<PAGE>
Registration No. 2-45272
File No. 811-2306
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 44 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 26 / X /
OPPENHEIMER SPECIAL FUND
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center
New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212) 323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On April 1, 1994, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / On _______ pursuant to paragraph (a)
of Rule (485).
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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 June 30, 1993, was filed August 26, 1993.
<PAGE>
FORM N-1A
OPPENHEIMER SPECIAL FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Fund Expenses
3 Condensed Financial Information; Fund Performance Information
- Total Return Information; Fund Performance Information -
Fund Performance
4 Front Cover Page; The Fund and its Investment Policies;
Special Investment Methods; Investment Restrictions
5 Fund Expenses; Management of the Fund; Back Cover; Additional
Information - Custodian and Transfer Agent
5A Fund Performance Information
6 Dividends, Distributions and Taxes; Additional Information;
Management of the Fund; Fund Expenses
7 How to Buy Shares; Exchanges of Shares and Retirement Plans;
Class A Service Plan; Class B Distribution and Service Plan
8 How to Redeem Shares; Exchanges of Shares and Retirement Plans
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Investment Restrictions
14 Trustees and Officers; Investment Management Services
15 Trustees and Officers - Major Shareholders; Investment
Management Services
16 Investment Management Services; Distribution and Service
Plans; Additional Information
17 Brokerage
18 Additional Information - Description of the Fund
19 Purchase, Redemption and Pricing of Shares; Automatic
Withdrawal and Exchange Plan Provisions; Terms of Escrow for
Letters of Intent
20 Total Return, Dividend and Tax Information
21 Brokerage; Additional Information
22 Performance, Dividend and Tax Information
23 Financial Statements
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* Not applicable or negative answer.
<PAGE>
OPPENHEIMER SPECIAL FUND
Supplement dated April 1, 1994
to the Prospectus dated April 1, 1994
All references in the Prospectus to Class Y shares are amended by the
following statement:
The offering of Class Y shares has not yet commenced.
April 1, 1994 PS270
<PAGE>
Oppenheimer Special Fund
Two World Trade Center, New York, NY 10048-0203
Telephone 1-800-525-7048
Oppenheimer Special Fund (the "Fund") is a mutual fund with the
investment objective of capital appreciation. Current income is not a
consideration in the selection of the Fund's portfolio securities.
In seeking its objective, the Fund emphasizes investments in common
stock issued by established growth companies that, in the opinion of
Oppenheimer Management Corporation (the "Manager"), have better-than-
expected earnings prospects but are selling at below-normal valuations.
In an uncertain investment environment, defensive investment methods may
be stressed. The Fund may also use certain hedging instruments. See "The
Fund and Its Investment Policies."
The Fund offers two classes of shares which may be purchased at a
price equal to their respective net asset value per share, plus a sales
charge. The investor may elect to purchase shares with a sales charge
imposed (1) at the time of purchase (the "Class A shares"), or (2) on a
contingent deferred basis (the "Class B shares"). Class B shares are also
subject to an asset-based sales charge. The contingent deferred sales
charge will be imposed on most redemptions of Class B shares within six
years of purchase. These alternatives permit an investor to choose the
method of purchasing shares that is more beneficial to that investor
depending on the amount of the purchase, the length of time the investor
expects to hold the shares and other circumstances. A third class of
shares may be purchased only by certain institutional investors at net
asset value per share (the "Class Y Shares"). See"How To Buy Shares -
Alternative Sales Arrangements" below for further details.
This Prospectus sets forth concisely information about the Fund that
a prospective investor should know before investing. A Statement of
Additional Information about the Fund (the "Additional Statement") dated
April 1, 1994, has been filed with the Securities and Exchange Commission
("SEC") and is available without charge upon written request to
Oppenheimer Shareholder Services (the "Transfer Agent"), P.O. Box 5270,
Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free
number above. The Additional Statement (which is incorporated in its
entirety by reference in this Prospectus) contains more detailed
information about the Fund and its management, including more complete
information as to certain risk factors.
Investors are advised to read and retain this Prospectus for future
reference. Shares of the Fund are not deposits or obligations of any
bank, are not guaranteed by any bank, are not insured by the FDIC or any
other agency, and involve investment risks, including the possible loss
of principal.
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.
This Prospectus is effective April 1, 1994.
<PAGE>
Table of Contents
Page
Fund Expenses
Financial Highlights
The Fund and Its Investment Policies
Special Investment Methods
Investment Restrictions
Management of the Fund
How to Buy Shares
Alternative Sales Arrangements
Class A Shares
Class A Sales Charge Table
Class A Contingent Deferred Sales Charge
Reduced Sales Charges for Class A Purchases
Class A Service Plan
Class B Shares
Class B Contingent Deferred Sales Charge
Class B Conversion Feature
Class B Distribution and Service Plan
Purchase Programs for Class A and Class B Shares
AccountLink
PhoneLink
Asset Builder Plans
Class Y Shares
How to Redeem Shares
Regular Redemption Procedures
Telephone Redemptions
Distributions from Retirement Plans
Automatic Withdrawal and Exchange Plans
Repurchase
Reinvestment Privilege
General Information on Redemptions
Exchanges of Shares and Retirement Plans
Dividends, Distributions and Taxes
Fund Performance Information
Additional Information
<PAGE>
Fund Expenses
The following table sets forth the fees that an investor in the Fund
might pay and the expenses paid by the Fund during its fiscal year ended
June 30, 1993.
Shareholder Transaction Expenses
Class A Class B Class Y
Shares Shares Shares
Maximum Sales Charge on
Purchases (as a percentage
of offering price) 5.75% None None
Sales Charge on Reinvested
Dividends None None None
Maximum Contingent Deferred
Sales Charge on Redemption None(1) 5.0%(2) None
Redemption Fees None None None
Exchange Fee $5.00 $5.00 $5.00
Annual Fund Operating Expenses (Restated as to
Class A Shares) (Estimated as to Class B and Class Y
Shares) (as a percentage of average net assets)
Class A Class B Class Y
Shares Shares Shares
Management Fees 0.71% 0.71% 0.71%
12b-1 (Distribution and/or
Service Plan) Fees 0.16% 1.00% None
Other Expenses 0.19% 0.19% 0.26%
Total Fund Operating Expenses 1.06% 1.90% 0.97%
____________
(1) Certain Class A purchases of $1 million or more are not subject to
front-end sales charges, but a contingent deferred sales charge
(maximum of 1%) is imposed on the proceeds of such shares redeemed
within 18 months of the end of the calendar month of their purchase,
subject to certain conditions. See "How to Buy Shares - Class A
Contingent Deferred Sales Charge," below.
(2) A contingent deferred sales charge is imposed on the proceeds of
Class B shares redeemed within six years of their purchase, subject
to certain exceptions. That charge is imposed as a percentage of net
asset value at the time of purchase or redemption, whichever is less,
and declines from 5.0% in the first year that shares are held, to
4.0% in the second year, 3.0% in the third and fourth years, 2.0% in
the fifth year, 1.0% in the sixth year and is eliminated thereafter.
There is no charge on Class B shares held for more than six years.
