Registration No. 2-76547
File No. 811-3420
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 23 / X /
and/or
REGISTRATION STATEMENT UNDER THE / X /
INVESTMENT COMPANY ACT OF 1940
AMENDMENT N0. 22 / X /
OPPENHEIMER INTEGRITY FUNDS
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
(Address of Principal Executive Offices)
1-303-671-3200
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center - Suite 3400
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 May 1, 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
- -----------------------------------------------------------------------
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 INTEGRITY FUNDS
Cross Reference Sheet
---------------------
Prospectus for Oppenheimer Investment Grade Bond Fund
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 Objective and Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 Expenses; Dividends, Capital Gains and Taxes
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; How to Exchange Shares; Special
Investor Services
9 *
Prospectus for Oppenheimer Value Stock Fund
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 Objective and Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 Expenses; Dividends, Capital Gains and Taxes
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; How to Exchange Shares; Special
Investor Services
9 *
__________________
* Not applicable or negative answer.
<PAGE>
FORM N-1A
OPPENHEIMER INTEGRITY FUNDS
Cross Reference Sheet
---------------------
Statement of Additional Information for Oppenheimer Investment Grade
Bond Fund
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
Appendix A (Prospectus) - Description of Securities Ratings
14 How the Fund is Managed; Trustees and Officers of the Fund
15 How the Fund is Managed -- Major Shareholders;
16 How the Fund is Managed; Distribution and Service Plans;
Additional Information about the Fund
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 *
Statement of Additional Information for Oppenheimer Value Stock Fund
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
Appendix A (Prospectus) - Description of Securities Ratings
14 How the Fund is Managed; Trustees and Officers of the Fund
15 How the Fund is Managed -- Major Shareholders;
16 How the Fund is Managed; Distribution and Service Plans;
Additional Information about the Fund
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>
O P P E N H E I M E R
Investment Grade Bond Fund
Prospectus dated May 1, 1995.
Oppenheimer Investment Grade Bond Fund (the "Fund") is a mutual
fund with the investment objective of seeking to achieve a high level
of current income consistent with prudent investment risk and the
stability of capital primarily through investment in a diversified
portfolio of investment grade fixed-income securities. You should
carefully review the risks associated with an investment in the Fund.
Please refer to "Investment Objectives and Polices" on page 10.
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. 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 24.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep
it for future reference. You can find more detailed information about
the Fund in the May 1, 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).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible loss
of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief 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
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
By Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix: Description of Securities Ratings
<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 shareholder 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 24 through 37 for an explanation of how and when these
charges apply.
<TABLE>
<CAPTION>
Class A Shares Class B Shares
<S> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 4.75% None
Sales Charge on Reinvested Dividends None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 5% in the first year,
declining to 1% in the
sixth year and eliminated
thereafter
Exchange Fee None None
<FN>
(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.
</TABLE>
- 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.
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 Plan Fees (the maximum is
0.25% of average annual net assets of that class), and for Class B
shares, the 12b-1 Distribution Plan Fees are the Distribution and
Service Plan Fees (the maximum service fee is 0.25% of average annual
net assets of the class) and the asset-based sales charge of 0.75%.
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. These Plans are discussed in greater detail in
"How to Buy Shares."
<TABLE>
<CAPTION>
Class A Shares Class B Shares
<S> <C> <C>
Management Fees 0.50% 0.50%
12b-1 Distribution Plan Fees 0.25%(1) 1.00%(2)
(includes Shareholder Service Plan Fees)
Other Expenses 0.31% 0.28%
Total Fund Operating Expenses 1.06% 1.78%
<FN>
(1) Service Plan fees only
(2) Includes Service Plan fees and asset-based sales charge
</TABLE>
- 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, 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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
<S> <C> <C> <C> <C>
Class A Shares $58 $80 $103 $171
Class B Shares $68 $86 $116 $173
If you did not redeem your investment, it would incur the following expenses:
Class A Shares $58 $80 $103 $171
Class B Shares $18 $56 $96 $173
<FN>
* 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.
</TABLE>
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
A Brief Overview Of The Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing in the Fund. Keep
the Prospectus for reference after you invest, particularly for
information about your account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund seeks to
achieve a high level of current income consistent with prudent
investment risk and the stability of capital primarily through
investment in a diversified portfolio of investment grade fixed-income
securities.
- What Does The Fund Invest In? The Fund primarily invests in a
diversified portfolio of investment grade fixed-income securities.
These include (i) investment-grade debt securities rated BBB or above
by Standard and Poor's Corporation or Baa or above by Moody's Investors
Service, Inc. or, if unrated, are of comparable quality as determined
by the Fund's Sub-Adviser; (ii) U.S. Government Securities; and (iii)
high-quality, short-term money market instruments. 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 10.
- Who Manages The Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation, which (including a
subsidiary) manages investment company portfolios currently having over
$30 billion in assets. The Manager handles the day-to-day business of
the Fund. The Fund also has a Sub-Adviser, Massachusetts Mutual Life
Insurance Company (the "Sub-Adviser") who is responsible for choosing
the Fund's investments. The Fund has a portfolio manager, Mary E.
Wilson, who is employed by the Sub-Adviser which is primarily
responsible for the selection of the Fund's securities. The Manager is
paid a management fee by the Fund, and the Manager, not the Fund, pays
the Sub-Adviser. The Fund's Board of Trustees, elected by
shareholders, oversees the Manager. Please refer to "How the Fund is
Managed," starting on page 18 for more information about the Manager
and the Sub-Adviser and their fees.
- How Risky Is The Fund? All investments carry risks to some
degree. The Fund's investments in fixed-income securities are subject
to changes in their value and their yield from a number of factors,
including changes in the general bond market and changes in interest
rates. These changes affect the value of the Fund's investments and
its share prices for each class of its shares. In the OppenheimerFunds
spectrum the Fund is generally considered a conservative income fund,
more aggressive than money market funds but less aggressive than high
yield or stock funds. 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 objective and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment
Objectives and Policies" starting on page 10 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 and Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
starting on page 24 for more details.
- Will I Pay A Sales Charge To Buy Shares? The Fund has two
classes of shares. Both classes have the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 4.75%, and reduced for larger purchases. Class B
shares are offered without 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 24 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 or by using Checkwriting. Please refer to "How to Sell
Shares" starting on page 35. The Fund also offers exchange privileges
to other OppenheimerFunds, described in "How to Exchange Shares" on
page 37.
- How Has The Fund Performed? The Fund measures its performance
by quoting its yield, average annual total return and cumulative total
return, which measure historical performance. Those yields and total
returns can be compared to the 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 23.
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. The information in the table for
the fiscal periods prior to 1991 was audited by the Fund's previous
independent auditors.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Financial Highlights
-----------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------
Eleven
Months
Ended
Year Ended December 31, Dec. 31,
1994 1993 1992 1991(3) 1990 1989 1988(2)
==========================================================
==========================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $11.12 $10.74 $10.80 $ 9.86 $10.29 $10.12 $10.55
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .65 .69 .75 .82 .88(4) .92 .93
Net realized and
unrealized gain (loss)
on investments (1.08) .40 (.05) .90 (.43) .19 (.36)
------- ------- ------- ------- ------ ------- -------
Total income (loss) from
investment operations (.43) 1.09 .70 1.72 .45 1.11 .57
- -------------------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net
investment income (.65) (.71) (.76) (.78) (.88) (.94) (1.00)
Dividends in excess of net
investment income (.03) -- -- -- -- -- --
------- ------- ------- ------- ------ ------- -------
Total dividends to
shareholders (.68) (.71) (.76) (.78) (.88) (.94) (1.00)
- -------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 10.01 $ 11.12 $ 10.74 $ 10.80 $ 9.86 $ 10.29 $ 10.12
======= ======= ======= ======= ======
======= =======
==========================================================
==========================================================
Total Return, at Net
Asset Value(5) (3.87)% 10.30% 6.77% 18.28% 4.74% 11.31% 4.48%
==========================================================
==========================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $96,640 $110,759 $106,290 $90,623 $87,021 $96,380 $102,293
- -------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $102,168 $111,702 $ 98,672 $86,471 $ 90,065 $100,891 $111,264
- -------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
period (in thousands) 9,653 9,963 9,899 8,390 8,829 9,369 10,108
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.25% 6.20% 7.00% 8.02% 8.85% 8.85% 8.75%
Expenses 1.06% 1.06% 1.10% 1.23% 1.24%(4) 1.14% 1.05%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 70.3% 110.1% 116.4% 97.1% 80.4% 41.3% 45.0%
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Financial Highlights (continued)
------------------------------------------------------------------------
Class A (continued) Class B
-------------------------------------------------------------- --------
Year Period
Ended Ended
Year Ended January 31, Dec. 31, Dec. 31,
1988(2) 1987(2) 1986(2) 1985(2) 1994 1993(1)
==========================================================
=============================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $ 11.30 $ 11.16 $ 10.91 $ 11.00 $ 11.11 $ 11.10
- -------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income 1.09 1.16 1.22 1.27 .58 .40
Net realized and
unrealized gain (loss)
on investments (.55) .22 .35 (.04) (1.08) .03
------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations .54 1.38 1.57 1.23 (.50) .43
- -------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net
investment income (1.29) (1.24) (1.32) (1.32) (.57) (.42)
Dividends in excess of net
investment income -- -- -- -- (.03) --
------- ------- ------- ------- ------- -------
Total dividends to
shareholders (1.29) (1.24) (1.32) (1.32) (.60) (.42)
- -------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 10.55 $ 11.30 $ 11.16 $ 10.91 $ 10.01 $ 11.11
======= ======= ======= ======= =======
=======
==========================================================
=============================================
Total Return, at Net
Asset Value(5) N/A N/A N/A N/A (4.53)% 3.91%
==========================================================
=============================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $118,568 $125,513 $121,979 $117,293 $3,451 $1,809
- -------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $118,724 $123,045 $118,253 $111,235 $2,747 $ 922
- -------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
period (in thousands) 11,234 11,103 10,930 10,751 345 163
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 10.28% 10.45% 11.26% 12.21% 5.53% 4.80%(6)
Expenses .98% .93% .97% 1.01% 1.78% 1.90%(6)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 19.5% 59.8% 36.5% 76.7% 70.3% 110.1%
<FN>
1. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
2. Operating results prior to April 15, 1988 were achieved by the Fund's predecessor corporation as
a
closed-end fund under different investment objectives and policies. Such results are thus not
necessarily representative of operating results the Fund may achieve under its current investment
objectives and policies.
3. On March 28, 1991, Oppenheimer Management Corporation became the investment advisor to the
Fund.
4. Net investment income would have been $.87 absent the voluntary expense limitation, resulting in
an expense ratio of 1.26%.
5. 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.
6. Annualized.
7. 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 $67,852,873 and $67,362,839, respectively.
</FN>
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks to achieve a high level of current
income consistent with prudent investment risk and the stability of
capital primarily though investment in a diversified portfolio of
investment grade fixed-income securities.
Investment Policies and Strategies. In seeking its investment
objective, the Fund invests in (i) investment grade debt securities
rated in one of the four highest rating categories by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") or,
if unrated, are of comparable quality as determined by the Fund's Sub-
Adviser, Massachusetts Mutual Life Insurance Company; (ii) U.S.
Government Securities; and (iii) high quality, short-term money market
instruments. Under normal market conditions, it is anticipated that
the dollar-weighted average life of the Fund's portfolio will be
between five and ten years. The dollar-weighted average portfolio
maturity of the Fund as of December 31, 1994, was 9 years.
While the Fund will generally purchase only investment grade debt
securities, the Fund is permitted to hold lower-rated securities
(securities rated "Ba" or lower by Moody's or "BB" or lower by S&P)
until investment considerations indicate that their sale is appropriate
or until maturity. Lower-rated securities are considered speculative
and involve greater risk. They may be less liquid than higher-rated
securities. If the Fund were forced to sell a lower-rated debt
security during a period of rapidly-declining prices, it might
experience significant losses especially if a substantial number of
other holders decide to sell at the same time. Other risks may involve
the default of the issuer or price changes in the issuer's securities
due to changes in the issuer's financial strength or economic
conditions. The Fund is not obligated to dispose of securities when
issuers are in default or if the rating of the security is reduced.
These risks are discussed in more detail in the Statement of Additional
Information.
When investing the Fund's assets, the Sub-Adviser considers many
factors, including current developments and trends in both the economy
and the financial markets. The Fund may try to hedge against losses in
the value of its portfolio of securities by using hedging strategies
described below. The Fund's Sub-Adviser may employ special investment
techniques, also described below. Additional information about the
securities the Fund may invest in, the hedging strategies the Fund may
employ and the special investment techniques may be found under the
same headings in the Statement of Additional Information.
- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." While it is a policy of the
Fund generally not to engage in trading for short-term gains, portfolio
changes will be made without regard to the length of time a security
has been held or whether a sale would result in a profit or loss, if in
the Sub-Adviser's judgment, such transactions are advisable in light of
the circumstances of a particular company or within a particular
industry or in light of market, economic or financial conditions. High
portfolio turnover may affect the ability of the Fund to qualify as a
"regulated investment company" under the Internal Revenue Code for tax
deductions for dividends and capital gains distributions the Fund pays
to shareholders. Portfolio turnover affects brokerage costs, dealer
markups and other transaction costs, and results in the Fund's
realization of capital gains or losses for tax purposes. See
"Financial Highlights" above, "Dividends, Capital Gains and Taxes"
below and "Brokerage Policies of the Fund" in the Statement of
Additional Information.
- Interest Rate Risks. In addition to credit risks, described
below, debt securities are subject to changes in their value due to
changes in prevailing interest rates. When prevailing interest rates
fall, the values of already-issued debt securities generally rise.
When interest rates rise, the values of already-issued debt securities
generally decline. The magnitude of these fluctuations will often be
greater for longer-term debt securities than shorter-term debt
securities. Changes in the value of securities held by 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.
- Credit Risks. Debt securities are also subject to credit
risks. Credit risk relates to the ability of the issuer of a debt
security to make interest or principal payments on the security as they
become due. Generally, higher-yielding, lower-rated bonds (which the
Fund may hold) are subject to greater credit risk than higher-rated
bonds. Securities issued or guaranteed by the U.S. Government are
subject to little, if any, credit risk. While the Sub-Adviser may rely
to some extent on credit ratings by nationally recognized rating
agencies, such as S&P or Moody's, in evaluating the credit risk of
securities selected for the Fund's portfolio, it may also use its own
research and analysis. However, many factors affect an issuer's
ability to make timely payments, and there can be no assurance that the
credit risks of a particular security will not change over time.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, which is 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.
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). The Fund's
Board of Trustees may change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus.
- Securities of Foreign Governments and Companies. The Fund may
invest in debt securities issued or guaranteed by foreign companies,
and debt securities of foreign governments or their agencies. These
foreign securities may include debt obligations such as government
bonds, debentures issued by companies, as well as notes. Some of these
debt securities may have variable interest rates or "floating" interest
rates that change in different market conditions. Those changes will
affect the income the Fund receives. These securities are described in
more detail in the Statement of Additional Information.
The Fund is not restricted in the amount of its assets it may
invest in foreign countries or in which countries. However, if the
Fund's assets are held abroad, the countries in which they are held and
the sub-custodians holding them must in most cases be approved by the
Trust's Board of Trustees.
Foreign Securities Have Special Risks. There are certain risks of
holding foreign securities. The first is the risk of changes in
foreign currency values. Because the Fund may purchase securities
denominated in foreign currencies, a change in the value of a foreign
currency against the U.S. dollar will result in a change in the U.S.
dollar value of the Fund's securities denominated in that currency.
The currency rate change will also affect its income available for
distribution. Although the Fund's investment income from foreign
securities may be received in foreign currencies, the Fund will be
required to distribute its income in U.S. dollars. Therefore, the Fund
will absorb the cost of currency fluctuations. If the Fund suffers
losses on foreign currencies after it has distributed its income during
the year, the Fund may find that it has distributed more income than
was available from actual investment income. That could result in a
return of capital to shareholders.
There are other risks of foreign investing. For example, foreign
issuers are not required to use generally-accepted accounting
principles. If foreign securities are not registered for sale in the
U.S. under U.S. securities laws, the issuer does not have to comply
with the disclosure requirements of our laws, which are generally more
stringent than foreign laws. The values of foreign securities
investments will be affected by other factors, including exchange
control regulations or currency blockage and possible expropriation or
nationalization of assets. There may also be changes in governmental
administration or economic or monetary policy in the U.S. or abroad
that can affect foreign investing. In addition, it is generally more
difficult to obtain court judgments outside the United States if the
Fund has to sue a foreign broker or issuer. Additional costs may be
incurred because foreign broker commissions are generally higher than
U.S. rates, and there are additional custodial costs associated with
holding securities abroad.
U.S. Government Securities. Certain U.S. Government securities,
including U.S. Treasury bills, notes and bonds, and mortgage
participation certificates guaranteed by Government National Mortgage
Association ("Ginnie Mae") are supported by the full faith and credit
of the U.S. government, which in general terms means that the U.S.
Treasury stands behind the obligation to pay principal and interest.
Ginnie Mae certificates are one type of mortgage-related U.S.
Government Security the Fund invests in. Other mortgage-related U.S.
Government Securities the Fund invests in that are issued or guaranteed
by federal agencies or government-sponsored entities are not supported
by the full faith and credit of the U.S. government. Those securities
include obligations supported by the right of the issuer to borrow from
the U.S. Treasury, such as obligations of Federal Home Loan Mortgage
Corporation ("Freddie Mac"), obligations supported only by the credit
of the instrumentality, such as Federal National Mortgage Association
("Fannie Mae") and obligations supported by the discretionary authority
of the U.S. Government to repurchase certain obligations of U.S.
Government agencies or instrumentalities such as the Federal Land Banks
and the Federal Home Loan Banks. Other U.S. Government Securities the
Fund invests in are collateralized mortgage obligations ("CMOs").
The value of U.S. Government Securities will fluctuate depending
on prevailing interest rates. Because the yields on U.S. Government
Securities are generally lower than on corporate debt securities, when
the Fund holds U.S. Government Securities it may attempt to increase
the income it can earn from them by writing covered call options
against them, when market conditions are appropriate. Writing covered
calls is explained below, under "Other Investment Techniques and
Strategies."
- Mortgage-Backed U.S. Government Securities and CMOs. Certain
mortgage-backed U.S. Government securities "pass-through" to investors
the interest and principal payments generated by a pool of mortgages
assembled for sale by government agencies. Pass-through mortgage-backed
securities entail the risk that principal may be repaid at any time
because of prepayments on the underlying mortgages. That may result in
greater price and yield volatility than traditional fixed-income
securities that have a fixed maturity and interest rate.
The Fund may also invest in CMOs, which generally are obligations
fully collateralized by a portfolio of mortgages or mortgage-related
securities. Payment of the interest and principal generated by the
pool of mortgages is passed through to the holders as the payments are
received. CMOs are issued with a variety of classes or series which
have different maturities. Certain CMOs may be more volatile and less
liquid than other types of mortgage-related securities, because of the
possibility of the prepayment of principal due to prepayments on the
underlying mortgage loans.
- Short-Term Debt Securities. The high quality, short-term money
market instruments in which the Fund may invest include U.S. Treasury
and agency obligations; commercial paper (short-term, unsecured,
negotiable promissory notes of a domestic or foreign company), short-
term obligations of corporate issuers; bank participation certificates;
and certificates of deposit and bankers' acceptances (time drafts drawn
on commercial banks usually in connection with international
transactions) of banks and savings and loan associations.
- Asset-Backed Securities. The Fund may invest in "asset-backed"
securities. These represent interests in pools of consumer loans and
other trade receivables, similar to mortgage-backed securities. They
are issued by trusts and "special purpose corporations." They are
backed by a pool of assets, such as credit card or auto loan
receivables, which are the obligations of a number of different
parties. The income from the underlying pool is passed through to
holders, such as the Fund. These securities may be supported by a
credit enhancement, such as a letter of credit, a guarantee or a
preference right. However, the extent of the credit enhancement may be
different for different securities and generally applies to only a
fraction of the security's value. These securities present special
risks. For example, in the case of credit card receivables, the issuer
of the security may have no security interest in the related
collateral.
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.
- Hedging. The Fund may purchase and sell certain kinds of
futures contracts, put and call options, forward contracts, and options
on futures and broadly-based securities indices, 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 "Other Investment Techniques and Strategies"
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 securities market as a
temporary substitute for purchasing individual securities. It may do
so to try to manage its exposure to changing interest rates. Some of
these strategies, such as selling futures, 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
contracts are used to try to manage foreign currency risks on the
Fund's foreign investments. Foreign currency options are used to try
to protect against declines in the dollar value of foreign securities
the Fund owns, or to protect against an increase in the dollar cost of
buying foreign securities. Writing covered call options may also
provide income to the Fund for liquidity purposes or defensive reasons
or to raise cash to distribute to shareholders.
Futures. The Fund may buy and sell futures contracts that relate
to (1) broadly-based bond indices (these are referred to as Bond Index
Futures), and (2) interest rates (these are referred to as Interest
Rate Futures). All of these futures are described in "Hedging" in the
Statement of Additional Information. The Fund does not use futures and
options on futures for speculative purposes.
Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls).
The Fund may purchase calls on (1) debt securities, (2) Futures,
(3) broadly-based bond indices and (4) foreign currencies, or to
terminate its obligation on a call the Fund previously wrote. The Fund
may write (that is, sell) covered call options on debt securities to
raise cash for income to distribute to shareholders or for defensive
reasons. 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). There is no limit on the amount of the
Fund's total assets that may be subject to covered calls.
The Fund may purchase put options. 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 purchase those puts
that relate to (1)securities that the Fund owns, (2) Interest Rate
Futures, (3) Bond Index Futures or (4) foreign currencies.
The Fund may write puts on securities, broadly-based stock or bond
indices, foreign currencies or Bond Index Futures. Writing puts
requires the segregation of liquid assets to cover the put.
The Fund may buy and sell calls if certain conditions are met.
Calls the Fund buys or sells must be listed on a domestic or foreign
securities or commodities exchange or quoted on the Automated Quotation
System of the National Association of Securities Dealers, Inc. Each
call the Fund writes must be "covered" while it is outstanding; that
means the Fund must own the securities on which the call is written or
it must own other securities that are acceptable for the escrow
arrangements required for calls. After the Fund writes a call, not
more than 25% of the Fund's total assets may be subject to calls. In
the case of puts and calls on foreign currency, they must be traded on
a securities or commodities exchange, or quoted by recognized dealers
in these options. The Fund may also write calls on Futures Contracts
it owns, but those calls must be covered by securities or other liquid
assets the Fund owns and segregates to enable it to satisfy its
obligations if the call is exercised. A call or put option may not be
purchased if the value of all of the Fund's put and call options would
exceed 5% of the Fund's total assets.
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 "lock-in" the
U.S. dollar price of a security denominated in a foreign currency that
the Fund has bought or sold, or to protect against losses from changes
in the relative values 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 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. Also,
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 than what is
required for normal portfolio management. If the Sub-Adviser uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums and has special
tax effects on the Fund. There are also special risks in particular
hedging strategies. If a covered call written by the Fund is exercised
on a security that has increased in value, the Fund will be required to
sell the security at the call price and will not be able to realize any
profit if the security has increased in value above the call price.
The use of forward contracts may reduce the gain that would otherwise
result from a change in the relationship between the U.S. dollar and a
foreign currency. To limit its exposure in foreign currency exchange
contracts, the Fund limits its exposure to the amount of its assets
denominated in the foreign currency. Interest rate swaps are subject
to credit risks (if the other party fails to meet its obligations) and
also to 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. These risks are described in greater detail in
the Statement of Additional Information.
- Illiquid and Restricted Securities. Under the policies
established by the Fund's Board of Trustees, 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.
- Loans of Portfolio Securities. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions. The Fund must receive collateral for a loan. These
loans are limited to not more than 25% of the value of the Fund's net
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 in the coming year.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However, if the
vendor fails to pay the resale price on the delivery date, the Fund may
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 the Fund's
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.
- When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
such securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery or are to be delivered
at a later date. There may be a risk of loss to the Fund if the value
of the security changes prior to the settlement date.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." The Fund may use some
types of derivatives for hedging purposes, and may invest in others
because they offer the potential for increased income and principal
value. 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 or currency.
In the broadest sense, derivative investments include exchange-traded
options and futures contracts (please refer to "Hedging" above).
One risk of investing in derivative investments is that the
company issuing the instrument might not pay the amount due on the
maturity of the instrument. There is also the risk that the underlying
investment or security might not perform the way the Sub-Adviser
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 these risks can mean that the Fund will realize less income than
expected from its investments, or that it can lose part of the value of
its investments, which will affect the Fund's share price. Certain
derivative investments held by the Fund may trade in the over-the-
counter markets and may be illiquid. If that is the case, the Fund's
investment in them will be limited, as discussed in "Illiquid and
Restricted Securities," above.
Another type of derivative the Fund may invest in is an "index-
linked" note. On the maturity of this type of debt security, payment
is made based on the performance of an underlying index, rather than
based on a set principal amount for a typical note. Another derivative
investment the Fund may invest in is a currency-indexed security.
These are typically short-term or intermediate-term debt securities.
Their value at maturity or the interest rates at which they pay income
are determined by the change in value of the U.S. dollar against one or
more foreign currencies or an index. In some cases, these securities
may pay an amount at maturity based on a multiple of the amount of the
relative currency movements. This variety of index security offers the
potential for greater income but at a greater risk of loss.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following: (1) make short sales
except for sales "against the box"; (2) borrow money or enter into
reverse repurchase agreements, except that the Fund may borrow money
from banks and enter into reverse repurchase agreements as a temporary
measure for extraordinary or emergency purposes (but not for the
purpose of making investments), provided that the aggregate amount of
all such borrowings and commitments under such agreements does not, at
the time of borrowing or of entering into such an agreement, exceed 10%
of the Fund's total assets taken at current market value; the Fund will
not purchase additional portfolio securities at any time that the
aggregate amount of its borrowings and its commitments under reverse
repurchase agreements exceeds 5% of the Fund's net assets (for purposes
of this restriction, entering into portfolio lending agreements shall
not be deemed to constitute borrowing money); (3) concentrate its
investments in any particular industry except that it may invest up to
25% of the value of its total assets in the securities of issuers in
any one industry (of the utility companies, gas, electric, water and
telephone will each be considered as a separate industry); and (4) buy
securities issued or guaranteed by any one issuer (except the U.S.
Government or any of its agencies or instrumentalities) if with respect
to 75% of its total assets (a) more than 5% of the Fund's total assets
would be invested in the securities of that issuer, or (b) the Fund
would own more than 10% of that issuer's voting securities.
All of the percentage restrictions described above and elsewhere
in this Prospectus and the Statement of Additional Information 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. Oppenheimer Integrity Funds (the
"Trust") was organized in 1982 as a multi-series Massachusetts business
trust and the Fund is a series of that Trust. That Trust is an open-
end, diversified management investment company, with an unlimited
number of authorized shares of beneficial interest. The Fund is one of
two series of the Trust. Each of the two series of the Trust issues
its own shares, has its own investment portfolio, and its own assets
and liabilities.
The Fund is governed by a Board of Trustees, which is responsible
for protecting the interests of shareholders under Massachusetts law.
The Trustees meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions of
the Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees 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 Trustee or to take other action
described in the Fund's Declaration of Trust.
The Board of Trustees 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 two classes of shares,
Class A and Class B. Both classes invest in the same investment
portfolio. Each class has its own dividends and distributions, and
pays certain expenses which may be different for the different classes.
Each class may have a different net asset value. Each share has one
vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote together on
matters that affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. Since March 28, 1991, the Fund has
been managed by the Manager, which handles its day-to-day business.
The Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an investment advisory agreement which
states the Manager's responsibilities and its fees. 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 entered into a contract with Massachusetts Mutual Life
Insurance Company to act as the Fund's Sub-Adviser. The Sub-Adviser is
responsible for choosing the Fund's investments and its duties and
responsibilities are set forth in the contract with the Manager. The
Manager, not the Fund, pays the Sub-Adviser.
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 (the "Sub-Adviser").
- Portfolio Manager. The Portfolio Manager of the Fund (who is
also a Vice President of the Fund) is Mary E. Wilson, a Vice President
and Managing Director of the Sub-Adviser. She has been responsible for
the day-to-day management of the Fund's portfolio since March, 1991.
Ms. Wilson also serves as Senior Vice President of MML Series
Investment Fund and Vice President of Mass Mutual Participation
Investors and MassMutual Corporate Investors. For more information
about the Fund's other officers and Trustees, see "Trustees 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: 0.50% of the first $100 million of
the Fund's average annual net assets, 0.45% of the next $200 million,
0.40% of the next $200 million, and 0.35% of net assets in excess of
$500 million. The Fund's management fee for its last fiscal year was
0.50% of average annual net assets for both its Class A and Class B
shares.
Under the Sub-Advisory Agreement, the Manager pays the Sub-Adviser
the following annual fees, which decline on additional assets as the
Fund grows: 0.35% of the first $100 million of the
Fund's average annual net assets; 0.25% of the next $200 million, 0.20%
of the next $200 million; and 0.15% of net assets in excess of $500
million.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' 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. Because the Fund
purchases most of its portfolio securities directly from the sellers
and not through brokers, it incurs relatively little expense for
brokerage. When deciding which brokers to use, the Sub-Adviser is
permitted by the sub-advisory agreement to consider whether brokers
have sold shares of the Fund or any other funds for which the Manager
or the Sub-Adviser or their affiliates serve 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
"cumulative total return," "average annual total return" and "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 return 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
and yields 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 normally
include the payment of the maximum initial sales charge. When total
returns are shown for Class B shares, they include the applicable
contingent deferred sales charge. Total returns may also be quoted "at
net asset value," without including the sales charge, and those returns
would be reduced if sales charges were deducted.
- Yield. Each class of shares calculates its yield by dividing
the annualized net investment income per share on the portfolio during
a 30-day period by the maximum offering price on the last day of the
period. The yield of each class will differ because of the different
expenses of each class of shares. The yield data represents a
hypothetical investment return on the portfolio, and does not measure
an investment return based on dividends actually paid to shareholders.
To show that return, a dividend yield may be calculated. Dividend
yield is calculated by dividing the dividends of a class derived from
net investment income during a stated period by the maximum offering
price on the last day of the period. Yields and dividend yields for
Class A shares reflect the deduction of the maximum initial sales
charge, but may also be shown based on 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 a graphical comparison of the Fund's performance to
an appropriate broad-based market index.
- Management's Discussion of Performance. In 1994, the Federal
Reserve aggressively moved to raise short term interest rates in an
effort to control inflation. As interest rates rose, the bond market
declined. In response to the rising interest rates in the U.S., the
Manger reduced the Fund's exposure to long-term U.S. Government
treasury securities whose performance tends to lag investment-grade
corporate bonds in the mid-to-late stages of economic expansion. The
Manager moved to position the Fund's assets somewhat more
conservatively by increasing its holdings in asset-backed issues and
mortgage-backed bonds which generally are more stable and predictable
in periods of rising interest rates and which the Manager viewed as
offering high credit quality and attractive yields. While waiting for
the bond market to stabilize, the Manager increased the Fund's holdings
in short-term money market securities.
- Comparing the Fund's Performance to the Market. The chart
below shows 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, from the inception of the class on April 15,
1988, and in the case of Class B shares, from the inception of the
class on May 1, 1994.
The performance of each class of the Fund's shares is compared to
the performance of the Lehman Brothers Corporate Bond Index, a broad-
based, unmanaged index of publicly-issued nonconvertible investment
grade corporate debt of U.S. issuers, widely recognized as a measure of
the U.S. fixed-rate corporate bond market. It includes a factor for
the reinvestment of interest, but does not reflect expenses or taxes.
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 the securities in any one 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 Investment in
Oppenheimer Investment Grade Bond Fund Class A Shares
and the Lehman Brothers Corporate Bond Index
(Graphs)
Past Performance is not predictive of future performance.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes
of shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
- Class A Shares. When 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 Class
A 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 in "Class A Shares".
- Class B Shares. When 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 that
varies depending on how long you own your shares. It is described
below in "Class B Shares".
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.
- How Long Do You Expect To Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long
you expect to hold your investment will assist you in selecting the
appropriate class of shares. 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, 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.
And for investors who invest $500,000 or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares
from a single investor.
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 contingent deferred
sales charge) in non-retirement accounts for Class B shareholders, you
should carefully review how you plan to use your investment account
before deciding which class of shares to buy. 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. Share certificates are not
available for Class C shares and if you are considering using your
shares as collateral for a loan, that may be a factor to consider.
- 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 for Class B shares
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; 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 from your bank account 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, or to have the Transfer Agent send redemption proceeds, or
transmit dividends and distributions to your bank account.
Shares are purchased for your account by 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 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 the close of The New York
Stock Exchange on each day the 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 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 a portion allocated to your dealer as
commission. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
<TABLE>
<CAPTION>
________________________________________________________________________________
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_________________________________________________________________________________
<S> <C> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%
$50,000 or more but
less than $100,000 4.50% 4.71% 3.75%
$100,000 or more but
less than $250,000 3.50% 3.63% 2.75%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
<FN>
__________________
The Distributor reserves the right to reallow the entire commission to dealers. If that occurs, the dealer may be considered
an "underwriter" under Federal securities laws.
</TABLE>
- 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") will 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 own
accounts, for your joint accounts, 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, (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 the 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 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 Declaration of Trust or adopted by
the Board of Trustees, and (5) Class A shares that would otherwise be
subject to the Class A contingent deferred sales charge are redeemed,
but at the time the purchase order for your shares was placed, the
dealer agreed 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 would be 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 Trustees
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. 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:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
Beginning of Month in Which on Redemptions in that Year
Purchase Order Was Accepted (As % of Amount Subject to Charge)
<S> <C>
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- 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 from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary 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
compensate 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 asset-based sales charge and service fees
increase Class B expenses by up to 1.00% of average net assets per
year.
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
(and the first year's service fee) 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 $184,525 (equal to 5.35% 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 Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor
for certain expenses it incurred before the Plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to enable
you to send money electronically between those accounts to perform a
number of types of account transactions. These include purchases of
shares by telephone (either through a service representative or by
PhoneLink, described below), automatic investments under Asset Builder
Plans, and sending dividends and distributions or Automatic Withdrawal
Plan payments directly to your bank account. Please refer to the
Application for details or call the Transfer Agent for more
information.
AccountLink privileges should be requested on the Application you
use to buy shares, or on your dealer's settlement instructions if you
buy your shares through your dealer. After your account is established,
you can request AccountLink privileges 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 sales charge. This privilege applies only to
redemptions of Class A shares or to redemptions of Class B shares of
the Fund that you purchased by reinvesting dividends or distributions
or 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 SARSEP-
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, by using the
Fund's Checkwriting privilege 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:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send Courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be received
by the Transfer Agent by the close of The New York Stock Exchange that
day, which is normally 4:00 P.M., but may be earlier on some days.
Shares held in an OppenheimerFunds retirement plan or under a share
certificate may not be redeemed 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, once 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. This service is not available within 30 days
of changing the address on an account.
- Telephone Redemptions Through AccountLink. 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.
Checkwriting. To be able to write checks against your Fund account,
you may request that privilege on your account Application or you can
contact the Transfer Agent for signature cards, which must be signed
(with a signature guarantee) by all owners of the account and returned
to the Transfer Agent so that checks can be sent to you to use.
Shareholders with joint accounts can elect in writing to have checks
paid over the signature of one owner.
- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
- Checkwriting privileges are not available for accounts holding
Class B shares or Class A shares that are subject to a contingent
deferred sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value.
Remember: your shares fluctuate in value and you should not
write a check close to the
total account value.
- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments
within the prior 10 days.
- Don't use your checks if you changed your Fund account number.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements For Repurchase of
Shares From Dealers And Brokers" in the Statement of Additional
Information for more details.
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 and/or Class
C 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 names and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of eligible OppenheimerFunds currently
available for exchanges in the Statement of Additional Information or
obtain their names 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 Trustees 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, and
call options and hedging instruments. 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 Trustees 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 and Class B shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. 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 $1,000 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 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 and
Class B shares from net investment income on each regular business day
and pays those dividends to shareholders monthly. Normally, dividends
are paid on the last business day of every month, but the Board of
Trustees can change that date. Distributions may be made monthly from
any net short-term capital gains the Fund realizes in selling
securities. It is expected that distributions paid with respect to
Class A shares will generally be higher than for Class B shares because
expenses allocable to Class B shares will generally be higher.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, 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 hold
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.
<PAGE>
Appendix
Description of Securities Ratings
Description of Standard & Poor's Corporation ("Standard & Poor's") and
Moody's Investors Service, Inc. ("Moody's") bond ratings:
Standard & Poor's describes its four highest ratings for corporate debt
as follows:
AAA: Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in a
small degree.
A: Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB: Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating
categories.
Moody's describes its four highest corporate bond ratings as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment
attributes and may be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER INVESTMENT GRADE BOND FUND
Graphic material included in Prospectus of Oppenheimer Investment
Grade Bond Fund: "Comparison of Total Return of Oppenheimer Investment
Grade Bond Fund and The Lehman Brothers Corporate Bond Index - Change
in Value of a $10,000 Hypothetical Investment"
Linear graphs will be included in the Prospectus of Oppenheimer
Investment Grade Bond Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 in the
Fund. In the case of the Fund's Class A shares, that graph will cover
each of the Fund's fiscal years since the inception of the class on
April 15, 1988 through December 31, 1995 and in the case of Class B
shares the graph will cover the period from the inception of the class
on May 1, 1993 through December 31, 1994. The graphs will compare such
values with the same investments over the same time periods with The
Lehman Brothers Corporate Bond Index. Set forth below are the relevant
data points that will appear on the linear graphs. Additional
information with respect to the foregoing, including a description of
The Lehman Brothers Corporate Bond Index, is set forth in the
Prospectus under "Performance of the Fund -- Comparing the Fund's
Performance to the Market"
<TABLE>
<CAPTION>
Oppenheimer Lehman Brothers
Fiscal Year Investment Grade Corporate
(Period) Ended Bond Fund A Bond Index
<S> <C> <C>
04/15/88 $9,525 $10,000
12/31/88 $9,952 $10,368
12/31/89 $11,077 $11,885
12/31/90 $11,602 $12,759
12/31/91 $13,723 $15,170
12/31/92 $14,653 $16,392
12/31/93 $16,163 $18,310
12/31/94 $15,538 $17,530
Oppenheimer Lehman Brothers
Fiscal Year Investment Grade Corporate
(Period) Ended Bond Fund B(1) Bond Index
05/01/93 $10,000 $10,000
12/31/93 $10,391 $10,503
12/31/94 $9,559 $10,056
<FN>
- ----------------------
(1) Class B shares of the Fund were first publicly offered on May 1, 1993.
</TABLE>
<PAGE>
Oppenheimer Investment Grade Bond Fund
3410 South Galena Street, Denver, Colorado 80231
Telephone: 1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing 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., Massachusetts Mutual Life Insurance Company, 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 offer in
such state.
PR0285.001.0595 *Printed on recycled paper
<PAGE>
OPPENHEIMER INVESTMENT GRADE BOND FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated May 1, 1995.
This Statement of Additional Information of Oppenheimer Investment
Grade Bond Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the
Prospectus dated May 1, 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.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How to Buy Shares
How to Sell Shares
How to Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Appendix A: Description of Securities Ratings A-1
Appendix B: Industry Classification B-1
Independent Auditors' Report
Financial Statements
<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 those policies and the types of
securities in which the Fund invests, as well as the strategies the
Fund may use to try to achieve its objective. Certain capitalized
terms used in this Statement of Additional Information have the same
meaning as those terms have in the Prospectus.
- Investment Risks. All fixed-income securities are subject to
two types of risks: credit risk and interest rate risk. Credit risk
relates to the ability of the issuer to meet interest or principal
payments or both as they become due. Generally, higher yielding bonds
are subject to credit risk to a greater extent than higher quality
bonds. Interest rate risk refers to the fluctuations in value of
fixed-income securities resulting solely from the inverse relationship
between price and yield of outstanding fixed-income securities. An
increase in prevailing interest rates will generally reduce the market
value of fixed-income investments, and a decline in interest rates
will tend to increase their value. In addition, debt securities with
longer maturities, which tend to produce higher yields, are subject to
potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Fluctuations in the market value
of fixed-income securities subsequent to their acquisition will not
affect the interest payable on those securities, and thus the cash
income from such securities, but will be reflected in the valuations of
these securities used to compute the Fund's net asset values.
- Short-Term Debt Securities. The high quality, short-term money
market instruments in which the Fund may invest include U.S. Treasury
and agency obligations; commercial paper (short-term, unsecured,
negotiable promissory notes of a domestic or foreign company) which, at
the time of purchase, are rated in the two highest rating categories
for commercial paper by S&P or Moody's or, if unrated, is issued by
companies having an outstanding debt issue currently rated at least A
by S&P or Moody's; short-term obligations of corporate issuers which
are rated in the two highest rating categories for corporate debt
securities by S&P or Moody's at the date of investment; bank
participation certificates provided that at the date of investment each
of the underlying loans is made to an issuer of securities rated at
least A-2, AA or SP-2 by S&P or P-2 or Aa by Moody's and also provided
the underlying loans have a remaining maturity of one year or less, and
certificates of deposit and bankers' acceptances (time drafts drawn on
commercial banks usually in connection with international transactions)
of banks and savings and loan associations.
Securities of Foreign Governments and Companies. As stated in the
Prospectus, the Fund may invest in debt obligations (which may be
dominated in U.S. dollars or non-U.S. currencies) issued or guaranteed
by foreign corporations, certain supranational entities (described
below) and foreign governments or their agencies or instrumentalities.
The percentage of the Fund's assets that will be allocated to
foreign securities will vary from time to time depending on, among
other things, the relative yields of foreign and U.S. securities, the
economies of foreign countries, the condition of such countries'
financial markets, the interest rate climate of such countries and the
relationship of such countries' currency to the U.S. dollar. The
Manager will consider an issuer's affiliation, if any, with a foreign
government as one of the factors in determining whether to purchase any
particular foreign security. These factors are judged on the basis of
fundamental economic criteria (e.g., relative inflation levels and
trends, growth rate forecasts, balance of payments status, and economic
policies) as well as technical and political data. The Fund's
portfolio of foreign securities may include those of a number of
foreign countries or, depending upon market conditions, those of a
single country.
Investments in foreign securities offer potential benefits not
available from investments solely in securities of domestic issuers, by
offering 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 bond or
other markets that do not move in a manner parallel to U.S. markets.
From time to time, 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
reimposed.
Securities of foreign issuers that are represented by American
depository receipts, or that are listed on a U.S. securities exchange,
or are traded in the U.S. over-the-counter market are not considered
"foreign securities," because they are not subject to many of the
special considerations and risks (discussed below) that apply to
foreign securities traded and held abroad. If the Fund's securities
are held abroad, the countries in which such securities may be held and
the sub-custodians holding must be, in most cases, approved by the
Fund's Board of Trustees under applicable SEC rules.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government.
Obligations of "supranational entities" include those of international
organizations designated or supported by governmental entities to
promote economic reconstruction or development and of international
banking institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the "World
Bank"), the European Coal and Steel Community, the Asian Development
Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," of these entities usually make initial
capital contributions to the supranational entity and in many cases are
committed to make additional capital contributions if the supranational
entity is unable to repay its borrowings. Each supranational entity's
lending activities are limited to a percentage of its total capital
(including "callable capital" contributed by members at the entity's
call), reserves and net income. There is no assurance that foreign
governments will be able or willing to honor their commitments.
Investing in foreign securities involves considerations and
possible risks not typically associated with investing in securities in
the U.S. The values of foreign securities will be affected by changes
in currency rates or exchange control regulations or currency blockage,
application of foreign tax laws, including withholding taxes, changes
in governmental administration or economic or monetary policy (in the
U.S. or abroad) or changed circumstances in dealings between nations.
There may be a lack of public information about foreign issuers.
Foreign countries may not have financial reporting, accounting and
auditing standards comparable to those that apply to U.S. issuers.
Costs will be incurred in connection with conversions between various
currencies. Foreign brokerage commissions are generally higher than
commissions in the U.S., and foreign securities markets may be less
liquid, more volatile and less subject to governmental regulation than
in the U.S. They may have increased delays in settling portfolio
transactions. Investments in foreign countries could be affected by
other factors not generally thought to be present in the U.S.,
including expropriation or nationalization, confiscatory taxation and
potential difficulties in enforcing contractual obligations, and could
be subject to extended settlement periods.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets and its income available for distribution. In addition,
although a portion of the Fund's investment income may be received or
realized in foreign currencies, the Fund will be required to compute
and distribute its income in U.S. dollars, and absorb the cost of
currency fluctuations. The Fund may engage in foreign currency
exchange transactions for hedging purposes to protect against changes
in future exchange rates. See "Other Investment Techniques and
Strategies - Hedging," below.
The values of foreign investments and the investment income
derived from them may also be affected unfavorably by changes in
currency exchange control regulations. Although the Fund will invest
only in securities denominated in foreign currencies that at the time
of investment do not have significant government-imposed restrictions
on conversion into U.S. dollars, there can be no assurance against
subsequent imposition of currency controls. In addition, the values of
foreign securities will fluctuate in response to a variety of factors,
including changes in U.S. and foreign interest rates.
U.S. Government Securities. U.S. Government Securities are debt
obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities, and include "zero coupon" Treasury
securities and mortgage-backed securities and CMOs.
- Mortgage-Backed Securities. These securities represent
participation interests in pools of residential mortgage loans which
are guaranteed by agencies or instrumentalities of the U.S. Government.
Such securities differ from conventional debt securities which
generally provide for periodic payment of interest in fixed or
determinable amounts (usually semi-annually) with principal payments at
maturity or specified call dates. Some mortgage-backed securities in
which the Fund may invest may be backed by the full faith and credit of
the U.S. Treasury (e.g., direct pass-through certificates of Government
National Mortgage Association); some are supported by the right of the
issuer to borrow from the U.S. Government (e.g., obligations of Federal
Home Loan Mortgage Corporation); and some are backed by only the credit
of the issuer itself. Those guarantees do not extend to the value of
or yield of the mortgage-backed securities themselves or to the net
asset value of the Fund's shares. Any of these government agencies may
also issue collateralized mortgage-backed obligations ("CMOs"),
discussed below.
The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual
life of any particular pool will be shortened by any unscheduled or
early payments of principal and interest. Principal prepayments
generally result from the sale of the underlying property or the
refinancing or foreclosure of underlying mortgages. The occurrence of
prepayments is affected by a wide range of economic, demographic and
social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. Yield on such pools
is usually computed by using the historical record of prepayments for
that pool, or, in the case of newly-issued mortgages, the prepayment
history of similar pools. The actual prepayment experience of a pool
of mortgage loans may cause the yield realized by the Fund to differ
from the yield calculated on the basis of the expected average life of
the pool.
Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will
most likely decline. When prevailing interest rates rise, the value of
a pass-through security may decrease as do the values of other debt
securities, but, when prevailing interest rates decline, the value of a
pass-through security is not likely to rise to the extent that the
value of other debt securities rise, because of the prepayment feature
of pass-through securities. The Fund's reinvestment of scheduled
principal payments and unscheduled prepayments it receives may occur at
times when available investments offer higher or lower rates than the
original investment, thus affecting the yield of the Fund. Monthly
interest payments received by the Fund have a compounding effect which
may increase the yield to the Fund more than debt obligations that pay
interest semi-annually. Because of those factors, mortgage-backed
securities may be less effective than Treasury bonds of similar
maturity at maintaining yields during periods of declining interest
rates. The Fund may purchase mortgage-backed securities at par, at a
premium or at a discount. Accelerated prepayments adversely affect
yields for pass-through securities purchased at a premium (i.e., at a
price in excess of their principal amount) and may involve additional
risk of loss of principal because the premium may not have been fully
amortized at the time the obligation is repaid. The opposite is true
for pass-through securities purchased at a discount.
The Fund may invest in "stripped" mortgage backed securities, in
which the principal and interest portions of the security are separated
and sold. Stripped mortgage-backed securities usually have at least
two classes each of which receives different proportions of interest
and principal distributions on the underlying pool of mortgage assets.
One common variety of stripped mortgage-backed security has one class
that receives some of the interest and most of the principal, while the
other class receives most of the interest and remainder of the
principal. In some cases, one class will receive all of the interest
(the "interest-only" or "IO" class), while the other class will receive
all of the principal (the "principal-only" or "PO" class). Interest
only securities are extremely sensitive to interest rate changes, and
prepayments of principal on the underlying mortgage assets. An
increase in principal payments or prepayments will reduce the income
available to the IO security. In other types of CMOs, the underlying
principal payments may apply to various classes in a particular order,
and therefore the value of certain classes or "tranches" of such
securities may be more volatile than the value of the pool as a whole,
and losses may be more severe than on other classes.
Mortgage-backed securities may be less effective than debt
obligations of similar maturity at maintaining yields during periods of
declining interest rates. As new types of mortgage-related securities
are developed and offered to investors, the Manager will, subject to
the direction of the Board of Trustees and consistent with the Fund's
investment objective and policies, consider making investments in such
new types of mortgage-related securities.
- GNMA Certificates. Certificates of Government National
Mortgage Association ("GNMA") are mortgage-backed securities of GNMA
that evidence an undivided interest in a pool or pools of mortgages
("GNMA Certificates"). The GNMA Certificates that the Fund may
purchase are of the "modified pass-through" type, which entitle the
holder to receive timely payment of all interest and principal payments
due on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether the mortgagor actually makes the payments when
due.
The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or
guaranteed by the Veterans Administration ("VA"). The GNMA guarantee
is backed by the full faith and credit of the U.S. Government. GNMA is
also empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.
The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages
in the pool. Foreclosures impose no risk to principal investment
because of the GNMA guarantee, except to the extent that the Fund has
purchased the certificates at a premium in the secondary market.
- FNMA Securities. The Federal National Mortgage Association
("FNMA") was established to create a secondary market in mortgages
insured by the FHA. FNMA issues guaranteed mortgage pass-through
certificates ("FNMA Certificates"). FNMA Certificates resemble GNMA
Certificates in that each FNMA Certificate represents a pro rata share
of all interest and principal payments made and owed on the underlying
pool. FNMA guarantees timely payment of interest and principal on FNMA
Certificates. The FNMA guarantee is not backed by the full faith and
credit of the U.S. Government.
- FHLMC Securities. The Federal Home Loan Mortgage Corporation
("FHLMC") was created to promote development of a nationwide secondary
market for conventional residential mortgages. FHLMC issues two types
of mortgage pass-through certificates ("FHLMC Certificates"): mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a
pro rata share of all interest and principal payments made and owed on
the underlying pool. FHLMC guarantees timely monthly payment of
interest on PCs and the ultimate payment of principal. The FHLMC
guarantee is not backed by the full faith and credit of the U.S.
Government.
GMCs also represent a pro rata interest in a pool of mortgages.
However, these instruments pay interest semi-annually and return
principal once a year in guaranteed minimum payments. The expected
average life of these securities is approximately ten years. The FHLMC
guarantee is not backed by the full faith and credit of the U.S.
Government.
- Collateralized Mortgage-Backed Obligations ("CMOs"). CMOs are
fully-collateralized bonds that are the general obligations of the
issuer thereof, either the U.S. Government, a U.S. government
instrumentality, or a private issuer, which may be a domestic or
foreign corporation. Such bonds generally are secured by an assignment
to a trustee (under the indenture pursuant to which the bonds are
issued) of collateral consisting of a pool of mortgages. Payments with
respect to the underlying mortgages generally are made to the trustee
under the indenture. Payments of principal and interest on the
underlying mortgages are not passed through to the holders of the CMOs
as such (i.e., the character of payments of principal and interest is
not passed through, and therefore payments to holders of CMOs
attributable to interest paid and principal repaid on the underlying
mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to
payment of interest on and repayment of principal of the CMOs. CMOs
often are issued in two or more classes with different characteristics
such as varying maturities and stated rates of interest. Because
interest and principal payments on the underlying mortgages are not
passed through to holders of CMOs, CMOs of varying maturities may be
secured by the same pool of mortgages, the payments on which are used
to pay interest on each class and to retire successive maturities in
sequence. Unlike other mortgage-backed securities (discussed above),
CMOs are designed to be retired as the underlying mortgages are repaid.
