $ 11,452,570 496,444 $23.07
Class Y $ 90,993,681 3,898,705 $23.34
Reflects issuance of 2,287,361 of Class A shares, 231,172 of Class B shares and
52,426 of Class C shares of Disciplined Value Fund in a tax-free exchange for
the net assets of LifeSpan Growth Fund, aggregating $59,918,794.
The pro forma ratio of expenses to average annual net assets of the Class A
shares at October 31, 1997 would have been 1.06%. The pro forma ratio of
expenses to average net assets of Class B shares at October 31, 1997 would have
been 1.84%. The pro forma ratio of expenses to average net assets of Class C
shares at October 31, 1997 would have been 1.85%. The pro forma ratio of
expenses to average net assets of Class Y shares at October 31, 1997 would have
been 0.75%.
COMPARISON BETWEEN
LIFESPAN GROWTH FUND
AND DISCIPLINED VALUE FUND
Information about LifeSpan Growth Fund and Disciplined Value Fund is presented
below. Additional information about Disciplined Value Fund is set forth in its
Prospectus, accompanying this Proxy Statement and Prospectus, and additional
information about both funds is set forth in documents that may be obtained upon
request of the transfer agent or upon review at the offices of the SEC. See
"Additional Information - Public Information."
INVESTMENT OBJECTIVES AND POLICIES
DISCIPLINED VALUE FUND
Disciplined Value 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. Under
normal circumstances, most of the fund's assets will be invested in stocks. The
Manager chooses stock investments for the fund using a quantitative value
oriented 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. 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 in turn may cause the
company's stock price to increase in
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value.
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
Disciplined Value 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.
Disciplined Value Fund may invest the remainder of its net assets (up to 10%
under normal circumstances) in U.S. Government securities and corporate debt
obligations, including convertible bonds, which may be rated as low as B by
Moody's Investors Service, Inc. ("Moody's"), Standard and Poor's Corporation
("Standard & Poor's"), Fitch Investors Service, Inc., Duff & Phelps, Inc. or
another nationally recognized statistical rating organization. The Statement of
Additional Information for Disciplined Value Fund contains a more detailed
discussion of the debt securities the fund may invest in. Under normal market
conditions, the fund may maintain up to 15% of its net assets in cash and cash
equivalent investments. When market conditions are unstable, the fund may invest
without limit in high-quality short-term debt securities for temporary defensive
purposes.
Consistent with the foregoing policies, Disciplined Value Fund may invest to a
limited degree in securities of foreign issuers, including issuers in developing
countries.
LIFESPAN GROWTH FUND
LifeSpan Growth Fund seeks long-term capital appreciation. Current income is not
a primary consideration. The 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 many types. The bond class includes several varieties of
fixed-income instruments. Allocating assets among different types of investments
allows the Fund to take advantage of a greater variety of investment
opportunities than funds that invest in only one asset class, but also subjects
the Fund to the risks of those types of investments.
The Manager has the ability to allocate the Fund's assets within specified
ranges. The 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 the Fund remains distinct and the Fund's
investment objective is preserved. The Manager will review normal allocations
between the stock and bond classes quarterly
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and, if necessary, will rebalance the investment allocation at that time.
Additional adjustments may be made if an asset allocation shift of 5% or more is
warranted. For a further discussion of the Fund's normal allocation among the
various asset classes, please refer to the LifeSpan Growth Fund prospectus.
The securities in which Disciplined Value Fund and LifeSpan Growth Fund may
invest are summarized below. Both funds invest in substantially the same types
of securities and have similar restrictions. When investing its assets
Disciplined Value Fund may not invest more than 5% of its total assets in
securities other than United States Government or Government agency securities
in any one issuer or more than 15% of the fund's total assets in any one bank.
LifeSpan Growth Fund with respect to 75% of its total assets, cannot 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.
PERMITTED INVESTMENTS BY BOTH LIFESPAN GROWTH FUND AND DISCIPLINED VALUE FUND
STOCK INVESTMENTS
Both Disciplined Value Fund and LifeSpan Growth Fund each normally invest a
substantial portion of their assets in stocks. Therefore, the value of each
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 each fund's net asset values per share, which will
fluctuate as the values of each fund's portfolio securities change. The types of
securities each fund purchases are described below. 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 the fund's assets in any one industry or sector.
Because of the types of securities each fund invests in and the investment
techniques each fund uses, some of which may be speculative, both Disciplined
Value Fund and LifeSpan Growth Fund are designed for investors who are investing
for the long-term and who are willing to accept greater risks of loss of their
investment in the hope of achieving capital appreciation. Neither fund is
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. Because changes in securities market prices can occur at any
time, there is no assurance that either fund will achieve its investment
objective, and when you redeem your shares, they may be worth more or less
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than what you paid for them.
FOREIGN SECURITIES
Each Fund may purchase equity securities issued by foreign companies and debt
securities issued or guaranteed by foreign governments or their agencies. Each
Fund may purchase securities of companies located 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, Disciplined Value 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. Disciplined Value Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.
There are special risks in investing in foreign securities. More information
about the risks and potential rewards of investing in foreign securities is
described above in the section entitled "Principal Risk Factors" and is
contained in each fund's respective Statement of Additional Information.
CONVERTIBLE SECURITIES
Both funds may invest in convertible securities. Convertible securities are
bonds, preferred stocks and other securities that normally pay a fixed rate of
interest or dividend and give the owner the option to convert the security into
common stock. While the value of convertible securities depends in part on
interest rate changes and the credit quality of the issuer, the price will also
change based on the price of the underlying stock. While convertible securities
generally have less potential for gain than common stock, their income provides
a cushion against the stock price's declines. They generally pay less income
than non-convertible bonds. The Manager generally analyzes these investments
from the perspective of the growth potential of the underlying stock and treats
them as "equity substitutes."
PORTFOLIO TURNOVER
A change in the securities held by either fund is known as "portfolio turnover."
Neither Fund ordinarily engages in short-term trading to try to achieve its
objective. For each fund's portfolio turnover rate, see "Financial Highlights"
in each fund's respective Prospectus or Annual Report.
Portfolio turnover affects brokerage costs, dealer markups and other transaction
costs, and may result in Disciplined Value Fund and LifeSpan Growth Fund's
realization of capital gains or losses for tax purposes. It may also affect
either fund's ability to qualify as a "regulated investment company" under the
Internal Revenue Code for tax deductions for dividends and capital gains
distributions either fund pays to shareholders. Both funds qualified in their
last fiscal year and intend to do so in the coming year, although both funds
reserve the right not to qualify.
HEDGING
Both funds may purchase and sell certain kinds of futures contracts, forward
contracts, and options on futures and broadly- based stock indices. Both Funds
may write covered call options on securities, stock indices and foreign
currency. These are all referred to as "hedging instruments." Neither Fund uses
hedging instruments for speculative purposes, and both have limits on the use of
them, described below. The hedging instruments the funds may use are described
below and in greater detail in "Other Investment Techniques and Strategies"
section in each fund's respective Statement of Additional Information.
Both funds may use hedging instruments for a number of purposes. Each fund 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. Each fund
may do so to try to manage its exposure to changing interest rates. Some of
these strategies, such as selling futures, buying puts and writing covered
calls, hedge the fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to increase the funds'
exposure to the securities market.
Forward contracts are foreign currency exchange contracts. They are used to buy
or sell foreign currency for future delivery at a fixed price. Both funds may
use them to try to "lock in" the U.S. dollar price of a security denominated in
a foreign currency that the fund has bought or sold, or to protect against
possible losses from changes in the relative values of the U.S. dollar and
foreign currency. Both funds limit their exposure in foreign currency exchange
contracts in a particular foreign currency to the amount of their respective
assets denominated in that currency or in a closely-correlated currency. Writing
covered call options may also provide income to the funds for liquidity purposes
or to raise cash to distribute to shareholders.
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Disciplined Value Fund may buy and sell futures contracts that relate to
broadly-based stock indices (these are referred to as Stock Index Futures) or
foreign currencies (these are called Forward Contracts and are discussed below).
LifeSpan Growth Fund may buy and sell futures contracts for hedging and
non-hedging purposes that relate to (1) foreign currencies ("Forward
Contracts"), (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).
Both funds may write (that is, sell) covered call options. Each call the funds
write must be "covered" while it is outstanding. That means the funds must own
the investment on which the call was written or each fund must own other
securities that are acceptable for the escrow arrangements required for calls.
The funds may write calls on futures contracts each fund owns, but these calls
must be covered by securities or other liquid assets each fund owns and
segregated to enable it to satisfy each fund's obligations if the call is
exercised. After the Disciplined Value Fund writes a call, not more than 20% of
its assets may be subject to calls. When either 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 respective 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 respective fund keeps the cash premium
(and the investment).
LifeSpan Growth Fund may purchase put options on Futures. Buying a put on an
investment gives the Fund the right to sell the investment at a set price to a
seller of a put on that investment. LifeSpan Growth Fund may sell a put on
Futures, but only if the puts are covered by segregated liquid assets.
LifeSpan Growth 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 the Fund's
restrictions on illiquid investments.
Both Funds 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. The Fund enters into swaps only on a net
basis, which means the two payment streams are netted out, with the Fund
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receiving or paying, as the case may be, only the net amount of the two
payments. LifeSpan Growth Fund will segregate liquid assets of any type (such as
cash, U.S. Government, equity or debt 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
which are described above in the section entitled "Principal Risk Factors."
Options trading involves the payment of premiums and has special tax effects on
either fund. There are also special risks in particular hedging strategies. If a
covered call written by either fund is exercised on an investment that has
increased in value, either 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 a put, there is a risk that
either 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. These risks are described in greater detail in each fund's respective
Statement of Additional Information.