See "How To Buy Shares--Class B Contingent Deferred Sales Charge,"
below.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly (shareholder transaction expenses) or indirectly (annual fund
operating expenses).
The "Annual Fund Operating Expenses" in the table above are restated
to reflect, effective October 1, 1993, the 0.15% annual 12b-1 fee on
assets representing Class A shares sold before April 1, 1991. Previously
that fee rate was zero. Such restatement sets forth what the Fund's 12b-1
distribution plan fees for its Class A shares would have been in the
Fund's fiscal year ended June 30, 1993 had the 0.15% 12b-1 fee on assets
representing pre-April 1, 1991 Class A shares been in effect during that
fiscal year. At the prior fee rate of zero for pre-April 1, 1991 assets,
the 12b-1 distribution plan fees for Class A shares during the fiscal year
ended June 30, 1993 were 0.03% of average annual net assets and total Fund
operating expenses were 0.93% of average annual net assets. See
"Distribution Plans" in the Additional Statement for further details.
The sales charge rate shown for Class A shares is the current maximum
rate applicable to purchases of Class A shares of the Fund. Investors in
Class A shares may be entitled to reduced sales charges based on the
amount purchased or the value of shares already owned and may be subject
to a contingent deferred sales charge in limited circumstances (see "How
to Buy Shares--Class A Contingent Deferred Sales Charge"). Class B and
Class Y shares were not publicly offered during the fiscal year ended June
30, 1993. The "Annual Fund Operating Expenses" as to Class B and Class
Y shares are estimates based on amounts that would have been payable in
that period, assuming that Class B and Class Y shares were outstanding
during such fiscal year. The actual amount of such fees and expenses in
the current and future years will depend on a number of factors, including
the actual average net assets of Class B and Class Y shares, respectively,
during such years. "Other Expenses" includes such expenses as custodial
and transfer agent fees, audit, legal and other business operating
expenses, but excludes extraordinary expenses. For further details, see
"Purchase, Redemption and Pricing of Shares - Dual Class Methodology" and
the Fund's financial statements, both included in the Additional
Statement.
The following examples apply the restated total Fund operating
expenses in the chart above and the current maximum sales charges to a
hypothetical $1,000 investment in shares of the Fund over the time periods
shown below, assuming a 5% annual rate of return on the investment. The
amounts below are the cumulative costs of such hypothetical $1,000
investment for the periods shown and, except as indicated in lines 3 and
4, assume that the shares are redeemed at the end of each stated
period.
1 year 3 years 5 years 10 years(1)
1. Class A Shares $68 $89 $113 $179
2. Class A Shares,
assuming no
redemption $68 $89 $113 $179
3. Class B Shares $69 $90 $123 $180
4. Class B Shares,
assuming no
redemption $19 $60 $103 $180
5. Class Y Shares $10 $31 $54 $119
6. Class Y Shares,
assuming no
redemption $10 $31 $54 $119
______________
(1) Class B shares convert to Class A shares under the terms and
conditions described under "How to Buy Shares - Class B Conversion
Feature." Therefore, years 7 through 10 reflect the Class A expenses
shown above. Long-term shareholders of Class B shares could pay the
economic equivalent, through the asset-based sales charge and
contingent deferred sales charge imposed on Class B shares, of more
than the maximum front-end sales charges permitted under applicable
regulatory requirements. The Class B Conversion Feature is intended
to minimize the likelihood that this will occur.
These examples should not be considered a representation of past or
future expenses or performance. Expenses are subject to change and actual
performance and expenses may be less or greater than those illustrated
above.
Financial Highlights
Selected data for a Class A share of the Fund outstanding throughout each
period
The information in the table below has been audited by KPMG Peat
Marwick, independent auditors, whose report on the financial statements
of the Fund for the fiscal year ended June 30, 1993 is included in the
Additional Statement. Class B and Class Y shares were not publicly
offered during that period. Accordingly, no information on Class B and
Class Y shares is reflected in the table below or in the Fund's other
financial statements for prior periods.
<TABLE>
<CAPTION>
Year Ended June 30,
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value,
beginning of year $ 24.94 $ 21.88 $ 20.60 $ 18.90 $ 17.13 $ 20.37 $ 23.82 $ 20.46 $ 19.45 $ 24.04
Income (loss) from investment
operations:
Net investment income .19 .29 .47 .64 .62 .67 .93 .75 .60 .39
Net realized and unrealized
gain (loss) on investments 4.03 3.13 1.36 1.76 1.78 (.89) .59 3.70 1.87 (2.83)
Total income (loss) from
investment operations 4.22 3.42 1.83 2.40 2.40 (.22) 1.52 4.45 2.47 (2.44)
Dividends and distributions
to shareholders:
Dividends from net
investment income (.25) (.36) (.55) (.70) (.59) (1.27) (.77) (.61) (.39) (.52)
Distributions from net realized
gain on investments (1.57) -- -- -- (.04) (1.75) (4.20) (.48) (1.07) (1.63)
Total dividends and
distributions to shareholders (1.82) (.36) (.55) (.70) (.63) (3.02) (4.97) (1.09) (1.46) (2.15)
Net asset value, end of year $ 27.34 $ 24.94 $ 21.88 $ 20.60 $ 18.90 $ 17.13 $ 20.37 $ 23.82 $ 20.46 $ 19.45
Total Return,
At Net Asset Value** 16.88% 15.69% 9.39% 12.98% 14.54% (1.03)% 9.48% 22.77% 14.24%
(10.95)%
Ratios/Supplemental Data:
Net assets, end of
year (in thousands) $743,830 $630,767 $550,480 $551,295 $542,250 $552,863 $690,326 $772,619 $834,054
$644,138
Average net assets
(in thousands) $710,391 $624,527 $520,335 $547,090 $529,699 $570,250 $717,115 $783,491 $765,214
$610,559
Number of shares outstanding
at end of year (in thousands) 27,210 25,287 25,155 26,760 28,687 32,277 33,890 32,437 40,759 33,110
Ratios to average net assets:
Net investment income .72% 1.14% 2.20% 3.07% 3.31% 3.78% 4.32% 3.03% 3.28%
2.19%
Expenses .93% .90% .94% .92% .97% .95% .93% .95% .94% 1.05%
Portfolio turnover rate* 23.2% 36.7% 31.1% 27.6% 27.1% 120.3% 371.2% 67.4% 16.8%
20.8%
</TABLE>
[FN]
* The lesser of purchases or sales of portfolio securities for a year,
divided by the monthly average of the market value of portfolio
securities owned during the year. 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 June
30, 1993 were $160,757,743 and $184,132,966, respectively.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal year, 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 year. Sales charges are not reflected in
the total returns.
<PAGE>
Selected data for a Class A and Class B share of the Fund outstanding
throughout each period (unaudited)
The information in the table below has not been audited. Class Y
shares were not publicly offered during that period and Class B shares
were first publicly offered on August 17, 1993. Accordingly, no
information on Class Y shares is reflected in the table below or in the
Fund's other financial statements for prior periods.