In the event of prepayment on such mortgages, the class of CMO first to
mature generally will be paid down. Therefore, although in most cases
the issuer of CMOs will not supply additional collateral in the event
of such prepayment, there will be sufficient collateral to secure CMOs
that remain outstanding.
- Asset-Backed Securities. The value of an asset-backed security
is affected by changes in the market's perception of the asset backing
the security, the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution
providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. The risks of investing in asset-backed
securities are ultimately dependent upon payment of consumer loans by
the individual borrowers. As a purchaser of an asset-backed security,
the Fund would generally have no recourse to the entity that originated
the loans in the event of default by a borrower. The underlying loans
are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner
as described above for the prepayments of a pool of mortgage loans
underlying mortgage-backed securities.
Other Investment Techniques And Strategies
- Hedging with Options and Futures Contracts. The Fund may
employ one or more types of Hedging Instruments for the purposes
described in the Prospectus. 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 Futures, (ii) purchase puts
on such Futures or securities, or (iii) write calls on securities held
by it or on Futures. When hedging to attempt to protect against the
possibility that portfolio securities are not fully included in a rise
in value of the debt securities market, the Fund may: (i) purchase
Futures, or (ii) purchase calls on such Futures or on securities.
Covered calls and puts may also be written on debt securities to
attempt to increase the Fund's income. When hedging to protect against
declines in the dollar value of a foreign currency-denominated
security, the Fund may: (a) purchase puts on that foreign currency and
on foreign currency Futures, (b) write calls on that currency or on
such Futures, or (c) enter into Forward Contracts at a lower rate than
the spot ("cash") rate.
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. At present, the Fund does not intend to
enter into Futures, Forward Contracts and options on Futures if, after
any such purchase, the sum of margin deposits on Futures and premiums
paid on Futures options exceeds 5% of the value of the Fund's total
assets. 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 Call Options. The Fund may write (i.e. sell) call
options ("calls") on debt securities that are traded on U.S. and
foreign securities exchanges and over-the-counter markets, to enhance
income through the receipt of premiums from expired calls and any net
profits from closing purchase transactions. After any such sale up to
100% of the Fund's total assets may be subject to calls. All such
calls written by the Fund must be "covered" while the call is
outstanding (i.e. the Fund must own the securities subject to the call
or other securities acceptable for applicable escrow requirements).
Calls on Futures (discussed below) must be covered by deliverable
securities or by liquid assets segregated to satisfy the Futures
contract. 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 was 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. 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.
The Fund may also write calls on Futures without owning a futures
contract or a deliverable bond, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an
equivalent dollar amount of liquid assets. The Fund will segregate
additional liquid assets if the value of the escrowed assets drops
below 100% of the current value of the Future. In no circumstances
would an exercise notice require the Fund to deliver a futures
contract; it would simply put the Fund in a short futures position,
which is permitted by the Fund's hedging policies.
- Writing Put Options. The Fund may write put options on debt
securities or Futures but only if such puts are covered by segregated
liquid assets. The Fund will not write puts if, as a result, more than
50% of the Fund's net assets would be required to be segregated to
cover such put obligations. In writing puts, there is the risk that
the Fund may be required to buy the underlying security at a
disadvantageous price. 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.
The Trustees have adopted a non-fundamental policy that the Fund
may write covered call options or write covered put options with
respect to not more than 5% of the value of its net assets. Similarly,
the Fund may only purchase call options and put options with a value of
up to 5% of its net assets.
- Purchasing Puts and Calls. The Fund may purchase calls in
order to protect against the possibility that the Fund's portfolio will
not fully participate in an anticipated rise in value of the long-term
debt securities market. When the Fund purchases a call, it pays a
premium (other than in a closing purchase transaction) and, except as
to calls on bond indices, 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. 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, 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 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 (a "protective put")
enables the Fund to attempt to protect itself during the put period
against a decline in the value of the underlying investment below the
exercise price by selling the 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 and the Fund will lose the premium payment
and the right to sell the underlying investment. However, the put may
be sold prior to expiration (whether or not at a profit).
Purchasing either a put on Interest Rate Futures or on debt
securities it does not own permits the Fund either to resell the put or
to 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 the expiration date. In
the event of a decline in price of the underlying investment, the Fund
could exercise or sell the put at a profit to attempt to offset some or
all of its loss on its portfolio securities. When the Fund purchases a
put on an Interest rate Future or debt security not held by it, the put
protects the Fund to the extent that the prices of the underlying
Future or debt securities move in a similar pattern of the debt
securities in the Fund's portfolio.
The Fund's option activities may affect its portfolio 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. The exercise by the Fund of puts on
securities will cause the sale of underlying investments, increasing
portfolio turnover. Although the decision whether to exercise a put it
holds is within the Fund's control, holding a put might cause the Fund
to sell the related investments for reasons that would not exist in the
absence of the put. The Fund will pay a brokerage commission each time
it buys or sells a call, put or an underlying investment in connection
with the exercise of a put or call. Those commissions may be higher
than the commissions for direct purchases or sales of the underlying
investments.
Premiums paid for options are small in relation to the market
value of the underlying 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.
- Options on Foreign Currencies. The Fund intends to write and
purchase calls on foreign currencies. The Fund may purchase and write
puts and calls on foreign currencies that are traded on a securities or
commodities exchange or quoted by major recognized dealers in such
options, for the purpose of protecting against declines in the dollar
value of foreign securities and against increases in the dollar cost of
foreign securities to be acquired. If a rise is anticipated in the
dollar value of a foreign currency in which securities to be acquired
are denominated, the increased cost of such securities may be partially
offset by purchasing calls or writing puts on that foreign currency.
If a decline in the dollar value of a foreign currency is anticipated,
the decline in value of portfolio securities denominated in that
currency may be partially offset by writing calls or purchasing puts on
that foreign currency. However, in the event of currency rate
fluctuations adverse to the Fund's position, it would lose the premium
it paid and transactions costs.
A call written on a foreign currency by the Fund is covered if the
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration
held in a segregated account by its custodian) upon conversion or
exchange of other foreign currency held in its portfolio. A call may
be written by the Fund on a foreign currency to provide a hedge against
a decline due to an expected adverse change in the exchange rate in the
U.S. dollar value of a security which the Fund owns or has the right to
acquire and which is denominated in the currency underlying the option.
This is a cross-hedging strategy. In such circumstances, the Fund
collateralizes the option by maintaining in a segregated account with
the Fund's custodian, cash or U.S. Government Securities in an amount
not less than the value of the underlying foreign currency in U.S.
dollars marked-to-market daily.
- Futures. The Fund may buy and sell Futures. No price is paid
or received upon the purchase or sale of an Interest Rate Future or a
foreign currency exchange contract ("Forward Contract"), discussed
below. An Interest Rate Future obligates the seller to deliver and the
purchaser to take a specific type of debt security at a specific future
date for a fixed price. That obligation may be satisfied by actual
delivery of the debt security or by entering into an offsetting
contract. A securities index assigns relative values to the securities
included in that index and is used as a basis for trading long-term
Financial Futures contracts. Financial Futures reflect the price
movements of securities included in the index. They differ from
Interest Rate Futures in that settlement is made in cash rather than by
delivery of the underlying investment.
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"). The
initial margin 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 specified conditions.
As the Future is marked to market to reflect changes in its market
value, subsequent margin payments, called variation margin, will be
made to or by the futures broker on a daily basis.
At any time prior to the expiration of the Future, if the Fund
elects to close out its position by taking an opposite position, a
final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or gain is
realized for tax purposes. Although Interest Rate Futures by their
terms call for settlement by delivery or acquisition of debt
securities, in most cases the obligation is fulfilled by entering into
an offsetting position. All futures transactions are effected through
a clearinghouse associated with the exchange on which the contracts are
traded.
- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. 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 enter into a Forward Contract in order to
"lock in" the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet settled,
or to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency.
There is a risk that 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. Forward contracts include
standardized foreign currency futures contracts which are traded on
exchanges and are subject to procedures and regulations applicable to
other Futures. The Fund may also enter into a forward contract to sell
a foreign currency denominated in a currency other than that in which
the underlying security is denominated. This is done in the
expectation that there is a greater correlation between the foreign
currency of the forward contract and the foreign currency of the
underlying investment than between the U.S. dollar and the foreign
currency of the underlying investment. This technique is referred to
as "cross hedging." The success of cross hedging is dependent on many
factors, including the ability of the Manager to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar.
To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the
cross currency hedge.
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.
There is no limitation as to the percentage of the Fund's assets
that may be committed to foreign currency exchange contracts. The Fund
does not enter into such forward contracts or maintain a net exposure
in such contracts to the extent that the Fund would be obligated to
deliver an amount of foreign currency in excess of the value of the
Fund's assets denominated in that currency, or enter into a "cross
hedge," unless it is denominated in a currency or currencies that the
Manager believes will have price movements that tend to correlate
closely with the currency in which the investment being hedged is
denominated. See "Tax Aspects of Covered Calls and Hedging
Instruments" below for a discussion of the tax treatment of foreign
currency exchange contracts.
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's Custodian will place cash or U.S. Government securities
or other liquid high-quality debt securities in a separate account of
the Fund with the Custodian having a value equal to the aggregate
amount of the Fund's commitments under forward contracts entered into
with respect to position hedges and cross hedges. If the value of the
securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the
value of the account will equal the amount of the Fund's obligations
with respect to such contracts. As an alternative to maintaining all
or part of the separate account, 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 that master agreement shall be
regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap
transactions, the net amount payable on that date in that currency
shall be paid. In addition, the master netting agreement may provide
that if one party defaults generally or on one swap, the counterparty
may terminate the swaps with that party. Under such agreements, if
there is a default resulting in a loss to one party, the measure of
that party's damages is calculated by reference to the average cost of
a replacement swap with respect to each swap (i.e., the mark-to-market
value at the time of the termination of each swap). The gains and
losses on all swaps are then netted, and the result is the
counterparty's gain or loss on termination. The termination of all
swaps and the netting of gains and losses on termination is generally
referred to as "aggregation".
- 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.
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 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.
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 ("SEC") is evaluating whether OTC
options should be considered liquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
- Regulatory Aspects of Hedging Instruments. The 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 Rule 4.5
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 initial futures margin and related option
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. Under the Rule, the Fund also must use short Futures and
Futures options positions solely for "bona fide hedging purposes"
within the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in
one or more accounts or through one or more exchanges or 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 or an affiliated investment
adviser. Position limits also apply to Futures. An exchange may order
the liquidation of positions found to be in violation of those limits
and may impose certain other sanctions. Due to requirements under the
Investment Company Act, when the Fund purchases a Future, the Fund will
maintain, in a segregated account or accounts with its custodian bank,
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 Bond 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 options which
expire in less than three months; (iii) effecting closing transactions
with respect to calls or puts written or purchased less than three
months previously; (iv) exercising puts or calls held by the Fund for
less than three months; or (v) writing calls on investments held 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
mark-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.
- Possible Risk Factors in Hedging. In addition to the risks
with respect to options discussed in the Prospectus and above, there is
a risk in using short hedging by selling Futures to attempt to protect
against decline in value of the Fund's portfolio securities (due to an
increase in interest rates) that the prices of such Futures will
correlate imperfectly with the behavior of the cash (i.e., market
value) prices of the Fund's securities. The ordinary spreads between
prices in the cash and futures markets are subject to distortions due
to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets 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.
- 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, 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 by the Trust's
Board of Trustees from time to time), for delivery on an agreed upon
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 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. Additionally, the Sub-
Adviser will continuously monitor the collateral's value.
- 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 Trustees
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.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the
loan collateral on each business day must at least equal the value of
the loaned securities and must consist of cash, bank letters of credit
or securities of the U.S. Government (or its agencies or
instrumentalities). 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. When it lends securities, the Fund receives
amounts equal to the dividends or interest on loaned securities and
also receives one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral, and (c) interest on short-term debt
securities purchased with such loan collateral. Either type of
interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian and administrative fees. In connection
with securities lending, the Fund might experience risks of delay in
receiving additional collateral, or risks of delay in recovery of
securities, or loss of rights in the collateral should the borrower
fail financially. The terms of the Fund's loans must meet applicable
tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on
any important matter.
- When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms
and indenture are available and for which a market exists, but which
are not available for immediate delivery. When such transactions are
negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The Fund does not intend to
make such purchases for speculative purposes. The commitment to
purchase a security for which payment will be made on a future date may
be deemed a separate security and involve a risk of loss if the value
of the security declines prior to the settlement date. During the
period between commitment by the Fund and settlement (generally within
two months but not to exceed 120 days), no payment is made for the
securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will maintain a segregated account with its Custodian,
consisting of cash, U.S. Government securities or other high grade debt
obligations at least equal to the value of purchase commitments until
payment is made.
The Fund will engage in when-issued transactions in order to
secure what is considered to be an advantageous price and yield at the
time of entering into the obligation. When the Fund engages in when-
issued or delayed delivery transactions, it relies on the buyer or
seller, as the case may be, to consummate the transaction. Failure of
the buyer or seller to do so may result in the Fund losing the
opportunity to obtain a price and yield considered to be advantageous.
At the time the Fund makes a commitment to purchase or sell a security
on a when-issued or forward commitment basis, it records the
transaction and reflects the value of the security purchased, or if a
sale, the proceeds to be received, in determining its net asset value.
If the Fund chooses to (i) dispose of the right to acquire a when-
issued security prior to its acquisition or (ii) dispose of its right
to deliver or receive against a forward commitment, it may incur a gain
or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and
not for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or
delivering the securities, although (as noted above), when-issued
securities and forward commitments may be sold prior to settlement
date. In addition, changes in interest rates before settlement in a
direction other than that expected by the Manager will affect the value
of such securities and may cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated
falling prices. In periods of falling interest rates and rising
prices, the Fund might sell portfolio securities and purchase the same
or similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth
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 shareholder meeting, if the
holders of more than 50% of the outstanding shares are present, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Trust may not, on behalf
of the Fund:
(1) act as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the Fund may be
deemed an underwriter under applicable laws;
(2) invest in oil, gas or other mineral leases, rights, royalty
contracts or exploration or development programs, real estate or
real estate mortgage loans (this restriction does not prevent the
Fund from purchasing securities secured or issued by companies
investing or dealing in real estate and by companies that are not
principally engaged in the business of buying and selling such
leases, rights, contracts or programs);
(3) purchase commodities or commodity contracts except futures
contracts, including but not limited to contracts for the future
delivery of securities and futures contracts based on securities
indexes;
(4) make loans other than by investing in obligations in which the
Fund may invest consistent with its investment objective and
policies and other than repurchase agreements and loans of
portfolio securities;
(5) pledge, mortgage or hypothecate its assets, except that, to secure
permitted borrowings, it may pledge securities having a market
value at the time of the pledge not exceeding 15% of the cost of
the Fund's total assets and except in connection with permitted
transactions in options, futures contracts and options on futures
contracts, and except for reverse repurchase agreements and
securities lending;
(6) purchase or retain securities of any issuer if, to the knowledge
of the Trust, more than 5% of such issuer's securities are
beneficially owned by officers and trustees of the Trust or
officers and directors of Massachusetts Mutual Life Insurance
Company ("MassMutual") who individually beneficially own more than
1/2 of 1% of the securities of such issuer; and
(7) make loans to an officer, trustee or employee of the Trust or to
any officer, director or employee of MassMutual, or to MassMutual.
In addition to the investment restrictions described above and
those contained in the Prospectus, the Trustees of the Trust have
voluntarily adopted certain policies and restrictions which are
observed in the conduct of the affairs of the Fund. These represent
intentions of the Trustees based upon current circumstances. They
differ from fundamental investment policies in that the following
additional investment restrictions may be changed or amended by action
of the Trustees without requiring prior notice to or approval of
shareholders. In accordance with such nonfundamental policies and
guidelines, the Fund may not: (1) invest for the purpose of exercising
control over, or management of, any company; (2) purchase any security
of a company which (including any predecessor, controlling person,
general partner and guarantor) has a record of less than three years of
continuous operations or relevant business experience , if such
purchase would cause more than 5% of the current value of the Fund's
assets to be invested in such companies; and (3) invest in securities
of other investment companies, except by purchase in the open market
where no commission or profit to a sponsor or dealer results from such
purchase other than the customary broker's commission, except when such
purchase is part of a plan of merger, consolidation, reorganization or
acquisition.
For purposes of the Fund's policy not to concentrate investments as
described in the investment restrictions in the Prospectus, the Fund
has adopted the industry classifications set forth in Appendix B to
this Statement of Additional Information. This policy is not a
fundamental policy.
How the Fund is Managed
Organization and History. The Fund is one of two series of
Oppenheimer Integrity Funds (the "Trust"). This Statement of
Additional Information may be used with the Fund's Prospectus only to
offer shares of the Fund. The Trust was established in 1982 as
MassMutual Liquid Assets Trust and changed its name to MassMutual
Integrity Funds on April 15, 1988. The Fund was reorganized from a
closed-end investment company known as MassMutual Income Investors,
Inc. into a series of the Trust on April 15, 1988. On March 29, 1991,
the Trust changed its name from MassMutual Integrity Funds to
Oppenheimer Integrity Funds and the Fund changed its name from
MassMutual Investment Grade Bond Fund to Oppenheimer Investment Grade
Bond Fund. Shares of the Fund represent an interest in the Fund
proportionately equal to the interest of each other share of the same
class and entitle the holder to one vote per share (and a fractional
vote for a fractional share) on matters submitted to their vote at
shareholders' meetings. Shareholders of the Fund and of the Trust's
other series 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 series or class vote separately on proposals which affect
that series or class, and shareholders of a series or class which is
not affected by that matter are not entitled to vote on the proposal.
For example, only shareholders of a series, such as the Fund, vote
exclusively on any material amendment to the investment advisory
agreement with respect to the series. Only shareholders of a class of
a series vote on certain amendments to the Distribution and/or Service
Plans if the amendments affect that class.
The Trustees are authorized to create new series and classes of
series. The Trustees may reclassify unissued shares of the Trust or
its series or classes into additional series or classes of shares. The
Trustees may also divide or combine the shares of a class into a
greater or lesser number of shares without thereby changing the
proportionate beneficial interest of a shareholder in the Fund. Shares
do not have cumulative voting rights or preemptive or subscription
rights. Shares may be voted in person or by proxy.
As a Massachusetts business trust, the Trust is not required to
hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust 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 Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Trust,
to remove a Trustee. The Trustees will call a meeting of shareholders
to vote on the removal of a Trustee upon the written request of the
record holders of at least 10% of its outstanding shares. In addition,
if the Trustees receive a request from at least 10 shareholders (who
have been shareholders for at least six months) holding shares of the
Trust valued at $25,000 or more or holding at least 1% of the Trust's
outstanding shares, whichever is less, stating that they wish to
communicate with other shareholders to request a meeting to remove a
Trustee, the Trustees will then either make the Trust's shareholder
list available to the applicants or mail their communication to all
other shareholders at the applicant's expense, or the Trustees may take
such other action as set forth under Section 16(c) of the Investment
Company Act.
The Trust's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Trust's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Trust) to be held personally liable as
a "partner" under certain circumstances, the risk of a Trust
shareholder incurring financial loss on account of shareholder
liability is limited to the relatively remote circumstances in which
the Fund would be unable to meet its obligations described above. Any
person doing business with the Trust, and any shareholder of the Trust,
agrees under the Trust's Declaration of Trust to look solely to the
assets of the Trust for satisfaction of any claim or demand which may
arise out of any dealings with the Trust, and the Trustees shall have
no personal liability to any such person, to the extent permitted by
law.
Trustees And Officers
The Trust's Trustees and officers and their principal occupations
and business affiliations during the past five years are listed below.
Each Trustee is also a trustee, director or managing general partner of
Oppenheimer Total Return Fund, Inc., Oppenheimer Equity Income Fund,
Oppenheimer High Yield Fund, Oppenheimer Cash Reserves, Oppenheimer
Tax-Exempt Bond Fund, Oppenheimer Limited-Term Government Fund, The New
York Tax-Exempt Income Fund, Inc., Oppenheimer Champion High Yield
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 Variable Account Funds, Daily Cash
Accumulation Fund, Inc., Centennial America Fund, L.P., Centennial
Money Market Trust, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial Tax Exempt Trust and Centennial California
Tax Exempt Trust, (collectively, the "Denver-based OppenheimerFunds").
Mr. Fossel is President and Mr. Swain is Chairman of each of the
Denver-based OppenheimerFunds. As of April 3, 1995, the Trustees and
officers of the Fund as a group owned of record or beneficially less
the 1% of each class of the Funds outstanding shares. The foregoing
does not include shares held of record by an employee benefit plan for
employees of the Manager (for which one of the officers, Mr. Donohue,
is a trustee) other than the shares beneficially owned under that plan
by the officers of the Fund listed below.
Robert G. Avis, Trustee; 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).
William A. Baker, Trustee; Age: 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; 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 Trustee*; Age: 53
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, Trustee; 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, Trustee; Age: 73
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
Robert M. Kirchner, Trustee; Age: 73
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
* A Trustee who is an interested person of the Fund as defined in the
Investment Company Act.
Ned M. Steel, Trustee; 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 Trustee*; Age: 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; President and director of Centennial
Asset Management Corporation, an investment adviser subsidiary of the
Manager ("Centennial"); formerly Chairman of the Board of SSI.
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 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; formerly Senior Vice President/Comptroller and
Secretary of OAMC.
Mary E. Wilson, Vice President and Portfolio Manager; Age: 41
Vice President and Managing Director of the Sub-Advisor; Senior Vice
President of MML Series Investment Fund; and Vice President of
MassMutual Participation Investors and MassMutual Corporate Investors.
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 of 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.
* A Trustee who is an interested person of the Fund as defined in the
Investment Company Act.
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 Trustees. The officers of the Fund are
affiliated with the Manager. They and the Trustees of the Fund who are
affiliated with the Manager (Messrs. Fossel and Swain, who are both
officers and Trustees) receive no salary or fee from the Fund. The
Trustees of the Fund (excluding Messrs. Fossel and Swain) received the
total amounts shown below from the Fund, during its fiscal year ended
December 31, 1994, and 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:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
<S> <C> <C>
Robert G. Avis $600.00 $53,000.00
Trustee
William A. Baker $829.00 $73,257.01
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $774.00 $68,293.67
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $600.00 $53,000.00
Trustee
C. Howard Kast $600.00 $53,000.00
Trustee
Robert M. Kirchner $774.00 $68,293.67
Audit and Review
Committee Member
and Trustee
Ned M. Steel $600.00 $53,000.00
Trustee
<FN>
______________________
1 For the 1994 calendar year.
</TABLE>
- Major Shareholders. As of April 3, 1995, the only entity
that owned of record or was known by the Fund to own beneficially 5% or
more of any class of the Fund's outstanding shares was MML Reinsurance
(Bermuda) Ltd., c/o Investment Services 1295 State Street, Springfield,
MA 01111-0001, which owned 777,936.187 Class A shares (7.31%) of the
Fund, and which represented less than 5% of the outstanding shares of
the Trust, and Smith Barney, Inc., 388 Greenwich Street, New York, NY
10013, which owned 102,753.693 Class B shares (17.91%) of the Fund, and
which represented less than 5% of the outstanding shares of the Trust.
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 Trust, and two of whom (Mr. Jon S. Fossel and
Mr. James C. Swain) serve as Trustees of the Trust.
The Manager, the Sub-Advisor, 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.
- The Investment Advisory Agreement. The investment advisory
agreement, dated as of March 28, 1991, between the Trust on behalf of
the Fund and the Manager 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 Distributors
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 Trustees, legal
and audit expenses, custodian and transfer agent expenses, share
issuance costs, certain printing and registration costs and non-
recurring expenses, including litigation costs.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting
from a good faith error or omission on its part with respect to any of
its duties thereunder. The advisory agreement permits the Manager to
act as investment adviser for any other person, firm or corporation and
to use the name "Oppenheimer" in connection with other investment
companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment adviser
to the Fund, the right of the Fund to use the name "Oppenheimer" as
part of its name may be withdrawn.
MassMutual serves as investment sub-adviser to the Fund
pursuant to a sub-advisory agreement between MassMutual and OMC dated
as of March 28, 1991. Under the sub-advisory agreement, MassMutual is
responsible for managing the Fund's portfolio of securities and making
investment decisions with respect to the Fund's investments, subject to
the Fund's investment policies established by the Board of Trustees of
the Trust, and in accordance with the Fund's investment objective,
policies and restrictions, set forth in the Prospectus and in this
Statement of Additional Information. The Sub-Adviser's fee is paid by
the Manager. The sub-advisory agreement has the same provisions as to
renewal, termination and the standard of care as the investment
advisory agreement, and both advisory agreements are subject to annual
approval by the Trustees, who may terminate either advisory agreement
on sixty days' notice approved by a majority of the Trustees.
The advisory agreements contain no expense limitation.
However, independently of the advisory agreements, the Manager has
undertaken that the total expenses of the Fund in any fiscal year
(including the management fee, but excluding taxes, interest, brokerage
fees, distribution plan payments, and extraordinary expenses, such as
litigation costs) shall not exceed (and the Manager undertakes to
reduce the Fund's management fee in the amount by which such expenses
shall exceed) the most stringent applicable state "blue sky" expense
limitation requirement for qualification of sale of the Fund's shares.
At present, that limitation is imposed by California and limits
expenses (with specified exclusions) to 2.5% of the first $30 million
of the Fund's average annual net assets, 2.0% of the next $70 million
of average net assets and 1.5% of average net assets in excess of $100
million. The Manager reserves the right to change or eliminate this
expense limitation at any time. The payment of the management fee at
the end of any month will be reduced so that at no time will there be
any accrued but unpaid liability under the above expense limitation.
For the fiscal years ended December 31, 1992, 1993 and 1994,
the advisory fees paid to the Manager were $491,642, $555,430 and
$522,205, respectively, of which $342,743, $380,790 and $362,287,
respectively, was paid by the Manager to the Sub-Adviser.
- The Distributor. Under the General Distributor's Agreement
between the Trust and the Distributor, the Distributor acts as the
Fund's principal underwriter in the continuous public offering of the
Fund's Class A and Class B shares, but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales
(other than those paid under the Class A and Class B Distribution and
Service Plan), 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
years ended December 31, 1992, 1993 and 1994, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $337,554,
$269,639 and $143,088, respectively, of which the Distributor and
MMLISI retained in the aggregate $213,717, $163,271 and $67,090 in
those respective years. For the fiscal year ended December 31, 1994,
the Distributor advanced $91,551 to broker-dealers on the sales of the
Funds' Class B shares, $8,449 of which went to MMLISI. In addition,
the Distributor collected $8,916 from contingent deferred sales charges
assessed on Class B shares.
- - 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 and Sub-Advisory
Agreements. One of the duties of the Sub-Adviser under the sub-advisory
agreement is to arrange the portfolio transactions of the Fund. In
doing so, the Sub-Adviser is authorized by the sub-advisory agreement
to employ broker-dealers ("brokers"), 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 Sub-Adviser need not seek competitive commission
bidding or base its selection on "posted" rates, 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 provisions of the
sub-advisory agreement and the interests and policies of the Fund as
established by the Trust's Board of Trustees. 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 sub-advisory agreement, the Sub-Adviser is authorized
to select brokers which provide brokerage and/or research services for
the Fund and/or the other accounts over which it 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 Sub-Adviser that the commission is
fair and reasonable in relation to the services provided. Most
purchases made by the Fund are principal transactions at net prices,
and the Fund incurs little or no brokerage costs. During the fiscal
year ended December 31, 1992, 1993 and 1994, no brokerage commissions
were paid by the Fund.
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
Sub-Advisors portfolio traders upon recommendations from the Sub-
Advisors 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. In either case, brokerage is allocated under the
supervision of the Manager's executive officers and the Sub-Adviser.
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 transactions in the securities
to which the option relates. Option commissions may be relatively
higher than those which would apply to direct purchases and sales of
portfolio securities. The Sub-Adviser 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 Sub-Adviser on the basis of all relevant factors and
considerations.
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 Sub-Adviser
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 Sub-Adviser in a non-research capacity (such as bookkeeping
or other administrative functions), then only the percentage or
component that provides assistance to the Sub-Adviser in the investment
decision-making process may be paid for in commission dollars. The
Board of Trustees 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 broaden the scope and
supplement the research activities of the Sub-Adviser by making
available additional views for consideration and comparisons, and
enabling the Sub-Adviser to obtain market information for the valuation
of securities held in the Fund's portfolio or being considered for
purchase. The Board, including the independent Trustees of the Trust
(those Trustees of the Trust 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 agreements
or Distribution Plans described below), annually reviews information
furnished by the Sub-Adviser 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.
Securities held by the Fund may also be held by Sub-Adviser in
its investment accounts and by other investment companies for which it
acts as investment adviser. If the same security is purchased or sold
for the Fund and such investment accounts or companies at or about the
same time, such purchases or sales normally will be combined, to the
extent practicable, and will be allocated as nearly as practicable on a
pro rata basis in proportion to the amounts to be purchased and sold.
The main factors to be considered will be the investment objectives of
the respective portfolios, the relative size of portfolio holdings of
the same or comparable security, availability of cash for investment by
the various portfolios and the size of their respective investment
commitments. It is believed that the ability of the Fund to
participate in larger volume transactions will, in most cases, produce
better execution for the Fund. In some cases, however, this procedure
could have a detrimental effect on the price and amount of a security
available to the Fund or the price at which a security may be sold. It
is the opinion of the Trust's management that such execution advantage
and the desirability of retaining the Sub-Adviser in that capacity
outweigh the disadvantages, if any, which might result from this
procedure.
Performance of the Fund
Yield and Total Return Information. As described in the
Prospectus, from time to time the "standardized yield," "dividend
yield," "average annual total return", "total return," "cumulative
total return," "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 yields and total returns
are calculated for each class and the components of those calculations
is set forth below.
The Fund's advertisement 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 on its shares. The
returns of Class A and Class B shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to a particular class.
- Standardized Yields.
- Yield. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated
using the following formula set forth in rules adopted by the
Securities and Exchange Commission that apply to all funds (other than
money market funds) that quote yields:
a-b 6
Yield = 2 ((---- + 1) -1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period
may differ from its yield for any other period. The SEC formula
assumes that the standardized yield for a 30-day period occurs at a
constant rate for a six-month period and is annualized at the end of
the six-month period. This standardized yield is not based on actual
distributions paid by the Fund to shareholders in the 30-day period,
but is a hypothetical yield based upon the net investment income from
the Fund's portfolio investments calculated for that period. The
standardized yield may differ from the "dividend yield" of that class,
described below. Additionally, because each class of shares is subject
to different expenses, it is likely that the standardized yields of the
Fund's classes of shares will differ. For the 30-day period ended
December 31, 1994, the standardized yields for the Fund's Class A and
Class B shares were 6.76% and 6.34%, respectively.
- 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)
Divided by number of days (accrual period) x 365
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.
From time to time similar yield or distribution return
calculations may also be made using the Class A net asset value
(instead of its respective maximum offering price) at the end of the
period. The dividend yields on Class A shares for distribution made on
December 30, 1994 covering the 31-day period ended December 31, 1994,
were 10.85 and 11.40% when calculated at maximum offering price and at
net asset value, respectively. The dividend yield on Class B shares
for the 30-day period ended December 31, 1994, was 10.63% when
calculated at net asset value. That distribution included amounts
distributed by the Fund for both Class A and Class B shares to avoid
paying excise tax on undistributed income at year-end as described in
Dividends, Capital Gains, and Taxes, below. Therefore, these
dividend yields are significantly higher than the divided yields for
prior months.
- 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 4.75% (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, the
payment of the applicable 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, 1.0% in the sixth year and none
thereafter, is applied, as described in the Prospectus. Total returns
also assume that all dividends and capital gains distributions during
the period are reinvested to buy additional shares at net asset value
per share, and that the investment is redeemed at the end of the
period. The "average annual total returns" on an investment in Class A
shares for the one year period ended December 31, 1994 and for the
period from April 15, 1988 (the date the Fund became an open-end Fund)
to December 31, 1994, were -8.43% and 6.79%, respectively. The
cumulative "total return" on Class A shares for the latter period was
55.38%. For the fiscal period from May 1, 1993 (inception of the
class), through December 31, 1994, the average annual total return and
the cumulative total return on an investment in Class B shares of the
Fund were -2.67% and -4.41%, respectively.
- 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 or Class
B 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 sales charges) and takes into consideration the reinvestment
of dividends and capital gains distributions. The cumulative total
returns at net asset value on the Fund's Class A shares for the fiscal
year ended December 31, 1993, and for the period from April 15, 1988 to
December 31, 1994 were -3.87 and 63.13%, respectively. The cumulative
total return at net asset value on the Fund's Class B shares for the
fiscal year-ended December 31, 1994 and for the period from May 1, 1993
through December 31, 1994 well -4.53% and -0.80%, respectively.
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.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring 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's classes is ranked
against (i) all other funds, excluding money market funds, and (ii) all
other general bond funds. The Lipper performance rankings are based on
total return that includes the reinvestment of capital gains
distributions and income dividends but does not take sales charges or
taxes into consideration.
The Fund's performance may also be compared to the performance
of the Lipper General Bond Fund Index, which is a net asset value
weighted index of general bond funds compiled by Lipper. It is
calculated with adjustments for income dividends and capital gains
distributions as of the ex-dividend date.
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 or Class B 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 or Class's
three, five and ten-year average annual total returns (when available).
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%). The
current ranking is a weighted average of the 3, 5 and 10 year rankings
(if available). Morningstar ranks the Class A and Class B shares of
the Fund in relation to other taxable bond funds. Rankings are subject
to change.
The total return on an investment in the Fund's Class A or
Class B shares may be compared with the performance for the same period
of one or more of the following indices: the Consumer Price Index, the
Salomon Brothers World Government Bond Fund Index, the Salomon Brothers
High Grade Corporate Bond Index, the Lehman Brothers
Government/Corporate Bond Index, the Lehman Brothers Aggregate Bond
Index, and the J.P. Morgan Government Bond Index. The Consumer Price
Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout
the world, including the United States. The Salomon Brothers High
Grade Corporate Bond Index generally represents the performance of high
grade long-term corporate bonds, and the Lehman Brothers
Government/Corporate Bond Index generally represents the performance of
intermediate and long-term government and investment grade corporate
debt securities. The Lehman Brothers Aggregate Bond Index generally
represents the performance of the general fixed-rate investment grade
debt market. The J.P. Morgan Government Bond Index generally represents
the performance of government bonds issued by various countries
including the United States. Each index includes a factor for the
reinvestment of interest but does not reflect expenses or taxes.
Investors may also wish to compare the Fund's Class A or Class
B return to the returns on fixed income investments available from
banks and thrift institutions, such as certificates of deposit,
ordinary interest-paying checking and savings accounts, and other forms
of fixed or variable time deposits, and various other instruments such
as Treasury bills. However, the Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily,
while bank depository obligations may be insured by the FDIC and may
provide fixed rates of return, and Treasury bills are guaranteed as to
principal and interest by the U.S. government.
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. Each Plan has been approved by
a vote of (i) the Board of Trustees of the Fund, including a majority
of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a "majority"
(as defined in the Investment Company Act) of the shares of each class.
(For the Distribution and Service Plan for the Class B shares, that
vote was cast by the Manager as the sole initial holder of Class B
shares of the Fund).
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. 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 Trustees
and its Independent Trustees 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
Trustees 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 Trustees.
While the Plans are in effect, the Treasurer of the Trust shall
provide separate written reports to the Trust's Board of Trustees 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 Trustees in the
exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those Trustees
of the Trust who are not "interested persons" of the Trust is committed
to the discretion of the Independent Trustees. 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 Trustees.
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 Trustees. Initially, the Board of Trustees
has set the fees at the maximum rate and set no minimum amount.
For the fiscal year ended December 31, 1994, payments under the
Class A Plan totaled $247,136, all of which was paid by the Distributor
to Recipients, including $154,100 paid to MMLISI.
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
0.25% 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.
Service fee payments of the asset based sales charge made under the
Class B Plan during the fiscal year ended December 31, 1994 totalled
$26,383, all of which was paid by the Distributor to Recipients,
including MMLISI.
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.
The two 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 Class B shares does
not constitute a taxable event for the holder under Federal income tax
law. If such a revenue ruling or opinion is no longer available, the
automatic conversion feature may be suspended, in which event no
further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged
for Class A shares on the basis of relative net asset value of the two
classes, without the 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 and Class B 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 Trustees, (v) custodian expenses, (vi) share
issuance costs, (vii) organization and start-up costs, (viii) interest,
taxes and brokerage commissions, and (ix) non-recurring expenses, such
as litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution and Service Plan fees,
(ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific class
rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values per
share of Class A and Class B 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 in debt securities and foreign
securities at times when the New York Stock Exchange is closed,
including weekends and holidays, or after the close of the Exchange on
a regular business day. The Fund may invest a substantial portion of
its assets in foreign securities primarily listed on foreign exchanges
or in foreign over-the-counter markets that may trade on Saturdays or
customary U.S. business holidays on which the Exchange is closed.
Because the Fund's net asset value will not be calculated on those
days, the Fund's net asset value per share may be significantly
affected on such days when shareholders may not purchase or redeem
shares.
The Trust's Board of Trustees has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a securities exchange or on NASDAQ for
which last sale information is regularly reported are valued at the
last reported sale price on their primary exchange or NASDAQ that day
(or, in the absence of sales that day, at values based on the last sale
prices of the preceding trading day or closing bid and asked prices);
(ii) NASDAQ and other unlisted equity securities for which last sales
prices are not regularly reported but for which over-the-counter market
quotations are readily available are valued at the highest closing bid
price at the time of valuation, or if no closing bid price is reported,
on the basis of a closing bid price obtained from a dealer who
maintains an active market in that security; (iii) securities
(including restricted securities) not having readily available market
quotations are valued at fair value under the Board's procedures; (iv)
unlisted debt securities having a remaining maturity in excess of 60
days are valued at the mean between the asked and bid prices determined
by a portfolio pricing service approved by the Trust's Board of
Trustees or obtained from an active market maker on the basis of
reasonable inquiry; (v) short-term debt securities having a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities traded on foreign exchanges or in foreign over-the-counter
markets are valued as determined by a portfolio pricing service,
approved by the Board, based on last sales prices reported on a
principal exchange or the mean between closing bid and asked prices and
reflect prevailing rates of exchange taken from the closing price on
the London foreign exchange market that day. Foreign currency will be
valued as close to the time fixed for the valuation date as is
reasonably practicable. The value of securities denominated in foreign
currency will be converted to U.S. dollars at the prevailing rates of
exchange at the time of valuation.
Trading in securities on European and Asian exchanges and over-
the-counter markets is normally completed before the close of The New
York Stock Exchange. Events affecting the values of foreign securities
traded in bond markets that occur between the time their prices are
determined and the close of the Exchange will not be reflected in the
Fund's calculation of net asset value unless the Board of Trustees, the
Manager, and/or the Sub-Adviser, under procedures established by the
Board of Trustees, determines that the particular event would
materially affect the Fund's net asset value, in which case an
adjustment would be made, if necessary. Foreign currency will be
valued as close to the time fixed for the valuation date as is
reasonably practicable. The values of investments denominated in
foreign currency will be converted to U.S. dollars at the prevailing
rates of exchange at the time of valuation.
In the case of U.S. Government Securities, mortgage-backed
securities, foreign government 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 Trust's Board of Trustees has
authorized the Manager and/or the Sub-Adviser to employ a pricing
service to price U.S. Government Securities, mortgage-backed
securities, foreign government securities and corporate bonds. The
Trustees will monitor the accuracy of such pricing services by
comparing prices used for portfolio evaluation to actual sales prices
of selected securities.
Calls, puts and Futures held by the Fund are valued at the last
sale prices on the principal exchange on which they are traded, or on
NASDAQ, as applicable, 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. 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 spose
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 Bond Fund
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
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
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.
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) sold with a front-end sales
charge 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
reinvestment 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 obtain
the reduced sales charge rate (as set forth in the Prospectus)
applicable to purchases of shares in that amount (the "intended
purchase amount"). Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of
shares in the intended purchase amount, as described in the Prospectus.
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
to 5% of the intended purchase amount be held in escrow by the Transfer
Agent. For example, if the intended purchase amount specified under
the Letter 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 the Letter) do not
include any shares sold without a front-end sales charge or shares
subject to a Class A contingent deferred sales charge unless (for the
purpose of determining completion of the obligation to purchase shares
under the Letter) the shares were acquired in exchange for shares of
one of the OppenheimerFunds whose shares were acquired by payment of a
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.
Checkwriting. When a check is presented to the Bank for clearance, the
Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of
the check. This enables the shareholder to continue receiving
dividends on those shares until the check is presented to the Fund.
Checks may not be presented for payment at the offices of the Bank or
the Fund's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The
Fund reserves the right to amend, suspend or discontinue offering
checkwriting privileges at any time without prior notice.
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 Trust's Board of Trustees 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
$1,000 or such lesser amount as the Board may fix. The Board of
Trustees 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, 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 Trustees of the Trust 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 Value 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 such privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains
tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the
Internal Revenue Code, if the redemption proceeds of Fund shares on
which a sales charge was paid are reinvested in shares of 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. 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 redemptions or exchanges 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 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 thereafter shares acquired with
reinvested dividends and capital gains distributions will be redeemed
next, followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made
under withdrawal plans should not be considered as a yield or income on
your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the 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 (the 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.
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 the following other OppenheimerFunds
currently offer Class B shares:
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 Main Street Income & Growth Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Value Stock Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are available
only by exchange)
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Global 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, open an account in, and
acknowledge receipt of a prospectus for, the fund to which the exchange
is to be made. For full or partial exchanges of an account made by
telephone, any special account features such as Asset Builder Plans,
Automatic Withdrawal Plans and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone and
would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day
the Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. 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 request 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 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.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares
held of record at the time of the previous determination of net asset
value, or as otherwise described in "How to Buy Shares." Daily
dividends on newly purchased shares will not be declared or paid until
such time as Federal Funds (funds credited to a member bank's account
at the Federal Reserve Bank) are available from the purchase payment
for such shares. Normally, purchase checks received from investors are
converted to Federal Funds on the next business day. Dividends will be
declared on shares repurchased by a dealer or broker for four business
days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are
redeemed, all dividends accrued on shares of the same class in the
account will be paid together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by the
Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after the
return of such checks to the Transfer Agent, in order to enable the
investor to earn a return on otherwise idle funds.
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
which 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 shares held
for 45 days or less. To the extent the Fund's dividends are derived
from its gross income from option premiums, interest income or short-
term gains from the sale of securities, or dividends from foreign
corporations, its dividends will not qualify for the deduction. It is
expected that for the most part the Fund's dividends will not qualify,
because of the nature of the investments held by the Fund in its
portfolio.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A and
Class B," above. Dividends are calculated in the same manner, at the
same time and on the same day for shares of each class. However,
dividends on Class B shares are expected to be lower as a result of the
asset-based sales charge on Class B shares, and Class B dividends will
also differ in amount as a consequence of any difference in net asset
value between Class A and Class B shares.
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 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.
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.
As of the date of this Statement of Additional Information, not all of
the OppenheimerFunds offer Class B 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.
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 between the Manager and 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.
<PAGE>
Appendix A: Description of Securities Ratings
Description of Standard & Poor's Corporation ("Standard & Poor's") and
Moody's Investors Service, Inc. ("Moody's") commercial paper, bond and
municipal securities ratings:
Commercial Paper Ratings
Standard & Poor's commercial paper ratings are graded into four
categories, ranging from "A" for the highest quality obligations to "D"
for the lowest. The "A-l" and "A-2" categories are described as
follows:
"A" - Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
further refined with the designations 1, 2, and 3 to indicate the
relative degree of safety.
"A-l" - This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics will be noted
with a plus (+) sign designation.
"A-2" - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated "A-l."
Moody's employs three designations, all judged to be investment grade,
to indicate the relative repayment ability of rated issuers. The two
highest designations are as follows:
Issuers (or supporting institutions) rated Prime-1 (or P-1) have a
superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will normally be evidenced by many of the
following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate
reliance on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or supporting institutions) rated Prime-2 (or P-2) have a
strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios,
while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
Bond Ratings
Standard & Poor's describes its four highest ratings for corporate debt
as follows:
AAA: Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only
in a small degree.
A: Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt rated "BBB" is regarded as having an adequate capacity to
pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating
categories.
Moody's describes its four highest corporate bond ratings as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective
elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be
as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may
be other elements present which make the long term risks
appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment
attributes and may be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
<PAGE>
Appendix B: 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
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
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
Independent Auditors' Report
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
The Board of Trustees and Shareholders of Oppenheimer Investment Grade Bond Fund:
We have audited the accompanying statement of assets and liabilities, including the statement of
investments, of Oppenheimer Investment Grade Bond Fund 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, 1991 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. The financial highlights (except for total return) for the period
February 1, 1984 to December 31, 1990 were audited by other auditors whose report dated February
4,
1991, expressed an unqualified opinion on those financial highlights.
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 also
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 Investment Grade Bond Fund 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
Denver, Colorado
January 23, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statement of Investments December 31, 1994
------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
==========================================================
==========================================================
===============
<S> <C> <C> <C>
Short-Term Notes--14.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--2.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Food Wholesalers--2.4% Tyson Foods, Inc., 6.10%, 1/4/95 $2,410,000 $
2,408,775
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated
Domestic--2.5% Burlington Resources, Inc., 6.30%, 1/17/95 2,500,000
2,493,000
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--3.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Finance--0.7% Ford Motor Credit Co., 5.80%, 1/9/95 555,000
555,000
------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 6.05%, 1/9/95 120,000 119,839
------------
674,839
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services:
Miscellaneous--2.5% Countrywide Funding Corp., 6.30%, 1/6/95 2,500,000
2,497,812
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--6.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Companies--4.5% Indiana & Michigan Power Co., 6.05%, 1/3/95 2,040,000
2,039,314
------------------------------------------------------------------------------------------------------
Texas Electric Services Co., 6.20%, 1/5/95 2,500,000 2,498,278
------------
4,537,592
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone--2.3% GTE Norwest, Inc., 5.88%, 1/13/95 2,340,000
2,335,414
------------
Total Short-Term Notes (Cost $14,947,432) 14,947,432
==========================================================
==========================================================
===============
Asset-Backed Securities--7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Auto Loan--7.1% Daimler-Benz Vehicle Trust, Series 1994-A, Cl. A, 5.95%, 12/15/00 827,697
814,537
------------------------------------------------------------------------------------------------------
Ford Credit Grantor Trust, Series 1994-B, Cl. A, 7.30%, 10/15/99 1,458,742
1,447,933
------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Grantor Trust, Series 1992-E,
Cl. A, 4.75%, 8/15/97 454,750 445,615
------------------------------------------------------------------------------------------------------
Nissan Auto Receivables Grantor Trust, Series 1994-A,
Cl. A, 6.45%, 9/15/99 2,241,045 2,202,567
------------------------------------------------------------------------------------------------------
Select Auto Receivable Trust, Series 1991-2 Asset-Backed Certificates,
Cl. A, 7.65%, 7/15/96 194,180 193,881
------------------------------------------------------------------------------------------------------
World Omni Automobile Lease Securitization Trust, Series 1994-A,
Cl. A, 6.45%, 9/25/00 2,000,000 1,967,360
------------
Total Asset-Backed Securities (Cost $7,163,638) 7,071,893
==========================================================
==========================================================
===============
Mortgage-Backed Obligations--13.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Government Agency--11.3%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--7.1% Federal Home Loan Mortgage Corp., Certificates of Participation,
9%, 3/1/17 770,177 772,234
------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Certificates of Participation,
Series 17-039, 13.50%, 11/1/10 91,657 101,813
------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Certificates of Participation,
Series 17-094, 12.50%, 4/1/14 50,645 55,629
------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mortgage Obligation
Gtd. Multiclass Certificates of Participation, 7.50%, 2/15/07 2,000,000 1,898,120
------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Multiclass Mortgage Participation
Certificates, Series 1460, Cl. 1460-H, 7%, 5/15/07 1,500,000 1,374,090
------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through
Certificates, 8%, 8/1/17 1,116,105 1,097,712
------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1993-191, Cl. PD, 5.40%, 4/25/04 1,500,000
1,365,300
</TABLE>
5 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FHLMC/FNMA/Sponsored
(continued) Federal National Mortgage Assn., Interest-Only Collateralized Mortgage
Obligation Gtd. Real Estate Mortgage Investment Conduit Pass-Through
Certificates, Trust 1992 G-57, Cl. SA, 44.60%, 10/25/22(1) $ 568,843 $ 443,698
------------
7,108,596
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed:--4.2% Government National Mortgage Assn.:
10%, 11/15/09 595,139 622,481
12%, 1/15/99 24,402 25,944
12%, 1/15/99 66,980 71,210
12%, 5/15/14 2,184 2,423
12.75%, 6/15/15 44,137 49,704
15%, 2/15/12 26,167 30,505
8%, 10/15/05 243,215 239,689
8%, 10/15/06 377,529 371,447
8%, 6/15/05 125,505 123,686
8%, 6/15/05 97,196 95,787
8%, 6/15/05 132,000 130,087
8%, 7/15/05 222,830 219,600
8%, 7/15/05 326,463 321,730
8%, 7/15/05 109,149 107,567
8%, 7/15/06 167,313 164,618
8%, 7/15/06 216,029 212,549
8%, 8/15/05 135,305 133,344
8%, 8/15/05 146,311 144,190
8%, 9/15/05 309,653 305,163
8%, 9/15/05 158,612 156,312
9%, 2/15/09 22,973 23,335
9%, 2/15/09 234,544 238,238
9%, 3/15/09 167,088 169,720
9%, 3/15/09 25,494 25,896
9%, 5/15/09 28,368 28,815
9%, 6/15/09 159,386 161,897
------------
4,175,937
- -----------------------------------------------------------------------------------------------------------------------------------
Other--2.0% JHM Acceptance Corp., 8.96% Collateralized Mortgage Obligation Bonds,
Series E, Cl. E-6, 4/1/19 2,000,000 2,008,900
------------
Total Mortgage-Backed Obligations (Cost $14,177,957) 13,293,433
==========================================================
==========================================================
===============
U.S. Government Obligations--43.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Agency--3.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Government Agency/
Full Faith--3.8% Allentown, Pennsylvania, U.S. Government Gtd. Nts.,
Series A, 8.74%, 8/1/01 65,000 66,092
------------------------------------------------------------------------------------------------------
Babylon, New York, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 115,000 104,767
------------------------------------------------------------------------------------------------------
Bakersfield, California, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 255,000 232,311
------------------------------------------------------------------------------------------------------
Boston, Massachusetts, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 795,000 724,262
------------------------------------------------------------------------------------------------------
Buena Vista Township, New Jersey, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 270,000 245,976
</TABLE>
6 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government Agency/
Full Faith (continued) Buffalo, New York, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 $ 400,000 $ 364,409
------------------------------------------------------------------------------------------------------
Detroit, Michigan, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 405,000 368,964
------------------------------------------------------------------------------------------------------
Fajardo, Puerto Rico, U.S. Government Gtd. Nts.,
Series A, 8.74%, 8/1/01 300,000 305,042
------------------------------------------------------------------------------------------------------
New Haven, Connecticut, U.S. Government Gtd. Nts.,
Series A, 8.74%, 8/1/01 400,000 406,722
------------------------------------------------------------------------------------------------------
Roanoke, Virginia, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 220,000 200,425
------------------------------------------------------------------------------------------------------
Sacramento County, California Redevelopment Agency U.S. Government
Gtd. Nts., Series 94A, 5.93%, 8/1/99 240,000 218,390
------------------------------------------------------------------------------------------------------
Tacoma, Washington, U.S. Government Gtd. Nts.,
Series 94A, 5.93%, 8/1/99 165,000 150,319
------------------------------------------------------------------------------------------------------
Trenton, New Jersey, U.S. Government Gtd. Nts.,
Series A, 5.93%, 8/1/99 135,000 122,988
------------------------------------------------------------------------------------------------------
Tujillo Alto, Puerto Rico, U.S. Government Gtd. Nts.,
Series A, 8.74%, 8/1/01 235,000 238,949
------------
3,749,616
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury--40.0% U.S. Treasury Bonds:
7.125%, 2/15/23 4,000,000 3,638,748
7.25%, 8/15/22 4,900,000 4,521,778
7.875%, 2/15/21 900,000 888,188
8%, 11/15/21 2,000,000 2,006,874
------------------------------------------------------------------------------------------------------
U.S. Treasury Notes:
6.375%, 8/15/02 2,750,000 2,519,687
7%, 4/15/99 10,700,000 10,372,312
7.25%, 8/15/04 10,000,000 9,600,000
8.50%, 7/15/97 6,400,000 6,504,000
------------
40,051,587
------------
Total U.S. Government Obligations (Cost $47,152,705) 43,801,203
==========================================================
==========================================================
===============
Foreign Government
Obligations--0.9% Iceland (Republic of) Nts., 6.125%, 2/1/04 (Cost $989,168) 1,000,000
857,030
==========================================================
==========================================================
===============
Corporate Bonds and Notes--29.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--5.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--0.4% Imcera Group, Inc., 6% Nts., 10/15/03 500,000 424,747
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--3.5% AMAX, Inc., 9.875% Nts., 6/13/01 1,000,000 1,041,957
------------------------------------------------------------------------------------------------------
Newmont Mining Corp., 8.625% Nts., 4/1/02 1,000,000 985,022
------------------------------------------------------------------------------------------------------
Teck Corp., 8.70% Debs., 5/1/02 1,500,000 1,479,052
------------
3,506,031
- -----------------------------------------------------------------------------------------------------------------------------------
Paper and Forest
Products--1.6% Georgia-Pacific Corp., 9.95% Debs., 6/15/02 1,500,000
1,600,647
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Automotive--1.1% Chrysler Corp., 10.40% Nts., 8/1/99 1,000,000
1,048,078
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Goods and
Services--1.0% Toro Co. (The), 11% Debs., 8/1/17 1,000,000 1,041,250
- -----------------------------------------------------------------------------------------------------------------------------------
Media--0.9% News America Holdings, Inc., 7.50% Gtd. Sr. Nts., 3/1/00 1,000,000
945,495
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--2.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Food--1.0% Wendy's International, Inc., 12.125% Debs., 4/1/95 1,000,000
1,010,211
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare--1.0% Baxter International, Inc., 9.25% Nts., 9/15/96 1,000,000 1,018,178
</TABLE>
7 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Energy--4.5% Enron Corp., 8.10% Nts., 12/15/96 $1,500,000 $
1,499,236
------------------------------------------------------------------------------------------------------
Union Oil Co. of California, 8.75% Nts., 8/15/01 1,500,000 1,517,873
------------------------------------------------------------------------------------------------------
Union Oil Co. of California, 9.625% Gtd. Debs., 5/15/95 1,500,000 1,513,434
------------
4,530,543
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--5.9% Ford Motor Credit Co., 9.90% Med.-Term Nts., 11/6/97 2,000,000
2,057,252
------------------------------------------------------------------------------------------------------
Goldman Sachs Group, LP, 6.20% Nts., 2/15/01 1,500,000 1,312,969
------------------------------------------------------------------------------------------------------
Leucadia National Corp., 7.75% Sr. Nts., 8/15/13 2,000,000 1,757,329
------------------------------------------------------------------------------------------------------
PaineWebber Group, Inc., 6.50% Nts., 11/1/05 1,000,000 794,856
------------
5,922,406
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--3.8%
- -----------------------------------------------------------------------------------------------------------------------------------
General Industrial--1.0% Thomas & Betts Corp., 8.25% Sr. Nts., 1/15/04 1,000,000
976,858
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--2.8% AMR Corp., 9% Debs., 8/1/12 1,500,000
1,353,010
------------------------------------------------------------------------------------------------------
United Air Lines, Inc., 10.11% Equipment Trust Certificates,
Series 91B, 2/19/06 1,449,687 1,409,815
------------
2,762,825
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--3.3% McDonnell Douglas Corp., 9.25% Nts., 4/1/02 2,750,000
2,812,540
------------------------------------------------------------------------------------------------------
Textron, Inc., 9.55% Med.-Term Nts., 3/19/01 500,000 525,255
------------
3,337,795
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--1.0% Tenaga Nasional Berhad, 7.875% Nts., 6/15/04(2) 1,000,000
951,846
------------
Total Corporate Bonds and Notes (Cost $30,473,758) 29,076,910
Shares
==========================================================
==========================================================
===============
Common Stocks--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Food Processing--0.0% Doskocil Cos., Inc. (Cost $0) 1,761 13,208
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $114,904,658) 109.0% 109,061,109
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (9.0) (8,970,361)
---------- ------------
Net Assets 100.0% $100,090,748
==========
============
<FN>
1. Interest rate resets monthly, inversely related to LIBOR. Interest-Only Strips represent the right
to receive the monthly interest payments on an underlying pool of mortgage loans. These securities
are
subject to the risk of accelerated principal paydowns as interest rates decline. The principal amount
represents the notional amount on which current interest is calculated.
