Registration No. 2-11052
File No. 811-490
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 75 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 32 / X /
OPPENHEIMER TOTAL RETURN FUND, INC.
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
(Address of Principal Executive Offices)
303-671-3200
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation, Suite 3400
Two World Trade Center, New York, New York 10048-0203
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On April 28, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On , pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ________________ pursuant to paragraph (a)(2) of Rule
485
Registration of Shares Under the Securities Act of 1933
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended December 31, 1994 was filed on February 27, 1995.
<PAGE>
FORM N-1A
OPPENHEIMER TOTAL RETURN FUND, INC.
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Front Cover Page
2 Expenses; Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed--Organization and
History; Investment Objectives and Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed-Organization and History; The
Transfer Agent; Dividends, Capital Gains and Taxes;
Investment Objectives and Policies-Portfolio Turnover
7 Shareholder Account Rules and Policies; How To Buy Shares;
How to Exchange Shares; Special Investor Services; Service
Plan for Class A Shares; Distribution and Service Plan
for Class B Shares; How to Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading In Statement of Additional Information
- --------- ----------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objectives and Policies; Other Investment
Techniques and Strategies; Additional Investment Restrictions
14 How the Fund is Managed - Directors and Officers of the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 *
- ----------------
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
Prospectus dated April 28, 1995
Oppenheimer Total Return Fund, Inc. (the "Fund") is a mutual fund
with the investment objective of seeking high total return. The Fund
intends to seek its investment objective through investment in securities
which it believes will provide a high return, including investments which
are expected to provide opportunities for growth or to produce income, or
both. The Fund is not restricted to any specific type of security and may
also use certain hedging instruments to try to reduce risks of market
fluctuations that affect the value of the securities the Fund holds. The
securities the Fund invests in are described more completely in
"Investment Objective and Policies."
The Fund offers two classes of shares: (1) Class A shares, which are
sold at a public offering price that includes a front-end sales charge,
and (2) Class B shares, which are sold without a front-end sales charge,
although you may pay a sales charge when you redeem your shares, depending
on how long you hold them. Class B shares are also subject to an annual
"asset-based sales charge." Each class of shares bears different
expenses. A third class of shares may be purchased only by certain
institutional investors at net asset value per share (the "Class Y
shares"). In deciding which class of shares to buy, you should consider
how much you plan to purchase, how long you plan to keep your shares, and
other factors discussed in "How to Buy Shares" starting on page __.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the April 28, 1995 Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus.
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Contents
ABOUT THE FUND
Expenses
Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class Y Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended December 31, 1994.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages ____ through ____, for an explanation of how and when these charges
apply.
Class A Class B Class Y
Shares Shares Shares
Maximum Sales Charge on 5.75% None None
Purchases (as a % of offering
price)
Sales Charge On Reinvested None None None
Dividends
Deferred Sales Charge None(1) 5% in the first None
(as a % of the lower of the year, declining
original purchase price or to 1% in the
redemption proceeds) sixth year and
eliminated thereafter
Exchange Fee None(2) None(2) None(2)
(1) If you invest more than $1 million in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Class A Shares,"
below.
(2)There is a $10 transaction fee for redemptions paid by Federal Funds
wire, but not for redemptions paid by check or by ACH wire through
AccountLink (see "How to Sell Shares").
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed," below. The Fund has other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal expenses. Those
expenses are detailed in the Fund's Financial Statements in the Statement
of Additional Information.
The numbers in the chart below are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The 12b-1 Distribution Plan Fees for
Class A shares are service fees. For Class B shares the 12b-1
Distribution Plan Fees are service fees and asset-based sales charges.
The service fee for Class A and Class B shares is a maximum of 0.25% of
average annual net assets of the class and the asset-based sales charge
for Class B shares is 0.75%. These plans are described in greater detail
in "How to Buy Shares." The Total Fund Operating Expenses as to Class Y
shares are based on expenses for the period from June 1, 1994 through
December 31, 1994.
The actual expenses for each class of shares in future years may be
more or less than the numbers in the chart, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares.
Class A Class B Class Y
Shares Shares Shares
Management Fees .55% .55% .55%
12b-1 Distribution
Plan Fees .18% 1.00% None
Other Expenses .28% .32% .41%
Total Fund Operating
Expenses 1.01% 1.87% .96%
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses 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 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $67 $88 $110 $174
Class B Shares $69 $89 $121 $176
Class Y Shares $10 $31 $ 53 $118
<PAGE>
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $67 $88 $110 $174
Class B Shares $19 $59 $101 $176
Class Y Shares $10 $31 $ 53 $118
*The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Long term Class B
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. Please refer
to "How to Buy Shares - Class B Shares" for more information.
These examples show the effect of the current level of expenses on
an investment attaining a hypothetical return, but are not meant to state
or predict actual or expected expenses or investment returns of the Fund,
all of which will vary.
Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek high total return.
- What Does the Fund Invest In? To achieve its objective, the Fund
primarily invests in securities which it believes will provide a high
return, including investments which are expected to provide opportunities
for growth or to produce income, or both. The Fund may also write covered
calls and use certain types of securities called "derivative investments"
and hedging instruments to try to manage investment risks. These
investments are more fully explained in "Investment Objective and
Policies" starting on page __.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation, which (including a
subsidiary) advises investment company portfolios currently having over
$30 billion in assets. The Fund's portfolio managers are John Wallace,
Bruce Bartlett and Diane Sobin, who are primarily responsible for the
selection of the Fund's securities. The Manager is paid an advisory fee
by the Fund, based on its assets. The Fund's Board of Directors, elected
by shareholders, oversees the investment adviser and the portfolio
manager. Please refer to "How the Fund is Managed," starting on page ___
for more information about the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in stocks and bonds are subject to changes
in their value from a number of factors such as changes in general bond
and stock market movements. The change in value of particular stocks or
bonds may result from an event affecting the issuer, or changes in
interest rates that can affect stock and bond prices. These changes
affect the value of the Fund's investments and its share prices for each
class of its shares. The Fund is more aggressive than most growth &
income funds but less aggressive than aggressive growth funds. In
addition, there are certain risks associated with the foreign securities
the Fund may purchase and the hedging strategies the Manager may utilize.
While the Manager tries to reduce risks by diversifying investments, by
carefully researching securities before they are purchased for the
portfolio, and in some cases by using hedging techniques, there is no
guarantee of success in achieving the Fund's objectives and your shares
may be worth more or less than their original cost when you redeem them.
Please refer to "Investment Objectives and Policies" starting on page ___
for a more complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
on page ___ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers the
individual investor two classes of shares. Class A shares are offered
with a front-end sales charge, starting at 5.75%, and reduced for larger
purchases. Class B shares are offered without a front-end sales charge,
but may be subject to a contingent deferred sales charge (starting at 5%
and declining as shares are held longer) if redeemed within 6 years of
purchase. There is also an annual asset-based sales charge on Class B
shares. Please review "How To Buy Shares" starting on page ___ for more
details, including a discussion about factors you and your financial
advisor should consider in determining which class may be appropriate for
you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How To Sell Shares" on page ___.
- How Has the Fund Performed? The Fund measures its performance by
quoting its dividend yield, average annual total return and cumulative
total return, which measure historical performance. Those yields and
returns can be compared to the yields and returns (over similar periods)
of other funds. Of course, other funds may have different objectives,
investments, and levels of risk. The Fund's performance can also be
compared to broad market indices, which we have done on page ___. Please
remember that past performance does not guarantee future results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense ratios
and other data based on the Fund's average net assets. This information
has been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report on the Fund's financial statements for the fiscal
year ended December 31, 1994 is included in the Statement of Additional
Information. Class Y shares were only offered during a portion of that
period.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $8.69 $7.84 $7.49 $6.13 $6.68 $6.35 $5.95
Income (loss) from
investment operations:
Net investment income .23 .18 .17 .24 .24 .27 .26
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions (.91) 1.45 .75 1.91 (.49) .93 .53
Total income (loss)
from investment operations (.68) 1.63 .92 2.15 (.25) 1.20 .79
Dividends and distributions
to shareholders:
Dividends from net
investment income (.21) (.20) (.20) (.23) (.24) (.28) (.27)
Distributions from net
realized gain on investments,
options written and foreign
currency transactions -- (.58) (.37) (.56) (.06) (.59) (.12)
Total dividends and
distributions to shareholders (.21) (.78) (.57) (.79) (.30) (.87) (.39)
Net asset value,
end of period $7.80 $8.69 $7.84 $7.49 $6.13 $6.68 $6.35
========== ========== ======== ========
======== ======== ========
TOTAL RETURN,
AT NET ASSET VALUE(3) (7.86)% 21.24% 12.83% 36.26% (3.86)% 19.25%
13.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,235,637 $1,223,395 $795,474 $555,865 $396,240 $389,413 $314,039
Average net assets
(in thousands) $1,261,729 $992,381 $662,917 $475,741 $394,903 $356,994 $298,509
Number of shares
outstanding at end of period
(in thousands) 158,417 140,711 101,433 74,245 64,644 58,333 49,464
Ratios to average net assets:
Net investment income 2.88% 2.21% 2.68% 3.26% 3.87% 3.96%
4.22%
Expenses 1.01% .93% .96% .95% .98% .98% .94%
Portfolio turnover rate(5) 117.2% 143.9% 143.5% 161.5% 114.1% 151.6%
127.3%
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund's investment objective is to seek high total
return. "Total return" is defined as a change in asset value over a
particular period taking into account both income and capital
appreciation.
Investment Policies and Strategies. In general, the Fund will attempt
to invest its assets to gain both reasonable income and capital
appreciation. The Manager does not follow a specified formula for
allocating the Fund's assets between income and capital appreciation.
Depending on the assessment of market conditions by the Fund's investment
adviser, Oppenheimer Management Corporation (the "Manager"), the Fund may
emphasize investment in common stocks and securities convertible into
common stocks, or securities which are acquired primarily to produce
income, or a combination of both types of investments. The Fund's
investments, however, are not restricted to any specific type of
securities. When the investment climate is viewed as favorable, common
stocks may be more heavily emphasized. In an uncertain environment when
it would be appropriate to maintain a temporary defensive position,
investment in preferred stocks, bonds, cash equivalents, Treasury bills
or commercial paper may be stressed.
While the Fund may invest in securities having appreciation
possibilities, such securities will not be selected which, in the view of
the Manager, would involve undue risk (e.g., securities of companies
having questionable financial solvency or securities having limited
marketability). The amount of dividends paid by the Fund may fluctuate.
The Fund is not intended for investors whose principal objective is
assured income and conservation of capital. Since market risks are
inherent in all investments to varying degrees, there can be no assurance
that the Fund's investment objective will be met.
The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies and derivative
investments described below. The Fund's portfolio managers may employ
special investment techniques in selecting securities for the Fund. These
are also described below. Additional information may be found about them
under the same headings in the Statement of Additional Information.
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, described above, as well as investment
policies it follows to try to achieve its objective. Additionally, the
Fund uses certain investment techniques and strategies in carrying out
those investment policies. The Fund's investment policies and techniques
are not "fundamental" unless this Prospectus or the Statement of
Additional Information says that a particular policy is "fundamental."
The Fund's investment objective is a fundamental policy.
The Fund's Board of Directors may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus. Fundamental policies are
those that cannot be changed without the approval of a "majority" of the
Fund's outstanding voting shares. The term "majority" is defined in the
Investment Company Act to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information).
- Stock Investment Risks. Because the Fund invests a substantial
portion of its assets in stocks, the value of the Fund's portfolio will
be affected by changes in the stock markets. At times, the stock markets
can be volatile and stock prices can change substantially. This market
risk will affect the Fund's net asset value per share, which will
fluctuate as the values of the Fund's portfolio securities change. Not
all stock prices change uniformly or at the same time, and other factors
can affect a particular stock's prices (for example, poor earnings reports
by an issuer, loss of major customers, major litigation against an issuer,
and changes in government regulations affecting an industry). Not all of
these factors can be predicted.
As discussed below, the Fund attempts to limit market risks by
diversifying its investments, that is, by not holding a substantial amount
of the stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Also, the Fund does
not concentrate its investments in any one industry or group of
industries. Because changes in overall market prices can occur at any
time, and because the income earned on securities is subject to change,
there is no assurance that the Fund will achieve its investment
objectives, and when you redeem your shares, they may be worth more or
less than what you paid for them.
- Investments in Convertible Securities. When investing in
convertible securities, the Manager looks to the conversion feature and
treats the securities as "equity securities." The Fund can buy unrated
securities, and when doing so, the Manager will determine whether unrated
securities are of comparable quality to securities rated by rating
organizations.
- Interest Rate Risks. In addition to credit risks, described
below, debt securities which the Fund may purchase are subject to changes
in their values due to changes in prevailing interest rates. When
prevailing interest rates fall, the value of already-issued debt
securities generally rise. When interest rates rise, the values of
already-issued debt securities generally decline. The magnitude of these
fluctuations will often be greater for longer-term debt securities than
shorter-term debt securities. Changes in the value of securities held by
the Fund mean that the Fund's share prices can go up or down when interest
rates change because of the effect of the change on the value of the
Fund's portfolio of debt securities.
- Special Risks of Lower-Rated Securities. The domestic and foreign
debt securities the Fund can invest in may include (without any
restriction as to the amount) high-yield, "lower-grade" debt securities
(including both high-yielding rated and unrated securities), because they
generally offer higher income potential than investment grade securities.
"Lower-grade" securities are those rated below "investment grade," which
means they have a rating below "BBB" by Standard & Poor's Corporation or
"Baa" by Moody's Investors Service, Inc. or similar ratings by other
rating organizations. "Lower-grade" debt securities the Fund may invest
in also include securities that are not rated by a nationally-recognized
rating organization like Standard & Poor's or Moody's, but which the
Manager judges to be comparable to lower-rated securities. The Fund may
invest in securities rated as low as "D" by Standard & Poor's or "C" by
Moody's.
High yield, lower-grade securities, whether rated or unrated, often
have speculative characteristics. Lower-grade securities have special
risks that make them riskier investments than investment grade securities.
They may be subject to greater market fluctuations and risk of loss of
income and principal than lower yielding, investment grade securities.
There may be less of a market for them and therefore they may be harder
to sell at an acceptable price. There is a relatively greater possibility
that the issuer's earnings may be insufficient to make the payments of
interest due on the bonds. The issuer's low creditworthiness may increase
the potential for its insolvency. For foreign lower-grade debt
securities, these risks are in addition to the risks of investing in
foreign securities, described in "Foreign Securities," below.
These risks mean that the Fund may not achieve the expected income
from lower-grade securities, and that the Fund's net asset value per share
may be affected by declines in value of these securities. However,
convertible securities may be less subject to some of these risks than
other debt securities, to the extent they can be converted into stock,
which may be more liquid and less affected by these risks.
- Foreign Securities. To broaden its opportunities to seek its
investment objective, the Fund may purchase equity and debt securities
issued or guaranteed by foreign companies or debt securities issued by
foreign governments, including foreign government agencies, that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. The Fund may buy securities of companies or governments in any
country, developed or underdeveloped. The Fund may invest up to 100% of
its assets in foreign securities. The Fund will hold foreign currency
only to effect foreign securities transactions and not as an investment.
If the Fund's securities are held abroad, the countries in which they are
held and the sub-custodians holding them must, in most cases, be approved
by the Fund's Board of Directors.
Foreign securities have special risks. For example, foreign issuers are
not subject to the same accounting and disclosure requirements that
U.S. companies are subject to. The value of foreign investments may be
affected by changes in foreign currency rates, exchange control
regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or other
political and economic factors. More information about the risks and
potential rewards of investing in foreign securities is contained in the
Statement of Additional Information.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their use
that are designed to reduce some of the risks.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." They are used in some cases
for hedging purposes and in other cases to attempt to enhance 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. In the
broadest sense, exchange-traded options and futures contracts (discussed
in "Hedging," below) may be considered "derivative investments."
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the
maturity of the instrument. Also, the underlying investment or security
on which the derivative is based might not perform the way the Manager
expected it to perform. The performance of derivative investments may
also be influenced by interest rate changes in the U.S. and abroad. All
of this can mean that the Fund will realize less principal or income from
the investment than expected. Certain derivative investments held by the
Fund may trade in the over-the-counter market and may be illiquid. Please
refer to "Illiquid and Restricted Securities."
The Fund may invest in different types of derivatives, described
below. "Index-linked" or "commodity-linked" notes are debt securities of
companies that call for payment on the maturity of the note in different
terms than the typical note where the borrower agrees to pay a fixed sum
on the maturity of the note. The payment on maturity of an index-linked
note depends on the performance of one or more market indices, such as the
S & P 500 Index or a weighted index of commodity futures, such as crude
oil, gasoline and natural gas. The Fund may invest in debt exchangeable
for common stock of an issuer or "equity-linked" debt securities of an
issuer. At maturity, the principal amount of the debt security is
exchanged for common stock of the issuer or is payable in an amount based
on the issuer's common stock price at the time of maturity. In either
case there is a risk that the amount payable at maturity will be less than
the principal amount of the debt.
The Fund may also invest in currency-indexed securities. Typically,
these are short-term or intermediate-term debt securities having a value
at maturity or an interest rate determined by reference to one or more
foreign currencies. The currency-indexed securities purchased by the Fund
may make payments based on a formula. The payment may be calculated as
a multiple of the movement of one currency against another currency, or
against an index. These investments may entail increased risk to
principal and increased price volatility.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures, on broadly-based stock indices and on
foreign currencies, or enter into interest rate swap agreements. These
are all referred to as "hedging instruments." The Fund does not use
hedging instruments for speculative purposes, and has limits on the use
of them, described below. The hedging instruments the Fund may use are
described below and in greater detail in the Statement of Additional
Information.
The Fund may buy and sell options, futures and forward contracts for
a number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the equities market as a temporary substitute
for purchasing particular equity securities. It 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 Fund's exposure to the securities market. Forward
contacts are used to try to manage foreign currency risks on the Fund's
foreign investments. Foreign currency options are used to try to protect
against declines in the dollar value of foreign securities the Fund owns,
or to protect against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income to the
Fund for liquidity purposes or defensive reasons.
- Futures. The Fund may buy and sell futures contracts that relate
to (1) foreign currencies (these are Forward Contracts), and (2) broadly-
based stock indices (these are referred to as Stock Index Futures). These
types of Futures are described in "Hedging" in the Statement of Additional
Information. At present, the Fund does not intend to enter into Stock
index Futures and options on Futures for bona fide hedging purposes, if,
after any such purchase or sales, the sum of margin deposits on Futures
and premiums paid on Futures options exceed 5% of the value of the Fund's
total assets.
- Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls).
The Fund may buy calls only on securities, securities indices, or
Stock Index Futures, or to terminate its obligation on a call the Fund
previously wrote. The Fund may write (that is, sell) call options only
if they are "covered." That means the Fund must own the security subject
to the call while the call is outstanding (or own other securities
acceptable for applicable escrow requirements). When the Fund writes a
call, it receives cash (called a premium). The call gives the buyer the
ability to buy the investment on which the call was written from the Fund
at the call price during the period in which the call may be exercised.
If the value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the Fund
keeps the cash premium (and the investment). The Fund may write calls to
generate additional income or for defensive purposes if, after any sale,
not more than 25% of the Fund's total assets are subject to calls. The
Fund may also purchase "relative performance call options." These are
call options that have a cash settlement based on the difference between
the returns on two market indices. These options are subject to the risk
that the value of the option may decline because of adverse movements in
the market indices.
The Fund may purchase puts. 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. The Fund can buy only those puts that relate to (1)
securities (whether or not held by it), (2) Stock Index Futures (whether
or not it holds such Stock Index Futures in its portfolio), or (3)
broadly-based stock indices. The Fund may sell a put on securities,
securities indices, or, Futures, but only if the puts are covered by
segregated liquid assets. The Fund will not write puts if more than 50%
of the Fund's net assets would have to be segregated to cover put
obligations.
A call or put may be purchased only if, after the purchase, the value
of all call and put options held by the Fund will not exceed 5% of the
Fund's total assets. The Fund may buy and sell put and 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 and traded 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, described in "Illiquid and Restricted Securities,"
below.
- Forward Contracts. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund uses them to try to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that the
Fund has purchased or sold, or to protect against possible losses from
changes in the relative value of the U.S. dollar and a foreign currency.
The Fund may also use "cross hedging," where the Fund hedges against
changes in currencies other than the currency in which a security it holds
is denominated.
- Interest Rate Swaps. In an interest rate swap, the 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 securities it owns. The Fund may not enter into swaps
with respect to more than 25% of its total assets. The Fund will
segregate liquid assets (such as cash or U.S. Government securities) to
cover any amounts it could owe under swaps that exceed the amounts it is
entitled to receive, and it will adjust that amount daily, as needed.
Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions are
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 Fund. There are also special risks in particular hedging
strategies. For example, in writing puts, there is a risk that the 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. The Fund limits its exposure in foreign currency
exchange contracts to the amount of its assets denominated in the foreign
currency, to avoid having to buy or sell foreign currency at
disadvantageous prices. Interest rate swaps are subject to the risk that
the other party will fail to meet its obligations (or that the underlying
issuer will fail to pay on time), as well as interest rate risks. The
Fund could be obligated to pay more under its swap agreements than it
receives under them, as a result of interest rate changes. If a covered
call written by the Fund is exercised on an investment that has increased
in value, the Fund will be required to sell the investment at the call
price and will not be able to realize any profit if the investment has
increased in value above the call price. These risks are described in
greater detail in the Statement of Additional Information.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Directors, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly at
an acceptable price. A restricted security is one that has a contractual
restriction on its resale or which cannot be sold publicly until it is
registered under the Securities Act of 1933. The Fund will not invest
more than 10% of its net assets in illiquid or restricted securities (that
limit may increase to 15% if certain state laws are changed or the Fund's
shares are no longer sold in those states). The Fund's percentage
limitation on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers.
- Repurchase Agreements. The Fund may enter into repurchase agreements
to generate income and for liquidity purposes to meet anticipated
redemptions, or pending the investment of proceeds from sales of Fund
shares or settlement of purchases of portfolio investments. In a
repurchase transaction, the Fund buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements
must be fully collateralized. However, if the vendor fails to pay the
resale price on the delivery date, the Fund may incur costs in disposing
of the collateral and may experience losses if there is any delay in its
ability to do so. The Fund will not enter into a repurchase agreement
that will cause more than 15% of its net assets to be subject to
repurchase agreements maturing in more than seven days. There is no limit
on the amount of the Fund's net assets that may be subject to repurchase
agreements of seven days or less. See the Statement of Additional
Information for more details.
- Loans of Portfolio Securities. To attempt to increase its income,
the Fund may lend its portfolio securities (other than in repurchase
transactions) to brokers, dealers and other financial institutions. These
loans are limited to not more than 10% of the value of the Fund's total
assets and are subject to other conditions described in the Statement of
Additional Information. The Fund presently does not intend to lend its
portfolio securities, but if it does, the value of securities loaned is
not expected to exceed 5% of the value of the Fund's total assets.
Other Investment Restrictions. The Fund has other investment
restrictions which, together with its investment objective, are
fundamental policies. Under these fundamental policies, the Fund cannot
do any of the following: (i) borrow or lend money, or lend, pledge,
mortgage, or hypothecate securities except as provided above under "Loans
of Portfolio Securities" (however, the Fund may purchase bonds or other
debt securities, and enter into escrow arrangements contemplated by the
writing of covered call options or other collateral or margin arrangements
in connection with Hedging Instruments the Fund may use under its other
fundamental policies); (ii) invest more than 5% of its assets in
securities of any one issuer other than the U.S. Government; (iii)
purchase the securities of any one issuer if immediately thereafter, the
Fund would own more than 10% of the outstanding voting securities or 10%
of any one class of securities of such issuer (except for securities of
investment companies acquired in exchange for Fund shares); or (iv)
concentrate investments in a particular industry or group of industries;
therefore, the Fund will not purchase the securities of companies in any
one industry if, thereafter, more than 25% of the value of the Fund's
assets would consist of securities of companies in that industry.
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time the Fund purchases a security, and the
Fund need not dispose of a security merely because the size of the Fund's
assets has changed or the security has increased in value relative to the
size of the Fund. There are other fundamental policies discussed in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1944. Since 1979,
the Fund has been a Maryland corporation. The Fund is a diversified open-
end, management investment company.
The Fund is governed by a Board of Directors, which is responsible
for protecting the interests of shareholders under Maryland law. The
Directors meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Directors and Officers of the Fund" in the Statement of Additional
Information names the Directors and provides more information about them
and the officers of the Fund. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Director or to take other action described in the
Fund's Articles of Incorporation.
The Board of Directors has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class Y. Each class has its own dividends and distributions
and pays certain expenses which may be different for the different
classes. Each class may have a different net asset value. Each share has
one vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote together on
matters that affect that class alone. Shares are freely transferrable.
Please refer to "How the Fund is Managed" in the Statement of Additional
Information for more information on the voting of shares.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting the
Fund's investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board
of Directors, under an Investment Advisory Agreement which states the
Manager's responsibilities. The Agreement sets forth the fees paid by the
Fund to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other OppenheimerFunds, with assets of more than $30 billion as
of March 31, 1995, and with more than 2.4 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
- Portfolio Manager. The portfolio managers of the Fund are John
Wallace, Bruce Bartlett and Diane Sobin. Each of them is a Vice President
of the Manager and serves as a Vice President and Portfolio Manager of the
Fund. John Wallace has been the person principally responsible for the
day-to-day management of the Fund's portfolio since February, 1990.
During the past five years, Mr. Wallace has also served as an officer of
other OppenheimerFunds, prior to which he was a securities analyst and
assistant portfolio manager for the Manager. Mr. Bartlett was previously
a Vice President and Senior Portfolio Manager with First of America
Investment Corporation. Ms. Sobin was previously a Vice President and
Senior Portfolio Manager with Dean Witter Intercapital, Inc. Prior to
that, she served as an international equity analyst with College
Retirement Equities Fund and was a financial planner with E.F. Hutton &
Company. For more information about the Fund's other officers and
Directors, see "Directors and Officers of the Fund" in the Statement of
Additional Information.
- Fees and Expenses. Under the investment advisory agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.75% of the first $100 million of
aggregate net assets, 0.70% of the next $100 million, 0.65% of the next
$100 million, 0.60% of the next $100 million, 0.55% of the next $100
million, and 0.50% of net assets in excess of $500 million. The Fund's
management fee for its last fiscal year was 0.55% of average annual net
assets for each of its Class A, Class B and Class Y shares, which may be
higher than the rate paid by some other mutual funds.
The Fund pays expenses related to its daily operations, such as
custodian fees, Directors' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the investment advisory
agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Fund's Distributor.
The Distributor also distributes the shares of other mutual funds managed
by the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return," "average annual total return" and "dividend yield" to illustrate
its performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will usually
be different as a result of the different kinds of expenses each class
bears. This performance information may be useful to help you see how
well your investment has done and to compare it to other funds or market
indices, as we have done below.
It is important to understand that the Fund's total returns and yield
represent past performance and should not be considered to be predictions
of future returns or performance. This performance data is described
below, but more detailed information about how total returns are
calculated is contained in the Statement of Additional Information, which
also contains information about other ways to measure and compare the
Fund's performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, they reflect the
payment of the current maximum initial sales charge. When total returns
are shown for Class B shares, they reflect the effect of the contingent
deferred sales charge that applies to the period for which total return
is shown. Total returns may also be quoted "at net asset value," without
considering the effect of the sales charge, and those returns would be
reduced if sales charges were deducted.
- Dividend Yield. Dividend yield is calculated by dividing the
dividends of a class derived from net investment income during a stated
period by the maximum offering price on the last day of the period.
Yields and dividend yields for Class A shares reflect the deduction of the
maximum initial sales charge, but may also be shown based on the Fund's
net asset value per share. Yields for Class B shares do not reflect the
deduction of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended December 31, 1994,
followed by graphical comparisons of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's last
fiscal year, the Federal Reserve Board moved aggressively to raise short-
term interest rates to attempt to fight the possibility of inflation. The
increases had a depressing effect on small to mid-size growth stocks in
which the Fund invests; the market sentiment favored larger-company
stocks. Yet the Fund benefitted from the Manager's investments in
technology stocks, certain stocks providing strong dividend yields,
special situations, European auto makers and international
telecommunications and technology companies. In addition, the Manager's
investments in convertible securities provided the Fund with income and
capital appreciation potential while helping to lower the overall risk
profile of the Fund. Given the Manager's belief that short-term interest
rates will rise slightly and long-term rates will stabilize or even
decline, the Manager took a "barbell" approach to the Fund's U.S.
Government bond investments, investing both in 5-and 10-year bonds, and
long-term zero coupon bonds, which will benefit most from any rally in
long-term rates.
- Comparing the Fund's Performance to the Market. The charts below
show the performance of a hypothetical $10,000 investment in each class
of shares of the Fund held until December 31, 1994; in the case of Class
A shares, for the past ten-year period, in the case of Class B shares,
from the inception of the Class on May 1, 1993, and in the case of Class
Y shares, from the inception of the Class on June 1, 1994, with all
dividends and capital gains distributions reinvested in additional shares.
As a result, the performance for Class B and Class Y shares is shown for
relatively short periods of time, and investors should realize that such
time periods may not be as appropriate or useful as a comparison for a
longer period. The graph for Class A shares reflects the deduction of the
5.75% current maximum initial sales charge on Class A shares and the graph
for Class B shares reflects the 4% contingent deferred sales charge that
applies to redemptions of Class B shares held from May 1, 1993 until
December 31, 1994.
The Fund's performance is compared to the performance of the Standard
& Poor's ("S&P") 500 Index. The S&P 500 Index is a broad based index of
equity securities widely regarded as the general measure of the
performance of the U.S. equity securities market. Index performance
reflects the reinvestment of dividends but does not consider the effect
of capital gains or transaction costs, and none of the data below shows
the effect of taxes. Also, the Fund's performance reflects the effect of
Fund business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to securities in the Index.
Moreover, the index performance data does not reflect any assessment of
the risk of the investments included in the Index.
Comparison of Change in Value
of $10,000 Hypothetical Investments
In: Oppenheimer Total Return Fund, Inc. and
S&P 500
(Graphs)
Average Annual Total Returns Average Annual Total Returns
of the Fund at 12/31/94 (1) of the Fund at 12/31/94(2)
- ---------------------------- ------------------------
A Shares 1-Year 5-Year 10 Years B Shares
________ -13.16% 9.25% 14.28% 1-Year Life (2)
-13.12% .18%
Cumulative Total Return of
Class Y shares of the Fund
at 12/31/94 (3)
----------------------------
Life
-3.15%
_____________________
(1) The average annual total returns and the ending account value in the
graph reflect reinvestment of all dividends and capital gains
distributions and are shown net of the applicable 5.75% maximum initial
sales charge.
(2) Class B shares of the Fund were first publicly offered on 5/1/93. The
average annual total returns reflect reinvestment of all dividends and
capital gains distributions and are shown net of the applicable 5% and 4%
contingent deferred sales charges, respectively, for the 1-year period and
life-of-the-class. The ending account value in the graph is net of the
applicable 4% contingent deferred sales charge.
(3) Class Y shares of the Fund were first publicly offered on 6/1/94.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers two different classes of shares,
Class A and Class B, to individual investors. Only certain institutional
investors may purchase a third class of shares, Class Y shares. The
different classes of shares represent investments in the same portfolio
of securities but are subject to different expenses and will likely have
different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, you will not pay an initial sales charge but if
you sell any of those shares within 18 months after your purchase, you may
pay a contingent deferred sales charge, which will vary depending on the
amount you invested. Sales charges are described below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years, you will normally pay a contingent deferred sales charge, described
below, that varies depending on how long you own your shares.
- Class Y Shares. Class Y Shares are sold at net asset value per
share without the imposition of a sales charge at the time of purchase to
separate accounts of insurance companies and other institutional investors
("Class Y Sponsors") having an agreement ("Class Y Agreements") with the
Manager or the Distributor. The intent of Class Y Agreements is to allow
tax qualified institutional investors to invest indirectly (through
separate accounts of the Class Y Sponsor) in Class Y Shares of the Fund
and to allow institutional investors to invest directly in Class Y shares
of the Fund. Individual investors are not permitted to invest directly in
Class Y Shares. As of the date of this Prospectus, Massachusetts Mutual
Life Insurance Company (an affiliate of the Manager and the Distributor)
acts as Class Y Sponsor for all outstanding Class Y Shares of the Fund.
While Class Y shares are not subject to a contingent deferred sales
charge, asset-based sales charge or service fee, a Class Y sponsor may
impose charges on separate accounts investing in Class Y shares.
None of the instructions described elsewhere in this Prospectus or
the Statement of Additional Information for the purchase, redemption,
reinvestment, exchange or transfer of shares of the Fund, the selection
of classes of shares or the reinvestment of dividends apply to its Class
Y shares. Clients of Class Y Sponsors must request their Sponsor to
effect all transactions in Class Y shares on their behalf.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other OppenheimerFunds
(not all of which currently offer Class B shares). If your goals and
objectives change over time and you plan to purchase additional shares,
you should re-evaluate those factors to see if you should consider another
class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We assumed you
are an individual investor, and therefore ineligible to purchase Class Y
shares. We used the sales charge rates that apply to Class A and B shares
considering the effect of the annual asset-based sales charge on Class B
expenses (which, like all expenses, will affect your investment return).
For the sake of comparison, we have assumed that there is a 10% rate of
appreciation in the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based
on the Fund's actual investment returns and the operating expenses borne
by each class of shares, and which class you invest in. The factors
discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are
different.
- How Long Do You Expect to Hold Your Investment? The Fund is
designed for long-term investment. While future financial needs cannot
be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares.
The effect of the sales charge over time, using our assumptions, will
generally depend on the amount invested. Because of the effect of class-
based expenses, your choice will also depend on how much you invest.
- How Much Do You Plan to Invest? If you plan to invest a
substantial amount over the long term, the reduced sales charges available
for larger purchases of Class A shares may offset the effect of paying an
initial sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher expenses on Class B shares, for which no
initial sales charge is paid. Additionally, dividends payable to Class
B shareholders will be reduced by the additional expenses borne solely by
Class B, such as the asset-based sales charge described below.
In general, if you plan to invest less than $100,000, Class B shares
may be more advantageous than Class A shares, using the assumptions in our
hypothetical example. However, if you plan to invest more than $100,000
(not only in the Fund, but possibly in other OppenheimerFunds as well),
then Class A shares generally will be more advantageous than Class B,
because of the effect of the reduction of initial sales charges on larger
purchases of Class A shares (described in "Reduced Sales Charges for Class
A Share Purchases," below). That is also the case because the annual
asset-based sales charge on Class B shares will have a greater impact on
larger investments than the initial sales charge on Class A shares because
of the reductions of initial sales charge available for larger
purchases.
For most investors who invest $500,000 or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Fund's distributor,
Oppenheimer Funds Distributor, Inc. (the "Distributor") normally will not
accept purchase orders of $500,000 or more of Class B shares from a single
investor.
Of course, these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumptions stated above. Therefore, these examples
should not be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class B
shareholders, or other features (such as Automatic Withdrawal Plans) might
not be advisable (because of the effect of the contingent deferred sales
charge), you should carefully review how you plan to use your investment
account before deciding which class of shares to buy. Also, because not
all OppenheimerFunds currently offer Class B shares, and because exchanges
are permitted only to the same class of shares in other OppenheimerFunds,
you should consider how important the exchange privilege is likely to be
for you.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class than another class. It is important that investors understand that
the purpose of the Class B contingent deferred sales charge and asset-
based sales charge is the same as the purpose of the front-end sales
charge on sales of Class A shares: to compensate the Distributor for
commissions it pays to dealers and financial institutions for selling
shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other OppenheimerFunds
(a list of them appears in the Statement of Additional Information, or you
can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements with
the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. When you buy shares, be sure to specify Class A or
Class B shares. If you do not choose, your investment will be made in
Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor,
to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to send redemption proceeds, and to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver. In most cases, to enable you to receive that
day's offering price, the Distributor must receive your order by the time
of day the New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of the New York Stock Exchange on a regular business
day, and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.
Class A Shares Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, purchases are not subject to an initial sales
charge, and the offering price will be the net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers
are as follows:
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commissions to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of the Fund and
other OppenheimerFunds that offer only one class of shares that has no
class designation are considered "Class A shares" for this purpose).
However, the Distributor pays dealers of record commissions on such
purchases in an amount equal to the sum of 1.0% of the first $2.5 million,
plus 0.50% of the next $2.5 million, plus 0.25% of share purchases over
$5 million. That commission will be paid only on the amount of those
purchases in excess of $1 million that were not previously subject to a
front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer
on all Class A shares of all OppenheimerFunds you purchased subject to
the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
contingent deferred sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A shares you purchase for your individual
accounts, or jointly, or on behalf of your children who are minors, under
trust or custodial accounts. A fiduciary can count all shares purchased
for a trust, estate or other fiduciary account (including one or more
employee benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A
shares of the Fund and other OppenheimerFunds. You can also include Class
A shares of OppenheimerFunds you previously purchased subject to a sales
charge, provided that you still hold your investment in one of the
OppenheimerFunds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the total amount
of the intended purchases. This can include purchases made up to 90 days
before the date of the Letter. More information is contained in the
Application and in "Reduced Sales Charges" in the Statement of Additional
Information.
- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients; (7) dealers, brokers or
registered investment advisers that have entered into an agreement with
the Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administration services.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party, or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates acts as sponsor, or (c) purchased by
the reinvestment of dividends or other distributions reinvested from the
Fund or other OppenheimerFunds (other than Oppenheimer Cash Reserves) or
unit investment trusts for which reinvestment arrangements have been made
with the Distributor, or (d) purchased and paid for with the proceeds of
shares redeemed in the prior 12 months from a mutual fund on which an
initial sales charge or contingent deferred sales charge was paid (other
than a fund managed by the Manager or any of its affiliates); this waiver
must be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver. There is a further discussion of this policy in "Reduced
Sales Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value described above and is also
waived if shares are redeemed in the following cases: (1) for retirement
distributions or loans to participants or beneficiaries from qualified
retirement plans, deferred compensation plans or other employee benefit
plans ("Retirement Plans"), (2) to return excess contributions made to
Retirement Plans, (3) to make Automatic Withdrawal Plan payments that are
limited to no more than 12% of the original account value annually, (4)
involuntary redemptions of shares by operation of law or under the
procedures set forth in the Fund's Articles of Incorporation or adopted
by the Board of Directors, and (5) if, at the time an order is placed for
Class A shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees to accept the dealer's portion
of the commission payable on the sale in installments of 1/18th of the
commission per month (and that no further commission is payable if the
shares were redeemed within 18 months of purchase).