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------- ------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, 1993 JUNE 30, DECEMBER 31, 1993
(UNAUDITED) 1993 1992 1991 1990 1989 (UNAUDITED)(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $27.34 $24.94 $21.88 $20.60 $18.90 $17.13 $27.02
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .07 .19 .29 .47 .64 .62 (.02)
Net realized and unrealized
gain (loss) on investments 1.08 4.03 3.13 1.36 1.76 1.78 1.34
------- ------ ------ ------ ------ ------ ------
Total income from
investment operations 1.15 4.22 3.42 1.83 2.40 2.40 1.32
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.16) (.25) (.36) (.55) (.70) (.59) (.11)
Distributions from net realized
gain on investments (.64) (1.57) - - - (.04) (.64)
------- ------- ------ ------ ------ ------ ------
Total dividends and
distributions to shareholders (.80) (1.82) (.36) (.55) (.70) (.63) (.75)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.69 $27.34 $24.94 $21.88 $20.60 $18.90 $27.59
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(2) 4.18% 16.88% 15.69% 9.39% 12.98% 14.54% 4.14%
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $741,391 $743,830 $630,767 $550,480 $551,295 $542,250 $4,913
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $735,616 $710,391 $624,527 $520,335 $547,090 $529,699 $2,606
- ------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 26,770 27,210 25,287 25,155 26,760 28,687 178
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .45%(3) .72% 1.14% 2.20% 3.07% 3.31% (.47)%(3)
Expenses 1.03%(3) .93% .90% .94% .92% .97% 2.01%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 9.3% 23.2% 36.7% 31.1% 27.6% 27.1% 9.3%
<FN>
1. For the period from August 17, 1993 (inception of offering) to December
31, 1993.
2. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal year, 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.
3. Annualized.
4. 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 six months ended December 31, 1993 were
$64,997,857 and $96,187,847, respectively.
</TABLE>
<PAGE>
The Fund and Its Investment Policies
The Fund is an open-end, diversified management investment company
presently organized as a Massachusetts business trust. It was initially
organized as a Maryland corporation in 1972. In seeking its objective of
capital appreciation in the value of its shares, the Fund will emphasize
investments in common stocks issued by established growth companies that,
in the opinion of the Manager, have better-than-expected earnings
prospects but are selling at below-normal valuations. In the event that
economic or financial conditions adversely affect equity securities,
defensive investment methods may be stressed. The investment policies and
practices described below are not "fundamental" policies unless a
particular policy is identified as fundamental. "Fundamental" policies
are those that cannot be changed without the approval of a "majority," as
defined in the Investment Company Act of 1940 (the "Investment Company
Act"), of the Funds outstanding voting securities. The Board may change
non-fundamental investment policies without shareholder approval.
The securities selected for their appreciation possibilities will be
primarily common stocks or securities having the investment
characteristics of common stocks, such as securities convertible into
common stocks. Investment opportunities may be sought among securities
of smaller, less well known companies as well as securities of large, well
known companies. Since investment in such securities may also involve
significant risks of loss, investments of this type may be considered
speculative, and there is no assurance that the Fund will achieve its
objective. The Fund is intended for investors seeking capital
appreciation over the long term and who are willing to accept greater
risks of loss in the hope of greater gain, but is not intended for
investors seeking current income or preservation of capital.
The securities selected for defensive or liquidity purposes may
include debt securities, such as rated or unrated bonds and debentures,
and other defensive securities such as preferred stocks. However, it is
expected that the emphasis of this portion of the portfolio will usually
be on short-term debt securities (i.e., those maturing in one year or less
from date of purchase), since such securities usually may be quickly
disposed of at prices not involving significant gains or losses when the
Manager wishes to increase the portion of the portfolio invested in
securities selected for appreciation possibilities.
The fact that a security selected for possible appreciation has a low
or no yield will not be an adverse factor in its selection, except to the
extent that such lack of yield might adversely affect appreciation
possibilities. Similarly, short-term debt securities may have a lower
yield than long-term debt securities, but their liquidity and relative
price stability are considered as more important than the yield factor.
Special Investment Methods
Small, Unseasoned Companies
The Fund may invest in securities of small, unseasoned companies as
well as those of large, well-known companies. In view of the limited
liquidity and volatility of price movements of the former, as a matter of
fundamental policy, the Fund will not make an investment that will result
in more than 15% of the Fund's total assets being invested in securities
of companies (including predecessors) that have been in operation less
than three years. The Fund has undertaken that it will not invest more
than 5% of its total assets in such companies. See "Small, Unseasoned
Companies" in "Investment Objective and Policies" in the Additional
Statement for a further discussion of the risks associated with such
investments.
Warrants and Rights
The Fund may invest up to 5% of its total assets in warrants and
rights (other than those that have been acquired in units or attached to
other securities). Not more than 2% of the Fund's assets may be invested
in warrants that are not listed on the New York or American Stock
Exchanges. For further details, see "Warrants and Rights" in "Investment
Objective and Policies" in the Additional Statement.
Foreign Securities
The Fund may purchase "foreign securities" that are debt or equity
securities issued by companies organized under the laws of countries other
than the United States and debt securities issued by foreign governments
that are listed on a foreign securities exchange or are traded in foreign
over-the-counter markets. The Fund has no restrictions on the amount of
its assets that may be invested in foreign securities. The Fund may
purchase securities in any country, developed or underdeveloped.
Securities of foreign issuers: (i) represented by American Depository
Receipts ("ADR's"), or (ii) traded in U.S. over-the-counter markets, or
(iii) listed on a U.S. securities exchange, are not considered "foreign
securities" for this purpose because they are not subject to many of the
special considerations and risks (discussed below and in the Additional
Statement) that apply to investments in foreign securities traded and held
abroad. If the Fund's securities are held abroad, the countries in which
such securities are held and the sub-custodians holding them, must be
approved by the Fund's Board of Trustees under applicable SEC rules. The
Fund will hold foreign currency only to effect foreign securities
transactions and not as an investment. Risks of investing in foreign
securities may include foreign taxation, changes in currency rates or
currency blockage, currency exchange costs, possibilities in some
countries of expropriation or nationalization of assets, political,
financial or social instability or adverse diplomatic developments, and
differences between domestic and foreign legal, auditing, brokerage and
economic standards. See "Investments in Foreign Securities" in
"Investment Objective and Policies" in the Additional Statement for
further discussion as to the possible rewards and risks of investing in
foreign securities.
Illiquid and Restricted Securities
As a non-fundamental policy, the Fund will not purchase or otherwise
acquire any securities which may be "illiquid" by virtue of the absence
of a readily-available market or because their disposition would be
subject to legal restrictions ("restricted securities") if, as a result,
more than 15% of its net assets (taken at current value) would be invested
in securities that are illiquid. This policy applies to repurchase
agreements maturing in more than seven days, and over-the-counter options
and a portion of the Fund's assets used to cover such options, but does
not limit the acquisition of restricted securities eligible for resale to
qualified institutional purchasers pursuant to Rule 144A under the
Securities Act of 1933 that are determined to be liquid by the Board of
Trustees or by the Manager under Board-approved guidelines. Such
guidelines take into account trading activity for such securities and the
availability of reliable pricing information, among other factors. If
there is a lack of trading interest in particular Rule 144A securities,
the Fund's holdings of those securities may be illiquid. There may be
undesirable delays in selling illiquid securities at prices representing
their fair value (see "Illiquid and Restricted Securities" in "Investment
Objective and Policies" in the Additional Statement for further details).