2. Restricted security--See Note 6 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
8 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1994
------------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C> <C>
Assets Investments, at value (cost $114,904,658)--see accompanying statement
$109,061,109
------------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 1,694,107
Shares of beneficial interest sold 202,489
------------------------------------------------------------------------------------------------------
Other 55,797
------------
Total assets 111,013,502
==========================================================
==========================================================
===============
Liabilities Bank overdraft 57,356
------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 9,823,047
Dividends 646,989
Shares of beneficial interest redeemed 258,588
Distribution and service plan fees--Note 4 65,541
Deferred trustee fees--Note 5 18,086
Other 53,147
------------
Total liabilities 10,922,754
==========================================================
==========================================================
===============
Net Assets $100,090,748
============
==========================================================
==========================================================
===============
Composition of
Net Assets Paid-in capital $110,009,506
------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income (204,894)
------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) from investment transactions (3,870,315
------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments--Note 3 (5,843,549)
-------------
Net assets $100,090,748
=============
==========================================================
==========================================================
===============
Net Asset Value
Per Share Class A Shares:
Net asset value and redemption price per share (based on net assets of
$96,639,607 and 9,653,273 shares of beneficial interest outstanding) $10.01
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $10.51
------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $3,451,141 and 344,660 shares of beneficial interest outstanding) $10.01
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C> <C>
Investment Income Interest $ 7,667,379
==========================================================
==========================================================
===============
Expenses Management fees--Note 4 522,205
------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 247,136
Class B--Note 4 26,383
------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 184,806
------------------------------------------------------------------------------------------------------
Shareholder reports 80,889
------------------------------------------------------------------------------------------------------
Legal and auditing fees 13,761
------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 12,864
------------------------------------------------------------------------------------------------------
Custodian fees and expenses 12,743
------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 162
Class B 603
------------------------------------------------------------------------------------------------------
Other 28,219
-----------
Total expenses 1,129,771
==========================================================
==========================================================
===============
Net Investment Income (Loss) 6,537,608
==========================================================
==========================================================
===============
Realized and Unrealized Gain
(Loss) on Investments Net realized gain (loss) on investments (2,274,518)
------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (8,559,673)
-----------
Net realized and unrealized gain (loss) on investments (10,834,191)
==========================================================
==========================================================
===============
Net Increase (Decrease) in Net Assets Resulting From Operations $(4,296,583)
===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
------------------------------------------------------------------------------------------------------
Year Ended December 31,
1994 1993
==========================================================
==========================================================
===============
<S> <C> <C> <C>
Operations Net investment income (loss) $6,537,608 $ 6,955,080
------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (2,274,518) 3,772,429
------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (8,559,673) 22,233
------------ ------------
Net increase (decrease) in net assets resulting from operations (4,296,583) 10,749,742
==========================================================
==========================================================
===============
Dividends and Distributions
To Shareholders Dividends from net investment income:
Class A ($.6539 and $.707 per share, respectively) (6,381,575) (7,067,709)
Class B ($.5754 and $.42 per share, respectively) (156,032) (33,652)
------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.0306 per share) (298,880) --
Class B ($.027 per share) (7,308) --
==========================================================
==========================================================
===============
Beneficial Interest
Transactions Net increase (decrease) in net assets resulting from
Class A beneficial interest transactions--Note 2 (3,255,547) 802,199
------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
Class B beneficial interest transactions--Note 2 1,918,288 1,828,205
==========================================================
==========================================================
===============
Net Assets Total increase (decrease) (12,477,637) 6,278,785
------------------------------------------------------------------------------------------------------
Beginning of period 112,568,385 106,289,600
------------ ------------
End of period (including overdistributed net investment
income of $204,894 and $56,074, respectively) $100,090,748 $112,568,385
============
============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Financial Highlights
-----------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------
Eleven
Months
Ended
Year Ended December 31, Dec. 31,
1994 1993 1992 1991(3) 1990 1989 1988(2)
==========================================================
==========================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $11.12 $10.74 $10.80 $ 9.86 $10.29 $10.12 $10.55
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .65 .69 .75 .82 .88(4) .92 .93
Net realized and
unrealized gain (loss)
on investments (1.08) .40 (.05) .90 (.43) .19 (.36)
------- ------- ------- ------- ------ ------- -------
Total income (loss) from
investment operations (.43) 1.09 .70 1.72 .45 1.11 .57
- -------------------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net
investment income (.65) (.71) (.76) (.78) (.88) (.94) (1.00)
Dividends in excess of net
investment income (.03) -- -- -- -- -- --
------- ------- ------- ------- ------ ------- -------
Total dividends to
shareholders (.68) (.71) (.76) (.78) (.88) (.94) (1.00)
- -------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 10.01 $ 11.12 $ 10.74 $ 10.80 $ 9.86 $ 10.29 $ 10.12
======= ======= ======= ======= ======
======= =======
==========================================================
==========================================================
Total Return, at Net
Asset Value(5) (3.87)% 10.30% 6.77% 18.28% 4.74% 11.31% 4.48%
==========================================================
==========================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $96,640 $110,759 $106,290 $90,623 $87,021 $96,380 $102,293
- -------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $102,168 $111,702 $ 98,672 $86,471 $ 90,065 $100,891 $111,264
- -------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
period (in thousands) 9,653 9,963 9,899 8,390 8,829 9,369 10,108
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.25% 6.20% 7.00% 8.02% 8.85% 8.85% 8.75%
Expenses 1.06% 1.06% 1.10% 1.23% 1.24%(4) 1.14% 1.05%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 70.3% 110.1% 116.4% 97.1% 80.4% 41.3% 45.0%
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Financial Highlights (continued)
------------------------------------------------------------------------
Class A (continued) Class B
-------------------------------------------------------------- --------
Year Period
Ended Ended
Year Ended January 31, Dec. 31, Dec. 31,
1988(2) 1987(2) 1986(2) 1985(2) 1994 1993(1)
==========================================================
=============================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $ 11.30 $ 11.16 $ 10.91 $ 11.00 $ 11.11 $ 11.10
- -------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income 1.09 1.16 1.22 1.27 .58 .40
Net realized and
unrealized gain (loss)
on investments (.55) .22 .35 (.04) (1.08) .03
------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations .54 1.38 1.57 1.23 (.50) .43
- -------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net
investment income (1.29) (1.24) (1.32) (1.32) (.57) (.42)
Dividends in excess of net
investment income -- -- -- -- (.03) --
------- ------- ------- ------- ------- -------
Total dividends to
shareholders (1.29) (1.24) (1.32) (1.32) (.60) (.42)
- -------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 10.55 $ 11.30 $ 11.16 $ 10.91 $ 10.01 $ 11.11
======= ======= ======= ======= =======
=======
==========================================================
=============================================
Total Return, at Net
Asset Value(5) N/A N/A N/A N/A (4.53)% 3.91%
==========================================================
=============================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $118,568 $125,513 $121,979 $117,293 $3,451 $1,809
- -------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $118,724 $123,045 $118,253 $111,235 $2,747 $ 922
- -------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
period (in thousands) 11,234 11,103 10,930 10,751 345 163
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 10.28% 10.45% 11.26% 12.21% 5.53% 4.80%(6)
Expenses .98% .93% .97% 1.01% 1.78% 1.90%(6)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 19.5% 59.8% 36.5% 76.7% 70.3% 110.1%
<FN>
1. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
2. Operating results prior to April 15, 1988 were achieved by the Fund's predecessor corporation as
a
closed-end fund under different investment objectives and policies. Such results are thus not
necessarily representative of operating results the Fund may achieve under its current investment
objectives and policies.
3. On March 28, 1991, Oppenheimer Management Corporation became the investment advisor to the
Fund.
4. Net investment income would have been $.87 absent the voluntary expense limitation, resulting in
an expense ratio of 1.26%.
5. 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.
6. Annualized.
7. 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 $67,852,873 and $67,362,839, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
12 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
1. Significant
Accounting Policies Oppenheimer Investment Grade Bond Fund (the Fund) is a separate fund of Oppenheimer
Integrity Funds,
a diversified, open-end management investment company registered under the Investment Company
Act of
1940, as amended. The Fund's investment advisor is Oppenheimer Management Corporation (the
Manager).
The Fund offers both Class A and Class B shares. Class A shares are sold with a front-end sales
charge. Class B shares may be subject to a contingent deferred sales charge. Both classes of shares
have identical rights to earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. 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. Long-term debt securities are valued by a portfolio pricing service approved by the Board of
Trustees. 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 Trustees 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. Forward
foreign currency contracts are valued at the closing price on the London foreign exchange market on
a
daily basis. 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.
-----------------------------------------------------------------------------------------------------
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 $3,738,000,
$442,000 of which will expire in 1997, $958,000 in 1998 and $2,338,000 in 2002.
-----------------------------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately for Class A and
Class
B shares from net investment income each day the New York Stock Exchange is open for business
and pay
such dividends monthly. Distributions from net realized gains on investments, if any, will be
declared at least once each year.
-----------------------------------------------------------------------------------------------------
Change in Accounting for Distributions to Shareholders. Net investment income (loss) and net
realized
gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains
and losses. 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 $29,803, an increase in undistributed net investment
income of $42,134, and an increase in undistributed capital loss on investments of $12,331. During
the year ended December 31, 1994, in accordance with Statement of Position 93-2, undistributed net
investment income was increased by $115,233 and undistributed capital loss on investments was
increased by the same amount.
</TABLE>
13 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
1. Significant
Accounting Policies
(continued) Other. Investment transactions are accounted for on the date the investments are purchased or sold
(trade 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 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
Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest of each
class. Transactions in shares of beneficial interest were as follows:
<CAPTION>
Year Ended December 31, 1994 Year Ended December 31, 1993(1)
---------------------------- ---------------------------------
Shares Amount Shares Amount
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,071,379 $ 11,256,317 2,953,788 $ 33,325,053
Dividends reinvested 323,100 3,353,309 259,953 2,897,712
Redeemed (1,704,508) (17,865,173) (3,149,098) (35,420,566)
--------- ------------ --------- ------------
Net increase (decrease) (310,029) $ (3,255,547) 64,643 $ 802,199
========= ============
========= ============
-----------------------------------------------------------------------------------------------------
Class B:
Sold 293,817 $ 3,089,618 195,606 $ 2,198,191
Dividends reinvested 11,974 123,504 2,293 25,726
Redeemed (123,969) (1,294,834) (35,061) (395,712)
--------- ------------ --------- ------------
Net increase 181,822 $ 1,918,288 162,838 $ 1,828,205
========= ============
========= ============
1. 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.
==========================================================
==========================================================
===============
<S> <C>
3. Unrealized Gains and
Losses on Investments At December 31, 1994, net unrealized depreciation on investments of $5,843,549 was
composed of gross
appreciation of $404,576, and gross depreciation of $6,248,125.
==========================================================
==========================================================
===============
4. Management Fees
And Other Transactions
With Affiliates Management fees paid to the Manager were in accordance with the investment advisory agreement
with
the Fund which provides for an annual fee of .50% on the first $100 million of net assets with a
reduction of .05% on each $200 million thereafter, to .35% 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 $143,088, of which $67,090 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
$8,916
upon redemption of Class B shares, as reimbursement for sales commissions advanced by OFDI at
the
time of sale of such 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, each class may expend up to .25% of its net assets annually to
reimburse OFDI for costs incurred in connection with the personal service and maintenance of
accounts
that hold shares of the Fund, including amounts paid to brokers, dealers, banks and other
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 Trustees may allow the Fund to continue payment of the asset-based sales charge
to
OFDI for distribution expenses incurred on Class B shares sold prior to termination or
discontinuance
of the plan. During the year ended December 31, 1994, OFDI paid $154,100 to an affiliated
broker/dealer as reimbursement for Class A personal service and maintenance expenses and retained
$27,341 as reimbursement for Class B sales commissions and service fee advances, as well as
financing
costs.
</TABLE>
14 Oppenheimer Investment Grade Bond Fund
<PAGE>
<TABLE>
==========================================================
==========================================================
===============
<S> <C>
5. Deferred Trustee
Compensation A former trustee elected to defer receipt of fees earned. These deferred fees earn interest at a
rate
determined by the current Board of Trustees at the beginning of each calendar year, compounded
each
quarter-end. As of December 31, 1994, the Fund was incurring interest at a rate of 5.22% per
annum.
Deferred fees are payable in annual installments, with accrued interest, each April 1 through 1995.
==========================================================
==========================================================
===============
6. Restricted
Securities The Fund owns securities purchased in private placement transactions, without registration under
the
Securities Act of 1933 (the Act). The securities are valued under methods approved by the Board of
Trustees 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
Trustees or by the Manager under Board-approved guidelines.
Valuation Per Unit
Security Acquisition Date Cost Per Unit of December 31, 1994
-----------------------------------------------------------------------------------------------------
Tenaga Nasional Berhad 7.875% Nts., 6/15/04(1) 9/27/94 $96.79 $95.18
1. Transferable under Rule 144A of the Act.
</TABLE>
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing 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 80202-4918
<PAGE>
O P P E N H E I M E R
Value Stock Fund
Prospectus dated May 1, 1995
Oppenheimer Value Stock Fund (the "Fund") is a mutual fund with the
investment objective of seeking long-term growth of capital and income
primarily through investments in stocks of well established companies.
You should carefully review the risks associated with an investment in
the Fund.
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. 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 11.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep
it for future reference. You can find more detailed information about
the Fund in the May 1, 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).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, nor are
they guaranteed by any bank are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible loss
of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief 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
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 shareholder 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.
<TABLE>
<CAPTION>
Class A Shares Class B Shares
<S> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None
Sales Charge on Reinvested Dividends None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 5% in the first year,
declining to 1% in the
sixth year and eliminated
thereafter
Exchange Fee None None
</TABLE>
(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.
- 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 and 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 Plan Fees (the fee is 0.25% of
average annual net assets of that class), and for Class B shares, the
12b-1 Distribution Plan Fees are the Distribution and Service Plan Fee
(the service fee is 0.25% of average annual net assets of that class)
and the asset-based sales charge of 0.75%. The actual expenses for
each class of shares in future years may be more or less, depending on
a number of factors, including the actual amount of the assets
represented by each class of shares. These Plans are discussed in
greater detail in "How to Buy Shares."
<TABLE>
<CAPTION>
Class A Shares Class B Shares
<S> <C> <C>
Management Fees 0.75% 0.75%
12b-1 Distribution and/or Plan Fees 0.25%(1) 1.00%(2)
Other Expenses 0.27% 0.26%
Total Fund Operating Expenses 1.27% 2.01%
<FN>
___________
(1) Service Plan fees only
(2) Includes Service Plan fee and asset-based sales charge.
</TABLE>
- Examples. To try to show the effect of the 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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
<S> <C> <C> <C> <C>
Class A Shares $70 $95 $123 $202
Class B Shares $70 $93 $128 $197
If you did not redeem your investment, it would incur the following expenses:
Class A Shares $70 $95 $123 $202
Class B Shares $20 $63 $108 $197
<FN>
* 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.
</TABLE>
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
A Brief Overview Of The Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing in the Fund. Keep
the Prospectus for reference after you invest, particularly for
information about your account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund seeks long-
term growth of capital and income primarily through investments in
stocks of well established companies.
- What Does The Fund Invest In? Under normal market conditions
the Fund primarily invests in a diversified portfolio of (i) common
stocks that pay cash dividends, (ii) securities convertible into common
stocks, and (iii) other equity securities issued by companies with a
market capitalization of at least $500 million or with a history of at
least five years of operations as a public company, and which are
listed on a national securities exchange or traded in the over-the-
counter markets. The Fund will invest primarily in cash dividend-
paying stocks. The Fund may also write covered calls and use certain
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) manages investment company portfolios currently having over
$30 billion in assets. The Manager handles the day-to-day business of
the Fund. The Fund also has a sub-adviser, Concert Capital Management,
Inc. (the "Sub-Adviser") who is responsible for choosing the Fund's
investments. The Fund has a portfolio manager, David B. Salerno, who
is employed by the Sub-Adviser and is primarily responsible for the
selection of the Fund's securities. The Manager is paid a management
fee by the Fund, and the Manager, not the Fund, pays the Sub-Adviser.
The Fund's Board of Trustees, elected by shareholders, oversees the
Manager. Please refer to "How the Fund is Managed," starting on page
___ for more information about the Manager and the Sub-Adviser and
their fees.
- How Risky Is The Fund? All investments carry risks to some
degree. The Fund's investments in stocks are subject to changes in
their value from a number of factors such as changes in general stock
market movements or changes in value of a particular stock because of
an event affecting the issuer. These changes affect the value of the
Fund's investments and its price per share. In the OppenheimerFunds
spectrum, the Fund is generally more conservative than aggressive
growth funds, but more aggressive than money market or growth and
income funds. While the Sub-Adviser 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 objective and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment
Objectives and Policies" starting on page ___ for a more complete
discussion of 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 and Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
starting on page ___ for more details.
- Will I Pay A Sales Charge To Buy Shares? The Fund has two
classes of shares. Both have the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class B
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" starting on page
___. The Fund also offers exchange privileges to other
OppenheimerFunds, described in "How to Exchange Shares" on page ___.
- How Has The Fund Performed? The Fund measures its performance
by quoting its average annual total return and cumulative total return,
which measure historical performance. Those total returns can be
compared to the 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.
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. The information in the table for
the fiscal periods prior to 1991 was audited by the Fund's previous
independent auditors.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------------------------------------------- ----------------
Year Ended Year Ended
December 31, December 31,
1994 1993 1992 1991(3) 1990 1989 1988 1987 1986(2) 1994 1993(1)
==========================================================
==========================================================
============
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $ 14.41 $ 14.19 $ 13.57 $ 11.39 $ 12.08 $ 10.47 $ 9.51 $ 9.98 $ 10.16 $ 14.35 $
14.60
Income from investment
operations:
Net investment income .31 .29 .32 .33 .37 .40 .33 .34 .01 .17 .17
Net realized and unrealized
gain (loss) on investments .16 .98 .97 2.49 (.57) 1.87 1.15 (.22) (.19) .19 .51
------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total income (loss) from
investment operations .47 1.27 1.29 2.82 (.20) 2.27 1.48 .12 (.18) .36 .68
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.31) (.29) (.32) (.33) (.39) (.41) (.33) (.41) -- (.21) (.17)
Dividends in excess of net
investment income (.01) -- -- -- -- -- -- -- -- (.01) --
Distributions from net realized
gain on investments (.40) (.76) (.35) (.31) (.10) (.25) (.19) (.18) -- (.40) (.76)
------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total dividends and
distributions to shareholders (.72) (1.05) (.67) (.64) (.49) (.66) (.52) (.59) -- (.62) (.93)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 14.16 $ 14.41 $ 14.19 $ 13.57 $ 11.39 $ 12.08 $ 10.47 $ 9.51 $ 9.98 $ 14.09 $
14.35
======= ======= ======= ======= ======= =======
======= ====== ======= ======= =======
==========================================================
==========================================================
============
Total Return, at Net Asset
Value(4) 3.28% 8.97% 9.61% 25.23% (1.53)% 21.93% 15.61% 1.10% (1.77)% 2.50%
4.63%
==========================================================
==========================================================
============
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $92,728 $90,470 $59,376 $49,381 $40,153 $37,713 $27,434 $19,377 $20,162 $10,893
$5,158
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $90,158 $80,229 $53,485 $45,581 $39,104 $33,742 $24,658 $22,322 $ --(2) $7,834
$2,527
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 6,548 6,280 4,184 3,639 3,526 3,122 2,620 2,039 2,021 773 359
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.16% 1.97% 2.34% 2.59% 3.22% 3.51% 3.45% 3.15% --(2)
1.45% .97%(5)
Expenses, before voluntary
reimbursement 1.27% 1.24% 1.19% 1.31% 1.36% 1.40% 1.21% .70% --(2) 2.01%
2.14%(5)
Expenses, net of voluntary
reimbursement N/A N/A N/A 1.26% 1.30% 1.30% 1.19% N/A --(2) N/A
N/A
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 16.3% 24.3% 12.3% 14.5% 13.5% 14.9% 13.1% 10.8% --(2) 16.3%
24.3%
<FN>
1. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
2. For the period from December 22, 1986 to December 31, 1986. Ratios during this development
period would not be indicative of representative results.
3. On March 28, 1991, Oppenheimer Management Corporation became the investment advisor to the
Fund.
4. 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.
5. Annualized.
6. 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 $20,227,936 and $14,410,677,
respectively.
</FN>
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks long-term growth of capital and income
primarily through investments in stocks of well established companies.
Investment Policies and Strategies. In seeking its investment
objective the Fund will invest, under normal market conditions, in a
diversified portfolio of (i) common stocks that pay cash dividends,
(ii) securities convertible into common stocks, and (iii) other equity
securities issued by companies with a market capitalization of at least
$500 million or with a history of at least five years of operations as
a public company, and which are listed on a national securities
exchange or traded in the over-the-counter markets. The Fund will
invest primarily in cash dividend-paying stocks. To provide liquidity
or for temporary defensive purposes, the Fund may invest all or any
portion of its assets in high-quality, short-term money market
instruments.
Concert Capital Management, Inc. (the "Sub-Adviser") will seek to
invest in the securities of companies which, in its opinion, are of
high quality, offer above-average dividend growth potential and are
attractively valued in the marketplace. This would include stocks
selling below their historical price/earnings ranges relative to the
Standard & Poor's 500 Stock Index or below their historical price/book
value ranges. The Sub-Adviser will give strong consideration to
securities of companies whose current prices do not adequately reflect,
in its opinion, the ongoing business value of the enterprise.
The Fund may try to hedge against losses in the value of its
portfolio securities by using hedging strategies described below. The
Sub-Adviser may employ special investment techniques, also described
below. Additional information about the securities the Fund may invest
in, the hedging strategies the Fund may employ and the special
investment techniques may be found under the same headings in the
Statement of Additional Information.
- Investment Risks. Because of the types of companies the Fund
invests in and the investment techniques the Fund uses, some of which
may be speculative, the Fund is designed for those investors who are
investing for the long-term and who are willing to accept greater risks
of loss of their capital in the hope of achieving capital appreciation.
Investing for capital appreciation entails the risk of loss of all or
part of your principal. There is no assurance that the Fund will
achieve its objective, and when you redeem your shares, they may be
worth more or less than what you paid for them.
Because the Fund can invest a substantial portion (or all) of its
assets in stocks, the value of the Fund's portfolio will be effected by
changes in the stock markets. This market risk will affect the Fund's
net asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all sock prices change
uniformly or at the same time, and other factors can affect a
particular stock's price (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an issuer,
changes in government regulations affecting an industry). Not all of
these factors can be predicted. Changes in the overall market prices
can occur at any time.
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. Also, the Fund does not
concentrate its investment in any one industry or group of industries
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." While it is a policy of the Fund
generally not to engage in trading for short-term gains, portfolio
changes will be made without regard to the length of time a security
has been held or whether a sale would result in a profit or loss, if in
the Sub-Adviser's judgment, such transactions are advisable in light of
the circumstances of a particular company or within a particular
industry or in light of market, economic or financial conditions. High
portfolio turnover may affect the ability of the Fund to qualify as a
"regulated investment company" under the Internal Revenue Code for tax
deductions for dividends and capital gains distributions the Fund pays
to shareholders. Portfolio turnover affects brokerage costs, dealer
markups and other transaction costs, and results in the Fund's
realization of capital gains or losses for tax purposes. See
"Financial Highlights" above, "Dividends, Capital Gains and Taxes"
below and "Brokerage Policies of the Fund" in the Statement of
Additional Information.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, which is 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.
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). The Fund's
Board of Trustees may change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this prospectus.
- Securities of Foreign Governments and Companies. The Fund may
invest in debt and equity securities issued or guaranteed by foreign
companies, and debt securities of foreign governments or their
agencies. These foreign securities may include debt obligations such
as government bonds, debentures issued by companies, as well as notes.
Some of these debt securities may have variable interest rates or
"floating" interest rates that change in different market conditions.
Those changes will affect the income the Fund receives. These
securities are described in more detail in the Statement of Additional
Information.
The Fund is not restricted in the amount of its assets it may invest
in foreign countries or in which countries. However, if the Fund's
assets 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 Trustees.
Foreign Securities Have Special Risks. There are certain risks of
holding foreign securities. The first is the risk of changes in
foreign currency values. Because the Fund may purchase securities
denominated in foreign currencies, a change in the value of a foreign
currency against the U.S. dollar will result in a change in the U.S.
dollar value of the Fund's securities denominated in that currency.
The currency rate change will also affect its income available for
distribution. Although the Fund's investment income from foreign
securities may be received in foreign currencies, the Fund will be
required to distribute its income in U.S. dollars. Therefore, the Fund
will absorb the cost of currency fluctuations. If the Fund suffers
losses on foreign currencies after it has distributed its income during
the year, the Fund may find that it has distributed more income than
was available from actual investment income. That could result in a
return of capital to shareholders.
There are other risks of foreign investing. For example, foreign
issuers are not required to use generally-accepted accounting
principles. If foreign securities are not registered for sale in the
U.S. under U.S. securities laws, the issuer does not have to comply
with the disclosure requirements of our laws, which are generally more
stringent than foreign laws. The values of foreign securities
investments will be affected by other factors, including exchange
control regulations or currency blockage and possible expropriation or
nationalization of assets. There may also be changes in governmental
administration or economic or monetary policy in the U.S. or abroad
that can affect foreign investing. In addition, it is generally more
difficult to obtain court judgments outside the United States if the
Fund has to sue a foreign broker or issuer. Additional costs may be
incurred because foreign broker commissions are generally higher than
U.S. rates, and there are additional custodial costs associated with
holding securities abroad.
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.
- Hedging. The Fund may purchase and sell certain kinds of futures
contracts, put and call options, forward contracts, and options on
futures and broadly-based securities indices. 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 "Other Investment Techniques and Strategies"
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 securities market as a
temporary substitute for purchasing individual securities. 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
contracts are used to try to manage foreign currency risks on the
Fund's foreign investments. Foreign currency options are used to try
to protect against declines in the dollar value of foreign securities
the Fund owns, or to protect against an increase in the dollar cost of
buying foreign securities. Writing covered call options may also
provide income to the Fund for liquidity purposes or defensive reasons.
Futures. The Fund may buy and sell futures contracts that relate to
broadly-based securities indices (these are referred to as Stock Index
Futures).
Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls).
The Fund may purchase calls only on Stock Index Futures, broadly-
based securities indices and foreign currencies, or to terminate its
obligation on a call the Fund previously wrote. The Fund may write
(that is, sell) covered call options. 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). There is no limit on
the amount of the Fund's total assets that may be subject to covered
calls.
The Fund may purchase put options. 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 purchase those puts
that relate to (1) securities the Fund owns, (2) Stock Index Futures
(whether or not the Fund owns that particular Stock Index Future in its
portfolio), (3) broadly-based Stock indices, or (4) foreign
currencies.
The Fund may write puts on securities, broadly-based stock indices,
foreign currencies or Stock Index Futures. Writing puts requires the
segregation of liquid assets to cover the put. The Fund will not write
a put if it would require more than 50% of its net assets to be
segregated to cover the put obligation.
The Fund may buy and sell calls if certain conditions are met.
Calls the Fund buys or sells must be listed on a domestic or foreign
securities or commodities exchange or quoted on the Automated Quotation
System of the National Association of Securities Dealers, Inc. Each
call the Fund writes must be "covered" while it is outstanding; that
means the Fund must own the securities on which the call is written or
it must own other securities that are acceptable for the escrow
arrangements required for calls. After the Fund writes a call, not
more than 25% of the Fund's total assets may be subject to calls. In
the case of puts and calls on foreign currency, they must be traded on
a securities or commodities exchange, or quoted by recognized dealers
in these options. The Fund may also write calls on Futures Contracts
it owns, but those calls must be covered by securities or other liquid
assets the Fund owns and segregates to enable it to satisfy its
obligations if the call is exercised. A call or put option may not be
purchased if the value of all of the Fund's put and call options would
exceed 5% of the Fund's total assets.
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 than what is
required for normal portfolio management. If the Sub-Adviser uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on a
security that has increased in value, the Fund will be required to sell
the security at the call price and will not be able to realize any
profit if the security has increased in value above the call price.
The use of forward contracts may reduce the gain that would otherwise
result from a change in the relationship between the U.S. dollar and a
foreign currency. To limit its exposure in foreign currency exchange
contracts, the Fund limits its exposure to the amount of its assets
denominated in the foreign currency. Interest rate swaps are subject
to credit risks (if the other party fails to meet its obligations) and
also to 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. 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 Trustees, 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). Certain restricted securities, eligible for resale to
qualified institutional purchasers, are not subject to that limit.
- Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers and other financial institutions. The Fund will receive
collateral for a loan. These loans are limited to not more than 25% of
the value of the Fund's net assets and are subject to the conditions
described in the Statement of Additional Information. The Fund
presently does not intend to engage in loans of securities that will
exceed 5% of the value of the Fund's total assets in the coming year.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However, if the
vendor of the securities under a repurchase agreement 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 having a maturity beyond 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.
- When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
such securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery or to be delivered at a
later date. There may be a risk of loss to the Fund if the value of
the security changes prior to the settlement date.
Other Investment Restrictions. The Fund has other investment
restrictions which are "fundamental" policies. Under these fundamental
policies, the Fund cannot do any of the following: (1) make short sales
except for sales "against the box"; (2) borrow money or enter into
reverse repurchase agreements, except that the Fund may borrow money
from banks and enter into reverse repurchase agreements as a temporary
measure for extraordinary or emergency purposes (but not for the
purpose of making investments), provided that the aggregate amount of
all such borrowings and commitments under such agreements does not, at
the time of borrowing or of entering into such an agreement, exceed 10%
of the Fund's total assets taken at current market value; the Fund will
not purchase additional portfolio securities at any time that the
aggregate amount of its borrowings and its commitments under reverse
repurchase agreements exceeds 5% of the Fund's net assets (for purposes
of this restriction, entering into portfolio lending agreements shall
not be deemed to constitute borrowing money); (3) concentrate its
investments in any particular industry except that it may invest up to
25% of the value of its total assets in the securities of issuers of
any one industry (of the utility companies, gas, electric, water and
telephone will each be considered as a separate industry); and (4) buy
securities issued or guaranteed by any one issuer (except the U.S.
Government or any of its agencies or instrumentalities) if with respect
to 75% of its total assets (a) more than 5% of the Fund's total assets
would be invested in the securities of such issuer, or (b) the Fund
would own more than 10% of that issuer's voting securities.
All of the percentage restrictions described above and elsewhere in
this Prospectus and in the Statement of Additional Information 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. Oppenheimer Integrity Funds (the
"Trust") was organized in 1982 as a multi-series Massachusetts business
trust and the Fund is a series of that Trust. That Trust is an open-
end, diversified management investment company, with an unlimited
number of authorized shares of beneficial interest. The Fund is one of
two series of the Trust. Each of the two series of the Trust is a fund
that issues its own shares, has its own investment portfolio, and its
own assets and liabilities.
The Trust is governed by a Board of Trustees, which is responsible
for protecting the interests of shareholders under Massachusetts law.
The Trustees meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions of
the Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees and provides more information
about them and the officers of the Fund. Although the Fund is not
required by law to hold annual shareholder meetings, it may hold
meetings from time to time on important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Declaration of Trust.
The Board of Trustees 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 two classes of shares,
Class A and Class B. Both classes invest in the same investment
portfolio. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes.
Each class may have a different net asset value. Each share has one
vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote together on
matters that affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. Since March 28, 1991, the Fund has
been managed by the Manager, which handles its day-to-day business.
The Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an investment advisory agreement which
states the Manager's responsibilities and its fees. 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 entered into a contract with Concert Capital
Management, Inc. ("Concert Capital"), an indirect wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company
("MassMutual"), to act as the Fund's Sub-Adviser. The Sub-Adviser is
responsible for choosing the Fund's investments and its duties and
responsibilities are set forth in the contract with the Manager. The
Manager, not the Fund, pays the Sub-Adviser.
The Manager has operated as an investment adviser since 1959. The
Manager (including an affiliate) 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 MassMutual. The Sub-Adviser was created
by MassMutual in 1982 and is provided business services by it. The
Sub-Adviser and MassMutual advise investment companies and
institutional clients.
The Manager, the Sub-Adviser 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.
- Portfolio Manager. The Portfolio Manager of the Fund (who is
also a Vice President of the Fund) is David B. Salerno, a Managing
Director of the Sub-Adviser. He has been responsible for the day-to-
day management of the Fund's portfolio since its inception in 1982.
Mr. Salerno also serves as a Senior Vice President of MML Series
Investment Fund. For more information about the Fund's other officers
and Trustees, see "Trustees 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
the Fund's average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, and 0.66% of net assets in excess of
$500 million. The Fund's management fee for its last fiscal year was
0.75% of average annual net assets for both its Class A shares and
0.75% for Class B shares.
Under the Sub-Advisory Agreement, the Manager pays the Sub-Adviser
the following annual fees, which decline on additional assets as the
Fund grows: 0.40% of the first $50 million of the Fund's average annual
net assets and 0.20% of net assets in excess of $50 million.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' 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. The Fund usually
uses brokers when buying portfolio securities. When deciding which
brokers to use, the Sub-Adviser is permitted by the sub-advisory
agreement to consider whether brokers have sold shares of the Fund or
any other funds for which the Manager or the Sub-Adviser or their
affiliates serve 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
"cumulative total return" and "average annual total return" to
illustrate its performance. The performance of each class of shares is
shown separately, because the performance of each class of shares will
usually be different, as a result of the different kinds of expenses
each class bears. 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
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, normally they
include the payment of the maximum initial sales charge. Total returns
may also be quoted "at net asset value," without including the sales
charge, and those returns would be reduced if sales charges were
deducted. When total returns are shown for Class B shares, they include
the applicable contingent deferred sales charge. Total Returns may also
be quoted "at net asset value", without including the contingent
deferred sales charge, and those returns would be reduced if the sales
charges were deducted.
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 a graphical comparison of the Fund's performance to
an appropriate broad-based market index.
- Management's Discussion of Performance. During the first half of
the Funds's fiscal year ended December 31, 1994, the Fund's performance
was effected by the rise in short-term interest rates. As interest
rates rose and the markets grew more volatile the value of the Fund's
assets held in high-quality value stocks increased. During the second
half of the Fund's fiscal year, the market moved away from value stocks
and toward growth issues. In response to this movement, the Manager
increased the Fund's exposure to consumer related stocks and healthcare
stocks which the Manager viewed as having a better value and a
potential for long-term growth.
- 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 at December 31, 1994; in the case of Class A
shares, from the inception of the class on December 26, 1986, and in
the case of Class B shares, from the inception of the class on May 1,
1993.
The performance of each class of the Fund's shares is compared to
the performance of the S&P 500 Index, an unmanaged index of 500 widely-
held common stocks traded on the New York and American Stock Exchanges
and the over-the-counter market. It is widely recognized as a general
measure of stock market performance. It includes a factor for the
reinvestment of dividends but does not reflect expenses or taxes.
Index performance reflects 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 the securities in any one 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 Investment in
Oppenheimer Value Stock Fund Class A Shares
and the S&P 500 Index
(Graphs)
Past Performance is not predictive of future performance.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes
of shares. The different classes of shares represent investments in
the same portfolio of securities but are subject to different expenses
and will likely have different share prices.
- Class A Shares. When 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 in "Class A Shares".
- Class B Shares. When 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 that
varies depending on how long you own your shares. It is described
below in "Class B Shares".
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.
- 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 shares, 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 shares, 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.
And for investors who invest $500,000 or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares
from a single investor.
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 contingent deferred
sales charge) in non-retirement accounts for Class B shareholders, you
should carefully review how you plan to use your investment account
before deciding which class of shares to buy. For example, not all
other OppenheimerFunds offer Class B shares limiting exchangability
the Fund. Share certificates are not available for Class B shares and
if you are considering using your shares as collateral, that may be a
factor. 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 for Class B shares
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; 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 from your bank account 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, to transmit funds electronically to purchase shares, or
to have the Transfer Agent send redemption proceeds or transmit
dividends and distributions to your bank account.
Shares are purchased for your account by Account Link 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 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 at 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, where purchases are not
subject to an initial sales charge, 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 a portion allocated to
your dealer as a commission. The current sales charge rates and
commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
________________________________________________________________________________
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_________________________________________________________________________________
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,00 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
________________________________________________________________________________
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of any
OppenheimerFunds that offers only one class of shares that has no class
designation are considered "Class A" shares for this purpose). 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") will 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 own
accounts, for your joint accounts, 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, (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 the 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 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 Declaration of Trust or adopted by
the Board of Trustees, and (5) Class A shares that would otherwise be
subject to the Class A contingent deferred sales charge are redeemed,
but at the time the purchase order for your shares was placed, the
dealer agreed 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 would be 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 Trustees
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. 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:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
Beginning of Month in Which on Redemptions in that Year
Purchase Order Was Accepted (As % of Amount Subject to Charge)
<S> <C>
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- 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 from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary 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
compensate 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 asset-based sales charge and service fees
increase Class B expenses by up to 1.00% of average net assets per
year.
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
(and the first year's service fee) 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 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 $391,541 (equal to 3.6% 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 Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor
for certain expenses it incurred before the Plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to enable
you to send money electronically between those accounts to perform a
number of types of account transactions. These include purchases of
shares by telephone (either through a service representative or by
PhoneLink, described below), automatic investments under Asset Builder
Plans, and sending dividends and distributions or Automatic Withdrawal
Plan payments directly to your bank account. Please refer to the
Application for details or call the Transfer Agent for more
information.
AccountLink privileges should be requested on the Application you
use to buy shares, or on your dealer's settlement instructions if you
buy your shares through your dealer. After your account is established,
you can request AccountLink privileges 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 sales charge. This privilege applies
only to redemption of Class A shares or to redemption of Class B shares
of the Fund that you purchased by reinvesting dividends or
distributions or 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 (and redemptions, transfers and
exchanges). The Distributor offers a number of different retirement
plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable
organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including
SARSEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
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 may be
required to 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 from 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:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be received
by the Transfer Agent by the close of The New York Stock Exchange that
day, which is normally 4:00 P.M., but may be earlier on some days.
Shares held in an OppenheimerFunds retirement plan or under a share
certificate may not be redeemed 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, once 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. This service is not available within 30 days
of changing the address on an account.
- Telephone Redemptions Through AccountLink. 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.
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 and/or Class
C 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 eligible OppenheimerFunds currently
available for exchanges in the Statement of Additional Information or
obtain their names 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, which is
normally 4:00 P.M. but may be earlier on some days, 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 Trustees 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, and
call options and hedging instruments. 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 Trustees 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 and Class B shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. 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 $1,000 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 and
Class B shares from net investment income and pays such dividends to
shareholders quarterly. It is expected that distributions paid with
respect to Class A shares will generally be higher than for Class B
shares because expenses allocable to Class B shares will generally be
higher.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, 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.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER VALUE STOCK FUND
Graphic material included in Prospectus of Oppenheimer Value Stock
Fund: "Comparison of Total Return of Oppenheimer Value Stock Fund with
the S&P 500 Index - Change in Value of a $10,000 Hypothetical
Investment"
Linear graphs will be included in the Prospectus of Oppenheimer
Value Stock Fund (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in each
class of shares of the Fund. In the case of Class A shares, that graph
will cover each of the Fund's fiscal years from the inception of the
class (December 31, 1986) through December 31, 1994, and in the case of
Class B shares the graph will cover the periods from inception of the
class (May 1, 1993) through December 31, 1994. The graphs will
compare such values with the same investments over the same time
periods with 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
Index, is set forth in the Prospectus under "Performance of the Fund --
Comparing the Fund's Performance to Market"
<TABLE>
<CAPTION>
Oppenheimer
Fiscal Year Value Stock
(Period) Ended Fund A S&P 500 Index
<S> <C> <C>
12/22/86 $9,452 $10,000
12/31/86 $9,258 $9,9366
12/31/87 $9,360 $10,458
12/31/88 $10,820 $12,189
12/31/89 $13,193 $16,045
12/31/90 $12,991 $15,546
12/31/91 $16,268 $20,272
12/31/92 $17,831 $21,815
12/31/93 $19,430 $24,009
12/31/94 $20,068 $24,324
Oppenheimer
Fiscal Year Value Stock
(Period) Ended Fund B(1) S&P 500 Index
05/1/93 $10,000 $10,000
12/31/93 $10,463 $10,525
12/31/94 $10,339 $10,663
<FN>
- ----------------------
(1) Class B shares of the Fund were first publicly offered on May 1, 1993.
</TABLE>
<PAGE>
Oppenheimer Value Stock Fund
3410 South Galena Street, Denver, Colorado 80231
Telephone: 1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
Concert Capital Management, Inc.
125 High Street
Boston, Massachusetts 02110
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing 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., Concert Capital Management, 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 offer in such state.
PR03265.001.0595 *Printed on recycled paper
<PAGE>
OPPENHEIMER VALUE STOCK FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated May 1, 1995.
This Statement of Additional Information of Oppenheimer Value
Stock Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the
Prospectus dated May 1, 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.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How to Buy Shares
How to Sell Shares
How to Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Independent Auditors' Report
Financial Statements
Appendix A: Industry Classifications
<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 those policies and the types of
securities in which the Fund invests, as well as the strategies the
Fund may use to try to achieve its objective. Certain capitalized
terms used in this Statement of Additional Information have the same
meaning as those terms have in the Prospectus.
The U.S. government obligations in which the Fund may invest in
for defensive reasons include U.S. Treasury bills, notes and bonds
which are direct obligations of the U.S. government and debt
obligations issued, assumed, guaranteed or sponsored by agencies or
instrumentalities established under the authority of an Act of
Congress, or obligations secured by such securities.
The Fund may invest up to 5% of the value of its assets in
warrants in an effort to build a position in the underlying common
stocks and, of such 5%, no more than 2% may be invested in warrants
that are not listed on the New York Stock Exchange or the American
Stock Exchange. A warrant typically gives the holder the right to
purchase underlying stock at a specified price for a designated period
of time. Warrants may be a relatively volatile investment. The holder
of a warrant takes the risk that the market price of the underlying
stock may never equal or exceed the exercise price of the warrant. A
warrant will expire without value if it is not exercised or sold during
its exercise period.
- Short-Term Money Market Securities. The high-quality, short-
term money market instruments the Fund may invest in to provide
liquidity or for temporary defensive purposes include U.S. government
obligations; commercial paper which at the date of the investment is
rated A-1 or A-2 by Standard & Poor's Corporation ("Standard & Poor's")
or P-1 or P-2 by Moody's Investors Service, Inc. ("Moody's") or, if
unrated, is issued by companies having an outstanding debt issue
currently rated at least A by Standard & Poor's or Moody's; short-term
obligations of corporate issuers which at the date of investment are
rated AAA or AA by Standard & Poor's or Aaa or Aa by Moody's; bank
participation certificates, provided that at the date of investment
each of the underlying loans is made to an issuer of securities rated
at least A-2, AA or SP-2 by Standard & Poor's or P-2 or Aa by Moody's,
and also provided that the underlying loans have a remaining maturity
of one year or less; and certificates of deposit and bankers'
acceptances of banks and savings and loan associations. The Fund may
also purchase short-term money market instruments which ratings are
substantially similar to the Moody's and Standard & Poor's ratings and
are from another NRSRO.
Securities of Foreign Governments and Companies. As stated in the
Prospectus, the Fund may invest in equity securities (which may be
dominated in U.S. dollars or non-U.S. currencies) issued or guaranteed
by foreign corporations, certain supranational entities (described
below) and foreign governments or their agencies or instrumentalities.
The percentage of the Fund's assets that will be allocated to
foreign securities will vary from time to time depending on, among
other things, the relative yields of foreign and U.S. securities, the
economies of foreign countries, the condition of such countries'
financial markets, the interest rate climate of such countries and the
relationship of such countries' currency to the U.S. dollar. The Sub-
Adviser will consider an issuer's affiliation, if any, with a foreign
government as one of the factors in determining whether to purchase any
particular foreign security. These factors are judged on the basis of
fundamental economic criteria (e.g., relative inflation levels and
trends, growth rate forecasts, balance of payments status, and economic
policies) as well as technical and political data. The Fund's
portfolio of foreign securities may include those of a number of
foreign countries or, depending upon market conditions, those of a
single country.
Securities of foreign issuers that are represented by American
depository receipts, or that are listed on a U.S. securities exchange,
or are traded in the U.S. over-the-counter market are not considered
"foreign securities," because they are not subject to many of the
special considerations and risks (discussed below) that apply to
foreign securities traded and held abroad. If the Fund's securities
are held abroad, the countries in which such securities may be held and
the sub-custodians holding must be, in most cases, approved by the
Fund's Board of Trustees under applicable SEC rules.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government.
Obligations of "supranational entities" include those of international
organizations designated or supported by governmental entities to
promote economic reconstruction or development and of international
banking institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the "World
Bank"), the European Coal and Steel Community, the Asian Development
Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," of these entities usually make initial
capital contributions to the supranational entity and in many cases are
committed to make additional capital contributions if the supranational
entity is unable to repay its borrowings. Each supranational entity's
lending activities are limited to a percentage of its total capital
(including "callable capital" contributed by members at the entity's
call), reserves and net income. There is no assurance that foreign
governments will be able or willing to honor their commitments.
Investing in foreign securities involves considerations and
possible risks not typically associated with investing in securities in
the U.S. The values of foreign securities will be affected by changes
in currency rates or exchange control regulations or currency blockage,
application of foreign tax laws, including withholding taxes, changes
in governmental administration or economic or monetary policy (in the
U.S. or abroad) or changed circumstances in dealings between nations.
There may be a lack of public information about foreign issuers.
Foreign countries may not have financial reporting, accounting and
auditing standards comparable to those that apply to U.S. issuers.
Costs will be incurred in connection with conversions between various
currencies. Foreign brokerage commissions are generally higher than
commissions in the U.S., and foreign securities markets may be less
liquid, more volatile and less subject to governmental regulation than
in the U.S. They may have increased delays in settling portfolio
transactions. Investments in foreign countries could be affected by
other factors not generally thought to be present in the U.S.,
including expropriation or nationalization, confiscatory taxation and
potential difficulties in enforcing contractual obligations, and could
be subject to extended settlement periods.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets and its income available for distribution. In addition,
although a portion of the Fund's investment income may be received or
realized in foreign currencies, the Fund will be required to compute
and distribute its income in U.S. dollars, and absorb the cost of
currency fluctuations. The Fund may engage in foreign currency
exchange transactions for hedging purposes to protect against changes
in future exchange rates. See "Other Investment Techniques and
Strategies - Hedging," below.