LOANS OF PORTFOLIO SECURITIES
To raise cash for liquidity purposes, LifeSpan Growth Fund may lend its
portfolio securities to brokers, dealers and other financial institutions.
LifeSpan Growth Fund restricts loans of securities wherein the value of the
securities loaned exceeds 33 1/3% of the value of its total assets. These loans
are subject to the conditions in LifeSpan Growth Fund's Statement of Additional
Information. LifeSpan Growth Fund presently does not intend to lend its
portfolio securities, but if it does, the value of the securities borrowed is
not expected to exceed 5% of its total assets.
ILLIQUID AND RESTRICTED SECURITIES
Both of the funds may invest in illiquid and restricted securities. 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. The funds will not invest more than 10% of their net assets in illiquid or
restricted securities (each fund's Board may increase that limit to 15% of net
assets). The funds' percentage limitation on these investments does not apply to
certain restricted securities that are eligible for resale to qualified
institutional purchasers.
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DERIVATIVE INVESTMENTS
LifeSpan Growth Fund and Disciplined Value Fund can each invest in a number of
different kinds of "derivative investments." Each fund may use some types of
derivatives for hedging purposes, and may invest in others because they offer
the potential for increased income. 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 funds may not purchase or sell physical commodities; however, the
funds may purchase and sell foreign currency in hedging transactions. This
policy also does not prevent the funds from buying or selling options and
futures contracts or from investing in securities or other instruments backed by
physical commodities. In the broadest sense, derivative investments include
exchange-traded options and futures contracts (please refer to "Hedging,"
above). Investing in derivative investments involves certain risks which are
described above in the section entitled "Principal Risk Factors."
REPURCHASE AGREEMENTS
Each of the funds may enter into repurchase agreements. Neither of the funds
will enter into repurchase agreements that will cause more than 10% of its net
assets to be subject to repurchase agreements having a maturity beyond seven
days (that limit may be increased to 15% by either fund's Board). However, if
the vendor fails to pay the resale price on the delivery date, the funds may
experience costs in disposing of the collateral and losses if there is any delay
in doing so.
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.
Both funds may invest up to 5% of their total assets in warrants or rights. That
5% limitation does not apply to warrants either fund may acquire as part of
units with other securities or that are attached to other securities. No more
than 2% of either 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 each fund's respective Statement
of Additional Information.
"WHEN-ISSUED" AND DELAYED DELIVERY TRANSACTIONS
Both funds may purchase securities on a "when-issued" basis and may
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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.
DEBT INSTRUMENTS
Under normal market conditions, Disciplined Value Fund may invest some of its
assets (normally up to 10%) in debt securities. LifeSpan Growth Fund may also
invest its assets (normally up to 20%) in debt securities. Some debt instruments
the funds may invest include the following:
U.S. GOVERNMENT SECURITIES
Both funds may invest in U.S. Government Securities which include debt
securities issued or guaranteed by the U.S. Government or its agencies and
instrumentalities. Certain U.S. Government Securities, including U.S. Treasury
bills, notes and bonds, and mortgage participation certificates guaranteed by
the Government National Mortgage Association 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.
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 funds
hold U.S. Government Securities each 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 above, under
"Hedging."
LOWER-GRADE DEBT SECURITIES
Both funds may also invest in "lower-grade" debt securities which generally
offer higher income potential than investment grade securities. "Lower-grade"
securities are those rated below "BBB" by Standard & Poor's Ratings Group
("Standard & Poor's") or "Baa" by Moody's Investors Services, Inc. ("Moody's")
or similar ratings given by other domestic or foreign rating organizations, or
securities that are not rated by a nationally-recognized rating organization but
the Manager judges them to be comparable to lower-rated securities. Disciplined
Value Fund will not purchase securities rated below B by Moody's or Standard &
Poor's. Disciplined Value 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 fund's best interest.
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LifeSpan Growth Fund may invest in securities rated as low as "D" by Standard &
Poor's or "C" by Moody's.
TEMPORARY DEFENSIVE INVESTMENTS
Each fund may invest substantial amounts of its assets in debt securities when
market conditions are unstable. Such debt securities include rated or unrated
bonds and debentures, cash equivalents and money market instruments, commercial
paper rated "A-1" or better by Standard & Poor's or "P-1" or better by Moody's,
or U.S. government securities. It is expected that at the time of purchase, debt
securities that would make up the fund's temporary defensive investments would
be rated BBB or above by S&P or Baa or above by Moody's or another nationally
recognized statistical rating organization or if unrated, of comparable quality
as determined by the Manager.
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 that ADR, 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. 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. Both funds may also invest in obligations of
foreign branches of U.S. banks (denominated in 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.
INVESTING IN EMERGING MARKET COUNTRIES. Babson-Stewart Ivory International
("Babson-Stewart"), as the Subadviser to the international component of LifeSpan
Growth Fund, may invest a portion of that Fund's assets in companies located in
emerging countries. The Subadviser considers emerging countries to include any
country that is defined as an emerging or developing economy by the
International Bank for Reconstruction and Development, the International Finance
Committee, The United Nations or its
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authorities, or the MSCI Emerging Markets Index. There are special risks
investing in emerging markets, discussed in "Investment Risks," above.
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.
LifeSpan Growth Fund may invest in collateralized mortgage obligations ("CMO"s),
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 Fund does not intend to acquire "residual" interests in
REMICs.
"STRIPPED" SECURITIES. LifeSpan Growth 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
"principal-only" security or "P/O") and the other which receives some or all of
the interest (and is known as an "interest-only" security, or "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, LifeSpan Growth 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, 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.
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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
LifeSpan Growth 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, discussed below.
ASSET-BACKED SECURITIES. LifeSpan Growth 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 LifeSpan Growth 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.
STRUCTURED NOTES. LifeSpan Growth Fund may invest in structured notes. A
structured note is a debt security having an interest rate or principal
repayment requirement based on the performance of a benchmark asset or market,
such as stock prices, currency exchange rates or commodity prices. They provide
exposure to the benchmark market while fixing the maximum loss if that market
does not perform as expected. Depending on the terms of the note, LifeSpan
Growth Fund could forego all or part of the interest and principal that would be
payable on a comparable conventional note, and the Fund's loss could not exceed
that amount. The Fund does not intend to invest more than 5% of its net assets
in structured notes.
INVERSE FLOATING RATE INSTRUMENTS. LifeSpan Growth 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.
SMALL, UNSEASONED COMPANIES. LifeSpan Growth Fund may invest in securities of
small, unseasoned companies. These are companies
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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 the Fund may have difficulty selling them at an acceptable
price when it wants to) and the price of these securities may be volatile.
INVESTMENT RESTRICTIONS
LifeSpan Growth Fund and Disciplined Value Fund have certain investment
restrictions that, together with their investment objectives, are fundamental
policies, changeable only by shareholder approval. Set forth below is a summary
of these investment restrictions which are different for each fund. Other
investment restrictions for each fund are substantially the same:
Under these fundamental policies, LifeSpan Growth Fund cannot do the following:
LifeSpan Growth Fund cannot 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.
LifeSpan Growth Fund may not 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.
LifeSpan Growth Fund cannot 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, mortgage dollar rolls, futures
contracts, options on futures contracts, securities or indices and forward
commitment transactions shall not constitute borrowing.
LifeSpan Growth Fund cannot purchase the securities of issuers conducting their
principal activity in the same industry if,
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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. The
Fund has undertaken, as a matter of non-fundamental policy, to apply this
restriction to 25% or more of their assets.
With respect to 75% of its total assets, LifeSpan Growth Fund cannot 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.
LifeSpan Growth Fund cannot 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.
LifeSpan Growth Fund may not 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.
LifeSpan Growth cannot 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.
LifeSpan Growth Fund cannot 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.
LifeSpan Growth Fund cannot issue senior securities, except as permitted above.
Under these fundamental policies, Disciplined Value Fund cannot do the
following:
Disciplined Value Fund cannot borrow amounts in excess of 10% of its total
assets, taken at market value at the time of the borrowing, and then only from
banks as a temporary measure for
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extraordinary or emergency purposes, or make investments in portfolio securities
while such outstanding borrowings exceed 5% of its total assets;
Disciplined Value Fund cannot 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);
Disciplined Value Fund cannot 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 United States Government, its agencies or instrumentalities;
Disciplined Value Fund cannot (a) invest more than 5% 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)
Disciplined Value Fund cannot 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;
Disciplined Value Fund cannot 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;
Disciplined Value Fund cannot make loans, except that it may (1) lend portfolio
securities in accordance with its investment policies up to 33 1/3% of its 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;
Disciplined Value Fund cannot mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned or held by it
except as may be necessary in connection with borrowings, and then such
mortgaging, pledging or hypothecating may
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not exceed 10 percent of its total assets, taken at market value at the time
thereof;
Disciplined Value Fund cannot issue senior securities, except as permitted
above;
Alone, or together with any other portfolio or portfolios, Disciplined Value
Fund cannot make investments for the purpose of exercising control over, or
management of, any issuer;
Disciplined Value Fund cannot 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 Disciplined Value Fund's total assets,
taken at market value, would be invested in such securities;
Disciplined Value Fund cannot 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;
Disciplined Value Fund cannot underwrite securities of other issuers except
insofar as the Company may be deemed an underwriter under the 1933 Act in
selling portfolio securities;
Disciplined Value Fund cannot write, purchase or sell puts, calls or
combinations thereof, except that covered call options may be written;
Disciplined Value Fund cannot invest in securities of foreign issuers if at the
time of acquisition more than 10 percent of its total assets, taken at market
value at the time of the investment, would be invested in such securities.