The Fund currently intends to invest no more than 10% of its net assets
in illiquid and restricted securities, excluding securities eligible for
resale pursuant to Rule 144A that are determined to be liquid by the Board
of Trustees or by the Manager under Board-approved guidelines.
Derivatives
The most common derivatives, also known as structured financial
products, in which the Fund may invest include: (i) index-linked notes
whose final payouts are dependent upon the performance of one or more
market indices, and (ii) relative performance options whose cash
settlement is a function of the differential returns between two market
indices. A risk of these derivatives is a decline in value of the
underlying instrument due to adverse movements in the index.
Repurchase Agreements
The Fund may acquire securities subject to repurchase agreements to
generate income for liquidity purposes, to meet anticipated redemptions,
or pending the investment of proceeds from sales of Fund shares or
settlement of purchases of portfolio investments. The Fund's repurchase
agreements will be fully collateralized. However, if the seller of the
securities fails to pay the agreed-upon repurchase price on the delivery
date, the Fund's risks may include the costs of disposing of the
collateral for the agreement and losses that might result from any delays
in foreclosing on the collateral. As a matter of non-fundamental policy,
the Fund will not enter into a repurchase agreement that will cause more
than 10% 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 maturing
in seven days or less. See "Repurchase Agreements" in "Investment
Objective and Policies" in the Additional Statement for more details.
Loans of Portfolio Securities
To attempt to increase its income for liquidity purposes, the Fund
may lend its portfolio securities (other than in repurchase transactions)
to qualified borrowers if the loan is collateralized in accordance with
applicable regulatory requirements, and if, after any loan, the value of
the securities loaned does not exceed 25% of the value of the Fund's total
assets. The Fund presently does not intend that the value of securities
loaned in the coming year will exceed 5% of the value of the Fund's total
assets. See "Loans of Portfolio Securities" in "Investment Objective and
Policies" in the Additional Statement for further information on
securities loans.
Borrowing
From time to time, the Fund may increase its ownership of securities
by borrowing from banks on an unsecured basis and investing the borrowed
funds (on which the Fund will pay interest), subject to the 300% asset
coverage requirement of the Investment Company Act of 1940 (the
"Investment Company Act"). Purchasing securities with borrowed funds is
a speculative investment method known as leverage. There are risks
associated with leveraging purchases of portfolio securities by borrowing,
including possible reduction of income and increased fluctuation of net
asset value per share. The Fund may be subject to relatively greater
risks and costs than a fund that does not use leverage. For further
discussion of such risks and other details, see "Borrowing" in "Investment
Objective and Policies" in the Additional Statement.
Writing Covered Calls
The Fund may write (i.e., sell) call options ("calls") to generate
income for liquidity purposes or for defensive reasons if: (i) after any
sale, not more than 25% of the Fund's total assets are subject to calls,
(ii) the calls are listed on a domestic securities exchange, quoted on
NASDAQ or traded in the over-the-counter market, and (iii) the calls are
"covered," i.e., the Fund owns the securities subject to the call (or
other securities acceptable for applicable escrow arrangements) while the
call is outstanding. The Fund may write calls on securities indices.
Hedging
For hedging purposes, the Fund may buy and sell certain put and call
options, Stock Index Futures (described below), options on Stock Index
Futures and enter into Interest Rate Swap transactions, all of which are
referred to as "Hedging Instruments." In general, the Fund may use
Hedging Instruments: (i) to attempt to protect against declines in the
market value of the Fund's portfolio securities or Stock Index Futures
resulting from downward market trends, or (ii) to establish a position in
the securities markets as a temporary substitute for purchasing particular
securities. The Fund will not use Hedging Instruments for speculation.
The Hedging Instruments the Fund may use are described below and in
greater detail under "Covered Calls and Hedging" in the Additional
Statement.
-- Purchasing Puts and Calls. The Fund may purchase put options
("puts") which relate to: (i) securities (whether or not held by it), (ii)
Stock Index Futures (defined below), whether or not it holds such Futures
in its portfolio, or (iii) broadly-based stock indices. The Fund may
purchase calls as to securities, securities indices or Stock Index
Futures, or to effect a "closing purchase transaction" to terminate its
obligation as to a call previously written. A call or put may be
purchased only if, after any such purchase, the value of all call and put
options held by the Fund would not exceed 5% of its total assets.
-- Stock Index Futures. The Fund may buy and sell futures contracts
only if they relate to broadly-based stock indices ("Stock Index
Futures"). A stock index is "broadly-based" if it includes stocks that
are not limited to issuers in any particular industry or group of
industries. Stock Index Futures are settled by payment or acceptance of
cash, not by the stocks comprising the index. At present, the Fund does
not intend to enter into Stock Index Futures and options on Futures if,
after any such purchase or sale, the sum of margin deposits on Futures and
premiums paid on Futures options exceeds 5% of the value of the Fund's
total assets. The Fund's potential liability generally will be
significantly in excess of that amount.
-- Writing Puts. The Fund may write puts on securities, securities
indices or Futures only if such puts are covered by segregated liquid
assets. The Fund may not write puts if, as a result, more than 50% of the
Fund's net assets would be required to be segregated liquid assets.
-- Foreign Currency Options. The Fund may purchase and write puts
and calls on foreign currencies that are traded on a securities or
commodities exchange or over-the-counter market 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 incur transactions costs.
-- 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. 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.
-- Interest Rate Swap Transactions. The Fund may enter into interest
rate swaps. In an interest rate swap, the Fund and another party exchange
their respective commitments to pay or receive interest on a security,
(e.g., an exchange of floating rate payments for fixed rate payments).
The Fund will not use interest rate swaps for leverage. Swap transactions
will be entered into only as to security positions held by the Fund. The
Fund may not enter into swap transactions with respect to more than 50%
of its total assets. The Fund will segregate liquid assets equal to the
net excess, if any, of its obligations over its entitlements under the
swap and will mark to market that amount daily. There is a risk of loss
on a swap equal to the net amount of interest payments that the Fund is
contractually obligated to make. The credit risk of an interest rate swap
depends on the counterparty's ability to perform.
-- Risks of Options and Futures Trading. "Covered Calls and Hedging"
in the Additional Statement contains more information about options,
Futures, Forward Contracts, segregation arrangements for Forward Contracts
and the Fund's other limitations (which are not fundamental policies) on
investment in Futures and options thereon. There are certain risks in
writing calls. If a call written by the Fund is exercised, the Fund
foregoes any profit from any increase in the market price above the call
price of the underlying investment on which the call was written. In
addition, the Fund could experience capital losses which might cause
previously distributed short-term capital gains to be re-characterized as
a non-taxable return of capital to shareholders. In writing puts, there
is the risk that the Fund may be required to buy the underlying security
at a disadvantageous price. The principal risks of Futures trading are:
(a) possible imperfect correlation between the prices of the Futures and
the market value of the debt securities in the Fund's portfolio; (b)
possible lack of a liquid secondary market for closing out a Futures
position; (c) the need for additional skills and techniques beyond those
required for normal portfolio management; and (d) losses on Futures
resulting from interest rate movements not anticipated by the Manager.