The values of foreign investments may also be affected unfavorably
by changes in currency exchange control regulations. Although the Fund
will invest only in securities denominated in foreign currencies that
at the time of investment do not have significant government-imposed
restrictions on conversion into U.S. dollars, there can be no assurance
against subsequent imposition of currency controls. In addition, the
values of foreign securities will fluctuate in response to a variety of
factors, including changes in U.S. and foreign interest rates.
- Convertible Securities. While convertible securities are a
form of debt security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as
"equity equivalents" so that the rating assigned to the security has
less impact on the investment decision than in the case of non-
convertible fixed income securities. To determine whether convertible
securities should be regarded as "equity equivalents," the Sub-Adviser
examines the following factors: (1) whether, at the option of the
investor, the convertible security can be exchanged for a fixed number
of shares of common stock of the issuer, (2) whether the issuer of the
convertible securities has restated its earnings per share of common
stock on a fully diluted basis (considering the effect of conversion of
the convertible securities), and (3) the extent to which the
convertible security may be a defensive "equity substitute," providing
the ability to participate in any appreciation in the price of common
stock.
Other Investment Techniques and Strategies
- Hedging. As described in the Prospectus, the Fund may employ
one or more types of Hedging Instruments. Hedging Instruments may be
used to attempt to: (i) protect against possible declines in the market
value of the Fund's portfolio resulting from downward trends in the
securities markets, (ii) protect unrealized gains in the value of the
Fund's securities which have appreciated, (iii) facilitate selling
securities for investment reasons, (iv) establish a position in the
securities markets as a temporary substitute for purchasing particular
equity securities, or (v) reduce the risk of adverse currency
fluctuations.
The Fund may use 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. To do so, the Fund may: (i) purchase Futures or (ii)
purchase calls on such Futures or securities. Normally, the Fund would
then purchase the equity securities and terminate the hedging position.
When hedging to protect against declines in the dollar value of a
foreign currency-denominated security, the Fund may: (a) purchase puts
on that foreign currency or on foreign currency Futures, (b) write
calls on that currency or on such Futures, or (c) enter into Forward
Contracts at a lower rate than the spot ("cash") rate.
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. At present, the Fund does not intend to enter into Futures,
Forward Contracts and options on Futures if, after any such purchase,
the sum of margin deposits on Futures and premiums paid on Futures
options exceeds 5% of the value of the Fund's total assets. 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. Additional
Information about the Hedging Instruments the Fund may use is provided
below
- Writing Call Options. The Fund may write (that is, sell) call
options ("calls"). All calls written by the Fund must be "covered"
while the call is outstanding (that means, the Fund must own the
securities subject to the call or other securities acceptable for
applicable escrow requirements). Calls on Futures (discussed below)
must be covered by deliverable securities or by liquid assets
segregated to satisfy the Futures contract.
When the Fund writes a call on an investment it receives a premium
and agrees to sell the callable investment to a purchaser of a
corresponding call 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 investment), 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 the Fund has written is more or less than the price of the call
the Fund has subsequently purchased. A profit may also be realized if
the call lapses unexercised, because the Fund retains the underlying
investment and the premium received. Those profits are considered
short-term capital gains for Federal income tax purposes, and when
distributed by the Fund are taxable as ordinary income. 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.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call
is written, the Fund covers the call by segregating in escrow an
equivalent dollar amount of deliverable securities or liquid assets.
The Fund will segregate additional liquid assets if the value of the
escrowed assets drops below 100% of the current value of the Future.
In no circumstances would an exercise notice require the Fund to
deliver a futures contract; it would simply put the Fund in a short
futures position, which is permitted by the Fund's hedging policies.
- Purchasing Calls and Puts. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
fully participate in an anticipated rise in the securities market.
When the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock
indices, 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 an index,
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.
The Fund may purchase put options ("puts") which relate to
securities, foreign currencies or Futures. When the Fund purchases a
put, it pays a premium and, except as to puts on stock indices, 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 the
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. In the event of a decline in the stock market, the
Fund could exercise or sell the put at a profit to attempt to offset
some or all of its loss on its portfolio securities. When the Fund
purchases a put on an index, or on a 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 an index or
Future, settlement is in cash rather than by delivery by the Fund of
the underlying investment.
Puts and calls on broadly-based stock indices or Stock Index
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
call 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.
- Stock Index Futures. The Fund may buy and sell Stock Index
Futures. This is 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
stocks included in the index and fluctuates with the changes in the
market value of these stocks. Stock indices cannot be purchased or
sold directly. Financial Futures are contracts based on the future
value of the basket of securities that comprise the underlying index.
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 futures obligations.
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"). The
initial margin will be deposited with the Funds's Custodian in an
account registered in the futures broker's name; however the futures
broker can gain access to that account only under specified conditions.
As the future is marked to market (that is, as the value on the Fund's
books is changed) to reflect changes in its market value, subsequent
margin payments, called variation margin, will be made to or by the
futures broker on a daily basis.
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 loss or
gain is then realized for tax purposes. Although Stock Index Futures
by their terms call for cash settlement or delivery of cash, in most
cases the obligation is fulfilled by entering into an offsetting
position. Al futures transactions are effected through a clearinghouse
associated with the exchange on which to contracts are traded.
- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. 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 enter into a Forward Contract in order to
"lock in" the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet settled,
or to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the gain that
would otherwise result from a change in the relationship between the
U.S. dollar and a foreign currency. To attempt to limit its exposure
to loss under Forward Contracts in a particular foreign currency, the
Fund limits its use of these contracts to the amount of its net assets
denominated in that currency or denominated in a closely-correlated
foreign currency. Forward contracts include standardized foreign
currency futures contracts which are traded on exchanges and are
subject to procedures and regulations applicable to other Futures. The
Fund may also enter into a forward contract to sell a foreign currency
denominated in a currency other than that in which the underlying
security is denominated. This is done in the expectation that there is
a greater correlation between the foreign currency of the forward
contract and the foreign currency of the underlying investment than
between the U.S. dollar and the foreign currency of the underlying
investment. This technique is referred to as "cross hedging." The
success of cross hedging is dependent on many factors, including the
ability of the Manager to correctly identify and monitor the
correlation between foreign currencies and the U.S. dollar. To the
extent that the correlation is not identical, the Fund may experience
losses or gains on both the underlying security and the cross currency
hedge.
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.
There is no limitation as to the percentage of the Fund's assets
that may be committed to foreign currency exchange contracts. The Fund
does not enter into such forward contracts or maintain a net exposure
in such contracts to the extent that the Fund would be obligated to
deliver an amount of foreign currency in excess of the value of the
Fund's assets denominated in that currency, or enter into a "cross
hedge," unless it is denominated in a currency or currencies that the
Manager believes will have price movements that tend to correlate
closely with the currency in which the investment being hedged is
denominated. See "Tax Aspects of Covered Calls and Hedging
Instruments" below for a discussion of the tax treatment of foreign
currency exchange contracts.
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's Custodian will place cash or U.S. Government securities
or other liquid high-quality debt securities in a separate account of
the Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If
the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the
Fund's commitments with respect to such contracts. 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.
- 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 from
the Fund 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.
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 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.
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 ("SEC") is evaluating whether OTC
options should be considered liquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
- Regulatory Aspects of Hedging Instruments. The 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 Rule 4.5 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 initial futures margin and related option 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. Under the
Rule, the Fund also must use short Futures and Futures options
positions solely for "bona fide hedging purposes" within the meaning
and intent of the applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by each of the 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 exchanges or
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 advisor as the Fund, or an
advisor that is an affiliate of the Fund's advisor. Position limits
also apply to Futures. An exchange may order the liquidation of
positions found to be in violation of those limits and may impose
certain other sanctions. Due to requirements under the Investment
Company Act, when the Fund purchases a Future, the Fund will maintain,
in a segregated account or accounts with its custodian bank, 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 options which
expire in less than three months; (iii) effecting closing transactions
with respect to calls or puts written or purchased less than three
months previously; (iv) exercising puts or calls held by the Fund for
less than three months; or (v) writing calls on investments held 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
mark-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 equity 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.
- Possible Risk Factors in Hedging. In addition to the risks
with respect to options discussed in the Prospectus and above, there is
a risk in using short hedging by selling Futures to attempt to protect
against decline in value of the Fund's portfolio securities (due to an
increase in interest rates) that the prices of such Futures will
correlate imperfectly with the behavior of the cash (i.e., market
value) prices of the Fund's securities. The ordinary spreads between
prices in the cash and futures markets are subject to distortions due
to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets 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 securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying Futures and/or calls on
such Futures or on securities, it is possible that the market may
decline; if the Fund then concludes not to invest in such 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
securities purchased.
- 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, 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 by the Trust's
Board of Trustees from time to time), for delivery on an agreed upon
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 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 Sub-Adviser will impose creditworthiness requirements
to confirm that the vendor is financially sound. Additionally, the
Sub-Adviser 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. Under applicable regulatory requirements (which are
subject to change), the loan collateral on each business day must at
least equal the value of the loaned securities and must consist of
cash, bank letters of credit or securities of the U.S. Government (or
its agencies or instrumentalities). 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. When it lends
securities, the Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower.
The Fund may also pay reasonable finder's, custodian and administrative
fees. The terms of the Fund's loans must meet applicable tests under
the Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
- 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 Trustees
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.
- When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms
and indenture are available and for which a market exists, but which
are not available for immediate delivery. When such transactions are
negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The Fund does not intend to
make such purchases for speculative purposes. The commitment to
purchase a security for which payment will be made on a future date may
be deemed a separate security and involve a risk of loss if the value
of the security declines prior to the settlement date. During the
period between commitment by the Fund and settlement (generally within
two months but not to exceed 120 days), no payment is made for the
securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will maintain a segregated account with its Custodian,
consisting of cash, U.S. Government securities or other high grade debt
obligations at least equal to the value of purchase commitments until
payment is made.
The Fund will engage in when-issued transactions in order to
secure what is considered to be an advantageous price and yield at the
time of entering into the obligation. When the Fund engages in when-
issued or delayed delivery transactions, it relies on the buyer or
seller, as the case may be, to consummate the transaction. Failure of
the buyer or seller to do so may result in the Fund losing the
opportunity to obtain a price and yield considered to be advantageous.
At the time the Fund makes a commitment to purchase or sell a security
on a when-issued or forward commitment basis, it records the
transaction and reflects the value of the security purchased, or if a
sale, the proceeds to be received, in determining its net asset value.
If the Fund chooses to (i) dispose of the right to acquire a when-
issued security prior to its acquisition or (ii) dispose of its right
to deliver or receive against a forward commitment, it may incur a gain
or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and
not for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or
delivering the securities, although (as noted above), when-issued
securities and forward commitments may be sold prior to settlement
date. In addition, changes in interest rates before settlement in a
direction other than that expected by the Sub-Adviser will affect the
value of such securities and may cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated
falling prices. In periods of falling interest rates and rising
prices, the Fund might sell portfolio securities and purchase the same
or similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields.
- Short Sales Against-the-Box. In a short sale, while the short
position is open, the Fund must own an equal amount of the securities
sold short, or by virtue of ownership of other securities have the
right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may
be made to defer, for Federal income tax purposes, recognition of gain
or loss on the sale of securities "in the box" until the short position
is closed out.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth
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 shareholder meeting, if the
holders of more than 50% of the outstanding shares are present, or (ii)
more than 50% of the outstanding shares. Under these additional
restrictions, the Trust may not, on behalf of the Fund:
(1) act as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the Fund may be
deemed an underwriter under applicable laws;
(2) invest in oil, gas or other mineral leases, rights, royalty
contracts or exploration or development programs, real estate or
real estate mortgage loans (this restriction does not prevent the
Fund from purchasing securities secured or issued by companies
investing or dealing in real estate and by companies that are not
principally engaged in the business of buying and selling such
leases, rights, contracts or programs);
(3) purchase commodities or commodity contracts except futures
contracts, including but not limited to contracts for the future
delivery of securities and futures contracts based on securities
indexes;
(4) make loans other than by investing in obligations in which the
Fund may invest consistent with its investment objective and
policies and other than repurchase agreements and loans of
portfolio securities;
(5) pledge, mortgage or hypothecate its assets, except that, to secure
permitted borrowings, it may pledge securities having a market
value at the time of the pledge not exceeding 15% of the cost of
the Fund's total assets and except in connection with permitted
transactions in options, futures contracts and options on futures
contracts, and except for reverse repurchase agreements and
securities lending;
(6) purchase or retain securities of any issuer if, to the knowledge
of the Trust, more than 5% of such issuer's securities are
beneficially owned by officers and trustees of the Trust or
officers and directors of Massachusetts Mutual Life Insurance
Company ("MassMutual") who individually beneficially own more than
1/2 of 1% of the securities of such issuer; and
(7) make loans to an officer, trustee or employee of the Trust or to
any officer, director or employee of MassMutual, or to MassMutual.
In addition to the investment restrictions described above and
those contained in the Prospectus, the Trustees of the Trust have
voluntarily adopted certain policies and restrictions which are
observed in the conduct of the affairs of the Fund. These represent
intentions of the Trustees based upon current circumstances. They
differ from fundamental investment policies in that the following
additional investment restrictions may be changed or amended by action
of the Trustees without requiring prior notice to or approval of
shareholders. In accordance with such nonfundamental policies and
guidelines, the Fund may not: (1) invest for the purpose of exercising
control over, or management of, any company; (2) purchase any security
of a company which (including any predecessor, controlling person,
general partner and guarantor) has a record of less than three years of
continuous operations or relevant business experience , if such
purchase would cause more than 5% of the current value of the Fund's
assets to be invested in such companies; and (3) invest in securities
of other investment companies, except by purchase in the open market
where no commission or profit to a sponsor or dealer results from such
purchase other than the customary broker's commission, except when such
purchase is part of a plan of merger, consolidation, reorganization or
acquisition.
For purposes of the Fund's policy not to concentrate investments
as described in the investment restrictions in the Prospectus, the Fund
has adopted the industry classifications set forth in Appendix A to
this Statement of Additional Information. This policy is not a
fundamental policy.
How the Fund is Managed
Organization and History. The Fund is one of two series of
Oppenheimer Integrity Funds (the "Trust"). This Statement of
Additional Information may be used with the Fund's Prospectus only to
offer shares of the Fund. The Trust was established in 1982 as
MassMutual Liquid Assets Trust and changed its name to MassMutual
Integrity Funds on April 15, 1988. The Fund was established as a
separate Massachusetts business trust known as MassMutual Equity
Investors Trust in 1986, and was reorganized as a series of the Trust
on April 15, 1988. On March 29, 1991, the Trust changed its name from
MassMutual Integrity Funds to Oppenheimer Integrity Funds and the Fund
changed its name from MassMutual Value Stock Fund to Oppenheimer Value
Stock Fund. Shares of the Fund represent an interest in the Fund
proportionately equal to the interest of each other share of the same
class and entitle the holder to one vote per share (and a fractional
vote for a fractional share) on matters submitted to their vote at
shareholders' meetings. Shareholders of the Fund and of the Trust's
other series 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 series or class vote separately on proposals which affect
that series or class, and shareholders of a series or class which is
not affected by that matter are not entitled to vote on the proposal.
For example, only shareholders of a series, such as the Fund, vote
exclusively on any material amendment to the investment advisory
agreement with respect to the series. Only shareholders of a class of
a series vote on certain amendments to the Distribution and/or Service
Plans if the amendments affect that class.
The Trustees are authorized to create new series and classes of
series. The Trustees may reclassify unissued shares of the Trust or
its series or classes into additional series or classes of shares. The
Trustees may also divide or combine the shares of a class into a
greater or lesser number of shares without thereby changing the
proportionate beneficial interest of a shareholder in the Fund. Shares
do not have cumulative voting rights or preemptive or subscription
rights. Shares may be voted in person or by proxy.
As a Massachusetts business trust, the Trust is not required to
hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust 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 Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Trust,
to remove a Trustee. The Trustees will call a meeting of shareholders
to vote on the removal of a Trustee upon the written request of the
record holders of at least 10% of its outstanding shares. In addition,
if the Trustees receive a request from at least 10 shareholders (who
have been shareholders for at least six months) holding shares of the
Trust valued at $25,000 or more or holding at least 1% of the Trust's
outstanding shares, whichever is less, stating that they wish to
communicate with other shareholders to request a meeting to remove a
Trustee, the Trustees will then either make the Trust's shareholder
list available to the applicants or mail their communication to all
other shareholders at the applicant's expense, or the Trustees may take
such other action as set forth under Section 16(c) of the Investment
Company Act.
The Trust's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Trust's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Trust) to be held personally liable as
a "partner" under certain circumstances, the risk of a Trust
shareholder incurring financial loss on account of shareholder
liability is limited to the relatively remote circumstances in which
the Fund would be unable to meet its obligations described above. Any
person doing business with the Trust, and any shareholder of the Trust,
agrees under the Trust's Declaration of Trust to look solely to the
assets of the Trust for satisfaction of any claim or demand which may
arise out of any dealings with the Trust, and the Trustees shall have
no personal liability to any such person, to the extent permitted by
law.
Trustees And Officers
The Trust's Trustees and officers and their principal occupations
and business affiliations during the past five years are listed below.
Each Trustee is also a trustee, director or managing general partner of
Oppenheimer Total Return Fund, Inc., Oppenheimer Equity Income Fund,
Oppenheimer High Yield Fund, Oppenheimer Cash Reserves, Oppenheimer
Tax-Exempt Bond Fund, Oppenheimer Limited-Term Government Fund, The New
York Tax-Exempt Income Fund, Inc., Oppenheimer Champion High Yield
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 Variable Account Funds, Daily Cash
Accumulation Fund, Inc., Centennial America Fund, L.P., Centennial
Money Market Trust, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial Tax Exempt Trust and Centennial California
Tax Exempt Trust, (collectively, the "Denver-based OppenheimerFunds").
Mr. Fossel is President and Mr. Swain is Chairman of each of the
Denver-based OppenheimerFunds. As of April 3, 1995, the Trustees and
officers of the Fund as a group owned of record or beneficially less
than 1% of each class of the Fund's outstanding shares. The foregoing
does not include shares held of record by an employee benefit plan for
employees of the Manager (for which one of the officers listed below,
Mr. Donohue, is a trustee) other than the shares beneficially owned
under that plan by the officers of the Fund listed below:
Robert G. Avis, Trustee; 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).
William A. Baker, Trustee; Age: 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; 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 Trustee*; Age: 53
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, Trustee; 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, Trustee; Age: 73
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
M. Kirchner, Trustee; Age: 73
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
__________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Ned M. Steel, Trustee; 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 Trustee*; Age: 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; President and Director of Centennial
Asset Management Corporation, an investment adviser subsidiary of the
Manager ("Centennial"); formerly Chairman of the Board of SSI.
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 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; formerly Senior Vice President/Comptroller and
Secretary of OAMC.
David B. Salerno, Vice President and Portfolio Manager; Age: 52
100 Northfield Drive, Windsor, Connecticut 06095
Managing Director of the Sub-Adviser; Senior Vice President of MML
Series Investment Fund.
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 of 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.
__________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
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 Trustees. The officers of the Fund are
affiliated with the Manager. They and the Trustees of the Fund who are
affiliated with the Manager (Messrs. Fossel and Swain, who are both
officers and Trustees) receive no salary or fee from the Fund. The
Trustees of the Fund (excluding Messrs. Fossel and Swain) received the
total amounts shown below from the Fund, during its fiscal year ended
December 31, 1994, and 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:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
<S> <C> <C>
Robert G. Avis $213 $53,000.00
Trustee
William A. Baker $295 $73,257.01
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $274 $68,293.67
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $213 $53,000.00
Trustee
C. Howard Kast $213 $53,000.00
Trustee
Robert M. Kirchner $274 $68,293.67
Audit and Review
Committee Member
and Trustee
Ned M. Steel $213 $53,000.00
Trustee
<FN>
______________________
1 For the 1994 calendar year.
</TABLE>
Major Shareholders. As of April 3, 1995, the only entities that owned
of record or was known by the Fund to own beneficially 5% or more of
any class of the Fund's outstanding shares was MML Securities Corp.,
1350 Main Street, Springfield, Massachusetts 01103-1627, which owned
2,206,826.537 Class A shares (31.61%) of the Fund, and which
represented less than 5% of the Trust; and MassMutual Life Insurance
Company, c/o Investment Securities Dept., 1295 State Street,
Springfield, Massachusetts 01111-0001, which owned 543,808.995 Class A
shares (7.78%) of the Fund, and which represented less than 5% of the
Trust.
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. Jon S. Fossel and
Mr. James C. Swain) serve as Trustees of the Fund.
The Manager, the Sub-Adviser 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.
- The Investment Advisory Agreement. The investment advisory
agreement, dated as of March 28, 1991, between the Trust on behalf of
the Fund and the Manager 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
Trustees, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs
and non-recurring expenses, including litigation costs.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting
from a good faith error or omission on its part with respect to any of
its duties thereunder. The advisory agreement permits the Manager to
act as investment adviser for any other person, firm or corporation and
to use the name "Oppenheimer" in connection with other investment
companies for which it may act as investment advisor or general
distributor. If the Manager shall no longer act as investment adviser
to the Fund, the right of the Fund to use the name "Oppenheimer" as
part of its name may be withdrawn.
Prior to April 23, 1993, MassMutual served as the Fund's
investment sub-adviser under a prior sub-advisory agreement (the "Prior
Sub-Advisory Agreement"). The Manager paid MassMutual a sub-advisory
fee under the Prior Sub-Advisory Agreement at the following annual
rates: 0.40% of the Fund's first $100 million of average annual net
assets, 0.30% of the next $200 million, 0.25% of the next $200 million
and 0.20% of average annual net assets in excess of $500 million. From
January 1, 1993 through April 23, 1993, MassMutual temporarily
delegated to the Sub-Adviser its duties to manage the investment and
reinvestment of the Fund's assets under the Prior Sub-Advisory
Agreement (but not its other duties). MassMutual also transferred the
senior investment personnel responsible for advising the Fund to the
Sub-Adviser. The delegation of duties to the Sub-Adviser was subject
to MassMutual's supervision and control and subject to MassMutual's
right to terminate the delegation at any time.
On April 23, 1993, the Fund's shareholders approved a new sub-
advisory agreement (the "sub-advisory agreement") with the Sub-Adviser,
thereby terminating the delegation of duties under the Prior Sub-
Advisory Agreement. The sub-advisory fees paid under the sub-advisory
agreement are stated in the Prospectus. In connection with approval of
the sub-advisory agreement by the Trust's Board of Trustees and
shareholders, MassMutual has represented that there will be no
substantive change in the sub-advisory relationship other than the
restructuring of investment advisory duties between MassMutual and the
Sub-Adviser pursuant to MassMutual's internal reorganization of its
investment advisory services for equity assets. MassMutual has agreed
to guarantee the performance of the Sub-Adviser under the sub-advisory
agreement. That guarantee may be amended or terminated by a written
instrument signed by MassMutual, the Manager and the Fund, and shall
terminate if for three consecutive 12 month fiscal year ends the Sub-
Adviser has total stockholders equity of at least $200,000 according to
its annual audited financial statements delivered to the Fund.
Attaining such level of stockholders equity shall not preclude the
Trust's Board of Trustees from considering the financial condition of
the Sub-Adviser or any other matters in determining at any time whether
to terminate, approve or renew the sub-advisory agreement.
Under the sub-advisory agreement, the Sub-Adviser is
responsible for managing the Fund's portfolio of securities and making
investment decisions with respect to the Fund's investments subject to
the Fund's investment policies established by the Board of Trustees of
the Trust, and in accordance with the Fund's investment objective,
policies and restrictions, set forth in the Prospectus and this
Additional Statement. The sub-advisory agreement has the same
provisions as to renewal, termination and the standard of care as the
investment advisory agreement, and both advisory agreements are subject
to annual approval by the Trustees, who may terminate either advisory
agreement on sixty days' notice approved by a majority of the Trustees.
The advisory agreements contain no expense limitation.
However, independently of the advisory and sub-advisory agreements, the
Manager has undertaken that the total expenses of the Fund in any
fiscal year (including the management fee, but excluding taxes,
interest, brokerage fees, distribution plan payments, and extraordinary
expenses, such as litigation costs) shall not exceed (and the Manager
undertakes to reduce the Fund's management fee in the amount by which
such expenses shall exceed) the most stringent applicable state "blue
sky" expense limitation requirement for qualification of sale of the
Fund's shares. At present, that limitation is imposed by California
and limits expenses (with specified exclusions) to 2.5% of the first
$30 million of the Fund's average annual net assets, 2.0% of the next
$70 million of average net assets and 1.5% of average net assets in
excess of $100 million. The Manager reserves the right to change or
eliminate this expense limitation at any time.
The payment of the management fee at the end of any month will
be reduced so that at no time will there be any accrued but unpaid
liability under the above expense limitation.
For the fiscal years ended December 31, 1992, 1993 and 1994,
the advisory fees paid to the Manager were $401,148, $614,932 and
$738,121, respectively, of which $215,035, $264,792 and $295,983,
respectively, was paid by the Manager to the Sub-Adviser.
- The Distributor. Under the General Distributor's Agreement
between the Trust and the Distributor, the Distributor acts as the
Fund's principal underwriter in the continuous public offering of the
Fund's Class A and Class B shares, but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales
(other than those paid under the Class A Service Plan and the Class B
Distribution and Service Plan), 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 years ended December 31, 1992, 1993 and 1994, the
aggregate amount of sales charges on sales of the Fund's Class A shares
was $171,597, $296,555 and $204,620, respectively, of which the
Distributor and Massachusetts Mutual Life Investors Services, Inc.
retained in the aggregate $162,902, $232,226 and $135,102 in those
respective years. For the year ending December 31, 1994, the
Distributor advanced $186,017 to broker-dealers on the sales of the
Funds' Class B shares, $35,292 of which went to MMLISI. In addition,
the Distributor collected $10,493 from contingent deferred sales
charges assessed on Class B shares.
- 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 and Sub-Advisory
Agreements. One of the duties of the Sub-Adviser under the sub-advisory
agreement is to arrange the portfolio transactions of the Fund. In
doing so, the Sub-Adviser is authorized by the sub-advisory agreement
to employ broker-dealers ("brokers"), 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.
Under the sub-advisory agreement, the Sub-Adviser is authorized
to select brokers which provide brokerage and/or research services for
the Fund and/or the other accounts over which it 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 Sub-Adviser that the commission is
fair and reasonable in relation to the services provided.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, the procedures and rules
described above, allocations of brokerage are generally made by the
Sub-Adviser's portfolio traders based upon recommendations by the Sub-
Adviser's portfolio manager. 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. In either case, brokerage is allocated under the
supervision of the Manager's executive officers and the Sub-Adviser.
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 otherwise 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 transactions in the securities to which
the option relates. Option commissions may be relatively higher than
those which would apply to direct purchases and sales of portfolio
securities.
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 Sub-Adviser
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 Sub-Adviser in a non-research capacity (such as bookkeeping
or other administrative functions), then only the percentage or
component that provides assistance to the Sub-Adviser in the investment
decision-making process may be paid for in commission dollars. The
Board of Trustees has permitted the Manager to use concessions on fixed
price offerings to obtain research in the same manner as is permitted
in agency transactions.
The research services provided by brokers broaden the scope and
supplement the research activities of the Sub-Adviser by making
available additional views for consideration and comparisons, and
enabling the Sub-Adviser to obtain market information for the valuation
of securities held in the Fund's portfolio or being considered for
purchase. The Board, including the independent Trustees of the Trust
(those Trustees of the Trust 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
agreements, or Distribution Plans described below) or in any agreements
relating to those Plans, annually reviews information furnished by the
Sub-Adviser 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.
Pursuant to the sub-advisory agreement, the Sub-Adviser is
authorized, in arranging the purchase and sale of the Fund's portfolio
securities, to employ or deal with such members of the securities
exchanges, brokers or dealers as may in the its best judgement
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (i.e., prompt and reliable execution at the most
favorable security price obtainable) of the Fund's portfolio
transactions. The Sub-Adviser 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 Sub-Adviser on the basis of all
relevant factors and considerations.
Securities held by the Fund may also be held by Sub-Adviser in
its investment accounts and by other investment companies for which it
acts as investment adviser. If the same security is purchased or sold
for the Fund and such investment accounts or companies at or about the
same time, such purchases or sales normally will be combined, to the
extent practicable, and will be allocated as nearly as practicable on a
pro rata basis in proportion to the amounts to be purchased and sold.
The main factors to be considered will be the investment objectives of
the respective portfolios, the relative size of portfolio holdings of
the same or comparable security, availability of cash for investment by
the various portfolios and the size of their respective investment
commitments. It is believed that the ability of the Fund to
participate in larger volume transactions will, in most cases, produce
better execution for the Fund. In some cases, however, this procedure
could have a detrimental effect on the price and amount of a security
available to the Fund or the price at which a security may be sold. It
is the opinion of the Trust's management that such execution advantage
and the desirability of retaining the Sub-Adviser in that capacity
outweigh the disadvantages, if any, which might result from this
procedure.
Paul Hallingby, Jr. is a director of MassMutual and a General
Partner of Bear Stearns & Co., Inc. ("Bear Stearns"). For its fiscal
years ended December 31, 1992, 1993 and 1994, the Fund paid brokerage
fees to Bear Stearns of $1,110, $4,239 and $3,546, respectively. For
the fiscal year ended December 31, 1994, the Fund placed 7.14% of its
transactions involving payment of commissions with Bear Stearns, for
which it was paid 7.06% of the Fund's aggregate brokerage fees for that
period.
During the fiscal years ended December 31, 1992, 1993 and 1994,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were
$20,543, $51,707 and $18,630, respectively. During the fiscal year
ended December 31, 1994, $0 was paid to dealers as brokerage
commissions in return for research services (including special
research, statistical information and execution); the aggregate dollar
amount of those transactions was $0. The transactions giving rise to
those commissions were allocated in accordance with the internal
allocation procedures described above.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return", "total return,"
"cumulative total return," "total return at net asset value" and
"cumulative total return at net asset value" of an investment in a
class of the Fund may be advertised. An explanation of how total
returns are calculated for each class and the components of those
calculations is set forth below.
The Fund's advertisement 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 total returns and share
prices are not guaranteed and normally will fluctuate on a daily basis.
When redeemed, an investor's shares may be worth more or less than
their original cost. Total returns for any given past period are not a
prediction or representation by the Fund of future rates of return on
its shares. The total returns of Class A and Class B shares of the
Fund are affected by portfolio quality, the type of investments the
Fund holds and its operating expenses allocated to a particular class.
- 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 4.75% (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, the
payment of the applicable 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, 1.0% in the sixth year and none
thereafter, is applied, as described in the Prospectus. Total returns
also assume that all dividends and capital gains distributions during
the period are reinvested to buy additional shares at net asset value
per share, and that the investment is redeemed at the end of the
period. The "average annual total returns" on an investment in Class A
shares of the Fund for the one and five-year periods ended December 31,
1994 and for the period from December 22, 1986 (the date the Fund
became an open-end Fund) to December 31, 1994, were -2.66%, 7.47% and
9.07%, respectively. The cumulative "total return" on Class A shares
for the latter period was 100.86%. For the fiscal period from May 1,
1993, through December 31, 1994, the average annual total returns and
the cumulative total returns on an investment in Class B shares of the
Fund were -2.41% and 2.02%, respectively.
- 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 or Class
B 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, 1993, and for the period
from December 22, 1986 to December 31, 1994 were 3.28% and 112.92%,
respectively. The cumulative total return at net asset value on the
Fund's Class B shares for the fiscal year ended December 31, 1993, and
for the fiscal period from May 1, 1993 through December 31, 1994 were
2.50% and 7.25%.
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.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A or Class B shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent mutual fund
monitoring 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's classes is ranked against
(i) all other funds, excluding money market funds, and (ii) all other
equity funds. The Lipper performance rankings are based on total
return that includes the reinvestment of capital gains distributions
and income dividends but does not take sales charges or taxes into
consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A or Class B shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks various mutual
funds, including the Fund, based on risk-adjusted investment return.
Investment return measures a fund's three, five and ten-year average
annual total returns (when available). 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 Fund in relation
to other equity funds. The current ranking is a weighted average of
the 3, 5 and 10-year rankings (if available). Rankings are subject to
change.
The total return on an investment in the Fund's Class A or
Class B shares may be compared with performance for the same period of
one or more of the following indices: the Standard & Poor's 500 Index
("S & P 500") or the Dow-Jones Industrial Average ("Dow"), which are
widely-recognized indices of U.S. stock market performance. Such
indices consist of unmanaged groups of common stocks. Each index
includes a factor for the reinvestment of interest but does not reflect
expenses or taxes.
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. Each Plan has been approved by
a vote of (i) the Board of Trustees of the Fund, including a majority
of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a "majority"
(as defined in the Investment Company Act) of the shares of each class.
For the Distribution and Service Plan for the Class B shares, that vote
was cast by the Manager as the sole initial holder of class B shares of
the Fund.
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. 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 Trustees
and its Independent Trustees 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
Trustees 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 Trustees.
While the Plans are in effect, the Treasurer of the Trust shall
provide separate written reports to the Trust's Board of Trustees 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 Trustees in the
exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those Trustees
of the Trust who are not "interested persons" of the Trust is committed
to the discretion of the Independent Trustees. 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 Trustees.
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 Trustees. Initially, the Board of Trustees
has set the fees at the maximum rate and set no minimum amount.
For the fiscal year ended December 31, 1994, payments under the
Class A Plan totaled $221,818, all of which was paid by the Distributor
to Recipients, including $154,383 paid to MMLISI.
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
0.25% 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 $78,251, all paid by the Distributor to
Recipients, including $1,554 paid to MMLISI.
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.
In the event the Class B Plan is terminated, the Distributor is
entitled to continue to receive the asset-based sales charge of 0.75%
per annum on Class B shares sold prior to termination until the
Distributor has recovered its Class B distribution expenses incurred
prior to termination from such payments and from the Class B CDSC.
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.
The two 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 Class B shares does
not constitute a taxable event for the holder under Federal income tax
law. If such a revenue ruling or opinion is no longer available, the
automatic conversion feature may be suspended, in which event no
further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged
for Class A shares on the basis of relative net asset value of the two
classes, without the 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 and Class B 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 Trustees, (v) custodian expenses, (vi) share
issuance costs, (vii) organization and start-up costs, (viii) interest,
taxes and brokerage commissions, and (ix) non-recurring expenses, such
as litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution and Service Plan fees,
(ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific class
rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values per
share of Class A and Class B 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 in debt securities and foreign
securities at times when the New York Stock Exchange is closed,
including weekends and holidays, or after the close of the Exchange on
a regular business day. The Fund may invest a substantial portion of
its assets in foreign securities primarily listed on foreign exchanges
or in foreign over-the-counter markets that may trade on Saturdays or
customary U.S. business holidays on which the Exchange is closed.
Because the Fund's net asset value will not be calculated on those
days, the Fund's net asset value per share may be significantly
affected on such days when shareholders may not purchase or redeem
shares.
The Trust's Board of Trustees has established procedures for
the valuation of the Fund's securities generally as follows: (i)
equity securities traded on a securities exchange or on NASDAQ for
which last sale information is regularly reported are valued at the
last reported sale price on their primary exchange or NASDAQ that day
(or, in the absence of sales that day, at values based on the last sale
prices of the preceding trading day or closing bid and asked prices);
(ii) NASDAQ and other unlisted equity securities for which last sales
prices are not regularly reported but for which over-the-counter market
quotations are readily available are valued at the highest closing bid
price at the time of valuation, or if no closing bid price is reported,
on the basis of a closing bid price obtained from a dealer who
maintains an active market in that security; (iii) securities
(including restricted securities) not having readily available market
quotations are valued at fair value under the Board's procedures; (iv)
unlisted debt securities having a remaining maturity in excess of 60
days are valued at the mean between the asked and bid prices determined
by a portfolio pricing service approved by the Trust's Board of
Trustees or obtained from an active market maker on the basis of
reasonable inquiry; (v) short-term debt securities having a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities traded on foreign exchanges or in foreign over-the-counter
markets are valued as determined by a portfolio pricing service,
approved by the Board, based on last sales prices reported on a
principal exchange or the mean between closing bid and asked prices and
reflect prevailing rates of exchange taken from the closing price on
the London foreign exchange market that day. Foreign currency will be
valued as close to the time fixed for the valuation date as is
reasonably practicable. The value of securities denominated in foreign
currency will be converted to U.S. dollars at the prevailing rates of
exchange at the time of valuation.
Trading in securities on European and Asian exchanges and over-
the-counter markets is normally completed before the close of The New
York Stock Exchange. Events affecting the values of foreign securities
traded in stock markets that occur between the time their prices are
determined and the close of the Exchange will not be reflected in the
Fund's calculation of net asset value unless the Board of Trustees, the
Manager, and/or the Sub-Adviser, under procedures established by the
Board of Trustees, determines that the particular event would
materially affect the Fund's net asset value, in which case an
adjustment would be made, if necessary. Foreign currency will be
valued as close to the time fixed for the valuation date as is
reasonably practicable. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the prevailing
rates of exchange at the time of valuation.
In the case of U.S. Government Securities, mortgage-backed
securities, foreign fixed-income 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 Trust's Board of Trustees has
authorized the Manager and/or the Sub-Adviser to employ a pricing
service to price U.S. Government Securities, mortgage-backed
securities, foreign government securities and corporate bonds. The
Trustees will monitor the accuracy of such pricing services by
comparing prices used for portfolio evaluation to actual sales prices
of selected securities.
Calls, puts and Futures held by the Fund are valued at the last
sale prices on the principal exchange on which they are traded, or on
NASDAQ, as applicable, 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. 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 Bond Fund
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
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
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.
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) sold with a front-end sales
charge 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
reinvestment 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 obtain
the reduced sales charge rate (as set forth in the Prospectus)
applicable to purchases of shares in that amount (the "intended
purchase amount"). Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of
shares in the intended purchase amount, as described in the Prospectus.
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
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 the Letter) do
not include any shares sold without a front-end sales charge or without
being subject to a Class A contingent deferred sales charge unless (for
the purpose of determining completion of the obligation to purchase
shares under the Letter) the shares were acquired in exchange for
shares of one of the OppenheimerFunds whose shares were acquired by
payment of a 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 "Exchange
Privilege," 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 Eligible Funds.
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 Trust's Board of Trustees has
the right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of these shares is less than
$1,000 or such lesser amount as the Board may fix. The Board of
Trustees 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, 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 Trustees of the Trust 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 Value 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 such privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains
tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the
Internal Revenue Code, if the redemption proceeds of Fund shares on
which a sales charge was paid are reinvested in shares of 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. 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 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 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 thereafter shares acquired with
reinvested dividends and capital gains distributions will be redeemed
next, followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made
under withdrawal plans should not be considered as a yield or income on
your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the 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 (the 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.
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 the following other OppenheimerFunds
currently offer Class B shares:
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 Main Street Income & Growth Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are available
only by exchange)
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Global 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 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, or acknowledge receipt of a prospectus of, the fund to
which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset
Builder Plans, Automatic Withdrawal Plans and retirement plan
contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day
the Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. 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 request 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 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.
Dividends, Capital Gains And Taxes
Dividends and Distributions. Dividends, distributions and the
proceeds of the redemption of Fund shares represented by checks
returned to the Transfer Agent by the Postal Service as undeliverable
will be invested in shares of Oppenheimer Money Market Fund, Inc., as
promptly as possible after the return of such checks to the Transfer
Agent, to enable the investor to earn a return on otherwise idle funds.
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
which 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 shares held
for 45 days or less. To the extent the Fund's dividends are derived
from its gross income from option premiums, interest income or short-
term gains from the sale of securities, or dividends from foreign
corporations, its dividends will not qualify for the deduction. It is
expected that for the most part the Fund's dividends will not qualify,
because of the nature of the investments held by the Fund in its
portfolio.
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 Trust's Board and 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.
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.
As of the date of this Statement of Additional Information, not all of
the OppenheimerFunds offer Class B 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 the Fund on the same basis.
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 between the Manager and 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.
<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
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>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
Independent Auditors' Report
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
The Board of Trustees and Shareholders of Oppenheimer Value Stock Fund:
We have audited the accompanying statement of assets and liabilities, including the statement of
investments, of Oppenheimer Value Stock Fund 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, 1991 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. The financial highlights (except for total return) for the period
December 22, 1986 to December 31, 1990 were audited by other auditors whose report dated
February 4,
1991, expressed an unqualified opinion on those financial highlights.
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 Value Stock Fund 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
Denver, Colorado
January 23, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Investments December 31, 1994
-----------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
==========================================================
==========================================================
===============
<S> <C> <C> <C>
Short-Term Notes--9.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Food Wholesalers--3.3% Pioneer Hi-Bred International, Inc., 5.97%, 1/10/95 $1,880,000 $
1,877,194
-----------------------------------------------------------------------------------------------------
Tyson Foods, Inc., 6.10%, 1/4/95 1,515,000 1,514,230
------------
3,391,424
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--2.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services: Countrywide Funding Corp., 6.30%, 1/6/95 2,000,000
1,998,250
-----------------------------------------------------------------------------------------------------
Miscellaneous--2.9% General Motors Acceptance Corp., 6.05%, 1/9/95 165,000
164,778
-----------------------------------------------------------------------------------------------------
ITT Financial Corp., 5.53%, 1/3/95 710,000 710,000
-----------------------------------------------------------------------------------------------------
PS Colorado Credit Corp., 5.95%, 1/25/95 170,000 169,326
------------
3,042,354
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--2.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Companies--1.8% Texas Electric Services Co., 6.20%, 1/5/95 1,920,000
1,918,677
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone--1.1% GTE Norwest, Inc., 5.88%, 1/13/95 1,115,000
1,112,815
------------
Total Short-Term Notes (Cost $9,465,270) 9,465,270
Shares
==========================================================
==========================================================
===============
Common Stocks--91.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--10.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Aluminum--0.9% Reynolds Metals Co. 19,000 931,000
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.9% Du Pont (E.I.) De Nemours & Co. 20,500 1,153,125
-----------------------------------------------------------------------------------------------------
Eastman Chemical Co. 37,000 1,868,500
------------
3,021,625
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals: Specialty--2.0% Lubrizol Corp. (The) 33,000 1,117,875
-----------------------------------------------------------------------------------------------------
Nalco Chemical Co. 27,200 911,200
------------
2,029,075
- -----------------------------------------------------------------------------------------------------------------------------------
Metal: Miscellaneous--0.7% Phelps Dodge Corp. 11,500 711,563
- -----------------------------------------------------------------------------------------------------------------------------------
Paper and Forest Westvaco Corp. 30,500 1,197,125
-----------------------------------------------------------------------------------------------------
Products--3.5% Weyerhaeuser Co. 49,000 1,837,500
-----------------------------------------------------------------------------------------------------
Willamette Industries, Inc. 13,300 631,750
------------
3,666,375
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--13.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Auto Parts: After Market--3.2% Genuine Parts Co. 50,500 1,818,000
-----------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 43,800 1,472,775
------------
3,290,775
</TABLE>
5 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
-----------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Automobiles--1.6% Ford Motor Co. 57,500 $ 1,610,000
- -----------------------------------------------------------------------------------------------------------------------------------
Hardware and Tools--1.1% Stanley Works (The) 32,000 1,144,000
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure Time--1.0% Eastman Kodak Co. 22,500 1,074,375
- -----------------------------------------------------------------------------------------------------------------------------------
Publishing--3.1% Dun & Bradstreet Corp. (The) 33,500 1,842,500
-----------------------------------------------------------------------------------------------------
McGraw-Hill, Inc. 21,000 1,404,375
------------
3,246,875
- -----------------------------------------------------------------------------------------------------------------------------------
Retail Stores: May Department Stores Co. 45,500 1,535,625
Department Stores--1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Retail Stores: General Kmart Corp. 30,500 396,500
-----------------------------------------------------------------------------------------------------
Merchandise Chains--1.2% Penney (J.C.) Co., Inc. 19,000 847,875
------------
1,244,375
- -----------------------------------------------------------------------------------------------------------------------------------
Textiles: Apparel V.F. Corp. 23,500 1,142,687
Manufacturers--1.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--14.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages: Alcoholic--1.2% Brown-Forman Corp., Cl. B 40,500
1,235,250
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages: Soft Drinks--1.0% PepsiCo, Inc. 28,000 1,015,000
- -----------------------------------------------------------------------------------------------------------------------------------
Drugs--3.7% Pfizer, Inc. 35,000 2,703,750
-----------------------------------------------------------------------------------------------------
Schering-Plough 15,000 1,110,000
------------
3,813,750
- -----------------------------------------------------------------------------------------------------------------------------------
Food Processing--3.7% Archer-Daniels-Midland Co. 51,690 1,066,105
-----------------------------------------------------------------------------------------------------
CPC International, Inc. 31,500 1,677,375
-----------------------------------------------------------------------------------------------------
Pioneer Hi-Bred International, Inc. 33,000 1,138,500
------------
3,881,980
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare: Diversified--2.5% Bristol-Myers Squibb Co. 44,000 2,546,500
- -----------------------------------------------------------------------------------------------------------------------------------
Household Products--1.2% Clorox Co. (The) 20,500 1,206,938
- -----------------------------------------------------------------------------------------------------------------------------------
Medical Products--1.4% Becton, Dickinson & Co. 31,000 1,488,000
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--8.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Oil: Exploration and Kerr-McGee Corp. 21,000 966,000
Production--0.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Oil:Integrated Domestic--0.9% Atlantic Richfield Co. 9,000 915,750
- -----------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated Amoco Corp. 37,300 2,205,363
International--6.8% -----------------------------------------------------------------------------------------------------
Chevron Corp. 48,500 2,164,313
-----------------------------------------------------------------------------------------------------
Mobil Corp. 20,000 1,685,000
-----------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 9,000 967,500
------------
7,022,176
</TABLE>
6 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial--15.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Services--1.2% Donnelley (R.R.) & Sons Co. 43,500 $
1,283,250
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--7.9% AMP, Inc. 37,400 2,720,850
-----------------------------------------------------------------------------------------------------
General Electric Co. 53,500 2,728,500
-----------------------------------------------------------------------------------------------------
Grainger (W. W.), Inc. 24,000 1,386,000
-----------------------------------------------------------------------------------------------------
Honeywell, Inc. 2,700 85,050
-----------------------------------------------------------------------------------------------------
Hubbell, Inc., Cl. B 23,521 1,252,493
------------
8,172,893
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing: Dover Corp. 20,000 1,032,500
-----------------------------------------------------------------------------------------------------
Diversified Industrials--4.1% General Signal Corp. 33,600 1,071,000
-----------------------------------------------------------------------------------------------------
Harsco Corp. 20,500 837,938
-----------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 29,000 1,319,500
------------
4,260,938
- -----------------------------------------------------------------------------------------------------------------------------------
Railroads--1.3% Norfolk Southern Corp. 23,000 1,394,375
- -----------------------------------------------------------------------------------------------------------------------------------
Truckers--1.1% Roadway Services, Inc. 20,000 1,135,000
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--11.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services: American Express Co. 55,000 1,622,500
Miscellaneous--1.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance: Life--1.0% Jefferson-Pilot Corp. 19,850 1,029,718
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance: Multi-Line--1.0% Unitrin, Inc. 24,500 1,053,500
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance: Property SAFECO Corp. 39,500 2,054,000
And Casualty--2.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Major Banks: Regional--4.2% Comerica, Inc. 52,500 1,279,688
-----------------------------------------------------------------------------------------------------
CoreStates Financial Corp. 50,000 1,300,000
-----------------------------------------------------------------------------------------------------
Norwest Corp. 38,000 888,250
-----------------------------------------------------------------------------------------------------
Wachovia Corp. 27,040 872,040
------------
4,339,978
- -----------------------------------------------------------------------------------------------------------------------------------
Money Center Banks--1.6% Bank of New York, Inc. 55,500 1,609,500
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--12.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--3.3% Boeing Co. (The) 24,000 1,122,000
-----------------------------------------------------------------------------------------------------
Lockheed Corp. 14,500 1,053,063
-----------------------------------------------------------------------------------------------------
Rockwell International Corp. 15,500 554,125
-----------------------------------------------------------------------------------------------------
TRW, Inc. 10,500 693,000
------------
3,422,188
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Systems--0.9% International Business Machines Corp. 12,500
918,750
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics: Hewlett-Packard Co. 26,300 2,626,713
Instrumentation--2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Office Equipment and Minnesota Mining & Manufacturing Co. 45,000
2,401,875
-----------------------------------------------------------------------------------------------------
Supplies--5.0% Pitney Bowes, Inc. 47,500 1,508,125
-----------------------------------------------------------------------------------------------------
Xerox Corp. 13,000 1,287,000
------------
5,197,000
</TABLE>
7 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
-----------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Telecommunications--0.9% Rochester Telephone Corp. 42,200 $ 891,474
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Companies--2.2% Niagara Mohawk Power Corp. 56,500
805,125
-----------------------------------------------------------------------------------------------------
NIPSCO Industries, Inc. 21,500 639,625
-----------------------------------------------------------------------------------------------------
Scana Corp. 20,000 842,500
------------
2,287,250
- -----------------------------------------------------------------------------------------------------------------------------------
Natural Gas--0.7% Consolidated Natural Gas Co. 21,000 745,500
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone--1.6% Ameritech Corp. 23,000 928,625
-----------------------------------------------------------------------------------------------------
Southern New England Telecommunications Corp. 23,000 738,875
------------
1,667,500
------------
Total Common Stocks (Cost $80,096,895) 94,451,721
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $89,562,165) 100.3% 103,916,991
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.3) (296,331)
----- ------------
Net Assets 100.0% $103,620,660
=====
============
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1994
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C>
Assets Investments, at value (cost $89,562,165)--see accompanying statement
$103,916,991
-----------------------------------------------------------------------------------------------------
Cash 4,715
-----------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 286,290
Shares of beneficial interest sold 184,483
-----------------------------------------------------------------------------------------------------
Other 20,975
------------
Total assets 104,413,454
==========================================================
==========================================================
===============
Liabilities Payables and other liabilities:
Shares of beneficial interest redeemed 322,571
Investments purchased 309,126
Distribution and service plan fees--Note 4 63,552
Dividends 18,262
Deferred trustee fees--Note 5 4,539
Other 74,744
------------
Total liabilities 792,794
==========================================================
==========================================================
===============
Net Assets $103,620,660
============
==========================================================
==========================================================
===============
Composition of Paid-in capital $ 89,314,351
Net Assets -----------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income (79,874)
-----------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) from investment transactions 31,357
-----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments--Note 3 14,354,826
------------
Net assets $103,620,660
============
==========================================================
==========================================================
===============
Per Share Class A Shares:
Net Asset Value Net asset value and redemption price per share (based on net assets
of $92,727,561 and 6,548,260 shares of beneficial interest outstanding) $14.16
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $15.02
-----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $10,893,099 and 772,962 shares of beneficial interest outstanding) $14.09
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1994
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C>
Investment Income Dividends $ 2,930,464
-----------------------------------------------------------------------------------------------------
Interest 429,125
------------
Total income 3,359,589
==========================================================
==========================================================
===============
Expenses Management fees--Note 4 738,121
-----------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 221,818
Class B--Note 4 78,251
-----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 109,435
-----------------------------------------------------------------------------------------------------
Shareholder reports 78,305
-----------------------------------------------------------------------------------------------------
Custodian fees and expenses 24,265
-----------------------------------------------------------------------------------------------------
Legal and auditing fees 18,674
-----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,695
-----------------------------------------------------------------------------------------------------
Registration and filing fees--Class B 2,175
-----------------------------------------------------------------------------------------------------
Other 30,856
------------
Total expenses 1,303,595
==========================================================
==========================================================
===============
Net Investment Income (Loss) 2,055,994
==========================================================
==========================================================
===============
Realized and Unrealized Net realized gain (loss) on investments 2,820,946
Gain (Loss) on Investments
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (1,764,415)
------------
Net realized and unrealized gain (loss) on investments 1,056,531
==========================================================
==========================================================
===============
Net Increase (Decrease) in Net Assets Resulting From Operations $ 3,112,525
============
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
-----------------------------------------------------------------------------------------------------
Year Ended December 31,
1994 1993
==========================================================
==========================================================
===============
<S> <C> <C>
Operations Net investment income (loss) $ 2,055,994 $ 1,598,257
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 2,820,946 4,772,844
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (1,764,415) (52,118)
------------- -------------
Net increase (decrease) in net assets resulting from operations 3,112,525 6,318,983
==========================================================
==========================================================
===============
Dividends and Dividends from net investment income:
Distributions to Class A ($.31 and $.288 per share, respectively) (1,921,684) (1,573,023)
Shareholders Class B ($.209 and $.166 per share, respectively) (130,461) (33,142)
-----------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.01 per share) (74,310) --
Class B ($.01 per share) (5,047) --
-----------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($.395 and $.76 per share, respectively) (2,490,365) (4,515,011)
Class B ($.395 and $.76 per share, respectively) (290,318) (258,413)
==========================================================
==========================================================
===============
Beneficial Interest Net increase (decrease) in net assets resulting from Class A
Transactions beneficial interest transactions--Note 2 3,834,762 30,973,434
-----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from Class B
beneficial interest transactions--Note 2 5,957,338 5,339,170
==========================================================
==========================================================
===============
Net Assets Total increase (decrease) 7,992,440 36,251,998
-----------------------------------------------------------------------------------------------------
Beginning of period 95,628,220 59,376,222
------------- -------------
End of period [including undistributed (overdistributed) net
investment income of $(79,874) and $225, respectively] $ 103,620,660 $ 95,628,220
=============
=============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------------------------------------------- ----------------
Year Ended Year Ended
December 31, December 31,
1994 1993 1992 1991(3) 1990 1989 1988 1987 1986(2) 1994 1993(1)
==========================================================
==========================================================
============
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $ 14.41 $ 14.19 $ 13.57 $ 11.39 $ 12.08 $ 10.47 $ 9.51 $ 9.98 $ 10.16 $ 14.35 $
14.60
Income from investment
operations:
Net investment income .31 .29 .32 .33 .37 .40 .33 .34 .01 .17 .17
Net realized and unrealized
gain (loss) on investments .16 .98 .97 2.49 (.57) 1.87 1.15 (.22) (.19) .19 .51
------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total income (loss) from
investment operations .47 1.27 1.29 2.82 (.20) 2.27 1.48 .12 (.18) .36 .68
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.31) (.29) (.32) (.33) (.39) (.41) (.33) (.41) -- (.21) (.17)
Dividends in excess of net
investment income (.01) -- -- -- -- -- -- -- -- (.01) --
Distributions from net realized
gain on investments (.40) (.76) (.35) (.31) (.10) (.25) (.19) (.18) -- (.40) (.76)
------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total dividends and
distributions to shareholders (.72) (1.05) (.67) (.64) (.49) (.66) (.52) (.59) -- (.62) (.93)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 14.16 $ 14.41 $ 14.19 $ 13.57 $ 11.39 $ 12.08 $ 10.47 $ 9.51 $ 9.98 $ 14.09 $
14.35
======= ======= ======= ======= ======= =======
======= ====== ======= ======= =======
==========================================================
==========================================================
============
Total Return, at Net Asset
Value(4) 3.28% 8.97% 9.61% 25.23% (1.53)% 21.93% 15.61% 1.10% (1.77)% 2.50%
4.63%
==========================================================
==========================================================
============
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $92,728 $90,470 $59,376 $49,381 $40,153 $37,713 $27,434 $19,377 $20,162 $10,893
$5,158
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $90,158 $80,229 $53,485 $45,581 $39,104 $33,742 $24,658 $22,322 $ --(2) $7,834
$2,527
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 6,548 6,280 4,184 3,639 3,526 3,122 2,620 2,039 2,021 773 359
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.16% 1.97% 2.34% 2.59% 3.22% 3.51% 3.45% 3.15% --(2)
1.45% .97%(5)
Expenses, before voluntary
reimbursement 1.27% 1.24% 1.19% 1.31% 1.36% 1.40% 1.21% .70% --(2) 2.01%
2.14%(5)
Expenses, net of voluntary
reimbursement N/A N/A N/A 1.26% 1.30% 1.30% 1.19% N/A --(2) N/A
N/A
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 16.3% 24.3% 12.3% 14.5% 13.5% 14.9% 13.1% 10.8% --(2) 16.3%
24.3%
<FN>
1. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
2. For the period from December 22, 1986 to December 31, 1986. Ratios during this development
period would not be indicative of representative results.