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net asset
value of Class A shares of the Fund. The Distributor uses all of those
fees to compensate dealers, brokers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares and to reimburse
itself (if the Fund's Board of Directors authorizes such reimbursements,
which it has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net asset value of Class A shares held
in accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares of the Fund by up to 0.25%
of the class' average annual net assets. For more details, please refer
to "Distribution and Service Plans" in the Statement of Additional
Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) to make distributions to participants or
beneficiaries from Retirement Plans, if the distributions are made (a)
under an Automatic Withdrawal Plan after the participant reaches age 59-
1/2, as long as the payments are no more than 10% of the account value
annually (measured in the first year, as of the date the redemption
request is received by the Transfer Agent, and in subsequent years as to
the most recent anniversary of that date), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary which occurred after the account was opened; (2)
redemptions from accounts other than Retirement Plans following the death
or disability of the shareholder (the disability must have occurred after
the account was established and you must provide evidence of a
determination of disability by the Social Security Administration), (3)
to make returns of excess contributions to Retirement Plans, and (4) to
make distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 591/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant
is age 591/2 but only after the participant has separated from service,
if the distributions are made in substantially equal periodic payments
over the life (or life expectancy) of the participant or the joint lives
(or joint life and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must comply
with other requirements for such distributions under the Internal Revenue
Code and may not exceed 10% of the account value annually, measured from
the date the Transfer Agent receives the request).
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described below. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A and Class
B Shares" in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to reimburse
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net asset value of Class B shares, determined as of the close of
each regular business day. The asset-based sales charge allows investors
to buy Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class B shares. Those services
are similar to those provided under the Class A Service Plan, described
above.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
The Distributor's actual expenses in selling Class B shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plan for Class B shares. Therefore, those expenses may be carried
over and paid in future years. At December 31, 1994, the end of the Plan
year, the Distributor had incurred unreimbursed expenses under the Plan
of $18,368,807 (equal to 4.3% of the Fund's net assets represented by
Class B shares on that date), which have been carried over into the
present Plan year. If the Plan is terminated by the Fund, the Board of
Directors may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for expenses it incurred before the Plan was
terminated.
The Class B Plan has the effect of increasing annual expenses of Class B
shares of the Fund by up to 1.00% of its average annual net assets from
what its expenses would otherwise be. In addition, the Manager and the
Distributor may, under the Class B Plan, from time to time from their own
resources (which, as to the Manager, may include profits derived from the
advisory fee it receives from the Fund) make payments to Recipients for
distribution and administrative services they perform.
The Fund's Board of Directors has determined that it is in the best
interest of the Fund's shareholders to adopt a new Distribution and
Service Plan for Class B shares to compensate the Distributor for its
services and costs in distributing Class B shares and servicing accounts.
Under the new plan, the Distributor would be compensated with a fixed fee
(0.25% of average annual net assets, which is the maximum rate under the
current Plan). The new plan is not expected to increase Fund expenses
materially under normal circumstances. Distribution costs in excess of
the fee will be borne by the Distributor. Details about the proposed plan
will be contained in a proxy statement to be sent to the Fund's
shareholders of record as of April 28, 1995, the record date of the
shareholder meeting to vote on the proposed plan. If shareholders do not
approve the adoption of the new Distribution and Service Plan, this
Prospectus will be amended accordingly.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to
your account at your bank or other financial institution to enable you to
send money electronically between those accounts to perform a number of
types of account transactions. These include purchases of shares by
telephone (either through a service representative or by PhoneLink,
described below), automatic investments under Asset Builder Plans, and
sending dividends and distributions or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the Application for details
or call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds exchange privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent
automatically to exchange an amount you establish in advance for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each OppenheimerFunds account is $25. These exchanges are subject to
the terms of the exchange privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying a
sales charge. This privilege applies to Fund shares that you purchased
with an initial sales charge. It also applies to shares on which you paid
a contingent deferred sales charge when you redeemed them. You must be
sure to ask the Distributor for this privilege when you send your payment.
Please consult the Statement of Additional Information for more
details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP-
IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional
Information.
- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations (there
may be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive a
check
- A redemption check is not payable to all shareholders listed on
the account statement
- A redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing on behalf of a corporation, partnership or other business, or
as a fiduciary, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail: Send courier or Express
Mail requests to:
Oppenheimer Shareholder Services Oppenheimer Shareholder Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price on a regular business day, your call must be received by the
Transfer Agent by the close of The New York Stock Exchange that day, which
is normally 4:00 P.M., but may be earlier on some days. You may not
redeem shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account statement. This service is not available within 30 days of
changing the address on an account.
- Telephone Redemptions Through AccountLink or By Wire. There are
no dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH wire to your
bank is initiated on the business day after the redemption. You do not
receive dividends on the proceeds of the shares you redeemed while they
are waiting to be wired.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal Reserve
wire system. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that
the wire may be delayed up to seven days to enable the Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or
paid on the proceeds of shares that have been redeemed and are awaiting
transmittal by wire. To establish wire redemption privileges on an
account that is already established, please contact the Transfer Agent for
instructions. There is a $10 fee for each wire.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on behalf
of their customers. Brokers or dealers may charge for that service.
Please refer to "Special Arrangements for Repurchase of Shares from
Dealers and Brokers" in the Statement of Additional Information for more
details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:
- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open
7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. Certain
OppenheimerFunds offer Class A, Class B or Class C or Class Y shares, and
a list can be obtained by calling the Distributor at 1-800-525-7048. In
some cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into if
it determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple exchange
requests from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the
Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any
time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange on each regular business
day by dividing the value of the Fund's net assets attributable to a class
by the number of shares of that class that are outstanding. The Fund's
Board of Directors has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Directors at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor the Fund will be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to complete
a telephone transaction and should consider placing your order by
mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class Y shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. Effective June 7, 1995,
for accounts registered in the name of a broker-dealer, payment will be
forwarded within 3 business days. The Transfer Agent may delay forwarding
a check or processing a payment via AccountLink for recently purchased
shares, but only until the purchase payment has cleared. That delay may
be as much as 10 days from the date the shares were purchased. That delay
may be avoided if you purchase shares by certified check or arrange to
have your bank provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or Employer Identification Number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class B shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class
B and Class Y shares from net investment income on a quarterly basis and
pays those dividends to shareholders in March, June, September and
December on a date set by the Fund's Board. Also, dividends paid on Class
A and Class Y shares generally are expected to be higher than for Class
B shares because expenses allocable to Class B shares will generally be
higher. There is no fixed dividend rate and there can be no assurance as
to the payment of any dividends or the realization of any gains.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the
year. Short-term capital gains are treated as dividends for tax purposes.
There can be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you received when you sold them.
- Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund
shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
APPENDIX TO PROSPECTUS OF
OPPENHEIMER TOTAL RETURN FUND, INC.
Graphic material included in Prospectus of Oppenheimer Total Return
Fund, Inc.: "Comparison of Total Return of Oppenheimer Total Return Fund,
Inc. with the S&P 500 Index - Change in Value of a $10,000 Hypothetical
Investment"
A linear graph will be included in the Prospectus of Oppenheimer
Total Return Fund, Inc. (the "Fund") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment in (i)
Class A shares of the Fund for each of the Fund's most ten recently
completed fiscal years, and (ii) Class B shares of the Fund for the period
May 1, 1993 (commencement of class) to December 31, 1994, and (iii) Class
Y shares of the Fund for the period from June 1, 1994 through December 31,
1994, and comparing such values with the same investments over the same
time periods in the S&P 500 Index. Set forth below are the relevant data
points that will appear on the linear graph. Additional information with
respect to the foregoing, including a description of the S&P 500 Index,
is set forth in the Prospectus under "Performance of the Fund-How Has the
Fund Performed."
Fiscal Oppenheimer Total Return S & P 500
Year Ended Fund, Inc. Class A Shares Index
12/31/84 $ 9,425 $10,627
12/31/85 $12,664 $13,999
12/31/86 $15,158 $16,613
12/31/87 $17,030 $17,485
12/31/88 $19,303 $20,380
12/31/89 $23,018 $26,826
12/31/90 $22,130 $25,992
12/31/91 $30,153 $33,894
12/31/92 $34,020 $36,473
12/31/93 $41,247 $40,142
12/31/94 $38,006 $40,668
Fiscal Oppenheimer Total Return S&P 500
Period Ended Fund, Inc. Class B Shares Index
05/01/93 $10,000 $10,000
12/31/93 $11,391 $10,807
12/31/94 $10,030 $10,949
Fiscal Oppenheimer Total Return S & P 500
Period Ended Fund, Inc. Class Y Shares Index
6/1/94 $10,000 $11,056
12/31/94 $ 9,686 $10,203
(1) Since June 1, 1994 (inception of the Class).
<PAGE>
Oppenheimer Total Return Fund, Inc.
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate thereof.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
Prospectus
OPPENHEIMER
Total Return
Fund, Inc.
Effective April 28, 1995
(OppenheimerFunds Logo)
PR421.0495.N
<PAGE>
Prospectus and
New Account Application
OPPENHEIMER
Total Return
Fund, Inc.
Effective April 28, 1995
(OppenheimerFunds Logo)
PR420.0495.N
<PAGE>
Oppenheimer Total Return Fund, Inc.
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated April 28, 1995
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated April 28, 1995. It should be read
together with the Prospectus which may be obtained by writing to the
Fund's Transfer Agent, Oppenheimer Shareholder Services, at P.O. Box 5270,
Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free
number shown above.
TABLE OF CONTENTS
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 3
Other Investment Restrictions 13
How the Fund is Managed 14
Organization and History 14
Directors and Officers of the Fund 14
The Manager and Its Affiliates 18
Brokerage Policies of the Fund 19
Performance of the Fund 21
Distribution and Service Plans 24
About Your Account
How To Buy Shares 27
How To Sell Shares 33
How To Exchange Shares 37
Dividends, Capital Gains and Taxes 39
Additional Information About the Fund 40
Financial Information About the Fund
Independent Auditors' Report 41
Financial Statements 42
Appendix A: Industry Classifications A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are discussed in the Prospectus. Set forth below is
supplemental information about these policies. Certain capitalized terms
used in this Statement of Additional Information are defined in the
Prospectus.
- Foreign Securities. "Foreign securities" include equity and
debt securities of companies organized under the laws of countries other
than the United States and debt securities of foreign governments, that
are traded on foreign securities exchanges or in the foreign over-the-
counter markets. Securities of foreign issuers that are represented by
American Depository Receipts or that are listed on a U.S. securities
exchange or traded in the U.S. over-the-counter markets are not considered
"foreign securities" for the purpose of the Fund's investment allocations,
because they are not subject to many of the special considerations and
risks, discussed below, that apply to foreign securities traded and held
abroad.
Investing in foreign securities offers the Fund potential benefits
not available from investing solely in securities of domestic issuers,
such as the opportunity to invest in foreign issuers that appear to offer
growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. If the
Fund's portfolio securities are held abroad, the countries in which such
securities may be held and the sub-custodians holding them must be
approved by the Fund's Board of Directors under applicable rules of the
Securities and Exchange Commission. In buying foreign securities, the
Fund may convert U.S. dollars into foreign currency, but only to effect
securities transactions on foreign securities exchanges and not to hold
such currency as an investment.
- Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the U.S.
These include: reduction of income by foreign taxes; fluctuation in value
of foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges for
currency exchange; lack of public information about foreign issuers; lack
of uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less liquidity
in foreign markets than in the U.S.; less regulation of foreign issuers,
stock exchanges and brokers than in the U.S.; greater difficulties in
commencing lawsuits against foreign issuers; higher brokerage commission
rates than in the U.S.; increased risks of delays in settlement of
portfolio transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization of
assets, confiscatory taxation, political, financial or social instability
or adverse diplomatic developments; and unfavorable differences between
the U.S. economy and foreign economies. In the past, U.S. Government
policies have discouraged certain investments abroad by U.S. investors,
through taxation or other restrictions, and it is possible that such
restrictions could be re-imposed.
Other Investment Techniques and Strategies.
- Hedging. As described in the Prospectus, the Fund may employ
one or more types of Hedging Instruments. When hedging to attempt to
protect against declines in the market value of the Fund's portfolio, to
permit the Fund to retain unrealized gains in the value of portfolio
securities which have appreciated, or to facilitate selling securities for
investment reasons, the Fund may: (i) sell Stock Index Futures, (ii) buy
puts, (iii) write covered calls on securities, securities indices or on
Stock Index Futures, or (iv) enter into interest rate swap agreements.
When hedging to permit the Fund to establish a position in the equity
market as a temporary substitute for purchasing individual equity
securities (which the Fund will normally purchase, and then terminate that
hedging position), the Fund may (1) buy Stock Index Futures, or (ii) buy
calls on such Futures on Securities held until. Covered calls and puts
may also be written on debt securities to attempt to increase the Fund's
income.
The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's activities in the underlying cash market.
Additional Information about the Hedging Instruments the Fund may use is
provided below. In the future, the Fund may employ hedging instruments
and strategies that are not presently contemplated but which may be
developed, to the extent such investment methods are consistent with the
Fund's investment objective, legally permissible and adequately disclosed.
- Writing Covered Call Options. When the Fund writes a call on a
security, it receives a premium and agrees to sell the callable investment
to a purchaser of a corresponding call on the same security during the
call period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying security),
regardless of market price changes during the call period. The Fund has
retained the risk of loss should the price of the underlying security
decline during the call period, which may be offset to some extent by the
premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call written is more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses unexercised,
because the Fund retains the underlying investment and the premium
received. Any such profits are considered short-term capital gains for
Federal income tax purposes, and when distributed by the Fund are taxable
as ordinary income. An option position may be closed out only on a market
that provides secondary trading for options of the same series, and there
is no assurance that a liquid secondary market will exist for a particular
option. If the Fund could not effect a closing purchase transaction due
to lack of a market, it would have to hold the callable investments until
the call lapsed or was exercised.
- Writing Put Options. A put option on securities gives the purchaser
the right to sell, and the writer the obligation to buy, the underlying
investment at the exercise price during the option period. Writing a put
covered by segregated liquid assets equal to the exercise price of the put
has the same economic effect to the Fund as writing a covered call. The
premium the Fund receives from writing a put option represents a profit,
as long as the price of the underlying investment remains above the
exercise price. However, the Fund has also assumed the obligation during
the option period to buy the underlying investment from the buyer of the
put at the exercise price, even though the value of the investment may
fall below the exercise price. If the put lapses unexercised, the Fund
(as the writer of the put) realizes a gain in the amount of the premium.
If the put is exercised, the Fund must fulfill its obligation to purchase
the underlying investment at the exercise price, which will usually exceed
the market value of the investment at that time. In that case, the Fund
may incur a loss, equal to the sum of the current market value of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities, to secure its obligation to pay
for the underlying security, the Fund will deposit in escrow liquid assets
with a value equal to or greater than the exercise price of the put
option. The Fund therefore forgoes the opportunity of investing the
segregated assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be assigned an
exercise notice by the broker-dealer through whom such option was sold,
requiring the Fund to take delivery of the underlying security against
payment of the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned
an exercise notice at any time prior to the termination of its obligation
as the writer of the put. This obligation terminates upon expiration of
the put, or such earlier time at which the Fund effects a closing
purchase transaction by purchasing a put of the same series as that
previously sold. Once the Fund has been assigned an exercise notice, it
is thereafter not allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a profit
on an outstanding put option it has written or to prevent an underlying
security from being put. Furthermore, effecting such a closing purchase
transaction will permit the Fund to write another put option to the extent
that the exercise price thereof is secured by the deposited assets, or to
utilize the proceeds from the sale of such assets for other investments
by the Fund. The Fund will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than
the premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from writing puts
are considered short-term gains for Federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.
- Purchasing Calls and Puts. When the Fund purchases a call (other
than in a closing purchase transaction), it pays a premium and, except as
to calls on securities indices or Stock Index Futures, has the right to
buy the underlying investment from a seller of a corresponding call on the
same investment during the call period at a fixed exercise price. When
the Fund purchases a call on a securities index or Stock Index Future, it
pays a premium, but settlement is in cash rather than by delivery of the
underlying investment to the Fund. In purchasing a call, the Fund
benefits only if the call is sold at a profit or if, during the call
period, the market price of the underlying investment is above the sum of
the call price plus the transaction costs and the premium paid and the
call is exercised. If the call is not exercised or sold (whether or not
at a profit), it will become worthless at its expiration date and the Fund
will lose its premium payment and the right to purchase the underlying
investment.
When the Fund purchases a put, it pays a premium and, except as to puts
on stock indices or Stock Index Futures, has the right to sell the
underlying investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying a put
on an investment the Fund owns enables the Fund to protect itself during
the put period against a decline in the value of the underlying investment
below the exercise price by selling such underlying investment at the
exercise price to a seller of a corresponding put. If the market price
of the underlying investment is equal to or above the exercise price and
as a result the put is not exercised or resold, the put will become
worthless at its expiration date, and the Fund will lose its premium
payment and the right to sell the underlying investment. The put may,
however, be sold prior to expiration (whether or not at a profit.)
Buying a put on an investment it does not own, either a put on an
index or a put on a Stock Index Future not held by the Fund, permits the
Fund either to resell the put or buy the underlying investment and sell
it at the exercise price. The resale price of the put will vary inversely
with the price of the underlying investment. If the market price of the
underlying investment is above the exercise price and as a result the put
is not exercised, the put will become worthless on its expiration date.
When the Fund purchases a put on a stock index, or on a Stock Index Future
not held by it, the put protects the Fund to the extent that the index
moves in a similar pattern to the securities held. In the case of a put
on a stock index or Stock Index Future, settlement is in cash rather than
by delivery by the Fund of the underlying investment.
Puts and calls on broadly-based indices or Futures are similar to
puts and calls on securities or futures contracts except that all
settlements are in cash and gain or loss depends on changes in the index
in question (and thus on price movements in the stock market generally)
rather than on price movements in individual securities or futures
contracts. When the Fund buys a calls on an index or Future, it pays a
premium. During the call period, upon exercise of a call by the Fund, a
seller of a corresponding call on the same investment will pay the Fund
an amount of cash to settle the call if the closing level of the index or
Future upon which the call is based is greater than the exercise price of
the call. That cash payment is equal to the difference between the
closing price of the index and the exercise price of the call times a
specified multiple (the "multiplier"), which determines the total dollar
value for each point of difference. When the Fund buys a put on an index
or Future, it pays a premium and has the right during the put period to
require a seller of a corresponding put, upon the Fund's exercise of its
put, to deliver to the Fund an amount of cash to settle the put if the
closing level of the index or Future upon which the put is based is less
than the exercise price of the put. That cash payment is determined by
the multiplier, in the same manner as described above as to calls.
An option position may be closed out only on a market which
provides secondary trading for options of the same series and there is no
assurance that a liquid secondary market will exist for any particular
option. The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise by the Fund of puts on securities
will cause the sale of related investments, increasing portfolio turnover.
Although such exercise is within the Fund's control, holding a put might
cause the Fund to sell the related investments for reasons which would not
exist in the absence of the put. The Fund will pay a brokerage commission
each time it buys a put or call, sells a call, or buys or sells an
underlying investment in connection with the exercise of a put or call.
Such commissions may be higher than those which would apply to direct
purchases or sales of such underlying investments. Premiums paid for
options are small in relation to the market value of the related
investments, and consequently, put or call options offer large amounts of
leverage. The leverage offered by trading in options could result in the
Fund's net asset value being more sensitive to changes in the value of the
underlying investments.
- Stock Index Futures. The Fund may buy and sell "Stock Index
Futures," a type of Financial Future for which the index used as the basis
for trading is a broadly-based stock index (including stocks that are not
limited to issuers in a particular industry or group of industries). A
stock index assigns relative values to the common stocks included in the
index and fluctuates with the changes in the market value of those stocks.
Stock indices cannot be purchased or sold directly. The contracts
obligate the seller to deliver, and the purchaser to take, cash to settle
the futures transaction or to enter into an offsetting contract. No
physical delivery of the securities underlying the index is made on
settling the futures obligation. No monetary amount is paid or received
by the Fund on the purchase or sale of a Financial Future or Stock Index
Future.
Upon entering into a Futures transaction, the Fund will be required
to deposit an initial margin payment, in cash or U.S. Treasury bills, with
the futures commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures broker can
gain access to that account only under certain specified conditions. As
the Future is marked to market (that is, its value on the Fund's books is
changed) to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures
broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may
elect to close out its position by taking an opposite position, at which
time a final determination of variation margin is made and additional cash
is required to be paid by or released to the Fund. Any gain or loss is
then realized by the Fund on the Future for tax purposes. Although Stock
Index Futures by their terms call for settlement by the delivery of cash,
in most cases the settlement obligation is fulfilled without such delivery
by entering into an offsetting transaction. All Futures transactions are
effected through a clearing house associated with the exchange on which
the contracts are traded.
- Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number of days
from the date of the contract agreed upon by the parties), at a price set
at the time the contract is entered into. These contracts are traded in
the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers.
The Fund may use Forward Contracts to protect against uncertainty
in the level of future exchange rates. The use of Forward Contracts does
not eliminate fluctuations in the prices of the underlying securities the
Fund owns or intends to acquire, but it does fix a rate of exchange in
advance. In addition, although Forward Contracts limit the risk of loss
due to a decline in the value of the hedged currencies, at the same time
they limit any potential gain that might result should the value of the
currencies increase.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross hedge").
The Fund will not enter into such Forward Contracts or maintain a
net exposure to such contracts where the consummation of the contracts
would obligate the Fund to deliver an amount of foreign currency in excess
of the value of the Fund's portfolio securities or other assets
denominated in that currency. The Fund, however, in order to avoid excess
transactions and transaction costs, may maintain a net exposure to Forward
Contracts in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency provided the excess amount is
"covered" by liquid, high-grade debt securities, denominated in any
currency, at least equal at all times to the amount of such excess. As
an alternative, the Fund may purchase a call option permitting the Fund
to purchase the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price or the Fund
may purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price as high
or higher than the forward contract price. Unanticipated changes in
currency prices may result in poorer overall performance for the Fund than
if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense
of such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.
A master netting agreement provides that all swaps done between the
Fund and that counterparty under the master agreement shall be regarded
as parts of an integral agreement. If on any date amounts are payable in
the same currency in respect of one or more swap transactions, the net
amount payable on that date in that currency shall be paid. In addition,
the master netting agreement may provide that if one party defaults
generally or on one swap, the counterparty may terminate the swaps with
that party. Under such agreements, if there is a default resulting in a
loss to one party, the measure of that party's damages is calculated by
reference to the average cost of a replacement swap with respect to each
swap (i.e., the mark-to-market value at the time of the termination of
each swap). The gains and losses on all swaps are then netted, and the
result is the counterparty's gain or loss on termination. The termination
of all swaps and the netting of gains and losses on termination is
generally referred to as "aggregation."
- Additional Information About Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities on the expiration of the option or upon the
Fund's entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option.
When the Fund writes an over-the-counter("OTC") option, it will
enter into an arrangement with a primary U.S. Government securities
dealer, which would establish a formula price at which the Fund would have
the absolute right to repurchase that OTC option. That formula price
would generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below the
market price of the underlying security (that is, the extent to which the
option is "in-the-money"). When the Fund writes an OTC option, it will
treat as illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the mark-to-
market value of any OTC option held by it. The Securities and Exchange
Commission is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond the Fund's control. The exercise by the
Fund of puts on securities or Futures may cause the sale of related
investments, also increasing portfolio turnover. Although such exercise
is within the Fund's control, holding a put might cause the Fund to sell
the related investments for reasons which would not exist in the absence
of the put. The Fund will pay a brokerage commission each time it buys
or sells a put, a call, or an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than those
which would apply to direct purchases or sales of the underlying
investments. Premiums paid for options are small in relation to the
market value of the related investments, and consequently, put and call
options offer large amounts of leverage. The leverage offered by trading
in options could result in the Fund's net asset value being more sensitive
to changes in the value of the underlying investments.
- Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to its
use of Futures and options on Futures established by the Commodity Futures
Trading Commission ("CFTC"). In particular, the Fund is exempted from
registration with the CFTC as a "commodity pool operator" if the Fund
complies with the requirements of the Rule adopted by the CFTC. The Rule
does not limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its aggregate
Futures margin and related options premiums to no more than 5% of the
Fund's net assets for hedging strategies that are not considered bona fide
hedging strategies under the Rule.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus, the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same adviser as the Fund (or an adviser
that is an affiliate of the Fund's adviser. The exchanges also impose
position limits on Futures transactions which apply to Futures. An
exchange may order the liquidation of positions found to be in violation
of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Future, the Fund will maintain, in a segregated account or
accounts with its Custodian, cash or readily-marketable, short-term
(maturing in one year or less) debt instruments in an amount equal to the
market value of the securities underlying such Future, less the margin
deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they receive
from the Fund (unless the Fund's shares are held in a retirement account
or the shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that less
than 30% of its gross income must be derived from gains realized on the
sale of securities held for less than three months. To comply with this
30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Stock Index Futures, held for less than three
months, whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing calls or puts which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; or (v) writing calls on
investments held for less than three months.
Certain foreign currency exchange contracts ("Forward Contracts")
in which the Fund may invest are treated as "section 1256 contracts."
Gains or losses relating to section 1256 contracts generally are
characterized under the Internal Revenue Code as 60% long-term and 40%
short-term capital gains or losses. However, foreign currency gains or
losses arising from certain section 1256 contracts (including Forward
Contracts) generally are treated as ordinary income or loss. In addition,
section 1256 contracts held by the Fund at the end of each taxable year
are "marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent such loss exceeds any
unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
- Risks of Hedging With Options and Futures. An option position
may be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. In addition to the
risks associated with hedging that are discussed in the Prospectus and
above, there is a risk in using short hedging by selling Stock Index
Futures or purchasing puts on stock indices or Stock Index Futures to
attempt to protect against decline in value of the Fund's equity
securities that the prices of the Futures or applicable index will
correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's equity securities. The ordinary spreads between
prices in the cash and futures markets are subject to distortions due to
differences in the natures of those markets. First, all participants in
the futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close out futures contracts through offsetting transactions
which could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depend on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of speculators, the
deposit requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.
If the Fund uses hedging instruments to establish a position in the
equities markets as a temporary substitute for the purchase of particular
equity securities by buying Stock Index Futures and/or calls on such
Futures, on securities or on stock indices, it is possible that the market
may decline. If the Fund then concludes not to invest in equity
securities at that time because of concerns as to possible further market
decline or for other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the equity
securities purchased.
The risk of imperfect correlation increases as the composition of
the Fund's portfolio diverges from the securities included in the
applicable index. To compensate for the imperfect correlation of
movements in the price of the equity securities being hedged and movements
in the price of the hedging instruments, the Fund may use hedging
instruments in a greater dollar amount than the dollar amount of equity
securities being hedged if the historical volatility of the prices of the
equity securities being hedged is more than the historical volatility of
the applicable index. It is also possible that if the Fund has used
hedging instruments in a short hedge, the market may advance and the value
of equity securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and also
experience a decline in value in its portfolio securities. However, while
this could occur for a very brief period or to a very small degree, over
time the value of a diversified portfolio of equity securities will tend
to move in the same direction as the indices upon which the hedging
instruments are based.
- Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund, if
such registration is required before such securities may be sold publicly.
When registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the decision
is made to sell the securities and the time the Fund would be permitted
to sell them. The Fund would bear the risks of any downward price
fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such
securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Directors of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Repurchase Agreements. In a repurchase transaction, the Fund
acquires a security from, and simultaneously resells it to, an approved
vendor (a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in government
securities which must meet the credit requirements set up by the Fund's
Board of Directors from time to time) for delivery on an agreed-on future
date. The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during
which the repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the resale
typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act,
collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price
to fully collateralize the repayment obligation. Additionally, the
Manager will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the collateral's
value.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus, to
attempt to increase the Fund's income. Under applicable regulatory
requirements (which are subject to change), the loan collateral must, on
each business day, be at least equal to the value of the loaned securities
and must consist of cash, bank letters of credit or securities of the U.S.
Government, or other cash equivalents in which the Fund is permitted to
invest. To be acceptable as collateral, letters of credit must obligate
a bank to pay amounts demanded by the Fund if the demand meets the terms
of the letter. Such terms and the issuing bank must be satisfactory to the
Fund. In a portfolio securities lending transaction, the Fund receives
from the borrower an amount equal to the dividends declared or interest
paid on loaned securities during the terms of this loan as well as the
interest on the collateral securities, less any finder's or administrative
fees the Fund pays in arranging the loan. The Fund may share the interest
it receives on the collateral securities with the borrower as long as it
realizes at least a minimum amount of interest required by the lending
guidelines established by its Board of Directors. The Fund will not lend
its portfolio securities to any officer, trustee, employee or affiliate
of the Fund or its Manager. The terms of the Fund's loans must meet
certain tests under the Internal Revenue Code and permit the Fund to
reacquire loaned securities on five business days' notice or in time to
vote on any important matter.
Other Investment Restrictions
The Fund's significant investment restrictions are described in the
Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective, cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of: (i) 67% or more of the shares present or
represented by proxy at a shareholders meeting if the holders of more than
50% of the outstanding shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot: (1) purchase
securities on margin or sell securities short; however, the Fund may make
margin deposits in connection with any of the Hedging Instruments which
it may use as permitted by any of its other investment policies; (2)
invest in other companies for the purpose of exercising control or
management; (3) purchase the securities of other investment companies,
except in connection with a merger or consolidation; (4) purchase or sell
real estate, including interests in real estate investment trusts; (5)
purchase or sell commodities or commodity contracts or purchase securities
for speculative short-term purposes; however, the Fund may buy or sell any
of the Hedging Instruments which it may use as permitted by any of its
other investment policies, whether or not any such Hedging Instrument is
considered to be a commodity or a commodity contract; (6) accept the
purchase price for any of its shares without immediately thereafter
issuing an appropriate number of shares; (7) invest in securities of any
corporation which has a record of less than three years' continuous
operation; or (8) purchase or retain securities of any issuer if those
officers and directors of the Fund or its adviser who own beneficially
more than .5% of the securities of such issuer together own beneficially
more than 5% of the securities of such issuer.
In connection with the qualification of its shares in certain states,
the Fund has undertaken that in addition to the above, as a non-
fundamental policy, it will not (i) invest in real estate limited
partnerships, (ii) invest in oil, gas and other mineral leases and (iii)
invest more than 5% of the value of its net assets in warrants (valued at
the lower of cost or market) of which no more than 2% of the value of the
Fund's net assets will be invested in warrants that are not listed on the
New York Stock Exchange or the American Stock Exchange; warrants acquired
in units or attached to other securities are not subject to this
restriction. In the event that the Fund's shares cease to be qualified
under such laws or if such undertaking(s) otherwise cease to be operative,
the Fund would not be subject to such restrictions.
For purposes of the Fund's policy not to concentrate described in
investment restriction number 4 of the Prospectus, the Fund has adopted
the industry classifications set forth in Appendix A to this Statement of
Additional Information. The Fund's adoption of these industry
classifications is not a fundamental policy of the Fund, and these
classifications may be modified or eliminated by the Board of
Directors.
<PAGE>
How the Fund Is Managed
Organization and History. As a Maryland corporation, the Fund is not
required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Directors or upon proper request of the
shareholders. 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 entitles 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 the Fund vote together in the
aggregate on certain matters at shareholders' meetings, such as the
election of Trustees and ratification of appointment of auditors for the
Trust. Shareholders of a particular class vote separately on proposals
which affect that class, and shareholders of a class which is not affected
by that matter are not entitled to vote on the proposal. For example,
only shareholders of a class of a series vote on certain amendments to the
Distribution and/or Service Plans if the amendments affect that class.
Directors and Officers of the Fund. The Fund's Directors and officers
and their principal occupations and business affiliations during the past
five years are set forth below. Each Director is also a Trustee, Director
or Managing General Partner of Daily Cash Accumulation Fund, Inc.,
Centennial Money Market Trust, Centennial Tax Exempt Trust, Centennial
Government Trust, Centennial New York Tax Exempt Trust, Centennial
California Tax Exempt Trust, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Equity Income Fund, Oppenheimer Champion High Yield Fund,
Oppenheimer High Yield Fund, Oppenheimer Cash Reserves, Oppenheimer
Variable Account Funds, Oppenheimer Main Street Funds, Inc., Oppenheimer
Integrity Funds, Oppenheimer Strategic Funds Trust, Oppenheimer Strategic
Investment Grade Bond Fund, Oppenheimer Strategic Short-Term Income Fund,
Centennial America Fund, L.P., Oppenheimer Tax-Exempt Bond Fund,
Oppenheimer Limited-Term Government Fund, and The New York Tax-Exempt
Income Fund, Inc. (collectively, the "Denver-based OppenheimerFunds").
Mr. Fossel is President and Mr. Swain is Chairman of each of the Denver-
based OppenheimerFunds. As of March 29, 1995, the Directors and officers
of the Fund as a group owned of record or beneficially less than 1% of
each class of shares of the Fund. The foregoing statement does not
reflect ownership of shares held of record by an employee benefit plan for
employees of the Manager (for which plan two of the officers listed below,
Messrs. Fossel and Donohue, are trustees), other than the shares
beneficially owned under that plan by the officers of the Fund listed
above.
Robert G. Avis, Director*, Age: 63
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
__________________
*A Director who is an "interested person" of the Fund as defined in the
Investment Company Act.
<PAGE>
William A. Baker, Director; Age: 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Director; Age: 64
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems, Co.; formerly
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, President and Director*: Age: 52
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of the Manager; President
and a director of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; President and a director of HarbourView Asset
Management Corporation ("HarbourView"), a subsidiary of the Manager; a
director of Shareholder Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager;
formerly President of the Manager.
Raymond J. Kalinowski, Director; Age: 65
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.; formerly Vice Chairman
and a director of A.G. Edwards, Inc., parent holding company of A.G.
Edwards & Sons, Inc. (a broker-dealer), of which he was a Senior Vice
President.
C. Howard Kast, Director; Age: 73
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
Robert M. Kirchner, Director; Age: 73
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Ned M. Steel, Director; Age: 79
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a Director of
Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman and Director*; Age: 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a director of the Manager; President and a director of
Centennial Asset Management Corporation, an investment adviser subsidiary
of the Manager ("Centennial"); formerly Chairman of the Board of SSI.
__________________
*A Director who is an "interested person" of the Fund as defined in the
Investment Company Act.
Andrew J. Donohue, Vice President; Age: 44
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"); an officer of
other OppenheimerFunds; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor; formerly a Partner in
Kraft & McManimon (a law firm), prior to which he was an officer of First
Investors Corporation (a broker-dealer) and First Investors Management
Company, Inc. (broker-dealer and investment adviser) and a director and
an officer of the First Investors Family of Funds and First Investors Life
Insurance Company.
George C. Bowen, Vice President, Secretary and Treasurer; Age: 58
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
John L. Wallace, Vice President and Portfolio Manager; Age: 41
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly a securities analyst and Assistant Portfolio Manager for the
Manager.
Bruce Bartlett, Portfolio Manager; Age:
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; a Portfolio Manager of other
OppenheimerFunds; formerly a Vice President and Senior Portfolio Manager
at First of America Investment Corporation.
Diane L. Sobin, Portfolio Manager; Age:
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; a Portfolio Manager of other
OppenheimerFunds; formerly a Vice president and Senior Portfolio Manager
at Dean Witter Intercapital, Inc.
Robert G. Zack, Assistant Secretary; Age: 46
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other OppenheimerFunds.
Robert J. Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions Supervisor
for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting, an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co. (a bank) and previously a Senior Fund Accountant
for State Street Bank & Trust Company.
- Remuneration of Directors. The officers of the Fund are
affiliated with the Manager; they and the Directors of the Fund who are
affiliated with the Manager (Messrs. Fossel and Swain, who are both
officers and Directors) receive no salary or fee from the Fund. The
Directors of the Fund (excluding Messrs. Fossel and Swain) received the
total amounts shown below (i) from the Fund, during its fiscal year ended
December 31, 1994, and (ii) from all 22 of the Denver-based
OppenheimerFunds (including the Fund) listed in the first paragraph of
this section, for services in the positions shown:
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
Robert G. Avis $10,212 $53,000.00
Director
William A. Baker $14,122 $73,257.01
Audit and Review
Committee Chairman
and Director
Charles Conrad, Jr. $13,163 $68,293.67
Audit and Review
Committee Member
and Director
Raymond J. Kalinowski $10,212 $53,000.00
Director
C. Howard Kast $10,212 $53,000.00
Director
Robert M. Kirchner $13,163 $68,293.67
Audit and Review
Committee Member
and Director
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
Ned M. Steel $10,212 $53,000.00
Director
______________________
1 For the 1994 calendar year.
- Major Shareholders. As of March 29, 1995, no person owned of
record or was known by the Fund to own beneficially 5% or more shares of
the Fund as a whole or any class of the Fund's outstanding shares.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Mr. Swain and Mr. Fossel)
serve as Directors of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's
Agreement are paid by the Fund. The advisory agreement lists examples of
expenses paid by the Fund, 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. For the Fund's fiscal years ended December
31, 1992, 1993, and 1994, the management fees paid by the Fund to the
Manager were $4,067,024, $6,012,518 and $8,860,284, respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of
average annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that so long as it shall have acted
with due care and in good faith, the Manager shall not be liable for any
loss sustained by reason of any investment, the adoption of any investment
policy, or the purchase, sale or retention of any security irrespective
of whether the determinations of the Manager relative thereto shall have
been based, wholly or partly, upon the investigation or research of any
other individual, firm or corporation believed by it to be reliable. The
advisory agreement shall not, however, be construed to protect the Manager
against any liability to the Fund or its shareholders by reasons of
willful misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of its reckless disregard of its obligations and
duties under the advisory agreement, or against any liability imposed by
law.
- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class Y
shares but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales (excluding payments under the Distribution
and Service Plans but including advertising and the cost of printing and
mailing prospectuses) other than those furnished to existing
shareholders), are borne by the Distributor. During the Fund's fiscal
year ended December 31, 1992, 1993 and 1994, the aggregate amounts of
sales charges on sales of the Fund's shares were $6,062,114, $9,787,762
and $8,832,144, respectively, of which the Distributor and an affiliated
broker retained $1,531,266, $3,438,923 and $2,726,018 in those respective
periods. During the Fund's fiscal year ended December 31, 1994, the
contingent deferred sales charges on the Fund's Class B shares totalled
$731,799, all of which the Distributor retained. For additional
information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and Service
Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ 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 the 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 be aware of the current
rates of eligible brokers and to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as
established by its Board of Directors. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the 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 that 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 the 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.
Description of Brokerage Practices Followed by the Manager. Subject
to the provisions of the advisory agreement, and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the Manager's
portfolio managers. In certain instances, portfolio managers may directly
place trades and allocate brokerage, also subject to the provisions of the
advisory agreement and the procedures and rules described above.