Short Sales Against-the-Box
The Fund may not sell securities short except in transactions
referred to as "short sales against-the-box." No more than 15% of the
Fund's net assets will be held as collateral for such short sales at any
one time. See "Short Sales Against-the-Box" in "Investment Objective and
Policies" in the Additional Statement for further details.
Investment Restrictions
The Fund has certain investment restrictions which, together with its
investment objective, are fundamental policies. Under some of those
restrictions, the Fund cannot: (1) with respect to 75% of its assets,
invest in the securities of any one issuer (other than the U.S. Government
or its agencies or instrumentalities) if immediately thereafter (a) more
than 5% of the Fund's total assets would be invested in securities of that
issuer, or (b) the Fund would then own more than 10% of that issuer's
voting securities; (2) concentrate investments in any particular industry;
therefore the Fund will not purchase the securities of companies in any
one industry if, thereafter, more than 25% of the value of the Fund's
assets would consist of securities of companies in that industry; or (3)
deviate from the percentage restrictions listed in "Special Investment
Methods" under "Small, Unseasoned Companies," "Warrants and Rights,"
"Loans of Portfolio Securities," "Borrowing" and "Short Sales Against-the-
Box." The percentage restrictions described above and in the Additional
Statement apply only at the time of investment and require no action by
the Fund as a result of subsequent changes in value of the investments or
size of the Fund. A supplementary list of investment restrictions is
contained in "Investment Restrictions" in the Additional Statement.
Management of the Fund
The Fund's Board of Trustees has overall responsibility for the
management of the Fund under the laws of Massachusetts governing the
responsibilities of trustees of business trusts. Subject to the authority
of the Board of Trustees, the Manager supervises the investment operations
of the Fund and the composition of its portfolio, and furnishes the Fund
advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities pursuant to an investment
advisory agreement with the Fund (the "Agreement").
Robert C. Doll, Jr., is Vice President and Portfolio Manager of the
Fund, and has been the person principally responsible for the day-to-day
management of the Fund's portfolio since September, 1987. He is an
Executive Vice President of the Manager and an officer of other
OppenheimerFunds. For more information about the Fund's other officers
and Trustees, see "Trustees and Officers" in the Additional Statement.
The Agreement contains provisions relating to the selection of
brokers and dealers ("brokers") for the Fund's portfolio transactions.
Subject to the Agreement, the Manager may consider sales of shares of the
Fund and other funds advised by the Manager or its affiliates as a factor
in the selection of brokers for the Fund's portfolio transactions. Under
the Agreement, the Fund pays a management fee to the Manager monthly at
the following annual rates, which are higher than those paid by most other
investment companies: 0.75% of the first $200 million of net assets; 0.72%
of the next $200 million; 0.69% of the next $200 million; 0.66% of the
next $200 million; and 0.60% of net assets over $800 million.
"Investment Management Services" in the Additional Statement contains more
information about the Agreement, including a description of expense
reimbursement arrangements, exculpation provisions, and brokerage
practices of the Fund.
The Manager has operated as an investment adviser since April 30,
1959. The Manager and its affiliates currently advise U.S. investment
companies with assets aggregating over $26 billion as of December 31,
1993, and having more than 1.8 million shareholder accounts. The Manager
is owned by Oppenheimer Acquisition Corp., a holding company owned in part
by senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company that also advises pension plans and investment companies.
How To Buy Shares
Alternative Sales Arrangements
Two classes of shares of the Fund are offered under the Fund's
"Alternative Sales Arrangements." The investor may elect to purchase
shares with a sales charge imposed (1) at the time of purchase or on a
contingent deferred basis on redemption of shares purchased in amounts
over $1 million (the "Class A shares"), or (2) on a contingent deferred
basis (the "Class B shares"). Only certain institutional investors may
elect to purchase a third class of shares at net asset value (the "Class
Y shares"). The contingent deferred sales charge will be imposed on most
redemptions of Class B shares within six years of purchase. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to that investor depending on
the amount of the purchase, the length of time the investor expects to
hold the shares and other relevant circumstances. The Fund's distributor,
Oppenheimer Funds Distributor, Inc. (the "Distributor"), will not
knowingly accept any order for $1 million or more of Class B shares of one
or more of the "Eligible Funds" listed in "Right of Accumulation" below
on behalf of a single investor (not including dealer "street name" or
omnibus accounts) because it generally will be more advantageous for such
investor to purchase Class A shares of such Eligible Fund(s) instead.
Investors should understand that the purpose and function of the deferred
sales charge and asset-based sales charges with respect to Class B shares
are the same as those of the initial sales charge with respect to Class
A shares. Any financial intermediary or other person entitled to receive
compensation for selling or servicing Fund shares may receive different
compensation with respect to one class of shares than the other.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, as described in this
Prospectus, each class has different shareholder privileges and features.
For each class, the net income attributable to that class and the
dividends payable on its 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 and the service plan fees to which Class
A and Class B shares are subject. For further information, see "Purchase,
Redemption and Pricing of Shares" in the Additional Statement.
The Fund's Class A and Class B shares may be purchased through any
dealer or broker which has a sales agreement with the Distributor, a
subsidiary of the Manager. There are two ways to make an initial
investment in shares of these two classes: either (1) complete an
OppenheimerFunds New Account Application and mail it with payment to the
Distributor at P.O. Box 5270, Denver, Colorado 80217 (if no dealer or
broker is named in the Application, the Distributor will be listed as the
dealer of record), or (2) order the shares through your dealer or broker.
Be certain to specify whether you wish to purchase Class A shares or Class
B shares. If no such instructions are provided, initial investments will
be made in Class A shares and subsequent investments will be made in the
same class as the most recent previous investment.
The minimum initial investment in Class A or Class B shares is
$1,000, except as otherwise described in this Prospectus. Subsequent
purchases must be at least $25 and may be made (1) through authorized
dealers or brokers, (2) by forwarding payment to the Distributor at the
above address with the names of all account owners, the account number and
the name of the Fund, (3) automatically through Asset Builder Plans or by
telephone using AccountLink or PhoneLink, described below, or (4) by
telephone using AccountLink, described below. Under an Asset Builder
Plan, Automatic Exchange Plan, military allotment plan or 403(b)(7)
custodial plan, initial and subsequent investments must be at least $25.
The minimum initial and subsequent purchase requirements are waived on
purchases made by reinvesting dividends from any of the "Eligible Funds"
listed in "Right of Accumulation," below, or by reinvesting distributions
from unit investment trusts for which reinvestment arrangements have been
made with the Distributor. No share certificates will be issued for Class
B or Class Y shares, and no share certificates will be issued for Class
A shares unless specifically requested in writing by an investor or the
dealer or broker.
The net asset value per share of each class is determined as of 4:00
P.M. (all references to time in this Prospectus mean New York time) each
day the New York Stock Exchange is open (a "regular business day") by
dividing the value of the Fund's net assets attributable to that class by
the number of shares of that class outstanding. The Fund's Board of
Trustees has established procedures for valuing the Fund's securities.