3. On March 28, 1991, Oppenheimer Management Corporation became the investment advisor to the
Fund.
4. 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.
5. Annualized.
6. 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 $20,227,936 and $14,410,677,
respectively.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
Notes to Financial Statements
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
1. Significant Oppenheimer Value Stock Fund (the Fund) is a separate fund of Oppenheimer Integrity Funds, a
Accounting Policies diversified, open-end management investment company registered under the Investment
Company Act of
1940, as amended. The Fund's investment advisor is Oppenheimer Management Corporation (the
Manager).
The Fund offers both Class A and Class B shares. Class A shares are sold with a front-end sales
charge. Class B shares may be subject to a contingent deferred sales charge. Both classes of shares
have identical rights to earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. 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. 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. Securities for which market quotes are not
readily available are valued under procedures established by the Board of Trustees to determine fair
value in good faith.
-----------------------------------------------------------------------------------------------------
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.
-----------------------------------------------------------------------------------------------------
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. 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 $42,792, a decrease in undistributed net investment income of $430,
and an increase in accumulated net realized gain on investments of $43,222. During the year ended
December 31, 1994, in accordance with Statement of Position 93-2, undistributed net investment
income
was decreased by $4,161, accumulated net realized gain on investments was decreased by $8,906,
and
paid-in capital was increased by $13,067.
-----------------------------------------------------------------------------------------------------
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. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
</TABLE>
13 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
2. Shares of The Fund has authorized an unlimited number of no par value shares of beneficial interest.
Beneficial Interest Transactions in shares of beneficial interest were as follows:
<CAPTION>
Year Ended Year Ended
December 31, 1994 December 31, 1993(1)
-------------------------- --------------------------
Shares Amount Shares Amount
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,880,960 $ 27,360,226 2,167,501 $ 19,481,793
Issued in connection with the acquisition
of Oppenheimer Blue Chip Fund--Note 6 -- -- 1,356,899 20,149,959
Dividends and distributions reinvested 311,720 4,414,279 379,876 5,528,826
Redeemed (1,924,358) (27,939,743) (1,808,202) (14,187,144)
------------ ------------ ------------ ------------
Net increase 268,322 $ 3,834,762 2,096,074 $ 30,973,434
============ ============
============ ============
-----------------------------------------------------------------------------------------------------
Class B:
Sold 499,617 $ 7,201,783 357,108 $ 5,313,077
Dividends and distributions reinvested 28,292 397,953 18,763 270,609
Redeemed (114,417) (1,642,398) (16,401) (244,516)
------------ ------------ ------------ ------------
Net increase 413,492 $ 5,957,338 359,470 $ 5,339,170
============ ============
============ ============
1. 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.
==========================================================
==========================================================
===============
<S> <C>
3. Unrealized Gains and At December 31, 1994, net unrealized appreciation on investments of $14,354,826 was
composed of gross
Losses on Investments appreciation of $16,299,468, and gross depreciation of $1,944,642.
==========================================================
==========================================================
===============
4. Management Fees and Management fees paid to the Manager were in accordance with the investment advisory
agreement with
Other Transactions the Fund which provides for an annual fee of .75% on the first $100 million of net assets with a
With Affiliates reduction of .03% on each $200 million thereafter, to .66% 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 $204,620, of which $135,102 was retained by Oppenheimer Funds
Distributor,
Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer.
During the period ended December 31, 1994, OFDI received contingent deferred sales charges of
$10,493
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, each class may expend up to .25% of its net assets annually to
reimburse OFDI for costs incurred in connection with the personal service and maintenance of
accounts
that holds shares of the Fund, 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 Trustees may allow the Fund to continue payment of the asset-based sales charge
to
OFDI for distribution expenses incurred on Class B shares sold prior to termination or
discontinuance
of the plan. During the year ended December 31, 1994, OFDI paid $154,383 and $1,554,
respectively, to
an affiliated broker/dealer as reimbursement for Class A and Class B personal service and
maintenance
expenses and retained $73,215 as reimbursement for Class B sales commissions and service fee
advances, as well as financing costs.
</TABLE>
14 Oppenheimer Value Stock Fund
<PAGE>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
5. Deferred Trustee A former trustee elected to defer receipt of fees earned. These deferred fees earn interest at a
rate
Compensation determined by the current Board of Trustees at the beginning of each calendar year,
compounded each
quarter-end. As of December 31, 1994, the Fund was incurring interest at a rate of 5.22% per
annum.
Deferred fees are payable in annual installments, with accrued interest, each April 1 through 1995.
==========================================================
==========================================================
===============
6. Acquisition of On March 26, 1993, the Fund acquired all of the net assets of Oppenheimer Blue Chip Fund
(Blue Chip),
Oppenheimer Blue pursuant to an Agreement and Plan of Reorganization approved by the Blue Chip shareholders
on
Chip Fund January 28, 1993. The Fund issued 1,356,899 shares of beneficial interest, valued at
$20,149,959, in
exchange for the net assets, resulting in combined net assets of $83,976,756 on March 26, 1993.
The
net assets acquired included net unrealized appreciation of $2,523,063. The exchange was tax-free.
</TABLE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
Concert Capital Management, Inc.
125 High Street
Boston, Massachusetts 02110
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing 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 80202-4918
<PAGE>
OPPENHEIMER INTEGRITY FUNDS
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
1. Financial Highlights (See Parts A and B, Prospectus and
Statement of Additional Information): Filed herewith.
2. Independent Auditors' Reports (See Part B, Statement of
Additional Information): Filed herewith.
3. Statements of Investments (See Part B, Statement of
Additional Information): Filed herewith.
4. Statements of Assets and Liabilities (See Part B, Statement
of Additional Information): Filed herewith.
5. Statements of Operations (See Part B, Statement of
Additional Information): Filed herewith.
6. Statements of Changes in Net Assets (See Part B, Statement
of Additional Information): Filed herewith.
7. Notes to Financial Statements (See Part B, Statement of
Additional Information): Filed herewith.
(b) Exhibits:
--------
1. Amended and Restated Declaration of Trust dated April 30,
1993: Filed with Registrant's Post-Effective Amendment No.
18, 4/30/93, and refiled herewith pursuant to Item 102 of
Regulation S-T.
2. Registrant's By-Laws dated 6/25/91: Filed with Registrant's
Post-Effective Amendment No. 16, 5/1/92, and refiled
herewith pursuant to Item 102 of Regulation S-T.
3. Not applicable.
4. (i) Specimen Class A Share Certificate for Oppenheimer
Value Stock Fund: Filed with Registrant's Post-
Effective Amendment No. 20, 4/29/94, and incorporated
herein by reference.
(ii) Specimen Class A Share Certificate for Oppenheimer
Investment Grade Bond Fund: Filed with Registrant's
Post-Effective Amendment No. 20, 4/29/94, and
incorporated herein by reference.
(iii) Specimen Class B Share Certificate for Oppenheimer
Value Stock Fund: Filed with Registrant's Post-
Effective Amendment No. 20, 4/29/94, and incorporated
herein by reference.
(iv) Specimen Class B Share Certificate for Oppenheimer
Investment Grade Bond Fund: Filed with Registrant's
Post-Effective Amendment No. 20, 4/29/94, and
incorporated herein by reference.
5. (i) Investment Advisory Agreement dated 3/28/91 for
Oppenheimer Investment Grade Bond Fund: Filed as
Exhibit 5(i) of Registrant's Post-Effective Amendment
No. 15, 3/29/91, and refiled herewith pursuant to Item
102 of Regulation S-T.
(ii) Investment Advisory Agreement dated 3/28/91 for
Oppenheimer Value Stock Fund: Filed with Registrant's
Post-Effective Amendment No. 16, 5/1/92, and
incorporated herein by reference.
(iii) Investment Sub-Advisory Agreement dated 3/28/91 for
Oppenheimer Investment Grade Bond Fund: Filed as
Exhibit 5(iii) of Registrant's Post-Effective Amendment
No. 15, 3/29/91, and refiled herewith pursuant to Item
102 of Regulation S-T.
(iv) Investment Sub-Advisory Agreement dated 4/23/93 for
Oppenheimer Value Stock Fund - Filed with Registrant's
Post-Effective Amendment No. 18, 4/30/93, and refiled
herewith pursuant to Item 102 of Regulation S-T.
(v) Letter dated 12/16/92 concerning temporary delegation
of duties to manage Oppenheimer Value Stock Fund -
Filed with Registrant's Post-Effective Amendment No.
18, 4/30/93, and refiled herewith pursuant to Item 102
of Regulation S-T.
(vi) Unconditional Guarantee Agreement dated 1/1/93 by
Massachusetts Mutual Life Insurance Company to
Oppenheimer Value Stock Fund of Concert Capital
Management, Inc.'s performance - Filed with
Registrant's Post-Effective Amendment No. 18, 4/30/93,
and refiled herewith pursuant to Item 102 of Regulation
S-T.
6. (i) General Distributor's Agreement dated 10/13/92: Filed
with Registrant's Post-Effective Amendment No. 17,
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.
14 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.
14 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. 14
to the Registration Statement of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and
incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Funds Distributor,
Inc. and Newbridge Securities, Inc. dated 10/1/86:
Filed with Post-Effective Amendment No. 25 to the
Registration Statement of Oppenheimer Growth Fund (Reg.
No. 2-45272), 11/1/86, and refiled with Post-Effective
Amendment No. 45 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94,
pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
7. Not applicable.
8. Custody Agreement dated 11/12/92, between the Registrant
and The Bank of New York: Filed with Registrant's Post-
Effective Amendment No. 17, 2/26/93, and refiled herewith
pursuant to Item 102 of Regulation S-T.
9. Not applicable.
10. Opinion and Consent of Counsel dated 2/11/91:
Incorporated herein by reference to Registrant's Rule
24f-2 Notice filed on 2/19/91.
11. Independent Auditors' Consent: Filed herewith.
12. Not applicable.
13. Not applicable.
14. (i) Form of Individual Retirement Account Trust
Agreement: Filed as Exhibit 14 of Post-Effective
Amendment No. 21 of Oppenheimer U.S. Government
Trust (Reg. No. 2-76645), 8/25/93, and incorporated
herein by reference.
(ii) 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. 3 of Oppenheimer
Global Growth & Income Fund (File No. 33-33799),
1/31/92, and refiled with Post-Effective Amendment
No. 7 to the Registration Statement of Oppenheimer
Global Growth & Income Fund (Reg. No. 33-33799),
12/1/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(iii) Form of Tax-Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax-
exempt organizations: Filed with Post-Effective
Amendment No. 47 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272),
10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 42 to the Registration
Statement of Oppenheimer Equity Income Fund (Reg.
No. 2-33043), 10/28/94, and incorporated herein by
reference.
(v) Form of SAR-SEP Simplified Employee Pension IRA:
Filed with Registrant's Post-Effective Amendment No.
19, 3/1/94, and incorporated herein by reference.
15. (i) Service Plan and Agreement under Rule 12b-1 of the
Investment Company Act of 1940 for Class A shares
of Oppenheimer Investment Grade Bond Fund dated
6/22/93: Filed with Registrant's Post-Effective
Amendment No. 19, 3/1/94, and incorporated herein
by reference.
(ii) Service Plan and Agreement under Rule 12b-1 of the
Investment Company Act of 1940 for Class A shares
of Oppenheimer Value Stock Fund dated 6/22/93: Filed
with Registrant's Post-Effective Amendment No. 19,
3/1/94, and incorporated herein by reference.
(iii) Distribution and Service Plan and Agreement under
Rule 12b-1 of the Investment Company Act of 1940 for
Class B shares of Oppenheimer Investment Grade Bond
Fund dated 6/22/93: Filed with Registrant's Post-
Effective Amendment No. 19, 3/1/94, and incorporated
herein by reference.
(iv) Distribution and Service Plan and Agreement under
Rule 12b-1 of the Investment Company Act of 1940 for
Class B shares of Oppenheimer Value Stock Fund dated
6/22/93: Filed with Registrant's Post-Effective
Amendment No. 19, 3/1/94, and incorporated herein
by reference.
16. (i) Performance Computation Schedule for Oppenheimer
Value Stock Fund: Filed herewith.
(ii) Performance Computation Schedule for Oppenheimer
Investment Grade Bond Fund: Filed herewith.
17. (i) Financial Data Schedule for Class A Shares of
Oppenheimer Investment Grade Bond Fund: Filed
herewith.
(ii) Financial Data Schedule for Class B Shares of
Oppenheimer Investment Grade Bond Fund: Filed
herewith.
(iii) Financial Data Schedule for Class A Shares of
Oppenheimer Value Stock Fund: Filed herewith.
(iv) Financial Data Schedule for Class B Shares of
Oppenheimer Value Stock Fund: Filed herewith.
-- Powers of Attorney and Certified Board Resolution:
Filed with Registrant's Post-Effective Amendment No.
19, 3/1/94, 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
Title of Class as of April 3, 1995
- -------------- ------------------------
Oppenheimer Investment Grade Bond Fund
Class A Shares of Beneficial Interest 10,033
Class B Shares of Beneficial Interest 434
Oppenheimer Value Stock Fund
Class A Shares of Beneficial Interest 6,410
Class B Shares of Beneficial Interest 1,795
Item 27. Indemnification
---------------
Article IV of Registrant's Declaration of Trust filed as Exhibit
24(b)(1) to this Registration Statement, generally provides, among other
things, for the indemnification of Registrant's Trustees and officers in
a manner consistent with Securities and Exchange Commission Release No.
IC-11330.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, 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 trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, 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. (a) Business and Other Connections of Investment Adviser and
Sub-Advisers
--------------------------------------------------------
(i) 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)(i) below.
(ii) Massachusetts Mutual Life Insurance Company
("MassMutual") and Concert Capital Management, Inc. ("Concert Capital"),
an indirect wholly owned management subsidiary of MassMutual, are the
investment sub-advisers of the Registrant's two series, Oppenheimer
Investment Grade Bond Fund and Oppenheimer Value Stock Fund, respectively.
MassMutual offers life, health, disability and accumulation products in
the personal, business and estate insurance markets. MassMutual and
Concert Capital also act as investment advisors to other registered
investment companies, a real estate investment trust, certain of
MassMutual's insurance company subsidiaries and various employee benefit
plans, as described hereof and listed in Item 28(b)(ii) below.
(b) (i) 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>
<CAPTION>
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 Trust
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.
***
(b) (ii) The directors and executive officers of Massachusetts
Mutual Life Insurance Company ("MassMutual") and Concert Capital
Management, Inc. ("Concert Capital"), their positions and their other
business affiliations and business experience for the past two years are
as follows:
Directors of MassMutual
ROGER G. ACKERMAN, Director and Member, Auditing and Compensation
Committees
President and Chief Operating Officer, Corning Incorporated
(manufacturer of specialty materials, communication equipment and
consumer products), One Riverfront Plaza, Corning, New York;
Director (since 1993), Dow Corning Corporation (producer of
silicone products), 2200 West Salzburg Road, Midland, Michigan;
Director, The Pittson Company (mining and marketing of coal for
electric utility and steel industries) One Pickwick Plaza,
Greenwich, Connecticut.
JACK F. BENNETT, Director and Member, Auditing and Investment Committees
Retired (since 1989); former Senior Vice President and Director,
Exxon Corporation (producer of petroleum products), 1251 Avenue
of the Americas, New York, New York; Director, Philips
Electronics N.V., Groenewoudseweg 1, 5621 BA Eindhoven, The
Netherlands; Dean Witter Mutual Funds, One World Trade Center,
New York, New York; and Tandem Computer, Inc. (designer of
computer systems), 19333 Vallco Parkway, Cupertino, California.
WILLIAM J. CLARK, Chairman of the Board and Member, Investment, Dividend
Policy, and Organization & Operations Committees.
Chairman of the Board of MassMutual, 1295 State Street,
Springfield, Massachusetts.
ANTHONY DOWNS, Director and Member, Dividend Policy and Investment
Committees
Senior Fellow, The Brookings Institution (non-profit policy
research center), 1775 Massachusetts Avenue, N.W., Washington,
D.C.; Director: The Pittway Corporation (publications and
security equipment), 200 South Wacker Drive, Suite 700, Chicago,
Illinois; National Housing Partnerships Foundation (non-profit
organization to own and manage rental housing), 1225 Eye Street,
N.W., Washington, D.C.; Bedford Properties, Inc. (real estate
investment trust), 3658 Mt. Diable Boulevard, Lafayette,
California; General Growth Properties, Inc. (real estate
investment trust), 215 Keo Way, Des Moines, Iowa; NAACP Legal and
Educational Defense Fund, Inc. (civil rights organization), 99
Hudson Street, New York, New York; Consultant, Aetna Realty
Investors (real estate investments), 242 Trumbull Street,
Hartford, Connecticut; and Salomon Brothers Inc (investment
banking), 7 World Trade Center, New York, New York; Trustee:
Urban Institute (public policy research organization), 2100 M
Street, N.W., Washington, D.C. and Urban Land Institute
(educational and research organization, 625 Indiana Avenue, N.W.,
Washington, D.C.
JAMES L. DUNLAP, Director and Member, Compensation and Organization &
Operations Committees
Senior Vice President of Texaco, Inc. (producer of petroleum
products), 2000 Westchester Avenue, White Plains, New York and
President, Texaco USA, 1111 Bagby, Houston, Texas.
RICHARD N. FRANK, Director and Member, Dividend Policy and Organization
& Operations Committees
Chairman of the Board of Directors and Chief Executive Officer,
Lawry's Restaurants, Inc. (operator of restaurants) 2950 Los
Feliz Boulevard, Los Angeles, California; Trustee, PIC Growth
Fund and PIC Balanced Pinnacle Fund (mutual funds managed by
Provident Investment Counsel), 300 North Lake Avenue, Pasadena,
California.
CHARLES K. GIFFORD, Director and Member, Investment and Auditing
Committees
President, The First National Bank of Boston, 100 Federal Street,
Boston, Massachusetts; President, Bank of Boston Corporation
(bank holding company), 100 Federal Street, Boston,
Massachusetts; Director, Member of Audit and Compensation
Committees, Boston Edison Co. (public utility electric company),
800 Boylston Street, Boston, Massachusetts.
WILLIAM N. GRIGGS, Director, Chairman, Auditing Committee and Member,
Investment Committee
Managing Director, Griggs & Santow Inc. (business consultants) 75
Wall Street, New York, New York; Director, T/SF Communications,
Inc. (diversified publishing and communications company), Tulsa,
Oklahoma.
JAMES G. HARLOW, JR., Director and Member, Dividend Policy and Auditing
Committee
Chairman and President, Oklahoma Gas and Electric Company
(electric utility), Corporate Tower, 101 N. Robinson, Oklahoma
City, Oklahoma; Director, Fleming Companies (wholesale food
distributors), 6301 Waterford Boulevard,Oklahoma City, Oklahoma;
Director (since 1994), Associated Electric & Gas Insurance
Services Limited, Harborside Financial Center, 700 Plaza Two,
Jersey City, New Jersey.
BARBARA B. HAUPTFUHRER, Director, Chairman, Compensation Committee and
Member, Organization & Operations Committee
Director and Member, Compensation, Nominating and Audit
Committees, The Vanguard Group of Investment Companies including
among others the following funds: Vanguard/Windsor Funds,
Vanguard/Wellington Fund, Vanguard/Morgan Growth Fund,
Vanguard/Wellesley Income Fund, Vanguard/Gemini Fund,
Vanguard/Explorer Fund, Vanguard Municipal Bond Fund, Vanguard
Fixed Income Securities Fund, Vanguard World Fund, Vanguard/Star
Fund, Vanguard Ginnie Mae Fund, Vanguard/Primecap Fund, Vanguard
Convertible Securities Fund, Vanguard Quantitative Fund, Vanguard
Index Trust, Vanguard/Trustees Commingled Equity Fund,
Vanguard/Trustees Commingled Fund-International, Vanguard Money
Market Trust, Vanguard/Windsor II, Vanguard Asset Allocation Fund
and Vanguard Equity Income Fund (principal offices, Drummers
Lane, Valley Forge, Pennsylvania); Director, Chairman of
Retirement Benefits Committee and Pension Fund Investment Review
- USA and Canada and Member, Audit, Finance and Executive
Committees, The Great Atlantic and Pacific Tea Company, Inc.
(operator of retail food stores) 2 Paragon Drive, Montvale, New
Jersey; Director, Chairman of Nominating Committee and Member,
Compensation Committee, Knight-Ridder, Inc. (publisher of daily
newspapers and operator of cable television and business
information systems) One Herald Plaza, Miami, Florida; Director
and Member, Compensation Committee, Raytheon Company,
(electronics manufacturer) 141 Spring Street, Lexington,
Massachusetts; Director and Member, Executive and Chairman, Human
Resources Committees, Alco Standard Corp. (diversified office
products and paper distributor) 825 Duportail Road, Valley Forge,
Pennsylvania.
SHELDON B. LUBAR, Director, Member, Investment Committee and Chairman,
Organization & Operations Committee
Chairman, Lubar & Co. Incorporated (investment management and
advisory company) 777 East Wisconsin Avenue, Milwaukee,
Wisconsin; Chairman, President and Director, The Christiana
Companies, Inc. (real estate development); Director: Firstar
Bank, Firstar Corporation (bank holding company), SLX Energy,
Inc. (oil and gas exploration); Member, Advisory Committee,
Venture Capital Fund, L.P. (principal offices, 777 East Wisconsin
Avenue, Milwaukee, Wisconsin); Director: Grey Wolf Drilling Co.
(contract oil and gas drilling), 2000 Post Oak Boulevard,
Houston, Texas; Marshall Erdman and Associates, Inc. (design,
engineering, and construction firm), 5117 University Avenue,
Madison, Wisconsin; Prideco, Inc. (drill collar manufacturer),
6039 Thomas Road, Houston, Texas; MGIC Investment Corporation
(investment company), MGIC Plaza, 111 E. Kilbourn Avenue,
Milwaukee, Wisconsin; Director (since 1993), Ameritech, Inc.
(regional holding company for telephone companies), 30 South
Wacker Drive, Chicago, Illinois; Director (1989-1994), Schwitzer,
Inc. (holding company for engine parts manufacturers), P.O. Box
15075, Asheville, North Carolina; and Briggs & Stratton (small
engine manufacturer) 3300 North 124th Street, Milwaukee,
Wisconsin.
WILLIAM B. MARX, JR., Director and Member, Dividend Policy and
Compensation Committees
Executive Vice President and Chief Executive Officer, Multimedia
Products Group (since 1994) and Network Systems Group (1993-
1994), AT&T (global communications and network computing
company), 295 North Maple Avenue, Basking Ridge, New Jersey;
Group Executive and President (1989-1993), AT&T Network Systems
(manufacturer and marketer of network telecommunications
equipment), 475 South Street, Morristown, New Jersey.
DONALD F. MCCULLOUGH, Director and Member, Dividend Policy and Auditing
Committees
Retired (since 1988); former Chairman and Chief Executive
Officer, Collins & Aikman Corp. (manufacturer of textile
products) 210 Madison Avenue, New York, New York; Director:
Bankers Trust New York Corp. (bank holding company) and Bankers
Trust Company (principal offices, 280 Park Avenue, New York, New
York); Melville Corporation (specialty retailer), One Theall
Road, Rye, New York.
BARBARA S. PREISKEL, Director, Chairman, Dividend Policy Committee and
Member, Compensation Committee
Attorney-at-Law, The Bar Building, 36 West 44th Street, New York,
New York; Director: Textron, Inc. (diversified manufacturing
company), 40 Westminster Street, Providence, Rhode Island;
General Electric Company (diversified manufacturer electrical
products), 3135 Easton Turnpike, Fairfield, Connecticut; The
Washington Post Company (publisher of daily newspaper),
Washington, D.C.; American Stores Company (operator of
supermarkets and drugstores), 709 East South Temple, Salt Lake
City, Utah.
THOMAS B. WHEELER, President, Director, Chief Executive Officer, Chairman,
Investment Committee and Member, Dividend Policy and Organization &
Operations Committees
President, Chief Executive Officer and Director of MassMutual;
and Chairman of the Board of Directors, MML Pension Insurance
Company (wholly-owned insurance subsidiary of MassMutual Holding
Company Two MSC, Inc.) (principal offices, 1295 State Street,
Springfield, Massachusetts); Chairman of the Board of Directors,
Concert Capital Management, Inc. (wholly-owned investment
advisory subsidiary of MassMutual Holding Company), 125 High
Street, Boston, Massachusetts; Director, The First National Bank
of Boston and Bank of Boston Corporation (bank holding company),
100 Federal Street, Boston, Massachusetts and Massachusetts
Capital Resources Company, 545 Boylston Street, Boston,
Massachusetts; Chairman and Director, Oppenheimer Acquisition
Corp. (parent of Oppenheimer Management Corporation, an
investment management company), Two World Trade Center, New York,
New York; Director (since 1993), Textron, Inc. (diversified
manufacturing company), 40 Westminster Street, Providence, Rhode
Island.
ALFRED M. ZEIEN, Director and Member Compensation and Organization &
Operations Committees
Chairman and Chief Executive Officer, The Gillette Company
(manufacturer of personal care products), Prudential Tower
Building, Boston, Massachusetts; Director: Polaroid Corporation
(manufacturer of photographic products), 549 Technology Square,
Cambridge, Massachusetts; Repligen Corporation (bio-technology);
Bank of Boston Corporation (bank holding company), 100 Federal
Street, Boston, Massachusetts; and Raytheon Corporation
(electronics manufacturer), 141 Spring Street, Lexington,
Massachusetts; Trustee, University Hospital of Boston,
Massachusetts.
Executive Vice Presidents of MassMutual
LAWRENCE V. BURKETT, Executive Vice President and General Counsel
Executive Vice President and General Counsel (since 1993), Senior
Vice President and Deputy General Counsel (1992-1993) of
MassMutual; Director (since 1993), MassMutual Holding Company and
Director (since 1994), MassMutual Holding Company Two, Inc.
(wholly-owned holding company subsidiaries of MassMutual),
Director (since 1994): MassMutual Holding Company Two MSC, Inc.
(wholly-owned holding company subsidiary of MassMutual Holding
Company Two, Inc.); and MML Pension Insurance Company (wholly-
owned insurance subsidiary of MassMutual Holding Company Two MSC,
Inc.) (principal offices, 1295 State Street, Springfield,
Massachusetts); Cornerstone Real Estate Advisers, Inc. (wholly-
owned real estate investment adviser subsidiary of MassMutual
Holding Company), 1500 Main Street, Suite 1400, Springfield,
Massachusetts; Director (since 1993), Sargasso Mutual Insurance
Co., Ltd., Victoria Hall, Victoria Street, Hamilton, Bermuda;
MassMutual of Ireland, Ltd. (wholly-owned subsidiary of
MassMutual Holding Company Two MSC, Inc. to provide group
insurance claim services), IDA Industrial Estate, P.O. Box 7,
Tipperary Town, Ireland; Chairman (since 1994), Director (since
1993), MML Reinsurance (Bermuda) Ltd. (wholly-owned property and
casualty reinsurance subsidiary of MassMutual Holding Company),
41 Cedar Avenue, Hamilton, Bermuda.
JOHN B. DAVIES, Executive Vice President
Executive Vice President (since 1994, Associate Executive Vice
President (1993-1994), General Agent (1982-1993) of MassMutual,
1295 State Street, Springfield, Massachusetts; Director (since
1994), MML Investors Services, Inc. (wholly-owned broker-dealer
subsidiary of MassMutual Holding Company), MML Insurance Agency,
Inc. (wholly-owned subsidiary of MML Investors Services, Inc.),
and MML Insurance Agency of Ohio, Inc. (subsidiary of MML
Insurance Agency, Inc.) (principal offices, One Financial Plaza,
1350 Main Street, Springfield, Massachusetts); and Cornerstone
Real Estate Advisers, Inc. (wholly-owned real estate investment
adviser subsidiary of MassMutual Holding Company), 1500 Main
Street, Suite 1400, Springfield, Massachusetts.
DANIEL J. FITZGERALD, Executive Vice President, Corporate Financial
Operations
Executive Vice President, Corporate Financial Operations (since
1994), Senior Vice President (1991-1994) of MassMutual; Vice
President (since 1994), Director (since 1993), MassMutual Holding
Company; and Vice President and Director (since 1994), MassMutual
Holding Company Two, Inc. (wholly-owned holding company
subsidiaries of MassMutual); Vice President and Director (since
1994): MassMutual Holding Company Two MSC, Inc. (wholly-owned
holding company subsidiary of MassMutual Holding Company Two,
Inc.); Director (since 1994), MML Pension Insurance Company
(wholly-owned insurance subsidiary of MassMutual Holding Company
Two MSC, Inc.); MML Bay State Life Insurance Company (wholly-
owned insurance subsidiary of MassMutual); MML Real Estate
Corporation and MML Realty Management Corporation (wholly-owned
real estate management subsidiaries of MassMutual Holding
Company) (principal offices, 1295 State Street, Springfield,
Massachusetts); Director (since 1994), Concert Capital
Management, Inc. (wholly-owned investment advisory subsidiary of
MassMutual Holding Company), 125 High Street, Boston,
Massachusetts; Director and Member, Compensation Committee (since
1994), Cornerstone Real Estate Advisers, Inc., 1500 Main Street,
Suite 1400, Springfield, Massachusetts; Director and Member,
Audit and Compensation Committees (since 1994), MML Investors
Services, Inc.(wholly-owned broker dealer subsidiary of
MassMutual Holding Company) and Director (1992-1993), MML
Insurance Agency, Inc. (wholly-owned subsidiary of MML Investors
Services, Inc.) (principal offices, One Financial Plaza, 1350
Main Street, Springfield, Massachusetts) Director (since 1994),
MassMutual of Ireland, Ltd. (wholly-owned subsidiary of
MassMutual Holding Company Two MSC, Inc. to provide group
insurance claim services), IDA Industrial Estate, P.O. Box 7,
Tipperary Town, Ireland.
LAWRENCE L. GRYPP, Executive Vice President
Executive Vice President of MassMutual, 1295 State Street,
Springfield, Massachusetts; Chairman and Member Executive and
Compensation Committees, MML Investors Services, Inc. (wholly-
owned broker-dealer subsidiary of MassMutual Holding Company) and
Director (1991-1993), MML Insurance Agency (wholly-owned
insurance subsidiary of MML Investors Services, Inc.) (principal
offices, One Financial Plaza, 1350 Main Street, Springfield,
Massachusetts); Director, Oppenheimer Acquisition Corp. (parent
of Oppenheimer Management Corporation, an investment management
company), Two World Trade Center, New York, New York: Director
(since 1993), Concert Capital Management, Inc. (wholly-owned
investment advisory subsidiary of MassMutual Holding Company),
125 High Street, Boston, Massachusetts; Trustee, The American
College, Bryn Mawr, Pennsylvania.
JAMES E. MILLER, Executive Vice President
Executive Vice President of MassMutual; President, Director and
Chief Executive Officer (since 1994), MML Pension Insurance
Company (wholly-owned insurance subsidiary of MassMutual Holding
Company Two MSC, Inc.) (principal offices, 1295 State Street,
Springfield, Massachusetts); Chairman (since 1994) and Director,
MassMutual of Ireland Ltd. (wholly-owned subsidiary of MassMutual
Holding Company Two MSC, Inc. to provide group insurance claim
services), IDA Industrial Estate, P.O. Box 7, Tipperary Town,
Ireland; Director: Benefit Panel Services, 888 South Figueroa
Street, Los Angeles, California; and National Capital Preferred
Provider Organization, 7979 Old Georgetown Road, Bethesda,
Maryland; Director (since 1994), Sloan's Lake Management Corp.
(preferred provider organization), 1355 South Colorado Boulevard,
Denver, Colorado; Vice President and Treasurer, Dental Learning
Systems, New York, New York; Director (1990-1994), The Ethix
Corporation, 12655 Southwest Center, Suite 180, Beaverton,
Oregon.
JOHN M. NAUGHTON, Executive Vice President
Executive Vice President of MassMutual; Trustee and Member,
Investment Pricing Committee, MassMutual Institutional Funds
(open-end investment company) (principal offices, 1295 State
Street, Springfield, Massachusetts); Chairman (since 1994) and
Trustee, Springfield Institution for Savings, 1441 Main Street,
Springfield, Massachusetts; Trustee, BayState Health Systems, 759
Chestnut Street, Springfield, Massachusetts; and American
International College, 1000 State Street, Springfield,
Massachusetts; Director, Oppenheimer Acquisition Corp. (parent of
Oppenheimer Management Corporation, an investment management
company), Two World Trade Center, New York, New York; and Concert
Capital Management, Inc. (wholly-owned investment advisory
subsidiary of MassMutual Holding Company), 125 High Street,
Boston, Massachusetts; Director (since 1993), Colebrook Group
(commercial real estate management and development), 1441 Main
Street, Springfield, Massachusetts and Association of Private
Pension and Welfare Plans; Trustee (since 1994), University of
Massachusetts, Amherst, Massachusetts.
JOHN J. PAJAK, Executive Vice President
Executive Vice President of MassMutual; Director (since 1994):
MassMutual Holding Company and MassMutual Holding Company Two,
Inc. (wholly-owned holding company subsidiaries of MassMutual);
MassMutual Holding Company Two MSC, Inc. (wholly-owned holding
company subsidiary of MassMutual Holding Company Two, Inc.); and
MML Pension Insurance Company (wholly-owned insurance subsidiary
of MassMutual Holding Company Two MSC, Inc.) (principal offices,
1295 State Street, Springfield, Massachusetts.)
GARY E. WENDLANDT, Executive Vice President
Chief Investment Officer (since 1993), Executive Vice President
of MassMutual; Trustee and President, MassMutual Corporate
Investors and MassMutual Participation Investors (closed-end
investment companies); Vice Chairman and Trustee (since 1993) and
President (1988-1993), MML Series Investment Fund (open-end
investment company); Chairman, Chief Executive Officer and
Member, Investment Pricing Committee (since 1994), MassMutual
Institutional Funds (open-end investment company); Chairman,
President and Chief Executive Officer (since 1994) and Director,
MassMutual Holding Company (wholly-owned holding company
subsidiary of MassMutual); Chairman, President and Director
(since 1994), MassMutual Holding Company Two, Inc. (wholly-owned
holding company subsidiary of MassMutual) and MassMutual Holding
Company Two MSC, Inc. (wholly-owned holding company subsidiary of
MassMutual Holding Company Two, Inc.); Chairman (since 1994) and
Director (since 1993), MML Real Estate Corporation and MML Realty
Management Corporation (wholly-owned real estate management
subsidiaries of MassMutual Holding Company) (principal offices,
1295 State Street, Springfield, Massachusetts); Chairman, Chief
Executive Officer and Member, Executive and Compensation
Committees (since 1994), Cornerstone Real Estate Advisers, Inc.,
1500 Main Street, Suite 1400, Springfield, Massachusetts;
President and Chief Executive Officer (since 1994) and Director,
Concert Capital Management, Inc. 125 High Street, Boston,
Massachusetts; Director, Oppenheimer Acquisition Corporation
(parent of Oppenheimer Management Corporation, an investment
management company), Two World Trade Center, New York, New York;
Supervisory Director, MassMutual/Carlson CBO N.V. (collateralized
bond fund), 6 John Gorsiraweg, P.O. Box 3889, Willemstad,
Curacao, Netherlands Antilles; Director, Merrill Lynch Derivative
Products, Inc., World Financial Center, North Tower, New York,
New York; Director (since 1994), MassMutual Corporate Value
Partners Limited (investor in debt and equity securities) and
MassMutual Corporate Value Limited (parent of MassMutual
Corporate Value Partners Limited) (principal offices, c/o
BankAmerica Trust and Banking Corporation, Box 1096, George Town,
Grand Cayman, Cayman Islands, British West Indies).
Directors of Concert Capital
THOMAS B. WHEELER, Chairman
Chairman of the Board of Directors, Concert Capital Management,
Inc. (wholly-owned investment advisory subsidiary of MassMutual
Holding Company), 125 High Street, Boston, Massachusetts. See
Directors of MassMutual, above, for further details.
RICHARD G. DOOLEY, Director
Director, Concert Capital Management, Inc. (wholly-owned
investment advisory subsidiary of MassMutual Holding Company),
125 High Street, Boston, Massachusetts; Retired (since 1993),
Executive Vice President and Chief Investment Officer (1978-1993)
of MassMutual; Chairman: MassMutual Corporate Investors and
MassMutual Participation Investors (closed-end investment
companies) and MML Series Investment Fund (open-end investment
company) (principal offices, 1295 State Street, Springfield,
Massachusetts); Director: The Advest Group, Inc. (financial
services holding company), 280 Trumbull Street, Hartford,
Connecticut; The New England Education Loan Marketing Corp.,
(finances college student loans) 25 Braintree Hill Park,
Braintree, Massachusetts; The Hartford Steam Boiler Inspection
and Insurance Co., One State Street, Hartford, Connecticut;
Trustee, Kimco Realty Corp., 1044 Northern Boulevard, Roslyn, New
York; Supervisory Director (1991-1994), MassMutual/Carlson CBO
(collateralized bond fund), 6 John Gorsiraweg, P.O. Box 3889,
Willemstad, Curacao, Netherlands Antilles; Director and Vice
President, Oppenheimer Acquisition Corp., Two World Trade Center,
New York, New York; Director (since 1993), Luxonen S.A. (Swedish
investment fund); and Jefferies Group, Inc. (financial services
holding company), 11100 Santa Monica Boulevard, Los Angeles,
California.
DANIEL J. FITZGERALD, Director
Director (since 1994), Concert Capital Management, Inc. (wholly-
owned investment advisory subsidiary of MassMutual Holding
Company), 125 High Street, Boston, Massachusetts. See Executive
Officers of MassMutual, above, for further details.
LAWRENCE L. GRYPP, Director
Director (since 1993), Concert Capital Management, Inc. (wholly-
owned investment advisory subsidiary of MassMutual Holding
Company), 125 High Street, Boston, Massachusetts. See Executive
Officers of MassMutual, above, for further details.
JOHN M. NAUGHTON, Director
Director, Concert Capital Management, Inc. (wholly-owned
investment advisory subsidiary of MassMutual Holding Company),
125 High Street, Boston, Massachusetts. See Executive Officers
of MassMutual, above, for further details.
GARY E. WENDLANDT, President, Director and Chief Executive Officer
President and Chief Executive Officer (since 1994) and Director,
Concert Capital Management, Inc. (wholly-owned investment
advisory subsidiary of MassMutual Holding Company), 125 High
Street, Boston, Massachusetts. See Executive Officers of
MassMutual, above, for further details.
Executive Officers of Concert Capital
DAVID B. SALERNO, Managing Director
Managing Director (since 1993), Vice President and Managing
Director (1992-1993) of Concert Capital Management, Inc., 125
High Street, Boston, Massachusetts; Senior Vice President, MML
Series Investment Fund (open-end investment company), 1295 State
Street, Springfield, Massachusetts; Vice President, Oppenheimer
Value Stock Fund (mutual fund), Two World Trade Center, New York,
New York.
JOHN V. MURPHY, Chief Operating Officer
Chief Operating Officer (since 1993), Concert Capital Management,
Inc., 125 High Street, Boston, Massachusetts; Chief Financial
Officer (1985-1993), Liberty Financial Companies, Boston,
Massachusetts.
GEORGE M. ULRICH, Senior Vice President
Senior Vice President (since 1993) of Concert Capital Management,
Inc., 125 High Street, Boston, Massachusetts.
The address of MassMutual is 1295 State Street, Springfield,
Massachusetts 01111 and the address of Concert Capital is 125 High Street,
Boston, Massachusetts 02110.
For information as to the business, profession, vocation or employment of
a substantial nature of the officers and trustees of MML Series Investment
Fund, reference is made to Part B of this registration statement and to
the registration on Form ADV filed by the Massachusetts Mutual Life
Insurance Company and Concert Capital Management, Inc., under the
Investment Advisers Act of 1940, which are incorporated herein by
reference.
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 Vice
President, and Secretary,
and
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 Vice President
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
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
</TABLE>
(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 both Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231 and MassMutual at its offices at 1295 State Street,
Springfield, Massachusetts 01111.
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
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
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 New York and State of New York
on the 28th day of April, 1995.
OPPENHEIMER INTEGRITY FUNDS
By: /s/ James C. Swain*
----------------------------------
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 on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ James C. Swain* Chairman of the
- ------------------ Board of Trustees April 28, 1995
James C. Swain
/s/ Jon S. Fossel* Chief Executive
- -------------------- Officer and April 28, 1995
Jon S. Fossel Trustee
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting April 28, 1995
George C. Bowen Officer
/s/ Robert G. Avis* Trustee April 28, 1995
- ------------------
Robert G. Avis
/s/ William A. Baker* Trustee April 28, 1995
- --------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee April 28, 1995
- -----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee April 28, 1995
- -------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee April 28, 1995
- ------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee April 28, 1995
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee April 28, 1995
- ----------------
Ned M. Steel
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER INTEGRITY FUNDS
EXHIBIT INDEX
Exhibit No. Document Description
- ----------- --------------------
24(b)1 Amended and Restated Declaration of Trust dated 4/30/93
24(b)2 By-Laws dated 6/25/91
24(b)5(i) Investment Advisory Agreement dated 3/28/91 for Oppenheimer
Investment Grade Bond Fund
24(b)5(ii) Investment Advisory Agreement dated 3/28/91 for Oppenheimer
Value Stock Fund
24(b)5(iii) Investment Sub-Advisory Agreement dated 3/28/91 for
Oppenheimer Investment Grade Bond Fund
24(b)5(iv) Investment Sub-Advisory Agreement dated 3/28/91 for
Oppenheimer Value Stock Fund
24(b)5(v) Letter dated 12/16/92 concerning temporary delegation of duties
to manage Oppenheimer Value Stock Fund
24(b)5(vi) Unconditional Guarantee Agreement dated 1/1/93 by
Massachusetts Mutual Life Insurance Company to Oppenheimer
Value Stock Fund of Concert Capital Management, Inc.'s
performance
24(b)6(i) General Distributor's Agreement dated 10/13/92
24(b)8 Custody Agreement dated 11/12/92
24(b)10 Opinion and Consent of Counsel dated 2/11/91
24(b)11 Independent Auditor's Consent
24(b)16(i) Performance Data Computation Schedule for Oppenheimer Value
Stock Fund
24(b)16(ii) Performance Data Computation Schedule for Oppenheimer
Investment Grade Bond Fund
24(b)17(i) Financial Data Schedule for Class A Shares of Oppenheimer
Investment Grade Bond Fund
24(b)17(ii) Financial Data Schedule for Class B Shares of Oppenheimer
Investment Grade Bond Fund
24(b)17(iii) Financial Data Schedule for Class A Shares of Oppenheimer
Value Stock Fund
24(b)(17) Financial Data Schedule for Class B Shares of Oppenheimer
Value Stock Fund
OPPENHEIMER INTEGRITY FUNDS
AMENDED AND RESTATED
DECLARATION OF TRUST
Dated April 30, 1993
<PAGE>
Table of Contents
Page
ARTICLE I -- NAME AND DEFINITIONS1
Section 1.1 Name1
Section 1.2 Definitions1
Section 1.3 Trust Only3
ARTICLE II -- TRUSTEES3
Section 2.1 Powers3
Section 2.2 Legal Title6
Section 2.3 Number of Trustees; Term of Office7
Section 2.4 Qualification of Trustees7
Section 2.5 Election of Trustees7
Section 2.6 Resignation and Removal7
Section 2.7 Vacancies7
Section 2.8 Committees; Delegation8
Section 2.9 By-Laws; Conduct of Business8
Section 2.10 Action Without a Meeting; Participation by
Conference Telephone9
Section 2.11 No Bond Required9
Section 2.12 Limitation on Liability; Reliance on Experts,
Etc.9
ARTICLE III -- CONTRACTS9
Section 3.1 Underwriting Contracts9
Section 3.2 Advisory or Management Contracts9
Section 3.3 Affiliations of Trustees or Officers, Etc.10
ARTICLE IV -- LIMITATION OF LIABILITY; INDEMNIFICATION10
Section 4.1 No Personal Liability of Shareholders, Trustees,
Etc.10
Section 4.2 Execution of Documents; Notice; Apparent
Authority10
Section 4.3 Indemnification of Trustees, Officers, Etc.11
Section 4.4 Advance Payments11
Section 4.5 Indemnification of Shareholders12
ARTICLE V -- SHARES OF BENEFICIAL INTEREST12
Section 5.1 Shares of Beneficial Interest12
Section 5.2 Series and Class Designation13
Section 5.3 Termination of a Series16
Section 5.4 Rights of Shareholders17
Section 5.5 Issuance of Shares17
Section 5.5.1 General17
Section 5.5.2 Price17
Section 5.5.3 On Merger or Consolidation17
Section 5.5.4 Fractional Shares17
Section 5.6 Register of Shares17
Section 5.7 Transfer of Shares18
Section 5.8 Voting Powers18
Section 5.9 Meetings of Shareholders19
Section 5.10 Action Without a Meeting19
Section 5.11 Removal of Trustees by Shareholders19
ARTICLE VI -- REDEMPTION AND REPURCHASE OF SHARES20
Section 6.1 Redemption of Shares20
Section 6.2 Price20
Section 6.3 Payment20
Section 6.4 Effect of Suspension of Right of Redemption20
Section 6.5 Repurchase by Agreement20
Section 6.6 Suspension of Right of Redemption20
Section 6.7 Involuntary Redemption of Shares; Disclosure of
Holding21
ARTICLE VII -- DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS22
Section 7.1 By Whom Determined22
Section 7.2 When Determined22
Section 7.3 Computation of Per Share Net Asset Value22
Section 7.4 Interim Determinations23
Section 7.5 Maintenance of Constant Net Asset Value Per
Share23
Section 7.6 Outstanding Shares23
Section 7.7 Distributions to Shareholders24
Section 7.8 Power to Modify Foregoing Procedures24
ARTICLE VIII -- CUSTODIANS25
Section 8.1 Appointment and Duties25
Section 8.2 Action Upon Termination of Custodian Agreement25
Section 8.3 Central Certificate System, Etc.25
Section 8.4 Acceptance of Receipts in Lieu of Certificates25
ARTICLE IX -- DURATION; TERMINATION OF TRUST; AMENDMENT;
MERGERS, ETC.26
Section 9.1 Duration and Termination26
Section 9.2 Amendment Procedure26
Section 9.3 Merger, Consolidation and Sale of Assets27
Section 9.4 Incorporation27
ARTICLE X -- REPORTS TO SHAREHOLDERS27
ARTICLE XI -- MISCELLANEOUS27
Section 11.1 Filing27
Section 11.2 Governing Law28
Section 11.3 Counterparts28
Section 11.4 Reliance by Third Parties28
Section 11.5 Provisions in Conflict with Law or Regulations28
Section 11.6 Section Headings; Interpretation28
Section 11.7 Action by the Board29
Section 11.8 Use of the Name "Oppenheimer"29
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER INTEGRITY FUNDS
Dated April 30, 1993
AMENDED AND RESTATED DECLARATION OF TRUST made as of April 30, 1993,
by and among the individuals executing this Amended and Restated
Declaration of Trust as Trustees;
WHEREAS, the Trustees (this and certain other capitalized terms used
herein having the meanings specified in Section 1.2 hereof) established
Oppenheimer Integrity Funds (the "Trust"), initially named "MassMutual
Integrity Funds," a trust fund under the laws of the Commonwealth of
Massachusetts, for the investment and reinvestment of funds contributed
thereto, under a Declaration of Trust dated March 9, 1982, as amended
November 12, 1986, December 18, 1987, February 9, 1988 and March 29, 1991;
WHEREAS, the Trustees desire to make certain changes to said
Declaration of Trust;
WHEREAS, such changes have been approved by the Trust's Shareholders
at a meeting held April 30, 1993;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust established hereunder and all proceeds thereof
shall henceforth be held and managed under this Amended and Restated
Declaration of Trust IN TRUST for the benefit of the holders, from time
to time, of the shares of beneficial interest issued hereunder and subject
to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The trust created hereby shall be known as
"Oppenheimer Integrity Funds." The address of the Trust is 3410 South
Galena Street, Denver, Colorado 80231. The registered agent for service
in Massachusetts is Massachusetts Mutual Life Insurance Company, 1295
State Street, Springfield, Massachusetts 01111, Attention: Stephen L.