Regardless, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those for which
an exchange is the primary market are generally done with principals or
market makers. Brokerage commissions are paid primarily for effecting
transactions in listed securities and are otherwise paid only if it
appears likely that a better price or execution can be obtained. When the
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.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. Instead of using a broker for those
transactions, the Fund normally deals directly with the selling or
purchasing principal or market maker unless it determines that a better
price or execution can be obtained by using a broker. Purchases of these
securities from underwriters include a commission or concession paid by
the issuer to the underwriter. Purchases from dealers include a spread
between the bid and asked prices. The Fund seeks to obtain prompt
execution of these orders at the most favorable net price.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the 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 has permitted the Manager to
use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Directors, including the "independent" Directors of the Fund (those
Directors of the Fund who are not "interested persons" as defined in the
Investment Company Act, and who have no direct or indirect financial
interest in the operation of the advisory agreement or the Distribution
Plans described below) annually reviews information furnished by the
Manager as to the commissions paid to brokers furnishing such services so
that the Board may ascertain whether the amount of such commissions was
reasonably related to the value or benefit of such services. The Board of
Directors has permitted the Manager to use concessions on fixed price
offerings to obtain research in the same manner as is permitted for agency
transactions.
During the Fund's fiscal years ended December 31, 1992, 1993 and
1994, total brokerage commissions paid by the Fund were $2,028,356,
$4,581,702 and $10,116,822, respectively. During the fiscal year ended
December 31, 1994, $1,589,304 was paid to brokers as commissions in return
for research services; the aggregate dollar amount of those transactions
was $730,594,644. The transactions giving rise to those commissions were
allocated in accordance with the Manager's internal allocation
procedures.
Performance of the Fund
Yield and Total Return Information. As described in the Prospectus,
from time to time the "dividend yield," "average annual total return,"
"cumulative total return," "average annual total return at net asset
value" and "cumulative total return at net asset value" of an investment
in a class of shares of the Fund may be advertised. An explanation of how
these total returns are calculated for each class and the components of
those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) ending as
of the most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of Class A,
Class B and Class Y shares of the Fund are affected by portfolio quality,
the type of investments the Fund holds and its operating expenses
allocated to the particular class.
- Dividend Yield and Distribution Return. From time to time the
Fund may quote a "dividend yield" or a "distribution return" for each
class. Dividend yield is based on the dividends paid on shares of a class
from net investment income during a stated period. Distribution return
includes dividends derived from net investment income and from realized
capital gains declared during a stated period. Under those calculations,
the dividends and/or distributions for that class declared during a stated
period of one year or less (for example, 30 days) are added together, and
the sum is divided by the maximum offering price per share of that class
on the last day of the period. When the result is annualized for a period
of less than one year, the "dividend yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ---------------------------------------------------- +
Max Offering Price of the Class (last day of period)
Number of days (accrual period) x 365 charge.
The maximum offering price for Class A shares includes the maximum front-
end sales charge. For Class B shares, the maximum offering price is the
net asset value per share without considering the effect of contingent
deferred sales charges.
- Total Return Information.
- Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of return for
each year in a specified number of years. It is the rate of return based
on the change in value of a hypothetical initial investment of $1,000 ("P"
in the formula below) held for a number of years ("n") to achieve an
Ending Redeemable Value ("ERV") of that investment, according to the
following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering price) is
deducted from the initial investment ("P") (unless the return is shown at
net asset value, as described below). For Class B shares, payment of a
contingent deferred sales charge of 5.0% for the first year, 4.0% for the
second year, 3.0% for the third and fourth years, 2.0% for the fifth year
and 1.0% for the sixth year, and none thereafter, is applied, as described
in the Prospectus. Class Y Shares are not subject to a sales charge.
Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to by additional shares,
at net asset value per share, and that the investment is redeemed at the
end of the period. The average annual total returns on an investment in
Class A shares for the one, five and ten-year periods ended December 31,
1994, and for the period were -13.16 % 9.25%; and 14.28%, respectively.
The average annual total returns on an investment in Class B shares for
the fiscal year ended December 31, 1994, and for the period May 1, 1993
(inception of the class) to December 31, 1994 were -13.12% and .18%,
respectively. The cumulative total return on Class A shares for the
period September 30, 1975 (the date shareholders of the Fund approved a
new management contract with a subsidiary of Oppenheimer Management
Corporation) through December 31, 1994 was 763.8%. The cumulative total
return on Class B shares for the period May 19, 1993 through December 31,
1994 was .30%. The cumulative total returns on Class Y shares for the
period June 1, 1994 (commencement of the offering of the Class of shares)
through December 31, 1994 was -3.14%.
- Total Returns At Net Asset Value. From time to time the Fund
may also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or Class
Y shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions. The cumulative total return
at net asset value on the Fund's Class A shares for the fiscal year ended
December 31, 1994, was 816.50%. The average annual total return at net
asset value for the period September 30, 1975 to December 31, 1994, for
Class A shares was 12.2%. The average annual total returns at net asset
value for Class B shares for the fiscal year ended December 31, 1994 and
for the period May 1, 1993 (inception of that class) to December 31, 1994
were -8.64% and 2.42%, respectively. The cumulative total return for
Class Y shares from June 1, 1994 (commencement of offering) to December
31, 1994 was -3.15%.
Total return information may be useful to investors in reviewing
the performance of the Fund's Class A or Class B shares. However, when
comparing total return of an investment in Class A or Class B shares of
the Fund, a number of factors should be considered before using such
information as a basis for comparison with other investments. No
adjustment is made for taxes payable on distributions. An investment in
the Fund's Class A or Class B shares is not insured; its total return is
not guaranteed and will fluctuate on a daily basis. Total return for any
given past period is not an indication or representation by the Fund of
future rates of return on its shares. The total return of the Class A and
Class B shares of the Fund is affected by portfolio quality, portfolio
maturity, type of investments held and operating expenses. When comparing
total return of an investment in Class A or Class B shares of the Fund
with that of other investment instruments, investors should understand
that certain other investment alternatives such as money market
instruments, certificates of deposit, U.S. Government securities or bank
accounts provide a return which remains relatively constant over time and
also that bank accounts may be insured. Investors should also understand,
when comparing the Fund's total return with that of other investment
alternatives, that since the Fund is an equity fund seeking capital
appreciation, its shares are subject to greater market risks than certain
other investments. The current price per share is listed daily in
newspaper financial sections.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A, Class B or Class Y shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent service.
Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods based
on categories relating to investment objectives. The performance of the
Fund is ranked against (i) all other funds, (ii) all other "growth and
income" funds, and (iii) all other growth and income funds in a specific
size category. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gains distributions and income
dividends but do not take sales charges or taxes into consideration. The
Fund may also compare its performance from time to time with that of
Morgan Stanley Capital International index, a capitalization-weighted
index which is widely utilized as a measure of world-wide stock market
performance.
From time to time, the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources, including Lipper.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class Y shares by Morningstar,
Inc., an independent mutual fund monitoring service, that ranks mutual
funds, including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when available) in excess of 90-day U.S.
Treasury bill returns after considering sales charges and expenses. Risk
reflects fund performance below 90-day U.S. Treasury bill monthly returns.
Risk and return are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars
is the "highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below average"
(next 22.5%) and one star is "lowest" (bottom 10%). Morningstar ranks the
Class A and Class B shares of the Fund in relation to other equity funds
and includes the maximum sales charge as a factor in its ranking
computations. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class
B or Class Y shares may be compared with the performance for the same
period of one or more of the following indices: the Dow Jones Industrial
Average ("Dow") or the Standard & Poor's 500 Index ("S&P 500"), both of
which are widely recognized indices of stock market performance. Both
indices consist of unmanaged groups of common stocks; the Dow consists of
thirty such issues. The performance of both indices includes a factor for
the reinvestment of income dividends. Neither index reflects reinvestment
of capital gains or takes sales charges or taxes into consideration as
these items are not applicable to indices.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the OppenheimerFunds, other than
performance rankings of the OppenheimerFunds themselves. Those ratings
or rankings of shareholder/investor services by third parties may compare
the OppenheimerFunds' services to those of other mutual fund families
selected by the rating or ranking services and may be based upon the
opinions of the rating or ranking service itself, based on its research
or judgment, or based upon surveys of investors, brokers, shareholders or
others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plan for Class B shares under Rule 12b-1 of the
Investment Company Act pursuant to which the Fund will reimburse the
Distributor quarterly for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that
class, as described in the Prospectus. No such plan has been adopted for
Class Y shares. Each Plan has been approved by a vote of (i) the Board
of Directors of the Fund, including a majority of the Independent
Directors, cast in person at a meeting called for the purpose of voting
on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class.
In addition, under the Plans, the Manager and the Distributor,
in their sole discretion, from time to time, may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund), to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform, at
no cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of payments they make from
their own resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of Directors
and its Independent Directors by a vote cast in person at a meeting called
for the purpose of voting on such continuance. Either Plan may be
terminated at any time by the vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as defined in the
Investment Company Act) of the outstanding shares of that class. Neither
Plan may be amended to increase materially the amount of payments to be
made unless such amendment is approved by shareholders of the class
affected by the amendment. All material amendments must be approved by
the Independent Directors.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Directors at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. The report for the Class B Plan shall also
include the Distributor's distribution costs for that quarter, and such
costs for previous fiscal periods that have been carried forward, as
explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and
approval of the Independent Directors in the exercise of their fiduciary
duty. Each Plan further provides that while it is in effect, the
selection and nomination of those Directors of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Directors. This does not prevent the involvement of others
in such selection and nomination if the final decision on selection or
nomination is approved by a majority of the Independent Directors.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Directors. Initially, the Board of Directors has set
the fees at the maximum rate and set no minimum amount.
For the fiscal year ended December 31, 1994, payments under the
Plan for Class A shares totaled $2,274,087, all of which was paid by the
Distributor to Recipients including $144,910 that was paid to an affiliate
of the Distributor. Any unreimbursed expenses incurred by the Distributor
with respect to Class A shares for any fiscal year may not be recovered
in subsequent fiscal years. Payments received by the Distributor under
the Plan for Class A shares will not be used to pay any interest expense,
carrying charges, or other financial costs, or allocation of overhead by
the Distributor.
The Plan for Class B shares allows the service fee payment to be
paid by the Distributor to Recipients in advance for the first year Class
B shares are outstanding, and thereafter on a quarterly basis, as
described in the Prospectus. Service fee payments by the Distributor to
Recipients will be made (i) in advance for the first year Class B shares
are outstanding, following the purchase of shares, in an amount equal to
0.25% of the net asset value of the shares purchased by the Recipient or
its customers and (ii) thereafter, on a quarterly basis, computed as of
the close of business each day at an annual rate of .25% of the average
daily net asset value of Class B shares held in accounts of the Recipient
or its customers. An exchange of shares does not entitle the Recipient
to an advance service fee payment. In the event Class B shares are
redeemed during the first year that the shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance
payment for those shares to the Distributor. Payments made under the
Class B Plan during the fiscal year ended December 31, 1994 totalled
$3,604,784, of which $3,465,766 was retained by the Distributor and $7,941
was paid to a dealer affiliated with the Distributor.
Although the Class B Plan permits the Distributor to retain both
the asset-based sales charge and the service fee on Class B shares, or to
pay Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor intends to pay the service fee to Recipients in
the manner described above. A minimum holding period may be established
from time to time under the Class B Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the Class B
Plan are subject to the limitations imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees. The Distributor anticipates
that it will take a number of years for it to recoup (from the Fund's
payments to the Distributor under the Class B Plan and recoveries of the
contingent deferred sales charge) the sales commissions paid to authorized
brokers or dealers.
Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without the assessment of a front-
end sales load and at the same time permit the Distributor to compensate
brokers and dealers in connection with the sale of Class B shares of the
Fund. The Distributor's actual distribution expenses for any given year
may exceed the aggregate of payments received pursuant to the Class B Plan
and from contingent deferred sales charges, and such expenses will be
carried forward and paid in future years. The Fund will be charged only
for interest expenses, carrying charges or other financial costs that are
directly related to the carry-forward of actual distribution expenses.
For example, if the Distributor incurred distribution expenses of $4
million in a given fiscal year, of which $2,000,000 was recovered in the
form of contingent deferred sales charges paid by investors and $1,600,000
was reimbursed in the form of payments made by the Fund to the Distributor
under the Class B Plan, the balance of $400,000 (plus interest) would be
subject to recovery in future fiscal years from such sources.
The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class B Plan is
intended to allow the Distributor to recoup the cost of sales commissions
paid to authorized brokers and dealers at the time of sale, plus financing
costs, as described in the Prospectus. Such payments may also be used to
pay for the following expenses in connection with the distribution of
Class B shares: (i) financing the advance of the service fee payment to
Recipients under the Class B Plan, (ii) compensation and expenses of
personnel employed by the Distributor to support distribution of Class B
shares, and (iii) costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue sky"
registration fees.
About Your Account
How To Buy Shares
Alternative Sales Arrangements - Class A and Class B Shares. The
availability of two classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B shares are the same as
those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling
Fund shares may receive different compensation with respect to one class
of shares than the other. The Distributor will not accept any order for
$500,000 or more of Class B shares on behalf of a single investor (not
including dealer "street name" or omnibus accounts) because generally it
will be more advantageous for that investor to purchase Class A shares of
the Fund instead. A third class of shares, may be purchased only by
certain institutional investors at net asset value per share (the "Class
Y Shares").
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter ruling
from the Internal Revenue Service, or an opinion of counsel or tax
adviser, to the effect that the conversion of B shares does not constitute
a taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Class
B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event for
the holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class Y shares
recognizes two types of expenses. General expenses that do not pertain
specifically to either class are allocated pro rata to the shares of each
class, based on the percentage of the net assets of such class to the
Fund's total assets, and then equally to each outstanding share within a
given class. Such general expenses include (i) management fees, (ii)
legal, bookkeeping and audit fees, (iii) printing and mailing costs of
shareholder reports, Prospectuses, Statements of Additional Information
and other materials for current shareholders, (iv) fees to unaffiliated
Directors, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a class are allocated
equally to each outstanding share within that class. Such expenses
include (i) Distribution Plan fees, (ii) incremental transfer and
shareholder servicing agent fees and expenses, (iii) registration fees and
(iv) shareholder meeting expenses, to the extent that such expenses
pertain to a specific class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class Y shares of the Fund are determined
as of the close of business of The New York Stock Exchange on each day
that the Exchange is open, by dividing the Fund's net assets attributable
to a class by the number of shares of that class that are outstanding.
The Exchange normally closes at 4:00 P.M., New York time, but may close
earlier on some days (for example, in case of weather emergencies or on
days falling before a holiday). The Exchange's most recent annual
announcement (which is subject to change) states that it will close on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other
days. Trading may occur in debt securities and in foreign securities when
the Exchange is closed (including weekends and holidays). Because the
Fund's net asset value will not be calculated at those times, if
securities held in the Fund's portfolio are traded at such time, net asset
values per share of Class A, Class B and Class Y shares of the Fund may
be significantly affected on such days when shareholders may not purchase
or redeem shares.
The Fund's Board of Directors has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a U.S. securities exchange or on NASDAQ for which
last sale information is regularly reported are valued at the last
reported sale price on their primary exchange or NASDAQ that day (or, in
the absence of sales that day, at values based on the last sales prices
of the preceding trading day, or closing bid and asked prices); (ii)
securities actively traded on a foreign securities exchange are valued at
the last sales price available to the pricing service approved by the
Fund's Board of Directors or to the Manager as reported by the principal
exchange on which the security is traded; (iii) unlisted foreign
securities or listed foreign securities not actively traded are valued at
the mean between "bid" and "asked" prices determined by a pricing service
approved by the Board of Directors or by the Manager; (iv) long-term debt
securities having a remaining maturity in excess of 60 days are valued at
the mean between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Directors or obtained from
active market makers in the security on the basis of reasonable inquiry;
(v) debt instruments having a maturity of more than one year when issued,
and non-money market type instruments having a maturity of one year or
less when issued, which have a remaining maturity of 60 days or less are
valued at the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Directors or obtained from
active market makers in the security on the basis of reasonable inquiry;
(vi) money market-type debt securities having a maturity of less than one
year when issued that having a remaining maturity of 60 days or less are
valued at cost, adjusted for amortization of premiums and accretion of
discounts; and (vii) securities (including restricted securities) not
having readily-available market quotations are valued at fair value under
the Board's procedures.
In the case of U.S. Government Securities, mortgage-backed
securities and corporate bonds, when last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis of
quality, yield, maturity, and other special factors involved. The Fund's
Board of Directors has authorized the Manager to employ a pricing service
to price U.S. Government Securities, mortgage-backed securities, and
foreign government and corporate bonds. The Directors will monitor the
accuracy of such pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Puts, calls and Futures held by the Fund are valued at the last
sales price on the principal exchange on which they are traded, or on
NASDAQ, as applicable as determined by a pricing service approved by the
Board of Directors or by the Manager, or, if there are no sales that day,
in accordance with (i), above. Forward currency contracts are valued at
the closing price on the London foreign exchange market as provided by a
reliable bank, dealer or pricing service. When the Fund writes an option,
an amount equal to the premium received by the Fund is included in the
Fund's Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is adjusted ("marked-to-market") to reflect the current market value of
the option. In determining the Fund's gain on investments, if a call
written by the Fund is exercised, the proceeds are increased by the
premium received. If a call or put written by the Fund expires, the Fund
has a gain in the amount of the premium; if the Fund enters into a closing
purchase transaction, it will have a gain or loss depending on whether the
premium was more or less than the cost of the closing transaction. If
the Fund exercises a put it holds, the amount the Fund receives on its
sale of the underlying investment is reduced by the amount of premium paid
by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the regular
business day the Distributor is instructed to initiate the Automated
Clearing House transfer to buy shares. Dividends will begin to accrue on
shares purchased by the proceeds of ACH transfers on the business day the
Fund receives Federal Funds for the purchase through the ACH system before
the close of The New York Stock Exchange. The Exchange normally closes
at 4:00 P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the shares
will be purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received by the
Fund 3 days after the transfers are initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
expenses realized by the Distributor, dealers and brokers making such
sales. No sales charge is imposed in certain circumstances described in
the Prospectus because the Distributor or dealer or broker incurs little
or no selling expenses. The term "immediate family" refers to one's
spouse, children, grandchildren, grandparents, parents, parents-in-law,
sons- and daughters-in-law, siblings, a sibling's spouse and a spouse's
siblings.
- The OppenheimerFunds. The OppenheimerFunds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt BondFund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
<PAGE>
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
<PAGE>
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
<PAGE>
There is an initial sales charge on the purchase of Class A
shares of each of the OppenheimerFunds except Money Market Funds (under
certain circumstances described herein, redemption proceeds of Money
Market Fund shares may be subject to a contingent deferred sales
charge).
- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the Fund
(and other eligible OppenheimerFunds) during the 13-month period from the
investor's first purchase pursuant to the Letter (the "Letter of Intent
period"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases (excluding
any purchases made by reinvestments of dividends or distributions or
purchases made at net asset value without sales charge), which together
with the investor's holdings of such funds (calculated at their respective
public offering prices calculated on the date of the Letter) will equal
or exceed the amount specified in the Letter. This enables the investor
to count the shares to be purchased under the Letter of Intent to obtain
the reduced sales charge rate (as set forth in the Prospectus) that
applies under the Right of Accumulation to current purchases of Class A
shares. Each purchase of Class A shares under the Letter will be made at
the public offering price (including the sales charge) that applies to a
single lump-sum purchase of shares in the amount intended to be purchased
under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within the
Letter of Intent period, when added to the value (at offering price) of
the investor's holdings of shares on the last day of that period, do not
equal or exceed the intended purchase amount, the investor agrees to pay
the additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
up to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter
is completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period
the total purchases pursuant to the Letter are less than the intended
purchase amount specified in the Letter, the investor must remit to the
Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which would
have been paid if the total amount purchased had been made at a single
time. Such sales charge adjustment will apply to any shares redeemed
prior to the completion of the Letter. If such difference in sales
charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary
to realize such difference in sales charges. Full and fractional shares
remaining after such redemption will be released from escrow. If a
request is received to redeem escrowed shares prior to the payment of such
additional sales charge, the sales charge will be withheld from the
redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes
and appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter) include
Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge, Class A shares acquired in exchange
for Class A shares of one of the other OppenheimerFunds that were acquired
subject to a Class A initial or contingent sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is requested,
as described in the section of the Prospectus entitled "How to Exchange
Shares," and the escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
OppenheimerFunds.
There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for
the Fund's shares (for example, when a purchase check is returned to the
Fund unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How To Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Involuntary Redemptions. The Fund's Board of Directors has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than $500
or such lesser amount as the Board may fix. The Board of Directors will
not cause the involuntary redemption of shares in an account if the
aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board elect
to exercise this right, it may also fix, in accordance with the Investment
Company Act, and the provisions of Maryland law, the requirements for any
notice to be given to the shareholders in question (not less than 30
days), or the Board may set requirements for granting permission to the
Shareholder to increase the investment, and set other terms and conditions
so that the shares would not be involuntarily redeemed.
- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However, the
Board of Directors of the Fund may determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case the
Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares, or (ii) Class B shares that were subject to the Class B
contingent deferred sales charge when redeemed. The reinvestment may be
made without sales charge only in Class A shares of the Fund or any of the
other OppenheimerFunds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares
of the Fund or another of the OppenheimerFunds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Transfers of Shares. Shareholders owning Class A or Class B shares
must specify whether they intend to transfer Class A or Class B. Shares
are not subject to the payment of a contingent deferred sales charge of
either class at the time of transfer to the name of another person or
entity (whether the transfer occurs by absolute assignment, gift or
bequest, not involving, directly or indirectly, a public sale). The
transferred shares will remain subject to the contingent deferred sales
charge, calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an account are
transferred, and some but not all shares in the account would be subject
to a contingent deferred sales charge if redeemed at the time of transfer,
the priorities described in the Prospectus under "How to Buy Shares" for
the imposition of the Class B contingent deferred sales charge will be
followed in determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension or
profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How
To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the
plan and the Fund's other redemption requirements. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request exchanges in or redemption
of their accounts. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are subject
to special requirements under the Internal Revenue Code and certain
documents (available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives the order
placed by the dealer or broker, except that if the Distributor receives
a repurchase order from a dealer or broker after the close of The New York
Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker
from its customers prior to the time the Exchange closes (normally, that
is 4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Payment ordinarily will be made
within seven days (effective June 7, 1995, within three days for accounts
registered in the name of a broker-dealer) after the Distributor's receipt
of the required redemption documents, with signature(s) guaranteed as
described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Withdrawal Plan. Shares will
be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B shareholders should not establish withdrawal
plans that would require the redemption of shares purchased subject to a
contingent deferred sales charge and held less than 6 years, because of
the imposition of the Class B contingent deferred sales charge on such
withdrawals (except where the Class B contingent deferred sales charge is
waived as described in the Prospectus under "Waivers of Class B Sales
Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares of
the Fund for shares (of the same class) of other OppenheimerFunds
automatically on a monthly, quarterly, semi-annual or annual basis under
an Automatic Exchange Plan. The minimum amount that may be exchanged to
each other fund account is $25. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How
to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent and the Fund shall incur no liability
to the Planholder for any action taken or omitted by the Transfer Agent
in good faith to administer the Plan. Certificates will not be issued for
shares of the Fund purchased for and held under the Plan, but the Transfer
Agent will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the
Plan.
For accounts subject to Automatic Withdrawal Plans, distributions
of capital gains must be reinvested in shares of the Fund, which will be
done at net asset value without a sales charge. Dividends on shares held
in the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be
made at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments are to
be sent may be changed at any time by the Planholder by writing to the
Transfer Agent. The Planholder should allow at least two weeks' time in
mailing such notification for the requested change to be put in effect.
The Planholder may, at any time, instruct the Transfer Agent by written
notice (in proper form in accordance with the requirements of the then-
current Prospectus of the Fund) to redeem all, or any part of, the shares
held under the Plan. In that case, the Transfer Agent will redeem the
number of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at any time
by the Transfer Agent upon receiving directions to that effect from the
Fund. The Transfer Agent will also terminate a Plan upon receipt of
evidence satisfactory to it of the death or legal incapacity of the
Planholder. Upon termination of a Plan by the Transfer Agent or the Fund,
shares that have not been redeemed from the account will be held in
uncertificated form in the name of the Planholder, and the account will
continue as a dividend-reinvestment, uncertificated account unless and
until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
<PAGE>
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
the OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All OppenheimerFunds offer
Class A shares (except for Oppenheimer Strategic Diversified Income Fund),
but only certain funds offer Class B and/or Class Y shares. The following
other OppenheimerFunds currently offer Class B shares:
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available
by exchange)
Oppenheimer Growth Fund
Oppenheimer Global Fund
The following OppenheimerFunds currently offer Class Y shares:
Oppenheimer Growth Fund
Oppenheimer Discovery Fund
Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may
be exchanged at net asset value for shares of any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
B contingent deferred sales charge is imposed on Class B shares acquired
by exchange if they are redeemed within 6 years of the initial purchase
of the exchanged Class B shares.
When Class B shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might
be imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of both classes must specify whether they intend to exchange
Class A or Class B shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of 10 or more
accounts. The Fund may accept requests for exchanges of up to 50 accounts
per day from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the
number requested would include shares subject to a restriction cited in
the Prospectus or this Statement of Additional Information or would
include shares covered by a share certificate that is not tendered with
the request. In those cases, only the shares available for exchange
without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of a
prospectus of, the fund to which the exchange is to be made. For full or
partial exchanges of an account made by telephone, any special account
features such as Asset Builder Plans, Automatic Withdrawal Plans,
Checkwriting, if available, and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations), shareholders
might not be able to request exchanges by telephone and would have to
submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day
the Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have
different investment objectives, policies and risks, and a shareholder
should assure that the Fund selected is appropriate for his or her
investment and should be aware of the tax consequences of an exchange.
For federal income tax purposes, an exchange transaction is treated as a
redemption of shares of one fund and a purchase of shares of another.
"Reinvestment Privilege," above, discusses some of the tax consequences
of reinvestment of redemption proceeds in such cases. The Fund, the
Distributor, and the Transfer Agent are unable to provide investment, tax
or legal advice to a shareholder in connection with an exchange request
or any other investment transaction.
<PAGE>
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by the
Postal Service as undeliverable will be invested in shares of Oppenheimer
Money Market Fund, Inc., as promptly as possible after the return of such
checks to the Transfer Agent, in order to enable the investor to earn a
return on otherwise idle funds.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned from
January 1 through December 31 of that year and 98% of its capital gains
realized in the period from November 1 of the prior year through October
31 of the current year, or else the Fund must pay an excise tax on the
amounts not distributed. While it is presently anticipated that the Fund
will meet those requirements, the Fund's Board of Directors and the
Manager might determine in a particular year that it would be in the best
interest of shareholders for the Fund not to make such distributions at
the required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains available
for distribution to shareholders.
If the Fund qualifies as a "regulated investment company" under
the Internal Revenue Code, it will not be liable for Federal income taxes
on amounts paid by it as dividends and distributions. The Fund qualified
during its past fiscal year, and intends to qualify in current and future
fiscal years, but reserves the right not to do so. The Internal Revenue
Code contains a number of complex tests relating to qualification which
the Fund might not meet in any particular year. For example, if the Fund
derives 30% or more of its gross income from the sale of securities held
less than three months, it may fail to qualify. If it did not so qualify,
the Fund would be treated for tax purposes as an ordinary corporation and
receive no tax deduction for payments made to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other OppenheimerFunds listed in
"Reduced Sales Charges," above, at net asset value without sales charge.
Class B and Class Y shareholders should be aware that as of the date of
this Statement of Additional Information, not all of the OppenheimerFunds
offer Class B and/or Class Y shares. To elect this option, a shareholder
must notify the Transfer Agent in writing and either have an existing
account in the fund selected for reinvestment or must obtain a prospectus
for that fund and an application from the Distributor to establish an
account. The investment will be made at the net asset value per share in
effect at the close of business on the payable date of the dividend or
distribution. Dividends and/or distributions from shares of other
OppenheimerFunds may be invested in shares of this Fund on the same basis.
<PAGE>
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery of
such securities to and from the Fund. The Manager has represented to the
Fund that the banking relationships with the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates. The Fund's cash
balances with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds advised
by the Manager and its affiliates.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Oppenheimer
Total Return Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the statement of investments, of
Oppenheimer Total Return Fund, Inc. as of December 31,
1994, the related statement of operations for the year
then ended, the statements of changes in net assets for
the years ended December 31, 1994 and 1993, and the
financial highlights for the period January 1, 1985 to
December 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included
confirmation of securities owned at December 31, 1994 by
correspondence with the custodian and brokers; where
replies were not received from brokers, we performed
other auditing procedures. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and
financial highlights present fairly, in all material
respects, the financial position of Oppenheimer Total
Return Fund, Inc. at December 31, 1994, the results of
its operations, the changes in its net assets, and the
financial highlights for the respective stated periods,
in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
STATEMENT OF INVESTMENTS December 31, 1994
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE
--------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.2%
Repurchase agreement with First Chicago Capital Markets, 6%, dated
12/30/94, to be repurchased at $69,903,571 on 1/3/95, collateralized by
U.S. Treasury Nts., 3.875%--8.875%, 5/31/95--8/31/05, with a value of
$66,433,201 and U.S. Treasury Bonds, 10.75%--14.25%, 2/15/02--8/15/05,
with a value of $4,880,216 (Cost $69,857,000) $ 69,857,000
$69,857,000
U.S. GOVERNMENT OBLIGATIONS--1.3%
TREASURY--1.3% U.S. Treasury Nts., 7.50%, 12/31/96 1,670,000
1,664,258
U.S. Treasury Nts., 7.75%, 11/30/99 10,000,000
9,965,619
U.S. Treasury Nts., 7.75%, 12/31/99 3,200,000
3,190,000
U.S. Treasury STRIPS, 0%, 5/15/18 40,000,000
6,341,640
---------
Total U.S. Government Obligations (Cost $20,623,560)
21,161,517
FOREIGN GOVERNMENT Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
OBLIGATIONS--3.0% Series I, 5.625%, 4/1/01(3) (5) 6,981,426
4,472,113
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 3.17%, 4/1/01(3) (5) ARA 8,921,972
3,791,167
Argentina (Republic of) Par Bonds, 4.25%, 3/31/23(6) 5,000,000
2,116,406
Argentina (Republic of) Past Due Interest Bonds, 6.50%, 3/31/05(3) 8,000,000
5,115,000
Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds, 8%, 8/5/03 6,000,000
4,650,000
Brazil (Federal Republic of) Interest Due and Unpaid Bonds, 6.063%, 1/1/01(3) 9,800,000
8,186,063
Brazil (Federal Republic of) Par Bonds, 4%, 4/15/24(6) 13,000,000
5,239,000
Ecuador (Republic of) Bonds, 0%, 12/29/49(4) (7) 15,000,000
8,156,250
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
12.25%, 3/25/00ESP 500,000,000 3,852,654
United Mexican States, 7.25% Notes, 12/31/19(3) 5,000,000
3,662,500
---------
Total Foreign Government Obligations (Cost $56,303,066)
49,241,153
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
FINANCIAL--0.0% Calfed, Inc., 10% Nts., 1/3/03 (Cost $169,100) 169,100
158,109
CONVERTIBLE CORPORATE BONDS AND NOTES--6.2%
BASIC MATERIALS--0.5%
METALS--0.3% Coeur d'Alene Mines Corp., 6.375% Cv. Sub. Debs., 1/31/04
6,500,000
5,335,000
PAPER AND FOREST Stone Container Corp., 6.75% Cv. Debs., 2/15/07
5,000,000
3,762,500
PRODUCTS--0.2%
</TABLE>
6 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE
--------- ------------
<S> <C> <C> <C>
CONSUMER CYCLICALS--1.1%
MEDIA--0.7% Comcast Corp., 1.125% Cv. Sub. Disc. Debs., 4/15/07 $15,000,000
$6,056,250
Time Warner, Inc., 8.75% Cv. Sr. Nts., 1/10/15 6,000,000
5,655,000
----------
11,711,250
OTHER--0.2% Titan Wheel International, Inc., 4.75% Cv. Sub. Nts., 12/1/00 3,500,000
3,727,500
RETAIL--0.2% Food Lion, Inc., 5% Cv. Sub. Debs., 6/1/03(4) 4,000,000
3,540,000
CONSUMER NON-CYCLICALS--0.8%
HEALTHCARE--0.8% Healthsouth Rehabilitation Corp., 5% Cv. Sub. Debs., 4/1/01 3,000,000
3,330,000
Novacare, Inc., 5.50% Cv. Sub. Debs., 1/15/00 4,500,000
3,408,750
Pharmaceutical Marketing Services, Inc., 6.25% Cv. Sub. Debs., 2/1/03(4) 3,500,000
2,380,000
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs., 8/15/00(4) (9) 4,000,000
3,795,000
----------
12,913,750
ENERGY--0.5% Cross Timbers Oil Co., 5.25% Cv. Sub. Nts., 11/1/03 3,500,000
2,856,875
Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 3,000,000
3,135,000
Kelly Oil & Gas Partners Ltd., 7.875% Cv. Sub. Nts., 12/15/99 2,500,000
1,934,375
----------
7,926,250
FINANCIAL--0.7% Banco de Galicia y Buenos Aires SA,
7% Cv. Negotiable Obligation Bonds, 8/1/02 6,250,000
4,875,000
First Financial Management Corp., 5% Cv. Debs., 12/15/99 5,000,000
5,187,500
Employee Benefit Plans, Inc., 6.75% Cv. Sub. Debs., 7/31/06 3,000,000
2,017,500
----------
12,080,000
INDUSTRIAL--2.0%
TRANSPORTATION--2.0% Air Express International Corp., 6% Cv. Sub. Debs., 1/15/03
3,500,000
3,465,000
Interpool, Inc., 5.25% Cv. Exch. Sub. Nts., 12/15/18 3,500,000
2,677,500
AMR Corp., 6.125% Cv. Sub. Debs., 11/1/24 20,000,000
16,100,000
Delta Airlines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 15,000,000
10,462,500
----------
32,705,000
</TABLE>
7 Oppenheimer Total Return Fund, Inc.
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE
--------- ------------
<S> <C> <C> <C>
TECHNOLOGY--0.6% Seagate Technology, 6.75% Cv. Sub. Debs., 5/1/12
$6,000,000
$4,957,500
Thermo Electron Corp., 5% Cv. Debs., 4/15/01 5,000,000
5,306,250
-----------
10,263,750
-----------
Total Convertible Corporate Bonds and Notes (Cost $112,871,142)
103,965,000
Shares
COMMON STOCKS--79.1%
BASIC MATERIALS--4.1%
CHEMICALS--2.0% Eastman Chemical Co. 200,000
10,100,000
Great Lakes Chemical Corp. 275,000 15,675,000
Imperial Chemical Industries PLC, ADS 150,000
6,975,000
-----------
32,750,000
GOLD--0.9% Cyprus Amax Minerals Co. 410,000
10,711,250
Santa Fe Pacific Gold Corp.(2) 302,953 3,900,520
------- -----------
14,611,770
METAL: MISCELLANEOUS--0.5% Material Sciences Corp.(2) 530,000
8,413,750
STEEL--0.7% Birmingham Steel Corp. 300,000
6,000,000
Oregon Steel Mills, Inc. 400,000 6,250,000
-----------
12,250,000
CONSUMER CYCLICALS--13.9%
AIRLINES--0.7% Atlantic Southeast Airlines, Inc. 550,000
8,525,000
Continental Airlines, Inc., Cl. B(2) 375,000 3,468,750
-----------
11,993,750
AUTOMOBILES--2.0% Chrysler Corp. 200,000
9,800,000
Daimler-Benz AKT 245,000 12,066,250
Volvo AB, Series B Free 650,000 12,240,943
-----------
34,107,193
BROADCAST MEDIA--0.6% TeleCommunications, Inc., Cl. A(2) 500,000
10,875,000
ENTERTAINMENT--0.2% Iwerks Entertainment, Inc.(2) (9) 540,000
2,565,000
LEISURE TIME--3.1% Brunswick Corp. 500,000
9,437,500
Caesar's World, Inc.(2) 200,000 13,350,000
Eastman Kodak Co. 300,000 14,325,000
Harley-Davidson, Inc. 500,000 14,000,000
-----------
51,112,500
</TABLE>
8 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
PUBLISHING--0.7% American Greetings Corp., Cl. A 425,000
$11,475,000
RETAIL STORES: Federated Department Stores, Inc. 525,000
10,106,250
DEPARTMENT STORES--0.6%
RETAIL STORES: GENERAL Meyer (Fred), Inc.(2) 550,000
16,912,500
MERCHANDISE CHAINS--1.0%
RETAIL: SPECIALTY--3.6% Alco Standard Corp. 275,000
17,256,250
Intelligent Electronics, Inc. 750,000 6,000,000
Regis Corp. of Minnesota(2) (9) 700,000 10,500,000
Rite Aid Corp. 1,022,000 23,889,250
Tandy Corp. 57,700 2,892,213
-----------
60,537,713
RETAIL: SPECIALTY APPAREL--0.4% Gap, Inc. (The)(8) 225,000
6,862,500
SHOES--1.0% Nike, Inc., Cl. B 225,000
16,790,625
CONSUMER NON-CYCLICALS--9.0%
DRUGS--1.3% Astra AB Free, Series A 350,000
9,039,465
Lilly (Eli) & Co. 200,000 13,125,000
-----------
22,164,465
FOOD PROCESSING--0.7% Archer-Daniels-Midland Co. 575,000
11,859,375
HEALTHCARE: DIVERSIFIED--0.7% Bristol-Myers Squibb Co. 200,000
11,575,000
HEALTHCARE: MISCELLANEOUS--1.6% COR Therapeutics, Inc.(2) 500,000
5,500,000
Healthsource, Inc.(2) 300,000 12,262,500
PCI Services, Inc.(2) 185,000 1,202,500
United Healthcare Corp. 175,000 7,896,875
-----------
26,861,875
HOSPITAL MANAGEMENT--0.7% Living Centers of America, Inc.(2) 175,000
5,840,625
Sun Healthcare Group, Inc.(2) 200,000 5,075,000
-----------
10,915,625
MEDICAL PRODUCTS--1.6% Angeion Corp.(2) (9) 500,000
1,500,000
Lynx Therapeutics, Inc.(2) (4) 153,900 30,780
Medtronic, Inc. 300,000 16,687,500
Sybron Corp. of Delaware(2) 226,500 7,814,250
-----------
26,032,530
</TABLE>
9 Oppenheimer Total Return Fund, Inc.
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
RETAIL STORES: Penn Traffic Co.(2) 225,800
$8,580,400
FOOD CHAINS--0.5%
TOBACCO--1.9% Philip Morris Cos., Inc. 550,000
31,625,000
ENERGY--5.5%
OIL AND GAS DRILLING--0.1% Noble Drilling Corp.(2) 350,000
2,056,250
OIL WELL SERVICES AND Dresser Industries, Inc. 500,000
9,437,500
EQUIPMENT--1.7% Halliburton Co. 300,000
9,937,500
Western Atlas, Inc.(2) 250,000 9,406,250
----------
28,781,250
OIL: INTEGRATED DOMESTIC--2.5% Atlantic Richfield Co. 200,000
20,350,000
Occidental Petroleum Corp. 700,000 13,475,000
Sun Co., Inc. 275,000 7,906,250
----------
41,731,250
OIL: INTEGRATED INTERNATIONAL--1.2% Amerada Hess Corp.