In general, those valuations are based on market value, with special
provisions for: (i) securities not having readily-available market
quotations; (ii) short-term debt securities; and (iii) covered calls and
Hedging Instruments. Further details are in "Purchase, Redemption and
Pricing of Shares" in the Additional Statement. The net asset values per
share of Class A, Class B and Class Y shares will differ due to
differences in expenses borne by each class, as discussed under "Purchase,
Redemption and Pricing of Shares - Multiple Class Methodology" in the
Additional Statement.
All purchase orders received by the Distributor at its address in
Denver, Colorado, prior to 4:00 P.M. on a regular business day are
processed at that day's offering price. However, an order received by the
Distributor from a dealer or broker after the offering price is determined
that day will receive such offering price if the order was received by
the dealer or broker from its customer prior to 4:00 P.M. and was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Purchase orders received on other
than a regular business day will be executed on the next succeeding
regular business day. The Distributor, in its sole discretion, may accept
or reject any order for the purchase of the Fund's shares. The sale of
shares will be suspended during any period in which the determination of
net asset value is suspended and may be suspended by the Board of Trustees
whenever the Board judges it in the best interest of the Fund to do so.
Class A Shares
Class A shares are sold at their offering price, which (as that term
is used in this Prospectus and the Additional Statement) is net asset
value plus a front-end sales charge, except that as to certain purchases
described below that are not subject a front-end sales charge, the
offering price is net asset value. The offering price is determined as
of 4:00 P.M. each regular business day. Class A shares may not be
converted into Class B or Class Y shares.
The following table shows the regular front-end sales charge rates
for Class A shares for a "single purchaser" (defined below), together
with the dealer discounts paid to authorized dealers and the agency
commissions paid to authorized brokers (collectively, "commissions"):
- ------------------------------------------------------------------
Front-End
Front-End Sales
Sales Charge as
Charge as Approximate
Percentage Percentage Commission as
of Offering of Amount Percentage of
Amount of Purchase Price Invested Offering Price
- ------------------ ----------- ----------- --------------
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- ------------------------------------------------------------------
$1 million or more None* None* None*
- ------------------------------------------------------------------
* See, "Class A Contingent Deferred Sales Charge," below.
Under certain circumstances, commissions up to the amount of the
entire sales charge may be reallowed to dealers or brokers, who might then
be deemed to be "underwriters" under the Securities Act of 1933.
Commission rates may vary among the funds for which the Manager and its
affiliates act as investment advisers.
The Distributor may advance up to 13 months' commissions to dealers
that have entered into special arrangements with the Distributor as to
purchases made by their clients under Oppenheimer Asset Builder Plans.
If a registered representative of a securities dealer sells more than $2.5
million of Class A shares of "Eligible Funds" other than "Money Market
Funds" (both terms are defined below) in a calendar year, the dealer firm
is eligible to send such representative, with a guest, to a three-day
sales conference (generally held in a resort), if one is sponsored and
held by the Distributor; or in lieu of sending such representative, that
firm may, at its option, receive the equivalent cash value of such award
as additional commission. The Distributor may, from time to time, enter
into arrangements with specific dealers whereby the Distributor may make
additional payments to that dealer based, in part, on that dealer meeting
certain sales criteria. Such additional payments may be based on sales
for a specific period of time, shares of certain or all of the "Eligible
Funds" held by the dealer and/or its customers, or some combination
thereof.
Dealers whose sales of Class A shares of "Eligible Funds" other than
"Money Market Funds" under OppenheimerFunds-sponsored 403(b)(7) custodial
plans exceed a rate of $5 million per year, calculated per calendar
quarter, will receive monthly one-half of the Distributor's retained
commission on such sales. Dealers whose sales of such plans exceed a rate
of $10 million per year, calculated per calendar quarter, will receive the
Distributor's entire retained commission on such sales; such dealers also
may be deemed to be "underwriters" as described above.
-- Class A Contingent Deferred Sales Charge. On certain purchases
of Class A shares of any one or more "Eligible Funds" by a "single
purchaser" (both terms are defined below in "Right of Accumulation")
aggregating $1 million or more, the Distributor will pay authorized
dealers an amount equal to 1.0% of the first $2.5 million of such
purchases, plus 0.50% of the next $2.5 million, plus 0.25% of such
purchases in excess of $5 million. However, that commission will be paid
only on the amount of those share purchases in excess of $1 million that
were not previously subject to a front-end sales charge and dealer
commissions (the shares with respect to which this commission is paid are
called "Class A CDSC shares"). A contingent deferred sales charge (the
"Class A CDSC") will be deducted from the redemption proceeds of Class A
CDSC shares redeemed within 18 months of the end of the calendar month of
their purchase. The Class A CDSC will be an amount equal to 1.0% of the
lesser of either (1) the aggregate net asset value of the redeemed shares
(not including shares purchased by reinvestment of dividends or capital
gains) or (2) the original cost of such shares. However, the total Class
A CDSC paid on such shares shall not exceed the aggregate commissions paid
to dealers on all Class A CDSC shares of "Eligible Funds" purchased by
that "single purchaser."
The Class A CDSC does not apply to purchases at net asset value
described in "Other Circumstances" and will be waived in the case of
redemptions of shares made for: (i) retirement distributions (or loans)
to participants or beneficiaries from retirement plans qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") or from Individual Retirement Accounts ("IRAs"),
403(b)(7) plans, deferred compensation plans created under Section 457 of
the Code or other employee benefit plans (collectively, "Retirement
Plans"); (ii) returns of excess contributions to such Retirement Plans;
(iii) Automatic Withdrawal Plan payments limited to no more than 12% of
the original account value annually; and (iv) involuntary redemptions of
shares by operation of law or under procedures set forth in the Fund's
Declaration of Trust or as adopted by the Board of Trustees (collectively,
"Involuntary Redemptions"). See "Transfers" in "Purchase, Redemption and
Pricing of Shares" in the Additional Statement for further details.
Some or all of the proceeds of redeemed shares on which a Class A
CDSC was paid on redemption may be reinvested within 6 months of
redemption without sales charge at net asset value on the reinvestment
date if the investor notifies the Distributor that the privilege applies.
See "How to Redeem Shares - Reinvestment Privilege" below. Additionally,
no Class A CDSC is charged on exchanges, pursuant to the Fund's exchange
privilege, of shares purchased subject to a Class A CDSC, except that if
the Class A shares acquired by exchange are redeemed within 18 months of
the end of the calendar month of the initial purchase of the exchanged
shares, the Class A CDSC will apply. In determining whether a Class A
CDSC is payable, and the amount of any such charge, shares not subject to
a Class A CDSC are redeemed first, including shares purchased by
reinvestment of dividends and capital gains distributions, and then other
shares are redeemed in the order of purchase.