Kuhn, Esq. As far as may be practicable the Trustees shall conduct the
business and activities of the trust created hereby and execute all
documents and take all actions under that name, which name (and the word
"Trust" whenever used in this Declaration, except where the context
requires otherwise) shall refer to the Trustees in their capacity as
Trustees, and not individually or personally, and shall not refer to the
officers, agents, employees or shareholders of the trust created hereby
or of such Trustees.
Section 1.2. Definitions. Wherever they are used herein, the
following terms have the following meanings:
"Affiliated Person" shall have the meaning set forth in Section
2(a)(3) of the 1940 Act.
"By-Laws" shall mean the By-Laws, if any, adopted pursuant to Section
2.9 hereof, as from time to time amended.
"Class" shall mean a class of a Series of Shares (as defined below)
of the Trust established and designated under or in accordance with the
provisions of Article V.
"Commission" shall mean the Securities and Exchange Commission.
"Custodian" shall mean any Person employed by the Trustees pursuant
to Section 8.1 of this Declaration as custodian of any Trust Property.
"Declaration" shall mean this Declaration of Trust as amended from
time to time.
"Distributor" shall have the meaning set forth in Section 3.1 hereof.
"Interested Person" shall have the meaning set forth in Section
2(a)(19) of the 1940 Act.
"Investment Adviser" shall have the meaning set forth in Section 3.2
hereof.
"Majority Shareholder Vote" shall mean the vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the 1940
Act) of the Trust, provided that in the event there shall be Shares of two
or more Series or Classes outstanding, then with respect to each such
Series or Class, any matter shall be deemed to be effectively acted upon
by the holders of Shares of such Series or Class if such matter shall have
been acted upon as contemplated by Rule 18f-2 of the Commission.
"1940 Act" shall mean the Investment Company Act of 1940, as amended
from time to time.
"Person" shall mean an individual, a company, a corporation,
partnership, trust or association, a joint venture, an organization, a
business, a firm or other entity, whether or not a legal entity, or a
country, state, municipality or other political subdivision or any
governmental agency or instrumentality.
"Series" shall mean the one or more separate series of Shares
authorized by Section 5.2.
"Shareholder" shall mean a record owner of Shares.
"Shares" shall mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust or any Series or
Class of the Trust (as the context may require) shall be divided from time
to time and includes fractions of Shares as well as whole Shares. All
references to Shares shall be deemed to refer to Shares of any or all
Class or Series as the context may require.
"Transfer Agent" shall mean any Person other than the Trustees who
maintains the Shareholder records of the Trust or any Class or Series
thereof, such as the list of Shareholders of each Class or Series, the
number of Shares credited to each account, and the like.
"Trust" shall mean Oppenheimer Integrity Funds.
"Trust Property" shall mean any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
the Trust or the Trustees, including any and all assets of or allocated
to any Class or Series.
"Trustees" shall mean the individuals who have signed this
Declaration of Trust, so long as they shall continue in office in
accordance with the terms hereof, and all other individuals who may from
time to time be duly elected or appointed, qualified and serving as
Trustees in accordance with the provisions of Article II hereof, and
reference herein to a Trustee or the Trustees shall refer to such person
or persons in his capacity or their capacities as trustees hereunder.
Section 1.3. Trust Only. The Trust shall be of the type commonly
termed a Massachusetts business trust. It is the intention of the
Trustees to create only the relationship of Trustee and beneficiary
between the Trustees and each Shareholder from time to time. It is not
the intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any form
of legal relationship other than a trust. Nothing in this Declaration
shall be construed to make the Shareholders, either by themselves or with
the Trustees, partners or members of a joint stock association.
ARTICLE II
TRUSTEES
Section 2.1. Powers. The Trustees, subject only to the specific
limitations contained in this Declaration, shall have exclusive and
absolute power, control and authority over the Trust Property and over the
business of the Trust to the same extent as if the Trustees were the sole
owners of the Trust Property and business in their own right, including
such power, control and authority to do all such acts and things as in
their sole judgment and discretion are necessary, incidental or desirable
for the carrying out of or conducting of the business of the Trust or in
order to promote the interests of the Trust, but with such powers of
delegation as may be permitted by this Declaration. The enumeration of
any specific power, control or authority herein shall not be construed as
limiting the aforesaid power, control and authority or any other specific
power, control or authority. The Trustees shall have power to conduct and
carry on the business of the Trust, or any Series thereof, to have one or
more offices and to exercise any or all of its trust powers and rights,
in the Commonwealth of Massachusetts, in any other states, territories,
districts, colonies and dependencies of the United States and in any
foreign countries. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees. Such
powers of the Trustees may be exercised without order of or resort to any
court.
Without limiting the foregoing, the Trustees shall have the power:
(a) To operate as and to carry on the business of an investment
company, and to exercise all the powers necessary and appropriate to
the conduct of such operations.
(b) To subscribe for and to invest and reinvest funds in, and
to hold for investment, the securities (including but not limited to
bonds, debentures, time notes, certificates of deposit, commercial
paper, bankers' acceptances and all other evidences of indebtedness
and shares, stock, subscription rights, profit-sharing interests or
participations and all other contracts for or evidences of equity
interests) of any Person and to hold cash uninvested.
(c) To acquire (by purchase, subscription or otherwise), to
trade in and deal in, to sell or otherwise dispose of, to enter into
repurchase agreements, reverse repurchase agreements and firm
commitment agreements with respect to, and to lend and to pledge, any
such securities.
(d) To exercise all rights, powers and privileges of ownership
or interest in all securities included in the Trust Property,
including the right to vote thereon and otherwise act with respect
thereto and to do all acts for the preservation, protection,
improvement and enhancement in value of all such securities and to
delegate, assign, waive or otherwise dispose of any of such rights,
powers or privileges.
(e) To declare (from interest, dividends or other income
received or accrued, from accruals of original issue or other
discounts on obligations held, from capital or other profits whether
realized or unrealized and from any other lawful sources) dividends
and distributions on the Shares of any Series or any Class and to
credit the same to the account of holders of Shares of such Series
or Class, or at the election of the Trustees to accrue income to the
account of such holders, on such dates (which may be as frequently
as every day) and at such time or times on such dates as the Trustees
may determine. Such dividends, distributions or accruals shall be
payable in cash, property or Shares of such Series or Class at such
intervals as the Trustees may determine at any time in advance of
such payment, whether or not the amount of such dividend,
distribution or accrual can at the time of declaration or accrual be
determined or must be calculated subsequent to declaration or accrual
and prior to payment by reference to amounts or other factors not yet
determined at the time of declaration or accrual (including but not
limited to the amount of a dividend or distribution to be determined
by reference to (i) what is sufficient to enable the Trust to qualify
as a regulated investment company under the United States Internal
Revenue Code or to avoid liability for Federal income tax or (ii)
what is necessary to maintain a constant net asset value per share
as contemplated by Section 7.5 hereof).
The power granted by this Subsection (e) shall include, without
limitation, and if otherwise lawful, the power (A) to declare
dividends or distributions or to accrue income to the account of
Shareholders by means of a formula or other similar method of
determination whether or not the amount of such dividend or
distribution can be calculated at the time of such declaration; (B)
to establish record or payment dates for dividends or distributions
on any basis, including the power to establish a number of record or
payment dates subsequent to the declaration of any dividend or
distribution; (C) to establish the same payment date for any number
of dividends or distributions declared prior to such date; (D) to
provide for payment of dividends or distributions declared and as yet
unpaid, or unpaid accrued income, to Shareholders redeeming Shares
prior to the payment date otherwise applicable; (E) to provide in
advance for conditions under which any dividend or distribution may
be payable in Shares to all or less than all of the Shareholders; and
(F) to provide for the reduction of accruals of income to the account
of Shareholders or of dividends previously declared but not yet paid
if deemed advisable by the Trustees in order to maintain a constant
net asset value per share as contemplated by Section 7.5 hereof.
(f) To provide for the adjustment of the total number of Shares
of any Series or Class outstanding as contemplated by Section 7.5
hereof in order to maintain a constant net asset value per share of
the Shares of such Series, if appropriate.
(g) To suspend or terminate the maintenance of the net asset
value per share of the Shares of any Series or Class at a constant
value from time to time and at any time that the Trustees determine
that such maintenance is not in the best interests of the Trust or
such Series or Class or the holders of Shares of such Series or
Class.
(h) To acquire (by purchase, lease or otherwise) and to hold,
use, maintain, develop and dispose of (by sale, lease or otherwise)
any property, real or personal, and any interest therein.
(i) To borrow money, and in this connection to issue notes or
other evidences of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting to security interests the Trust
Property; and to lend Trust Property.
(j) To aid by further investment any Person, if any obligation
of or interest in such Person is included in the Trust Property or
if the Trustees have any direct or indirect interest in the affairs
of such Person; to do anything designed to preserve, protect, improve
or enhance the value of such obligation or interest; and to guarantee
or become surety on any or all of the contracts, stocks, bonds,
notes, debentures and other obligations of any such Person.
(k) To promote or aid the incorporation of any organization or
enterprise under the law of any country, state, municipality or other
political subdivision, and to cause the same to be dissolved, wound
up, liquidated, merged or consolidated.
(l) To enter into joint ventures, general or limited
partnerships and any other combinations or associations.
(m) To purchase and pay for out of Trust Property insurance
policies insuring the Shareholders, Trustees, officers, employees and
agents of the Trust, any Investment Adviser, any Distributor and
dealers or independent contractors of the Trust against all claims
and liabilities of every nature arising by reason of holding or
having held any such position or by reason of any action taken or
omitted by any such Person in such capacity, whether or not
constituting negligence and whether or not the Trust would have the
power to indemnify such Person against such liability.
(n) To the extent permitted by law and determined by the
Trustees, to indemnify any Person with whom the Trust has dealings,
including, without limitation, the Shareholders, the Trustees, the
officers, employees and agents of the Trust, any Investment Adviser,
any Distributor, any Transfer Agent, any Custodian and dealers and
independent contractors.
(o) To establish pension, profit-sharing, share purchase, and
other retirement, incentive and benefit plans for any Trustees,
officers, employees or agents of the Trust.
(p) To incur and pay any charges, taxes and expenses which in
the opinion of the Trustees are necessary or incidental to or proper
for carrying out any of the purposes of this Declaration, and to pay
from the Trust Property to themselves as Trustees reasonable
compensation and reimbursement for expenses.
(q) To prosecute or abandon and to compromise, arbitrate or
otherwise adjust claims in favor of or against the Trust or any
matter in controversy, including but not limited to claims for taxes.
(r) To foreclose any security interest securing any obligations
owed to the Trust.
(s) To exercise the right to consent, and to enter into
releases, agreements and other instruments.
(t) To employ or contract with such Persons as the Trustees may
deem desirable for the transaction of the business of the Trust.
(u) To determine and change the fiscal year of the Trust or any
Series or Class thereof and the method in which accounts shall be
kept.
(v) To adopt a seal for the Trust, but the absence of such seal
shall not impair the validity of any instrument executed on behalf
of the Trust.
(w) To purchase liability, casualty, property or other
insurance and to pay from the Trust Property the premiums therefor.
(x) To change the name of the Trust or any Class or Series of
the Trust as they consider appropriate without prior Shareholder
approval.
(y) To take such actions as are authorized or required to be
taken by the Trustees pursuant to other provisions of this
Declaration.
(z) In general to carry on any other business in connection
with or incidental to any of the objects and purposes of the Trust
or any Series or Class thereof, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power herein set forth, either
alone or in association with others, and to take any action
incidental or appurtenant to or growing out of or connected with the
business, purposes, objects or powers of the Trustees.
The foregoing clauses shall be construed both as objects and as
powers, and the foregoing enumeration of specific powers shall not be held
to limit or restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited by any law now or hereafter in
effect limiting the investments which may be made or retained by
fiduciaries, but they shall have full power and authority to make any and
all investments within the limitation of authority this Declaration that
they, in their sole and absolute discretion, shall determine, and without
liability for loss even though such investments do not or may not produce
income or are of a character or in an amount not considered proper for the
investment of trust funds.
Section 2.2. Legal Title. Legal title to all the Trust Property
shall as far as may be practicable be vested in the name of the Trust,
which name shall refer to the Trustees in their capacity as Trustees, and
not individually or personally, and shall not refer to the officers,
agents, employees or Shareholders of the Trust or of the Trustees,
provided that the Trustees shall have power to cause legal title to any
Trust Property to be held by or in the name of one or more of the Trustees
with suitable reference to their trustee status, or in the name of the
Trust or any Series or Class thereof, or in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of a custodian or sub-custodian or a nominee or nominees or
otherwise. The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the termination of the term of office of a Trustee,
whether upon such Trustee's resignation or removal, or upon the due
election and qualification of his successor, or upon the occurrence of any
of the events specified in the first sentence of Section 2.7 hereof or
otherwise, such Trustee shall automatically cease to have any right, title
or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically
in the remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.
Section 2.3. Number of Trustees, Term of Office. The number of
Trustees shall be two, which number may be increased and thereafter
decreased from time to time by a written instrument signed by a majority
of the Trustees, provided that the number of Trustees shall not be less
than two nor more than 15. The two initial Trustees named in Section 2.5
hereof and each Trustee elected (whenever such election occurs) shall hold
office until his successor is elected and qualified or until the earlier
occurrence of any of the events specified in the first sentence of Section
2.7 hereof.
Section 2.4. Qualification of Trustees. Trustees may but need not
own Shares.
Section 2.5. Election of Trustees. Vacancies in the Board of
Trustees may be filled by the Trustees, as provided in Section 2.7 hereof;
and Trustees may be elected by the Shareholders, as provided in Section
2.7 hereof or at any meeting of Shareholders called pursuant to Section
5.11 hereof.
If a special meeting of Shareholders for the election of Trustees is
called as provided in Section 2.7 hereof or in Section 5.11 hereof, any
vacancies shall be filled at such meeting by a Majority Shareholder Vote.
Section 2.6. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an instrument
in writing signed by him and delivered to the Chairman of the Board, or
the Secretary or any Assistant Secretary, and such resignation shall be
effective upon such delivery, or at any later date specified in the
instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than two) with
cause by the affirmative vote of two-thirds of the remaining Trustees.
Any Trustee may also be removed by the Shareholders pursuant to Section
5.11 hereof. Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held
in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver
on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
Section 2.7. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, retirement,
resignation or removal (whether pursuant to Section 2.6 hereof or Section
5.11 hereof or otherwise), bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office of a Trustee. A vacancy
shall also occur upon an increase in the number of Trustees pursuant to
Section 2.3 hereof. No vacancy shall operate to annul this Declaration
or to revoke any existing agency created pursuant to the terms of this
Declaration. In the event of any vacancy, including a vacancy existing
by reason of an increase in the authorized number of Trustees pursuant to
Section 2.3 hereof, the remaining Trustees may fill, subject to the
requirements of Section 2.4 hereof, such vacancy by the appointment of
such individual as they in their sole and absolute discretion shall see
fit, made by a written instrument signed by a majority of the Trustees
then in office, provided that immediately after filling any such vacancy
at least two-thirds of the Trustees then holding office shall have been
elected to such office by the Shareholders.
In the event that at any time less than a majority of the Trustees
holding office at that time were elected by the Shareholders, a meeting
of Shareholders pursuant to Section 5.11 hereof shall be held promptly and
in any event within 60 days (unless the Commission shall by order extend
such period) for the purpose of electing Trustees to fill any existing
vacancies. A special meeting of Shareholders may be held for the purpose
of electing Trustees to fill any existing vacancies.
Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided in this Section 2.7, the Trustees in office,
regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by
this Declaration.
Section 2.8. Committees; Delegation. The Trustees shall have the
power to appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including an executive
committee which may exercise some or all of the power and authority of the
Trustees as the Trustees may determine (including but not limited to the
power to determine net asset value and net income), subject to any
limitations contained in the By-Laws, and in general to delegate from time
to time to one or more of their number or to officers, employees or agents
of the Trust such power and authority and the doing of such things and the
execution of such instruments, either in the name of the Trust or the
names of the Trustees or otherwise, as the Trustees may deem expedient,
provided that no committee shall have the power
(a) to change the principal office of the Trust;
(b) to amend the By-Laws;
(c) to issue shares;
(d) to elect or remove from office any Trustee or the Chairman
of the Board, the President, the Treasurer or the Secretary of the
Trust;
(e) to increase or decrease the number of Trustees;
(f) to declare a dividend or other distribution on the Shares;
(g) to authorize the repurchase of Shares; or
(h) to authorize any merger, consolidation or sale, lease or
exchange of all or substantially all of the Trust Property.
Section 2.9. By-Laws; Conduct of Business. The Trustees may adopt
By-Laws not inconsistent with this Declaration to provide for the conduct
of the business of the Trust, and may amend or repeal such By-Laws.
Section 2.10. Action Without a Meeting; Participation by Conference
Telephone. Unless the 1940 Act requires that a particular action must be
taken only at a meeting of the Trustees, any action required or permitted
to be taken at any meeting of the Trustees (or of any committee of the
Trustees) may be taken without a meeting if written consents thereto are
signed by a majority of the Trustees (or of the members of such committee)
and such written consents are filed with the records of the meetings.
Trustees may participate in a meeting of the Trustees (or of any committee
of the Trustees) by means of a conference telephone or similar
communications equipment if all individuals participating can hear each
other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 2.11. No Bond Required. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 2.12. Limitation on Liability; Reliance on Experts, Etc.
A Trustee, officer, agent or employee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law.
Each Trustee, officer, agent and employee of the Trust shall, in the
performance of his duties, be fully and completely justified and protected
in relying in good faith upon the books of account or other records of the
Trust, or upon reports made to the Trustees (a) by any of the officers or
employees of the Trust, (b) by any Investment Adviser, Distributor,
Custodian or Transfer Agent, or (c) by any accountants, dealers or
appraisers or other agents, experts or consultants selected with
reasonable care by the Trustees, regardless of whether such agent, expert
or consultant may also be a Trustee. The Trustees, officers, agents and
employees of the Trust may take advice of counsel with respect to the
meaning and operation of this Declaration, and shall be under no liability
for any act or omission in accordance with such advice or for failing to
follow such advice. The exercise by the Trustees of their powers and
discretion hereunder and the construction in good faith by the Trustees
of the meaning or effect of any provision of this Declaration shall be
binding upon everyone interested.
ARTICLE III
CONTRACTS
Section 3.1. Underwriting Contracts. The Trustees may from time to
time enter into an underwriting contract with another Person (a
"Distributor") providing for the sale of Shares of any one or more Series
or Class, pursuant to which the Trustees may agree to sell such Shares to
such Distributor or appoint such Distributor their sales agent for such
Shares. Such contract may also provide for the repurchase of Shares of
any such Series or Class by such Distributor as agent of the Trustees and
shall contain such terms and conditions, if any, as may be prescribed in
the By-Laws and such further terms and conditions not inconsistent with
the provisions of this Declaration or the By-Laws as the Trustees may in
their discretion determine.
Section 3.2. Advisory or Management Contracts. Subject to approval
by a Majority Shareholder Vote, the Trustees may from time to time enter
into an investment advisory or management contract with another Person (an
"Investment Adviser") pursuant to which an Investment Adviser shall agree
to furnish to the Trusts with respect to one or more Series or Class,
management, investment advisory, administrative, statistical, and research
facilities and services, such contract to contain such other terms and
conditions, if any, as may be prescribed in the By-Laws and such further
terms and conditions not inconsistent with the provisions of this
Declaration or the By-Laws as the Trustees may in their discretion
determine, including the grant of authority to such Investment Adviser to
determine what securities shall be purchased or sold by the Trust for the
portfolio of the applicable Series or Class and what portion of the assets
of or allocated to the pertinent Series or Class shall be uninvested and
to implement its determinations by making changes in the investments of
such Series or Class.
Section 3.3. Affiliations of Trustees or Officers, Etc. The fact
that any Shareholder, Trustee, officer, agent or employee of the Trust is
a shareholder, member, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any Person or of or for any
parent or affiliate of any Person with which an investment advisory or
management contract, principal underwriter or distributor contract or
custodian, transfer agent, disbursing agent or similar agency contract may
have been or may hereafter be made, or that any such Person, or any parent
or affiliate thereof, is a Shareholder of or has any other interest in the
Trust or any Series or Class thereof, or that any such Person also has any
one or more similar contracts with one or more other such Persons, or has
other businesses or interests, shall not affect the validity of any such
contract made or that may hereafter be made with the Trustees or
disqualify any Shareholder, Trustee, officer, agent or employee of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trustees, the Trust, any Series or Class thereof or
the Shareholders.
ARTICLE IV
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc.
No Shareholder shall be subject to any personal liability whatsoever in
connection with Trust Property or the acts, obligations or affairs of the
Trust or any Series or Class thereof. All persons extending credit to,
contracting with or having any claim against the Trust or any Series or
Class thereof shall look only to the assets of the Trust for payment under
such credit, contract or claim, and neither the Shareholders nor the
Trustees, nor any officer, employee or agent of the Trust whether past,
present or future, shall be personally liable therefor. The Trustees
shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, employee or agent (including, without
limitation, any Investment Adviser, Distributor, Custodian or Transfer
Agent) of the Trust, nor shall any Trustee be responsible or liable for
the act or omission of any other Trustee. Nothing in this Declaration
shall, however, protect any Trustee, officer, employee or agent of the
Trust against any liability to which such Person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 4.2. Execution of Documents; Notice; Apparent Authority.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of
the Trust or any Series or Class thereof or the Trustees or any of them
in connection with the Trust or any Series or Class thereof shall be
conclusively deemed to have been executed or done only in or with respect
to their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon. Every note, bond,
contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officers or officer shall refer to this Declaration and
shall recite that the obligations of such instruments are not binding upon
any of the Trustees, Shareholders, officers, employees or agents of the
Trust individually but are binding only upon the assets and property of
the Trust but the omission thereof shall not operate to bind any Trustee,
Shareholder, officer, employee or agent of the Trust individually. No
purchaser, lender or other Person dealing with the Trustees or any
officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the
Trustees or by such officer, employee or agent or make inquiry concerning
or be liable for the application of money or property paid, loaned or
delivered to or on the order of the Trustees or of such officer, employee
or agent.
Section 4.3. Indemnification of Trustees, Officers, Etc. To the
fullest extent permitted by law, but subject to the next sentence of this
Section 4.3, the Trust shall indemnify each of its Trustees, officers,
employees and agents (including any individual who serves at its request
as director, officer, partner, trustee or the like of another organization
in which it has any interest as a shareholder, creditor or otherwise)
against all liabilities and expenses (including amounts paid in
satisfaction or judgments, in compromise or as fines and penalties, and
counsel fees reasonably incurred by him) which arise in connection with
the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
legislative body, in which he may be or may have been involved as a party
or otherwise or with which he may be or may have been threatened, while
acting as Trustee or as an officer, employee or agent of the Trust or the
Trustees, as the case may be, or thereafter, by reason of his being or
having been such a Trustee, officer, employee or agent. If a Trustee,
officer, employee or agent of the Trust shall be charged with not having
acted in good faith in the reasonable belief that his actions were in the
best interests of the Trust or any Series thereof or with willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("disabling conduct"), the
Trust shall not indemnify such Person unless
(a) such charges shall have been finally disposed of on the
merits favorably to such Person;
(b) such charges shall have been dismissed for lack of evidence
of disabling conduct;
(c) such charges shall have been finally disposed of otherwise
than on the merits favorably to such Person and there shall have been
a determination as contemplated by the next sentence of this Section
4.3 that such Person was not guilty of disabling conduct; or
(d) such charges shall have been finally disposed of by
settlement or compromise and there shall have been a determination
as contemplated by the next sentence of this Section 4.3 that such
Person was not guilty of disabling conduct and that such settlement
or compromise was in the best interests of the Trust.
Any determination required to be made under the preceding sentence may be
made by (a) majority vote of a quorum consisting of Trustees who are
neither Interested Persons of the Trust nor parties to the action, suit
or proceeding, or (b) if such a quorum is not obtainable or, even if
obtainable, if a majority vote of such quorum so directs, by independent
legal counsel in a written opinion, or (c) a Majority Shareholder Vote
(excluding Shares owned of record or beneficially by such individual).
The rights accruing to any Trustee, officer, employee or agent under these
provisions shall not exclude any other right to which he may be lawfully
entitled.
Section 4.4. Advance Payments. The Trustees may make advance
payments in connection with the expense of defending any action with
respect to which indemnification might be sought under Section 4.3 if
there is an undertaking by or on behalf of the indemnitee to repay such
advance payments unless it is ultimately determined that he is entitled
to indemnification, provided that either (a) the indemnitee shall provide
a security for his undertaking, (b) the Trust shall be insured against
losses arising by reason of any lawful advances, or (c) a majority of a
quorum of Trustees who are neither Interested Persons of the Trust nor
parties to the action, suit or proceeding, or an independent legal counsel
in a written opinion, shall determine, based on a review of readily
available facts, that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
Section 4.5. Indemnification of Shareholders. In case any
Shareholder or former Shareholder shall be held to be personally liable
solely by reason of his being or having been a Shareholder and not because
of acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets
of the Series or Class of which he held Shares to be held harmless from
and indemnified against all loss and expense, including legal expenses
reasonably incurred, arising from such liability. The rights accruing to
a Shareholder under this Section 4.5 shall not exclude any other right to
which such Shareholder may be lawfully entitled, nor shall anything
contained herein restrict the right of the Trust to indemnify or reimburse
a Shareholder in any appropriate situation even though not specifically
provided herein.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Shares of Beneficial Interest.
(a) The beneficial interest in the Trust shall be divided into
Shares, all without par value, but the Trustees shall have the
authority from time to time, without obtaining shareholder approval,
to create one or more Series of Shares in addition to the Series
specifically established and designated in this Article V, and to
divide the shares of any Series into two or more Classes pursuant to
this Article V, all as they deem necessary or desirable, to establish
and designate such Series and Classes, and to fix and determine the
relative rights and preferences as between the different Series or
Classes of Shares as to right of redemption and the price, terms and
manner of redemption, liabilities and expenses to be borne by any
Series or Class, special and relative rights as to dividends and
other distributions and on liquidation, sinking or purchase fund
provisions, conversion on liquidation, conversion rights, and
conditions under which the several or Classes of Shares shall have
individual voting rights or no voting rights. Except as aforesaid,
all Shares of the different Series shall be identical.
(1) The number of authorized Shares and the number of
Shares of each Series and each Class of a Series that may be
issued is unlimited, and the Trustees may issue Shares of any
Series or Class of any Series for such consideration and on such
terms as they may determine (or for no consideration if pursuant
to a Share dividend or split-up), all without action or approval
of the Shareholders. All Shares when so issued on the terms
determined by the Trustees shall be fully paid and non-
assessable. The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and reacquired
of any Series into one or more Series or Classes of Series that
may be established and designated from time to time. The
Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as
they may determine, or cancel, at their discretion from time to
time, any Shares of any Series reacquired by the Trust.
(2) The establishment and designation of any Series or any
Class of any Series in addition to that established and
designated in Section 5.2 of this Article V shall be effective
upon the execution by a majority of the Trustees of an
instrument setting forth such establishment and designation and
the relative rights and preferences of such Series or such Class
of such Series or as otherwise provided in such instrument. At
any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may
by an instrument executed by a majority of their number abolish
that Series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall be an amendment
to this Declaration of Trust, and the Trustees may make any such
amendment without shareholder approval.
(3) Any Trustee, officer or other agent of the Trust, and
any organization in which any such person is interested may
acquire, own, hold and dispose of Shares of any Series or Class
of any Series of the Trust to the same extent as if such person
were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Series or Class of any Series from any
such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the
sale or purchase of Shares of such Series or Class generally.
(b) The Trustees shall have the authority from time to time,
without obtaining shareholder approval, to divide the Shares of any
Series into two or more Classes as they deem necessary or desirable,
and to establish and designate such Classes. In such event, each
Class of a Series shall represent interests in the designated Series
of the Trust and have such voting, dividend, liquidation and other
rights as may be established and designated by the Trustees.
Expenses related directly or indirectly to the Shares of a Class of
a Series may be borne solely by such Class (as shall be determined
by the Trustees) and, as provided in Section 5.8, a Class of a Series
may have exclusive voting rights with respect to matters relating
solely to such Class. The bearing of expenses solely by a Class of
Shares of a Series shall be appropriately reflected (in the manner
determined by the Trustees) in the net asset value, dividend and
liquidation rights of the Shares of such Class of a Series. The
division of the Shares of a Series into Classes and the terms and
conditions pursuant to which the Shares of the Classes of a Series
will be issued must be made in compliance with the 1940 Act. No
division of Shares of a Series into Classes shall result in the
creation of a Class of Shares having a preference as to dividends or
distributions or a preference in the event of any liquidation,
termination or winding up of the Trust, to the extent such a
preference is prohibited by Section 18 of the 1940 Act as to the
Trust.
The relative rights and preferences of Shares of different
Classes shall be the same in all respects except that, unless and
until the Board of Trustees shall determine otherwise: (i) when a
vote of Shareholders is required under this Declaration of Trust or
when a meeting of Shareholders is called by the Board of Trustees,
the Shares of a Class shall vote exclusively on matters that affect
that Class only, (ii) the expenses related to a Class shall be borne
solely by such Class (as determined and allocated to such Class by
the Trustees from time to time in a manner consistent with Sections
5.1 and 5.2 of this Article V); and (iii) pursuant to Section 11.7,
the Shares of each Class shall have such other rights and preferences
as are set forth from time to time in the then-effective Prospectus
and/or Statement of Additional Information relating to the Shares.
Dividends and distributions on one class may differ from the
dividends and distributions on another Class, and the net asset value
of the Shares of one Class may differ from the net asset value of the
Shares of another Class.
Section 5.2. Series and Class Designation. Without limiting the
authority of the Trustees set forth in Section 5.1 to establish and
designate any further Series, the Trustees hereby establish two Series of
Shares (to be known as "Oppenheimer Investment Grade Bond Fund" and
"Oppenheimer Value Stock Fund" individually, a "Fund" and collectively,
the "Funds"), and said Series shall be divided into two Classes, which
shall be designated "Class A" and "Class B," with the Shares outstanding
since the inception of the Funds hereby designated Class A Shares, and the
Shares of the Funds initially issued upon the division of the Shares of
such Series into two Classes hereby designated Class B Shares. The Shares
of that Series and any Shares of any further Series or Classes that may
from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further
Series or Classes at the time of establishing and designating the same)
have the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject
only to the rights of creditors, and shall be so recorded upon the
books of account of the Trust. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds,
in whatever form the same may be, together with any General Items
allocated to that Series as provided in the following sentence, are
herein referred to as "assets belonging to" that Series. In the
event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Series (collectively
"General Items"), the Trustees shall allocate such General Items to
and among any one or more of the Series established and designated
from time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series. Each
such allocation by the Trustees shall be conclusive and binding upon
the shareholders of all Series for all purposes.
(b) (1) Liabilities Belonging to Series. The assets belonging
to each particular Series shall be charged with the liabilities
of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges and reserves of the Trust
which are not identifiable as belong to any particular Series
shall be allocated and charged by the Trustees to and among any
one or more of the Series established and designated from time
to time in such manner and on such basis as the Trustees in
their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so charged
to each Series are herein referred to as "liabilities belonging
to" that Series. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall be conclusive
and binding upon the shareholders of all Series for all
purposes.
(2) Liabilities Belonging to a Class. If a Series is
divided into more than one Class, the liabilities, expenses,
costs, charges and reserves attributable to a Class shall be
charged and allocated to the Class to which such liabilities,
expenses, costs, charges or reserves are attributable. Any
general liabilities, expenses, costs, charges or reserves
belonging to the Series which are not identifiable as belonging
to any particular Class shall be allocated and charged by the
Trustees to and among any one or more of the Classes established
and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and
equitable. The allocations described in the two preceding
sentences shall be subject to the 1940 Act and any release,
rule, regulation, interpretation or order thereunder relating
to such allocations. The liabilities, expenses, costs, charges
and reserves allocated and so charged to each Class are herein
referred to as "liabilities belonging to" that Class. Each
allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the holders
of all Classes for all purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series or Class may be paid to the holders of Shares of
that Series or Class, with such frequency as the Trustees may
determine, which may be daily or otherwise, pursuant to a standing
resolution or resolutions adopted only once or with such frequency
as the Trustees may determine, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series,
as the Trustees may determine, after providing for actual and accrued
liabilities belonging to such Series or Class. All dividends and
distributions on Shares of a particular Series or Class shall be
distributed pro rata to the Shareholders of such Series or Class in
proportion to the number of Shares of such Series or Class held by
such Shareholders at the date and time of record established for the
payment of such dividends or distributions, except that in connection
with any dividend or distribution program or procedure the Trustees
may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment
have not been received by the time or times established by the
Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination thereof
as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or distribution
paid in Shares will be paid at the net asset value thereof as
determined in accordance with paragraph 13 of Article SEVENTH.
(d) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Series and all
Classes of each Series that have been established and designated
shall be entitled to receive, as a Series or Class, when and as
declared by the Trustees, the excess of the assets belonging to that
Series over the liabilities belonging to that Series or Class. The
assets so distributable to the Shareholders of any particular Class
and Series shall be distributed among such Shareholders in proportion
to the number of Shares of such Class of that Series held by them and
recorded on the books of the Trust.
(e) Transfer. All Shares of each particular Series or Class
shall be transferable, but transfers of Shares of a particular Class
or Series will be recorded on the Share transfer records of the Trust
applicable to such Series or Class only at such times as Shareholders
shall have the right to require the Trust to redeem Shares of such
Series or Class and at such other times as may be permitted by the
Trustees.
(f) Equality. All Shares of each Series shall represent an
equal proportionate interest in the assets belonging to that Series
(subject to the liabilities belonging to such Series or any Class of
that Series), and each Share of any particular Series shall be equal
to each other Share of that Series and Shares of each Class of a
Series shall be equal to each other Share of such Class; but the
provisions of this sentence shall not restrict any distinctions
permissible under this Article FOURTH that may exist with respect to
Shares of a Series or the different Classes of a Series. The
Trustees may from time to time divide or combine the Shares of any
particular Class or Series into a greater or lesser number of Shares
of that Class or Series without thereby changing the proportionate
beneficial interest in the assets belonging to that Class or Series
or in any way affecting the rights of Shares of any other Class or
Series.
(g) Fractions. Any fractional Share of any Class and Series,
if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of
that Class and Series, including those rights and obligations with
respect to voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust.
(h) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority
to provide that (i) holders of Shares of any Series shall have the
right to exchange said Shares into Shares of one or more other Series
of Shares, (ii) holders of shares of any Class shall have the right
to exchange said Shares into Shares of one or more other Classes of
the same or a different Series, and/or (iii) the Trust shall have the
right to carry out exchanges of the aforesaid kind, in each case in
accordance with such requirements and procedures as may be
established by the Trustees.
(i) Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent
for the Trust, which books shall be maintained separately for the
Shares of each Class and Series that has been established and
designated. No certification certifying the ownership of Shares need
be issued except as the Trustees may otherwise determine from time
to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters.
The record books of the Trust as kept by the Trust or any transfer
or similar agent, as the case may be, shall be conclusive as to who
are the Shareholders and as to the number of Shares of each Class
and Series held from time to time by each such Shareholder.
(j) Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for
such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase or sale of Shares that
conform to such authorized terms and to reject any purchase or sale
orders for Shares whether or not conforming to such authorized terms.
At any time that there are no Shares outstanding of any particular
Series or Class previously established, the Trustees may by an instrument
executed by a majority of their number abolish that Series or Class.
Section 5.3. Termination of a Series. Any Series may be terminated
by the affirmative vote of at least 66-2/3% of the Shares of such Series
outstanding or, when authorized by a Majority Shareholder Vote, by an
instrument in writing signed by a majority of the Trustees. Upon the
termination of a Series, the Series shall carry on no business except for
the purpose of winding up its affairs, and the Trustees shall proceed to
wind up the affairs of the Series, having with respect to such Series all
powers contemplated by Section 9.1 of this Declaration in the event of the
termination of the Trust.
Section 5.4. Rights of Shareholders. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration.
Every Shareholder by virtue of having become a Shareholder shall be held
to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The ownership of the Trust Property and the right
to conduct any business hereinbefore described are vested exclusively in
the Trustees, and the Shareholders shall have no interest therein other
than the beneficial interest conferred by their Shares, and they shall
have no right to call for any partition or division of any property,
profits, rights or interests of the Trust nor can they be called upon to
share or assume any losses of the Trust or suffer an assessment of any
kind by virtue of their ownership of Shares. The death of a Shareholder
during the continuance of the Trust shall not operate to terminate the
same nor to entitle the legal representative of such Shareholder to an
accounting or to take any action in any court or otherwise against other
Shareholders or the Trustees or the Trust Property, but only to the rights
of such Shareholder hereunder.
Section 5.5. Issuance of Shares.
Section 5.5.1. General. The Trustees may from time to time without
vote of the Shareholders issue and sell or cause to be issued and sold
Shares of any Series or Class except that only Shares previously
contracted to be sold may be issued during any period when the right of
redemption is suspended pursuant to the provisions of Section 6.6 hereof.
All such Shares, when issued in accordance with the terms of this Section
5.5, shall be fully paid and nonassessable.
Section 5.5.2. Price. No Shares of any Series shall be issued or
sold by the Trustees for less than an amount which would result in
proceeds to the Trust, before taxes and other expenses payable by the
Trust in connection with such transaction, of at least the net asset value
per share of Shares of such Series determined as contemplated by Article
VII hereof.
Section 5.5.3. On Merger or Consolidation. In connection with the
acquisition of assets (including the acquisition of assets subject to, and
in connection with the assumption of, liabilities), businesses or stock
of another Person, the Trustees may issue or cause to be issued Shares of
any Series or Class and accept in payment therefor, in lieu of cash, such
assets or businesses at their market value (as determined by the
Trustees), or such stock at the market value (as determined by the
Trustees) of the assets held by such other Person, either with or without
adjustment for contingent costs or liabilities, provided that the funds
of the Trust are permitted by law to be invested in such assets,
businesses or stock.
Section 5.5.4. Fractional Shares. The Trustees may issue and sell
fractions of Shares of any Series or Class, having pro rata all the rights
of full Shares of such Series, including, without limitation, the right
to vote and to receive dividends and distributions.
Section 5.6. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of a Transfer Agent which shall
contain the names and addresses of the Shareholders of each Series and
Class and the number of Shares of such Series or Class held by them
respectively and a record of all transfers thereof. A separate register
shall be kept for each Series and Class. Such register or registers shall
be conclusive as to who are the holders of the Shares of each Series or
Class and who shall be entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Shareholders of such Series
or Class. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein or in
the By-Laws provided, until he has given his address to the Transfer Agent
for such Series or Class or such other agent or officer of the Trust as
shall keep the said register or registers for entry thereon.
Section 5.7. Transfer of Shares. Shares shall be transferable on
the records of the Trust upon delivery to the Trust or the Transfer Agent
or Agents of appropriate evidence of assignment, transfer, succession or
authority to transfer. Upon such delivery the transfer shall be recorded
on the register of the appropriate Series or Class. Until such record is
made, the Trustees, the Transfer Agent or Agents, and the officers,
employees and agents of the Trust shall not be entitled or required to
treat the assignee or transferee of any Share as the absolute owner
thereof for any purpose, and accordingly shall not be bound to recognize
any legal, equitable or other claim or interest in such Share on the part
of any Person, other than the holder of record, whether or not any of them
shall have express or other notice of such claim or interest.
Section 5.8. Voting Powers. Except as set forth in the next
paragraph, the Shareholders shall have power to vote only on the following
matters, as to each of which matters all Shareholders of all Series shall
vote together: (a) for the election of Trustees as provided in Sections
2.5 and 2.7 hereof; (b) with respect to the removal of Trustees pursuant
to Section 5.11 hereof; (c) with respect to any termination of the Trust,
as provided in Section 9.1 hereof; (d) with respect to any amendment of
this Declaration affecting Shareholders of all Series equally to the
extent and as provided in Section 9.2 hereof; (e) with respect to any
merger, consolidation, or sale of assets of the Trust as provided in
Section 9.3 hereof; (f) with respect to incorporation of the Trust to the
extent and as provided in Section 9.4 hereof; (g) to the same extent as
the stockholders of a Massachusetts business corporation as to whether or
not a court action, proceeding or claim should or should not be brought
or maintained derivatively or as a class action on behalf of the Trust or
the Shareholders; and (h) with respect to such additional matters relating
to the Trust as may be required by this Declaration or the By-Laws or by
reason of the registration of the Trust or the Shares with the Commission
or any State or by any applicable law or any regulation or order of the
Commission or any State or as the Trustees may consider necessary or
desirable.
The Shareholders of each Series shall have power to vote as a
separate Series only on the following matters: (i) with respect to any
investment advisory or management contract with respect to such Series
entered into pursuant to Section 3.2 hereof; (ii) with respect to any
amendment of this Declaration affecting the Shareholders of such Series
differently from the Shareholders of other Series; and (iii) with respect
to such additional matters relating to such Series as may be required by
this Declaration or the By-Laws or by reason of the registration of the
Trust or the Shares of such Series with the Commission or any State or by
any applicable law or any regulation or order of the Commission or any
State or as the Trustees may consider necessary or desirable.
If the Shares of a Series shall be divided into Classes as provided
in Section 5.2, the shares of each Class shall have identical voting
rights except that the Trustees, in their discretion, may provide a Class
of a Series with exclusive voting rights with respect to matters which
relate solely to such Classes. If the Shares of any Series shall be
divided into Classes with a Class having exclusive voting rights with
respect to certain matters, the quorum and voting requirements described
below with respect to action to be taken by the Shareholders of the Class
of such Series on such matters shall be applicable only to the Shares of
such Class. Any fractional Share shall carry proportionately all the
rights of a whole Share, including the right to vote and the right to
receive dividends.
Each whole Share shall be entitled to one vote as to any matter on
which Shareholders are entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote, A majority of the Shares
voted shall decide any questions, except when a different vote is
specified by applicable law, any provision of the By-Laws or this
Declaration. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders (including
the right to authorize an amendment to this Declaration under Section 9.2
hereof) and may take any action required by applicable law, the By-Laws
or this Declaration to be taken by Shareholders. The By-Laws may include
further provisions for Shareholder votes and related matters.
Section 5.9. Meetings of Shareholders. Special meetings of the
Shareholders of any one or more Series may be called at any time by the
Chairman of the Board, the President or a Vice President of the Trust, or
by a majority of the Trustees. Without limiting the provisions of Section
5.11 hereof a special meeting of Shareholders may also be called at any
time upon the written request of a holder or the holders of not less than
25% of all of the Shares entitled to be voted at such meetings, provided
that the Shareholder or Shareholders requesting such meeting shall have
paid to the Trust the reasonably estimated cost of preparing and mailing
the notice thereof, which the Secretary shall determine and specify to
such Shareholder or Shareholders.
Section 5.10. Action Without a Meeting. Any action which may be
taken by Shareholders may be taken without a meeting if such proportion
of Shareholders as is required to vote for approval of the matter by law,
this Declaration or the By-Laws consents to the action in writing and the
written consents are filed with the records of Shareholders' meetings.
Such consents shall be treated for all purposes as a vote taken at a
Shareholders' meeting.
Section 5.11. Removal of Trustees by Shareholders. No Trustee shall
serve as trustee of the Trust, after the holders of record of not less
than 66-2/3% of the Shares outstanding have declared that such Trustee be
removed from the office either by declaration in writing filed with the
Secretary of the Trust or by votes cast in person or by proxy at a meeting
of Shareholders specifically called for such purpose. Notwithstanding the
provisions of Section 5.9 hereof, the Trustees shall promptly call a
meeting of Shareholders for the purpose of voting upon the question of
removal of any or all of the Trustees pursuant to this Section 5.11 when
requested in writing to do so by the record holders of not less than 10%
of the outstanding Shares of the Trust.
Whenever ten or more Shareholders who have been such for at least six
months preceding the date of application and who hold in the aggregate
either Shares having a net asset value of at least $25,000 or at least 1%
of the outstanding Shares of the Trust, whichever is less, shall apply to
the Trustees in writing stating that they wish to communicate with other
Shareholders with a view to obtaining signatures to a request for a
meeting for consideration of the removal of any or all of the Trustees and
accompanied by a form of communication and request which they wish to
transmit, the Trustees shall within five business days after receipt of
such application either (1) afford to such applicants access to a list of
the names and addresses of all Shareholders as recorded on the books of
the Trust; or (2) inform such applicants as to the approximate number of
Shareholders of record, and the approximate cost of mailing to them the
proposed communications and form of request. If the Trustees elect to
follow the course specified in clause (2) of the preceding sentence, the
Trustees shall comply with the provisions of Section 16(c) of the 1940 Act
or any successor thereto, and any rule, release or order promulgated
thereunder.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. The Trustees shall redeem Shares
of any Series or Class, subject to the conditions and at the price
determined as herein set forth, upon proper application of the record
holder thereof at such office or agency as may be designated from time to
time for that purpose by the Trustees. The Trustees shall have power to
determine from time to time the form and the other accompanying documents
which shall be necessary to constitute a proper application for
redemption.
Section 6.2. Price. Shares shall be redeemed for an amount not
exceeding the net asset value of such Shares determined as contemplated
by Article VII hereof.
Section 6.3. Payment. Payment for Shares redeemed shall be made to
the Shareholder of record within 7 days after the date upon which proper
application is received, subject to the Trustees or their designated agent
being satisfied that the purchase price of such Shares has been collected
and to the provisions of Section 6.4 hereof. Such payment shall be made
in cash or other assets of the Trust or both, as the Trustees shall
prescribe. For the purposes of such payment for Shares redeemed, the
value of assets delivered shall be determined as set forth in Article VII
hereof.
Section 6.4. Effect of Suspension of Right of Redemption. If,
pursuant to Section 6.6 hereof, the Trustees shall declare a suspension
of the right of redemption, the rights of Shareholders (including those
who shall have applied for redemption pursuant to Section 6.1 hereof but
who shall not yet have received payment) to have Shares redeemed and paid
for by the Trust shall be suspended until the time specified in Section
6.6. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice
of revocation at the office or agency where application was made, revoke
any application for redemption not honored. The redemption price of
Shares for which redemption applications have not been revoked shall not
exceed the net asset value of such Shares next determined as set forth in
Article VII hereof after the termination of such suspension and payment
shall be made within 7 days after the date upon which the application was
made plus the period after such application during which the determination
of net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase
Shares directly, or through the Distributor or another agent designated
for the purpose, by agreement with the owner thereof at a price not
exceeding the net asset value per share of such Shares next determined as
set forth in Article VII hereof.
Section 6.6. Suspension of Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of
payment or redemption for the whole or any part of any period (a) during
which the New York Stock Exchange is closed, other than customary week-end
and holiday closings, (b) during which trading on the New York Stock
Exchange is restricted, (c) during which an emergency exists as a result
of which disposal by the Trustees of securities owned by them is not
reasonably practicable or it is not reasonably practicable for the
Trustees fairly to determine the value of the net assets of the Trust, or
(d) during which the Commission may for the protection of security holders
of the Trust by order permit suspension of the right of redemption or
postponement of the date of payment or redemption.
Such suspension shall take effect at such time as the Trustees shall
specify, which shall not be later than the close of business on the
business day next following the declaration, and thereafter there shall
be no determination of net asset value until the Trustees shall declare
the suspension at an end, except that the suspension shall terminate in
any event on the first day on which (i) the condition giving rise to the
suspension shall have ceased to exist and (ii) no other condition exists
under which suspension is authorized under this Section 6.6. Each
declaration by the Trustees pursuant to this Section 6.6 shall be
consistent with such applicable rules and regulations, if any, relating
to the subject matter thereof as shall have been promulgated by the
Commission or any other governmental body having jurisdiction over the
Trust and as shall be in effect at the time. To the extent not
inconsistent with such rules and regulations, the determination of the
Trustees shall be
conclusive.
Section 6.7. Involuntary Redemption of Shares; Disclosure of
Holding.
(a) If the Trustee shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares or other
securities of the Trust or any Series or Class thereof has or may
become concentrated in any person to an extent which would disqualify
the Trust as a regulated investment company under the United States
Internal Revenue Code, then the Trustees shall have the power by lot
or other means deemed equitable by them
(i) to call for redemption a number, or principal amount,
of Shares sufficient in the opinion of the Trustees to maintain
or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification and
(ii) to refuse to transfer or issue Shares to any Person
whose acquisition of the Shares in question would in the opinion
of the Trustees result in such disqualification.
Any redemption pursuant to this Section 6.7(a) shall be effected at a
redemption price determined in accordance with Section 6.2 hereof.
(b) The holders of Shares shall upon request disclose to the
Trustees in writing such information with respect to direct and
indirect ownership of Shares as the Trustees deem necessary to comply
with the provisions of the United States Internal Revenue Code, or
to comply with the requirements of any other taxing authority.
(c) The Trustees shall have the power to redeem Shares in any
account at a redemption price determined in accordance with Section
6.2 hereof if at any time the value of the total investment in such
account is less than $1,000, in which event the Shareholder shall be
notified that the value of his account is less than $1,000 and
allowed 30 days to purchase additional Shares before his Shares are
redeemed.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS
Section 7.1. By Whom Determined. The Trustees shall have the power
and duty to determine from time to time the net asset value per share of
the Shares of each Series or Class. They may appoint one or more Persons
to assist them in the determination of the value of securities in the
portfolio of each Series or Class and to make the actual calculations
pursuant to their directions. Any determination made pursuant to this
Article VII shall be binding on all parties concerned.
Section 7.2. When Determined. The net asset value shall be
determined at such times as the Trustees shall prescribe in accordance
with the applicable provisions of the 1940 Act and the regulations and
orders from time to time in effect thereunder. The Trustees may suspend
the daily determination of net asset value to the extent permitted by the
1940 Act or the regulations and orders from time to time in effect
thereunder.
Section 7.3. Computation of Per Share Net Asset Value. For purposes
of the computation of net asset value, as in this Declaration of Trust
referred to, the following rules shall apply:
(a) The net asset value per Share of any Series, as of the time
of valuation on any day, shall be the quotient obtained by dividing
the value, as at such time, of the net assets of that Series (i.e.,
the value of the assets of that Series less its liabilities exclusive
of its surplus) by the total number of Shares of that Series
outstanding at such time. The assets and liabilities of any Series
shall be determined in accordance with generally accepted accounting
principles, provided, however, that in determining the liabilities
of any Series there shall be included such reserves for taxes or
contingent liabilities as may be authorized or approved by the
Trustees, and provided further that in connection with the accrual
of any fee or refund payable to or by an investment advisor of the
Trust for such Series, the amount of which accrual is not definitely
determinable as of any time at which the net asset value of each
Share of that Series is being determined due to the contingent nature
of such fee or refund, the Trustees are authorized to establish from
time to time formulae for such accrual, on the basis of the
contingencies in question to the date of such determination, or on
such other bases as the Trustees may establish.