However, up to 25 percent of the total assets of such portfolio may be invested
in the aggregate in such securities (i) issued, assumed or guaranteed by foreign
governments, or political subdivisions or instrumentalities thereof, (ii)
assumed or guaranteed by domestic issuers, including Eurodollar securities, or
(iii) issued, assumed or guaranteed by foreign issuers having a class of
securities listed for trading on the New York Stock Exchange; and
Disciplined Value Fund cannot 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.
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Unless the prospectus of the Fund states that a percentage restriction applies
on an ongoing basis, it applies only at the time that fund makes an investment
and the Fund need not sell securities to meet the percentage limits if the value
of the investment increases in proportion to the size of the Fund.
DESCRIPTION OF BROKERAGE PRACTICES
The brokerage practices of the funds are the same. Subject to the provisions of
each fund's 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 each advisory agreement and the procedures and
rules described above. In either case, brokerage is allocated under the
supervision of the Manager's executive officers and the Manager. Transactions in
securities other than those for which an exchange in 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 are otherwise paid
only if it appears likely that a better price or execution can be obtained.
When either fund engages 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 or 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 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 either fund 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 permits the Manager to use concessions on fixed-price
offerings to obtain research, in the
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same manner as is permitted for agency transactions. The Board also permits the
Manager to use stated commissions on secondary fixed-income agency trades to
obtain research where the broker has represented to the Manager that: (i) the
trade is not from or for the broker's own inventory, (ii) the trade was not
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 broaden the scope and supplement 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 each fund's portfolio or
being considered for purchase.
The Board of Directors, including the "independent" directors of the Funds,
(those 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
Investment Advisory Agreement or Distribution Plan 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.
Please refer to the Statement of Additional Information for each fund for
further information on each fund's brokerage practices.
EXPENSE RATIOS AND PERFORMANCE
The ratio of expenses to average annual net assets for LifeSpan Growth Fund for
the fiscal year ended October 31, 1997 was 1.50% for Class A, 2.27% for Class B
and 2.29% for Class C shares. The ratio of expenses to average annual net assets
for Disciplined Value Fund for the fiscal year ended October 31, 1997, for its
Class A, Class B, Class C and Class Y shares (on an annualized basis) were
1.06%, 1.84%, 1.85% and 0.75%, respectively. Further details are set forth above
under "Comparative Fee Table", and in LifeSpan Growth Fund's Annual Report as of
October 31, 1997, and Disciplined Value Fund's Annual Report as of October 31,
1997, which are included in the Statement of Additional Information. The
performance of the funds for the 1,3,5 and 10 year periods ended October 31,
1997 is set forth in Exhibit B.
SHAREHOLDER SERVICES
The policies of LifeSpan Growth Fund and Disciplined Value Fund with respect to
minimum initial investments and subsequent investments by its shareholders are
the same. Both LifeSpan Growth Fund and Disciplined Value Fund offer the
following privileges: (i) Right of Accumulation, (ii) Letter of Intent, (iii)
reinvestment of
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dividends and distributions at net asset value, (iv) net asset value purchases
by certain individuals and entities, (v) Asset Builder (automatic investment)
Plans, (vi) Automatic Withdrawal and Exchange Plans for shareholders who own
shares of the fund valued at $5,000 or more, (vii) AccountLink and PhoneLink
arrangements, (viii) exchanges of shares for shares of the same class of certain
other funds at net asset value, and (ix) telephone redemption and exchange
privileges.
Shareholders may purchase shares through OppenheimerFunds AccountLink, which
links a shareholder account to an account at a bank or financial institution and
enables shareholders to send money electronically between those accounts to
perform a number of types of account transactions. This includes the purchase of
shares through the automated telephone system (PhoneLink). Exchanges can also be
made by telephone, or automatically through PhoneLink. After AccountLink
privileges have been established with a bank account, shares may be purchased by
telephone in an amount up to $100,000. Shares of either Fund may be exchanged
for shares of certain Oppenheimer funds at net asset value per share; however,
shares of a particular class may be exchanged only for shares of the same class
of other Oppenheimer funds. Shareholders of the funds may redeem their shares by
written request or by telephone request in an amount up to $50,000 in any
seven-day period. Shareholders may arrange to have share redemption proceeds
wired to a pre-designated account at a U.S. bank or other financial institution
that is an ACH member, through AccountLink. There is no dollar limit on
telephone redemption proceeds sent to a bank account when AccountLink has been
established. Shareholders may also redeem shares automatically by telephone by
using PhoneLink. Shareholders of Disciplined Value Fund and LifeSpan Growth Fund
may also have the Transfer Agent send redemption proceeds of $2,500 or more by
Federal Funds wire to a designated commercial bank which is a member of the
Federal Reserve wire system. Shareholders of the funds have up to six months to
reinvest redemption proceeds of their Class A shares which they purchase subject
to a sales charge or their Class B shares on which they paid a contingent
deferred sales charge, in Class A shares of the funds or other Oppenheimer funds
without paying a sales charge. LifeSpan Growth Fund and Disciplined Value Fund
may redeem accounts with less than 100 shares if the account has fallen below
such stated amount for reasons other than market value fluctuations. Both funds
offer Automatic Withdrawal and Automatic Exchange Plans under certain
conditions.
RIGHTS OF SHAREHOLDERS
The shares of each such fund, including shares of each class, entitle the holder
to one vote per share on the election of directors of the Company and all other
matters submitted to shareholders of the fund. Each share of the fund represents
an
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interest in the fund proportionately equal to the interest of each other share
of the same class and entitle the holder to one vote per share (and a fractional
vote for a fractional share) on matters submitted to their vote at shareholders'
meetings. Shareholders of each fund vote together with the shareholders of other
series of the Company in the aggregate on certain matters at shareholders'
meetings, such as the election of Directors and ratification of appointment of
auditors. Shareholders of a particular series or class vote separately on
proposals which affect that series or class, and shareholders of a series or
class which is not affected by that matter are not entitled to vote on the
proposal. For example, only shareholders of a series vote exclusively on any
material amendment to the investment advisory agreement with respect to the
series. Only shareholders of a class of a series vote on certain amendments to
the Distribution and/or Service Plans if the amendments affect only that class.
The Board of the Company is authorized to create new series and classes of
series. The Board may reclassify unissued shares of both funds into additional
series or classes of shares. The Board may also divide or combine the shares of
a class into a greater or lesser number of shares without thereby changing the
proportionate beneficial interest of a shareholder in each fund. Shares do not
have cumulative voting rights or preemptive or subscription rights. Shares may
be voted in person or by proxy. Each share has one vote at shareholder meetings,
with fractional shares voting proportionately. Shares of a particular class vote
together on matters that affect that class. Most amendments to the Articles of
Incorporation governing the Company require the approval of a "majority" of the
outstanding voting securities (as defined in the Investment Company Act) of the
Company's shares without regard to series or class.
Class A, Class B and Class C shares of LifeSpan Growth Fund and the Class A,
Class B and Class C shares of Disciplined Value Fund which LifeSpan Growth Fund
shareholders will receive in the Reorganization and Class Y shares of
Disciplined Value Fund, participate equally in the funds' dividends and
distributions and in the funds' net assets upon liquidation, after taking into
account the different expenses paid by each class. Distributions and dividends
for each class will be different and Class B and Class C dividends and
distributions will be lower than Class A and Class Y dividends.
It is not contemplated that the Company will hold regular annual meetings of
shareholders. Under the Investment Company Act, shareholders of LifeSpan Growth
Fund do not have rights of appraisal as a result of the transactions
contemplated by the Reorganization Agreement. However, they have the right at
any time prior to the consummation of such transaction to redeem their shares at
net asset value, less any applicable contingent deferred sales charge.
Shareholders of both of the funds have the right, under certain circumstances,
to remove a Director and will be
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assisted in communicating with other shareholders for such purpose.
Each Fund is a series of the Company, which is a corporation organized under the
laws of the state of Maryland. As a general matter, shareholders of a
corporation will not be liable to the corporation or its creditors with respect
to their interests in the corporation as long as their shares have been paid for
and the requisite corporate formalities have been observed, both in the
organization of the corporation and in the conduct of its business.
ORGANIZATION AND HISTORY
Disciplined Value Fund and LifeSpan Growth Fund are diversified series of
Oppenheimer Series Fund, Inc. which was organized in 1981 as a Maryland
corporation and is an open-end management investment company. Organized as a
series fund, Oppenheimer Series Fund, Inc. presently has five series, including
the Disciplined Value Fund and LifeSpan Growth Fund. The Company is governed by
a Board of Directors.
MANAGEMENT AND DISTRIBUTION ARRANGEMENTS
The Manager, located at Two World Trade Center, New York, New York 10048-0203,
acts as the investment adviser for LifeSpan Growth Fund and also acts as the
investment adviser to Disciplined Value Fund. The terms and conditions of the
investment advisory agreement for each fund are substantially the same. The
monthly management fee payable to the Manager by each fund is set forth under
"Synopsis Investment Advisory and Distribution and Service Plan Fees" along with
the fees paid by the Manger to the Sub-Advisers for LifeSpan Growth Fund. The
12b-1 Distribution and Service Plan fees paid by fund with respect to Class A,
Class B and Class C shares are set forth above under "Synopsis - Investment
Advisory and Distribution and Service Plan Fees." No Distribution and Service
Plan fees are paid by Disciplined Value Fund with respect to Class Y shares.