-- Reduced Sales Charges For Class A Purchases. The Class A sales
charge rates in the table above may be reduced as follows:
Right of Accumulation. In calculating the sales charge rate
applicable to current purchases of Class A shares, a "single purchaser"
(defined below) is entitled to cumulate current purchases with the greater
of: (1) amounts previously paid for, or (2) the current value (at offering
price) of, Class A shares of certain other "Eligible Funds" and of the
Fund if sold subject to an initial sales charge and if the investment is
still held in one of the Eligible Funds. The Eligible Funds are those for
which the Distributor or an affiliate acts as the distributor and include
the following: (i) the Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer
California Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-Exempt Fund,
Oppenheimer High Yield Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Insured Tax-Exempt Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond Fund, Oppenheimer Investment Grade Bond Fund, Oppenheimer
Value Stock Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer
Florida Tax-Exempt Fund, Oppenheimer New Jersey Tax-Exempt Fund,
Oppenheimer Strategic Income Fund, Oppenheimer Strategic Investment Grade
Bond Fund, Oppenheimer Strategic Income & Growth Fund, Oppenheimer
Strategic Short-Term Income Fund, Oppenheimer Discovery Fund, Oppenheimer
Target Fund, Oppenheimer Champion High Yield Fund, Oppenheimer Time Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Government Securities Fund,
Oppenheimer Global Environment Fund, Oppenheimer Global Growth & Income
Fund, Oppenheimer Global Bio-Tech Fund, Oppenheimer Fund, Oppenheimer
Global Fund, Oppenheimer Asset Allocation Fund, Oppenheimer Mortgage
Income Fund, Oppenheimer Equity Income Fund, Oppenheimer Gold & Special
Minerals Fund, Oppenheimer Main Street Income & Growth Fund and
Oppenheimer Main Street California Tax-Exempt Fund; (ii) the following
"Money Market Funds": Centennial Tax Exempt Trust, Centennial Money Market
Trust, Centennial America Fund, L.P., Centennial Government Trust,
Centennial California Tax Exempt Trust, Centennial New York Tax Exempt
Trust, Oppenheimer Money Market Fund, Inc., Daily Cash Accumulation Fund,
Inc., Oppenheimer Cash Reserves and Oppenheimer Tax-Exempt Cash Reserves.
There is an initial sales charge on the purchase of Class A shares of each
Eligible Fund except the Money Market Funds (under certain circumstances
described above, redemption proceeds of Money Market Fund shares may be
subject to a CDSC). The reduced sales charge applies only to current
purchases.
The term "single purchaser" refers to: (i) an individual; (ii) an
individual and spouse purchasing shares of the Fund for their own account
or for trust or custodial accounts for their minor children; or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401 or 457 of the
Internal Revenue Code, including related plans of the same employer. To
be entitled to a reduced sales charge under the Right of Accumulation, at
the time of purchase the purchaser must ask the Distributor for such
entitlement and provide the account number(s) for shares of Eligible Funds
owned by the "single purchaser," and the age of any minor children for
whom shares are held.
Letter of Intent. By initially investing at least $1,000 and
submitting a Letter of Intent (the "Letter") to the Distributor, a "single
purchaser" may purchase Class A shares of the Fund and the other Eligible
Funds (other than the Money Market Funds) during a 13-month period at the
reduced sales charge rates or at net asset value but subject to the Class
A CDSC (described above), if applicable, applying to the aggregate amount
of the intended purchases stated in the Letter. The Letter may apply to
purchases made up to 90 days before the date of the Letter. The Fund and
the Distributor reserve the right to amend or terminate such program at
any time. For further details, including escrow requirements, see
"Letters of Intent" in the Additional Statement.
Other Circumstances. No sales charge is imposed on Class A shares
of the Fund: (i) sold to the Manager or its affiliates, or to present and
former officers, trustees or directors and employees (and their "immediate
families," as defined in "Reduced Sales Charges" in the Additional
Statement) of the Fund, the Manager and its affiliates, and to retirement
plans established by them for employees; (ii) issued in plans of
reorganization, such as mergers, asset acquisitions and exchange offers,
to which the Fund is a party; (iii) sold to registered investment
companies or to separate accounts of insurance companies having an
agreement with the Manager or the Distributor; (iv) sold to dealers or
brokers that have a sales agreement with the Distributor, for their own
account or for retirement plans for their employees, or sold to employees
(and their spouses) of such dealers or brokers or of financial
institutions that have entered into a sales arrangement with such dealer
or broker or the Distributor (and are identified to the Distributor by
such dealer or broker); the purchaser must certify to the Distributor at
the time of purchase that such purchase is for its own account (or for the
benefit of such employee's minor children); (v) sold to 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 the clients of the
dealer, broker or registered investment adviser; or (vi) purchased by the
reinvestment of (a) loan repayments by a participant in a retirement plan
for which the Manager or its affiliates act as sponsor, or (b) dividends
or other distributions reinvested from the Fund or other "Eligible Funds"
(other than Cash Reserves Funds) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor. "Reduced
Sales Charges" in the Additional Statement discusses this policy.
-- Class A Service Plan. The Fund has adopted a Service Plan (the
"Class A Plan") under Rule 12b-1 of the Investment Company Act pursuant
to which the Fund will reimburse the Distributor for all or a portion of
its costs incurred in connection with the personal service and maintenance
of accounts that hold Class A shares. The Distributor will use such fees
received from the Fund in their entirety: (i) to compensate brokers,
dealers, banks and other institutions ("Recipients") each quarter for
providing personal service and maintenance of accounts that hold Class A
shares; and (ii) to reimburse itself (to the extent authorized by the
Board of Trustees) for its other expenditures under the Plan and for its
direct costs for personal service and maintenance of accounts. The Board
of Trustees has not presently authorized any reimbursement to the
Distributor under (ii) above. The services to be provided under the Class
A Plan include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the Fund,
providing such customers with information on their investment in Class A
shares, assisting in the establishment and maintenance of accounts or sub-
accounts in the Fund, making the Fund's investment plans and dividend
payment options available, and providing such other information and
customer liaison services and the maintenance of accounts as the
Distributor or the Fund may reasonably request.
The Distributor will be reimbursed only for quarterly payments made
to each Recipient at a rate not to exceed 0.0625% (0.25% annually) of the
average net asset value of Class A shares owned by the Recipient or its
customers. Initially, the Board of Trustees has set the fee for assets
sold on or after April 1, 1991 at the maximum rate, with a reduced rate
to apply to assets representing Class A shares sold before April 1, 1991.
The Board may increase the fee for assets sold before April 1, 1991, but
not above the maximum rate. In no instance is there any minimum amount.
Under the Service Plan, any unreimbursed expenses incurred during any
quarter by the Distributor may not be recovered in later periods. The
Fund will not be charged for any interest expense, carrying charges or
other financial costs, or allocation of overhead by the Distributor.
The Class A Plan has the effect of increasing annual expenses of
Class A shares of the Fund by up to 0.25% of the class's average annual
net assets. In addition, the Manager and the Distributor may, under the
Class A Plan, from time to time from their own resources (which, as to the
Manager, may include profits derived from the advisory fee it receives
from the Fund) make payments to Recipients for distribution and
administrative services they perform. For further details, see
"Distribution and Service Plans" in the Additional Statement.
Class B Shares
Class B shares are sold at net asset value per share without the
imposition of a sales charge at the time of purchase.