(1) Shares of a Series to be issued shall be deemed to be
outstanding as of the time of the determination of the net asset
value per Share applicable to such issuance and the net price
thereof shall be deemed to be an asset of that Series;
(2) Shares of a Series to be redeemed by the Trust shall
be deemed to be outstanding until the time of the determination
of the net asset value applicable to such redemption, and
thereupon, and until paid, the redemption price thereof shall
be deemed to be a liability of that Series; and
(3) Shares of a Series voluntarily purchased or contracted
to be purchased by the Trust pursuant to the provisions of
Section 6.5 shall be deemed to be outstanding until whichever
is the later of (i) the time of the making of such purchase or
contract of purchase, and (ii) the time at which the purchase
price is determined, and thereupon, and until paid, the purchase
price thereof shall be deemed to be a liability of that Series.
Section 7.4. Interim Determinations. Any determination of net asset
value other than at the time or times prescribed under Section 7.2 hereof
may be made either by appraisal or by calculation or estimate. Any such
calculation or estimate shall be based on changes in the market value of
representative or selected securities or on changes in recognized market
averages since the last closing appraisal and made in a manner which in
the opinion of the Trustees will fairly reflect the changes in the net
asset value.
Section 7.5. Maintenance of Constant Net Asset Value Per Share. The
Trustees shall have the power to maintain the net asset value per share
of the Shares of any Series or Class at a constant amount. In the
exercise of the power granted in this Section 7.5 the Trustees may:
(a) Suspend the accrual or payment of net income to holders of
Shares of any Series or Class or the declaration or payment of
dividends.
(b) Offset or cause to be offset losses (whether realized or
unrealized) suffered in respect of the assets of any Series or Class
against net income accrued to the account of holders of Shares of
such Series or Class or against dividends declared but not yet paid
to such holders.
(c) Provide for the entry in such holders' accounts of debits
representing proportionate amounts of such losses.
(d) Adjust the total number of Shares outstanding of any Series
or Class by treating each holder of Shares of such Series or Class
as having made a proportionate contribution to capital of Shares of
such Series or Class representing an aggregate amount equal to such
losses (or to a portion of such losses), by accruing net income to
the accounts of such holders or by declaring a dividend in Shares of
such Series or Class representing such aggregate amount.
(e) Take such other action as the Trustees may deem advisable
in order to maintain the net asset value per share at a constant
amount.
Nothing in this Section 7.5 shall, however, require the Trustees to
maintain the net asset value per share of the Shares of any Series or
Class at a constant amount in the event that the Trustees determine that
the maintenance of such net asset value per share at a constant amount is
not in the best interest of the Trust or the holders of Shares of such
Series or Class.
Section 7.6. Outstanding Shares. For the purposes of this Article
VII, outstanding Shares of any Series or Class shall mean those Shares
shown from time to time on the books of such Series or the Transfer Agent
for such Series or Class as then issued and outstanding, adjusted as
follows:
(a) Shares sold shall be deemed to be outstanding Shares from
the time when the sale is reported to the Trustees or their agents
for determining net asset value, but not before (i) an unconditional
purchase order therefor has been received by the Trustees (directly
or through one of their agents) or by the Distributor or Transfer
Agent of such Series or Class and the sale price in currency has been
determined and (ii) receipt by the Trustees (directly or through one
of their agents) of Federal funds in the amount of the sale price;
and such sale price (net of commission, if any, and any stamp or
other tax payable by the Trust in connection with the issue and sale
of the Shares sold) shall be thereupon deemed to be an asset of the
Trust.
(b) Shares distributed pursuant to Section 7.7 shall be deemed
to be outstanding as of the time that Shareholders who shall receive
the distribution are determined.
(c) Shares for which a proper application for redemption has
been made or which are subject to repurchase by the Trustees shall
be deemed to be outstanding Shares up to and including the time as
of which the redemption or repurchase price is determined. After
such time, they shall be deemed to be no longer outstanding Shares
and the redemption or purchase price until paid shall be deemed to
be a liability of the appropriate Series.
Section 7.7. Distributions to Shareholders. Without limiting the
powers of the Trustees under Subsection (e) of Section 2.1 of Article II
hereof, the Trustees may at any time and from time to time, as they may
determine, allocate or distribute to Shareholders of any Series or Class
such income and capital gains, accrued or realized, of such Series or
Class as the Trustees may determine, after providing for actual, accrued
or estimated expenses and liabilities of such Series or Class (including
such reserves as the Trustees may establish) determined in accordance with
generally accepted accounting practices. The Trustees shall have full
discretion to determine which items shall be treated as income and which
items as capital and their determination shall be binding upon the
Shareholders. Such distributions shall be made in cash, property or
Shares of the appropriate Series or Class or any combination thereof as
determined by the Trustees. Any such distribution paid in Shares shall
be paid at the net asset value thereof as determined pursuant to this
Article VII. The Trustees may adopt and offer to Shareholders such
dividend reinvestment plans, cash dividend payout plans or related plans
as the Trustees shall deem appropriate. Inasmuch as the computation of
net income and gains for Federal income tax purposes may vary from the
computation thereof on the books of the Trust, the above provisions shall
be interpreted to give the Trustees the power in their discretion to
allocate or distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient
to enable the Trust to avoid or reduce liability for taxes.
Section 7.8. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article VII, the Trustees may
prescribe, in their absolute discretion, such other based and times for
the determination of the per share net asset value of Shares of any Series
or Class as may be permitted by, or as they may deem necessary or
desirable to enable the Trust to comply with, any provision of the 1940
Act, any rule or regulation thereunder (including any rule or regulation
adopted pursuant to Section 22 of the 1940 Act by the Commission or any
securities association or exchange registered under the Securities
Exchange Act of 1934, as amended) or any order of exemption issued by the
Commission, all as in effect now or as hereafter amended or modified.
ARTICLE VIII
CUSTODIANS
Section 8.1. Appointment and Duties. Subject to the 1940 Act and
such rules, regulations and orders as the Commission may adopt, the
Trustees shall employ a bank or trust company having a capital, surplus
and undivided profits of at least $2,000,000 as Custodian for each Series
with authority as the agent of the Trust, but subject to such
restrictions, limitations and other requirements, if any, as may be
contained in the By-Laws of the Trust:
(a) to hold the securities owned by the Series, or by the Trust
on behalf of such Series, and deliver the same upon written order;
(b) to receive and receipt for any moneys due to the Series,
or to the Trust on behalf of such Series, and deposit the same in its
own banking department or elsewhere as the Trustees may direct; and
(c) to disburse such funds upon orders or vouchers.
The Trustees may also authorize such Custodian as the agent of the Trust
(x) to keep the books and accounts of the Series and furnish clerical and
accounting services and (y) to compute the net income and the value of the
net assets of the Series.
The acts and services of a Custodian shall be performed upon such
basis of compensation as may be agreed upon by the Trustees and the
Custodian.
The Trustees may also authorize a Custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the Custodian and upon such terms and conditions, as may be agreed upon
between the Custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company having capital, surplus and undivided profits of at least
$2,000,000.
Section 8.2. Action Upon Termination of Custodian Agreement. Upon
termination of a Custodian agreement or inability of any Custodian to
continue to serve, the Trustees shall promptly appoint a successor
Custodian, but in the event that no successor Custodian can be found who
has the required qualifications and is willing to serve, the Trustees
shall call as promptly as possible a special meeting of holders of Shares
of the applicable Series to determine whether the Series shall function
without a Custodian or shall be liquidated. If so directed by vote of the
holders of a majority of the Shares of the applicable Series outstanding
and entitled to vote, the Custodian shall deliver and pay over all
property of the Series held by it as specified in such vote.
Section 8.3. Central Certificate System, Etc. Subject to such
rules, regulations and orders as the Commission may adopt, the Trustees
may direct the Custodian to deposit all or any part of the securities of
the applicable Series in a system for the central handling of securities
established by a national securities exchange or a national securities
association registered with the Commission under the Securities Exchange
Act of 1934, or such other person as may be permitted by the Commission,
or otherwise in accordance with the 1940 Act, pursuant to which system all
securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon
the order of the Trust.
Section 8.4. Acceptance of Receipts in Lieu of Certificate. Subject
to such rules, regulations and orders as the Commission may adopt, the
Trustees may direct the Custodian to accept written receipts or other
written evidences indicating purchases of securities held in book-entry
form in the Federal Reserve System in accordance with regulations
promulgated by the Board of Governors of the Federal Reserve System and
the local Federal Reserve Banks in lieu of receipt of certificates
representing such securities.
ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1. Duration and Termination.
(a) Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated by
the affirmative vote of at least 66-2/3% of the Shares outstanding
or, when authorized by a Majority Shareholder Vote, by an instrument
in writing signed by a majority of the Trustees. Upon the
termination of the Trust,
(i) The Trust shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of
the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust shall
have been wound up, including the power to fulfill or discharge
the contracts of the Trust, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any
part of the remaining Trust Property to one or more persons at
public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any
kind, discharge or pay its liabilities and do all other acts
appropriate to liquidate its business, provided that any sale,
conveyance, assignment, exchange, transfer or other disposition
of all or substantially all the Trust Property that requires
Shareholder approval under Section 9.3 hereof shall receive the
approval so required.
(iii) After paying or adequately providing for the payment
of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for
their protection, the Trustees may distribute the remaining
Trust Property, in cash or in kind or partly each, among the
Shareholders according to their respective rights.
(b) After termination of the Trust and distribution to the
Shareholders as herein provided, a majority of the Trustees shall
execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination, and the Trustees
shall thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Shareholders shall
thereupon cease.
Section 9.2. Amendment Procedure.
(a) This Declaration may be amended from time to time by an
instrument in writing signed by a majority of the Trustees when
authorized by a Majority Shareholder Vote, provided that amendments
having the purpose (x) of changing the name of the Trust or (y)
authorizing additional Series of Shares shall not require
authorization by the Shareholders. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair
the exemption from personal liability of the Shareholders, Trustees,
officers, employees and agents of the Trust to permit assessments
upon Shareholders.
(b) A certificate signed by a majority of the Trustees setting
forth an amendment and reciting that it was duly adopted as
aforesaid, or a copy of this Declaration as amended, executed by a
majority of the Trustees, shall be conclusive evidence of such
amendment when lodged among the records of the Trust.
(c) Notwithstanding any other provision hereof, until such time
as a Registration Statement under the Securities Act of 1933, as
amended, covering the first public offering of securities of the
Trust shall become effective, this Declaration may be terminated or
amended in any respect by the affirmative vote of a majority of the
Trustees or by an instrument signed by a majority of the Trustees.
Section 9.3. Merger, Consolidation and Sale of Assets. The Trust
or any Series or Class may merge or consolidate with any Series or Class
or any other corporation, association, trust or other organization or may
sell, lease or exchange all or substantially all of the Trust Property or
Trust Property allocable to such Series, as the case may be, including its
good will, upon such terms and conditions for such consideration and when
as authorized at any Shareholders' meeting called for the purpose by a
Majority Shareholder Vote.
Section 9.4. Incorporation. With the approval of a Majority
Shareholder Vote, the Trustees may cause to be organized or assist in
organizing under the laws of any jurisdiction a corporation or
corporations or any other trust, partnership, association or other
organization to take over all of the Trust Property or to carry on any
business in which the Trust shall directly or indirectly have any
interest, and may sell, convey and transfer the Trust Property to any such
corporation, trust, partnership, association or other organization in
exchange for the shares or securities thereof or otherwise, and may lend
money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
other organization, or any corporation, partnership, trust, association
or other organization in which the Trust holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or successor thereto and any such
corporation, trust, partnership, association or other organization.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or
more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring less than all or
substantially all of the Trust Property to such organization or entities.
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders
of each Series a written financial report of the transactions of the
appropriate Series, including financial statements which shall at least
annually be accompanied by a report thereon of independent public
accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto
shall be filed with the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of the Commonwealth
of Massachusetts and may also be filed or recorded in such other places
as the Trustees deem appropriate. Unless any such amendment sets forth
some later time for the effectiveness of such amendment, such amendment
shall be effective upon its filing with the Secretary of the Commonwealth
of Massachusetts. A restated Declaration, integrating into a single
instrument all of the provisions of this Declaration which are then in
effect and operative, may be executed from time to time by a majority of
the Trustees and shall, upon filing with the Secretary of the Commonwealth
of Massachusetts, be conclusive evidence of all amendments contained
therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
Section 11.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with
reference to the laws thereof, and the rights of all parties and the
validity and construction of every provision hereof shall be subject to
and construed according to the laws of said Commonwealth.
Section 11.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such
original counterpart.
Section 11.4. Reliance by Third Parties. Any certificate executed
by an individual who, according to the records of the Trust, appears to
be a Trustee hereunder, certifying to: (a) the number or identity of
Trustees or Shareholders, (b) the due authorization of the execution of
any instrument or writing, (c) the form of any vote passed at a meeting
of Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-
Laws adopted by or the identity of any officers elected by the Trustees,
or (f) the existence of any fact or facts which in any manner relate to
the affairs of the Trust, shall be conclusive evidence as to the matters
so certified in favor of any Person dealing with the Trustees and their
successors.
Section 11.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any
of such provisions is in conflict with requirements of the 1940 Act,
would be inconsistent with any of the conditions necessary for
qualification of the Trust as a regulated investment company under
the United States Internal Revenue Code or is inconsistent with other
applicable laws and regulations, such provision shall be deemed never
to have constituted a part of this Declaration, provided that such
determination shall not affect any of the remaining provisions of
this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any
other jurisdiction or any other provision of this Declaration in any
jurisdiction.
Section 11.6. Section Headings; Interpretation. Section headings
in this Declaration are for convenience of reference only, and shall not
limit or otherwise affect the meaning hereof. References in this
Declaration to "this Declaration" shall be deemed to refer to this
Declaration as from time to time amended, and all expressions such as
"hereof," "herein" and "hereunder" shall be deemed to refer to this
Declaration and not exclusively to the article or section in which such
words appear. The words "he," "his" and "him" shall be deemed to include
the feminine and neuter, as well as the masculine gender.
Section 11.7. Action by the Board. Any action which may be taken
by the Board of Trustees under this Declaration of Trust or its By-Laws
may be taken by the description thereof in the then effective Prospectus
and/or Statement of Additional Information relating to the Shares under
the Securities Act of 1933 or in any proxy statement of the Trust rather
than by formal resolution of the Board.
Section 11.8. Use of the Name "Oppenheimer". The name "Oppenheimer"
included in the name of the Trust and of any Series or Class shall be used
pursuant to a royalty-free, non-exclusive license from Oppenheimer
Management Corporation ("OMC"), incidental to and as part of an advisory,
management or supervisory contract which may be entered into by the Trust
with OMC. The license may be terminated by OMC upon termination of such
advisory, management or supervisory contract or without cause upon 60
days' written notice, in which case neither the Trust nor any Series or
Class shall have any further right to use the name "Oppenheimer" in its
name or otherwise and the Trust, the Shareholders and its officers and
Trustees shall promptly take whatever action may be necessary to change
its name and the names of any Series or Classes accordingly.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument
this 30th day of April, 1993.
/s/ William A. Baker /s/ Charles Conrad, Jr., Trustee
- ------------------------ --------------------------------
William A Baker, Trustee Charles Conrad, Jr., Trustee
/s/ Jon S. Fossel Raymond J. Kalinowski
- ------------------------ ---------------------------------
Jon S. Fossel, Trustee Raymond J. Kalinowski, Trustee
/s/ C. Howard Kast Robert M. Kirchner
- ------------------------ ----------------------------------
C. Howard Kast, Trustee Robert M. Kirchner, Trustee
/s/ Ned M. Steel /s/ James C. Swain
- ------------------------ ----------------------------------
Ned M. Steel, Trustee James C. Swain, Trustee
/s/ Joseph A. Uhl
- ----------------------
Joseph A. Uhl, Trustee
ORGZN\285#5
OPPENHEIMER INTEGRITY FUNDS
(the "Trust")
BY-LAWS
(Adopted June 25, 1991)
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the Shareholders
(which terms as used herein shall, together with all other terms defined
in the Declaration of Trust, have the same meaning as in the Declaration
of Trust) shall be held at the principal office of the Trust or at such
other place as may from time to time be designated by the Board of
Trustees and stated in the notice of meeting.
Section 2. Shareholder Meetings. Shareholders' meetings shall
be held when authorized or required by the Declaration at the times
designated by the Trustees and on such date as may be set by the Trustees
as set forth in the notice of meeting.
A special meeting of Shareholders of any one or more Series may
be called at any time by the Chairman of the Board or the President of the
Trust, or by a majority of the Trustees. Without limiting the provisions
of Section 5.11 of the Declaration a special meeting of Shareholders may
also be called at any time upon the written request of a holder or the
holders of not less than 25% of all of the Shares entitled to be voted at
such meeting, provided that the Shareholder or Shareholders requesting
such meeting shall have paid to the Trust the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary shall
determine and specify to such Shareholder or Shareholders.
Section 3. Notice of Meetings of Shareholders. Not less than
ten days' and not more than 120 days' written or printed notice of every
meeting of Shareholders, stating the time, place and purpose thereof shall
be given to each Shareholder entitled to vote thereat by leaving the same
with him or at his residence or usual place of business or by mailing it,
postage prepaid and addressed to him at his address as it appears upon the
books of the Trust.
No notice of the time, place or purpose of any meeting of
Shareholders need be given to any Shareholder who attends in person or by
proxy or to any Shareholder who, in a writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
Section 4. Record Dates. The Board of Trustees may fix, in
advance or from time to time, a date, not exceeding 120 days and not less
than ten days preceding the date of any meeting of Shareholders or the
Shareholders of any Series, and not exceeding 120 days preceding any
dividend payment date or any date for the allotment of rights, as a record
date for the determination of the Shareholders entitled to vote at such
meeting or to receive such dividend or rights, as the case may be; and
only Shareholders of record on such date and entitled to receive such
dividends or rights shall be entitled to notice of and to vote at such
meeting or to receive such dividends or rights, as the case may be.
Section 5. Access to Shareholder List. The Board of Trustees
shall make available a list of the names and addresses of all shareholders
as recorded on the books of the Trust, upon receipt of the request in
writing signed by not less than ten Shareholders (who have been
shareholders for at least six months prior to submitting such request)
holding Shares of the Trust valued at $25,000 or more at current offering
price (as defined in the Trust's Prospectus) or holding not less than one
percent in amount of the entire number of shares of the Trust issued and
outstanding, whichever is less; such request must state that such
Shareholders wish to communicate with other Shareholders with a view to
obtaining signatures to request a meeting pursuant to Section 2 of Article
II of these By-Laws and must be accompanied by the form of communication
requested to be sent to the Shareholders. The Board of Trustees within
5 business days after receipt of such request, shall either make available
the Shareholder List to such Shareholders at the principal offices of the
Trust, or at the offices of the Trust's transfer agent, during regular
business hours, or mail a copy of such Shareholders' proposed
communication and form of request, at such Shareholders' expense, to all
other Shareholders.
Section 6. Quorum, Adjournment of Meetings. A quorum for the
transaction of business at any meeting of Shareholders shall consist of
the presence, in person or by proxy, of Shareholders entitled to cast a
majority of the shares which may be voted at such meeting pursuant to
Section 4 hereof and Section 5.8 of the Declaration. If at any meeting
of Shareholders there shall be less than a quorum present, the
Shareholders 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
Shareholders, each Shareholder shall be entitled to one vote on each
matter submitted to a vote of the Shareholders or the vote of the
Shareholders of the affected Series for each share standing in his name
on the books of the Trust on the date, fixed for determination of
Shareholders entitled to vote at such meeting (except if the Board so
determines, for Shares redeemed prior to the meeting), and each such
Series shall vote as an individual class ("Individual Class Voting"); a
Series shall be deemed to be affected when a vote of the holders of that
Series on a matter is required by the 1940 Act; provided, however, that
as to any matter with respect to which a vote of Shareholders is required
by the 1940 Act or by any applicable law that must be complied with, such
requirements as to a vote by Shareholders shall apply in lieu of
Individual Class Voting as described above. Any fractional Share shall
carry proportionately all the rights of a whole Share, including the right
to vote and the right to receive dividends.
All elections of Trustees shall be had by a plurality of the
votes cast and all questions shall be decided by a majority of the votes
cast, in each case at a duly constituted meeting, except as otherwise
provided in the Declaration of Trust or in these By-Laws or by specific
statutory provision superseding the restrictions and limitations contained
in the Declaration of Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees 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 Shares
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 Trustee 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 Shareholders' Meetings. The meetings of
the Shareholders or of the Shareholders of any Series shall be presided
over by the Chairman of the Board of Trustees 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 the Chairman of the Board of Trustees, the
President or any Vice-President is present, by a chairman to be elected
at the meeting. The Secretary of the Trust, if present, shall act as
Secretary of such meetings, or if the Secretary is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an
Assistant Secretary is present, than the meeting shall elect its
secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At
every meeting of the Shareholders, 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 TRUSTEES
Section 1. Number and Tenure of Office. The business and
property of the Trust shall be conducted and managed by a Board of
Trustees and the number of Trustees may be increased or decreased as
provided in Section 2 of this Article. Each Trustee shall, except as
otherwise provided herein, hold office until the next meeting of
Shareholders of the Trust following his election called for the purpose
of electing Trustees or until his successor is duly elected and qualifies.
Trustees need not be Shareholders.
Section 2. Increase or Decrease in Number of Trustees; Removal.
The Board of Trustees, by the vote of a majority of the entire Board, may
increase the number of Trustees to a number not exceeding fifteen, and may
elect Trustees to fill the vacancies created by any such increase in the
number of Trustees until the next meeting called for the purpose of
electing Trustees or until their successors are duly elected and qualify;
the Board of Trustees, by the vote of a majority of the entire Board, may
likewise decrease the number of Trustees to a number not less than two but
the tenure of office of any Trustee shall not be affected by any such
decrease. Vacancies occurring other than by reason of any such increase
shall be filled by a vote of a majority of the Board then sitting. A
Trustee at any time may be removed either with or without cause by
resolution duly adopted by the affirmative votes of the holders of not
less than two-thirds of the Shares of the Trust, present in person or by
proxy at any meeting of Shareholders at which such vote may be taken. Any
Trustee at any time may be removed for cause by resolution duly adopted
at any meeting of the Board of Trustees 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 the Trustees whose removal
is not proposed. As used herein, "for cause" shall mean any cause which
under Massachusetts law would permit the removal of a Trustee of a
business trust.
Section 3. Place of Meeting. The Trustees may hold their
meetings, have one or more offices, and keep the books of the Trust
outside Massachusetts, at any office or offices of the Trust or at any
other place as they may from time to time by resolution determine, or, in
the case of meetings, as they may from time to time by resolution
determine or as shall be specified or fixed in the respective notices or
waivers of notice thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
Trustees shall be held at such time and on such notice, if any, as the
Trustees may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of
Trustees may be held from time to time upon call of the Chairman of the
Board of Trustees, if any, the President, or two or more of the Trustees,
by oral, telegraphic or written notice duly served on or sent or mailed
to each Trustee not less than one day before such meeting. No notice need
be given to any Trustee who attends in person or to any Trustee 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 6. Quorum. A majority of the Trustees then in office
shall constitute a quorum for the transaction of business, provided that
a quorum shall in no case be less than two Trustees. If at any meeting
of the Board there shall be less than a quorum present (in person or by
open telephone line, to the extent permitted by the 1940 Act, a majority
of those present may adjourn the meeting from time to time until a quorum
shall have been obtained. The act of the majority of the Trustees present
at any meeting at which there is a quorum shall be the act of the Board,
except as may be otherwise specifically provided by statute, by the
Declaration of Trust or by these By-Laws.
Section 7. Executive Committee. The Board of Trustees may, by
the affirmative vote of a majority of the entire Board, elect from the
Trustees an Executive Committee to consist of such number of Trustees as
the Board may from time to time determine. The Board of Trustees 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 election from
the Trustees. When the Board of Trustees is not in session, the Executive
Committee shall have and may exercise any or all of the powers of the
Board of Trustees in the management of the business and affairs of the
Trust (including the power to authorize the seal of the Trust to be
affixed to all papers which may require it) except as provided by law and
except the power to increase or decrease the size of, or fill vacancies
on, the Board. 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 Trustees, 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 Trustees to act in the place of such absent member.
Section 8. Other Committees. The Board of Trustees, 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 (not
less than two) and shall have and may exercise 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 Trustees shall otherwise
provide. The Board of Trustees shall have power at any time to change the
members and powers of any such committee, to fill vacancies, and to
discharge any such committee.
Section 9. Informal Action by, and Telephone Meetings of,
Trustees and Committees. Any action required or permitted to be taken at
any meeting of the Board of Trustees or any committee thereof may 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. Trustees
or members of a committee of the Board of Trustees may participate in a
meeting by means of a conference telephone or similar communications
equipment; such participation shall, except as otherwise required by the
1940 Act, have the same effect as presence in person.
Section 10. Compensation of Trustees. Trustees shall be
entitled to receive such compensation from the Trust for their services
as may from time to time be voted by the Board of Trustees.
Section 11. Dividends. Dividends or distributions payable on
the Shares of any Series may, but need not be, declared by specific
resolution of the Board as to each dividend or distribution; in lieu of
such specific resolutions, the Board may, by general resolution, determine
the method of computation thereof, the method of determining the
Shareholders of the Series to which they are payable and the methods of
determining whether and to which Shareholders they are to be paid in cash
or in additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the
Trust shall include a Chairman of the Board of Trustees, a President, one
or more Vice-Presidents (the number thereof to be determined by the Board
of Trustees), a Secretary and a Treasurer. The Chairman of the Board of
Trustees and the President shall be selected from among the Trustees. The
Board of Trustees may also in its discretion appoint Assistant
Secretaries, Assistant Treasurers, and other officers, agents and
employees, who shall have such authority and perform such duties as the
Board or the Executive Committee may determine. The Board of Trustees may
fill any vacancy which may occur in any office. Any two 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 or these By-Laws to be executed, acknowledged or verified
by two or more officers.
Section 2. Term of Office. The term of office of all officers
shall be one year and until their respective successors are chosen and
qualify; however, any officer may be removed from office at any time with
or without cause by the vote of a majority of the entire Board of
Trustees.
Section 3. Powers and Duties. The officers of the Trust shall
have such powers and duties as generally pertain to their respective
offices, as well as such powers and duties as may from time to time be
conferred by the Board of Trustees or the Executive Committee. Unless
otherwise ordered by the Board of Trustees, the Chairman of the Board
shall be the Chief Executive Officer.
ARTICLE IV
SHARES
Section 1. Certificates of Shares. Each Shareholder of any
Series of the Trust may be issued a certificate or certificates for his
Shares of that Series, in such form as the Board of Trustees may from time
to time prescribe, but only if and to the extent and on the conditions
described by the Board.
Section 2. Transfer of Shares. Shares of any Series shall be
transferable on the books of the Trust 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 that Series, duly endorsed or accompanied by proper instruments of
assignment and transfer, with such proof of the authenticity of the
signature as the Trust or its agent may reasonably require; in the case
of shares not represented by certificates, similar requirements may be
imposed by the Board of Trustees.
Section 3. Share Ledgers. The share ledgers of the Trust,
containing the name and address of the Shareholders of each Series and the
number of shares of that Series, held by them respectively, shall be kept
at the principal offices of the Trust or, if the Trust employs a transfer
agent, at the offices of the transfer agent of the Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Trustees may determine the conditions upon which a new certificate 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 certificate or his legal representative to give bond, with sufficient
surety to the Trust 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
SEAL
The Board of Trustees shall provide a suitable seal of the Trust,
in such form and bearing such inscriptions as it may determine. The seal
may be used by causing it or a facsimile to be impressed or affixed or
printed or otherwise reproduced. Unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair the validity, of any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board of
Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added to or
repealed by the Shareholders or by majority vote of the entire Board of
Trustees, but any such alteration, amendment, addition or repeal of the
By-Laws by action of the Board of Trustees may be altered or repealed by
the Shareholders.
ORGZN\285
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 28th day of March, 1991, by and between OPPENHEIMER
INTEGRITY FUNDS (the "Trust") and OPPENHEIMER MANAGEMENT CORPORATION
(hereinafter referred to as "OMC").
WHEREAS, the Trust is an open-end, diversified series management
investment company registered as such with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of
1940 (the "Investment Company Act"), and OMC is an investment adviser
registered as such with the Commission under the Investment Advisers Act
of 1940; and
WHEREAS, OPPENHEIMER INVESTMENT GRADE BOND FUND (the "Fund") is a series
of the Trust having a separate portfolio, investment policies and
investment restrictions;
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.
(a) The Trust hereby employs OMC and OMC 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. OMC shall, in all matters, give to
the Fund and the Trust's Board of Trustees the benefit of
its best judgment, effort, advice and recommendations and
shall, at all times conform to, and use its best efforts to
enable the Fund to conform to (i) the provisions of the
Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state
or federal law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Trust as amended from time to
time; (iv) policies and determinations of the Board of
Trustees of the Trust; (v) the fundamental policies and
investment restrictions of the Fund as reflected in the
Trust's registration statement under the Investment Company
Act or as such policies may, from time to time, be amended
by the Fund's shareholders; and (vi) the Prospectus and
Statement of Additional Information of the Fund in effect
from time to time. The appropriate officers and employees
of OMC shall be available upon reasonable notice for
consultation with any of the Trustees and officers of the
Trust with respect to any matters dealing with the business
and affairs of the Trust including the valuation of
portfolio securities of the Fund which are either not
registered for public sale or not traded on any securities
market.
(b) At its option, OMC may appoint a sub-adviser (which may be
affiliated with OMC) to perform all or such
responsibilities of OMC under this Agreement as shall be
delegated by OMC to such subadviser provided, however, that
the appointment of any subadviser and the assumption by
such subadviser of any responsibilities of OMC shall be
subject to the approval of the Board of Trustees of the
Trust, including the vote of the majority of the Trustees
of the Trust who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company
Act) of
any such person, cast in person at a meeting called for the
purpose
of voting on such approval, and, to the extent necessary,
the shareholders
of the Fund. OMC agrees to give the Trust prompt written
notice of the
termination of, or any notice to terminate, any subadviser
agreement.
2. Investment Management.
(a) OMC shall, subject to the direction and control by the
Trust's Board of Trustees, (i) supervise and monitor
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; (ii) subject to
subsection (i) hereof, regularly provide investment advice
and recommendations to the Fund with respect to its
investments, investment policies and the purchase and sale
of securities; and (iii) arrange, subject to the provisions
of paragraph 7 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities
and other investments held in the Fund's portfolio.
(b) Provided that the Trust shall not be required to pay any
compensation other than as provided by the terms of this
Agreement and subject to the provisions of paragraph 7
hereof, OMC may obtain investment information, research or
assistance from any other person, firm or corporation to
supplement, update or otherwise improve its investment
management services.
(c) Provided that nothing herein shall be deemed to protect OMC
from willful misfeasance, bad faith or gross negligence in
the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, OMC shall not
be liable for any loss sustained by reason of good faith
errors or omissions in connection with any matters to which
this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any officer
thereof from acting as investment adviser for any other
person, firm or corporation and shall not in any way limit
or restrict OMC or any of its directors, officers,
stockholders 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 OMC of its duties and
obligations under this Agreement.
3. Other Duties of OMC.
OMC shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel as shall
be required to provide effective corporate administration for
the Fund, including the compilation and maintenance of such
records with respect to its operations as may reasonably be
required; the preparation and filing of such reports with
respect thereto as shall be required by the Commission;
composition of periodic reports with respect to operations of
the Fund for its shareholders; composition of proxy materials
for meetings of the Fund's shareholders; and the composition of
such registration statements as may
be required by federal and state securities laws for continuous
public sale of shares of the Fund. OMC shall, at its own cost
and expense, also provide the Trust with adequate office space,
facilities and equipment. OMC shall, at its own expense,
provide such officers for the Trust as the Trust's Board may
request.
4. Allocation of Expenses.
All other costs and expenses of the Fund not expressly assumed
by OMC under this Agreement, by a sub-adviser under any Sub-
Advisory Agreement or to be paid by the Distributor of the
shares of the Fund, shall be paid by the Trust, including, but
not limited to: (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums for fidelity and other
coverage requisite to its operations; (iv) compensation and
expenses of the Trust's trustees other than those affiliated
with OMC; (v) legal and audit expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the
redemption of its shares; (viii) expenses incident to the
issuance of its shares against payment therefor by or on behalf
of the subscribers thereto; (ix) fees and expenses, other than
as hereinabove provided, incident to the registration under
federal and state "blue sky" securities laws of shares of the
Fund for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the
Fund; (xi) except as noted above, all other expenses incidental
to holding meetings of the Fund's shareholders; and (xii) such
extraordinary non-recurring expenses as may arise, including
litigation, affecting the Fund and any legal obligation which
the Trust may have (on behalf of the Fund) to indemnify its
officers and trustees with respect thereto. Any officers or
employees of OMC or any entity controlling, controlled by or
under common control with OMC who may also serve as officers,
trustees or employees of the Fund shall not receive any
compensation from the Fund for their services. The expenses
with respect to any two or more series of the Trust shall be
allocated in proportion to the net assets of the respective
series except where allocations of direct expenses can be made.
5. Compensation of OMC.
The Trust agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on
its part to be performed pursuant to the provisions hereof, a
fee computed on the aggregate net asset value of the Fund as of
the close of each business day and payable monthly at the
following annual rate:
.50% of the first $100 million of average annual net assets;
.45% of the next $200 million;
.40% of the next $200 million; and
.35% of average annual net assets in excess of $500 million.
6. Use of Name "Oppenheimer."
OMC hereby grants to the Trust a royalty-free, non-exclusive
license to use the name "Oppenheimer" in the name of the Trust
and the Fund for the duration of this Agreement and any
extensions or renewals thereof.
To the extent necessary to protect OMC's rights to the name
"Oppenheimer" under applicable law, such license shall
allow OMC to inspect and, subject to control by the Trust'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 OMC, in
which event the Trust shall promptly take whatever action
may be necessary to change its name and the name of the
Fund and discontinue any further use of the name
"Oppenheimer" in the name of the Trust and the Fund or
otherwise. The name "Oppenheimer" may be used by OMC in
connection with any of its activities, or licensed by OMC
to any other party.
7. Portfolio Transactions and Brokerage.
(a) OMC is authorized, in arranging the purchase and sale of
the Fund's portfolio securities, to employ or deal with
such members of securities or commodities 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 security price
obtainable) of the Fund's portfolio transactions as well as
to obtain, consistent with the provisions of subparagraph
(c) of this paragraph 7, the benefit of such investment
information or research as will be of significant
assistance to the performance by OMC of its investment
management functions.
(b) OMC 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 OMC 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.
(c) OMC shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to
broker-dealers, other than affiliated broker-dealers,
qualified to obtain best execution of such transactions who
provide brokerage and/or research services (as such
services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) for the Fund and/or other accounts
for which OMC or its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of
the Securities Exchange Act of 1934) and to cause the Fund
to pay such broker-dealers a commission for effecting a
portfolio transaction for the Fund that is in excess of the
amount of commission another broker-dealer adequately
qualified to effect such transaction would have charged for
effecting that transaction, if OMC determines, in
good faith, that such commission is reasonable in relation
to the value of the brokerage and/or research services
provided by such broker-dealer, viewed in terms of either
that particular transaction or the overall responsibilities
of OMC or its affiliates with respect to the accounts as to
which they exercise investment discretion. In reaching
such determination, OMC 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, OMC shall be prepared to show that
all commissions were allocated for purposes contemplated by
this Agreement and that the total commissions paid by the
Fund over a representative period selected by the Trustees
were reasonable in relation to the benefits to the Fund.
(d) OMC shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to
select any broker-dealer on the basis of its purported or
"posted" commission rate but will, to the best of its
ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the
expense incurred by the Fund for effecting its portfolio
transactions to the extent consistent with the interests
and policies of the Fund as established by the
determinations of the Board of Trustees and the provisions
of this paragraph 7.
(e) The Trust recognizes that an affiliated broker-dealer: (i)
may act as one of the Fund's regular brokers for the Fund
so long as it is lawful for it so to act; (ii) may be a
major recipient of brokerage commissions paid by the
brokerage commissions paid by the Fund; and (iii) may
effect portfolio transactions for the Fund only if the
commissions, fees or other remuneration received or to be
received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under
the Investment Company Act for determining the permissible
level of such commissions.
(f) Subject to the foregoing provisions of this paragraph "7,"
OMC may also consider sales of shares of the Fund and the
other funds managed by the Manager and its affiliates as a
factor in the selection of broker-dealers for its portfolio
transactions.
8. Duration.
This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to paragraph 9
hereof, this Agreement shall remain in effect until December 31,
1992, and thereafter will continue in effect from year to year,
so long as such continuance shall be approved at least annually
by the Trust's Board of Trustees, including the vote of the
majority of the trustees of the Trust who are not parties to
this Agreement or "interested persons" (as defined in the
Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by
the holders of a "majority" (as defined in the Investment
Company Act) of the outstanding voting securities of the Fund
and by such a vote of the Trust's Board of Trustees.
9. Termination.
This Agreement may be terminated (i) by OMC at any time without
penalty upon sixty days' written notice to the Trust (which
notice may be waived by the Trust); or (ii) by the Trust at any
time without penalty upon sixty days' written notice to OMC
(which notice may be waived by OMC) provided that such
termination by the Trust shall be directed or approved by the
vote of a majority of all of the Trustees of the Trust then in
office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the
Investment Company Act).
10. Assignment or Amendment.
This Agreement may not be amended or the rights of OMC hereunder
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" (as defined in the
Investment Company Act).
11. Disclaimer of Shareholder or Trustee Liability.
OMC understands and agrees that the obligations of the Trust or
the Fund under this Agreement are not binding upon any trustee
or shareholder of the Trust or the Fund personally, but bind
only the Trust and the Trust's property. OMC represents that it
has notice of the provisions of the Declaration of Trust of the
Trust disclaiming shareholder or trustee liability for acts or
obligations of the Trust.
12. Definitions. The terms and provisions of the Agreement shall be
interpreted and defined in a manner consistent with the
provisions and definitions contained in the Investment Company
Act.
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER INVESTMENT GRADE BOND
FUND
Attest:
/s/ Mitchell J. Lindauer By: /s/ Robert G. Galli
- ------------------------ -------------------
Mitchell J. Lindauer Robert G. Galli
OPPENHEIMER MANAGEMENT CORPORATION
Attest:
/s/ Mitchell J. Lindauer By: /s/ Robert G. Zack
- ------------------------ -------------------
Mitchell J. Lindauer Robert G. Zack
ADVISORY\285#5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 28th day of March, 1991, by and between OPPENHEIMER
INTEGRITY FUNDS (the "Trust") and OPPENHEIMER MANAGEMENT CORPORATION
(hereinafter referred to as "OMC").
WHEREAS, the Trust is an open-end, diversified series management
investment company registered as such with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of
1940 (the "Investment Company Act"), and OMC is an investment adviser
registered as such with the Commission under the Investment Advisers Act
of 1940; and
WHEREAS, OPPENHEIMER VALUE STOCK FUND (the "Fund") is a series of the
Trust having a separate portfolio, investment policies and investment
restrictions;
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.
(a) The Trust hereby employs OMC and OMC 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. OMC shall, in all matters, give to
the Fund and the Trust's Board of Trustees the benefit of
its best judgment, effort, advice and recommendations and
shall, at all times conform to, and use its best efforts to
enable the Fund to conform to (i) the provisions of the
Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state
or federal law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Trust as amended from time to
time; (iv) policies and determinations of the Board of
Trustees of the Trust; (v) the fundamental policies and
investment restrictions of the Fund as reflected in the
Trust's registration statement under the Investment Company
Act or as such policies may, from time to time, be amended
by the Fund's shareholders; and (vi) the Prospectus and
Statement of Additional Information of the Fund in effect
from time to time. The appropriate officers and employees
of OMC shall be available upon reasonable notice for
consultation with any of the Trustees and officers of the
Trust with respect to any matters dealing with the business
and affairs of the Trust including the valuation of
portfolio securities of the Fund which are either not
registered for public sale or not traded on any securities
market.
(b) At its option, OMC may appoint a sub-adviser (which may be
affiliated with OMC) to perform all or such
responsibilities of OMC under this Agreement as shall be
delegated by OMC to such subadviser provided, however, that
the appointment of any subadviser and the assumption by
such subadviser of any responsibilities of OMC shall be
subject to the approval of the Board of Trustees of the
Trust, including the vote of the majority of the Trustees
of the Trust who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company
Act) of
<PAGE>
any such person, cast in person at a meeting called for the
purpose
of voting on such approval, and, to the extent necessary, the
shareholders
of the Fund. OMC agrees to give the Trust prompt written
notice of the
termination of, or any notice to terminate, any subadviser
agreement.
2. Investment Management.
(a) OMC shall, subject to the direction and control by the
Trust's Board of Trustees, (i) supervise and monitor
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; (ii) subject to
subsection (i) hereof, regularly provide investment advice
and recommendations to the Fund with respect to its
investments, investment policies and the purchase and sale
of securities; and (iii) arrange, subject to the provisions
of paragraph 7 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities
and other investments held in the Fund's portfolio.
(b) Provided that the Trust shall not be required to pay any
compensation other than as provided by the terms of this
Agreement and subject to the provisions of paragraph 7
hereof, OMC may obtain investment information, research or
assistance from any other person, firm or corporation to
supplement, update or otherwise improve its investment
management services.
(c) Provided that nothing herein shall be deemed to protect OMC
from willful misfeasance, bad faith or gross negligence in
the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, OMC shall not
be liable for any loss sustained by reason of good faith
errors or omissions in connection with any matters to which
this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any officer
thereof from acting as investment adviser for any other
person, firm or corporation and shall not in any way limit
or restrict OMC or any of its directors, officers,
stockholders 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 OMC of its duties and
obligations under this Agreement.
3. Other Duties of OMC.
OMC shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel as shall
be required to provide effective corporate administration for
the Fund, including the compilation and maintenance of such
records with respect to its operations as may reasonably be
required; the preparation and filing of such reports with
respect thereto as shall be required by the Commission;
composition of periodic reports with respect to operations of
the Fund for its shareholders; composition of proxy materials
for meetings of the Fund's shareholders; and the composition of
such registration statements as may
be required by federal and state securities laws for continuous
public sale of shares of the Fund. OMC shall, at its own cost
and expense, also provide the Trust with adequate office space,
facilities and equipment. OMC shall, at its own expense,
provide such officers for the Trust as the Trust's Board may
request.
4. Allocation of Expenses.
All other costs and expenses of the Fund not expressly assumed
by OMC under this Agreement, by a sub-adviser under any Sub-
Advisory Agreement or to be paid by the Distributor of the
shares of the Fund, shall be paid by the Trust, including, but
not limited to: (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums for fidelity and other
coverage requisite to its operations; (iv) compensation and
expenses of the Trust's trustees other than those affiliated
with OMC; (v) legal and audit expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the
redemption of its shares; (viii) expenses incident to the
issuance of its shares against payment therefor by or on behalf
of the subscribers thereto; (ix) fees and expenses, other than
as hereinabove provided, incident to the registration under
federal and state "blue sky" securities laws of shares of the
Fund for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the
Fund; (xi) except as noted above, all other expenses incidental
to holding meetings of the Fund's shareholders; and (xii) such
extraordinary non-recurring expenses as may arise, including
litigation, affecting the Fund and any legal obligation which
the Trust may have (on behalf of the Fund) to indemnify its
officers and trustees with respect thereto. Any officers or
employees of OMC or any entity controlling, controlled by or
under common control with OMC who may also serve as officers,
trustees or employees of the Fund shall not receive any
compensation from the Fund for their services. The expenses
with respect to any two or more series of the Trust shall be
allocated in proportion to the net assets of the respective
series except where allocations of direct expenses can be made.
5. Compensation of OMC.
The Trust agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on
its part to be performed pursuant to the provisions hereof, a
fee computed on the aggregate net asset value of the Fund as of
the close of each business day and payable monthly at the
following annual rate:
.75% of the first $100 million of average annual net assets;
.72% of the next $200 million;
.69% of the next $200 million; and
.66% of average annual net assets in excess of $500 million.
6. Use of Name "Oppenheimer."
OMC hereby grants to the Trust a royalty-free, non-exclusive
license to use the name "Oppenheimer" in the name of the Trust
and the Fund for the duration of this Agreement and any
extensions or renewals thereof.
To the extent necessary to protect OMC's rights to the name
"Oppenheimer" under applicable law, such license shall
allow OMC to inspect and, subject to control by the Trust'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 OMC, in
which event the Trust shall promptly take whatever action
may be necessary to change its name and the name of the
Fund and discontinue any further use of the name
"Oppenheimer" in the name of the Trust and the Fund or
otherwise. The name "Oppenheimer" may be used by OMC in
connection with any of its activities, or licensed by OMC
to any other party.
7. Portfolio Transactions and Brokerage.
(a) OMC is authorized, in arranging the purchase and sale of
the Fund's portfolio securities, to employ or deal with
such members of securities or commodities 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 security price
obtainable) of the Fund's portfolio transactions as well as
to obtain, consistent with the provisions of subparagraph
(c) of this paragraph 7, the benefit of such investment
information or research as will be of significant
assistance to the performance by OMC of its investment
management functions.
(b) OMC 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 OMC 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.
(c) OMC shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to
broker-dealers, other than affiliated broker-dealers,
qualified to obtain best execution of such transactions who
provide brokerage and/or research services (as such
services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) for the Fund and/or other accounts
for which OMC or its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of
the Securities Exchange Act of 1934) and to cause the Fund
to pay such broker-dealers a commission for effecting a
portfolio transaction for the Fund that is in excess of the
amount of commission another broker-dealer adequately
qualified to effect such transaction would have charged for
effecting that transaction, if OMC determines, in
good faith, that such commission is reasonable in relation
to the value of the brokerage and/or research services
provided by such broker-dealer, viewed in terms of either
that particular transaction or the overall responsibilities
of OMC or its affiliates with respect to the accounts as to
which they exercise investment discretion. In reaching
such determination, OMC 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, OMC shall be prepared to show that
all commissions were allocated for purposes contemplated by
this Agreement and that the total commissions paid by the
Fund over a representative period selected by the Trustees
were reasonable in relation to the benefits to the Fund.
(d) OMC shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to
select any broker-dealer on the basis of its purported or
"posted" commission rate but will, to the best of its
ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the
expense incurred by the Fund for effecting its portfolio
transactions to the extent consistent with the interests
and policies of the Fund as established by the
determinations of the Board of Trustees and the provisions
of this paragraph 7.
(e) The Trust recognizes that an affiliated broker-dealer: (i)
may act as one of the Fund's regular brokers for the Fund
so long as it is lawful for it so to act; (ii) may be a
major recipient of brokerage commissions paid by the
brokerage commissions paid by the Fund; and (iii) may
effect portfolio transactions for the Fund only if the
commissions, fees or other remuneration received or to be
received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under
the Investment Company Act for determining the permissible
level of such commissions.
(f) Subject to the foregoing provisions of this paragraph "7,"
OMC may also consider sales of shares of the Fund and the
other funds managed by the Manager and its affiliates as a
factor in the selection of broker-dealers for its portfolio
transactions.
8. Duration.
This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to paragraph 9
hereof, this Agreement shall remain in effect until December 31,
1992, and thereafter will continue in effect from year to year,
so long as such continuance shall be approved at least annually
by the Trust's Board of Trustees, including the vote of the
majority of the trustees of the Trust who are not parties to
this Agreement or "interested persons" (as defined in the
Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by
the holders of a "majority" (as defined in the Investment
Company Act) of the outstanding voting securities of the Fund
and by such a vote of the Trust's Board of Trustees.
9. Termination.
This Agreement may be terminated (i) by OMC at any time without
penalty upon sixty days' written notice to the Trust (which
notice may be waived by the Trust); or (ii) by the Trust at any
time without penalty upon sixty days' written notice to OMC
(which notice may be waived by OMC) provided that such
termination by the Trust shall be directed or approved by the
vote of a majority of all of the Trustees of the Trust then in
office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the
Investment Company Act).
10. Assignment or Amendment.
This Agreement may not be amended or the rights of OMC hereunder
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" (as defined in the
Investment Company Act).
11. Disclaimer of Shareholder or Trustee Liability.
OMC understands and agrees that the obligations of the Trust or
the Fund under this Agreement are not binding upon any trustee
or shareholder of the Trust or the Fund personally, but bind
only the Trust and the Trust's property. OMC represents that it
has notice of the provisions of the Declaration of Trust of the
Trust disclaiming shareholder or trustee liability for acts or
obligations of the Trust.
12. Definitions. The terms and provisions of the Agreement shall be
interpreted and defined in a manner consistent with the
provisions and definitions contained in the Investment Company
Act.
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER VALUE STOCK FUND
Attest:
/s/ Mitchell J. Lindauer By: /s/ Robert G. Galli
- ------------------------ -------------------
Mitchell J. Lindauer Robert G. Galli
OPPENHEIMER MANAGEMENT CORPORATION
Attest:
/s/ Mitchell J. Lindauer By: /s/ Robert G. Zack
- ------------------------ --------------------
Mitchell J. Lindauer Robert G. Zack
ADVISORY\325
SUB-ADVISORY AGREEMENT
THIS AGREEMENT dated as of March 28, 1991, by and between
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company organized under the laws of the Commonwealth of Massachusetts (the
"Sub-Adviser"), and Oppenheimer Management Corporation, a Colorado
corporation controlled by the Sub-Adviser ("OMC").
WHEREAS, Oppenheimer Investment Grade Bond Fund (the "Fund") is
a series of Oppenheimer Integrity Funds (the "Trust"), a Massachusetts
business trust which is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission
(the "Commission") pursuant to the Investment Company Act of 1940, as
amended (the "Act"), and whereas the Trust has appointed OMC as the
investment adviser for the Fund, pursuant to the terms of an Investment
Advisory Agreement (the "Advisory Agreement");
WHEREAS, the Advisory Agreement provides that OMC may, at its
option, subject to approval by the Trustees of the Trust and, to the
extent necessary, shareholders of the Fund, appoint a subadviser to assume
certain of the responsibilities and obligations of OMC under the Advisory
Agreement;
WHEREAS, the Sub-Adviser is a registered investment adviser,
and OMC desires to appoint the Sub-Adviser as its subadviser for the Fund
and the Sub-Adviser is willing to act in such capacity upon the terms
herein set forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. General Provision.
OMC hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment subadviser of the Fund to
provide investment advice and to perform for the Fund such
other duties and functions as are hereinafter set forth. The
Sub-Adviser shall, in all matters, give to the Fund and the
Trust's Board of Trustees, directly or through OMC, the benefit
of the Sub-Adviser's best judgment, effort, advice and
recommendations and shall, at all times conform to, and use its
best efforts to enable the Fund to conform to (i) the
provisions of the Investment Company Act and any rules or
regulations thereunder; (ii) any other applicable provisions of
state or federal law; (iii) the provisions of the Declaration
of Trust and By-Laws of the Trust as amended from time to time;
(iv) policies and determinations of the Board of Trustees of
the Trust and OMC; (v) the fundamental policies and investment
restrictions of the Fund as reflected in the Trust's
registration statement under the Investment Company Act or as
such policies may, from time to time, be amended by the Fund's
shareholders; and (vi) the Prospectus and Statement of
Additional Information of the Fund in effect from time to time.
The appropriate officers and employees of the Sub-Adviser shall
be available upon reasonable notice for consultation with any
of the Trustees and officers of the Trust and OMC with respect
to any matters dealing with the business and affairs of the
Fund including the valuation of portfolio securities of the
Fund which securities are either not registered for public sale
or not traded on any securities market.
2. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall, subject to the direction and
control by the Trust's Board of Trustees or OMC, to the
extent OMC's direction is not inconsistent with that of
the Board of Trustees, (i) supervise and monitor
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; (ii) subject to
subsection (i) hereof, regularly provide investment advice
and recommendations to the Fund, directly or through OMC,
with respect to the Fund's investments, investment
policies and the purchase and sale of securities; (iii)
arrange, subject to the provisions of paragraph 5 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; and (iv) provide
reports on the foregoing to the Board of Trustees at each
Board meeting.
(b) Provided that neither OMC nor the Fund or the Trust shall
be required to pay any compensation other than as provided
by the terms of this Agreement and subject to the
provisions of paragraph 5 hereof, the Sub-Adviser may
obtain investment information, research or assistance from
any other person, firm or corporation to supplement,
update or otherwise improve its investment management
services.