Pursuant to each investment advisory agreement, the Manager supervises the
investment operations of the funds and the composition of their portfolios, and
furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities. Both investment advisory
agreements require the Manager to provide LifeSpan Growth Fund and Disciplined
Value 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 administration for the funds, including the
compilation and maintenance of records with respect to their operations, the
preparation and filing of specified reports, and composition of proxy materials
and registration statements for continuous public sale of shares of each fund.
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The Manager has engaged three Subadvisers to provide day-to-day portfolio
management for certain components of the LifeSpan Growth Fund. Babson-Stewart,
One Memorial Drive, Cambridge, MA 02142, the Subadviser to the international
component, was established in 1987. The general partners of Babson-Stewart are
David L. Babson & Co., which is an indirect subsidiary of Massachusetts Mutual
Life Insurance Company, and Stewart Ivory & Co., Ltd.
BEA Associates, One Citicorp Center, 153 East 53rd Street, 57th Floor, New York,
NY 10022, the Subadviser to the high yield/high risk bond component, has been
providing fixed-income and equity management services to institutional clients
since 1984. BEA is a partnership between Credit Suisse Capital Corporation and
CS Advisors Corp.
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), 1255 Drummers Lane, Wayne,
PA 19087, the Subadviser to the small cap component, was established in 1982 to
provide specialized equity management for institutional investors including
other investment companies. Pilgrim Baxter is a wholly-owned subsidiary of
United Asset Management Corporation. Each Subadviser 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 Fund, pays the Subadvisers.
Expenses not expressly assumed by the Manager under each fund's advisory
agreement or by OppenheimerFunds Distributor, Inc., the funds' distributor (the
"Distributor"), under the General Distributor's Agreement are paid by the funds.
The advisory agreements list examples of expenses paid by the funds, the major
categories of which relate to interest, taxes, brokerage commissions, fees to
certain Directors, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs and
non-recurring expenses, including litigation costs. The management fee paid by
LifeSpan Growth Fund for the fiscal year ended October 31, 1997 was $457,316.
For the fiscal year ended October 31, 1997, the management fee paid by
Disciplined Value Fund was $1,850,924. The funds' investment advisory agreements
contain no expense limitation.
The Manager is controlled by Oppenheimer Acquisition Corp., a holding company
owned in part by senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance company
that also advises pension plans and investment companies. The Manager has
operated as an investment company adviser since 1959. The Manager and its
affiliates currently advise investment companies with combined net assets
aggregating over $75 billion as of December 31, 1997, with more than 3.5 million
shareholder accounts. OppenheimerFunds Services, a division of the Manager, acts
as transfer and
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shareholder servicing agent on an at-cost basis for LifeSpan Growth Fund and
Disciplined Value Fund and for certain other open-end funds managed by the
Manager and its affiliates.
The Distributor, under a General Distributor's Agreement for each of the funds,
acts as the principal underwriter in the continuous public offering of Class A,
Class B and Class C shares of each fund and Class Y shares of Disciplined Value
Fund. During LifeSpan Growth Fund's fiscal year ended October 31, 1997, the
aggregate sales charges on sales of LifeSpan Growth Fund's Class A shares were
$137,511, of which the Distributor and an affiliated broker-dealer retained in
the aggregate $111,486. During LifeSpan Growth Fund's fiscal year ended October
31, 1997, the contingent deferred sales charges collected on LifeSpan Growth
Fund's Class B and Class C shares totaled $2,500 and $0, respectively, all of
which the Distributor retained. For the fiscal year ended October 31, 1997, the
aggregate amount of sales charges on sales of Disciplined Value Fund's Class A
shares was $885,737, of which $558,864 was retained by the Distributor and an
affiliated broker-dealer. Contingent deferred sales charges collected by the
Distributor on the redemption of Class B and Class C shares for the fiscal year
ended October 31, 1997 totaled $31,154 and $0, respectively, all of which was
retained by the Distributor. For additional information about distribution of
the funds' shares and the payments made by the funds to the Distributor in
connection with such activities, please refer to "Distribution and Service
Plans," in each fund's Statement of Addition Information.
PURCHASE OF ADDITIONAL SHARES
Class A shares of LifeSpan Growth Fund and Class A shares of Disciplined Value
Fund may be purchased with an initial sales charge of 5.75% for purchases of
less than $25,000. The sales charge of 5.75% is reduced for purchases of either
fund's Class A shares of $25,000 or more. For purchases of $1 million or more
($500,000 or more for purchases by "Retirement Plans", as defined in each fund's
prospectus) if those shares are redeemed within 12 calendar months (18 months
for shares purchased prior to May 1, 1997) of the end of the calendar month of
their purchase, a contingent sales charge may be deducted from the redemption
proceeds. Class B shares of LifeSpan Growth Fund and Disciplined Value Fund are
sold at net asset value without an initial sales charge, however, if Class B
shares of either fund are redeemed within six years of the end of the calendar
month of their purchase, a contingent deferred sales charge may be deducted of
up to 5%, depending upon how long such shares had been held. Class C shares of
either fund may be purchased without an initial sales charge, but if sold within
12 months of buying them, a contingent deferred sales charge of 1% may be
deducted. Class Y shares are sold without a sales charge and are only available
to certain qualified institutional purchasers.
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The initial sales charge and contingent deferred sales charge on Class A shares,
Class B and Class C shares of Disciplined Value Fund will only affect
shareholders of LifeSpan Growth Fund to the extent that they desire to make
additional purchases of shares of Disciplined Value Fund in addition to the
shares which they will receive as a result of the Reorganization. The Class A,
Class B and Class C shares to be issued under the Reorganization Agreement will
be issued by Disciplined Value Fund at net asset value. Future dividends and
capital gain distributions of Disciplined Value Fund, if any, may be reinvested
without sales charge. The contingent deferred sales charge for each class of
shares for both funds is the same. If Class A, Class B or Class C shares of
LifeSpan Growth Fund are currently subject to a contingent deferred sales
change, the Disciplined Value Fund shares issued in the Reorganization will
continue to be subject to the same contingent deferred sales charge. Any
LifeSpan Growth Fund shareholder who is entitled to a reduced sales charge on
additional purchases by reason of a Letter of Intent or Right of Accumulation
based upon holdings of shares of LifeSpan Growth Fund will continue to be
entitled to a reduced sales charge on any future purchase of shares of
Disciplined Value Fund.
DIVIDENDS AND DISTRIBUTIONS
LifeSpan Growth Fund declares dividends from net investment income and pays such
dividends to shareholders annually. LifeSpan Growth Fund may also make
distributions annually in December from any net short-term capital gains the
Fund realizes in selling securities. Disciplined Value Fund declares and pays
dividends and capital gains distributions, if any, annually. Dividends are paid
separately for each class of shares and normally, the dividends on Class A and
Class Y shares are generally expected to be higher than for Class B and Class C
shares because the expenses allocable to Class B and Class C shares will
generally be higher than for Class A and Class Y shares. There is no fixed
dividend rate for either fund and there can be no assurance that either fund
will pay any dividends or distributions.
METHOD OF CARRYING OUT THE REORGANIZATION
The consummation of the transactions contemplated by the Reorganization
Agreement is contingent upon the receipt of an order from the Securities and
Exchange Commission exempting the Funds from the provisions of Section 17(a) of
the Investment Company Act, the approval of the Reorganization by the
shareholders of LifeSpan Growth Fund and the receipt of the opinions and
certificates set forth in Sections 10 and 11 of the Reorganization Agreement and
the occurrence of the events described in those Sections. Under the
Reorganization Agreement, all the assets of LifeSpan Growth Fund, excluding the
Cash Reserve, will be delivered to Disciplined Value Fund in exchange for Class
A, Class B and Class C shares of Disciplined Value Fund. The Cash Reserve to be
retained by LifeSpan Growth Fund will be sufficient in the discretion of the
Board for the payment of LifeSpan Growth Fund's liabilities, and
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LifeSpan Growth Fund's expenses of liquidation.
Assuming the shareholders of LifeSpan Growth Fund approve the Reorganization,
the actual exchange of assets is expected to take place on June 12, 1998, or as
soon thereafter as is practicable (the "Closing Date") on the basis of net asset
values as of the close of business on the business day preceding the Closing
Date (the "Valuation Date"). Under the Reorganization Agreement, all redemptions
of shares of LifeSpan Growth Fund shall be permanently suspended at the close of
business on the Valuation Date; only redemption requests received in proper form
on or prior to the close of business on that date shall be fulfilled by it;
redemption requests received by LifeSpan Growth Fund after that date will be
treated as requests for redemptions of Class A, Class B or Class C shares of
Disciplined Value Fund to be distributed to the shareholders requesting
redemption. The exchange of assets for shares will be done on the basis of the
per share net asset value of the Class A, Class B and Class C shares of
Disciplined Value Fund, and the value of the assets of LifeSpan Growth Fund to
be transferred as of the close of business on the Valuation Date, valued in the
manner used by Disciplined Value Fund in the valuation of assets. Disciplined
Value Fund is not assuming any of the liabilities of LifeSpan Growth Fund,
except for portfolio securities purchased which have not settled and outstanding
shareholder redemption and dividend checks.
The net asset value of the shares transferred by Disciplined Value Fund to
LifeSpan Growth Fund will be the same as the value of the assets received by
Disciplined Value Fund. For example, if, on the Valuation Date, LifeSpan Growth
Fund were to have securities with a market value of $95,000 and cash in the
amount of $10,000 (of which $5,000 was to be retained by it as the Cash
Reserve), the value of the assets which would be transferred to Disciplined
Value Fund would be $100,000. If the net asset value per share of Disciplined
Value Fund were $10 per share at the close of business on the Valuation Date,
the number of shares to be issued would be 10,000 ($100,000 / $10). These 10,000
shares of Disciplined Value Fund would be distributed to the former shareholders
of LifeSpan Growth Fund. This example is given for illustration purposes only
and does not bear any relationship to the dollar amounts or shares expected to
be involved in the Reorganization.