300,000
13,687,500
Shell Transport & Trading Co., PLC, New York Shares 100,000
6,537,500
----------
20,225,000
INDUSTRIAL--9.1%
BUILDING MATERIALS GROUP--1.1% Centex Construction Products, Inc.(2)
400,000
4,950,000
Vulcan Materials Co. 265,000 13,415,625
----------
18,365,625
COMMERCIAL SERVICES--1.0%
Reynolds & Reynolds Co., Cl. A 315,000 7,875,000
Sensormatic Electronics Corp. 250,000 9,000,000
----------
16,875,000
CONGLOMERATES--2.9% Hanson PLC, ADR 1,000,000
18,000,000
Litton Industries, Inc.(2) 400,000 14,800,000
Tenneco, Inc. 375,000 15,937,500
----------
48,737,500
ELECTRICAL EQUIPMENT--1.7% General Electric Co. 550,000
28,050,000
MANUFACTURING: Parker-Hannifin Corp. 275,000
12,512,500
DIVERSIFIED INDUSTRIALS--1.6% Tyco Laboratories, Inc. 300,000
14,250,000
----------
26,762,500
</TABLE>
10 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
RAILROADS--0.7% Southern Pacific Rail Corp.(2) 600,000
$10,875,000
TRANSPORTATION: Stolt Comex Seaway SA(2) 200,000
1,400,000
MISCELLANEOUS--0.1%
FINANCIAL--6.5%
FINANCIAL SERVICES: H & R Block, Inc. 485,000
18,005,625
MISCELLANEOUS--1.6% Travelers, Inc. 270,000
8,775,000
-----------
26,780,625
INSURANCE: LIFE--0.5% Bankers Life Holding Corp. 400,000
7,600,000
MAJOR BANKS: REGIONAL--1.7% CoreStates Financial Corp. 650,000
16,900,000
First Interstate Bancorp 160,000 10,820,000
-----------
27,720,000
MONEY CENTER BANKS--2.1% Citicorp 440,000
18,205,000
First Chicago Corp. 365,000 17,428,750
-----------
35,633,750
SAVINGS AND LOANS/ TCF Financial Corp. 250,000
10,312,500
HOLDING COS.--0.6%
TECHNOLOGY--16.0%
AEROSPACE/DEFENSE--0.9% Martin Marietta Corp. 350,000
15,531,250
COMPUTER SOFTWARE Adobe Systems, Inc. 292,500
8,701,875
AND SERVICES--3.8% Bay Networks, Inc.(2) 405,001
11,947,530
Compuware Corp.(2) 420,000 15,120,000
Intersolv, Inc.(2) 160,000 2,900,000
Lotus Development Corp.(2) 250,000 10,250,000
Microsoft Corp.(2) 250,000 15,281,250
-----------
64,200,655
COMPUTER SYSTEMS--1.5% Adaptec, Inc.(2) 195,000
4,606,875
Apple Computer, Inc. 80,000 3,120,000
Auspex Systems, Inc.(2) 400,000 2,700,000
Cisco Systems, Inc.(2) 400,000 14,050,000
----------
24,476,875
ELECTRONICS: ADT Ltd.(2) 604,100
6,494,075
INSTRUMENTATION--0.9% Belden, Inc. 350,000
7,787,500
----------
14,281,575
</TABLE>
11 Oppenheimer Total Return Fund, Inc.
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C> <C>
ELECTRONICS: Actel Corp.(2) 250,000
$2,062,500
SEMICONDUCTORS--3.5% Applied Materials, Inc.(2) 300,000
12,675,000
Dallas Semiconductor Corp.(2) 145,000 2,410,625
Intel Corp. 100,000 6,387,500
Motorola, Inc. 300,000 17,362,500
Texas Instruments, Inc. 225,000 16,846,875
----------
57,745,000
OFFICE EQUIPMENT AND Moore Corp. Ltd. 912,200
17,217,775
SUPPLIES--1.0%
TELECOMMUNICATIONS--4.4% Airtouch Communications, Inc.(2)
500,000
14,562,500
AT & T Corp. 325,000 16,331,250
IDB Communications Group, Inc.(2) 700,000
6,431,250
LCI International, Inc.(2) 625,000 16,250,000
LDDS Communications, Inc.(2) 100,000 1,943,750
Millicom International Cellular SA(2) 150,000 4,518,750
PT Indosat, ADR(2) 149,000 5,326,750
Tele Danmark AS, ADR(2) 325,000 8,287,500
---------
73,651,750
UTILITIES--15.0%
ELECTRIC COMPANIES--12.3% Allegheny Power System, Inc. 450,000
9,787,500
American Electric Power Co., Inc. 350,000 11,506,250
Baltimore Gas & Electric Co. 450,000 9,956,250
Detroit Edison Co. 750,000 19,593,750
Dominion Resources, Inc. 250,000 8,937,500
Florida Progress Corp. 275,000 8,250,000
FPL Group, Inc. 350,000 12,293,750
Houston Industries, Inc. 625,000 22,265,625
Ohio Edison Co. 350,000 6,475,000
Pacific Gas & Electric Co. 800,000 19,500,000
Pennsylvania Power & Light Co. 400,000 7,600,000
Public Service Enterprise Group, Inc. 1,025,000 27,162,500
Texas Utilities Co. 1,000,000 32,000,000
Union Electric Co. 250,000 8,843,750
204,171,875
TELEPHONE--2.7% GTE Corp. 600,000
18,225,000
Pacific Telesis Group 600,000 17,100,000
Telecom Italia SpA 3,500,000 9,104,637
44,429,637
Total Common Stocks (Cost $1,246,440,057)
1,318,590,463
</TABLE>
12 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ -------------
<S> <C> <C> <C>
PREFERRED STOCKS--7.2%
Atlantic Richfield Co., 9% Exchangeable Notes for Common Stock of
Lyondell Petrochemical Co., 9/15/97 600,000
$15,675,000
Boise Cascade Corp., $1.58 Cum. Cv., Series G 390,000
9,311,250
Catellus Development Corp., $3.625 Cv., Series B(2) (4) 240,000
9,240,000
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%,3/3/98(4) 150,000
7,575,000
Fiat SpA(2) 4,500,000 10,346,739
Freeport-McMoRan Copper & Gold, Inc., Cv. Depositary Shares 320,000
6,640,000
General Motors Corp., $3.25 Cv., Series C 150,000
8,606,250
James River Corp. of Virginia, Dividend Enhanced Convertible Stock,
9% Cv. Exch. Depositary Shares, Series P 600,000
12,150,000
Noble Drilling Corp., $1.50 Cv. Exch. 150,000
3,150,000
Noble Drilling Corp., $2.25 Cv. Exch., Series A 130,000
4,257,500
Occidental Petroleum Corp., $3.00 Cum. Cv. Canadian Occidental
Petroleum Ltd.--Indexed 175,000 8,356,250
Olympic Financial Ltd., $2.00 Cum. Cv. Exch. 100,000
2,975,000
Reynolds Metals Co., 7% Preferred Redeemable Increased
Dividend Equity Securities, $3.31 Cv., 12/31/97 112,500
5,442,186
Transco Energy Co., $3.50 Cum. Cv., Series E(4) 100,000
4,550,000
Unisys Corp., $3.75 Cv., Series A 150,000 4,762,500
WHX Corp., $3.75 Cv., Series B 150,000
6,412,500
-----------
Total Preferred Stocks (Cost $121,452,540) 119,450,175
</TABLE>
<TABLE>
<CAPTION>
UNITS
-----
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
Angeion Corp. Wts., Exp. 3/96(9) 500,000 125,000
Morgan Stanley Group Inc., Japanese Index Call Wts., Exp. 5/96 60,000
187,500
-------
Total Rights, Warrants and Certificates (Cost $360,340) 312,500
</TABLE>
<TABLE>
<CAPTION>
SHARES SUBJECT
DATE/PRICE TO PUT
---------- --------------
<S> <C> <C> <C>
PUT OPTIONS PURCHASED--0.0%
Lowe's Cos., Inc. Jan./$35 600 56,250
Promus Cos., Inc. Jan./$25 500 3,125
Promus Cos., Inc. Jan./$30 750 60,938
Promus Cos., Inc. Feb./$30 700 91,875
-------
Total Put Options Purchased (Cost $288,088) 212,188
</TABLE>
13 Oppenheimer Total Return Fund, Inc.
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
------ ------------
<S> <C> <C>
TOTAL INVESTMENTS, AT VALUE (COST $1,628,364,892) 101.0%
$1,682,948,105
LIABILITIES IN EXCESS OF OTHER ASSETS (1.0)
(16,809,945)
----- --------------
NET ASSETS 100.0% $1,666,138,160
=====
==============
</TABLE>
1. Face amount is reported in local currency. Foreign
currency abbreviations are as follows:
ARA--Argentine Austral
ESP--Spanish Peseta
2. Non-income producing security.
3. Represents the current interest rate for a variable
rate security.
4. Restricted security--See Note 6 of Notes to Financial
Statements.
5. Interest or dividend is paid in kind.
6. Represents the current interest rate for an
increasing rate security.
7. When-issued security to be delivered and settled
after December 31, 1994.
8. Securities with an aggregate market value of
$1,525,000 are held in escrow to cover outstanding call
options, as follows:
<TABLE>
<CAPTION>
SHARES EXPIRATION EXERCISE PREMIUM MARKET
VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE
1
--------------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Gap. Inc. (The) 50,000 1/95 $30.00 $36,499 $75,000
</TABLE>
9. Affiliated company. Represents ownership of at least
5% of the voting securities of the issuer and is or was
an affiliate, as defined in the Investment Company Act
of 1940, at or during the period ended December 31,
1994. The aggregate fair value of all securities of
affiliated companies as of December 31, 1994 amounted to
$18,485,000. Transactions during the period in which the
issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE
DECEMBER 31, 1993 GROSS ADDITIONS
----------------- ---------------
SHARES/FACE COST SHARES/FACE COST
<S> <C> <C> <C> <C>
Angeion Corp. -- $ -- 500,000 $1,187,500
Angeion Corp. Wts. -- -- 500,000 --
Baldwin Piano & Organ Co.(10) 256,000 4,418,500 -- --
INTERLINQ Software Corp.(10) 300,000 2,332,500 -- --
Iwerks Entertainment, Inc. 465,000 14,569,045 145,000 3,267,500
Physician's Clinical Laboratory, Inc.,
7.50% Cv. Sub. Debs., 8/15/00 4,000,000 4,000,000 -- --
Regis Corp. of Minnesota 650,000 6,964,363 50,000 706,250
----------- ----------
$32,284,408 $5,161,250
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
BALANCE
GROSS REDUCTIONS DECEMBER 31, 1994
INTEREST
SHARES/FACE COST SHARES/FACE COST
INCOME
----------- ---- ----------- ---- --------
<S> <C> <C> <C> <C> <C>
Angeion Corp. -- $ -- 500,000 $ 1,187,500 $ --
Angeion Corp. Wts. -- -- 500,000 -- --
Baldwin Piano & Organ Co.(10) 256,000 4,418,500 -- -- --
INTERLINQ Software Corp.(10) 300,000 2,332,500 -- -- --
Iwerks Entertainment, Inc. 70,000 2,359,965 540,000 15,476,580 --
Physician's Clinical Laboratory, Inc.,
7.50% Cv. Sub. Debs., 8/15/00 -- -- 4,000,000 4,000,000 299,958
Regis Corp. of Minnesota -- -- 700,000 7,670,613 --
---------- ----------- --------
$9,110,965 $28,334,693 $299,958
========== ===========
========
</TABLE>
10. Not an affiliate as of December 31, 1994.
See accompanying Notes to Financial Statements.
14 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
<S> <C> <C>
ASSETS Investments, at value (cost $1,628,364,892)--see accompanying statement
$1,682,948,105
Cash 596,761
Receivables:
Interest and dividends 10,500,854
Investments sold 5,853,180
Shares of capital stock sold 3,031,040
Other 134,895
--------------
Total assets 1,703,064,835
LIABILITIES Options written, at value (premiums received $36,499)--see accompanying
statement--Note 4 75,000
Payables and other liabilities:
Investments purchased 29,258,939
Shares of capital stock redeemed 4,826,944
Distribution and service plan fees--Note 5 891,853
Dividends and distributions 619,022
Other 1,254,917
--------------
Total liabilities 36,926,675
NET ASSETS $1,666,138,160
==============
COMPOSITION OF Par value of shares of capital stock
$21,392,839
NET ASSETS Additional paid-in capital 1,617,136,104
Undistributed (overdistributed) net investment income 1,960,766
Accumulated net realized gain (loss) from investment,
written option and foreign currency transactions (28,896,123)
Net unrealized appreciation (depreciation) on investments and translation of assets
and liabilities denominated in foreign currencies 54,544,574
--------------
Net assets $1,666,138,160
==============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of $1,235,636,724
and 158,416,599 shares of capital stock outstanding) $7.80
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price)
$8.28
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $429,427,171 and 55,374,013 shares of capital stock outstanding)
$7.76
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,074,265 and 137,776 shares of capital stock outstanding) $7.80
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Total Return Fund, Inc.
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended
December 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME Interest:
Unaffiliated companies $14,804,215
Affiliated companies 299,958
Dividends (net of withholding taxes of $300,721) 48,337,266
-----------
Total income 63,441,439
EXPENSES Management fees-Note 5
8,860,284
Distribution and service plan fees:
Class A--Note 5 2,274,087
Class B--Note 5 3,604,784
Transfer and shareholder servicing agent fees--Note 5 2,768,911
Shareholder reports 863,738
Custodian fees and expenses 212,676
Legal and auditing fees 102,872
Directors' fees and expenses 81,296
Registration and filing fees:
Class A 119,368
Class B 201,613
Class Y 439
Other 417,432
-----------
Total expenses 19,507,500
NET INVESTMENT INCOME (LOSS)
43,933,939
REALIZED AND UNREALIZED Net realized gain (loss) on:
GAIN (LOSS) ON INVESTMENTS, Investments
(24,167,951)
OPTIONS WRITTEN Closing and expiration of options written--Note 4
449,883
AND FOREIGN CURRENCY Foreign currency transactions
774,143
TRANSACTIONS -----------
Net realized gain (loss) (22,943,925)
Net change in unrealized appreciation or depreciation on:
Investments (161,615,681)
Translation of assets and liabilities denominated in foreign currencies
1,957,256
------------
Net change (159,658,425)
------------
Net realized and unrealized gain (loss) on investments, options written and foreign
currency transactions (182,602,350)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
$(138,668,411)
=============
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Total Return Fund, Inc.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993
---- ----
<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ 43,933,939 $
22,572,620
Net realized gain (loss) on investments, options written
and foreign currency transactions (22,943,925) 82,466,024
Net change in unrealized appreciation or depreciation
on investments and translation of assets and
liabilities denominated in foreign currencies (159,658,425)
93,114,925
------------- ------------
Net increase (decrease) in net assets resulting from operations (138,668,411)
198,153,569
EQUALIZATION Net change --
3,854,582
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.2122 and $.20 per share, respectively) (32,935,100)
(23,576,552)
SHAREHOLDERS Class B ($.1563 and $.1091 per share, respectively) (7,410,674)
(1,142,362)
Class Y ($.1719 per share) (9,979) --
Distributions from net realized gain on investments, options written
and foreign currency transactions:
Class A ($.5834 per share) -- (76,215,894)
Class B ($.5834 per share) -- (13,016,692)
CAPITAL STOCK Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS capital stock transactions--Note 2 150,027,163
335,283,270
Net increase (decrease) in net assets resulting from Class B
capital stock transactions--Note 2 251,910,438 223,296,915
Net increase (decrease) in net assets resulting from Class Y
capital stock transactions--Note 2 1,113,774 --
NET ASSETS Total increase (decrease) 224,027,211
646,636,836
Beginning of period 1,442,110,949 795,474,113
------------- ------------
End of period [including undistributed (overdistributed) net
investment income of $1,960,766 and $(750,275), respectively] $1,666,138,160
$1,442,110,949
==============
==============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Total Return Fund, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $8.69 $7.84 $7.49 $6.13 $6.68 $6.35 $5.95
Income (loss) from
investment operations:
Net investment income .23 .18 .17 .24 .24 .27 .26
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions (.91) 1.45 .75 1.91 (.49) .93 .53
Total income (loss)
from investment operations (.68) 1.63 .92 2.15 (.25) 1.20 .79
Dividends and distributions
to shareholders:
Dividends from net
investment income (.21) (.20) (.20) (.23) (.24) (.28) (.27)
Distributions from net
realized gain on investments,
options written and foreign
currency transactions -- (.58) (.37) (.56) (.06) (.59) (.12)
Total dividends and
distributions to shareholders (.21) (.78) (.57) (.79) (.30) (.87) (.39)
Net asset value,
end of period $7.80 $8.69 $7.84 $7.49 $6.13 $6.68 $6.35
========== ========== ======== ========
======== ======== ========
TOTAL RETURN,
AT NET ASSET VALUE(3) (7.86)% 21.24% 12.83% 36.26% (3.86)% 19.25%
13.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,235,637 $1,223,395 $795,474 $555,865 $396,240 $389,413 $314,039
Average net assets
(in thousands) $1,261,729 $992,381 $662,917 $475,741 $394,903 $356,994 $298,509
Number of shares
outstanding at end of period
(in thousands) 158,417 140,711 101,433 74,245 64,644 58,333 49,464
Ratios to average net assets:
Net investment income 2.88% 2.21% 2.68% 3.26% 3.87% 3.96%
4.22%
Expenses 1.01% .93% .96% .95% .98% .98% .94%
Portfolio turnover rate(5) 117.2% 143.9% 143.5% 161.5% 114.1% 151.6%
127.3%
</TABLE>
<TABLE>
<CAPTION>
CLASS A Class B Class Y
-------------------------------- ---------------------- --------
YEAR PERIOD
ENDED ENDED
DEC. 31, DEC 31
1987 1986 1985 1994 1993(2) 1994(1)
---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $6.76 $6.81 $5.40 $8.66 $8.23 $8.23
Income (loss) from
investment operations:
Net investment income .25 .35 .25 .17 .09 .15
Net realized and
unrealized gain (loss)
on investments, options
written and foreign
currency transactions .63 1.00 1.58 (.91) 1.03 (.41)
Total income (loss)
from investment operations .88 1.35 1.83 (.74) 1.12 (.26)
Dividends and distributions
to shareholders:
Dividends from net
investment income (.32) (.37) (.21) (.16) (.11) (.17)
Distributions from net
realized gain on investments,
options written and foreign
currency transactions (1.37) (1.03) (.21) -- (.58) --
Total dividends and
distributions to shareholders (1.69) (1.40) (.42) (.16) (.69) (.17)
Net asset value,
end of period $5.95 $6.76 $6.81 $7.76 $8.66 $7.80
======== ======== ======== ========
======== ======
TOTAL RETURN,
AT NET ASSET VALUE(3) 12.35% 19.70% 34.36% (8.64)% 13.91% (3.15)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $274,068 $234,674 $229,783 $429,427 $218,716 $1,074
Average net assets
(in thousands) $277,877 $246,530 $213,803 $360,773 $90,952 $320
Number of shares
outstanding at end of period
(in thousands) 46,080 34,703 33,720 55,374 25,261 138
Ratios to average net assets:
Net investment income 3.42% 4.37% 3.81% 2.11% 1.09%(4) 4.07%(4)
Expenses .88% .85% .89% 1.87% 1.87%(4) .96%(4)
Portfolio turnover rate(5) 173.4% 88.3% 143.9% 117.2% 143.9% 117.2%
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to December 31,
1994.
2. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the year
ended December 31, 1994 were $2,221,635,120 and $1,847,495,076, respectively.
See accompanying Notes to Financial Statements.
18 Oppenheimer Total Return Fund, Inc.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT Oppenheimer Total Return Fund, Inc. (the Fund) is
ACCOUNTING registered under the Investment Company Act of 1940, as
POLICIES amended, as a diversified, open-end management investment
company. The Fund's investment advisor is Oppenheimer
Management Corporation (the Manager). The Fund offers
Class A, Class B and Class Y shares. Class A shares are
sold with a front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge. All three
classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has
its own expenses directly attributable to a particular
class and exclusive voting rights with respect to matters
affecting a single class. Classes A and B have separate
distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after
the date of purchase. The following is a summary of
significant accounting policies consistently followed by
the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at
4:00 p.m. (New York time) on each trading day. Listed and
unlisted securities for which such information is
regularly reported are valued at the last sale price of
the day or, in the absence of sales, at values based on
the closing bid or asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Directors. Long-term debt securities which
cannot be valued by the approved portfolio pricing
service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering
the quotes is reliable and that the quotes reflect
current market value, or under consistently applied
procedures established by the Board of Directors to
determine fair value in good faith. Short-term debt
securities having a remaining maturity of 60 days or less
are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or
discount. Options are valued based upon the last sale
price on the principal exchange on which the option is
traded or, in the absence of any transactions that day,
the value is based upon the last sale on the prior
trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is
outside the spread, the closing bid or asked price
closest to the last reported sale price is used.
FOREIGN CURRENCY TRANSLATION. The accounting records of
the Fund are maintained in U.S. dollars. Prices of
securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of
securities and investment income are translated at the
rate of exchange prevailing on the respective dates of
such transactions.
The Fund generally enters into forward currency
exchange contracts as a hedge, upon the purchase or sale
of a security denominated in a foreign currency. Risks
may arise from the potential inability of the
counterparty to meet the terms of the contract and from
unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
The effect of changes in foreign currency exchange
rates on investments is separately identified from the
fluctuations arising from changes in market values of
securities held and reported with all other foreign
currency gains and losses in the Fund's results of
operations.
REPURCHASE AGREEMENTS. The Fund requires the custodian to
take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value of
the underlying securities is required to be at least 102%
of the resale price at the time of purchase. If the
seller of the agreement defaults and the value of the
collateral declines, or if the seller enters an
insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated daily
to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
FEDERAL INCOME TAXES. The Fund intends to continue to
comply with provisions of the Internal Revenue Code
applicable to regulated investment companies and to
distribute all of its taxable income, including any net
realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income
tax provision is required. At December 31, 1994, the Fund
had available for federal income tax purposes an unused
capital loss carryover of approximately $3,800,000 which
will expire in 2002.
19 Oppenheimer Total Return Fund, Inc.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT EQUALIZATION. Prior to September 24, 1993, the Fund
ACCOUNTING followed the accounting practice of equalization, by
POLICIES which a portion of the proceeds from sales and costs of
(CONTINUED) redemption of Fund shares equivalent on a per share basis
to the amount of undistributed net investment income were
credited or charged to undistributed income. The
cumulative effect of the change in accounting practice
resulted in a reclassification of $3,804,345 from
undistributed net investment income to paid-in capital.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
CHANGE IN ACCOUNTING CLASSIFICATION OF DISTRIBUTIONS TO
SHAREHOLDERS. Net investment income (loss) and net
realized gain (loss) may differ for financial statement
and tax purposes primarily because of the recognition of
certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes. The character of the
distributions made during the year from net investment
income or net realized gains may differ from their
ultimate characterization for federal income tax
purposes. Also, due to timing of dividend distributions,
the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain
(loss) was recorded by the Fund. Effective January 1,
1994, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of
distributions to shareholders to better disclose the
differences between financial statement amounts and
distributions determined in accordance with income tax
regulations. Accordingly, subsequent to December 31,
1993, amounts have been reclassified to reflect a
decrease in paid-in capital of $45,349, a decrease in
undistributed net investment income of $301,605, and an
increase in accumulated net realized gain on investments
of $346,954. During the year ended December 31, 1994, in
accordance with Statement of Position 93-2, undistributed
net investment income was decreased by $ 614,718, and
accumulated net realized gain on investments was
increased by the same amount.
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date)
and dividend income is recorded on the ex-dividend date.
Discount on securities purchased is amortized over the
life of the respective securities, in accordance with
federal income tax requirements. Realized gains and
losses on investments and options written and unrealized
appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for
federal income tax purposes.
2. SHARES OF The Fund has authorized 450,000,000, 200,000,000, and
CAPITAL STOCK 50,000,000 shares of $.10 par value Class A, Class B and
Class Y capital stock, respectively. Transactions in
shares of capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994(1) YEAR ENDED
DECEMBER
31, 1993(2)
------------------------------ --------------------------------
SHARES AMOUNT SHARES
AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A:
Sold 36,009,865 $302,062,255 40,537,799
$349,550,087
Dividends and distributions reinvested 3,725,296 30,098,615 10,935,488
90,416,322
Redeemed (22,029,323) (182,133,707) (12,195,290)
(104,683,139)
----------- ------------ ----------- ------------
Net increase 17,705,838 $150,027,163 39,277,997
$335,283,270
=========== ============
=========== ============
Class B:
Sold 35,786,510 $297,977,920 24,707,937
$219,055,169
Dividends and distributions reinvested 864,830 6,912,262 1,561,693
13,222,296
Redeemed (6,537,842) (52,979,744) (1,009,115)
(8,980,550)
----------- ------------ ----------- ------------
Net increase 30,113,498 $251,910,438 25,260,515
$223,296,915
=========== ============
=========== ============
Class Y:
Sold 144,607 $1,168,840
Dividends and distributions reinvested 1,275 9,979
Redeemed (8,106) (65,045)
----------- ------------
Net increase 137,776 $1,113,774
=========== ============
</TABLE>
1. For the year ended December 31, 1994 for Class A and
Class B shares and for the period from June 1, 1994
(inception of offering) to December 31, 1994 for Class Y
shares.
2. For the year ended December 31, 1993 for Class A
shares and for the period from May 1, 1993 (inception of
offering) to December 31, 1993 for Class B shares.
20 Oppenheimer Total Return Fund, Inc.
<PAGE>
3. UNREALIZED GAINS At December 31, 1994, net unrealized appreciation on
AND LOSSES investments of $54,544,712 was composed of gross
ON INVESTMENTS appreciation of $141,457,423, and gross depreciation of
$86,912,711.
4. OPTION ACTIVITY The Fund may buy and sell put and call options, or write
covered call options on portfolio securities in order to
produce incremental earnings or protect against changes
in the value of portfolio securities.
The Fund generally purchases put options or writes
covered call options to hedge against adverse movements
in the value of portfolio holdings. When an option is
written, the Fund receives a premium and becomes
obligated to sell or purchase the underlying security at
a fixed price, upon exercise of the option. The Fund
segregates assets to cover its obligations under option
contracts.
Options are valued daily based upon the last sale
price on the principal exchange on which the option is
traded and unrealized appreciation or depreciation is
recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an
option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option,
or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or
paid.
In this report, securities segregated to cover
outstanding call options are noted in the Statement of
Investments. Shares subject to call, expiration date,
exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments.
Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund
gives up the opportunity for profit if the market price
of the security increases and the option is exercised.
The risk in writing a put option is that the Fund may
incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying
an option is that the Fund pays a premium whether or not
the option is exercised. The Fund also has the additional
risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist.
Call option activity for the year ended December 31, 1994
was as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
--------- ----------
<S> <C> <C>
Options outstanding at December 31, 1993 -- $ --
Options written 6,400 1,229,866
Options canceled in closing purchase transactions (3,400) (724,845)
Options exercised (1,250) (254,079)
Options lapsed (1,250) (214,443)
------ ----------
Options outstanding at December 31, 1994 500 $ 36,499
====== ==========
</TABLE>
5. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS which provides for an annual fee of .75% on the first
WITH AFFILIATES $100 million of net assets with a reduction of .05% on
each $100 million thereafter, to .50% on net assets in
excess of $500 million. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent applicable
regulatory limit on Fund expenses.
For the year ended December 31, 1994, commissions
(sales charges paid by investors) on sales of Class A
shares totaled $8,832,144, of which $2,726,018 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by
an affiliated broker/dealer. During the year ended
December 31, 1994, OFDI received contingent deferred
sales charges of $731,799 upon redemption of Class B
shares.
Oppenheimer Shareholder Services (OSS), a division
of the Manager, is the transfer and shareholder servicing
agent for the Fund, and for other registered investment
companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans, Class A and Class B
may expend up to .25% of net assets annually to reimburse
OFDI for costs incurred in distributing shares of the
Fund (prior to July 1, 1994, reimbursements were made
with respect to shares sold subsequent to March 31, 1988
for Class A), including amounts paid to brokers, dealers,
banks and other financial institutions. In addition,
Class B shares are subject to an asset-based sales charge
of .75% of net assets annually, to reimburse OFDI for
sales commissions paid from its own resources at the time
of sale and associated financing costs. In the event of
termination or discontinuance of the Class B plan, the
Board of Directors may allow the Fund to continue payment
of the asset-based sales charge to OFDI for distribution
expenses incurred on Class B shares prior to termination
or discontinuance of the plan.
21 Oppenheimer Total Return Fund, Inc.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
5. MANAGEMENT FEES During the year ended December 31, 1994, OFDI paid
AND OTHER $144,910 and $7,941, respectively, to an affiliated
TRANSACTIONS broker/dealer as reimbursement for Class A and Class B
WITH AFFILIATES personal service and maintenance expenses and retained
(CONTINUED) $3,465,766 as reimbursement for Class B sales commissions
and service fee advances, as well as financing costs.
6. RESTRICTED The Fund owns securities purchased in private placement
SECURITIES transactions, without registration under the Securities
Act of 1933 (the Act). The securities are valued under
methods approved by the Board of Directors as reflecting
fair value. The Fund intends to invest no more than 10%
of its net assets (determined at the time of purchase) in
restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Directors or
by the Manager under Board-approved guidelines.
Restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act,
amount to $30,780 or less than .01% of the Fund's net
assets at December 31, 1994. Illiquid and/or restricted
securities, including those restricted securities that
are transferable under Rule 144A of the Act, are listed
below.
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE COST PER
UNIT
-------- ---------------- -------------
<S> <C> <C>
Catellus Development Corp., $3.625 Cv., Series B(1) 10/28/93--6/17/94 $ 49.35
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(1) 3/3/94--6/28/94 $
65.47
Ecuador (Republic of) Bonds, 0%, 12/29/49(1) 10/25/94 $ 60.38
Food Lion, Inc., 5% Cv. Sub. Debs., 6/1/03(1) 3/21/94--6/3/94 $ 99.34
Lynx Therapeutics, Inc. 10/19/92 $ .67
Pharmaceutical Marketing Services, Inc.,
6.25% Cv. Sub. Debs., 2/1/03(1) 1/27/93--12/6/94 $ 91.14
Physicians Clinical Laboratory,
Inc., 7.50% Cv. Sub. Debs., 8/15/00(1) 8/17/93 $ 100.00
Transco Energy Co., $3.50 Cum. Cv., Series E(1) 10/27/93--1/20/94 $ 49.81
</TABLE>
<TABLE>
<CAPTION>
VALUATION PER UNIT AS
SECURITY OF DECEMBER 31, 1994
-------- ---------------------
<S> <C>
Catellus Development Corp., $3.625 Cv., Series B(1) $38.50
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(1) $50.50
Ecuador (Republic of) Bonds, 0%, 12/29/49(1) $54.38
Food Lion, Inc., 5% Cv. Sub. Debs., 6/1/03(1) $88.50
Lynx Therapeutics, Inc. $ .20
Pharmaceutical Marketing Services, Inc.,
6.25% Cv. Sub. Debs., 2/1/03(1) $68.00
Physicians Clinical Laboratory,
Inc., 7.50% Cv. Sub. Debs., 8/15/00(1) $94.88
Transco Energy Co., $3.50 Cum. Cv., Series E(1) $45.50
</TABLE>
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
<PAGE>
________________
* For purposes of the Fund's investment policy not to concentrate
in securities of issuers in the same industry, gas utilities and gas
transmission utilities each will be considered a separate industry.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf P.C.
1600 Broadway
Denver, Colorado 80202
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Highlights - See Parts A and B: Filed herewith.
(2) Independent Auditors' Report - See Part B: Filed
herewith.
(3) Statement of Investments - See Part B: Filed herewith.
(4) Statement of Assets and Liabilities - See Part B: Filed
herewith.
(5) Statement of Operations - See Part B: Filed herewith.
(6) Statement of Changes in Net Assets - See Part B: Filed
herewith.
(7) Notes to Financial Statements - See Part B: Filed
herewith.
(b) Exhibits
(1)(i) Articles of Incorporation dated 12/5/79: Previously
filed with Registrant's Post-Effective Amendment No. 48,
8/19/80, and refiled herewith pursuant to Item 102 of
Regulation S-T.
(ii) Articles of Incorporation, amended as of 8/24/81:
Previously filed with Registrant's Post-Effective
Amendment No. 50, 4/23/82, and refiled herewith pursuant
to Item 102 of Regulation S-T.
(iii) Articles of Amendment dated 4/28/87 to Articles of
Incorporation, changing Registrant's name from "Hamilton
Funds, Inc." to Oppenheimer Total Return Fund, Inc.":
Previously filed with Registrant's Post-Effective
Amendment No. 62, 4/27/87, and refiled herewith pursuant
to Item 102 of Regulation S-T.
(iv) Articles of Amendment dated 3/23/93 to Articles of
Incorporation: Previously filed with Registrant's Post-
Effective Amendment No. 72, 4/28/93, and refiled
herewith pursuant to Item 102 of Regulation S-T.
(v)Articles Supplementary dated 4/14/93 to Articles of
Incorporation: Previously filed with Registrant's Post-
Effective Amendment No. 72, 4/28/93, and refiled herewith
pursuant to Item 102 of Regulation S-T.
(vi) Articles Supplementary dated 3/28/94 to Articles of
Incorporation: Filed with Registrant's Post-Effective
Amendment No. 74, 3/30/94, and incorporated herein by
reference.
(2) By-Laws, as amended through 6/26/90: Previously filed with
Registrant's Post-Effective Amendment No. 70, 4/30/92, and
refiled herewith pursuant to Item 102 of Regulation S-T.
(3) Not applicable.
(4) (i)Specimen Class A Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 74, 3/30/94, and
incorporated herein by reference.
(ii) Specimen Class B Share Certificate: Previoulsy filed with
Registrant's Post-Effective Amendment No. 74, 3/30/94, and
incorporated herein by reference.
(iii) Specimen Class Y Share Certificate: Previously filed with
Registrant's Post- Effective Amendment No. 74, 3/30/94,
and incorporated herein by reference.
(5) Investment Advisory Agreement between Registrant and
Oppenheimer Management Corporation dated 10/22/90:
Previously filed with Post-Effective Amendment No. 68,
2/28/91, and refiled herewith pursuant to Item 102 of
Regulation S-T.
(6)(i) General Distributor's Agreement between Registrant and
Oppenheimer Fund Management, Inc. dated 10/13/92:
Previously filed with Registrant's Post-Effective
Amendment No. 71, 2/26/93, and refiled herewith pursuant
to Item 102 of Regulation S-T.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Filed with Post-Effective Amendment No. 12 to
the Registration Statement of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and
incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No. 12 to
the Registration Statement of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and
incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement: Filed with Post-Effective Amendment No. 12 to
the Registration Statement of Oppenheimer Main Street
Funds (File No. 33-17850), 9/30/94, and incorporated
herein by reference.
(v) Broker Agreement between Oppenheimer Fund Management,
Inc. and Newbridge Securities, Inc. dated 10/1/86:
Previously filed with Post-Effective Amendment No. 25 to
the Registration Statement of Oppenheimer Special Fund
(Reg. No. 2-45272), 11/1/86, and refiled with Post-
Effective Amendment No. 45 of Oppenheimer Growth Fund
(Reg. No. 2-45272), 8/22/94, and incorporated herein by
reference.
(7) Not applicable.
(8) Custody Agreement with The Bank of New York dated
10/6/92: Previously filed with Registrant's Post-
Effective Amendment No. 71, 2/26/93, and refiled
herewith pursuant to Item 102 of Regulation S-T.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 1/30/81: Previously
filed with Registrant's Post-Effective Amendment No. 57,
4/25/85, and refiled herewith pursuant to Item 102 of
Regulation S-T.
(11) Independent Auditors' Consent: filed herewith.
(12) Not applicable.
(13) Not applicable.
(14)
(i)Form of Individual Retirement Account Trust Agreement: Filed with
Post-Effective Amendment No. 21 to the Registration Statement of
Oppenheimer U.S. Government Trust (File No. 2-76645), 8/25/93, and
incorporated herein by reference.
(ii)Form of Tax Sheltered Retirement Plan and Custody Agreement
for employees of public schools and tax-exempt organizations:
Previously filed with Post-Effective Amendment No. 47 to the
Registration Statement of Oppenheimer Growth Fund (File No. 2-
45272), 10/21/94, and incorporated herein by reference.
(iii)Form of Simplified Employee Pension IRA: Filed with Post-
Effective Amendment No. 42 to the Registration Statement of
Oppenheimer Equity Income Fund (File No. 2-33043), 10/28/94, and
incorporated herein by reference.
(iv)Form of prototype Standardized and Non-Standardized Profit-
Sharing Plan and Money Purchase Pension Plan for self-employed
persons and corporations: Filed with Post-Effective Amendment No.
15 to the Registration Statement of Oppenheimer Mortgage Income
Fund (Reg. No. 33-6614), 1/19/95, and incorporated herein by
reference.
(v)Form of SAR-SEP Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund (File No. 33-6614), 1/19/95, and
incorporated herein by reference.
(15)(i)Service Plan and Agreement for Class A Shares dated
7/1/94, pursuant to Rule 12b-1 of the Investment Company Act
of 1940: Filed herewith.
(ii)Distribution and Service Plan and Agreement for Class B Shares
dated 6/21/94, pursuant to Rule 12b-1 of the Investment Company Act
of 1940: Filed herewith.
(16) Performance Calculations: Filed herewith.
(17) Financial Data Schedules for Class A, Class B and Class Y
shares: Filed herewith.
-- Powers of Attorney and Certified Board Resolutions: Filed
with Registrant's Post-Effective Amendment No. 73, 1/28/94,
and incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
Number of
Record Holders as
Title of Class of March 29, 1995
Class A Common Stock, Par Value $.01 100,277
Class B Common Stock, Par Value $.01 47,933
Class Y Common Stock, Par Value $.01 1
Item 27. Indemnification
Reference is made to Section 7(c) of Article SEVENTH of
Registrant's Articles of Incorporation filed as Exhibit 24(b)(1)
to this Registration Statement, and to Section 2-418 of the
Maryland General Corporation Law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser
of the Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described in
Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in
which each officer and director of Oppenheimer Management Corporation is,
or at any time during the past two fiscal years has been, engaged for
his/her own account or in the capacity of director, officer, employee,
partner or trustee.