(c) Provided that nothing herein shall be deemed to protect
the Sub-Adviser from willful misfeasance, bad faith or
gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under
this Agreement, the Sub-Adviser shall not be liable for
any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this
Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or the Sub-
Adviser or any officer thereof from acting as investment
adviser or subadviser for any other person, firm or
corporation and shall not in any way limit or restrict OMC
or the Sub-Adviser or any of their respective directors,
officers, stockholders or employees from buying, selling
or trading any securities for its or their own account or
for the account of others for whom it or they may be
acting, provided that such activities will not adversely
affect or otherwise impair the performance by any party of
its duties and obligations under this Agreement.
(e) The Sub-Adviser shall cooperate with OMC by providing OMC
with any information in the Sub-Adviser's possession
necessary for supervising the activities of all
administrative and clerical personnel as shall be required
to provide effective corporate administration for the
Fund, including the compilation and maintenance of such
records with respect to its operations as may reasonably
be required. The Sub-Adviser shall, at its own expense,
provide such officers for the Trust as its Board may
request.
3. Duties of OMC.
OMC shall provide the Sub-Adviser with the following information
about the Fund:
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 11:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions
of the documents and policies referred to in subparagraphs
(iii), (iv), (v) and (vi) of paragraph 1., above.
4. Compensation of the Sub-Adviser.
OMC agrees to pay the Sub-Adviser and the Sub-Adviser agrees to
accept as full compensation for the performance of all
functions and duties on its part to be performed pursuant to
the provisions hereof, a fee computed on the aggregate net
asset value of the Fund as of the close of each business day
and payable monthly by the tenth business day of the following
month, at the following annual rate:
.35% of the first $100 million of average annual net
assets;
.25% of the next $200 million of average annual net
assets;
.20% of the next $200 million of average annual net
assets; and .15% of average annual net assets in excess of
$500 million.
5. Portfolio Transactions and Brokerage.
(a) The Sub-Adviser is authorized, in arranging the purchase
and sale of the Fund's publicly-traded 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 security price obtainable) of the Fund's
portfolio transactions as well as to obtain, consistent
with the provisions of subparagraph (d) of this paragraph
5, the benefit of such investment information or research
as will be of significant assistance to the performance by
the Sub-Adviser of its investment management functions.
(b) The Sub-Adviser may effect the purchase and sale of
securities (which are otherwise publicly traded) in
private transactions on such terms and conditions as are
customary in such transactions, may use a broker in such
to effect said transactions, and may enter into a contract
in which the broker acts either as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the
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
Sub-Adviser on the basis of all relevant factors and considerations
including, insofar as feasible, the execution capabilities required by the
transaction or transactions; the ability and willingness of the broker-
dealer to facilitate the 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 Sub-Adviser shall have discretion, in the interests of
the Fund, to allocate brokerage on the Fund's portfolio transactions to
broker-dealers, other than affiliated broker-dealers, qualified to obtain
best execution of such transactions who provide brokerage and/or research
services (as such services are defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) for the Fund and/or other accounts for
which the Sub-Adviser or its affiliates exercise "investment discretion"
(as that term is defined in Section 3(a)(35) of the Securities Exchange
Act of 1934) and to cause the Fund to pay such broker-dealers a commission
for effecting a portfolio transaction for the Fund that is in excess of
the amount of commission another broker-dealer adequately qualified to
effect such transaction would have charged for effecting that transaction,
if the Sub-Adviser determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser
or its affiliates with respect to the accounts as to which they exercise
investment discretion. In reaching such determination, the Sub-Adviser
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 Sub-Adviser shall be prepared to show that all
commissions were allocated for purposes contemplated by this Agreement and
that the total commissions paid by the Fund over a representative period
selected by the Trustees were reasonable in relation to the benefits to
the Fund.
(e) The Sub-Adviser shall have no duty or obligation to seek
advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any
broker-dealer on the basis of its purported or "posted" commission rate
but will, to the best of its ability, endeavor to be aware of the current
level of the charges of eligible broker-dealers and to minimize the
expense incurred by the Fund for effecting its portfolio transactions to
the extent consistent with the interests and policies of the Fund as
established by the determinations of the Board of Trustees and the
provisions of this paragraph 5.
6. Duration.
This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to paragraph 7
hereof, this Agreement shall remain in effect until December
31, 1992, and thereafter will continue in effect from year to
year, so long as such continuance shall be approved at least
annually by the Trust's Board of Trustees, including the vote
of the majority of the trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined
in the Investment Company Act) of any such party, cast in
person at a meeting called for the purpose of voting on such
approval, or by the holders of a "majority" (as defined in the
Investment Company Act) of the outstanding voting securities of
the Fund and by such a vote of the Trust's Board of Trustees.
7. Termination.
This Agreement shall terminate automatically in the event of
its assignment or in the event the Trust terminates the
Advisory Agreement; it may also be terminated: (i) for cause or
with the consent of the parties and the Trust, by OMC or the
Sub-Adviser at any time without penalty upon sixty days'
written notice to the other party and the Trust; (ii) by the
Sub-Adviser at any time without penalty upon sixty days'
written notice to OMC and the Trust (which notice may be waived
by OMC and the Trust); or (iii) by the Trust at any time
without penalty upon sixty days' written notice to OMC and the
Sub-Adviser provided that such termination by the Trust shall
be directed or approved by the vote of a majority of all of the
trustees of the Trust then in office or by the vote of the
holders of a "majority" of the outstanding voting securities of
the Fund (as defined in the Investment Company Act).
8. Disclaimer of Shareholder Liability.
OMC and the Sub-Adviser understand that the obligations of the
Trust under this Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust
and the Trust's property. OMC and the Sub-Adviser represent
that each has notice of the provisions of the Declaration of
Trust of the Trust disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
9. Notice.
Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party,
with a copy to the Trust, at the addresses below or such other
address as such other party may designate for the receipt of
such notice.
If to OMC:
Oppenheimer Management Corporation
2 World Trade Center, 34th Floor
New York, New York 10048-0669
Attention: Robert G. Galli, Esq.
If to the Sub-Adviser:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Gary E. Wendlandt, Executive Vice President
If to either party, copy to:
Oppenheimer Integrity Funds
3410 South Galena Street
Denver, Colorado 80231
Attention: James C. Swain, Chairman
IN WITNESS WHEREOF, OMC and the Sub-Adviser have caused this
Agreement to be executed on the day and year first above written.
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Robert G. Zack
-------------------------
Robert G. Zack,
Senior Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Hamline C. Wilson
----------------------
Hamline C. Wilson
Vice President
Accepted and Acknowledged:
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER INVESTMENT GRADE BOND FUND
By: /s/ Robert G. Galli
---------------------
Robert G. Galli, Vice President
advisory\285#3
SUB-ADVISORY AGREEMENT
THIS AGREEMENT dated as of March 28, 1991, by and between
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company organized under the laws of the Commonwealth of Massachusetts (the
"Sub-Adviser"), and Oppenheimer Management Corporation, a Colorado
corporation controlled by the Sub-Adviser ("OMC").
WHEREAS, Oppenheimer Value Stock Fund (the "Fund") is a series of
Oppenheimer Integrity Funds (the "Trust"), a Massachusetts business trust
which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission")
pursuant to the Investment Company Act of 1940, as amended (the "Act"),
and whereas the Trust has appointed OMC as the investment adviser for the
Fund, pursuant to the terms of an Investment Advisory Agreement (the
"Advisory Agreement");
WHEREAS, the Advisory Agreement provides that OMC may, at its option,
subject to approval by the Trustees of the Trust and, to the extent
necessary, shareholders of the Fund, appoint a subadviser to assume
certain of the responsibilities and obligations of OMC under the Advisory
Agreement;
WHEREAS, the Sub-Adviser is a registered investment adviser, and OMC
desires to appoint the Sub-Adviser as its subadviser for the Fund and the
Sub-Adviser is willing to act in such capacity upon the terms herein set
forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. General Provision.
OMC hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment subadviser of the Fund to provide
investment advice and to perform for the Fund such other duties and
functions as are hereinafter set forth. The Sub-Adviser shall, in
all matters, give to the Fund and the Trust's Board of Trustees,
directly or through OMC, the benefit of the Sub-Adviser's best
judgment, effort, advice and recommendations and shall, at all times
conform to, and use its best efforts to enable the Fund to conform
to (i) the provisions of the Investment Company Act and any rules or
regulations thereunder; (ii) any other applicable provisions of state
or federal law; (iii) the provisions of the Declaration of Trust and
By-Laws of the Trust as amended from time to time; (iv) policies and
determinations of the Board of Trustees of the Trust and OMC; (v) the
fundamental policies and investment restrictions of the Fund as
reflected in the Trust's registration statement under the Investment
Company Act or as such policies may, from time to time, be amended
by the Fund's shareholders; and (vi) the Prospectus and Statement of
Additional Information of the Fund in effect from time to time. The
appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the
Trustees and officers of the Trust and OMC with respect to any
matters dealing with the business and affairs of the Fund including
the valuation of portfolio securities of the Fund which securities
are either not registered for public sale or not traded on any
securities market.
2. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall, subject to the direction and control by
the Trust's Board of Trustees or OMC, to the extent OMC's
direction is not inconsistent with that of the Board of
Trustees, (i) regularly provide investment advice and
recommendations to the Fund, directly or through OMC, with
respect to the Fund's investments, investment policies and the
purchase and sale of securities; (ii) supervise and monitor
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; (iii) arrange, subject to the
provisions of paragraph 5 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; and
(iv) provide reports on the foregoing to the Board of Trustees
at each Board meeting.
(b) Provided that neither OMC nor the Fund or the Trust 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 5 hereof, the Sub-Adviser may obtain investment
information, research or assistance from any other person, firm
or corporation to supplement, update or otherwise improve its
investment management services.
(c) Provided that nothing herein shall be deemed to protect the Sub-
Adviser from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, the Sub-Adviser
shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to
which this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or the Sub-Adviser
or any officer thereof from acting as investment adviser or
subadviser for any other person, firm or corporation and shall
not in any way limit or restrict OMC or the Sub-Adviser or any
of their respective directors, officers, stockholders or
employees from buying, selling or trading any securities for its
or their own account or for the account of others for whom it
or they may be acting, provided that such activities will not
adversely affect or otherwise impair the performance by any
party of its duties and obligations under this Agreement.
(e) The Sub-Adviser shall cooperate with OMC by providing OMC with
any information in the Sub-Adviser's possession necessary for
supervising the activities of all administrative and clerical
personnel as shall be required to provide effective corporate
administration for the Fund, including the compilation and
maintenance of such records with respect to its operations as
may reasonably be required. The Sub-Adviser shall, at its own
expense, provide such officers for the Trust as its Board may
request.
3. Duties of OMC.
OMC shall provide the Sub-Adviser with the following information
about the Fund:
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 11:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in subparagraphs (iii), (iv),
(v) and (vi) of paragraph 1., above.
4. Compensation of the Sub-Adviser.
OMC agrees to pay the Sub-Adviser and the Sub-Adviser agrees to
accept as full compensation for the performance of all functions and
duties on its part to be performed pursuant to the provisions hereof,
a fee computed on the aggregate net asset value of the Fund as of the
close of each business day and payable monthly by the tenth business
day of the following month, at the following annual rate:
.40% of the first $100 million of average annual net assets;
.30% of the next $200 million of average annual net assets;
.25% of the next $200 million of average annual net assets; and
.20% of average annual net assets in excess of $500 million.
5. Portfolio Transactions and Brokerage.
(a) The Sub-Adviser is authorized, in arranging the purchase and
sale of the Fund's publicly-traded 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 security price obtainable) of the Fund's portfolio
transactions.
(b) The Sub-Adviser may effect the purchase and sale of securities
(which are otherwise publicly traded) in private transactions
on such terms and conditions as are customary in such
transactions, may use a broker in such to effect said
transactions, and may enter into a contract in which the broker
acts either as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the 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 Sub-Adviser on the basis of all relevant
factors and considerations including, insofar as feasible, the
execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer
to facilitate the 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 Sub-Adviser shall have discretion, in the interests of the
Fund, to allocate brokerage on the Fund's portfolio transactions
to broker-dealers, other than affiliated broker-dealers,
qualified to obtain best execution of such transactions who
provide brokerage and/or research services (as such services are
defined in Section 28(e)(3) of the Securities Exchange Act of
1934) for the Fund and/or other accounts for which the Sub-
Adviser or its affiliates exercise "investment discretion" (as
that term is defined in Section 3(a)(35) of the Securities
Exchange Act of 1934) and to cause the Fund to pay such broker-
dealers a commission for effecting a portfolio transaction for
the Fund that is in excess of the amount of commission another
broker-dealer adequately qualified to effect such transaction
would have charged for effecting that transaction, if the Sub-
Adviser determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser or its affiliates with
respect to the accounts as to which they exercise investment
discretion. In reaching such determination, the Sub-Adviser
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 Sub-Adviser
shall be prepared to show that all commissions were allocated
for purposes contemplated by this Agreement and that the total
commissions paid by the Fund over a representative period
selected by the Trustees were reasonable in relation to the
benefits to the Fund.
(e) The Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select
any broker-dealer on the basis of its purported or "posted"
commission rate but will, to the best of its ability, endeavor
to be aware of the current level of the charges of eligible
broker-dealers and to minimize the expense incurred by the Fund
for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Fund as
established by the determinations of the Board of Trustees and
the provisions of this paragraph 5.
6. Duration.
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 7 hereof, this
Agreement shall remain in effect until December 31, 1992, and
thereafter will continue in effect from year to year, so long as such
continuance shall be approved at least annually by the Trust's Board
of Trustees, including the vote of the majority of the trustees of
the Trust who are not parties to this Agreement or "interested
persons" (as defined in the Investment Company Act) of any such
party, cast in person at a meeting called for the purpose of voting
on such approval, or by the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding voting securities of
the Fund and by such a vote of the Trust's Board of Trustees.
7. Termination.
This Agreement shall terminate automatically in the event of its
assignment or in the event the Trust terminates the Advisory
Agreement; it may also be terminated: (i) for cause or with the
consent of the parties and the Trust, by OMC or the Sub-Adviser at
any time without penalty upon sixty days' written notice to the other
party and the Trust; or (ii) by the Trust at any time without penalty
upon sixty days' written notice to OMC and the Sub-Adviser provided
that such termination by the Trust shall be directed or approved by
the vote of a majority of all of the trustees of the Trust then in
office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the
Investment Company Act).
8. Disclaimer of Shareholder Liability.
OMC and the Sub-Adviser understand that the obligations of the Trust
under this Agreement are not binding upon any Trustee or shareholder
of the Trust personally, but bind only the Trust and the Trust's
property. OMC and the Sub-Adviser represent that each has notice of
the provisions of the Declaration of Trust of the Trust disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust.
9. Notice.
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy
to the Trust, at the addresses below or such other address as such
other party may designate for the receipt of such notice.
If to OMC:
Oppenheimer Management Corporation
2 World Trade Center, 34th Floor
New York, New York 10048-0669
Attention: Robert G. Galli, Esq.
If to the Sub-Adviser:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Gary E. Wendlandt, Executive Vice President
If to either party, copy to:
Oppenheimer Integrity Fund
3410 South Galena Street
Denver, Colorado 80231
Attention: James C. Swain, Chairman
IN WITNESS WHEREOF, OMC and the Sub-Adviser have caused this
Agreement to be executed on the day and year first above written.
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Robert G. Zack
------------------------------
Robert G. Zack,
Senior Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Hamline C. Wilson
------------------------------
Hamline C. Wilson, Vice President
Accepted and Acknowledged:
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER VALUE STOCK FUND
By: /s/ Robert G. Galli
---------------------------
Robert G. Galli, Vice President
ADVISORY\325#2
December 16, 1992
F. Jerome Grimm
President and Chief Executive Officer
Concert Capital Management, Inc.
1295 State Street
Springfield, MA 01111
Re: Delegation of Investment Advisory Services:
Oppenheimer Value Stock Fund
Dear Mr. Grimm:
This letter sets forth the terms of the temporary delegation (the
"Delegation") to Concert Capital Management, Inc. ("Concert") of certain
investment advisory duties that Massachusetts Mutual Life Insurance
Company ("MassMutual") has pursuant to a sub-advisory agreement dated
March 28, 1991 (the "MassMutual Sub-Advisory Agreement") with Oppenheimer
Management Corporation ("OMC").
MassMutual's sub-advisory duties relate to OMC's investment advisory
agreement dated March 28 1991 (the "OMC Advisory Agreement") with
Oppenheimer Integrity Funds on behalf of Oppenheimer Value Stock Fund
("Value Stock Fund" or "Fund). Pursuant to the terms of the OMC Advisory
Agreement, OMC is, and would continue to be, ultimately responsible for
all investment advisory and management services for Value Stock Fund.
This Delegation shall be superseded and terminated as of the effective
date of the investment sub-advisory agreement between Concert and
Oppenheimer Management Corporation (the "Concert Sub-Advisory Agreement").
Oppenheimer Integrity Funds is an open-end diversified management
investment company registered as such with the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. Oppenheimer
Integrity Funds is organized as a Massachusetts business trust and has a
Board of Trustees. MassMutual, OMC, and Concert are registered investment
advisors pursuant to the Investment Advisors Act of 1940.
MassMutual desires to transfer its equity investment operations to Concert
and as of January 1, 1993, Concert rather than MassMutual, will provide
equity investment advisory services to MassMutual's investment clients,
including Value Stock Fund. We have agreed that the transfer should have
little practical impact on Value Stock Fund because all of the senior
investment professionals of MassMutual's Equity Department will transfer
to and become employees of Concert; MassMutual will continue to own 100%
of Concert's stock, and a majority of Concert's directors will continue
to be MassMutual officers and employees.
Effective as of January 1, 1993, MassMutual hereby delegates to Concert,
and Concert agrees to provide, MassMutual's duties to manage the
investment and reinvestment of the assets of Value Stock fund as set forth
in the MassMutual Sub-Advisory Agreement, but not MassMutual's other
duties, if any, thereunder. This Delegation is subject to MassMutual's
continuing supervision and control and subject to MassMutual's right to
terminate the Delegation at any time. Terms and conditions of the
MassMutual Sub-Advisory Agreement applicable to MassMutual shall apply in
like manner to Concert, unless inconsistent with the terms of this
Delegation.
Concert, in providing investment advisory services to the Value Stock
Fund, agrees to utilize only those senior investment professionals who
performed such services as employees of MassMutual. Concert also agrees
to provide these services at its expense. MassMutual agrees to pay
Concert, and Concert agrees to accept as full compensation for the
performance of all functions and duties assumed by the Delegation, a fee
computed on the aggregate net asset value of the Value Stock Fund assets
as of the close of each business day and payable monthly by the tenth
business day of the following month, at the following annual rate:
.40% of the first $100 million of average annual net assets;
.30% of the next $200 million of average annual net assets;
.25% of the next $200 million of average annual net assets; and
.20% of the average annual net assets in excess of $500 million.
Subject to MassMutual's right to terminate this Delegation at any time,
it will remain in effect so long as the MassMutual Sub-Advisory Agreement
remains in effect, or if earlier, this Delegation shall terminate
automatically: 1) in the event of its assignment; 2) on the effective
date of the Concert Sub-Advisory Agreement as approved by shareholders;
3) on 180 days written notice by Concert Capital to MassMutual without the
payment of penalty; 4) on such other date as the parties agree; 5) on 60
days written notice by Oppenheimer Integrity Funds to Concert Capital or
MassMutual at any time without penalty.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Hamline C. Wilson
-----------------------
Hamline C. Wilson
Vice President and Managing Director
CONCERT CAPITAL MANAGEMENT, INC.
By: /s/ F. Jerome Grimm
-------------------
F. Jerome Grimm
President and CEO
ACKNOWLEDGED AND ACCEPTED BY:
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER VALUE STOCK FUND
By: /s/ Robert G. Galli
-------------------
Robert G. Galli
Vice President
OPINION\285#2
Unconditional Guarantee Agreement
As of January 1, 1993
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Oppenheimer Value Stock Fund,
a series of Oppenheimer Integrity Funds
3410 South Galena Street
Denver, Colorado 80231
Ladies and Gentlemen:
Massachusetts Mutual Life Insurance Company ("MassMutual") has requested
that Oppenheimer Management Corporation ("Oppenheimer"), as the investment
adviser of Oppenheimer Value Stock Fund ("Value Stock Fund"), a series of
Oppenheimer Integrity Funds ("Integrity Funds"), and Value Stock Fund each
permit: (a) MassMutual to temporarily delegate its duties to manage the
investment and reinvestment of Value Stock Fund's assets under the current
sub-advisory agreement between MassMutual and Oppenheimer (the "Current
Sub-Advisory Agreement"), but not its other duties, to Concert Capital
Management, Inc. ("Concert Capital"), an indirect wholly-owned subsidiary
of MassMutual, effective January 1, 1993; and (b) Concert Capital to
become the sub-adviser for Value Stock Fund upon approval of the proposed
sub-advisory agreement between Oppenheimer and Concert Capital (the
"Proposed Sub-Advisory Agreement") by the shareholders of Value Stock
Fund. According to the attached financial statements of Concert Capital
for the year ended December 31, 1992, the total shareholder's equity of
Concert Capital at December 31, 1992 was ($275,432).
In order to induce Oppenheimer and Value Stock Fund to agree to the
temporary delegation by MassMutual to Concert Capital and the appointment
of Concert Capital as the Sub-Adviser to Value Stock Fund, MassMutual
hereby unconditionally guarantees Concert Capital's performance and the
proper discharge of its responsibilities and obligations pursuant to (i)
the aforementioned delegation under the Current Sub-Advisory Agreement and
(ii) the Proposed Sub-Advisory Agreement. If shareholders of Value Stock
Fund do not approve the Proposed Sub-Advisory Agreement, MassMutual will
remain as the Sub-Advisor to Value Stock fund pursuant to the Current Sub-
Advisory Agreement.
The obligations of MassMutual under its Guaranty Agreement are absolute
and in no way conditional or contingent and shall not be affected by the
invalidity or unenforceability against Concert Capital of any obligation
under the Proposed Sub-Advisory Agreement or the aforementioned temporary
delegation under the Current Sub-Advisory Agreement and any obligations
to be performed or payments required thereby shall be due and payable by
MassMutual notwithstanding the fact that the collection or enforcement may
be stayed or enjoined under Title 11 of the United States Code, as from
time to time in effect, or any other applicable law.
MassMutual acknowledges that Oppenheimer and Value Stock fund have agreed
to the delegation and the Proposed Sub-Advisory Agreement in reliance on
this Guaranty Agreement being a continuing agreement and the
irrevocability of the guaranty hereunder and agrees that this guaranty may
not be revoked in whole or in part. However, if for three consecutive 12
month fiscal year ends Concert Capital has total stockholders equity of
at least $200,000 according to its annual audited financial statements
delivered to Value Stock Fund, then this Agreement shall thereupon
terminate as to Concert Capital's performance and the discharge of its
responsibilities after such termination. Attaining such level of
shareholder's equity shall not preclude the Board of Trustees of Value
Stock Fund from considering the financial condition of Concert Capital or
any other matters in determining at any time whether to terminate, approve
or review the Proposed Sub-Advisory Agreement or the temporary delegation
under the Current Sub-Advisory Agreement. commencing with the quarter
ending March 31, 1993 and quarterly thereafter, Concert Capital shall
deliver on a current basis its unaudited quarterly financial information
and also its annual audited financial statements to Value Stock Fund.
This Guaranty Agreement may also be amended or terminated by a written
instrument properly executed by MassMutual, Oppenheimer and Value Stock
Fund.
MassMutual hereby waives, to the extent it may lawfully do so, all of the
following and all defenses, offsets, counterclaims and other consequences
of and rights and claims of any nature based upon or arising by reason of,
any one or more of the following:
(a) demand for performance or observance of, and any enforcement of
any provision of the Current Sub-Advisory Agreement and the
Proposed Sub-Advisory Agreement (collectively the "Sub-Advisory
Agreements") or any pursuit or exhaustion of rights or remedies
against Concert Capital thereunder or any other person or any
requirement of diligence or promptness on the part of
Oppenheimer or Value Stock Fund in connection with any of the
foregoing, and
(b) any action or omission on the part of Oppenheimer or Value Stock
Fund in exercising any right under the Sub-Advisory Agreements
which may impair or prejudice the rights of MassMutual.
MassMutual represents that it is a duly organized and validly existing
mutual life insurance company in good standing under the laws of the
Commonwealth of Massachusetts with powers adequate for the making and
performance of this Guaranty Agreement and that MassMutual has taken all
necessary corporate and other action to make this Guaranty Agreement the
legal, valid, binding and enforceable obligation it purports to be.
MassMutual represents that neither the execution and delivery of this
Guaranty Agreement nor the consummation of any transaction contemplated
hereby, nor the fulfillment of the terms hereof or of any other agreement
or instrument referred to herein, has constituted or resulted in, or will
constitute or result in, a breach of the provisions of any material
instrument, contract or agreement to which MassMutual is a party or by
which it is bound, or the violation of any law, judgment, decree or
governmental or administrative order, rule or regulation applicable to it.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority is required to be
obtained or made by MassMutual in connection with the execution, delivery
and performance of this Guaranty Agreement. This Guaranty Agreement
constitutes the legal, binding and enforceable obligation of MassMutual
in accordance with its terms.
MassMutual agrees that it will indemnify and save and hold Oppenheimer,
Value Stock Fund and their respective shareholders, directors, trustees,
officers, employees and agents and each person, if any, who controls
Oppenheimer or Value Stock (each, an "Indemnitee") harmless from and
against any and all claims, damages, loss, liability, judgements or
expenses (including, without limitation, all reasonable fees and
disbursements of counsel with whom any of them may consult in connection
therewith and all expenses of litigation or preparation therefor) which
may be incurred or sustained by or asserted against any Indemnitee
directly or indirectly, in connection with the enforcement of this
Guaranty Agreement; provided, however, that the foregoing shall not extend
as to any Indemnitee to actions not taken in good faith by the same, but
any action or failure to act in accordance with an opinion of counsel
shall conclusively be deemed to be in good faith. This covenant shall
survive the termination of the other provisions of this Agreement.
Any notice or other communication in connection with this Agreement shall
be in writing or in the form of a telex and shall be deemed to be
delivered if addressed as provided below and if either (a) actually
delivered at said address (evidenced in the case of a telex by receipt of
the correct answerback) or (b) in the case of a letter, three business
days shall have elapsed after the same shall have been deposited in the
United States mail, postage prepaid and registered or certified:
If Oppenheimer to:
Oppenheimer Management Corporation
Two World Trade Center
New York, NY 10048-0203
Attention: General Counsel
If to MassMutual to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 011-0001
Attention: General Counsel
If to Value Stock Fund to:
Oppenheimer Value Stock Fund,
a series of Oppenheimer Integrity Funds
3410 South Galena Street
Denver, Colorado 80231
Attention: Secretary
or at such other address it shall specify by notice actually received by
the addressee.
This Guaranty Agreement embodies the entire agreement and understanding
between MassMutual and Oppenheimer and Value Stock fund with respect to
the subject matter set forth herein, and supersedes all prior agreements
and understandings relating thereto. No course of prior dealings between
the parties, no usage of the trade, and no parole or extrinsic evidence
of any nature shall be used or be relevant to supplement, explain or
modify any term used herein. Any provision of this Guaranty Agreement
which shall be held invalid or unenforceable under applicable law shall
be ineffective without invalidating the remaining provisions of this
Guaranty Agreement. The provisions of this Guaranty Agreement shall inure
to the benefit of Oppenheimer and Value Stock Fund and their respective
successors and assigns and shall be binding upon MassMutual and its
respective successors and assigns.
This Guaranty Agreement may be executed in any number of counterparts
which together shall constitute one instrument, and shall be governed by
and construed in accordance with the laws (other than the conflict of law
rules) of the State of New York.
A copy of the Agreement and Declaration of Trust establishing Oppenheimer
Integrity Funds, of which Oppenheimer Value Stock fund is a series, is on
file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this Guaranty Agreement is executed by
officers of the Trust as officers and not individually and that any
obligations arising out of this Guaranty Agreement are not binding upon
any of the Trustees, officers or shareholders of the Trusts individually
but binding only upon the assets and property belonging to Oppenheimer
Value Stock fund, a series of Oppenheimer Integrity Funds.
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the
appropriate space below and return one copy to MassMutual. This letter
shall become a binding agreement among you and each of the undersigned as
of the date hereof when so accepted by you.
Very truly yours,
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Hamline C. Wilson
---------------------
Hamline C. Wilson
Vice President and Managing Director
The foregoing is accepted by:
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Andrew J. Donohue
---------------------
Andrew J. Donohue,
Executive Vice President and
General Counsel
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER VALUE STOCK FUND
By: /s/ Robert G. Galli
-------------------
Robert G. Galli
Vice President
OPINION\285#3
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
TELECOPIER: (617) 951-7050
February 11, 1991
MassMutual Integrity Funds
1295 State Street
Springfield, Massachusetts 01111
Gentlemen:
We understand that MassMutual Integrity funds (the "Trust") is about to
file a Rule 24f-2 Notice (the "Notice") with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 24f-2 (the "Rule") under
the Investment Company Acto of 1940, as amended, making definite the
registration of the following numbers of shares of beneficial interest,
without par value (the "Shares"), of the nine series of the Trust sold in
reliance upon the Rule during the Trust's fiscal period ended
December 31, 1990:
MassMutual Money Market Fund 76,749,807.35
MassMutual Tax-Exempt Money
Market Fund 13,260,616.12
MassMutual U.S. Government
Securities Fund 364,267.838
MassMutual Tax-Exempt Bond Fund 258,954.099
MassMutual Investment Grade Bond Fund 529,366.619
MassMutual Balanced Fund 782,901.048
MassMutual Value Stock Fund 465,392.322
MassMutual Capital Appreciation Fund 378,763.129
MassMutual Corporate Cash Fund 15,180.363
We have acted as counsel for the Trust during 1990 and are familiar with
the action taken by its trustees to authorize the issuance of the Shares.
We have examined its records of trustee and shareholder action, its By-
Laws and its documents on file at the office of the Secretary of The
Commonwealth of Massachusetts and the Springfield City Clerk. We have
also examined such other documents as we deem necessary for the purpose
of this opinion.
We assume that appropriate action has been taken to register or qualify
the sale of the Shares under any applicable state and federal laws
regulating offerings and sales of securities and that the Notice will be
timely filed. We also assume that the Trust or its authorized agent
received the authorized payment for the Shares in accordance with the
terms described in the Trust's Registration Statement on Form N-1A (File
No. 2-76547) under the Securities Act of 1933.
Based on the foregoing, we are of the opinion that the Shares are validly
issued, fully paid and non-assessable, except as set forth in the next
paragraph.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Pursuant to certain decisions of the Supreme Judicial
Court of Massachusetts, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for the obligations
of the Trust. Even if, however, the Trust were held to be a partnership,
the possibility of its shareholders incurring financial loss for that
reason appears to be remote because the Trust's Declaration of Trust
contains an express disclaimer of shareholder liability for obligations
of the Trust and requires that notice of such disclaimer be given each
agreement, obligation or instrument entered into or executed by the Trust
or its trustees, because the Declaration of Trust provides for
indemnification out of the trust property for any shareholder held
personally liable for the obligations of the Trust.
We consent to this opinion accompanying the Notice when filed with the
Commission.
Very truly yours,
/s/ Ropes & Gray
----------------
Ropes & Gray
OPINION\285
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER INTEGRITY FUNDS
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 INTEGRITY FUNDS, a Massachusetts business trust (the "Trust"),
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 of beneficial interest ("Shares") of Oppenheimer Investment
Grade Bond Fund and Oppenheimer Value Stock Fund, each of which is a
series of the Trust and each of which is individually herein referred to
as a "Fund", 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
Trust's Registration Statement as it may be amended from time to time (the
"current Prospectus and/or SAI").
In this connection, the Trust 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 Trust 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 Trust hereby appoints you as the
sole General Distributor, pursuant to the aforesaid continuous public
offering of its Shares, and the Trust further agrees from and after
the date of this Agreement, that it will not, without your consent,
sell or agree to sell and Shares otherwise than through you, except
(a) the Trust 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 Trust, the Trust'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 Trust 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 Trust may issue shares for the reinvestment of dividends
and other distributions of the Trust if permitted by the current
Prospectus and/or SAI; and (d) the Trust 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 Trust 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 Trust and the General
Distributor, you will suspend such efforts. The Trust 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.
<PAGE>
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
for Oppenheimer Investment Grade bond Fund and 8.5% of the offering
price for Oppenheimer Value Stock fund, 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 a 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 re-allow 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 a 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 a 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 a
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 Trust to issue
as your agent confirmations of all accepted purchase orders and
to transmit a copy of such confirmations to the Trust. The net
asset value of all Shares which are the subject of such
confirmations, computed in accordance with he applicable rules
under the 1940 Act, shall be a liability of the General
Distributor to the Trust 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 Trust 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 for originating dealer or broker, or investor. You
agree promptly to reimburse a 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 a 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 Trust agrees that if such investor
fails to make you whole for any loss you pay to a Fund on such
canceled purchase order, a Fund will reimburse you such loss to
the extent of the aggregate redemption proceeds of any other
shares of a Fund owned by such investor, on your demand that a
Fund exercises its right to claim such redemption proceeds. the
Trust 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 Trust 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 Trust
(which shall not prevent the imposition of any CDSC that may
apply) to the extent set forth in the current Prospectus and/or
SAI.
5. Repurchase of Shares.
(a) In connection with the repurchase of Shares, you are appointed
and shall act as Agent of the Trust. You are authorized, for
so long as you act as General Distributor of the Trust, to
repurchase, from authorized dealers, certified 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 a 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 a 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 Trust, or, if
so directed, to any duly appointed transfer or shareholder
servicing agent of the Trust. 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 Trust shall be a
third party beneficiary of such indemnification.
(c) Upon receipt by the Trust 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 of guarantee required by
the then-currently effective Prospectus or SAI of a Fund, A 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 a 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 a 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
SIA of a 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 Trust harmless from
the effect of any errors or omissions which might cause an over-
or under-redemption of a 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 a Fund, you agree promptly to
reimburse a Fund for any amount by which any loss shall exceed
then-existing gains so arising.
6. 1933 Act Registration. The Trust has delivered to you a copy of its
current Prospectus and SAI. The Trust agrees that it will use its
best efforts to continue the effectiveness of the Registration
Statement under the 1933 Act. The Trust 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 Trust 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 Trust 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 Trust 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 review or
extend any such qualification; provided, however, that the Trust
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 Trust.
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 Trust 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 Trust or its transfer or shareholder servicing agent to
respond to shareholder requests or complaints, and to permit the
Trust to maintain proper accounting records, and you shall make
such records available to the Trust and its transfer agent or
shareholder servicing agent upon request; and
(e) In performing under this Agreement, you shall comply with all
requirements of a 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 Trust 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 the 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 Trust'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 Trust 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 lease annually: (a) by the Trust's
Board of Trustees or by vote of a majority of the Trustees, who are
not parties to this Agreement or "interested persons" (as defined by
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 Trust); (b) by the Trust
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 Trust and the General
Distributor, provided that such termination by the Trust shall be
directed or approved by the Board of Trustees of the Trust or by the
vote of the holders of a "majority" of the outstanding voting
securities of the Trust. In the event this Agreement is terminated
by the Trust, 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. Disclaimer of Shareholder Liability. The General Distributor
understands and agrees that the obligations of the Trust under this
Agreement are not binding upon any Trustee or shareholder of the
Trust personally, but bind only the Trust and the Trust's property;
the General Distributor represents that it has notice of the
provisions of the Declaration of Trust of the Trust disclaiming
Trustee and shareholder liability for acts or obligations of the
Trust.
15. Section Headings. The heading of each section is for descriptive
purposes only, and such headings are not to be construed or
interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so indicate by
signing in the space provided below.
OPPENHEIMER INTEGRITY FUNDS
By: /s/ James C. Swain
------------------
James C. Swain
Chairman
Accepted:
OPPENHEIMER FUND MANAGEMENT, INC.
By: /s/ George C. Bowen
-------------------
George C. Bowen
Vice President
OFMI\285#2
OPPENHEIMER INTEGRITY FUNDS
CUSTODY AGREEMENT
Agreement made as of this 12th day of November, 1992, between
OPPENHEIMER INTEGRITY FUNDS, a business trust organized and existing under
the laws of the Commonwealth of Massachusetts, 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 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. 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
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 control
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.
9. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the obligations of
the instrument are not binding upon any of the Trustees or shareholders
individually but are binding upon the assets and property of the Fund;
provided, however, that the Declaration of Trust of the Fund provides that
the assets of a particular series of the Fund shall under no circumstances
be charges with liabilities attributable to any other series of the Fund
and that all persons extending credit to, or contracting with or having
any claim against a particular series of the Fund shall look only to the
assets of that particular series for payment of such credit, contract or
claim.
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 INTEGRITY FUNDS
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/ Jorge Ramos
---------------
Jorge Ramos
Attest:
/s/ Michael A. Cicero
-----------------
Michael A. Cicero
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.1 49
Appendix B
Article XIX.2 50
Exhibit A
Article III.1 7
Exhibit B
Article III.1 8
Exhibit C
Article III.1 8
Exhibit D 34
Article XV.4 34
Schedule A
Article XV.1 33
CUSTODY\325
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Integrity Funds:
We consent to the use in Post-Effective Amendment No. 23 to the
Registration Statement No. 2-76547 of our reports dated January 23, 1995
appearing in the Statements of Additional Information, which are a part
of such Registration Statement, and to the reference to us under the
caption "Financial Highlights" appearing in the Prospectuses, which are
also a part of such Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
April 28, 1995
Oppenheimer Investment Grade Bond Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the
past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/30/88 0.2600 0.0000 10.360
09/30/88 0.2400 0.0000 10.370
12/30/88 0.2500 0.0000 10.110
03/31/89 0.2500 0.0000 10.020
06/30/89 0.2400 0.0000 10.450
09/29/89 0.2300 0.0000 10.360
12/29/89 0.2200 0.0000 10.290
01/31/90 0.0800 0.0000 10.120
02/28/90 0.0800 0.0000 9.930
03/30/90 0.0800 0.0000 9.930
04/30/90 0.0700 0.0000 9.840
05/31/90 0.0700 0.0000 10.060
06/29/90 0.0700 0.0000 9.960
07/31/90 0.0750 0.0000 9.900
08/31/90 0.0750 0.0000 9.810
09/28/90 0.0750 0.0000 9.690
10/31/90 0.0700 0.0000 9.790
11/30/90 0.0750 0.0000 9.930
12/31/90 0.0640 0.0000 9.780
01/31/91 0.0650 0.0000 10.030
02/28/91 0.0650 0.0000 9.970
04/03/91 0.0650 0.0000 9.980
05/01/91 0.0650 0.0000 10.040
05/29/91 0.0650 0.0000 10.030
06/26/91 0.0650 0.0000 9.930
07/24/91 0.0620 0.0000 9.980
08/21/91 0.0650 0.0000 10.250
09/18/91 0.0650 0.0000 10.290
10/16/91 0.0600 0.0000 10.370
11/20/91 0.0650 0.0000 10.470
12/18/91 0.0760 0.0000 10.550
01/15/92 0.0600 0.0000 10.670
02/19/92 0.0650 0.0000 10.470
03/18/92 0.0650 0.0000 10.380
04/15/92 0.0610 0.0000 10.530
05/20/92 0.0650 0.0000 10.610
06/17/92 0.0620 0.0000 10.600
07/15/92 0.0600 0.0000 10.800
08/19/92 0.0600 0.0000 10.990
09/16/92 0.0600 0.0000 11.050
10/21/92 0.0600 0.0000 10.830
11/18/92 0.0600 0.0000 10.790
Oppenheimer Investment Grade Bond Fund
Page 2
April 28, 1995
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
12/16/92 0.0850 0.0000 10.730
01/20/93 0.0500 0.0000 10.790
02/17/93 0.0600 0.0000 10.990
03/17/93 0.0600 0.0000 11.060
04/21/93 0.0600 0.0000 11.160
05/19/93 0.0600 0.0000 11.050
06/16/93 0.0560 0.0000 11.110
07/29/93 0.0810 0.0000 11.180
08/30/93 0.0590 0.0000 11.350
09/30/93 0.0530 0.0000 11.350
10/29/93 0.0565332 0.0000 11.340
11/30/93 0.0574140 0.0000 11.130
12/31/93 0.0538857 0.0000 11.120
12/31/94 0.0525032 0.0000 11.210
02/28/94 0.0504297 0.0000 10.920
03/31/94 0.0589669 0.0000 10.610
04/29/94 0.0472313 0.0000 10.450
05/31/94 0.0510183 0.0000 10.390
06/30/94 0.0531201 0.0000 10.310
07/29/94 0.0562604 0.0000 10.430
08/31/94 0.0552602 0.0000 10.390
09/30/94 0.0569318 0.0000 10.190
10/31/94 0.0519490 0.0000 10.110
11/30/94 0.0551407 0.0000 10.040
12/30/94 0.0956482 0.0000 10.010
Class B Shares
05/19/93 0.0540 0.0000 11.050
06/16/93 0.0490 0.0000 11.100
07/29/93 0.0740 0.0000 11.180
08/30/93 0.0520 0.0000 11.350
09/30/93 0.0460 0.0000 11.340
10/29/93 0.0489813 0.0000 11.330
11/30/93 0.0493279 0.0000 11.120
12/31/93 0.0466107 0.0000 11.110
01/31/94 0.0460055 0.0000 11.200
02/28/94 0.0434651 0.0000 10.910
03/31/94 0.0480784 0.0000 10.600
04/29/94 0.0410750 0.0000 10.450
05/31/94 0.0448825 0.0000 10.390
06/30/94 0.0466505 0.0000 10.310
07/29/94 0.0495636 0.0000 10.430
08/31/94 0.0487199 0.0000 10.390
09/30/94 0.0500287 0.0000 10.190
10/31/94 0.0461829 0.0000 10.110
11/30/94 0.0486446 0.0000 10.040
12/30/94 0.0891509 0.0000 10.010
Oppenheimer Investment Grade Bond Fund
Page 3
April 28, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$ 915.68 1 $1,336.06 .2
(---------) - 1 = -8.43% (---------) - 1 = 5.97%
$1,000 $1,000
Inception
$1,553.78 .1490
(---------) - 1 = 6.79%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00% for
the first
year, and 4.00% for the second year:
One Year Inception
$ 909.67 1 $ 955.94 .6
(---------) - 1 = -9.03% (---------) - 1 = -2.67%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$ 961.34 1 $1,402.69 .2
(---------) - 1 = -3.87% (---------) - 1 = 7.00%
$1,000 $1,000
Inception
$1,631.26 .1490
(---------) - 1 = 7.56%
$1,000
Oppenheimer Investment Grade Bond Fund
Page 4
April 28, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Class B Shares
One Year Inception
$ 954.72 1 $ 992.02 .6
(---------) - 1 = -4.53% (---------) - 1 = -0.48%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 12/31/94:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$ 915.68 - $1,000 $1,336.06 - $1,000
------------------ = -8.43% ------------------ = 33.61%
$1,000 $1,000
Inception
$1,553.78 - $1,000
------------------ = 55.38%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00% for
the first
year, and 4.00% for the second year:
One Year Inception
$ 909.67 - $1,000 $ 955.94 - $1,000
------------------ = -9.03% ------------------ = -4.41%
$1,000 $1,000
Oppenheimer Investment Grade Bond Fund
Page 5
April 28, 1995
2. Cumulative Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$ 961.34 - $1,000 $1,402.69 - $1,000
------------------ = -3.87% ------------------ = 40.27%
$1,000 $1,000
Inception
$1,631.26 - $1,000
------------------ = 63.13%
$1,000
Class B Shares
One Year Inception
$ 954.72 - $1,000 $ 992.02 - $1,000
------------------ = -4.53% ------------------ = -0.80%
$1,000 $1,000
Oppenheimer Invetment Grade Bond Fund
Page 6
April 28, 1995
3. Standardized Yield for the 30-Day Period Ended 12/31/94:
The Fund's standardized yields are calculated using the following formula
set
forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
The symbols above represent the following factors:
a = Dividends and interest earned during the 30-day period.
b = Expenses accrued for the period (net of any expense
reimbursements).
c = The average daily number of Fund shares outstanding during
the 30-day period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
e = The Fund's net asset value (excluding contingent deferred
sales charge) per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 4.75%:
$636,209.05 - $74,734.78 6
2{(------------------------ + 1) - 1} = 6.76%
9,611,752 x $10.51
Class B Shares
Example at NAV:
$ 22,297.63 - $ 4,722.90 6
2{(------------------------ + 1) - 1} = 6.34%
336,762 x $10.01
Oppenheimer Investment Grade Bond Fund
Page 7
April 28, 1995
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/94:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = { (a / 30) x 365 } / b or c
The symbols above represent the following factors:
a = The accrual dividend earned during the period.
b = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share
on the last day of the period.
Examples:
Class A Shares
Dividend Yield
at Maximum Offering ($.0937644/30 x 365)/$10.51 = 10.85%
Dividend Yield
at Net Asset Value ($.0937644/30 x 365)/$10.01 = 11.40%
Class B Shares
Dividend Yield
at Net Asset Value ($.0874729/30 x 365/$10.01 = 10.63%
4. TAX-EQUIVALENT YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/94:
The Fund's tax-equivalent yields are calculated using the
following formula:
(a / ( 1 - c)) + b = Tax-Equivalent Yeild
The symbols above represent the following factors:
a = 30-day SEC yield of tax-exempt security positions in the portfolio.
b = 30-day SEC yield of taxable security positions in the portfolio.
c = Stated income tax rate for an individual in the 39.6% federal tax
bracket filing singly).
Examples:
Class A Shares
(0.0676 / ( 1 - .3960 ) ) + 0 = 11.19%
Class B Shares
(0.0634 / ( 1 - .3960 ) ) + 0 = 10.50%
Oppenheimer Value Stock Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the
past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
03/19/87 0.0900 0.0100 11.270
12/31/87 0.3138 0.1777 9.520
06/30/88 0.1800 0.0000 10.460
09/30/88 0.0700 0.0000 10.530
12/30/88 0.0806 0.1894 10.590
03/31/89 0.1000 0.0000 11.060
06/30/89 0.1200 0.0000 11.770
09/29/89 0.0900 0.0000 12.300
12/29/89 0.0993 0.2507 11.990
03/30/90 0.1000 0.0000 11.700
06/29/90 0.1000 0.0000 12.230
09/28/90 0.0900 0.0000 10.600
12/31/90 0.0964 0.1036 10.850
04/03/91 0.0900 0.0000 12.840
06/21/91 0.0800 0.0000 13.040
09/20/91 0.0800 0.0000 13.150
12/20/91 0.0840 0.3110 12.680
03/27/92 0.0800 0.0000 13.510
06/26/92 0.0800 0.0000 13.780
09/25/92 0.0800 0.0000 13.970
12/28/92 0.0820 0.3460 14.220
03/24/93 0.0700 0.0000 14.790
06/25/93 0.0700 0.0000 14.650
09/24/93 0.0700 0.0000 14.910
12/29/93 0.0780 0.7600 14.460
03/25/94 0.0660 0.0000 14.380
06/24/94 0.0600 0.0000 14.170
09/23/94 0.0700 0.0000 14.580
12/20/94 0.1240 0.3950 14.080
Class B Shares
06/25/93 0.0600 0.0000 14.630
09/24/93 0.0530 0.0000 14.870
12/29/93 0.0530 0.7600 14.400
03/25/94 0.0430 0.0000 14.320
06/24/94 0.0360 0.0000 14.100
09/23/94 0.0440 0.0000 14.510
12/20/94 0.0960 0.3950 14.020
Oppenheimer Value Stock Fund
Page 2
April 28, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$ 973.43 1 $1,433.65 .2
(---------) - 1 = -2.66% (---------) - 1 = 7.47%
$1,000 $1,000
Inception
$2,006.80 .1246
(---------) - 1 = 9.07%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for
the first
year, and 4.00% for the inception year:
One Year Inception
$ 975.93 1 $1,033.92 .6000
(---------) - 1 = -2.41% (---------) - 1 = 2.02%
$1,000 $1,000
Oppenheimer Value Stock Fund
Page 3
April 28, 1995
1. Average Annual Total Returns for the Periods Ended 12/31/94 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,032.82 1 $1,521.12 .2
(---------) - 1 = 3.28% (---------) - 1 = 8.75%
$1,000 $1,000
Inception
$2,129.23 .1246
(---------) - 1 = 9.88%
$1,000
Class B Shares
One Year Inception
$1,025.02 1 $1,072.52 .6000
(---------) - 1 = 2.50% (---------) - 1 = 4.29%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 12/31/94:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$ 973.43 - $1,000 $1,433.65 - $1,000
------------------ = -2.66% ------------------ = 43.37%
$1,000 $1,000
Inception
$2,006.80 - $1,000
------------------ = 100.68%
$1,000
Oppenheimer Value Stock Fund
Page 4
April 28, 1995
2. Cumulative Total Returns for the Periods Ended 12/31/94 (Continued):
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for
the first
year, and 4.00% for the inception year:
One Year Inception Year
$ 975.93 - $1,000 $1,033.92 - $1,000
------------------ = -2.41% ------------------ = 3.39%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,032.82 - $1,000 $1,521.12 - $1,000
------------------ = 3.28% ------------------ = 52.11%
$1,000 $1,000
Inception
$2,129.23 - $1,000
------------------ = 112.92%
$1,000
Class B Shares
One Year Inception Year
$1,025.02 - $1,000 $1,072.52 - $1,000
------------------ = 2.50% ------------------ = 7.25%
$1,000 $1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701265
<NAME> OPPENHEIMER INVESTMENT GRADE BOND
<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> 114904658
<INVESTMENTS-AT-VALUE> 109061109
<RECEIVABLES> 1896596
<ASSETS-OTHER> 55797
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 111013502
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10922754
<TOTAL-LIABILITIES> 10922754
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110009506
<SHARES-COMMON-STOCK> 9653273
<SHARES-COMMON-PRIOR> 9963302
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 204894
<ACCUMULATED-NET-GAINS> (3870315)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5843549)
<NET-ASSETS> 96639607
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7667379
<OTHER-INCOME> 0
<EXPENSES-NET> 1129771
<NET-INVESTMENT-INCOME> 6537608
<REALIZED-GAINS-CURRENT> (2274518)
<APPREC-INCREASE-CURRENT> (8559673)
<NET-CHANGE-FROM-OPS> (4296583)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6381575
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 298880
<NUMBER-OF-SHARES-SOLD> 1071379
<NUMBER-OF-SHARES-REDEEMED> 1704508
<SHARES-REINVESTED> 323100
<NET-CHANGE-IN-ASSETS> (12477637)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1468233)
<OVERDISTRIB-NII-PRIOR> 56074
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 522205
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1129771
<AVERAGE-NET-ASSETS> 102168000
<PER-SHARE-NAV-BEGIN> 11.12
<PER-SHARE-NII> .65
<PER-SHARE-GAIN-APPREC> (1.08)
<PER-SHARE-DIVIDEND> .65
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.01
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701265
<NAME> OPPENHEIMER INVESTMENT GRADE BOND
<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
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 344660
<SHARES-COMMON-PRIOR> 162838
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3451141
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 156032
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 7308
<NUMBER-OF-SHARES-SOLD> 293817
<NUMBER-OF-SHARES-REDEEMED> 123969
<SHARES-REINVESTED> 11974
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2747000
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> .58
<PER-SHARE-GAIN-APPREC> (1.08)
<PER-SHARE-DIVIDEND> .57
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.01
<EXPENSE-RATIO> 1.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701265
<NAME> OPPENHEIMER VALUE STOCK 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> 89562165
<INVESTMENTS-AT-VALUE> 103916991
<RECEIVABLES> 470773
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<NAME> OPPENHEIMER VALUE STOCK FUND
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