Following the Closing Date, LifeSpan Growth Fund will distribute on a pro rata
basis to its shareholders of record on the Valuation Date the Class A, Class B
and Class C shares of Disciplined Value Fund received by LifeSpan Growth Fund at
the closing, in liquidation of the outstanding shares of LifeSpan Growth Fund,
and the outstanding shares of LifeSpan Growth Fund will be canceled. To assist
LifeSpan Growth Fund in this distribution, Disciplined Value Fund will, in
accordance with a shareholder list supplied by LifeSpan Growth Fund, cause the
transfer agent to credit and confirm an appropriate number of shares of
Disciplined Value Fund to each shareholder of LifeSpan Growth Fund. Certificates
for Class A shares of Disciplined Value Fund will be issued upon written request
of a former shareholder of LifeSpan Growth Fund but
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only for whole shares with fractional shares credited to the name of the
shareholder on the books of Disciplined Value Fund and only of shares
represented by certificates are delivered for cancellation. Former Class A
shareholders of LifeSpan Growth Fund who wish certificates representing their
shares of Disciplined Value Fund must, after receipt of their confirmations,
make a written request to OppenheimerFunds Services, P.O. Box 5270, Denver,
Colorado 80217. Shareholders of LifeSpan Growth Fund holding certificates
representing their shares will not be required to surrender their certificates
to anyone in connection with the Reorganization. After the Reorganization,
however, it will be necessary for such shareholders to surrender such
certificates in order to redeem, transfer, pledge or exchange any shares of
Disciplined Value Fund.
Under the Reorganization Agreement, within one year after the Closing Date,
LifeSpan Growth Fund shall: (a) either pay or make provision for all of its
debts and taxes; and (b) either (i) transfer any remaining amount of the Cash
Reserve to Disciplined Value Fund, if such remaining amount is not material (as
defined below) or (ii) distribute such remaining amount to the shareholders of
LifeSpan Growth Fund who were such on the Valuation Date. Such remaining amount
shall be deemed to be material if the amount to be distributed, after deducting
the estimated expenses of the distribution, equals or exceeds one cent per share
of the number of LifeSpan Growth Fund shares outstanding on the Valuation Date.
Within one year after the Closing Date, LifeSpan Growth Fund will complete its
liquidation.
The obligations of either LifeSpan Growth Fund or Disciplined Value Fund under
the Agreement shall be subject to obtaining the necessary relief from the
Securities and Exchange Commission and to the right of either Fund to abandon
and terminate the Reorganization Agreement for any reason and without liability,
provided, however, that if a Fund should terminate the Agreement without
reasonable cause, the terminating Fund shall, upon demand, reimburse the other
Fund for all expenses, including reasonable out-of-pocket expenses and fees
incurred in connection with the Agreement.
In the event that the Reorganization Agreement is not consummated for any
reason, the Board will consider and may submit to the shareholders other
alternatives.
ADDITIONAL INFORMATION
FINANCIAL INFORMATION
The Reorganization will be accounted for by the surviving fund in its financial
statements similar to a pooling without restatement. Further financial
information as to LifeSpan Growth Fund is contained in its current Prospectus,
which is available without charge from OppenheimerFunds Services, the Transfer
Agent, P.O. Box 5270, Denver, Colorado 80217, and is incorporated herein by
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reference, and in its Annual Report as of October 31, 1997, which is included in
its Statement of Additional Information. Financial information for Disciplined
Value Fund is contained in its current Prospectus accompanying this Proxy
Statement and Prospectus and incorporated herein by reference, and in its Annual
Report as of October 31, 1997, which is included in its Statement of Additional
Information.
PUBLIC INFORMATION
Additional information about LifeSpan Growth Fund and Disciplined Value Fund is
available, as applicable, in the following documents which are incorporated
herein by reference: (i) Disciplined Value Fund's Prospectus dated February 19,
1998 accompanying this Proxy Statement and incorporated herein; (ii) LifeSpan
Growth Fund's Prospectus dated February 19, 1998, as supplemented on February
24, 1998, which may be obtained without charge by writing to OppenheimerFunds
Services, P.O. Box 5270, Denver, Colorado 80217; (iii) Disciplined Value Fund's
Annual Report as of October 31, 1997, which may be obtained without charge by
writing to OppenheimerFunds Services at the address indicated above; and (iv)
LifeSpan Growth Fund's Annual Report as of October 31, 1997, which may be
obtained without charge by writing to OppenheimerFunds Services at the address
indicated above. All of the foregoing documents may be obtained by calling the
toll-free number on the cover of this Proxy Statement and Prospectus.
Additional information about the following matters is contained in the Statement
of Additional Information relating to this Reorganization, which incorporates by
reference the Disciplined Value Fund Statement of Additional Information dated
February 19, 1998 and LifeSpan Growth Fund's Prospectus and Statement of
Additional Information, each dated February 19, 1998, as supplemented on
February 24, 1998; the organization and operation of Disciplined Value Fund and
LifeSpan Growth Fund; more information on investment policies, practices and
risks; information about the Company's Board and its responsibilities; a further
description of the services provided by Disciplined Value Fund's and LifeSpan
Growth Fund's investment advisor, distributor, and transfer and shareholder
servicing agent; dividend policies; tax matters; an explanation of the method of
determining the offering price of the shares and/or contingent deferred sales
charges, as applicable of Class A, Class B and Class C shares of Disciplined
Value Fund and LifeSpan Growth Fund; purchase, redemption and exchange programs;
the different expenses paid by each class of shares; and distribution
arrangements.
The Company on behalf of Disciplined Value Fund and LifeSpan Growth Fund is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith, file reports and other
information with the SEC. Proxy material,
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reports and other information about LifeSpan Growth Fund and Disciplined Value
Fund which are of public record can be inspected and copied at public reference
facilities maintained by the SEC in Washington, D.C. and certain of its regional
offices, and copies of such materials can be obtained at prescribed rates from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, Washington, D.C. 20549.
OTHER BUSINESS
Management of LifeSpan Growth Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not known
at the time of the solicitation may come before the Meeting, the proxy as
solicited confers discretionary authority with respect to such matters as
properly come before the Meeting, including any adjournment or adjournments
thereof, and it is the intention of the persons named as attorneys-in-fact in
the proxy to vote this proxy in accordance with their judgment on such matters.
By Order of the Board of Directors
Andrew J. Donohue, Secretary
April 6, 1998 335
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
_________, 1998 by and between Oppenheimer Series Funds, Inc., a Maryland
corporation (the "Company") on behalf of its series, Oppenheimer Disciplined
Value Fund ("Disciplined Value Fund") and Oppenheimer LifeSpan Growth Fund
("LifeSpan Growth Fund"), a Maryland Corporation.
W I T N E S S E T H:
WHEREAS, the parties are each a series of an open-end investment company of
the management type; and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as amended
(the "Code"), of LifeSpan Growth Fund through the acquisition by Disciplined
Value Fund of substantially all of the assets of LifeSpan Growth Fund in
exchange for the voting shares of beneficial interest ("shares") of Class A,
Class B and Class C shares of Disciplined Value Fund and the assumption by
Disciplined Value Fund of certain liabilities of LifeSpan Growth Fund, which
Class A, Class B and Class C shares of Disciplined Value Fund are to be
distributed by LifeSpan Growth Fund pro rata to its shareholders in complete
liquidation of LifeSpan Growth Fund and complete cancellation of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. The parties hereto hereby adopt this Agreement and Plan of
Reorganization (the "Agreement") pursuant to Section 368(a)(1) of the Code as
follows: The reorganization will be comprised of the acquisition by Disciplined
Value Fund of substantially all of the properties and assets of LifeSpan Growth
Fund in exchange for Class A, Class B and Class C shares of Disciplined Value
Fund and the assumption by Disciplined Value Fund of certain liabilities of
LifeSpan Growth Fund, followed by the distribution of such Class A, Class B and
Class C shares of Disciplined Value Fund shares to the Class A, Class B and
Class C shareholders of LifeSpan Growth Fund in exchange for their Class A,
Class B and Class C shares of LifeSpan Growth Fund, all upon and subject to the
terms of the Agreement hereinafter set forth.
The share transfer books of LifeSpan Growth Fund will be permanently
closed at the close of business on the Valuation Date (as hereinafter defined)
and only redemption requests received in proper form on or prior to the close of
business on the Valuation
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Date shall be fulfilled by LifeSpan Growth Fund; redemption requests received by
LifeSpan Growth Fund after that date shall be treated as requests for the
redemption of the shares of Disciplined Value Fund to be distributed to the
shareholder in question as provided in Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets of
LifeSpan Growth Fund on that date, excluding a cash reserve (the "Cash Reserve")
to be retained by LifeSpan Growth Fund sufficient in its discretion for the
payment of the expenses of LifeSpan Growth Fund's dissolution and its
liabilities, but not in excess of the amount contemplated by Section 10E, shall
be delivered as provided in Section 8 to Disciplined Value Fund, in exchange for
and against delivery to LifeSpan Growth Fund on the Closing Date of a number of
Class A, Class B and Class C shares of Disciplined Value Fund, having an
aggregate net asset value equal to the value of the assets of LifeSpan Growth
Fund so transferred and delivered.