<TABLE>
<CATPION>
Name & Current Position
with Oppenheimer Other Business and Connections
Management Corporation During the Past Two Years
- ----------------------- ------------------------------
<S> <C>
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund and
Oppenheimer Global Emerging Growth Fund.
Victor Babin, None.
Senior Vice President
Robert J. Bishop Assistant Treasurer of the OppenheimerFunds
Assistant Vice President (listed below); previously a Fund Controller
for Oppenheimer Management Corporation (the
"Manager").
George Bowen Treasurer of the New York-based
Senior Vice President OppenheimerFunds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based
OppenheimerFunds. Vice President and
Treasurer of Oppenheimer Funds Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of OMC; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
OMC; President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers; formerly Senior Vice President/
Comptroller and Secretary of Oppenheimer
Asset Management Corporation ("OAMC"), an
investment adviser which was a subsidiary of
the OMC.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President/Director of Internal
Audit of the Manager.
O. Leonard Darling, Formerly Co-Director of Fixed Income for
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund and Oppenheimer
Target Fund; Senior Vice President and
Portfolio Manager of Strategic Income &
Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President OppenheimerFunds; Vice President of the
& General Counsel Denver-based OppenheimerFunds; Executive
Vice President, Director and General Counsel
of the Distributor; formerly Senior Vice
President and Associate General Counsel of
the Manager and the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Global Securities Fund.
Scott Farrar, Assistant Treasurer of the OppenheimerFunds;
Assistant Vice President previously a Fund Controller for the
Manager.
Katherine P.Feld Vice President and Secretary of Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc. and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board, Acquisition Corp. ("OAC"), the Manager's
Chief Executive Officer parent holding company; President, CEO and
and Director a director of HarbourView; a director of SSI
and SFSI; President, Director, Trustee, and
Managing General Partner of the Denver-based
OppenheimerFunds; formerly President of the
Manager. President and Chairman of the Board
of Main Street Advisers, Inc.
Robert G. Galli, Trustee of the New York-based
Vice Chairman OppenheimerFunds; Vice President and Counsel
of OAC; formerly he held the following
positions: a director of the Distributor,
Vice President and a director of HarbourView
and Centennial, a director of SFSI and SSI,
an officer of other OppenheimerFunds and
Executive Vice President & General Counsel
of the Manager and the Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman
Brothers.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Bond Fund and
Oppenheimer Intermediate Tax Exempt Bond
Fund; an officer of other OppenheimerFunds;
formerly Vice President of Fixed Income
Portfolio Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
Stephen Jobe, None.
Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund; Associate Portfolio
Manager of Oppenheimer Discovery Fund and
Oppenheimer Time Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director of HarbourView; Director of Main
President and Director Street Advisers, Inc.; and Chairman of
Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer
Strategic Investment Grade Bond Fund,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer High Income Fund and
Oppenheimer Bond Fund; an officer of other
OppenheimerFunds.
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Julia O'Neal, None.
Assistant Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Insured Tax-Exempt
Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond Fund, Oppenheimer Florida Tax-
Exempt Fund, Oppenheimer New Jersey Tax-
Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond Fund;
Vice President of the New York Tax-Exempt
Income Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund and
Portfolio Manager for Oppenheimer Variable
Account Funds-Growth Fund; Senior Investment
Officer and Portfolio Manager with Chemical
Bank.
Russell Read, Formerly an International Finance Consultant
Assistant Vice President for Dow Chemical.
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust; an officer of other
OppenheimerFunds; formerly a Securities
Analyst for the Manager.
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund and
Oppenheimer U.S. Government Trust. Formerly
Vice President and Senior Portfolio Manager
for Delaware Investment Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer Multiple
Strategies Fund; an officer of other
OppenheimerFunds; formerly Vice President
and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
Ellen Schoenfeld, None.
Assistant Vice President
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus OppenheimerFunds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond
Fund, Oppenheimer Strategic Short-Term
Income Fund; an officer of other
OppenheimerFunds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion High Yield Fund and
Oppenheimer High Yield Fund; an officer of
other OppenheimerFunds.
John Stoma, Vice President Formerly Vice President of Pension Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors OppenheimerFunds; President and a Director
and Director of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Time Fund and Oppenheimer
Discovery Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Ashwin Vasan, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust: an officer of other
OppenheimerFunds.
Valerie Victorson, None.
Vice President
John Wallace, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, and
Oppenheimer Main Street Income and Growth
Fund; an officer of other OppenheimerFunds;
formerly a Securities Analyst and Assistant
Portfolio Manager for the Manager.
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial Government
Trust and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice President
of HarbourView; an officer of other
OppenheimerFunds.
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P., Centennial
Government Trust, Centennial Money Market
Trust and Daily Cash Accumulation Fund,
Inc.; Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President of
Centennial.
Robert G. Zack, Associate General Counsel of the Manager;
Senior Vice President Assistant Secretary of the OppenheimerFunds;
and Assistant Secretary Assistant Secretary of SSI, SFSI; an officer
of other OppenheimerFunds.
Eva A. Zeff, Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Mortgage Income Fund; an officer
of other OppenheimerFunds; formerly a
Securities Analyst for the Manager.
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust; Vice
President of Centennial; an officer of other
OppenheimerFunds.
</TABLE>
The OppenheimerFunds include the New York-based OppenheimerFunds
and the Denver-based OppenheimerFunds set forth below:
New York-based OppenheimerFunds
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Mortgage Income Fund
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer Time Fund
Oppenheimer U.S. Government Trust
Denver-based OppenheimerFunds
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Tax-Exempt Bond Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New York-
based OppenheimerFunds, Oppenheimer Funds Distributor, Inc., Harbourview
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New
York 10048-0203.
The address of the Denver-based OppenheimerFunds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., Oppenheimer
Shareholder Services, Centennial Asset Management Corporation, Centennial
Capital Corp., and Main Street Advisers, Inc. is 3410 South Galena Street,
Denver, Colorado 80231.
Item 29. Principal Underwriter
(a) Oppenheimer Funds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which Oppenheimer Management
Corporation is the investment adviser, as described in Part A and B of
this Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President & Treasurer Treasurer
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Ronald Corlew Vice President None
1020 Montecito Drive
Los Angeles, CA 90031
Mary Crooks+ Vice President None
Paul Della Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary
President & Director
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Gregory Farley Vice President - None
1116 Westbury Circle Financial Institution Div.
Eagan, MN 55123
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Terry Lee Kelley Vice President - None
1431 Woodview Lane Financial Institution Div.
Commerce Township, MI 48382
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Vice President - None
Director of Key Accounts
Gina Munson Vice President None
120 Fisherville Road
Apt. 136
Concord, NH 03301
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
1900 Eight Avenue
San Francisco, CA 94116
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
David Robertson Vice President None
9 Hawks View
Hoeoye Falls, NY 14472
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
Paul Stickney Vice President None
1314 Log Cabin Lane
St. Louis, MO 63124
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
Bernard J. Wolocko Vice President None
33915 Grand River
Farmington, MI 48335
William Harvey Young+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act
of 1940 and rules promulgated thereunder are in the possession of
Oppenheimer Management Corporation, at its offices at 3410 South
Galena Street, Denver, Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver and State
of Colorado on the 26th day of April 1995.
OPPENHEIMER TOTAL RETURN FUND, INC.
/s/ James C. Swain *
by: --------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signatures: Title Date
- ----------- ----------------- --------------
/s/ James C. Swain* Chairman of the Board April 26, 1995
- ---------------------- of Directors and
James C. Swain Principal Executive
Officer
/s/ Jon S. Fossel* President and Director April 26, 1995
- ----------------------
Jon S. Fossel
/s/ George Bowen* Treasurer and April 26, 1995
- ---------------------- Principal Financial
George Bowen and Accounting Officer
/s/ Robert G. Avis* Director April 26, 1995
- ----------------------
Robert G. Avis
/s/ William A. Baker* Director April 26, 1995
- ----------------------
William A. Baker
/s/ Charles Conrad, Jr.* Director April 26, 1995
- ----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Director April 26, 1995
- ----------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Director April 26, 1995
- ----------------------
C. Howard Kast
/s/ Robert M. Kirchner* Director April 26, 1995
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Director April 26, 1995
- ---------------------------
Ned M. Steel
*By: /s/ Robert G. Zack
-------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
EXHIBIT INDEX
Form N-1A
Item No. Description
24(b)(1)(i) Articles of Incorporation dated 12/5/79
24(b)(1)(ii) Articles of Incorporation, amended as of 8/24/81
24(b)(1)(iii) Articles of Amendment dated 4/28/87
24(b)(1)(iv) Articles of Amendment dated 3/23/93
24(b)(1)(v) Articles Supplementary dated 4/14/93 to Articles of
Incorporation
24(b)(2) By-Laws, as amended through 6/26/90
24(b)(5) Investment Advisory Agreement dated 10/22/90
24(b)(6)(i) General Distributor's Agreement dated 10/31/92
24(b)(8) Custody Agreement dated 10/6/92
24(b)(10) Opinion and Consent dated 1/30/81
24(b)(11) Independent Auditor's Consent
24(b)(15)(i) Service Plan and Agreement for Class A Shares dated
7/1/94
24(b)(15)(ii) Distribution and Service Plan and Agreement for Class B
Shares dated 6/21/94
24(b)(16) Performance Calculations
24(b)(17) Financial Data Schedules for Class A, Class B, and
Class Y shares
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 WEST PRESTON STREET
BALTIMORE 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the
ARTICLES OF INCORPORATION
OF
HAMILTON FUNDS, INC.
as approved and received for record by the State Department of Assessments
and Taxation of Maryland, December 11, 1979 at 8:30 o'clock A.M.
AS WITNESS my hand and official Seal of the said Department at
Baltimore this 12th day of December 1979.
/s/ Dean W. Kitchen
_ _ _ _ _ _ _ _ _ _ _
Dean W. Kitchen
Charter Specialist
<PAGE>
ARTICLES OF INCORPORATION
OF
HAMILTON FUNDS, INC.
THIS IS TO CERTIFY THAT:
ARTICLE I
The undersigned, Robert G. Same, whose post office address is 36000
South Yosemite Street, Denver, Colorado 80237, being of full legal age,
does, under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations, act as incorporator with the
intention of forming a corporation.
ARTICLE II
The name of the corporation (hereinafter called the Corporation) is:
HAMILTON FUNDS, INC.
ARTICLE III
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are
as follows:
1) To engage generally in the business of investing,
reinvesting, owning, holding and trading in securities, to issue
redeemable securities, and to generally engage in the business of an
open-end management investment company in the United States, the
territories and possessions thereof, and in foreign countries.
2) To invest and reinvest its capital and/or surplus and/or
reserves and other assets and to acquire by exchange, purchase,
subscription, contract or otherwise, and to receive, own, hold, sell,
assign, exchange, pledge, borrow upon the credit or, transfer or
otherwise dispose of and generally deal in all forms of securities,
including, but not by way of limitation, shares, stocks (preferred,
common and debenture), notes, bonds, debentures, scrip, warrants,
participation certificates, mortgages, commercial paper, choses in
action, evidences of indebtedness and other obligations of every kind
and description:
a) of any corporation, syndicate, association, common law trust,
partnership, form or other entity, whether private, public or quasi-
public, existing or carrying on business in the United States or
elsewhere throughout the world, and whether or not the issuer of any
such security is organized or exists under the laws of the United
States, or any state, territory or possession thereof, or under the
laws of any foreign country, or subdivision thereof;
b) of the Untied States or any agency thereof;
c) of any State of the United States or any territory or
possession of the United States, or any country, municipality,
district or political subdivision in any State of the United States,
or any agency of any of them;
d) of any foreign country, or any agency or political
subdivision thereof;
3) To consolidate or merge with, to acquire and take over the
assets of and assume the liabilities and obligations of any other
investment company, whether incorporated or unincorporated, and to
do all acts and things necessary and incidental to effectuate such
consolidation or merger.
4) To make contracts and generally to do any and all acts and
things necessary or desirable in furtherance of any of the corporate
purposes or designed to protect, preserve and/or enhance the value
of the corporate assets, or to the extent permitted to business
corporation authorized under the laws of the State of Maryland, as
now or may in the future be authorized by said law; and to do all and
everything necessary, suitable and proper for the accomplishment of
any of the purposes, objects or powers hereinbefore set forth to the
same extent and as fully as a natural person might or could do, in
any part of the world and either alone or in association or
partnership with other corporations, firms or individuals; and to
have all the rights, powers and privileges now or hereafter conferred
by the laws of the State of Maryland upon a Corporation organized
under the General Laws of the State of Maryland, or under any act
amendatory thereof, supplemental thereto or in substitution therefor.
5) To redeem or repurchase any of its shares and/or to retire
the same, reduce the capital stock of the Corporation and restore
such shares to the status of authorized and unissued shares.
6) To borrow or raise money for any purpose of the Corporation
and from time to time draw, make, accept, endorse, execute and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and nonnegotiable instruments and
evidences of indebtedness, and to pledge, hypothecate and borrow upon
the credit of the assets of the Corporation.
7) To take such action as shall be desirable and necessary to
procure its shares to be licensed or registered for sale under the
laws of the United States and in any state, county, city or other
municipality of the Untied States, the territories thereof, the
District of Columbia or in any foreign country and in any town, city
or subdivision thereof.
The foregoing clauses shall be construed both as objects and powers,
and it is expressly hereby provided that the enumeration herein of any
specific objects and powers shall not be held to limit or restrict in any
way the general powers of the Corporation. Nor shall such objects and
powers, except when otherwise expressly provided, be in anywise limited
or restricted by reference to, or inference from, the terms of any other
clause of these Articles of Incorporation, but the objects and powers
specified in each of the foregoing clauses of this Article shall be
regarded as independent objects and powers.
ARTICLE IV
The post office address of the principal office of the Corporation
in the State of Maryland is c/o The Corporation Trust Incorporated, First
Maryland Building, 25 South Charles Street, Baltimore, Maryland 21201.
The Corporation's resident agent is The Corporation Trust
Incorporated, whose post office address is First Maryland Building, 25
South Charles Street, Baltimore, Maryland 21201. Said resident agent is
a corporation of the State of Maryland.
ARTICLE V
The total number of shares which the Corporation will have the
authority to issue is Four Hundred Million (400,000,000) shares, all of
one class, of the par value of ten cents ($.10) per share to be known as
Series H-DA shares and of the aggregate par value of $40,000,000. The
minimum amount of capital with which the Corporation will commence
business if $100,000.00. This Corporation shall have the power to issue
fractional shares. Each share of stock of the Corporation shall be
entitled to one vote. Each fractional share shall be entitled to such
fraction of one vote as the fractional share shall bear to one share.
Cumulative voting shall not be allowed.
ARTICLE VI
The number of Directors of the Corporation shall be eight and these
who will serve until the first annual meeting and until their successors
are duly chosen and qualify are: James C. Swain, Fed E. Neef, Joseph A.
Uhl, Robert M. Kirchner, Ned M. Steel, Harry A. King, William A. Baker,
and Charles COnrad, Jr.
However, the By-Laws of the Corporation may fix the number of
Directors at a number greater or lesser than that named in these Articles
of Incorporation and may authorize the Board of Directors, by the vote of
a majority of the entire Board of Directors, to increase or decrease the
number of Directors fixed by these Articles of Incorporation or in the By-
Laws, within the limits specified in the By-Laws, provided that in no case
shall the number of Directors be less than three, and to fill any
vacancies on the Board of Directors. Unless otherwise provided by the By-
Laws of the Corporation, the Directors of the Corporation need not be
stockholders therein.
ARTICLE VII
No holder of stock of the Corporation of any class, whether now or
hereafter authorized, shall have any preemptive or preferential or other
right of subscription to any shares of any class of stock, or securities
convertible into or evidencing the right to purchase stock of any class
whatsoever, whether or not the stock in question be of the same class as
may be held by such stockholder, and whether now or hereafter authorized
and whether issued for cash, property, services or otherwise other than
such, if any, as the Board of Directors in its discretion may from time
to time determine, and then only at such prices and on such terms and
conditions as the Board of Directors may from time to time fix.
ARTICLE VIII
The Corporation shall be obligated to redeem or repurchase any of its
shares at the option of a registered stockholder, such redemption or
repurchase to be at the value determined in accordance with the provisions
of the By-Laws of this Corporation. The method for determining such value
shall be based upon the net asset value of the Corporation's assets
determined in accordance with such BY-Law provisions. Upon the redemption
or repurchase of the Corporation's shares as herein provided, the shares
may be restored to the status of authorized and unissued shares. The
Corporation shall pay for any shares thus redeemed or repurchase in cash.
Notwithstanding the foregoing, the Board of Directors may suspend or
modify the right of the stockholders to require the Corporation to redeem
or repurchase shares when permitted or required to do so by the 1940 Act
(which term the "1940 Act" shall for the purposes of these Articles of
Incorporation mean the Investment Company Act of 1940 as from time to time
amended and any rule, regulation or order thereunder).
ARTICLE IX
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
1) To make, alter or repeal the By-Laws of the Corporation,
provided, however, that the by-law adopted under the title
"Fundamental Investment Policies" shall only be repealed, altered or
amended after such repeal, alteration or amendment has been approved
by stockholder vote in accordance with the 1940 Act.
2) To declare and pay dividends or make distributions to the
shareholders of the Corporation payable either in cash, in property,
or in shares of the capital stock of the Corporation and to set apart
out of any funds of the Corporation available for dividends or
distributions a reserve or reserves and for any proper purpose to
abolish any such reserve in the manner in which it was created. Such
reserve or reserves may be invested and reinvested by the Board of
Directors in the same way and subject to such restrictions as are
provided for the investment and reinvestment of the capital of the
Corporation. When and only when the Board of Directors shall decide
that it is advisable or necessary to pay dividends or distributions
out of the reserve shall such funds be subject to payment of
dividends or distributions.
3) To manage all the business and affairs of the Corporation;
and by resolution passed by a majority of the whole Board, designate
an executive committee and one or more other committees, which, to
the extent provided in said resolution or in the By-Laws of the
Corporation, shall have and may exercise such of the powers of the
Board of Directors in the management of the business and affairs of
the Corporation as may be lawfully delegated. Each such committee
shall consist of two or more directors of the corporation.
4) To enter into custody or trust agreements providing for the
placing of all cash and securities of the Corporation in custody with
one or more banks or trust companies or other person qualified by law
to hold such property in custody or in trust.
5) Subject to all applicable provisions of the By-Laws and of
the 1940 Act to enter into a written agreement with any person, firm,
or corporation to act as manager, investment adviser, underwriter,
distributor, fiscal agent or depositary of the Corporation.
6) In addition to the powers hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or
done by the Corpoartion, subject, nevertheless, to the express
provisions of the Laws of Maryland, of these Articles of
Incorporation or any amendment hereto and of the By-Laws of the
Corporation.
7) To fix reasonable compensation of Directors for serving on
the Board and on committees.
ARTICLE X
The stockholders, the Board of Directors and any committees thereof
shall have power to hold their meetings and keep the books, documents and
papers of the Corporation (except as otherwise provided by law) outside
of the State of Maryland at such places as maybe from time to time
designated by the By-Laws or by resolution of the stockholders or
directors.
ARTICLE XI
The Corporation shall have perpetual existence. The private property
of the stockholders shall not be subject to the payment of the
Corporation's debts to any extent whatever.
ARTICLE VII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation in the manner
now or hereafter prescribed by statute and all rights conferred upon
stockholders herein are granted subject to this reservation.
The term "these Articles of Incorporation" as used herein and in the
By-laws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended and restated.
IN WITNESS WHEREOF, the undersigned incorporator of Hamilton Funds,
Inc. who executed the foregoing Articles of Incorporation hereby
acknowledges the same to be his free act and deed and further acknowledges
that to the best of his knowledge, information and belief the matters and
facts set forth therein are true in all material respects.
Dated this 5th day of December, 1979.
/s/ Robert G. Same
_ _ _ _ _ _ _ _ _ __
Robert G. Same
/s/ Michael Corrig
_ _ _ _ _ _ _ _ _ _ _
WITNESS:
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
On this 5th day of December, 1979, before me personally appeared
Robert G. Same, to me known to be the person described in and who executed
the foregoing instrument, and he acknowledged that he executed the same
as his free act and deed.
IN WITNESS WHEREOF, I hereto set my hand and official seal.
/s/ Gloria LaFond
_ _ _ _ _ _ _ _ _ _
Gloria LaFond
Notary Public
My Commission expires: October 19, illegible
orgzn\420artco
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 WEST PRESTON STREET
BALTIMORE 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the
ARTICLES OF AMENDMENT
OF
HAMILTON FUNDS, INC.
as approved and received for record by the State Department of
Assessments and Taxation of Maryland, August 27, 1981 at 11:30
o'clock a.m.
AS WITNESS my hand and official Seal of the said Department at
Baltimore this 8th day of September, 1981,
/s/ William J. Simmons
_ _ _ _ _ _ _ _ _ _ _ _
William J. Simmons
Corporate Administrator
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
HAMILTON FUNDS, INC.
HAMILTON FUNDS, INC., a Maryland Corporation, (the "Corporation")
having its principal office in Baltimore, Maryland and having The
Corporation Trust Incorporated as its registered agent, located at First
Maryland Building, 25 South Charles Street, Baltimore, Maryland 21201,
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The Articles of Incorporation of the Corporation were filed
with the State Department of Assessments and Taxation of Maryland on
December 11, 1979.
SECOND: The Articles of Incorporation of the Corporation are hereby
amended by
(a) Adding the following two paragraphs to Article V:
The presence in person or by proxy of the holders of one-third
of the shares of capital stock of the Corporation outstanding and
entitled to vote thereat shall constitute a quorum at any meeting of
the stockholders; provided however, if any action to be taken by the
stockholders at a meeting requires an affirmative vote of a majority
of the shares outstanding and entitled to vote, then in such event
the presence in person or by proxy of the holders of a majority of
the shares of capital stock of the Corporation outstanding and
entitled to vote at such a meeting shall constitute a quorum for all
purposes.
Notwithstanding any provision of the laws of the State of
Maryland requiring any action to be taken or authorized by the
affirmative vote of the holders of a majority, or more than a
majority, of the shares of all classes or of any class of stock, such
action shall be effective and valid if taken or authorized by the
affirmative vote of the holders of a majority of the total number of
shares outstanding and entitled to vote thereon pursuant to the
provisions of these Articles of Incorporation.
(b) Striking out the first paragraph of Article XII and inserting in
lieu thereof, the following
The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in these Articles of Incorporation
in the manner now or hereafter prescribed either by statute or by
these Articles of Incorporation, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
THIRD: The Board of Directors of the Corporation, at a meeting duly
convened and held on March 23, 1981, adopted a resolution in which was set
forth the foregoing amendments to the Articles of Incorporation, declaring
that the said amendments of the Articles of Incorporation were advisable
and directing that they be submitted for action thereon at the annual
meeting of stockholders to be held on June 29, 1981, or any adjournment
thereof.
FOURTH: Notice setting forth the said amendments of the Articles of
Incorporation and a summary of the changes to be effected by said
amendments and stating that a purpose of the meeting of the stockholders
would be to take action thereon, was given as required by law, to all
stockholders of the Corporation entitled to vote thereon; and like notice
was given to all stockholders of the Corporation not entitled to vote
thereon, whose contract rights as expressly set forth in the Articles of
Incorporation would be altered by the amendments. The amendments of the
Articles of Incorporation of the Corporation as hereinabove set forth were
approved by the stockholders of the Corporation at the adjourned meeting
of stockholders held August 24, 1981 by the affirmative vote of two-thirds
of all the votes entitled to be cast thereon.
FIFTH: The amendments of the Articles of Incorporation of the
Corporation as hereinabove set forth have been duly advised by the Board
of Directors and approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, HAMILTON FUNDS, INC. has caused these presents
to be signed in its name and on its behalf by its President or one of its
Vice Presidents and its corporate seal to be hereunto affixed and attested
by its Secretary or one of its Assistant Secretaries on August 24, 1981.
HAMILTON FUNDS, INC.
By: /s/ James C. Swain, President
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
James C. Swain, President
ATTEST:
/s/ George C. Bowen
_ _ _ _ _ _ _ _ _ _ _ _ _
George C. Bowen
Secretary
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I hereby certify that on August 24, 1981 before me the subscriber,
a notary public in the State of Colorado, in and for the City and County
of Denver, personally appeared James C. Swain, President of HAMILTON
FUNDS, INC., a Maryland corporation acknowledged the foregoing Articles
of Amendment to be the corporate act of said corporation and further made
oath in due form of law that the matters and facts set forth in said
Articles of Amendment with respect to the approval thereof are true to the
best of his knowledge, information and belief.
WITNESS my hand and notarial seal the day and year first above
written.
My commission expires: September 18, 1984
Sandra J. Farber
Notary Public
Sandra J. Farber
orgzn\420incor
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
HAMILTON FUNDS, INC.
HAMILTON FUNDS, INC., a Maryland corporation (hereinafter called the
"Corporation"), having its principal office in the State of Maryland in
Baltimore, Maryland, and having the CT Corporation System as its resident
agent, located at 32 South Street, Baltimore, Maryland 21202, hereby
certifies the following to the State Department of Assessments and
Taxation of Maryland:
FIRST: The Articles of Incorporation of the Corporation were filed
with the State Department of Assessments and Taxation of Maryland on
December 11, 1979.
SECOND: The Articles of Incorporation of the Corporation are hereby
amended as follows:
The name of the Corporation is hereby changed from "Hamilton
Funds, Inc." to "Oppenheimer Total Return Fund, Inc." by:
(a) Amending the heading of the Articles of Incorporation
to read: "ARTICLES OF INCORPORATION OF OPPENHEIMER TOTAL RETURN
FUND, INC."
(b) Amending Article II of the Articles of Incorporation
by striking out the first sentence thereof and by substituting
therefor the following: "The name of the corporation
(hereinafter called the "Corporation") is: Oppenheimer Total
Return Fund, Inc."
THIRD: The Board of Directors of the Corporation, at a meeting
duly convened and held on January 20, 1987, adopted and approved a
resolution in which was set forth the foregoing amendments to the Articles
of Incorporation, declaring that said amendments of the Articles of
Incorporation were advisable and directed that they be submitted for
approval by stockholders of the Corporation at the annual meeting of
stockholders of the Corporation on April 28, 1987.
FOURTH: Notice in the manner required by Maryland law setting forth
the said Amendments of the Articles of Incorporation and a summary of the
changes they will effect, and stating that a purpose of the meeting of the
stockholders would be to take action thereon was given as required by law
to all stockholders of the Corporation entitled to vote thereon. The
amendments of the Articles of Incorporation of the Corporation as
hereinabove set forth were approved by the stockholders of the Corporation
at a meeting duly held on April 28, 1987 by the affirmative vote of a
majority of all the votes entitled to be cast thereon.
FIFTH: The amendments of the Articles of Incorporation of the
Corporation as hereinabove set forth have been duly advised by the Board
of Directors and approved by the stockholders of the Corporation.
SIXTH: These Articles of Amendment shall be effective on April 30,
1987.
IN WITNESS WHEREOF, Hamilton Funds, Inc. has caused these presents
to be signed and acknowledged in its name and on its behalf by one of its
Vice Presidents and its corporate seal to be hereunto affixed and attested
by its Secretary on April 28, 1987.
HAMILTON FUNDS, INC.
ATTEST:
/s/ Philip R. Carroll By: /s/ Robert G. Galli
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Philip R. Carroll Robert G. Galli, Vice President
Assistant Secretary
[SEAL]
STATE OF NEW YORK )
) ss.
_______COUNTY OF NEW YORK )
I hereby certify that on April 28, 1987, before me, the subscriber,
a Notary Public of the State of New York in and for the County of New
York, personally appeared Robert G. Galli, Vice President of Hamilton
Funds, Inc., a Maryland corporation, and in the name and on behalf of said
corporation, acknowledged the foregoing Articles of Amendment to be the
corporate act of said Corporation, and further verified under oath in due
form of law that the matters and facts set forth in the said Articles of
Amendment with respect to the authorization and approval thereof are true
to the best of his knowledge, information and belief.
WITNESS my hand and notarial seal, the day and year last above
written.
[SEAL] /s/ Katherine Feld
_ _ _ _ _ _ _ _ _ _
Notary Public
orgzn\420amend
OPPENHEIMER TOTAL RETURN FUND, INC.
ARTICLES OF AMENDMENT
3/23/93
Oppenheimer Total Return Fund, Inc., a Maryland corporation having
its principal office in the State of Maryland in Baltimore City
(hereinafter called the Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that;
FIRST: The charter of the Corporation is hereby amended:
a. By deleting the designation "Series H-DA" shares in the first
sentence of Article V of the Articles of Incorporation and
inserting in lieu thereof the designation "Class A" shares.
b. By adding a new paragraph (8) to Article IX of the Articles of
Incorporation to read:
"(8) The Board of Directors shall have the power to classify or
reclassify any unissued stock, whether now or hereafter
authorized, by setting or changing the preferences, conversion
or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption
of such stock."
SECOND: The designation of each share of stock of the Corporation
outstanding immediately prior to the effective time of these Articles of
Amendment shall be changed as of the effective time of these Articles of
Amendment from "Series H-DA" shares to "Class A" shares. Certificates
reflecting the designation "Class A" need not be issued to holders of
Certificates for "Series H-DA" shares until certificates reflecting the
designation "Series H-DA", if issued, have been received by the
Corporation or its agent duly endorsed for transfer.
THIRD: The Amendment of the Articles of Incorporation of the
Corporation as hereinabove set forth has been duly advised by the board
of directors of the Corporation and approved by the stockholders of the
Corporation in the manner and by the vote required by law.
IN WITNESS WHEREOF, the Corporation, has caused these presents to be
signed in its name and on its behalf by its Vice President and its
corporate seal to be hereunto affixed and attested by its Assistant
Secretary.
The undersigned acknowledge these Articles of Amendment to be the
corporate act of the Corporation and states that to the best of his
knowledge, information and belief the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all
material respects and that this statement is made under the penalties of
perjury.
<PAGE>
Oppenheimer Total Return Fund, Inc.
By: /s/ Robert G. Galli
_ _ _ _ _ _ _ __ _ _ _ _ _
Robert G. Galli,
Vice President
Attest:
/s/ Robert G. Zack
_ _ _ _ _ _ _ _ _ _
Robert G. Zack,
Assistant Secretary
[Seal]
orgzn\420art
OPPENHEIMER TOTAL RETURN FUND, INC.
ARTICLES SUPPLEMENTARY
OPPENHEIMER TOTAL RETURN FUND, INC., a Maryland corporation having
its principal office in Maryland in the City of Baltimore (hereinafter
called the "Corporation"), certifies that:
FIRST: Pursuant to authority contained in the charter of the
Corporation, two hundred million (200,000,000) shares of authorized but
unissued Class A shares have been duly reclassified by the Board of
Directors as authorized but unissued Class B shares, par value ten cents
($.10) per share. Upon such reclassification, the Corporation will have
four hundred million (400,000,000) shares authorized, each with a par
value of ten cents ($.10) per share and with an aggregate par value of
$40,000,000. These Articles Supplementary do not increase the authorized
stock of the Corporation.
SECOND: Acting pursuant to paragraph (8) of Article IX of the
Articles of Incorporation as amended, the Board of Directors has set the
following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of Class B stock, together with those set forth
in other provisions of the Articles of Incorporation relating to stock of
the Corporation generally.
(1) As more fully set forth hereinafter, the liabilities and the
expenses of the Class B shares shall be determined separately
from those of the Class A shares and from those of any other
class of the Corporation's stock and, accordingly, the net asset
value, the dividends and distributions payable to holders, and
the amounts distributable in the event of liquidation of the
Corporation to holders of shares of the Corporation's stock may
vary from class to class. Article VIII of the Articles of
Incorporation shall be construed in such manner as to reflect
the provisions of the immediately prior sentence and of these
Article Supplementary generally. Except for these differences
and certain other differences hereinafter set forth, the Class
B shares shall have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of, and
rights to require redemption of the Class A shares and any other
class of the Corporation's stock that represents an interest in
the same portfolio of investments as the Class B shares.
(2) The Class B shares shall represent interests in the same
portfolio of investments as the Class A shares.
(3) The dividends and distributions of investment income and
capital gains to holders of the Class B shares shall be in such
amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary from
the dividends and distributions of investment income and capital
gains to holders of the Class A shares and any other class of
the Corporation's stock to reflect differing allocations of the
liabilities and expenses of the Corporation among the classes
of shares and any resultant differences among the net asset
values per share of the classes of shares, to such extent and
for such purposes as the Board of Directors may deem
appropriate. The allocation of investment income, capital
gains, expenses and liabilities of the Corporation among the
Class A shares, the Class B shares, and any other class of the
Corporation's stock that represents an interest in the same
portfolio of investments as the Class B shares shall be
determined by the Board of Directors in a manner that is
consistent with the order dated 11/24/92 (Investment Company Act
of 1940 Release No. 19173) issued by the Securities and Exchange
Commission in connection with the application for exemption
filed by Oppenheimer Management Corp., et a., and any existing
or future amendment to such order or any rule or interpretation
under the Investment Company Act of 1940 or its successor that
modifies or supersedes such order.
(4) Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, the holders
of the Class B shares shall have exclusive voting rights with
respect to any matter submitted to a vote of stockholders that
affects only holders of the Class B shares and no voting rights
with respect to any matter submitted to a vote of stockholders
that does not affect holders of the Class B shares.
(5) (a) Each Class B share shall be converted automatically and
without any action or choice on the part of the holder thereof,
into Class A shares at the close of business on the Conversion
Date thereof, established as provided in the next following
sentence. The Conversion Date for Class B shares shall be
determined by the Board of Directors in a manner and pursuant
to terms and conditions consistent with the Order dated 11/24/92
(Investment Company Act of 1940 Rel. No. 19123) issued by the
Securities and Exchange Commission in connection with the
application for exemption filed by Oppenheimer Management
Corporation, et al. and any existing or future amendment to such
Order or any rule or interpretation under the Investment Company
Act of 1940 or its successor that modified or supersedes such
Order and which Conversion Date is described, from time to time,
in the Corporation's then current prospectus.
(b) The number of Class A shares into which a Class B share
is converted pursuant to paragraph (5)(a) hereof shall equal the
number (including for this purpose fractions of a share)
obtained by dividing the net asset value per share of the Class
B shares for the purposes of sales and redemption thereof on the
Conversion Date by the net asset value per share of the Class
A shares for the purposes of sales and redemption thereof on the
Conversion Date.
(c) On the Conversion Date, the Class B shares converted
into Class A shares will cease to accrue dividends and will no
longer be deemed outstanding and the rights of the holders
thereof (except the right to receive the number of Class A
shares into which the Class B shares have been converted and
declared but unpaid dividends to the Conversion Date) will
cease. Certificates representing Class A shares resulting from
the conversion need not be issued until certificates
representing the Class B shares converted, if issued, have been
received by the Corporation or its agent duly endorsed for
transfer.
(d) The automatic conversion of the Class B shares into
Class A shares as set forth in paragraph (5)(a) shall be
suspended at any time that the Board of Directors determines (i)
that there is not available a private letter ruling from the
Internal Revenue Service or a reasonably satisfactory opinion
of counsel to the effect that the conversion of the Class B
shares does not constitute a taxable event under federal income
tax law, or that (ii) any other condition to conversion set
forth in the Corporation's prospectus, as such prospectus may
be amended from time to time, is not satisfied.
(e) The automatic conversion of the Class B shares into
Class A shares as set forth in paragraph (5) (a) may also be
suspended by action of the Board of Directors at any time that
the Board of Directors determines such suspension to be
appropriate in order to comply with, or satisfy the requirements
of the Investment Company Act of 1940, as amended, and in effect
from time to time, or any rule, regulation or order issued
thereunder relating to voting by the holders of the Class B
shares on any plan with respect to the Class A shares proposed
under Rule 12b-1 of the Investment Company Act of 1940, as
amended, and in effect from time to time, and in connection
with, or in lieu of, any such suspension, the Board of Directors
may provide holders of the Class B shares with alternative
conversion or exchange rights into other classes of stock of
the Corporation in a manner consistent with the law, rule,
regulation or order giving rise to the possible suspension of
the conversion right.
THIRD: The Class B shares aforesaid have been duly reclassified
by the Corporation's Board of Directors pursuant to authority
and power contained in the Corporation's Articles of
Incorporation.
IN WITNESS WHEREOF, Oppenheimer Total Return Fund, Inc. has
caused these Articles Supplementary to be executed by its Vice
President and witnessed by its Assistant Secretary on this 14th
day of April, 1993. The Vice President of the Corporation who
signed these Articles Supplementary acknowledges them to be the
act of the Corporation and states under the penalties of perjury
that, to the best of his knowledge, information and belief, the
matters and facts set forth herein relating to authorization and
approval hereof are true in al material respects.
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
By: /s/ Robert G. Galli (SEAL)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Robert G. Galli
Vice President
WITNESS:
/s/ Robert G. Zack
_ _ _ _ _ _ _ _ _ _ _ _ _
Robert G. Zack
Assistant Secretary
artsupp.420
OPPENHEIMER TOTAL RETURN FUND, INC.
(A Maryland Corporation)
___________________
BY-LAWS
(as amended through June 26, 1990)
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
ARTICLE I
STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders
shall be held at the principal office of the Corporation in the State of
Colorado or at such other place within the United States as may be fixed
by the Board of Directors.
Section 2. Meetings of Stockholders. Meetings of the
stockholders shall be held at a time designated by the Board of Directors
on such date as may be fixed by the Board of Directors at which time the
stockholders shall act on such matters as are submitted to a vote of
stockholders, and may transact any other business within the powers of the
Corporation. Any business of the Corporation may be transacted at such
meeting without being specifically designated in the notice, except such
business as is specifically required by statutes to be stated in the
notice.
Notwithstanding the foregoing provisions of this Section 2, a
meeting of stockholders shall be held when the Investment Company Act of
1940, as amended, requires one or more of the following matters be acted
on by stockholders:
1) Election of Directors;
2) Approval of an investment advisory agreement;
3) Ratification of the selection of independent public
accounts; or
4) Approval of a distribution agreement.
Also, notwithstanding the provisions of this Section 2, a meeting
of the stockholders shall be called by the Secretary upon receipt of the
request in writing signed by stockholders holding not less than one
quarter in amount of the votes entitled to be cast thereat. Such request
shall state the purpose or purposes of the proposed meeting and the
matters proposed to be acted on at it. Meetings requested by stockholders
need not be called unless (i) required by law; and (ii) all conditions to
the calling of such meeting required by law have been met.
Section 3. RESERVED FOR FUTURE USE.