3. The net asset value of Class A, Class B and Class C shares of
Disciplined Value Fund and the value of the assets of LifeSpan Growth Fund to be
transferred shall in each case be determined as of the close of business of the
New York Stock Exchange on the Valuation Date. The computation of the net asset
value of the Class A, Class B and Class C shares of Disciplined Value Fund and
the Class A, Class B and Class C shares of LifeSpan Growth Fund shall be done in
the manner used by Disciplined Value Fund and LifeSpan Growth Fund,
respectively, in the computation of such net asset value per share as set forth
in their respective prospectuses. The methods used by Disciplined Value Fund in
such computation shall be applied to the valuation of the assets of LifeSpan
Growth Fund to be transferred to Disciplined Value Fund.
LifeSpan Growth Fund shall declare and pay, immediately prior to the
Valuation Date, a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to LifeSpan Growth Fund's
shareholders all of LifeSpan Growth Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without regard to
any dividends paid) and all of its net capital gain, if any, realized in taxable
years ending on or prior to the Closing Date (after reduction for any capital
loss carry-forward).
4. The closing (the "Closing") shall be at the offices of
OppenheimerFunds, Inc. (the "Agent"), Two World Trade Center, 34th Floor, New
York, New York 10048, at 4:00 P.M. New York time on June 12, 1998 or at such
other time or place as the parties may designate or as provided below (the
"Closing Date"). The business day preceding the Closing Date is hereinafter
referred to as the "Valuation Date."
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In the event that on the Valuation Date either party has, pursuant
to the Investment Company Act of 1940, as amended (the "Act"), or any rule,
regulation or order thereunder, suspended the redemption of its shares or
postponed payment therefore, the Closing Date shall be postponed until the first
business day after the date when both parties have ceased such suspension or
postponement; provided, however, that if such suspension shall continue for a
period of 60 days beyond the Valuation Date, then the other party to the
Agreement shall be permitted to terminate the Agreement without liability to
either party for such termination.
5. In conjunction with the closing, LifeSpan Growth Fund shall distribute
on a pro rata basis to the shareholders of LifeSpan Growth Fund on the Valuation
Date the Class A, Class B and Class C shares of Disciplined Value Fund received
by LifeSpan Growth Fund on the Closing Date in exchange for the assets of
LifeSpan Growth Fund in complete liquidation of LifeSpan Growth Fund; for the
purpose of the distribution by LifeSpan Growth Fund of Class A, Class B and
Class C shares of Disciplined Value Fund to its shareholders, Disciplined Value
Fund will promptly cause its transfer agent to: (a) credit an appropriate number
of Class A, Class B and Class C shares of Disciplined Value Fund on the books of
Disciplined Value Fund to each Class A, Class B and Class C shareholder,
respectively of LifeSpan Growth Fund in accordance with a list (the "Shareholder
List") of its shareholders received from LifeSpan Growth Fund; and (b) confirm
an appropriate number of Class A, Class B and Class C shares of Disciplined
Value Fund to each shareholder of LifeSpan Growth Fund; certificates for Class
A, Class B and Class C shares of Disciplined Value Fund will be issued upon
written request of a former shareholder of LifeSpan Growth Fund but only for
whole shares, with fractional shares credited to the name of the shareholder on
the books of Disciplined Value Fund.
The Shareholder List shall indicate, as of the close of business on
the Valuation Date, the name and address of each shareholder of LifeSpan Growth
Fund, indicating his or her share balance. LifeSpan Growth Fund agrees to supply
the Shareholder List to Disciplined Value Fund not later than the Closing Date.
Shareholders of LifeSpan Growth Fund holding certificates representing their
shares shall not be required to surrender their certificates to anyone in
connection with the reorganization. After the Closing Date, however, it will be
necessary for such shareholders to surrender their certificates in order to
redeem, transfer or pledge the shares of Disciplined Value Fund which they
received.
6. Within one year after the Closing Date, LifeSpan Growth Fund shall (a)
either pay or make provision for payment of all of its liabilities and taxes,
and (b) either (i) transfer any remaining amount of the Cash Reserve to
Disciplined Value Fund, if
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such remaining amount (as reduced by the estimated cost of distributing it to
shareholders) is not material (as defined below) or (ii) distribute such
remaining amount to the shareholders of LifeSpan Growth Fund on the Valuation
Date. Such remaining amount shall be deemed to be material if the amount to be
distributed, after deduction of the estimated expenses of the distribution,
equals or exceeds one cent per share of LifeSpan Growth Fund outstanding on the
Valuation Date.
7. Prior to the Closing Date, there shall be coordination between the
parties as to their respective portfolios so that, after the closing,
Disciplined Value Fund will be in compliance with all of its investment policies
and restrictions. Promptly after the Closing, LifeSpan Growth Fund shall deliver
to Disciplined Value Fund two copies of a list setting forth the securities then
owned by LifeSpan Growth Fund. Promptly after the Closing, LifeSpan Growth Fund
shall provide Disciplined Value Fund a list setting forth the respective federal
income tax bases thereof.
8. Portfolio securities or written evidence acceptable to Disciplined
Value Fund of record ownership thereof by The Depository Trust Company or
through the Federal Reserve Book Entry System or any other depository approved
by LifeSpan Growth Fund pursuant to Rule 17f-4 and Rule 17f-5 under the Act
shall be endorsed and delivered, or transferred by appropriate transfer or
assignment documents, by LifeSpan Growth Fund on the Closing Date to Disciplined
Value Fund, or at its direction, to its custodian bank, in proper form for
transfer in such condition as to constitute good delivery thereof in accordance
with the custom of brokers and shall be accompanied by all necessary state
transfer stamps, if any. The cash delivered shall be in the form of certified or
bank cashiers' checks or by bank wire or intra-bank transfer payable to the
order of Disciplined Value Fund for the account of Disciplined Value Fund.
Shares of Disciplined Value Fund representing the number of shares of
Disciplined Value Fund being delivered against the assets of LifeSpan Growth
Fund, registered in the name of LifeSpan Growth Fund, shall be transferred to
LifeSpan Growth Fund on the Closing Date. Such shares shall thereupon be
assigned by LifeSpan Growth Fund to its shareholders so that the shares of
Disciplined Value Fund may be distributed as provided in Section 5.
If, at the Closing Date, LifeSpan Growth Fund is unable in the
ordinary course of business to make delivery under this Section 8 to Disciplined
Value Fund of any of its portfolio securities or cash for the reason that any of
such securities purchased by LifeSpan Growth Fund, or the cash proceeds of a
sale of portfolio securities, prior to the Closing Date have not yet been
delivered to it or LifeSpan Growth Fund's custodian, then the delivery
requirements of this Section 8 with respect to said
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undelivered securities or cash will be waived and LifeSpan Growth Fund will
deliver to Disciplined Value Fund by or on the Closing Date and with respect to
said undelivered securities or cash executed copies of an agreement or
agreements of assignment in a form reasonably satisfactory to Disciplined Value
Fund, together with such other documents, including a due bill or due bills and
brokers' confirmation slips as may reasonably be required by Disciplined Value
Fund.
9. Disciplined Value Fund shall not assume the liabilities (except for
portfolio securities purchased which have not settled and for shareholder
redemption and dividend checks outstanding) of LifeSpan Growth Fund, but
LifeSpan Growth Fund will, nevertheless, use its best efforts to discharge all
known liabilities, so far as may be possible, prior to the Closing Date. The
cost of printing and mailing the proxies and proxy statements will be borne by
LifeSpan Growth Fund. LifeSpan Growth Fund and Disciplined Value Fund will bear
the cost of their respective tax opinion. Any documents such as existing
prospectuses or annual reports that are included in that mailing will be a cost
of the fund issuing the document. Any other out-of-pocket expenses of
Disciplined Value Fund and LifeSpan Growth Fund associated with this
reorganization, including legal, accounting and transfer agent expenses, will be
borne by LifeSpan Growth Fund and Disciplined Value Fund, respectively, in the
amounts so incurred by each.
10. The obligations of Disciplined Value Fund hereunder shall be subject
to the following conditions:
A. The Board of Directors of the Company shall have authorized the
execution of the Agreement, and the shareholders of LifeSpan Growth Fund shall
have approved the Agreement and the transactions contemplated thereby, and
LifeSpan Growth Fund shall have furnished to Disciplined Value Fund copies of
resolutions to that effect certified by the Secretary or an Assistant Secretary
of the Company; such shareholder approval shall have been by the affirmative
vote of "a majority of the outstanding voting securities" (as defined in the
Act) of LifeSpan Growth Fund at a meeting for which proxies have been solicited
by the Proxy Statement and Prospectus (as hereinafter defined).
B. Disciplined Value Fund shall have received an opinion of counsel
to LifeSpan Growth Fund dated the Closing Date, to the effect that (i) LifeSpan
Growth Fund is a series of the Company which is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
with full powers to carry on its business as then being conducted and to enter
into and perform the Agreement (Maryland counsel may be relied upon for this
opinion); and (ii) that all action necessary to make the Agreement, according to
its terms, valid, binding and enforceable on LifeSpan Growth Fund and to
authorize effectively
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the transactions contemplated by the Agreement have been taken by LifeSpan
Growth Fund.
C. The representations and warranties of LifeSpan Growth Fund
contained herein shall be true and correct at and as of the Closing Date, and
Disciplined Value Fund shall have been furnished with a certificate of the
President, or a Vice President, or the Secretary or the Assistant Secretary or
the Treasurer of the Company, dated the Closing Date, to that effect.
D. On the Closing Date, LifeSpan Growth Fund shall have furnished to
Disciplined Value Fund a certificate of the Treasurer or Assistant Treasurer of
the Company as to the amount of the capital loss carry-over and net unrealized
appreciation or depreciation, if any, with respect to LifeSpan Growth Fund as of
the Closing Date.
E. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of LifeSpan Growth Fund at the
close of business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by the Company under
the Securities Act of 1933, as amended (the "1933 Act"), containing a
preliminary form of the Proxy Statement and Prospectus, shall have become
effective under the 1933 Act not later than July 15, 1998.
G. On the Closing Date, Disciplined Value Fund shall have received a
letter from Andrew J. Donohue or other senior executive officer of
OppenheimerFunds, Inc. acceptable to Disciplined Value Fund, stating that
nothing has come to his or her attention which in his or her judgment would
indicate that as of the Closing Date there were any material actual or
contingent liabilities of LifeSpan Growth Fund arising out of litigation brought
against LifeSpan Growth Fund or claims asserted against it, or pending or to the
best of his or her knowledge threatened claims or litigation not reflected in or
apparent from the most recent audited financial statements and footnotes thereto
of LifeSpan Growth Fund delivered to Disciplined Value Fund. Such letter may
also include such additional statements relating to the scope of the review
conducted by such person and his or her responsibilities and liabilities as are
not unreasonable under the circumstances.
H. Disciplined Value Fund shall have received an opinion, dated the
Closing Date, of KPMG Peat Marwick LLP, to the same effect as the opinion
contemplated by Section 11.E. of this Agreement.
I. Disciplined Value Fund shall have received at the closing all
of the assets of LifeSpan Growth Fund to be conveyed
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hereunder, which assets shall be free and clear of all liens, encumbrances,
security interests, restrictions and limitations whatsoever.
11. The obligations of LifeSpan Growth Fund hereunder shall be subject to
the following conditions:
A. The Board of Directors of the Company shall have authorized the
execution of the Agreement, and the transactions contemplated thereby, and
Disciplined Value Fund shall have furnished to LifeSpan Growth Fund copies of
resolutions to that effect certified by the Secretary or an Assistant Secretary
of the Company.
B. LifeSpan Growth Fund's shareholders shall have approved the
Agreement and the transactions contemplated hereby, by an affirmative vote of "a
majority of the outstanding voting securities" (as defined in the Act) of
LifeSpan Growth Fund, and LifeSpan Growth Fund shall have furnished Disciplined
Value Fund copies of resolutions to that effect certified by the Secretary or an
Assistant Secretary of the Company.
C. LifeSpan Growth Fund shall have received an opinion dated the
Closing Date of counsel to Disciplined Value Fund, to the effect that (i)
Disciplined Value Fund is a series of the Company and is duly organized, validly
existing and in good standing under the laws of the State of Maryland with full
powers to carry on its business as then being conducted and to enter into and
perform the Agreement (Maryland counsel may be relied upon for this opinion);
(ii) all action necessary to make the Agreement, according to its terms, valid,
binding and enforceable upon Disciplined Value Fund and to authorize effectively
the transactions contemplated by the Agreement have been taken by Disciplined
Value Fund, and (iii) the shares of Disciplined Value Fund to be issued
hereunder are duly authorized and when issued will be validly issued, fully-paid
and non-assessable.
D. The representations and warranties of Disciplined Value Fund
contained herein shall be true and correct at and as of the Closing Date, and
LifeSpan Growth Fund shall have been furnished with a certificate of the
President, a Vice President or the Secretary or an Assistant Secretary or the
Treasurer of the Company to that effect dated the Closing Date.
E. LifeSpan Growth Fund shall have received an opinion of KPMG Peat
Marwick LLP to the effect that the Federal tax consequences of the transaction,
if carried out in the manner outlined in this Plan of Reorganization and in
accordance with (i) LifeSpan Growth Fund's representation that there is no plan
or intention by any Fund shareholder who owns 5% or more of LifeSpan Growth
Fund's outstanding shares, and, to LifeSpan Growth Fund's
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best knowledge, there is no plan or intention on the part of the remaining Fund
shareholders, to redeem, sell, exchange or otherwise dispose of a number of
Disciplined Value Fund shares received in the transaction that would reduce
LifeSpan Growth Fund shareholders' ownership of Disciplined Value Fund shares to
a number of shares having a value, as of the Closing Date, of less than 50% of
the value of all of the formerly outstanding Fund shares as of the same date,
and (ii) the representation by each of LifeSpan Growth Fund and Disciplined
Value Fund that, as of the Closing Date, LifeSpan Growth Fund and Disciplined
Value Fund will meet the diversification test of Section 368(a)(2)(F)(ii) of the
Code, will be as follows:
1. The transactions contemplated by the Agreement will qualify
as a tax-free "reorganization" within the meaning of Section 368(a)(1) of the
Code, and under the regulations promulgated thereunder.
2. LifeSpan Growth Fund and Disciplined Value Fund will each
qualify as a "party to a reorganization" within the meaning of Section 368(b)(2)
of the Code.
3. No gain or loss will be recognized by the shareholders of
LifeSpan Growth Fund upon the distribution of shares of beneficial interest in
Disciplined Value Fund to the shareholders of LifeSpan Growth Fund pursuant to
Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by LifeSpan Growth Fund by reason of the transfer of substantially
all its assets in exchange for shares of Disciplined Value Fund.
5. Under Section 1032 of the Code no gain or loss will be
recognized by Disciplined Value Fund by reason of the transfer of substantially
all LifeSpan Growth Fund's assets in exchange for Class A, Class B and Class C
shares of Disciplined Value Fund and Disciplined Value Fund's assumption of
certain liabilities of LifeSpan Growth Fund.
6. The shareholders of LifeSpan Growth Fund will have the same
tax basis and holding period for the Class A, Class B or Class C shares of
beneficial interest in Disciplined Value Fund that they receive as they had for
LifeSpan Growth Fund shares that they previously held, pursuant to Section
358(a) and 1223(1), respectively, of the Code.
7. The securities transferred by LifeSpan Growth Fund to
Disciplined Value Fund will have the same tax basis and holding period in the
hands of Disciplined Value Fund as they had for LifeSpan Growth Fund, pursuant
to Section 362(b) and 1223(1),
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respectively, of the Code.
F. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of LifeSpan Growth Fund at the
close of business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by the Company under
the 1933 Act, containing a preliminary form of the Proxy Statement and
Prospectus, shall have become effective under the 1933 Act not later than July
15, 1998.
H. On the Closing Date, LifeSpan Growth Fund shall have received a
letter from Andrew J. Donohue or other senior executive officer of
OppenheimerFunds, Inc. acceptable to LifeSpan Growth Fund, stating that nothing
has come to his or her attention which in his or her judgment would indicate
that as of the Closing Date there were any material actual or contingent
liabilities of Disciplined Value Fund arising out of litigation brought against
Disciplined Value Fund or claims asserted against it, or pending or, to the best
of his or her knowledge, threatened claims or litigation not reflected in or
apparent by the most recent audited financial statements and footnotes thereto
of Disciplined Value Fund delivered to LifeSpan Growth Fund. Such letter may
also include such additional statements relating to the scope of the review
conducted by such person and his or her responsibilities and liabilities as are
not unreasonable under the circumstances.
I. LifeSpan Growth Fund shall acknowledge receipt of the shares of
Disciplined Value Fund.
12. The Company on behalf of LifeSpan Growth Fund hereby represents and
warrants that:
A. The financial statements of LifeSpan Growth Fund as at October
31, 1997 (audited) heretofore furnished to Disciplined Value Fund, present
fairly the financial position, results of operations, and changes in net assets
of LifeSpan Growth Fund as of that date, in conformity with generally accepted
accounting principles applied on a basis consistent with the preceding year; and
that from October 31, 1997 through the date hereof there have not been, and
through the Closing Date there will not be, any material adverse change in the
business or financial condition of LifeSpan Growth Fund, it being agreed that a
decrease in the size of LifeSpan Growth Fund due to a diminution in the value of
its portfolio and/or redemption of its shares shall not be considered a material
adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated thereby by LifeSpan Growth Fund's shareholders, LifeSpan Growth
Fund has authority to transfer all of
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the assets of LifeSpan Growth Fund to be conveyed hereunder free and clear of
all liens, encumbrances, security interests, restrictions and limitations
whatsoever;
C. The Prospectus, as amended and supplemented, contained in
LifeSpan Growth Fund's Registration Statement under the 1933 Act, as amended, is
true, correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Registration Statement, as amended, was, as of the
date of the filing of the last Post-Effective Amendment, true, correct and
complete, conformed to the requirements of the 1933 Act and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
D. There is no material contingent liability of LifeSpan Growth Fund
and no material claim and no material legal, administrative or other proceedings
pending or, to the knowledge of LifeSpan Growth Fund, threatened against
LifeSpan Growth Fund, not reflected in such Prospectus;
E. Except for this Agreement, there are no material contracts
outstanding to which LifeSpan Growth Fund is a party other than those ordinary
in the conduct of its business;
F. LifeSpan Growth Fund is a series of the Company which is a
Maryland corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland; and has all necessary and material Federal
and state authorizations to own all of its assets and to carry on its business
as now being conducted; and the Company is duly registered under the Act and
such registration has not been rescinded or revoked and is in full force and
effect;
G. All Federal and other tax returns and reports of LifeSpan Growth
Fund required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision shall
have been made for the payment thereof and to the best of the knowledge of
LifeSpan Growth Fund no such return is currently under audit and no assessment
has been asserted with respect to such returns and to the extent such tax
returns with respect to the taxable year of LifeSpan Growth Fund ended October
31, 1997 have not been filed, such returns will be filed when required and the
amount of tax shown as due thereon shall be paid when due; and
H. LifeSpan Growth Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its
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<PAGE>
operations, LifeSpan Growth Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment company and
LifeSpan Growth Fund intends to meet such requirements with respect to its
current taxable year.