Section 4. Notice of Meetings of Stockholders. Not less than
ten days' and not more than sixty days' written or printed notice of every
meeting of stockholders, stating the time and place thereof (and the
general nature of the business proposed to be transacted at any special
or extraordinary meeting), shall be given to each stockholder entitled to
vote thereaft either by mail or by presenting it to him personally or by
leaving it at his residence or usual place of business. If mailed, such
notice shall be deemed to be given when deposited in the United States
mail addressed to the stockholder at his post office address as it appears
on the records of the Corporation, with postage thereon prepaid.
No notice of the time, place or purpose of any meeting of
stockholders need be given to any stockholder who attends in person or by
proxy or to any stockholder who, in writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
Section 5. Record Dates. The Board of Directors may fix, in
advance, a date not exceeding sixty days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding sixty
days preceding any dividend payment date or any date for the allotment of
rights, as a record date for the determination of the stockholders
entitled to notice of and to vote at such meeting, or entitled to receive
such dividend or rights, as the case may be; and only stockholders of
record on such date shall be entitled to notice of and to vote at such
meeting or to receive such dividend or rights, as the case may be.
Section 6. Quorum, Adjournment of Meetings. The presence in
person or by proxy of the holders of record of one-third of the shares of
capital stock of the Corporation outstanding and entitled to vote
thereaft, shall constitute a quorum at any meeting of the stockholders;
provided however, that if any action to be taken by the Shareholders at
a meeting requires an affirmative vote of a majority, or more than a
majority, of the shares outstanding and entitled to vote, then in such
event the presence in person or by proxy of the holders of a majority of
the shares outstanding and entitled to vote at such a meeting shall
constitute a quorum for all purposes. If at any meeting of the
stockholders there shall be less than a quorum present, the stockholders
present at such meeting may, without further notice, adjourn the same from
time to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of
stockholders, every stockholder of record entitled to vote thereat shall
be entitled to one vote for each share of stock standing in his name on
the books of the Corporation (and such stockholders of record holding
fractional shares shall have proportionate voting rights as provided in
the Articles of Incorporation) on the date for the determination of
stockholders entitled to vote at such meeting, either in person or by
proxy appointed by instrument in writing subscribed by such stockholder
or his duly authorized attorney. No proxy which is attempted to be used
more than eleven months after its date shall be accepted, unless such
proxy shall, on its face, name a longer period for which it is to remain
in force.
All elections shall be had and all questions decided by a
majority of the votes cast at a duly constituted meeting, except as
otherwise provided in the Articles of Incorporation or in these By-Laws
or by specific statutory provision superseding the restrictions and
limitations contained in the Articles of Incorporation or in these By-
Laws.
At any election of Directors, the Board of Directors prior
thereto may, or, if they have not so acted, the Chairman of the meeting
may, and upon the request of the holders of ten percent (10%) of the stock
entitled to vote at such election shall, appoint two inspectors of
election who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after
the election make a certificate of the result of the vote taken. No
candidate for the office of Director shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election or matter, and such vote shall be taken upon the
request of the holders of ten percent (10%) of the Shares entitled to vote
on such election or matter.
Section 8. Conduct of Stockholders' Meetings. The meetings of
the stockholders shall be presided over by the Chairman of the Board, if
any, or if he shall not be present, by the President, or if he shall not
be present, by a Vice President, or if none of them is present, by a
chairman to be elected at the meeting. The Secretary of the Corporation,
if present, shall act as secretary of such meetings, or if he is not
present, an Assistant Secretary shall so act; if neither the Secretary nor
an Assistant Secretary is present, then the Chairman of the meeting shall
appoint its Secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At
every meeting of the stockholders, all proxies shall be received and taken
in charge of and all ballots shall be received and canvassed by the
secretary of the meeting, who shall decide all questions touching the
qualification of voters, the validity of the proxies, and the acceptance
or rejection of votes, unless inspectors of election shall have been
appointed as provided in Section 7, in which event such inspectors of
election shall decide all such questions.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Tenure of Office. The business and
affairs of the Corporation shall be conducted and managed by a Board of
Directors consisting of that number of Directors specified in the Articles
of Incorporation of the Corporation as originally filed, which number may
be increased or decreased as provided in Section 3 of this Article. Each
director shall hold office until the next meeting of directors called for
the purpose of electing directors and until his successor is duly elected
and qualified.
Section 2. Vacancies. Subject to the provisions of the 1940 Act
(which term, as used in these By-Laws, shall have the same meaning as in
the Articles of Incorporation of the Corporation), in case of any vacancy
in the Board of Directors through death, resignation, removal, or other
cause, a majority of the remaining Directors, although such majority is
less than a quorum, by an affirmative vote, may elect a successor to hold
office until the next meeting of the stockholders called for the purpose
of electing Directors and until his successor is duly elected and
qualifies.
Section 3. Increase or Decrease in Number of Directors; Removal.
Subject to the 1940 Act, the Board of Directors, by the vote of a majority
of the entire Board, may increase the number of Directors to a number not
exceeding fifteen, and may elect Directors to fill the vacancies created
by any such increase in the number of Directors and to hold office until
the next meeting of the stockholders called for the purpose of electing
Directors and until their successors are duly elected and qualify. The
Board of Directors, by the vote of a majority of the entire Board, may
likewise decrease the number of Directors to a number not less than three,
but the tenure of office of any Director shall not be affected by any such
decrease made by the Board. Any director may at any time be removed
either with or without cause by resolution duly adopted by the affirmative
votes of the holders of a majority of the shares of the capital stock of
the Corporation present in person or by proxy at any meeting of
stockholders provided that a quorum is present or by such larger vote as
may be required by Maryland law. Any director may at any time be removed
for cause by resolution duly adopted at any meeting of stockholders
provided that a quorum is present or by such larger vote as may be
required by Maryland law. Any director may at any time be removed for
cause by resolution duly adopted at any meeting of the Board of Directors
provided that notice thereof is contained in the notice of such meeting
and that such resolution is adopted by the vote of at least two thirds of
those directors whose removal is not proposed.
Section 4. Place of Meeting. The Directors may hold their
meetings, have one or more offices, and keep the books of the Corporation
outside the State of Maryland, at any office or offices of the Corporation
or at any other place as they may from time to time by resolution
determine, or, in the case of meetings, as shall be specified or fixed in
the respective notices or waivers of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and on such notice, if any, as the
Directors may from time to time determine. The Board of Directors shall
hold an annual meeting.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be held from time to time upon call of the Chairman of the
Board of Directors, if any, or the President or a majority of the
Directors, by oral or telegraphic or written notice duly served on or sent
or mailed to each Director not less than one day before each such meeting.
No notice need be given to any Director who attends in person or to any
Director who, in writing executed and filed with the records of the
meeting either before or after the holding thereof, waives such notice.
Such notice or waiver of notice need not state the purpose or purposes of
such meeting.
Section 7. Quorum. One-third of the entire Board of Directors
shall constitute a quorum for the transaction of business, provided that
a quorum shall in no case be less than two Directors. If at any meeting
of the Board there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to time until a quorum
shall have been obtained. The action of a majority of the Directors
present at any meeting at which there is a quorum shall be the action of
the Board of Directors, except as may be otherwise specifically provided
by statute, by the Articles of Incorporation or by these By-Laws.
Section 8. Executive Committee. The Board of Directors may, in
each year, by the affirmative vote of a majority of the entire Board,
appoint from the Directors an Executive Committee to consist of such
number of Directors (but not less than three) as the Board may from time
to time determine. The Board of Directors by such affirmative vote shall
have power at any time to change the members of such Committee and may
fill vacancies in the Committee by appointment from the Directors. When
the Board of Directors is not in session, the Executive Committee shall
have and may exercise any or all of the powers of the Board of Directors
in the management of the business and affairs of the Corporation
(including the power to authorize the seal of the Corporation to be
affixed to all papers which may require it) except as provided by law.
The Executive Committee may fix its own rules of procedure, and may meet
when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary
to constitute a quorum. In the absence of any member of the Executive
Committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act
in the place of such absent member.
Section 9. Other Committees. The Board of Directors, by the
affirmative vote of a majority of the entire Board, may appoint other
committees which shall in each case consist of such number of members of
the Board (not less than two) and shall have and may exercise, to the
extent permitted by law, such powers as the Board may determine in the
resolution appointing them. A majority of all members of any such
committee may determine its action, and fix the time and place of its
meetings, unless the Board of Directors shall otherwise provide. The
Board of Directors shall have power at any time to change the members and,
to the extent permitted by law, the powers of any such committee, to fill
vacancies, and to discharge any such committee.
Section 10. Informal Action by Directors and Committees. Any
action required or permitted to be taken at any meeting of the Board of
Directors or any Committee thereof may, except as otherwise required by
the 1940 Act, be taken without a meeting, if a written consent to such
action is signed by all members of the Board, or of such committee, as the
case may be and filed with the minutes of the proceedings of the Board or
committee. Subject to the 1940 Act, members of the Board of Directors or
a committee thereof may participate in a meeting by means of a conference,
telephone or similar communications equipment if all persons participating
in the meeting can hear each other at the same time.
Section 11. Compensation of Directors. Directors shall be
entitled to receive such compensation from the Corporation for their
services as may from time to time be voted by the Board of Directors.
Section 12. Substitute Member. The members of any committee
present at any meeting, whether or not they constitute a quorum, may
appoint a Director to act in the place of an absent member.
Section 13. During the term this Section of the By-Laws is in
effect, no person shall be elected to serve as a Director, and the Board
of Directors is prohibited from taking any action to nominate, elect or
propose any person to serve as a director, if his election would then
cause the composition of the Board of Directors not to be in compliance
with the standards set forth in Section 15(f)(1)(a) of the Investment
Company Act of 1940, as amended (the "Act"), as such Section of the Act
may be amended from time to time. During the term this Section of the By-
Laws is in effect, any director who becomes an "interested person" (as
defined in the Act) and thereby causes the composition of the Board of
Directors not to be in compliance with the standards set forth in Section
15(f)(1)(a) of the Act, as such Section of the Act may be amended from
time to time, shall cease automatically, immediately upon the existence
of such status as an "interested person," to be qualified to serve as a
director and shall cease to be a Director, without any further action
required on the part of the remaining qualified directors or the
stockholders to remove such Director from office. This Section of the By-
Laws may be altered or repealed only by a vote of a majority of the
outstanding shares of the Corporation but shall expire automatically and
cease to be of any effect three years from the closing of the purchase of
the stock of Mercantile House Holdings, PLC or three years from the
consummation of the transaction by which Caledonia Investments PLC
reduces its holdings to less than five percent of British & Commonwealth's
outstanding voting securities.
ARTICLE III
OFFICERS
Section 1. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a Chairman of the Board of Directors,
a President, a Vice President, a Secretary, and a Treasurer. The Board
of Directors may designate a Vice President as the Executive Vice
President and may also choose additional Vice Presidents and one or more
Assistant Secretaries and Assistant Treasurer. Two or more offices,
except those of Chairman of the Board and Secretary and President and
Secretary, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law, the Articles of Incorporation or these By-
Laws to be executed, acknowledged or verified by two or more officers.
Section 2. The Board of Directors at its first meeting after
each annual meeting of the Board shall choose a Chairman of the Board, a
President and shall choose one or more Vice Presidents, a Secretary and
a Treasurer.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such power and perform such
duties as shall be determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall serve for one
year and until their successors are chosen and qualify. Any officer or
agent may be removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contractual rights, if any, of
the persons so removed. If the office of any officer becomes vacant for
any reason, the vacancy shall be filled by the Board of Directors.
CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation; he shall preside at all meetings of
the stockholders and at all meetings of the Board of Directors and shall
have general and active management of the business of the Corporation, and
he shall see that all orders and resolutions of the Board are carried to
effect.
Section 7. He shall execute in the Corporate name all authorized
deeds, mortgages, bonds, contracts or other instruments requiring a seal
under the seal of the Corporation, except in cases in which the signing
or execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
PRESIDENT
Section 8. The President, in the absence, unavailability, or
disability of the Chairman of the Board, shall perform the duties and
exercise the powers of the Chairman of the Board. In addition, the
President shall perform such duties and exercise such powers as may be
assigned to him from time to time by the Board of Directors.
EXECUTIVE VICE PRESIDENT
Section 9. If an Executive Vice President is designated by the
Board of Directors, he shall, in the absence, unavailability or disability
of the Chairman of the Board and the President, perform the duties and
exercise the powers of the Chairman of the Board. In addition, the
Executive Vice President shall perform such additional duties and exercise
such powers as may be assigned to him from time to time by the Board of
Directors.
ARTICLE IV
CAPITAL STOCK
Section 1. Certificates of Shares. Each stockholder shall be
entitled to a stock certificate evidencing his interest in the Corporation
in such form as the Board of Directors may from time to time prescribe.
No certificate shall be valid unless it is signed by the Chairman of the
Board of Directors, if any, or the President or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer of the Corporation and sealed with its seal.
The signatures may be either manual or facsimile signatures, and the seal
may be either facsimile or any other form of seal. In case any officer
who has signed any certificate ceases to be an officer of the Corporation
before the certificate is issued, the certificate may nevertheless be
issued by the Corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue.
Section 2. Transfer of Shares. Shares of the Corporation shall
be transferable on the books of the Corporation by the holder thereof in
person or by his duly authorized attorney or legal representative, upon
surrender and cancellation of certificates, if any, for the same number
of shares of the same class, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the
authenticity of the signature as the Corporation or its agent may
reasonably require; in the case of shares not represented by certificates,
the same or similar requirements may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of
shares held by them respectively, shall be kept at the principal office
of the Corporation or, if the Corporation employs a transfer agent, at the
office of the transfer agent of the Corporation. The stock ledger may be
in written form or in any other form which can be converted within a
reasonable time into written form for visual inspection.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors or the Executive Committee may determine the conditions upon
which a new certificate of stock of the Corporation of any class may be
issued in place of a certificate which is alleged to have been lost,
stolen or destroyed; and may, in their discretion, require the owner of
such certificates or his legal representative to give bond, with
sufficient surety to the Corporation and the transfer agent, if any, to
indemnify it and such Transfer Agent against any and all loss or claims
which may arise by reason of the issue of a new certificate in the place
of the one so lost, stolen or destroyed.
ARTICLE V
DETERMINATION OF NET ASSET VALUE
Net asset value of the Corporation's shares is determined as of
the close of the New York Stock Exchange on each day it is open by
dividing the value of the net assets of the Corporation by the total
number of shares outstanding at such close. The cost of making this
determination is borne by the Corporation. The market value of the
Corporation's portfolio securities is determined by valuing all securities
with remaining maturities in excess of sixty days at the over-the-counter
bid price if market quotations are readily available or, if not readily
available, by appraisal at their fair value determined in good faith under
procedures established by and under the general supervision and
responsibility of the Board of Directors of the Corporation. Securities
having a remaining maturity of less than sixty days when purchased and
securities originally purchased with maturities in excess of sixty days
but which currently have maturities of sixty days or less are valued at
cost adjusted for amortization of premiums and accretion of discounts.
Accumulated unrealized appreciation or depreciation on the sixty-first
day, if any, is amortized to maturity.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another company, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interest of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 2. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and expect that no indemnification shall be
made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
Section 3. To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Sections 1 or 2, or in
defense of any claim, issue or matter therein, he shall be indemnified
against expense (including attorneys' fees) actually and reasonably
incurred by him on connection therewith.
Section 4. Any indemnification under Sections 1 or 2 (unless ordered by
a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in Sections 1 and 2.
Such determination shall be made (1) by the Board of Directors by a
majority vote of directors who are not parties to such action, suit or
proceeding, including a majority vote of those independent directors who
are not parties to such action, suit or proceedings; (2) if such a
majority vote cannot be obtained, by independent legal counsel in a
written opinion; or (3) by a majority vote of all outstanding shares
represented by the stockholders of the Corporation.
Section 5. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case provided that:
(1)Any advance must be limited to amounts used or to be used for the
preparation and/or presentation of a defense to the action;
(2)Any advance must be accompanied by a promise by or on behalf of the
recipient to repay that amount of the advance which exceeds the amount to
which it is ultimately determined that he is entitled to receive from the
company by reason of indemnification;
(3)Such promise must be secured by a surety bond or other suitable
insurance;
(4)Such surety bond or other insurance must be paid for by the recipient
of the advance.
Section 6. The indemnification provided by this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-laws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit
of the heirs, executors and administrators of such a person.
Section 7. The following persons shall be indemnified by the Corporation
under the terms and conditions set forth in this by-law.
(a)In this Section, the following terms shall have the following meanings:
(i)the term "indemnitee" shall mean any present or former Director,
officer or employee of the Corporation, any present or former trustee,
partner, director or officer of another trust, partnership, corporation
or association whose securities are or were owned by the Corporation and
who served or serves in such capacity at the request of the Corporation,
and the heirs, executors, administrators, successors and assigns of any
of the foregoing, and shall include any other person who the Directors,
acting pursuant to the terms and conditions set forth herein, shall
determine is entitled to indemnification; however, whenever conduct by an
indemnitee is referred to, the conduct shall be that of the original
indemnitee rather than that of the heir, executor, administrator,
successor or assignee;
(ii)the term "covered proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which an indemnitee is or was a party
or is threatened to be made a party by reason of the fact or facts under
which he or it is an indemnitee as defined above;
(iii)the term "disabling conduct" shall mean willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of the office in question;
(iv)the term "covered expenses" shall mean expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by an indemnitee in connection with a covered
proceeding; and
(v)the term "adjudication of liability" shall mean, as to any covered
proceeding and as to any indemnitee, an adverse determination as to the
indemnitee whether by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent.
(b)The Corporation shall not indemnify any indemnitee for any covered
expenses in any covered proceeding if there has been an adjudication of
liability against such indemnitee expressly based on a finding of
disabling conduct.
(c)Except as set forth in paragraph (b) above and after making the
determinations required in sub-paragraph (d) below, the Corporation shall
indemnify any indemnitee for covered expenses in any covered proceeding,
whether or not there is an adjudication of liability as to such
indemnitee, such indemnification by the Corporation to be to the fullest
extent now or hereafter permitted by any applicable law unless the By-
laws limit or restrict the indemnification to which any indemnitee may be
entitled. The Board may adopt resolutions and take actions to implement
the provisions of this Section.
(d)Before an indemnitee shall be indemnified by the Corporation, there
shall be a reasonable determination upon review of the facts that the
person to be indemnified was not liable by reason of disabling conduct as
defined above. Such determination may be made either by vote of a
majority of a quorum of the Board who are neither "interested persons" of
the Corporation or the investment adviser nor parties to the proceeding
or by independent legal counsel. The Corporation may advance attorneys'
fees and expenses incurred in a covered proceeding to the indemnitee if
the indemnitee undertakes to repay the advance unless it is determined
that he is entitled to indemnification under these By-laws. Also at least
one of the following conditions must be satisfied: (1) the indemnitee
provides security for his undertaking, or (2) the Corporation is insured
against losses arising by reason of lawful advances, or (3) a majority of
the disinterested nonparty Directors or independent legal counsel in a
written opinion shall determine, based upon review of all of the facts,
that there is reason to believe that the indemnitee will ultimately be
found entitled to indemnification.
(e)Nothing herein shall be deemed to affect the right of the Corporation
and/or any indemnitee to acquire and pay for any insurance covering any
or all indemnitees to the extent permitted by applicable law or to affect
any other indemnification rights to which any indemnitee may be entitled
to the extent permitted by applicable law.
(f)the foregoing rights to indemnification shall not be deemed exclusive
of any other rights to which such indemnitee may be entitled under any
statute, By-Law, contract or otherwise.
ARTICLE VII
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal,
in such form and bearing such inscriptions as it may determine.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE IX
AMENDMENT OF BY-LAWS
The By-Laws of the Corporation may be altered, amended, added to
or repealed by the stockholders or by majority vote of the entire Board
of Directors; but any such alteration, amendment, addition or repeal of
the By-Laws by action of the Board of Directors may be altered or repealed
by the stockholders.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of the October 22, 1990, by and between
OPPENHEIMER TOTAL RETURN FUND, INC. (hereinafter the "Fund"), and
OPPENHEIMER MANAGEMENT CORPORATION (hereinafter the "Manager"):
WHEREAS, the Fund is an open-end, diversified investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended
(the "Investment Company Act") and the Manager is a registered investment
adviser;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, it is agreed by and between the parties,
as follows:
1. GENERAL PROVISION.
The Fund hereby employs the Manager and the Manager hereby undertakes
to act as the investment adviser of the Fund and to perform for the Fund
such other duties and functions as are hereinafter set forth. The Manager
shall, in all matters, give to the Fund and its Board of Directors the
benefit of its best judgment, effort, advice and recommendations and
shall, at all times conform to, and use its best efforts to enable the
Fund to conform to (i) the provisions of the Investment Company Act and
any rules and regulations thereunder; (ii) any other applicable provisions
of state or federal law; (iii) the provisions of the Certificate of
Incorporation and By-Laws of the Fund as amended from time to time; (iv)
policies and determinations of the Board of Directors of the Fund; (v) the
fundamental policies and investment restrictions of the Fund as reflected
in its registration statement under the Investment Company Act and the
Fund's By-Laws, or as such policies may, from time to time, be amended by
the Fund's shareholders; and (vi) the Prospectus of the Fund in effect
from time to time. The appropriate officers and employees of the Manager
shall be available upon reasonable notice for consultation with any of the
Directors and officers of the Fund with respect to any matters dealing
with the business and affairs of the Fund including the valuation of any
of the Fund's portfolio securities which are either not registered for
public sale or not being traded on any securities market.
2. INVESTMENT MANAGEMENT.
(a) The Manager shall, subject to the direction and control by the
Fund's Board of Directors (i) regularly provide investment advice and
recommendations to the Fund with respect to its investments, investment
policies and the purchase and sale of securities; (ii) supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased or sold by the
Fund; and (iii) arrange, subject to the provisions of paragraph "6"
hereof, for the purchase of securities and other investments for the Fund
and the sale of securities and other investments held in the portfolio of
the Fund. The Manager shall also conduct investigations and research in
the securities field and furnish to the Fund's Board of Directors
statistical and other factual information and reports on industries,
businesses or corporations, to assist the Manager and the Fund's Board of
Directors in furthering the investment policies of the Fund; and the
Manager shall compile, for its use and that of the Fund, and furnish to
the Fund's Board of Directors, information and advice on economic and
business trends, and render such other complete investment management
services as may be necessary or appropriate to effectuate the investment
of the resources of the Fund through the acquisition, holding and
disposition of portfolio securities.
(b) Provided that the Fund shall not be required to pay any
compensation other than as provided by the terms of this Agreement and
subject to the provisions of paragraph 6 hereof, the Manager may obtain
investment information, research or assistance from any other person, firm
or corporation to supplement, update or otherwise improve its investment
management services.
(c) So long as it shall have acted with due care and in good
faith, the Manager shall not be liable for any loss sustained by reason
of any investment, the adoption of any investment policy, or the purchase,
sale or retention of any security irrespective of whether the
determinations of the Manager relative thereto shall have been based,
wholly or partly, upon the investigation or research of any other
individual, firm or corporation believed by it to be reliable. Nothing
herein contained shall, however, be construed to protect the Manager
against any liability to the Fund or its shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(d) Nothing in this Agreement shall prevent the manager or any
officer thereof from acting as investment adviser or performing management
services for any other person, firm or corporation and shall not in any
way limit or restrict the Manager or any of its directors, officers,
shareholders or employees from buying, selling or trading any securities
for its or their own account or for the account of others for whom it or
they may be acting, provided that such activities will not adversely
affect or otherwise impair the performance by the Manager of its duties
and obligations under this Agreement, nor adversely affect the Fund.
3. OTHER DUTIES OF THE MANAGER.
The Manager shall, at its own expense, provide and supervise the
activities of all executive, administrative and clerical personnel as
shall be required to provide effective corporate administration for the
Fund, including the compilation and maintenance of such records with
respect to its operations as may reasonably be required; the preparation
and filing of such reports with respect thereto as shall be required by
the Commission, and the laws of any state, territory or possession of the
United States or any foreign country; composition of periodic reports
with respect to its operations for the shareholders of the Fund;
composition of proxy materials for meetings of the Fund's shareholders;
and the composition of such registration statements as may be required
by federal securities laws and the laws of any state, territory or
possession of the United States or any foreign country for continuous
public sale of shares of the Fund. The Manager shall, at its own cost and
expense, provide such officers for the Fund as the Fund's Board may
request and shall also provide the Fund's Directors, at their request,
with adequate office space, and normal office equipment and secretarial
assistance as may be necessary for them to perform their functions as
such, and the Manager shall, at its own cost and expense, calculate the
daily net asset value of the Fund's shares and maintain the Fund's general
accounting books and records. The cost and expenses of the Manager set
forth in this paragraph 3 do not include the transfer agent and other
costs and expenses set forth in paragraph 4 following.
4. ALLOCATION OF EXPENSES TO THE FUND.
All other costs and expenses not expressly assumed by the Manager
under this Agreement, or to be paid by the General Distributor of the
shares of the Fund, shall be paid by the Fund, including but not limited
to (i) interest and taxes; (ii) brokerage commissions; (iii) insurance
premiums on fidelity and other coverage requisite to its operations; (iv)
compensation and expenses of its Directors except as qualified further in
this paragraph 4; (v) legal and audit expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the
redemption of its shares; (viii) expenses incident to the issuance of its
shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration of the Fund's shares for public sale under
federal securities laws or the laws of any state, territory or possession
of the United States or any foreign country; (x) expenses of printing and
mailing reports and notices and proxy material to shareholders of the
Fund; (xi) except as noted in paragraph 3 hereof, all other expenses
incidental to holding meetings of the Fund's shareholders; and (xii) such
extraordinary non-recurring expenses as may arise, including litigation,
affecting the Fund and the legal obligation or right which the Fund may
have to indemnify its officers and Directors with respect thereto unless
the Fund has the right to recover said indemnity payments from the
Manager. Any officers or employees of the Manager or any entity
controlling, controlled by or under common control with the Manager who
may also serve as officers, Directors or employees of the Fund shall not
receive any compensation by the Fund for their services.
5. COMPENSATION OF THE MANAGER.
The Fund agrees to pay the Manager and the Manager agrees to
accept as full compensation for the performance of all functions and
duties on its part to be performed pursuant to the provisions hereof, a
fee computed on the net asset value of the Fund as of the close of each
business day and payable monthly at the following annual rates:
.75% of the first $100 million of net assets;
.70% of the next $100 million;
.65% of the next $100 million;
.60% of the next $100 million;
.55% of the next $100 million;
.50% of net assets in excess of $500 million.
<PAGE>
6. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) The Manager will render all services for the Fund in
connection with placing orders with brokers and dealers for the purchase,
sale or trade of securities for the Fund's portfolio.
(b) The Manager is authorized, in arranging the purchase and sale
of the Fund's portfolio securities, to employ or deal with such members
of securities exchanges, brokers or dealers (hereinafter "broker-
dealers"), including "affiliated" broker-dealers (as that term is defined
in the Investment Company Act), as may, in its best judgment, implement
the policy of the Fund to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution at the most favorable securities
price obtainable) of the Fund's portfolio transactions as well as to
obtain, consistent with provisions of subparagraph (c) of this paragraph
6, the benefit of such investment information or research as will be of
significant assistance to the performance by the Manager of its investment
management functions.
(c) The Manager shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their ability to
obtain best execution of particular and related portfolio transactions.
The abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Manager on the basis of all
relevant factors and considerations including, insofar as feasible, the
execution capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the Fund's
portfolio transactions by, participating therein for its own account; the
importance to the Fund of speed, efficiency or confidentiality; the
broker-dealer's apparent familiarity with sources from or to whom
particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and
related transactions of the Fund.
(d) The Manager shall have discretion, in the interests of the
Fund, to allocate brokerage on the Fund's portfolio transactions to
broker-dealers, other than an affiliated broker-dealer, qualified to
obtain best execution of such transactions and who provide "brokerage
and/or research services" (as such services are defined in Section 28 (e)
(3) of the Securities Exchange Act of 1934) for the Fund and/or other
accounts for which the Manager exercises "investment discretion" (as that
term is defined in Section 3 (a) (35) of the Securities Exchange Act of
1934) and to cause the Fund to pay such broker-dealers a commission for
effecting a portfolio transaction for the Fund that is in excess of the
amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if the
Manager determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage and/or research services provided
by such broker-dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the
accounts as to which it exercises investment discretion. In reaching such
determination, the Manager will not be required to place or attempt to
place a specific dollar value on the brokerage and/or research services
provided or being provided by such broker-dealer. In demonstrating that
such determinations were made in good faith, the Manager shall be prepared
to show that all commissions were allocated for purposes
<PAGE>
contemplated by this Agreement and that the total commissions paid by the
Fund over a representative period selected by the Fund's Directors were
reasonable in relation to the benefits to the Fund.
(e) The Manager shall have discretion in the interests of the Fund
and when consistent with the then effective rules of the Commission and
the National Association of Securities Dealers, Inc., to consider the
sales of shares of the Fund and other Funds managed by the Manager and its
affiliates as a factor in the selection of broker-dealers to execute
portfolio transactions for the Fund. In doing so, the portfolio
transactions must be (i) consistent with obtaining the "best execution"
of the Fund's portfolio transactions (as defined in subparagraph (b) of
this paragraph), and (ii) the commissions paid to brokers selected wholly
or partly on this basis do not exceed the commissions otherwise authorized
by this Management Agreement.
(f) The Manager shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable to
any particular portfolio transactions or to select any broker-dealer on
the basis of its purported or "posted" commission rate but will, to the
best of its ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the expense incurred
by, the Fund for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Fund as established by
the determinations of its Board of Directors and the provisions of this
paragraph 6.
(g) The Fund recognizes that an affiliated broker (i) may act as
one of the Fund's regular brokers so long as it is lawful for it so to
act; (ii) may be a major recipient of brokerage commissions paid by the
Fund, and (iii) may effect portfolio transactions for the Fund only if the
commissions, fees or other remuneration received or to be received by it
are determined in accordance with procedures contemplated in any rule,
regulation or order adopted under the Investment Company Act for
determining the permissible level of such commissions.
7. USE OF NAME "OPPENHEIMER".
The Manager hereby grants to the Fund a royalty-free, non-
exclusive license to use the name "Oppenheimer" in the name of the Fund
for the duration of this Agreement and any extensions or renewals thereof.
To the extent necessary to protect the Manager's rights to the name
"Oppenheimer" under applicable law, such license shall allow the Manager
to inspect and, subject to control by the Fund's Board, control the nature
and quality of services offered by the Fund under such name. Such license
may, upon termination of this Agreement, be terminated by the Manager, in
which event the Fund shall promptly take whatever action may be necessary
to change its name and discontinue any further use of the name
"Oppenheimer" in the name of the Fund or otherwise. The name "Oppenheimer"
may be used by the Manager in connection with any of its activities, or
licensed by the Manager to any other party.
8. DURATION.
This Agreement will take effect on the date first set forth above
and shall continue in effect until December 31, 1991, and thereafter, from
year to year, so long as such continuance shall be approved at least
annually by the Fund's Board of Directors, including the vote of a
majority of the Directors of the Fund who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by the
holders of a majority of the outstanding voting securities of the Fund and
by such a vote of the Fund's Board of Directors.
9. TERMINATION.
This Agreement may be terminated (i) by the Manager at any time
without penalty by giving sixty days' written notice (which notice may be
waived by the Fund); or (ii) by the Fund at any time without penalty upon
sixty days' written notice to the Manager (which notice may be waived by
the Manager), provided that such termination by the Fund shall be directed
or approved by the Board of Directors of the Fund or by the vote of the
holders of a majority of the outstanding voting securities of the Fund.
10. ASSIGNMENT OR AMENDMENT.
This Agreement may not be amended or the rights of the Manager
thereunder sold, transferred, pledged or otherwise in any manner
encumbered without the affirmative vote or written consent of the holders
of the majority of the outstanding voting securities of the Fund; this
Agreement shall automatically and immediately terminate in the event of
its assignment.
11. DEFINITIONS.
The terms and provisions of this Agreement shall be interpreted
and defined in a manner consistent with the provisions and definitions of
the Investment Company Act and other applicable laws.
ATTEST: OPPENHEIMER TOTAL RETURN FUND, INC.
/s/ Sara L. Badler By: /s/ Robert G. Galli
ATTEST:
OPPENHEIMER MANAGEMENT CORPORATION
/s/ Sara L. Badler By:/s/ Katherine P. Feld
ADVISORY/420
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER TOTAL RETURN FUND, INC.
AND
OPPENHEIMER FUND MANAGEMENT, INC.
Date: October 13, 1992
OPPENHEIMER FUND MANAGEMENT, INC.
Two World Trade Center, Suite 3400
New York, NY 10048
Dear Sirs:
OPPENHEIMER TOTAL RETURN FUND, INC., a Maryland corporation (the
"Fund"), is registered as an investment company under the Investment
Company Act of 1940 (the "1940 Act"), and an indefinite number of one or
more classes of its shares ("Shares") have been registered under the
Securities Act of 1933 (the "1933 Act") to be offered for sale to the
public in a continuous public offering in accordance with the terms and
conditions set forth in the Prospectus and Statement of Additional
Information ("SAI") included in the Fund's Registration Statement as it
may be amended from time to time (the "current Prospectus and/or SAI").
In this connection, the Fund desires that your firm (the "General
Distributor") act in a principal capacity as General Distributor for the
sale and distribution of Shares which have been registered as described
above and of any additional Shares which may become registered during the
term of this Agreement. You have advised the Fund that you are willing
to act as such General Distributor, and it is accordingly agreed by and
between us as follows:
1. Appointment of the Distributor. The Fund hereby appoints you
as the sole General Distributor, pursuant to the aforesaid continuous
public offering of its Shares, and the Fund further agrees from and after
the date of this Agreement, that it will not, without your consent, sell
or agree to sell any Shares otherwise than through you, except (a) the
Fund may itself sell shares without sales charge as an investment to the
officers, trustees or directors and bona fide present and former full-time
employees of the Fund, the Fund's Investment Adviser and affiliates
thereof, and to other investors who are identified in the current
Prospectus and/or SAI as having the privilege to buy Shares at net asset
value; (b) the Fund may issue shares in connection with a merger,
consolidation or acquisition of assets on such basis as may be authorized
or permitted under the 1940 Act; (c) the Fund may issue shares for the
reinvestment of dividends and other distributions of the Fund or of any
other Fund if permitted by the current Prospectus and/or SAI; and (d) the
Fund may issue shares as underlying securities of a unit investment trust
if such unit investment trust has elected to use Shares as an underlying
investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-existing
net asset value.
2. Sale of Shares. You hereby accept such appointment and agree
to use your best efforts to sell Shares, provided, however, that when
requested by the Fund at any time because of market or other economic
considerations or abnormal circumstances of any kind, or when agreed to
by mutual consent of the Fund and the General Distributor, you will
suspend such efforts. The Fund may also withdraw the offering of Shares
at any time when required by the provisions of any statute, order, rule
or regulation of any governmental body having jurisdiction. It is
understood that you do not undertake to sell all or any specific number
of Shares.
3. Sales Charge. Shares shall be sold by you at net asset value
plus a front-end sales charge not in excess of 8.5% of the offering price,
but which front-end sales charge shall be proportionately reduced or
eliminated for larger sales and under other circumstances, in each case
on the basis set forth in the Fund's current Prospectus and/or SAI. The
redemption proceeds of shares offered and sold at net asset value with or
without a front-end sales charge may be subject to a contingent deferred
sales charge ("CDSC") under the circumstances described in the current
Prospectus and/or SAI. You may reallow such portion of the front-end
sales charge to dealers or cause payment (which may exceed the front-end
sales charge, if any) of commissions to brokers through which sales are
made, as you may determine, and you may pay such amounts to dealers and
brokers on sales of shares from your own resources (such dealers and
brokers shall collectively include all domestic or foreign institutions
eligible to offer and sell the Shares), and in the event the Fund has more
than one class of Shares outstanding, then you may impose a front-end
sales charge and/or a CDSC on Shares of one class that is different from
the charges imposed on Shares of the Fund's other class(es), in each case
as set forth in the current Prospectus and/or SAI, provided the front-end
sales charge and CDSC to the ultimate purchaser do not exceed the
respective levels set forth for such category of purchaser in the Fund's
current Prospectus and/or SAI.
4. Purchase of Shares.
(a) As General Distributor, you shall have the right to accept
or reject orders for the purchase of Shares at your
discretion. Any consideration which you may receive in
connection with a rejected purchase order will be returned
promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to
issue as your agent confirmations of all accepted purchase
orders and to transmit a copy of such confirmations to the
Fund. The net asset value of all Shares which are the
subject of such confirmations, computed in accordance with
the applicable rules under the 1940 Act, shall be a
liability of the General Distributor to the Fund to be
paid promptly after receipt of payment from the
originating dealer or broker (or investor, in the case of
direct purchases) and not later than eleven business days
after such confirmation even if you have not actually
received payment from the originating dealer or broker or
investor. In no event shall the General Distributor make
payment to the Fund later than permitted by applicable
rules of the National Association of Securities Dealers,
Inc.
(c) If the originating dealer or broker shall fail to make
timely settlement of its purchase order in accordance with
applicable rules of the National Association of Securities
Dealers, Inc., or if a direct purchaser shall fail to make
good payment for shares in a timely manner, you shall have
the right to cancel such purchase order and, at your
account and risk, to hold responsible the originating
dealer or broker, or investor. You agree promptly to
reimburse the Fund for losses suffered by it that are
attributable to any such cancellation, or to errors on
your part in relation to the effective date of accepted
purchase orders, limited to the amount that such losses
exceed contemporaneous gains realized by the Fund for
either of such reasons with respect to other purchase
orders.
(d) In the case of a canceled purchase for the account of a
directly purchasing shareholder, the Fund agrees that if
such investor fails to make you whole for any loss you pay
to the Fund on such canceled purchase order, the Fund will
reimburse you for such loss to the extent of the aggregate
redemption proceeds of any other shares of the Fund owned
by such investor, on your demand that the Fund exercise
its right to claim such redemption proceeds. The Fund
shall register or cause to be registered all Shares sold
to you pursuant to the provisions hereof in such names and
amounts as you may request from time to time and the Fund
shall issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your
direction if and to the extent that the shareholder
account in question contemplates the issuance of such
certificates. All Shares when so issued and paid for,
shall be fully paid and non-assessable by the Fund (which
shall not prevent the imposition of any CDSC that may
apply).
5. Repurchase of Shares.
(a) In connection with the repurchase of Shares, you are
appointed and shall act as Agent of the Fund. You are
authorized, for so long as you act as General Distributor
of the Fund, to repurchase, from authorized dealers,
certificated or uncertificated shares of the Fund
("Shares") on the basis of orders received from each
dealer ("authorized dealer") with which you have a dealer
agreement for the sale of Shares and permitting resales of
Shares to you, provided that such authorized dealer, at
the time of placing such resale order, shall represent (i)
if such Shares are represented by certificate(s), that
certificate(s) for the Shares to be repurchased have been
delivered to it by the registered owner with a request for
the redemption of such Shares executed in the manner and
with the signature guarantee required by the then-
currently effective prospectus of the Fund, or (ii) if
such Shares are uncertificated, that the registered
owner(s) has delivered to the dealer a request for the
redemption of such Shares executed in the manner and with
the signature guarantee required by the then-currently
effective prospectus of the Fund.
(b) You shall (a) have the right in your discretion to accept
or reject orders for the repurchase of Shares; (b)
promptly transmit confirmations of all accepted repurchase
orders; and (c) transmit a copy of such confirmation to
the Fund, or, if so directed, to any duly appointed
transfer or shareholder servicing agent of the Fund. In
your discretion, you may accept repurchase requests made
by a financially responsible dealer which provides you
with indemnification in form satisfactory to you in
consideration of your acceptance of such dealer's request
in lieu of the written redemption request of the owner of
the account; you agree that the Fund shall be a third
party beneficiary of such indemnification.
(c) Upon receipt by the Fund or its duly appointed transfer or
shareholder servicing agent of any certificate(s) (if any
has been issued) for repurchased Shares and a written
redemption request of the registered owner(s) of such
Shares executed in the manner and bearing the signature
guarantee required by the then-currently effective
Prospectus or SAI of the Fund, the Fund will pay or cause
its duly appointed transfer or shareholder servicing agent
promptly to pay to the originating authorized dealer the
redemption price of the repurchased Shares (other than
repurchased Shares subject to the provisions of part (d)
of Section 5 of this Agreement) next determined after your
receipt of the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of Section 5 of
this Agreement, repurchase orders received from an
authorized dealer after the determination of the Fund's
redemption price on a regular business day will receive
that day's redemption price if the request to the dealer
by its customer to arrange such repurchase prior to the
determination of the Fund's redemption price that day
complies with the requirements governing such requests as
stated in the current Prospectus and/or SAI.
(e) You will make every reasonable effort and take all
reasonably available measures to assure the accurate
performance of all services to be performed by you
hereunder within the requirements of any statute, rule or
regulation pertaining to the redemption of shares of a
regulated investment company and any requirements set
forth in the then-current Prospectus and/or SAI of the
Fund. You shall correct any error or omission made by you
in the performance of your duties hereunder of which you
shall have received notice in writing and any necessary
substantiating data; and you shall hold the Fund harmless
from the effect of any errors or omissions which might
cause an over- or under-redemption of the Fund's Shares
and/or an excess or non-payment of dividends, capital
gains distributions, or other distributions.
(f) In the event an authorized dealer initiating a repurchase
order shall fail to make delivery or otherwise settle such
order in accordance with the rules of the National
Association of Securities Dealers, Inc., you shall have
the right to cancel such repurchase order and, at your
account and risk, to hold responsible the originating
dealer. In the event that any cancellation of a Share
repurchase order or any error in the timing of the
acceptance of a Share repurchase order shall result in a
gain or loss to the Fund, you agree promptly to reimburse
the Fund for any amount by which any loss shall exceed
then-existing gains so arising.
6. 1933 Act Registration. The Fund has delivered to you a copy of
its current Prospectus and SAI. The Fund agrees that it will use its best
efforts to continue the effectiveness of the Registration Statement under
the 1933 Act. The Fund further agrees to prepare and file any amendments
to its Registration Statement as may be necessary and any supplemental
data in order to comply with the 1933 Act. The Fund will furnish you at
your expense with a reasonable number of copies of the Prospectus and SAI
and any amendments thereto for use in connection with the sale of Shares.
7. 1940 Act Registration. The Fund has already registered under
the 1940 Act as an investment company, and it will use its best efforts
to maintain such registration and to comply with the requirements of the
1940 Act.
8. State Blue Sky Qualification. At your request, the Fund will
take such steps as may be necessary and feasible to qualify Shares for
sale in states, territories or dependencies of the United States, the
District of Columbia, the Commonwealth of Puerto Rico and in foreign
countries, in accordance with the laws thereof, and to renew or extend any
such qualification; provided, however, that the Fund shall not be required
to qualify shares or to maintain the qualification of shares in any
jurisdiction where it shall deem such qualification disadvantageous to the
Fund.
9. Duties of Distributor. You agree that:
(a) Neither you nor any of your officers will take any long or
short position in the Shares, but this provision shall not
prevent you or your officers from acquiring Shares for
investment purposes only; and
(b) You shall furnish to the Fund any pertinent information
required to be inserted with respect to you as General
Distributor within the purview of the Securities Act of
1933 in any reports or registration required to be filed
with any governmental authority; and
(c) You will not make any representations inconsistent with
the information contained in the current Prospectus and/or
SAI; and
(d) You shall maintain such records as may be reasonably
required for the Fund or its transfer or shareholder
servicing agent to respond to shareholder requests or
complaints, and to permit the Fund to maintain proper
accounting records, and you shall make such records
available to the Fund and its transfer agent or
shareholder servicing agent upon request; and
(e) In performing under this Agreement, you shall comply with
all requirements of the Fund's current Prospectus and/or
SAI and all applicable laws, rules and regulations with
respect to the purchase, sale and distribution of Shares.
10. Allocation of Costs. The Fund shall pay the cost of composition
and printing of sufficient copies of its Prospectus and SAI as shall be
required for periodic distribution to its shareholders and the expense of
registering Shares for sale under federal securities laws and under state
blue sky laws pursuant to paragraph 8. You shall pay the expenses
normally attributable to the sale of Shares, other than as paid under the
Fund's Distribution Plan under Rule 12b-1 of the 1940 Act, including the
cost of printing and mailing of the Prospectus (other than those furnished
to existing shareholders) and any sales literature used by you in the
public sale of the Shares.
11. Duration. This Agreement shall take effect on the date first
written above, and shall supersede any and all prior General Distributor's
Agreements by and among the Fund and you. Unless earlier terminated
pursuant to paragraph 12 hereof, this Agreement shall remain in effect
until September 30, 1993. This Agreement shall continue in effect from
year to year thereafter, provided that such continuance shall be
specifically approved at least annually: (a) by the Fund's Board of
Trustees or by vote of a majority of the voting securities of the Fund;
and (b) by the vote of a majority of the Trustees, who are not parties to
this Agreement or "interested persons" (as defined the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of voting
on such approval.
12. Termination. This Agreement may be terminated (a) by the
General Distributor at any time without penalty by giving sixty days'
written notice (which notice may be waived by the Fund); (b) by the Fund
at any time without penalty upon sixty days' written notice to the General
Distributor (which notice may be waived by the General Distributor); or
(c) by mutual consent of the Fund and the General Distributor, provided
that such termination by the Fund shall be directed or approved by the
Board of Trustees of the Fund or by the vote of the holders of a
"majority" of the outstanding voting securities of the Fund. In the event
this Agreement is terminated by the Fund, the General Distributor shall
be entitled to be paid the CDSC under paragraph 3 hereof on the redemption
proceeds of Shares sold prior to the effective date of such termination.
13. Assignment. This Agreement may not be amended or changed except
in writing and shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors; however, this Agreement
shall not be assigned by either party and shall automatically terminate
upon assignment.
14. Section Headings. The heading of each section is for
descriptive purposes only, and such headings are not to be construed or
interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so
indicate by signing in the space provided below.
OPPENHEIMER TOTAL RETURN FUND, INC.
By/s/ James C. Swain
Chairman
Accepted:
OPPENHEIMER FUND MANAGEMENT, INC.
By/s/ George C. Bowen
Vice President
OPPENHEIMER TOTAL RETURN FUND, INC.
CUSTODY AGREEMENT
Agreement made as of this 6th day of October, 1992, between
OPPENHEIMER TOTAL RETURN FUND, INC., a corporation organized and existing
under the laws of the State of Maryland, having its principal office and
place of business at 3410 South Galena Street, Denver, Colorado 80231
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York
corporation authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Custodian").
W I T N E S E T H
that for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
shall have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all Appendices
and Certifications described in the Exhibits delivered in connection
herewith.
2. "Authorized Person" shall mean any person, whether or not such
person is an Officer or employee of the Fund, duly authorized by the Board
of Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time, provided that each person who is designated in any such
Certificate as an "Officer of OSS" shall be an Authorized Person only for
purposes of Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded Option with respect
to Securities other than Index, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof
the specified underlying instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received (irrespective of
constructive receipt) by the Custodian and signed on behalf of the Fund
by any two Officers. The term Certificate shall also include instructions
by the Fund to the Custodian communicated by a Terminal Link.
6. "Clearing Member" shall mean a registered broker-dealer which
is a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment
company, or any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
7. "Collateral Account" shall mean a segregated account so de-
nominated which is specifically allocated to a Series and pledged to the
Custodian as security for, and in consideration of, the Custodian's
issuance of any Put Option guarantee letter or similar document described
in paragraph 8 of Article V herein.
8. "Covered Call Option" shall mean an exchange traded Option
entitling the holder, upon timely exercise and payment of the exercise
price, as specified therein, to purchase from the writer thereof the
specified underlying instruments, currency, or Securities (excluding
Futures Contracts) which are owned by the writer thereof.
9. "Depository" shall mean The Depository Trust Company ("DTC"),
a clearing agency registered with the Securities and Exchange Commission,
its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized
to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the Custodian,
including, without limitation, a Foreign Depository.
10. "Financial Futures Contract" shall mean the firm commitment to
buy or sell financial instruments on a U.S. commodities exchange or board
of trade at a specified future time at an agreed upon price.
11. "Foreign Subcustodian" shall mean an "Eligible Foreign
Custodian" as defined in Rule 17-5 which is appointed by the Custodian to
perform or coordinate the receipt, custody and delivery of Foreign
Property of the Fund outside the United States in a manner consistent with
the provisions of this Agreement and whose written contract is approved
by the Board of Trustees of the Fund in accordance with Rule 17f-5.
References to the Custodian herein shall, when appropriate, include
reference to its Foreign Subcustodians.
12. "Foreign Depository" shall mean an entity organized under the
laws of a foreign country which operates a system outside the United
States in general use by foreign banks and securities brokers for the
central or transnational handling of securities or equivalent book-entries
which is regulated by a foreign government or agency thereof and which is
an "Eligible Foreign Custodian" as defined in Rule 17f-5.
13. "Foreign Securities" shall mean securities and/or short term
paper as defined in Rule 17f-5 under the Act, whether issued in registered
or bearer form.
14. "Foreign Property" shall mean Foreign Securities and money of
any currency which is held outside of the United States.
15. "Futures Contract" shall mean a Financial Futures Contract
and/or Index Futures Contracts.
16. "Futures Contract Option" shall mean an Option with respect to
a Futures Contract.
17. "Investment Company Act of 1940" shall mean the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder.
18. "Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount
of cash equal to a specified dollar amount times the difference between
the value of a particular index at the close of the last business day of
the contract and the price at which the futures contract is originally
struck.
19. "Index Option" shall mean an exchange traded Option entitling
the holder, upon timely exercise, to receive an amount of cash determined
by reference to the difference between the exercise price and the value
of the index on the date of exercise.
20. "Margin Account" shall mean a segregated account in the name of
a broker, dealer, futures commission merchant, or a Clearing Member, or
in the name of the Fund for the benefit of a broker, dealer, futures
commission merchant, or Clearing Member, or otherwise, in accordance with
an agreement between the Fund, the Custodian and a broker, dealer, futures
commission merchant or a Clearing Member (a "Margin Account Agreement"),
separate and distinct from the custody account, in which certain
Securities and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may from
time to time determine. Securities held in the Book-Entry System or a
Depository shall be deemed to have been deposited in, or withdrawn from,
a Margin Account upon the Custodian's effecting an appropriate entry in
its books and records.
21. "Money Market Security" shall mean all instruments and ob-
ligations commonly known as a money market instruments, where the purchase
and sale of such securities normally requires settlement in federal funds
on the same day as such purchase or sale, including, without limitation,
certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and/or principal by the government of the United
States or agencies or instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to Securities and bank
time deposits.
22. "Nominee" shall mean, in addition to the name of the registered
nominee of the Custodian, (i) a partnership or other entity of a Foreign
Subcustodian which is used solely for the assets of its customers other
than the Custodian and the Foreign Subcustodian, if any, by which it was
appointed; or (ii) the nominee of a Foreign Depository which is used for
the securities and other assets of its customers, members or participants.
23. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of
1934, its successor or successors, and its nominee or nominees.
24. "Officers" shall mean the President, any Vice President, the
Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer, and any other person or persons, whether or not any
such other person is an officer or employee of the Fund, but in each case
only if duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be received by the Custodian from time to time;
provided that each person who is designated in any such Certificate as
holding the position of "Officer of OSS" shall be an Officer only for
purposes of Articles XII and XIII hereof.
25. "Option" shall mean a Call Option, Covered Call Option, Index
Option and/or a Put Option.
26. "Oral Instructions" shall mean verbal instructions actually
received (irrespective of constructive receipt) by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian
to be an Authorized Person.
27. "Put Option" shall mean an exchange traded Option with respect
to instruments, currency, or Securities other than Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying instruments, currency, or
Securities, to sell such instruments, currency, or Securities to the
writer thereof for the exercise price.
28. "Repurchase Agreement" shall mean an agreement pursuant to which
the Fund buys Securities and agrees to resell such Securities at a
described or specified date and price.
29. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.
30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. Section 270.17f-5)
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended.
31. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over
the counter Options on Securities, common stocks and other securities
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or rights to any property or assets.
32. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as
a segregated account, by recordation or otherwise, within the custody
account in which certain Securities and/or other assets of the Fund
specifically allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may from time
to time determine.
33. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for
the Fund, except that if the Fund does not have more than one portfolio,
"Series" shall mean the Fund or be ignored where a requirement would be
imposed on the Fund or the Custodian which is unnecessary if there is only
one portfolio.
34. "Shares" shall mean the shares of beneficial interest of the
Fund and its Series.
35. "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use
of the Terminal Link the use of an authorization code provided by the
Custodian and at least two access codes established by the Fund, provided,
that the Fund shall have delivered to the Custodian a Certificate
substantially in the form of Appendix C.
36. "Transfer Agent" shall mean Oppenheimer Shareholder Services,
a division of Oppenheimer Management Corporation, its successors and as-
signs.
37. "Transfer Agent Account" shall mean any account in the name of
the Fund, or the Transfer Agent, as agent for the Fund, maintained with
United Missouri Bank or such other Bank designated by the Fund in a
Certificate.
38. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the Custodian
from an Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such system
whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the identity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned or held by the
Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer Agent
Account, or as otherwise provided in paragraph 7 of this Article or in
Article VIII or XV, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during
the period of this Agreement, and shall specify with respect to such
Securities and money the Series to which the same are specifically
allocated, and the Custodian shall not be responsible for any Securities
or money not so delivered. Except for assets held at DTC, the Custodian
shall physically segregate, keep and maintain the Securities of the Series
separate and apart from each other Series and from other assets held by
the Custodian. Except as otherwise expressly provided in this Agreement,
the Custodian will not be responsible for any Securities and moneys not
actually received by it, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Custodian will
be entitled to reverse any credit of money made on the Fund's behalf where
such credits have been previously made and moneys are not finally col-
lected, unless the Custodian has been negligent or has engaged in willful
misconduct with respect thereto; provided that if such reversal is thirty
(30) days or more after the credit was issued, the Custodian will give
five (5) days' prior notice of such reversal. The Fund shall deliver to
the Custodian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit
in the Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated and
to utilize the Book-Entry System to the extent possible in connection with
its performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of Securities
and deliveries and returns of Securities collateral. Prior to a deposit
of Securities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the Board
of Trustees of the Fund, substantially in the form of Exhibit B hereto,
approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate to deposit
in such Depository all Securities specifically allocated to such Series
eligible for deposit therein, and to utilize such Depository to the extent
possible with respect to such Securities in connection with its per-
formance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys
deposited in either the Book-Entry System or a Depository will be
represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custo-
dian acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate account
for the applicable Series. Prior to the Custodian's accepting, utilizing
and acting with respect to Clearing Member confirmations for Options and
transactions in Options for a Series as provided in this Agreement, the
Custodian shall have received a certified resolution of the Fund's Board
of Trustees, substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All Securities are to be held or
disposed of by the Custodian for, and subject at all times to the
instructions of, the Fund pursuant to the terms of this Agreement. The
Custodian shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any Securities except as provided by the terms of
this Agreement, and shall have the sole power to release and deliver
Securities held pursuant to this Agreement.
2. The Custodian shall establish and maintain separate accounts,
in the name of each Series, and shall credit to the separate account for
each Series all moneys received by it for the account of the Fund with
respect to such Series. Money credited to a separate account for a Series
shall be subject only to drafts, orders, or charges of the Custodian
pursuant to this Agreement and shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the Fund's
Board of Trustees certified by an Officer and by the Secretary or
Assistant Secretary of the Fund setting forth the name and address of the
person to whom the payment is to be made, the Series account from which
payment is to be made, the purpose for which payment is to be made, and
declaring such purpose to be a proper corporate purpose; provided,
however, that amounts representing dividends, distributions, or
redemptions proceeds with respect to Shares shall be paid only to the
Transfer Agent Account;
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series and
authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes,
management fees or operating expenses (including, without limitation
thereto, Board of Trustees' fees and expenses, and fees for legal
accounting and auditing services), which Certificates set forth the name
and address of the person to whom payment is to be made, state the purpose
of such payment and designate the Series for whose account the payment is
to be made.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series,
either hereunder or with any co-custodian or subcustodian appointed in
accordance with this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series but held in a
Depository, the Custodian shall upon such transfer also by book-entry or
otherwise identify such Securities as belonging to such Series in a
fungible bulk of Securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the Book-
Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per
Series basis, of the Securities and moneys held under this Agreement for
the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held hereunder may be registered in the name of the Fund,
in the name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of the Book-
Entry System or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or a Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in a Depository in a separate account in the name of
such Series physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or a Depository with
respect to Securities held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Promptly collect all income, dividends and dis-
tributions due or payable;
(b) Promptly give notice to the Fund and promptly present
for payment and collect the amount of money or other consideration payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice of such
call appears in one or more of the publications listed in Appendix D
annexed hereto, which may be amended at any time by the Custodian without
the prior consent of the Fund, provided the Custodian gives prior notice
of such amendment to the Fund;
(c) Promptly present for payment and collect for the
Fund's account the amount payable upon all Securities which mature;
(d) Promptly surrender Securities in temporary form in
exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary de-
clarations or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or hereafter
in effect;
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account
of a Series, all rights and similar securities issued with respect to any
Securities held by the Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, proxies,
proxy soliciting materials, consents and other written information
(including, without limitation, notices of tender offers and exchange
offers, pendency of calls, maturities of Securities and expiration of
rights) relating to Securities held pursuant to this Agreement which are
actually received by the Custodian, such proxies and other similar
materials to be executed by the registered holder (if Securities are
registered otherwise than in the name of the Fund), but without indicating
the manner in which proxies or consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:
(a) Promptly execute and deliver to such persons as may
be designated in such Certificate proxies, consents, authorizations, and
any other instruments whereby the authority of the Fund as owner of any
Securities held hereunder for the Series specified in such Certificate may
be exercised;
(b) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any right, warrant or conversion privilege and receive
and hold hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold hereunder
specifically allocated to such Series in exchange therefor such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such
Securities as may be issued upon such delivery; and
(d) Promptly present for payment and collect the amount
payable upon Securities which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have
received a Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the Custodian
such a Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940 in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer, or
futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures
Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise in the name the
Custodian (or any nominee of the Custodian) as custodian for the Fund;
provided, however, that notwithstanding the foregoing, payments to or
deliveries from the Margin Account and payments with respect to Securities
to which a Margin Account relates, shall be made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for
which such instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such certificate, and
deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt
by the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract, a Futures
Contract Option, a Repurchase Agreement, a Reverse Repurchase Agreement
or a Short Sale, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money Market
Securities, a Certificate, oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the Series to which
such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom
or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker or other party to
whom payment is to be made. Custodian shall, upon receipt of such
Securities purchased by or for the Fund, pay to the broker specified in
the Certificate out of the moneys held for the account of such Series the
total amount payable upon such purchase, provided that the same conforms
to the total amount payable as set forth in such Certificate, oral
Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures Contract
Option, Repurchase Agreement, Reverse Repurchase Agreement or Short Sale,
the Fund shall deliver such to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each sale of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale and settlement; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the name of the
broker through whom or the person to whom the sale was made, and the name
of the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian
shall deliver the Securities specifically allocated to such Series to the
broker in accordance with generally accepted street practices and as
specified in the Certificate upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the total
amount payable as set forth in such Certificate, oral Instructions or
Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option by the
Fund other than a closing purchase transaction, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each Option
purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the name of
the in the case of an Index Option, the index to which such Option relates
and the number of Index Options purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; and (h)
the name of the Clearing Member through whom such Option was purchased.
The Custodian shall pay, upon receipt of a Clearing Member's written
statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as Custodian for the Fund, out of
moneys held for the account of the Series to which such Option is to be
specifically allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that the same
conforms to the amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option purchased
by the Fund, other than a closing sale transaction, pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a Certificate specifying
with respect to each such sale: (a) the Series to which such Option was
specifically allocated; (b) the type of Option (put or call); (c) the
instrument, currency, or Security underlying such Option and the number
of Options, or the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Index Option, the index to
which such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph of
this Article with respect to such Option upon receipt by the Custodian of
the total amount payable to the Fund, provided that the same conforms to
the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Call Option was exercised. The Custo-
dian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the
Series to which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call Option was ex-
ercised, provided that the same conforms to the total amount payable as
set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct a Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Index Option: (a) the Series to which such Index Option was specifically
allocated; (b) the type of Index Option (put or call) (c) the number of
Options being exercised; (d) the index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be
received by the Fund in connection with such exercise; and (h) the
Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Covered Call Option: (a) the Series for which such Covered Call
Option was written; (b) the name of the issuer and the title and number
of shares for which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the premium
is to be received. The Custodian shall deliver or cause to be delivered,
upon receipt of the premium specified in the Certificate with respect to
such Covered Call Option, such receipts as are required in accordance with
the customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct a Depository to impose, upon the
underlying Securities specified in the Certificate specifically allocated
to such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior
written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate instructing the Custodian
to deliver, or to direct the Depository to deliver, the Securities subject
to such Covered Call Option and specifying: (a) the Series for which such
Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing
Member to whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund upon such delivery. Upon the return
and/or cancellation of any receipts delivered pursuant to paragraph 6 of
this Article, the Custodian shall deliver, or direct a Depository to
deliver, the underlying Securities as specified in the Certificate upon
payment of the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the
name of the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the Clearing Member
through whom the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such Series; and
(i) the amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the deposits
into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the Clearing Member
specified in the Certificate upon receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be under
no obligation to issue any Put Option guarantee letter or similar document
if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put
Option was written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the amount and
kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically allocated to such
series, if any, to be withdrawn from the Senior Security Account. Upon
the return and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the account of
the series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set
forth in such Certificate, upon delivery of such Securities, and shall
make the withdrawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) whether such Index Option is a put or a call; (c) the number
of Options written; (d) the index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received by the Fund;
(i) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; (j) the amount of cash and/or the amount
and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount
of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name
in which such account is to be or has been established. The Custodian
shall, upon receipt of the premium specified in the Certificate, make the
deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the
Custodian has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Index Options and make
the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certi-
ficate.
11. Whenever an Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) such information as may be necessary to identify the Index
Option being exercised; (c) the Clearing Member through whom such Index
Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be with-
drawn from the Margin Account; and (f) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Collateral Account for
such Series. Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series
to which such Stock Index Option was specifically allocated to the Clear-
ing Member specified in the Certificate the total amount payable, if any,
as specified therein.
12. Promptly after the execution of a purchase or sale by the Fund
of any Option identical to a previously written Option described in
paragraphs, 6, 8 or 10 of this Article in a transaction expressly
designated as a "Closing Purchase Transaction" or a "Closing Sale
Transaction", the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Option being purchased: (a)
that the transaction is a Closing Purchase Transaction or a Closing Sale
Transaction; (b) the Series for which the Option was written; (c) the
instrument, currency, or Security subject to the Option, or, in the case
of an Index Option, the index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by or
the amount to be paid to the Fund; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase or sale; (i) the
name of the Clearing Member to whom the premium is to be paid or from whom
the amount is to be received; and (j) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for
such Series. Upon the Custodian's payment of the premium or receipt of
the amount, as the case may be, specified in the Certificate and the
return and/or cancellation of any receipt issued pursuant to paragraphs
6, 8 or 10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction or the Closing Sale Transaction,
the Custodian shall remove, or direct a Depository to remove, the pre-
viously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or written by
the Fund and described in this Article, the Custodian shall delete such
Option from the statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of any
receipts issued by the Custodian, shall make such withdrawals from the
Collateral Account, and the Margin Account and/or the Senior Security
Account as may be specified in a Certificate received in connection with
such expiration, exercise, or consummation.
14. Securities acquired by the Fund through the exercise of an
Option described in this Article shall be subject to Article IV hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
such Futures Contract, (or with respect to any number of identical Futures
Contract (s)): (a) the Series for which the Futures Contract is being
entered; (b) the category of Futures Contract (the name of the underlying
index or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were) entered into
and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) such Futures Contract(s); (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker,
dealer, or futures commission merchant through whom the Futures Contract
was entered into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the deposits,
if any, to the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make payment out of
the moneys specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and kind of
Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures commission
merchant with respect to an outstanding Futures Contract shall be made by
the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with respect
to an outstanding Futures Contract shall be received and dealt with by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian prior to the delivery
or settlement date a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to an Index Futures
Contract, the total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities and/or amount
of cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn
from the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and delete such
Futures Contract from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset
a Futures Contract held by the Custodian hereunder, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the items of information
required in a Certificate described in paragraph 1 of this Article, and
(b) the Futures Contract being offset. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant
to paragraph 3 of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in the Cer-
tificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a)
the Series to which such Option is specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the amount of premium to be paid by the Fund upon such
purchase; (h) the name of the broker or futures commission merchant
through whom such Option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Cus-
todian shall pay out of the moneys specifically allocated to such Series
the total amount to be paid upon such purchase to the broker or futures
commissions merchant through whom the purchase was made, provided that the
same conforms to the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or
call); (c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the date
of settlement; (g) the total amount payable to the Fund upon such sale;
and (h) the name of the broker of futures commission merchant through whom
the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of
the total amount payable to the Fund, provided the same conforms to the
total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to
which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the
type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised; (f) the
net total amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund; and (h) the amount of cash and/or the amount and
kind of Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if any, and
the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Futures Contract Option: (a) the Series for which such
Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g) the name
of the broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified
in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account,
if any, as specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is
a call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract
Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited in the
Senior Security Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any, specified in
such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The de-
posits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Option
was specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
and kind of Securities and/or cash to be withdrawn from or deposited in,
the Senior Security Account for such Series, if any. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account,
if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
7. Promptly after the execution by the Fund of a purchase of any
Futures Contract Option identical to a previously written Futures Contract
Option described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall deliver to the
Custodian a Certificate specifying with respect to the Futures Contract
Option being purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate.
The withdrawals, if any, to be made from the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall
(a) delete such Futures Contract Option from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein and (b) make such
withdrawals from and/or in the case of an exercise such deposits into the
Senior Security Account as may be specified in a Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of
a Futures Contract Option described in this Article shall be subject to
Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of Securities
by any Series of the Fund, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was
made; (b) the name of the issuer-and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited
in a Senior Security Account, and (i) the name of the broker through whom
such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or
any nominee of the Custodian) as custodian of the Fund, issue a receipt
or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any
short sale of Securities, the Fund shall promptly deliver to the Custodian
a Certificate specifying with respect to each such closing out: (a) the
Series for which such transaction is being made; (b) the name of the
issuer and the title of the Security; (c) the number of shares or the
principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net
total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account; and
(j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect
to the short sale being closed-out, pay out of the moneys held for the
account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or a
Reverse Repurchase Agreement with respect to Securities and money held by
the Custodian hereunder, the Fund shall deliver to the Custodian a Certi-
ficate, or in the event such Repurchase Agreement or Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which the
Repurchase Agreement or Reverse Repurchase Agreement is entered; (b) the
total amount payable to or by the Fund in connection with such Repurchase
Agreement or Reverse Repurchase Agreement and specifically allocated to
such Series; (c) the broker, dealer, or financial institution with whom
the Repurchase Agreement or Reverse Repurchase Agreement is entered; (d)
the amount and kind of Securities to be delivered or received by the Fund
to or from such broker, dealer, or financial institution; (e) the date of
such Repurchase Agreement or Reverse Repurchase Agreement; and (f) the
amount of cash and/or the amount and kind of Securities, if any, specifi-
cally allocated to such Series to be deposited in a Senior Security Ac-
count for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable
to or by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions make or accept the delivery to or from the broker,
dealer, or financial institution and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Repurchase Agreement or a Reverse
Repurchase Agreement described in preceding paragraph 1 of this Article,
the Fund shall promptly deliver a Certificate or, in the event such
Repurchase Agreement or Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions, or Written Instructions to the
Custodian specifying: (a) the Repurchase Agreement or Reverse Repurchase
Agreement being terminated and the Series for which same was entered; (b)
the total amount payable to or by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received or
delivered by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the
name of the broker, dealer, or financial institution with whom the Repur-
chase Agreement or Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt or delivery of the amount and kind of
Securities or cash to be received or delivered by the Fund specified in
the Certificate, Oral Instructions, or Written Instructions, make or
receive the payment to or from the broker, dealer, or financial
institution and make the withdrawals, if any, from the Senior Security
Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
3. The Certificates, Oral Instructions, or Written Instructions
described in paragraphs 1 and 2 of this Article may with respect to any
particular Repurchase Agreement or Reverse Repurchase Agreement be
combined and delivered to the Custodian at the time of entering into such
Repurchase Agreement or Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall
deliver or cause to be delivered to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned
Securities are specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the principal amount
loaned, (d) the date of loan and delivery, (e) the total amount to be
delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately iden-
tified, and (f) the name of the broker, dealer, or financial institution
to which the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or a Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds.
2. In connection with each termination of a loan of Securities by
the Fund, the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying with respect to each such loan termination and
return of Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the principal
amount to be returned, (d) the date of termination, (e) the total amount
to be delivered by the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institution from
which the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial institution to
which such Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and from
time to time make such deposits thereto, or withdrawals therefrom, as
specified in a Certificate. Such Certificate shall specify the Series for
which such deposit or withdrawal is to be made and the amount of cash
and/or the amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such
deposit has been made.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing
Member in whose name, or for whose benefit, the account was established
as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall to the extent permitted by the Fund's
Declaration of Trust, investment restrictions and the Investment Company
Act of 1940 have a continuing lien and security interest in and to any
property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the Custodian;
provided, however, that the Custodian shall not be required to issue any
Put Option guarantee letter unless it shall have received an opinion of
counsel to the Fund or its investment adviser that the issuance of such
letters is authorized by the Fund and that the Custodian's continuing lien
and security interest is valid, enforceable and not limited by the
Declaration of Trust, any investment restrictions or the Investment
Company Act of 1940. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's obligations
under any Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund within the
scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with
a statement with respect to each Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind
of Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker, dealer, or
futures commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such Margin
Account.
6. The Custodian shall establish a Collateral Account and from time
to time shall make such deposits thereto as may be specified in a
Certificate. Promptly after the close of business on each business day
in which cash and/or Securities are maintained in a Collateral Account for
any Series, the Custodian shall furnish the Fund with a statement with
respect to such Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later than the close
of business next succeeding the delivery to the Fund of such statement,
the Fund shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities described
in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding
Put Option guarantee letter or similar document, the Fund shall promptly
specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Secretary or any
Assistant Secretary, either (i) setting forth with respect to the Series
specified therein the date of the declaration of a dividend or distribu-
tion, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and
the total amount payable to the Transfer Agent Account and any sub-
dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein and the
declaration of dividends and distributions thereon the Custodian to rely
on Oral Instructions, Written Instructions, or a Certificate setting forth
the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of such Series
to the shareholders of record as of that date and the total amount payable
to the Transfer Agent Account on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may be,
the Custodian shall pay to the Transfer Agent Account out of the moneys
held for the account of the Series specified therein the total amount
payable to the Transfer Agent Account and with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or
cause to be delivered, to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian
for the sale of such Shares and specifically allocated to the separate
account in the name of such Series.
2. Upon receipt of such money from the Fund's General Distributor,
the Custodian shall credit such money to the separate account in the name
of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian shall
pay, out of the money held for the account of such Series, all original
issue or other taxes required to be paid by the Fund in connection with
such issuance upon the receipt of a Certificate specifying the amount to
be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder
in connection with a redemption of any Shares, it shall furnish, or cause
to be furnished, to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting
forth the Series and number of Shares received by the Transfer Agent for
redemption and that such Shares are in good form for redemption, the
Custodian shall make payment to the Transfer Agent Account out of the
moneys held in the separate account in the name of the Series the total
amount specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held
by the Custodian in the separate account for such Series shall be insuffi-
cient to pay the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a Certificate, Oral
Instructions, or Written Instructions or which results in an overdraft in
the separate account of such Series for some other reason, or if the Fund
is for any other reason indebted to the Custodian with respect to a Ser-
ies, (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement
and subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to the Federal Funds
Rate plus 1/2%, such rate to be adjusted on the effective date of any
change in such Federal Funds Rate but in no event to be less than 6% per
annum. In addition, unless the Fund has given a Certificate that the
Custodian shall not impose a lien and security interest to secure such
overdrafts (in which event it shall not do so), the Custodian shall have
a continuing lien and security interest in the aggregate amount of such
overdrafts and indebtedness as may from time to time exist in and to any
property specifically allocated to such Series at any time held by it for
the benefit of such Series or in which the Fund may have an interest which
is then in the Custodian's possession or control or in possession or con-
trol of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to charge
any such overdraft or indebtedness together with interest due thereon
against any money balance in an account standing in the name of such
Series' credit on the Custodian's books. In addition, the Fund hereby
covenants that on each Business Day on which either it intends to enter
a Reverse Repurchase Agreement and/or otherwise borrow from a third party,
or which next succeeds a Business Day on which at the close of business
the Fund had outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify the Series
to which the same relates, and shall not incur any indebtedness, including
pursuant to any Reverse Repurchase Agreement, not so specified other than
from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities held by the Custodian hereunder as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the
Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement, (d) the time and date, if known, on which the loan
is to be entered into, (e) the date on which the loan becomes due and
payable, (f) the total amount payable to the Fund on the borrowing date,
(g) the market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares
or the principal amount of any particular Securities, and (h) a statement
specifying whether such loan is for investment purposes or for temporary
or emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus and Statement of
Additional Information. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its possession, but
such collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified
in a Certificate to collateralize further any transaction described in
this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, to any such bank, the Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE XV
CUSTODY OF ASSETS OUTSIDE THE U.S.
1. The Custodian is authorized and instructed to employ, as its
agent, as subcustodians for the securities and other assets of the Fund
maintained outside of the United States the Foreign Subcustodians and For-
eign Depositories designated on Schedule A hereto. Except as provided in
Schedule A, the Custodian shall employ no other Foreign Custodian or
Foreign Depository. The Custodian and the Fund may amend Schedule A
hereto from time to time to agree to designate any additional Foreign
Subcustodian or Foreign Depository with which the Custodian has an
agreement for such entity to act as the Custodian's agent, as subcus-
todian, and which the Custodian in its absolute discretion proposes to
utilize to hold any of the Fund's Foreign Property. Upon receipt of a
Certificate or Written Instructions from the Fund, the Custodian shall
cease the employment of any one or more of such subcustodians for
maintaining custody of the Fund's assets and such custodian shall be
deemed deleted from Schedule A.
2. The Custodian shall limit the securities and other assets
maintained in the custody of the Foreign Subcustodians to: (a) "foreign
securities," as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Fund may determine to be reasonably necessary to effect the
foreign securities transactions of the Fund.
3. The Custodian shall identify on its books as belonging to the
Fund, the Foreign Securities held by each Foreign Subcustodian.
4. Each agreement pursuant to which the Custodian employs a Foreign
Subcustodian shall be substantially in the form reviewed and approved by
the Fund and will not be amended in a way that materially affects the Fund
without the Fund's prior written consent and shall:
(a) require that such institution establish custody account(s)
for the Custodian on behalf of the Fund and physically segregate in each
such account securities and other assets of the fund, and, in the event
that such institution deposits the securities of the Fund in a Foreign
Depository, that it shall identify on its books as belonging to the Fund
or the Custodian, as agent for the Fund, the securities so deposited;
(b) provide that:
(1) the assets of the Fund will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of
the Foreign Subcustodian or its creditors, except a claim of payment for
their safe custody or administration;
(2) beneficial ownership for the assets of the Fund will
be freely transferable without the payment of money or value other than
for custody or administration;
(3) adequate records will be maintained identifying the
assets as belonging to the Fund;
(4) the independent public accountants for the Fund will
be given access to the books and records of the Foreign Subcustodian
relating to its actions under its agreement with the Custodian or
confirmation of the contents of those records;
(5) the Fund will receive periodic reports with respect
to the safekeeping of the Fund's assets, including, but not necessarily
limited to, notification of any transfer to or from the custody
account(s); and
(6) assets of the Fund held by the Foreign Subcustodian
will be subject only to the instructions of the Custodian or its agents.
(c) Require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian from and against any loss, damage, cost, expense, liability or
claim arising out of or in connection with the institution's performance
of such obligations, with the exception of any such losses, damages,
costs, expenses, liabilities or claims arising as a result of an act of
God. At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
Foreign Subcustodian as a consequence of any such loss, damage, cost,
expense, liability or claim of or to the Fund, if and to the extent that
the Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
5. Upon receipt of a Certificate or Written Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall on behalf of the Fund make or cause its Foreign
Subcustodian to transfer, exchange or deliver securities owned by the
Fund, except to the extent explicitly prohibited therein. Upon receipt
of a Certificate or Written Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
on behalf of the fund pay out or cause its Foreign Subcustodians to pay
out monies of the Fund. The Custodian shall use all means reasonably
available to it, including, if specifically authorized by the Fund in a
Certificate, any necessary litigation at the cost and expense of the Fund
(except as to matters for which the Custodian is responsible hereunder)
to require or compel each Foreign Subcustodian or Foreign Depository to
perform the services required of it by the agreement between it and the
Custodian authorized pursuant to this Agreement.