13. The Company on behalf of Disciplined Value Fund hereby represents and
warrants that:
A. The financial statements of Disciplined Value Fund as at October
31, 1997 (audited) heretofore furnished to LifeSpan Growth Fund, present fairly
the financial position, results of operations, and changes in net assets of
Disciplined Value Fund, as of that date, in conformity with generally accepted
accounting principles applied on a basis consistent with the preceding year; and
that from October 31, 1997 through the date hereof there have not been, and
through the Closing Date there will not be, any material adverse changes in the
business or financial condition of Disciplined Value Fund, it being understood
that a decrease in the size of Disciplined Value Fund due to a diminution in the
value of its portfolio and/or redemption of its shares shall not be considered a
material or adverse change;
B. The Prospectus, as amended and supplemented, contained in the
Company's Registration Statement under the 1933 Act, is true, correct and
complete, conforms to the requirements of the 1933 Act and does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Registration Statement, as amended, was, as of the date of the filing of the
last Post-Effective Amendment, true, correct and complete, conformed to the
requirements of the 1933 Act and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
C. Except for this Agreement, there is no material contingent
liability of Disciplined Value Fund and no material claim and no material legal,
administrative or other proceedings pending or, to the knowledge of Disciplined
Value Fund, threatened against Disciplined Value Fund, not reflected in such
Prospectus;
D. There are no material contracts outstanding to which Disciplined
Value Fund is a party other than those ordinary in the conduct of its business;
E. Disciplined Value Fund is a series of the Company which is a
Maryland corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland; has all necessary and material Federal and
state authorizations to own all its properties and assets and to carry on its
business as now being conducted; the shares of Disciplined Value Fund which it
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issues to LifeSpan Growth Fund pursuant to the Agreement will be duly
authorized, validly issued, fully-paid and non-assessable; and will conform to
the description thereof contained in Disciplined Value Fund's Registration
Statement, will be duly registered under the 1933 Act and in the states where
registration is required; and Disciplined Value Fund is duly registered under
the Act and such registration has not been revoked or rescinded and is in full
force and effect;
F. All Federal and other tax returns and reports of Disciplined
Value Fund required by law to be filed have been filed, and all Federal and
other taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the knowledge of
Disciplined Value Fund no such return is currently under audit and no assessment
has been asserted with respect to such returns and to the extent such tax
returns with respect to the taxable year of Disciplined Value Fund ended October
31, 1997 have not been filed, such returns will be filed when required and the
amount of tax shown as due thereon shall be paid when due;
G. Disciplined Value Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations, Disciplined
Value Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and Disciplined
Value Fund intends to meet such requirements with respect to its current taxable
year;
H. Disciplined Value Fund has no plan or intention (i) to dispose of
any of the assets transferred by LifeSpan Growth Fund, other than in the
ordinary course of business, or (ii) to redeem or reacquire any of the shares
issued by it in the reorganization other than pursuant to valid requests of
shareholders; and
I. After consummation of the transactions contemplated by the
Agreement, Disciplined Value Fund intends to operate its business in a
substantially unchanged manner.
14. Each party hereby represents to the other that no broker or finder has
been employed by it with respect to the Agreement or the transactions
contemplated hereby. Each party also represents and warrants to the other that
the information concerning it in the Proxy Statement and Prospectus will not as
of its date contain any untrue statement of a material fact or omit to state a
fact necessary to make the statements concerning it therein not misleading and
that the financial statements concerning it will present the information shown
fairly in accordance with generally accepted accounting principles applied on a
basis consistent with the preceding year. Each party also represents and
warrants to the other that the Agreement is valid, binding and enforceable in
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accordance with its terms and that the execution, delivery and performance of
the Agreement will not result in any violation of, or be in conflict with, any
provision of any charter, by-laws, contract, agreement, judgment, decree or
order to which it is subject or to which it is a party. Disciplined Value Fund
hereby represents to and covenants with LifeSpan Growth Fund that, if the
reorganization becomes effective, Disciplined Value Fund will treat each
shareholder of LifeSpan Growth Fund who received any of Disciplined Value Fund's
shares as a result of the reorganization as having made the minimum initial
purchase of shares of Disciplined Value Fund received by such shareholder for
the purpose of making additional investments in shares of Disciplined Value
Fund, regardless of the value of the shares of Disciplined Value Fund received.
15. Disciplined Value Fund agrees that it will prepare and file a
Registration Statement on Form N-14 under the 1933 Act which shall contain a
preliminary form of proxy statement and prospectus contemplated by Rule 145
under the 1933 Act. The final form of such proxy statement and prospectus is
referred to in the Agreement as the "Proxy Statement and Prospectus." Each party
agrees that it will use its best efforts to have such Registration Statement
declared effective and to supply such information concerning itself for
inclusion in the Proxy Statement and Prospectus as may be necessary or desirable
in this connection. Oppenheimer LifeSpan Growth Fund covenants and agrees to, as
soon as practicable and, upon closing, to cause the cancellation of its
outstanding shares.
16. The obligations of the parties, their respective directors, officers,
agents or others acting on their behalf under the Agreement shall be subject to
obtaining an exemptive order from the Securities and Exchange Commission under
Section 17(a) of the Act and to the right of either party to abandon and
terminate the Agreement for any reason and there shall be no liability for
damages or other recourse available to a party not so terminating this
Agreement, provided, however, that in the event that a party shall terminate
this Agreement without reasonable cause, the party so terminating shall, upon
demand, reimburse the party not so terminating for all expenses, including
reasonable out-of-pocket expenses and fees incurred in connection with this
Agreement.
17. The Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
Agreement. The rights and obligations of each party pursuant to the Agreement
shall not be assignable.
18. All prior or contemporaneous agreements and representations are merged
into the Agreement, which constitutes the entire contract between the parties
hereto. No amendment or modification hereof shall be of any force and effect
unless in writing and signed by the parties and no party shall be deemed to
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have waived any provision herein for its benefit unless it executes a written
acknowledgment of such waiver.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed and attested by its officers thereunto duly authorized on the date
first set forth above.
OPPENHEIMER SERIES FUND, INC.,
on behalf of,
OPPENHEIMER DISCIPLINED VALUE FUND
By:___________________________
Andrew J. Donohue, Secretary
OPPENHEIMER SERIES FUND, INC.
on behalf of
OPPENHEIMER LIFESPAN GROWTH FUND
By:________________________________
Andrew J. Donohue, Secretary
A-14
<PAGE>
Exhibit B
Average Annual Total Returns
for the Periods Ended 10/31/97
1-YEAR 3-YEAR 5-YEAR 10-YEAR
Disciplined Value Fund Class A Shares(1) 20.27% 21.11% 18.70% 17.06%
LifeSpan Growth Fund Class A Shares(1) 6.46%
Disciplined Value Fund Class B Shares(2) 21.61%
LifeSpan Growth Fund Class B Shares(2) 7.07%
Disciplined Value Fund Class C Shares(3) 25.64%
LifeSpan Growth Fund Class C Shares(3) 11.05%
Disciplined Value Fund Class Y Shares(4) 23.62%
Total Returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
An explanation of the different performance calculations is in each fund's
Prospectus.
(1) Class A returns include the current maximum initial sales charge of 5.75%.
Disciplined Value Fund's maximum sales charge rate for Class A shares was higher
during a portion of some of the periods shown, so that actual results would have
been lower.
(2) Class B returns include the applicable contingent deferred sales charge of
5% (1-year). Class B shares are subject to an annual 0.75% asset-based sales
charge.
(3) Class C returns reflect the 1% contingent deferred sales charge for the
1-year result. Class C shares are subject to an annual 0.75% asset-based sales
charge.
(4) The Class Y return shown is a cumulative total return from the inception of
the class on December 16, 1996.
<PAGE>
OPPENHEIMER SERIES FUND, INC.
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048-0203
1-800-525-7048
STATEMENT OF ADDITIONAL INFORMATION
APRIL 6, 1998
-----------------------------------
This Statement of Additional Information of Oppenheimer Series Fund, Inc. (the
"Registrant") consists of this cover page and the following documents:
1. Prospectus of Oppenheimer Disciplined Allocation Fund dated February 19,
1998*
2. Statement of Additional Information of Oppenheimer Disciplined Allocation
Fund dated February 19, 1998*
3. Prospectus of Oppenheimer LifeSpan Balanced Fund dated February 19, 1998*
4. Statement of Additional Information of Oppenheimer LifeSpan Balanced Fund
dated February 19, 1998*
5. Annual Report of Oppenheimer Disciplined Allocation Fund as of October 31,
1997*
6. Annual Report of Oppenheimer LifeSpan Balanced Fund dates as of October 31,
1997*
7. Pro Forma Financial Statements, including Pro Forma Statement of
Investments: Oppenheimer LifeSpan Balanced Fund. into Oppenheimer
Disciplined Allocation Fund*
This Statement of Additional Information (the "Additional Statement") is not a
Prospectus. This Additional Statement should be read in conjunction with the
Proxy Statement and Prospectus of the Registrant dated April 6, 1998, which may
be obtained by written request to OppenheimerFunds Services, P.O. Box 5270,
Denver, Colorado 80217, or by calling at the toll-free number shown above.
- ------------------
* Filed with Registrant's Registration Statement on Form N-14 (Reg. No.
333-47049) 2/27/98, and incorporated herein by reference.