6. The Custodian shall maintain all books and records as shall be
necessary to enable the Custodian readily to perform the services required
of it hereunder with respect to the Fund's Foreign Properties. The
Custodians shall supply to the Fund from time to time, as mutually agreed
upon, statements in respect of the Foreign Securities and other Foreign
Properties of the Fund held by Foreign Subcustodians, directly or through
Foreign Depositories, including but not limited to an identification of
entities having possession of the Fund's Foreign Securities and other
assets, an advice or other notification of any transfers of securities to
or from each custodial account maintained for the Fund or the Custodian
on behalf of the Fund indicating, as to securities acquired for the Fund,
the identity of the entity having physical possession of such securities.
The Custodian shall promptly and faithfully transmit all reports and
information received pertaining to the Foreign Property of the Fund,
including, without limitation, notices or reports of corporate action,
proxies and proxy soliciting materials.
7. Upon request of the Fund, the Custodian shall use reasonable
efforts to arrange for the independent accountants of the Fund to be
afforded access to the books and records of any Foreign Subcustodian, or
confirmation of the contents thereof, insofar as such books and records
relate to the Foreign Property of the Fund or the performance of such
Foreign Subcustodian under its agreement with the Custodian; provided that
any litigation to afford such access shall be at the sole cost and expense
of the Fund.
8. The Custodian recognizes that employment of a Foreign Sub-
custodian or Foreign Depository for the Fund's Foreign Securities and
Foreign Property is permitted by Section 17(f) of the Investment Company
Act of 1940 only upon compliance with Section (a) of Rule 17f-5
promulgated thereunder. With respect to the Foreign Subcustodians and
Foreign Depositories identified on Schedule A, the Custodian represents
that it has furnished the Fund with certain materials prepared by the
Custodian and with such other information in the possession of the Cus-
todian as the Fund advised the Custodian was reasonably necessary to
assist the Board of Trustees of the Fund in making the determinations
required of the Board of Trustees by Rule 17f-5, including, without
limitation, consideration of the matters set forth in the Notes to Rule
17f-5. If the Custodian recommends any additional Foreign Subcustodian
or Foreign Depository, the Custodian shall supply information similar in
kind and scope to that furnished pursuant to the preceding sentence. Fur-
ther, the Custodian shall furnish annually to the Fund, at such time as
the Fund and Custodian shall mutually agree, information concerning each
Foreign Subcustodian and Foreign Depository then identified on Schedule
A similar in kind and scope to that furnished pursuant to the preceding
two sentences.
9. The Custodian's employment of any Foreign Subcustodian or
Foreign Depository shall constitute a representation that the Custodian
believes in good faith that such Foreign Subcustodian or Foreign
Depository provides a level of safeguards for maintaining the Fund's
assets not materially different from that provided by the Custodian in
maintaining the Fund's securities in the United States. In addition, the
Custodian shall monitor the financial condition and general operational
performance of the Foreign Subcustodians and Foreign Depositories and
shall promptly inform the Fund in the event that the Custodian has actual
knowledge of a material adverse change in the financial condition thereof
or that there appears to be a substantial likelihood that the share-
holders' equity of any Foreign Subcustodian will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million , or that the Foreign Subcustodian
or Foreign Depository has breached the agreement between it and the
Custodian in a way that the Custodian believes adversely affects the Fund.
Further, the Custodian shall advise the Fund if it believes that there is
a material adverse change in the operating environment of any Foreign
Subcustodian or Foreign Depository.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the performance of
its duties hereunder, and, except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except
for any such loss or damage arising out of its own negligence, bad faith,
or willful misconduct or that of the subcustodians or co-custodians
appointed by the Custodian or of the officers, employees, or agents of any
of them. The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and obtain the
advice and opinion of counsel to the Fund, at the expense of the Fund, or
of its own counsel, at its own expense, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any
loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, bad faith or willful mis-
conduct on the part of the Custodian or any of its employees or agents.
2. Notwithstanding the foregoing, the Custodian shall be under no
obligation to inquire into, and shall not be liable for:
(a) The validity (but not the authenticity) of the issue of any
Securities purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety of the amount
paid or received therefor, as specified in a Certificate, Oral
Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor, as specified
in a Certificate;
(c) The legality of the declaration or payment of any dividend
by the Fund, as specified in a resolution, Certificate, Oral Instructions,
or Written Instructions;
(d) The legality of any borrowing by the Fund using Securities
as collateral;
(e) The legality of any loan of portfolio Securities, nor shall
the Custodian be under any duty or obligation to see to it that the cash
collateral delivered to it by a broker, dealer, or financial institution
or held by it at any time as a result of such loan of portfolio Securities
of the Fund is adequate collateral for the Fund against any loss it might
sustain as a result of such loan, except that this subparagraph shall not
excuse any liability the Custodian may have for failing to act in accor-
dance with Article X hereof or any Certificate, Oral Instructions or
Written Instructions given in accordance with this Agreement. The Custo-
dian specifically, but not by way of limitation, shall not be under any
duty or obligation periodically to check or notify the Fund that the
amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution
to which portfolio Securities of the Fund are lent pursuant to Article X
of this Agreement makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of such
loan or at the termination of such loan, provided, however, that the
Custodian shall promptly notify the Fund in the event that such dividends
or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or
Collateral Account in connection with transactions by the Fund, except
that this subparagraph shall not excuse any liability the Custodian may
have for failing to establish, maintain, make deposits to or withdrawals
from such accounts in accordance with this Agreement. In addition, the
Custodian shall be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment which the Fund
may be entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to notify the
Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft,
or other instrument for the payment of money, received by it on behalf of
the Fund until the Custodian actually receives such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. With respect to Securities held in a Depository, except as
otherwise provided in paragraph 5(b) of Article III hereof, the Custodian
shall have no responsibility and shall not be liable for ascertaining or
acting upon any calls, conversions, exchange offers, tenders, interest
rate changes or similar matters relating to such Securities, unless the
Custodian shall have actually received timely notice from the Depository
in which such Securities are held. In no event shall the Custodian have
any responsibility or liability for the failure of a Depository to
collect, or for the late collection or late crediting by a Depository of
any amount payable upon Securities deposited in a Depository which may
mature or be redeemed, retired, called or otherwise become payable. How-
ever, upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in a Depository the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian shall not
be under any obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by a Depository which in
its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often
as may be required, or alternatively, the Fund shall be subrogated to the
rights of the Custodian with respect to such claim against the Depository
should it so request in a Certificate. This paragraph shall not, however,
excuse any failure by the Custodian to act in accordance with a
Certificate, Oral Instructions, or Written Instructions given in
accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution
by the Transfer Agent of the Fund of any amount paid by the Custodian to
the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which
such amount is payable are in default, or if payment is refused after the
Custodian has timely and properly, in accordance with this Agreement, made
due demand or presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with
any such action, but the Custodian shall have such a duty if the Secu-
rities were not in default on the payable date and the Custodian failed
to timely and properly make such demand for payment and such failure is
the reason for the non-receipt of payment.
7. The Custodian may, with the prior approval of the Board of
Trustees of the Fund, appoint one or more banking institutions as
subcustodian or subcustodians, or as co-Custodian or co-Custodians, of
Securities and moneys at any time owned by the Fund, upon such terms and
conditions as may be approved in a Certificate or contained in an
agreement executed by the Custodian, the Fund and the appointed
institution; provided, however, that appointment of any foreign banking
institution or depository shall be subject to the provisions of Article
XV hereof.
8. The Custodian agrees to indemnify the Fund against and save the
Fund harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of the
negligence, bad faith or willful misconduct of any subcustodian of the
Securities and moneys owned by the Fund.
9. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it,
for the account of the Fund and specifically allocated to a Series are
such as properly may be held by the Fund or such Series under the
provisions of its then current prospectus, or (b) to ascertain whether any
transactions by the Fund, whether or not involving the Custodian, are such
transactions as may properly be engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund agrees
to pay to the Custodian all reasonable out-of-pocket expenses and such
compensation as may be agreed upon in writing from time to time between
the Custodian and the Fund. The Custodian may charge such compensation,
and any such expenses with respect to a Series incurred by the Custodian
in the performance of its duties under this Agreement against any money
specifically allocated to such Series. The Custodian shall also be
entitled to charge against any money held by it for the account of a
Series the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement attributable to, or arising out of, its
serving as Custodian for such Series. The expenses for which the
Custodian shall be entitled to reimbursement hereunder shall include, but
are not limited to, the expenses of subcustodians and foreign branches of
the Custodian incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund. Notwithstanding
the foregoing or anything else contained in this Agreement to the
contrary, the Custodian shall, prior to effecting any charge for
compensation, expenses, or any overdraft or indebtedness or interest
thereon, submit an invoice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing, Oral Instructions, or Written
Instructions received by the Custodian and reasonably believed by the
Custodian to be genuine. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof
is received by the Custodian, whether by hand delivery, telecopier or
other similar device, or otherwise, by the close of business of the same
day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions thereby
authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from
an Authorized Person.
12. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed
by the Custodian to be given in accordance with the terms and conditions
of any Margin Account Agreement. Without limiting the generality of the
foregoing, the Custodian shall be under no duty to inquire into, and shall
not be liable for, the accuracy of any statements or representations
contained in any such instrument or other notice including, without limi-
tation, any specification of any amount to be paid to a broker, dealer,
futures commission merchant or Clearing Member. This paragraph shall not
excuse any failure by the Custodian to have acted in accordance with any
Margin Agreement it has executed or any Certificate, Oral Instructions,
or Written Instructions given in accordance with this Agreement.
13. The books and records pertaining to the Fund, as described in
Appendix E hereto, which are in the possession of the Custodian shall be
the property of the Fund. Such books and records shall be prepared and
maintained by the Custodian as required by the Investment Company Act of
1940, as amended, and other applicable Securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall
have access to such books and records during the Custodian's normal
business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by the Custodian to the Fund or
the Fund's authorized representative, and the Fund shall reimburse the
Custodian its expenses of providing such copies. Upon reasonable request
of the Fund, the Custodian shall provide in hard copy or on micro-film,
whichever the Custodian elects, any records included in any such delivery
which are maintained by the Custodian on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Custodian for its expenses
of providing such hard copy or micro-film.
14. The Custodian shall provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-
Entry system, each Depository or O.C.C., and with such reports on its own
systems of internal accounting control as the Fund may reasonably request
from time to time.
15. The Custodian shall furnish upon request annually to the Fund
a letter prepared by the Custodian's accountants with respect to the
Custodian's internal systems and controls in the form generally provided
by the Custodian to other investment companies for which the Custodian
acts as custodian.
16. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising out of, or
related to, the Custodian's performance of its obligations under this
Agreement, except for any such liability, claim, loss and demand arising
out of the negligence, bad faith, or willful misconduct of the Custodian,
any co-Custodian or subcustodian appointed by the Custodian, or that of
the officers, employees, or agents of any of them.
17. Subject to the foregoing provisions of this Agreement, the
Custodian shall deliver and receive Securities, and receipts with respect
to such Securities, and shall make and receive payments only in accordance
with the customs prevailing from time to time among brokers or dealers in
such Securities and, except as may otherwise be provided by this Agreement
or as may be in accordance with such customs, shall make payment for
Securities only against delivery thereof and deliveries of Securities only
against payment therefor.
18. The Custodian will comply with the procedures, guidelines or
restrictions ("Procedures") adopted by the Fund from time to time for par-
ticular types of investments or transactions, e.g., Repurchase Agreements
and Reverse Repurchase Agreements, provided that the Custodian has
received from the Fund a copy of such Procedures. If within ten days
after receipt of any such Procedures, the Custodian determines in good
faith that it is unreasonable for it to comply with any new procedures,
guidelines or restrictions set forth therein, it may within such ten day
period send notice to the Fund that it does not intend to comply with
those new procedures, guidelines or restrictions which it identifies with
particularity in such notice, in which event the Custodian shall not be
required to comply with such identified procedures, guidelines or
restrictions; provided, however, that, anything to the contrary set forth
herein or in any other agreement with the Fund, if the Custodian identi-
fies procedures, guidelines or restrictions with which it does not intend
to comply, the Fund shall be entitled to terminate this Agreement without
cost or penalty to the Fund upon thirty days' written notice.
19. Whenever the Custodian has the authority to deduct monies from
the account for a series without a Certificate, it shall notify the Fund
within one business day of such deduction and the reason for it. Whenever
the Custodian has the authority to sell Securities or any other property
of the Fund on behalf of any Series without a Certificate, the Custodian
will notify the Fund of its intention to do so and afford the Fund the
reasonable opportunity to select which Securities or other property it
wishes to sell on behalf of such Series. If the Fund does not promptly
sell sufficient Securities or Deposited Property on behalf of the Series,
then, after notice, the Custodian may proceed with the intended sale.
20. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth or referred to in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
ARTICLE XVII
TERMINATION
1. Except as provided in paragraph 3 of this Article, this
Agreement shall continue until terminated by either the Custodian giving
to the Fund, or the Fund giving to the Custodian, a notice in writing
specifying the date of such termination, which date shall be not less than
60 days after the date of the giving of such notice. In the event such
notice or a notice pursuant to paragraph 3 of this Article is given by the
Fund, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by an Officer and the Secretary or an
Assistant Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be
eligible to serve as a custodian for the Securities of a management
investment company under the Investment Company Act of 1940. In the event
such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the ab-
sence of such designation by the Fund, the Custodian may designate a
successor custodian which shall be a bank or trust company eligible to
serve as a custodian for Securities of a management investment company
under the Investment Company Act of 1940 and which is acceptable to the
Fund. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of acceptance
by the successor custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held by it
as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon
the date specified in the notice of termination of this Agreement and upon
the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement arising thereafter, other than the duty with
respect to Securities held in the Book Entry System which cannot be deliv-
ered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
3. Notwithstanding the foregoing, the Fund may terminate this
Agreement upon the date specified in a written notice in the event of the
"Bankruptcy" of The Bank of New York. As used in this sub-paragraph, the
term "Bankruptcy" shall mean The Bank of New York's making a general
assignment, arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or the entry of a order for
relief under any applicable bankruptcy law or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors
rights, or if a petition is presented for the winding up or liquidation
of the party or a resolution is passed for its winding up or liquidation,
or it seeks, or becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or for all
or substantially all of its assets or its taking any action in furtherance
of, or indicating its consent to approval of, or acquiescence in, any of
the foregoing.
ARTICLE XVIII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions of this
Article shall apply if, but only if, the Fund in its sole and absolute
discretion elects to utilize the Terminal Link to transmit Certificates
to the Custodian.
2. The Terminal Link shall be utilized only for the purpose of the
Fund providing Certificates to the Custodian and the Custodian providing
notices to the Fund and only after the Fund shall have established access
codes and internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes. Each use of the
Terminal Link by the Fund shall constitute a representation and warranty
that at least two officers have each utilized an access code that such
internal safekeeping procedures have been established by the Fund, and
that such use does not contravene the Investment Company Act of 1940 and
the rules and regulations thereunder.
3. Each party shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the other
party shall not be responsible for the reliability or availability of any
such equipment or services, except that the Custodian shall not pay any
communications costs of any line leased by the Fund, even if such line is
also used by the Custodian.
4. The Fund acknowledges that any data bases made available as part
of, or through the Terminal Link and any proprietary data, software,
processes, information and documentation (other than any such which are
or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The Fund shall, and
shall cause others to which it discloses the Information, to keep the
Information confidential by using the same care and discretion it uses
with respect to its own confidential property and trade secrets, and shall
neither make nor permit any disclosure without the express prior written
consent of the Custodian.
5. Upon termination of this Agreement for any reason, each Fund
shall return to the Custodian any and all copies of the Information which
are in the Fund's possession or under its control, or which the Fund
distributed to third parties. The provisions of this Article shall not
affect the copyright status of any of the Information which may be
copyrighted and shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from
time to time without notice to the Fund, except that the Custodian shall
give the Fund notice not less than 75 days in advance of any modification
which would materially adversely affect the Fund's operation, and the Fund
agrees not to modify or attempt to modify the Terminal Link without the
Custodian's prior written consent. The Fund acknowledges that any
software provided by the Custodian as part of the Terminal Link is the
property of the Custodian and, accordingly, the Fund agrees that any
modifications to the same, whether by the Fund or the Custodian and
whether with or without the Custodian's consent, shall become the property
of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it
utilizes or the Fund utilizes in connection with the Terminal Link makes
any warranties or representations, express or implied, in fact or in law,
including but not limited to warranties of merchantability and fitness for
a particular purpose.
8. Each party will cause its officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the other to act in accordance
with and rely on Certificates and notices received by it through the
Terminal Link. Each party acknowledges that it is its responsibility to
assure that only its authorized persons use the Terminal Link on its
behalf, and that a party shall not be responsible nor liable for use of
the Terminal Link on behalf of the other party by unauthorized persons of
such other party.
9. Notwithstanding anything else in this Agreement to the contrary,
neither party shall have any liability to the other for any losses,
damages, injuries, claims, costs or expenses arising as a result of a
delay, omission or error in the transmission of a Certificate or notice
by use of the Terminal Link except for money damages for those suffered
as the result of the negligence, bad faith or willful misconduct of such
party or its officers, employees or agents in an amount not exceeding for
any incident $100,000; provided, however, that a party shall have no
liability under this Section 9 if the other party fails to comply with the
provisions of Section 11.
10. Without limiting the generality of the foregoing, in no event
shall either party or any manufacturer or supplier of its computer
equipment, software or services relating to the Terminal Link be
responsible for any special, indirect, incidental or consequential damages
which the other party may incur or experience by reason of its use of the
Terminal Link even if such party, manufacturer or supplier has been
advised of the possibility of such damages, nor with respect to the use
of the Terminal Link shall either party or any such manufacturer or
supplier be liable for acts of God, or with respect to the following to
the extent beyond such person's reasonable control: machine or computer
breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as
promptly as practicable, and in any event within 24 hours after the
earliest of (i) discovery thereof, and (ii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error,
it being agreed that discovery and receipt of notice may only occur on a
business day. The Custodian shall promptly advise the Fund whenever the
Custodian learns of any errors, omissions or interruption in, or delay or
unavailability of, the Terminal Link.
12. Each party shall, as soon as practicable after its receipt of
a Certificate or a notice transmitted by the Terminal Link, verify to the
other party by use of the Terminal Link its receipt of such Certificate
or notice, and in the absence of such verification the party to which the
Certificate or notice is sent shall not be liable for any failure to act
in accordance with such Certificate or notice and the sending party may
not claim that such Certificate or notice was received by the other party.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event
that any such present Authorized Person ceases to be an Authorized Person
or in the event that other or additional Authorized Persons are elected
or appointed. Until such new Certificate shall be received, the Custodian
shall be entitled to rely and to act upon Oral Instructions, Written
Instructions, or signatures of the present Authorized Persons as set forth
in the last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees
to furnish to the Custodian a new Certificate in similar form in the event
any such present officer ceases to be an officer of the Fund, or in the
event that other or additional officers are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be entitled
to rely and to act upon the signatures of the officers as set forth in the
last delivered Certificate to the extent provided by this Agreement.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, other than any
Certificate or Written Instructions, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices
at 90 Washington Street, New York, New York 10286, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or rehired
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at the
address for the Fund first above written, or at such other place as the
Fund may from time to time designate in writing.
5. This Agreement constitutes the entire agreement between the
parties, replaces all prior agreements and may not be amended or modified
in any manner except by a written agreement executed by both parties with
the same formality as this Agreement and approved by a resolution of the
Board of Trustees of the Fund, except that Appendices A and B may be
amended unilaterally by the Fund without such an approving resolution.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the Custodian or The Bank of
New York without the written consent of the Fund, authorized or approved
by a resolution of the Fund's Board of Trustees. For purposes of this
paragraph, no merger, consolidation, or amalgamation of the Custodian, The
Bank of New York, or the Fund shall be deemed to constitute an assignment
of this Agreement.
7. This Agreement shall be construed in accordance with the laws
of the State of New York without giving effect to conflict of laws
principles thereof. Each party hereby consents to the jurisdiction of a
state or federal court situated in New York City, New York in connection
with any dispute arising hereunder and hereby waives its right to trial
by jury.
8. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized and
their respective seals to be hereunto affixed, as of the day and year
first above written.
OPPENHEIMER TOTAL RETURN FUND, INC.
By: /s/ Robert G. Galli
Robert G. Galli, Vice President
(SEAL)
Attest:
/s/ Robert G. Zack
Robert G. Zack, Assistant Secretary
THE BANK OF NEW YORK
(SEAL) By/s/ illegible
Attest:
/s/ illegible
<PAGE>
APPENDIX A
I, President and I,
, of Oppenheimer Fund,
a Massachusetts business trust (the "Fund") do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust
and By-Laws to give Oral Instructions and Written Instructions on behalf
of the Fund, except that those persons designated as being an "Officer of
OSS" shall be an Authorized Person only for purposes of Articles XII and
XIII. The signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
<PAGE>
APPENDIX B
I, President and I,
, of Oppenheimer Fund, a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals for whom a position other than "Officer of
OSS" is specified serve in the following positions with the Fund and each
has been duly elected or appointed by the Board of Trustees of the Fund
to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws. With respect to the following
individuals for whom a position of "Officer of OSS" is specified, each
such individual has been designated by a resolution of the Board of
Trustees of the Fund to be an Officer for purposes of the Fund's Custody
Agreement with The Bank of New York, but only for purposes of Articles XII
and XIII thereof and a certified copy of such resolution is attached
hereto. The signatures of each individual below set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
<PAGE>
APPENDIX C
The undersigned, hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund (the "Fund"),
further certifies that the following resolutions were adopted by the Board
of Trustees of the Fund at a meeting duly held on __________________, 199
, at which a quorum at all times present and that such resolutions have
not been modified or rescinded and are in full force an effect as of the
date hereof.
RESOLVED, that The Bank New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the
Fund dated as of 199 (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on instructions by
the Fund to the Custodian communicated by a Terminal Link as
defined in the Custody Agreement.
RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to officers of the Fund
as defined in the Custody Agreement, and shall establish
internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the
Custody Agreement shall, following the establishment of such
access codes and such internal safekeeping procedures,
advise the Custodian that the same have been established by
delivering a Certificate, as defined in the Custody
Agreement, and the Custodian shall be entitled to rely upon
such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of
, as of the day of , 199 .
<PAGE>
APPENDIX D
I, Richard P. Lando, an Assistant Vice President with THE BANK OF NEW
YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
APPENDIX E
The following books and records pertaining to Fund shall be prepared
and maintained by the Custodian and shall be the property of the Fund:
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust
(the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on 199
, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis to deposit in the Book-Entry System, as defined in the
Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance
thereunder, including, without limitation, In connection
with settlements of purchases and sales of Securities, loans
of Securities, and deliveries and returns of Securities col-
lateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 199 .
__________________________
(SEAL)
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned , hereby certifies
that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit
in The Depository Trust Company ("DTC") as a "Depository" as
defined in the Custody Agreement, all Securities eligible
for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize DTC to the
extent possible in connection with its performance there-
under, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
as of the day of , 199 .
___________________________
(SEAL)
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, hereby certifies that he or she
is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
until such time as it receives a Certificate, as defined in
the Custody Agreement, to the contrary to deposit in the
Participants Trust Company as a Depository, as defined in
the Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Participants
Trust Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns
of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
, as of the day of , 199 .
_______________________
(SEAL)
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies that
he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary, to ac-
cept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in Options,
regardless of the Series to which the same are specifically
allocated, as such terms are defined in the Custody
Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of , as of the day of , 199 .
____________________________
(SEAL)
<PAGE>
EXHIBIT D
(FORM OF FOREIGN SUBCUSTODIAN AGREEMENT)
<PAGE>
Appendix A
Article XIX.149
Appendix B
Article XIX.250
Exhibit A
Article III.17
Exhibit B
Article III.18
Exhibit C
Article III.18
Exhibit D34
Article XV.434
Schedule A
Article XV.133
CUSTODY/420
NEEF, SWANSON AND MYER
ATTORNEYS AT LAW
SUITE 1000
THE COLORADO STATE BANK BUILDING
1600 BROADWAY
DENVER, COLORADO 80202
January 30, 1981
Hamilton Funds, Inc.
3600 South Yosemite Street
Denver, Colorado 80237
Gentlemen:
On December 22, 1980 the Agreement and Articles of Merger dated February
29, 1980 (the "Agreement") between Hamilton Funds, Inc., a Maryland
corporation, (the "Maryland Corporation" or the "Surviving Corporation")
and Hamilton Funds, Inc., a Delaware corporation (the "Delaware
Corporation") was duly accepted for recording with the State Department
of Assessments and Taxation of Maryland, under the General Corporation Law
of Maryland, and was filed with the office of the Secretary of State of
Delaware in accordance with the General Corporation Law of the State of
Delaware:
1. The corporate existence, good standing and authorized stock of
each of the constituent corporations are as stated or referred to in the
Agreement;
2. The shares of stock of the Surviving Corporation to be issued
pursuant to the terms of the Agreement have been duly authorized and, when
issued and delivered as provided in the Agreement, will be validly issued,
fully paid, and nonassessable by the Surviving Corporation;
3. All corporate and other proceedings required to be taken by or
on the part of either of the constituent corporations to authorize and
carry out the Agreement and to effect the merger contemplated thereby have
been duly and properly taken; and
4. The Agreement is the valid obligation of each of the constituent
corporations legally binding upon it in accordance with its terms.
Sincerely yours,
NEEF, SWANSON AND MYER
By: /s/ Rendle Myer
____________________
Rendle Myer
420con
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Total Return Fund, Inc.:
We consent to the use in this Post-Effective Amendment No. 75 to
Registration Statement No. 2-11052 to our report dated January 23, 1995
on the financial statements of Oppenheimer Total Return Fund, Inc.
appearing in the Statement of Additional Information, which is a part of
such Registration Statement, and to the reference to us under the caption
"Financial Highlights" appearing in the Prospectus, which is also a part
of such Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 24, 1995
Exhibit B
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER TOTAL RETURN FUND, INC.
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT (the "Plan") dated the 1st day of July, 1994,
by and between OPPENHEIMER TOTAL RETURN FUND, INC. (the "Fund") and
OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written service plan for its
Class A Shares described in the Fund's registration statement as of the
date this Plan takes effect, contemplated by and to comply with Article
III, Section 26 of the Rules of Fair Practice of the National Association
of Securities Dealers, pursuant to which the Fund will reimburse the
Distributor for a portion of its costs incurred in connection with the
personal service and the maintenance of shareholder accounts ("Accounts")
that hold Class A Shares (the "Shares") of the Fund. The Fund may be
deemed to be acting as distributor of securities of which it is the
issuer, pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "1940 Act"), according to the terms of this Plan. The Distributor
is authorized under the Plan to pay "Recipients," as hereinafter defined,
for rendering services and for the maintenance of Accounts. Such
Recipients are intended to have certain rights as third-party
beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered services in connection with the
personal service and maintenance of Accounts; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning such service; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Fund's Board of Directors (the "Board")
who are not "interested persons" (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this
Plan or in any agreements relating to this Plan (the "Independent
Directors") may remove any broker, dealer, bank or other institution
as a Recipient, whereupon such entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed owned
by more than one Recipient for purposes of this Plan. In the event
that two entities would otherwise qualify as Recipients as to the same
Shares, the Recipient which is the dealer of record on the Fund's
books shall be deemed the Recipient as to such Shares for purposes of
this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor,
within forty-five (45) days of the end of each calendar quarter, in the
amount of the lesser of: (i) .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value
of the Shares computed as of the close of each business day of
Qualified Holdings, or (ii) the Distributor's actual expenses under the
Plan for that quarter of the type approved by the Board. The
Distributor will use such fee received from the Fund in its entirety
to reimburse itself for payments to Recipients and for its other
expenditures and costs of the type approved by the Board incurred in
connection with the personal service and maintenance of Accounts
including, but not limited to, the services described in the following
paragraph. The Distributor may make Plan payments to any "affiliated
person" (as defined in the 1940 Act) of the Distributor if such
affiliated person qualifies as a Recipient.
The services to be rendered by the Distributor and Recipients in
connection with the personal service and the maintenance of Accounts
may include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the Fund,
providing such customers with information on their investment in
shares, assisting in the establishment and maintenance of accounts or
sub-accounts in the Fund, making the Fund's investment plans and
dividend payment options available, and providing such other
information and customer liaison services and the maintenance of
Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that a Recipient has provided services qualifying for
compensation under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either the
Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may not
be rendering appropriate services, then the Distributor, at the request
of the Board, shall require the Recipient to provide a written report
or other information to verify that said Recipient is providing
appropriate services in this regard. If the Distributor still is not
satisfied, it may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such entity's rights as a
third-party beneficiary hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan
will not be used to pay any interest expense, carrying charges or other
financial costs, or allocation of overhead by the Distributor, or for
any other purpose other than for the payments described in this Section
3. The amount payable to the Distributor each quarter will be reduced
to the extent that reimbursement payments otherwise permissible under
the Plan have not been authorized by the Board of Directors for that
quarter. Any unreimbursed expenses incurred for any quarter by the
Distributor may not be recovered in later periods.
(b) The Distributor shall make payments to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed .0625% (.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day, of Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority
of the Independent Directors. A majority of the Independent Directors
may at any time or from time to time increase or decrease and
thereafter adjust the rate of fees to be paid to the Distributor or to
any Recipient, but not to exceed the rate set forth above, and/or
increase or decrease the number of shares constituting Minimum
Qualified Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings and the rate of payments hereunder
applicable to Recipients, and shall provide each Recipient with written
notice within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice.
(c) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC), from
its own resources.
4. Selection and Nomination of Directors. While this Plan is in
effect, the selection or replacement of Independent Directors and the
nomination of those persons to be Directors of the Fund who are not
"interested persons" of the Fund shall be committed to the discretion of
the Independent Directors. Nothing herein shall prevent the Independent
Directors from soliciting the views or the involvement of others in such
selection or nomination if the final decision on any such selection and
nomination is approved by a majority of the incumbent Independent
Directors.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide at least quarterly a written report to the Fund's Board for
its review, detailing the amount of all payments made pursuant to this
Plan, the identity of the Recipient of each such payment, and the purposes
for which the payments were made. The report shall state whether all
provisions of Section 3 of this Plan have been complied with. The
Distributor shall annually certify to the Board the amount of its total
expenses incurred that year with respect to the personal service and
maintenance of Accounts in conjunction with the Board's annual review of
the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be
in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by vote of a majority of the
Independent Directors or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its "assignment" (as defined in the 1940 Act); (iii) it shall
go into effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by the Board and its Independent
Directors cast in person at a meeting called for the purpose of voting on
such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Independent Directors cast in person
at a meeting called on June 22, 1993 for the purpose of voting on this
Plan. It takes effect as of July 1, 1994, whereupon it replaces the
Service Plan and Agreement dated June 22, 1993. Unless terminated as
hereinafter provided, it shall continue in effect until October 31, 1994
and from year to year thereafter or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by the Board and its Independent Directors cast in person at a
meeting called for the purpose of voting on such continuance. This Plan
may be terminated at any time by vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as defined in the
1940 Act) of the Fund's outstanding voting securities of the Class. This
Plan may not be amended to increase materially the amount of payments to
be made without approval of the Shareholders of the Class, in the manner
described above, and all material amendments must be approved by a vote
of the Board and of the Independent Directors.
OPPENHEIMER TOTAL RETURN FUND, INC.
By:/s/ Andrew J. Donohue
---------------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
---------------------------------------
Katherine P. Feld, Vice President
OFMI/420A#2
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER TOTAL RETURN FUND, INC.
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 21st
day of June, 1994 by and between OPPENHEIMER TOTAL RETURN FUND, INC. (the
"Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for a
portion of its costs incurred in connection with the distribution of
Shares, and the personal service and maintenance of shareholder accounts
that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to
the terms of this Plan. The Distributor is authorized under the Plan to
pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended
to have certain rights as third-party beneficiaries under this Plan. The
terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the
1940 Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., or
its successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Directors (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Directors") may remove any broker, dealer, bank or
other institution as a Recipient, whereupon such entity's rights as
a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that two entities would otherwise qualify as Recipients as to
the same Shares, the Recipient which is the dealer of record on the
Fund's books shall be deemed the Recipient as to such Shares for
purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) within ten (10) days of the end of each month, in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares
computed as of the close of each business day (the "Asset Based Sales
Charge") outstanding for six years or less (the "Maximum Holding
Period"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing
administrative support services of the type approved by the Board
with respect to Accounts. Such Asset Based Sales Charge payments
received from the Fund will compensate the Distributor and Recipients
for providing distribution assistance in connection with the sales
of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor still is not satisfied,
it may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such entity's rights as a third-party
beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service
fee payments ("Advance Service Fee Payments") to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed (i) 0.25% of the average during the
calendar quarter of the aggregate net asset value of Shares, computed
as of the close of business on the day such Shares are sold,
constituting Qualified Holdings sold by the Recipient during that
quarter and owned beneficially or of record by the Recipient or by
its Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value
of Shares computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or by its Customers for a period of more than one (1) year, subject
to reduction or chargeback so that the Advance Service Fee Payments
do not exceed the limits on payments to Recipients that are, or may
be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after
the date such Shares were sold, the Recipient is obligated and will
repay to the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares were
held to one (1) year. The Advance Service Fee Payments described in
part (i) of the preceding sentence may, at the Distributor's sole
option, be made more often than quarterly, and sooner than the end
of the calendar quarter. However, no such payments shall be made to
any Recipient for any such quarter in which its Qualified Holdings
do not equal or exceed, at the end of such quarter, the minimum
amount ("Minimum Qualified Holdings"), if any, to be set from time
to time by a majority of the Independent Directors. A majority of
the Independent Directors may at any time or from time to time
decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth
above, and/or direct the Distributor to increase or decrease the
Maximum Holding Period, the Minimum Holding Period or the Minimum
Qualified Holdings. The Distributor shall notify all Recipients of
the Minimum Qualified Holdings, Maximum Holding Period or Minimum
Holding Period, if any, and the rate of payments hereunder applicable
to Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The
Distributor may make Plan payments to any "affiliated person" (as
defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient.
(c) The Distributor is entitled to retain from the payments
described in Section 3(a) the aggregate amount of (i) the Service Fee
on Shares outstanding for less than the Minimum Holding Period plus
(ii) the Asset-Based Sales Charge on Shares outstanding for not more
than the Maximum Holding Period, in each case computed as of the
close of each business day during that period and subject to
reduction or elimination of such amounts under the limits to which
the Distributor is, or may become, subject under Article III, Section
26, of the NASD Rules of Fair Practice. Such amount is collectively
referred to as the "Quarterly Limitation." The distribution
assistance and administrative support services in connection with the
sale of Shares to be rendered by the Distributor may include, but
shall not be limited to, the following: (i) paying sales commissions
to any broker, dealer, bank or other institution that sell Shares,
and\or paying such persons Advance Service Fee Payments in advance
of, and\or greater than, the amount provided for in Section 3(a) of
this Agreement; (ii) paying compensation to and expenses of personnel
of the Distributor who support distribution of Shares by Recipients;
(iii) paying of or reimbursing the Distributor for interest and
other borrowing costs on unreimbursed Carry Forward Expenses (as
hereafter defined) at the rate paid by the Distributor or, if such
amounts are financed by the Distributor from its own resources or by
an affiliate, at the rate of 1% per annum above the prime rate (which
shall mean the most preferential interest rate on corporate loans at
large U.S. money center commercial banks) then being reported in the
Eastern edition of the Wall Street Journal (or if such prime rate is
no longer so reported, such other rate as may be designated from time
to time by the Distributor with the approval of the Independent
Directors); (iv) other direct distribution costs of the type approved
by the Board, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished
to current Shareholders) and state "blue sky" registration expenses;
and (v) any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. The Distributor's
costs of providing the above-mentioned services are hereinafter
collectively referred to as "Distribution and Service Costs." "Carry
Forward Expenses" are Distribution and Service Costs that are not
paid in the fiscal quarter in which they arise because they exceed
the Quarterly Limitation. In the event that the Board should have
reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support
services in connection with the sale of Shares, then the Distributor,
at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is
providing appropriate services in this regard.
(d) The excess in any fiscal quarter of (i) the Quarterly Limitation
plus any contingent deferred sales charge ("CDSC") payments recovered
by the Distributor on the proceeds of redemption of Shares over (ii)
Distribution and Service Costs during that quarter, shall be applied
in the following order of priority: first to interest on unreimbursed
Carry Forward Expenses, second to reduce any unreimbursed Carry
Forward Expenses, third to reduce Distribution and Service Costs
during that quarter, and fourth, to reduce the Asset Based Sales
Charge payments by the Fund to the Distributor in that quarter.
Carry Forward Expenses shall be carried forward by the Fund until
payment can be made under the Quarterly Limitation.
(e) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset Based Sales Charge payments or
from its borrowings.
4. Selection and Nomination of Directors. While this Plan is in effect,
the selection and nomination of those persons to be Directors of the Fund
who are not "interested persons" of the Fund ("Disinterested Directors")
shall be committed to the discretion of such Disinterested Directors.
Nothing herein shall prevent the Disinterested Directors from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide at least quarterly a written report to the Fund's Board for
its review, detailing distribution expenditures properly attributable to
the Shares, including the amount of all payments made pursuant to this
Plan, the identity of the Recipient of each such payment, the amount paid
to the Distributor and the Distribution and Service Costs and Carry
Forward Expenses for that period. The report shall state whether all
provisions of Section 3 of this Plan have been complied with. The
Distributor shall annually certify to the Board the amount of its total
expenses incurred that year and its total expenses incurred in prior years
and not previously recovered with respect to the distribution of Shares
in conjunction with the Board's annual review of the continuation of the
Plan.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Directors or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Directors
cast in person at a meeting called on February 23, 1994 for the purpose
of voting on this Plan, and replaces the Distribution and Service Plan and
Agreement dated June 22, 1993. Unless terminated as hereinafter provided,
it shall continue in effect until October 31, 1994 and from year to year
thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by a vote of the
Board and its Independent Directors cast in person at a meeting called for
the purpose of voting on such continuance. This Plan may not be amended
to increase materially the amount of payments to be made without approval
of the Class B Shareholders, in the manner described above, and all
material amendments must be approved by a vote of the Board and of the
Independent Directors. This Plan may be terminated at any time by vote
of a majority of the Independent Directors or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities of the Class. In the event of such termination, the
Board and its Independent Directors shall determine whether the
Distributor is entitled to payment from the Fund of any Carry Foward
Expenses and related costs properly incurred in respect of Shares sold
prior to the effective date of such termination, and whether the Fund
shall continue to make payment to the Distributor in the amount the
Distributor is entitled to retain under part (c) of Section 3 hereof,
until such time as the Distributor has been reimbursed for all or part of
such amounts by the Fund and by retaining CDSC payments.
OPPENHEIMER TOTAL RETURN FUND, INC.
By: /s/ Andrew J. Donohue
---------------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
---------------------------------------
Katherine P. Feld, Vice President
OFMI/420B#2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
04/01/84
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000045147
<NAME> OPPENHEIMER TOTAL RETURN FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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