-- Class B Contingent Deferred Sales Charge. A contingent deferred
sales charge (the "Class B CDSC") will be deducted from the redemption
proceeds of Class B shares redeemed within six years of their purchase
(not including shares purchased by reinvestment of dividends or capital
gains). The charge will be assessed on an amount equal to the lesser of
the then current net asset value or the original purchase price of the
Class B shares being redeemed. Accordingly, no Class B CDSC will be
imposed on amounts representing increases in net asset value above the
initial purchase price (including increases due to reinvestment of
dividends or capital gains). In determining whether a Class B CDSC
applies to a redemption, Class B shares are redeemed in the following
order: (1) those acquired pursuant to reinvestment of dividends or
distributions, (2) those held for over six years, and (3) those held
longest during the six-year period.
Proceeds from the Class B CDSC are paid to the Distributor and are
used by it to reimburse its expenses related to providing
distribution-related services to the Fund in connection with the sale of
Class B shares. The combination of the Class B CDSC and the distribution
fee retained by the Distributor (as described under "Class B Distribution
and Service Plan") facilitates the sale of Class B shares without a sales
charge being deducted at the time of purchase. Any Class B CDSC required
to be imposed on Class B share redemptions will be assessed according to
the following schedule:
Contingent Deferred
Year(s) Since Sales Charge
Purchase Order in That Year (as % of
Was Accepted Applicable Proceeds)
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 or more None
In the table above, a "year" is a period of twelve months. In
determining the amount of the Class B CDSC that applies and when Class B
shares convert to Class A shares as described in the paragraph below, all
purchases shall be considered as having been made on the first regular
business day of the month in which the purchase was made. The Class B
CDSC will be waived upon the request of the shareholder for redemptions
for: (1) distributions to participants or beneficiaries from Retirement
Plans, which distributions are made either (a) under an Automatic
Withdrawal Plan (described under "How to Redeem Shares") after the
participant attains age 59-1/2, and which are limited to no more than 10%
of the account value annually (determined in the first year, as of the
date the redemption request is received by the Transfer Agent, and in
subsequent years, as of the most recent anniversary of that date) or (b)
following the participant's or beneficiary's (i) "disability" (as defined
in the Internal Revenue Code) that occurs since the account was
established, or (ii) death; (2) redemptions other than from Retirement
Plans following the (i) death or (ii) complete disability (as evidenced
by a certificate from the U.S. Social Security Administration) of all
persons individually owning such shares of record and not as fiduciaries
or agents, that occurs since the account was established; and (3) returns
of excess contributions to such Retirement Plans.
In addition, no Class B CDSC is imposed on shares of the Fund: (i)
sold to the Manager or its affiliates; (ii) sold to registered investment
companies or separate accounts of insurance companies having an agreement
with the Manager or the Distributor; (iii) issued in plans of
reorganization, such as mergers, asset acquisitions and exchange offers
to which the Fund is a party; or (iv) redeemed in Involuntary Redemptions.
See "Transfers" in "Purchase, Redemption and Pricing of Shares" in the
Additional Statement for details.
-- Class B Conversion Feature. At the end of the month seventy-two
months after an investor's purchase order for Class B shares is accepted,
such "Matured Class B Shares" automatically will convert to Class A
shares, on the basis of the relative net asset value of the two classes,
without the imposition of any sales load or other charge. Each time any
Matured Class B shares convert to Class A shares, any Class B shares
acquired by the reinvestment of dividends or distributions on such Matured
Class B shares that are still held will also convert to Class A Shares,
on the same basis. The conversion feature is intended to relieve holders
of Matured Class B shares of the asset-based sales charge under the Class
B Plan (as defined below) after such shares have been outstanding long
enough that the Distributor may have been compensated for distribution
expenses related to such shares.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or a tax adviser, to
the effect that the conversion of Matured Class B shares does not
constitute a taxable event for the holder under the Federal income tax
law. If such a private letter ruling or opinion is no longer available,
the automatic conversion feature may be suspended, in which event no
further conversions of Matured Class B shares would occur while such
suspension remained in effect. Although Matured 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.
-- Class B Distribution and Service Plan. The Fund has adopted a
Plan of Distribution and Service (the "Class B Plan") under Rule 12b-1 of
the Investment Company Act, pursuant to which it will compensate the
Distributor for its services and costs incurred in connection with the
distribution and service of the Fund's Class B shares. Pursuant to the
Class B Plan, the Fund will pay the Distributor an asset-based sales
charge of 0.75% per annum on Class B shares outstanding for six years or
less, plus a service fee of 0.25% per annum, each of which is computed on
the average net assets of Class B shares of the Fund determined as of the
close of each regular business day.
The Distributor will use the service fee payment to compensate
Recipients for providing personal service and the maintenance of
shareholder accounts that hold Class B shares, examples of which are
described under "Class A Service Plan." 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 such shares, in
an amount equal to 0.25% of the net asset value of the Class B 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 net asset value of Class B shares held in
accounts of the Recipient or its customers. Other terms and options under
the Class B Plan for payment of the service fee by the Distributor to
Recipients, and other terms and conditions of the Class B Plan are
described under "Distribution and Service Plans" in the Additional
Statement. Asset-based sales charges and service fees will be paid by the
Fund to the Distributor monthly and quarterly, respectively.
The Distributor currently expects to pay sales commissions from its
own resources to authorized dealers or brokers at the time of sale equal
to 3.75% of the purchase price of Fund shares sold by such dealer or
broker, and to advance the first year service fee of 0.25%. The
asset-based sales charge payments by the Fund to the Distributor under the
Class B Plan are intended to allow it to recoup such sales commissions
plus financing costs. The Distributor anticipates that it will take a
number of years to recoup the sales commissions paid to authorized brokers
or dealers from the Fund's payments to the Distributor under the Class B
Plan.
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 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
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 million was recovered in the
form of contingent deferred sales charges paid by investors and $1.6
million 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 contains a provision that contractually obligates
the Fund to continue payments to the Distributor for certain expenses
incurred for Class B shares sold prior to termination of the Class B Plan.
If 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 Fund believes that under applicable accounting standards, its
obligation under the Class B Plan to pay any asset-based sales charges in
future periods is not required to be recognized as a liability. In the
future, if applicable accounting standards should be deemed to require
that obligation to be recognized as a liability, a decrease in the net
asset value per share of Class B shares could result. Were that to occur,
such decrease would affect all Class B shares regardless of how long the
shares were held. Furthermore, Class B shareholders would continue to
remain subject to the Class B CDSC. The accounting treatment of the
Fund's obligations under the Class B Plan for future payments is discussed
in "Distribution and Service Plans" in the Additional Statement. The
accounting standards now used are currently under review by the American
Institute of Certified Public Accountants and it is possible that those
standards will change and that the Fund's Class B Plan would be changed
as a result.
The Class B Plan has the effect of increasing annual expenses of
Class B shares of the Fund by up to 1.00% of the class's average annual
net assets from what its expenses would otherwise be. In addition, the
Manager and the Distributor may, under the Class B Plan, from time to time
from their own resources (which, as to the Manager, may include profits
derived from the advisory fee it receives from the Fund) make payments to
Recipients for distribution and administrative services they perform. For
further details, see "Distribution and Service Plans" in the Additional
Statement.
Purchase Programs for Class A and Class B Shares
-- AccountLink. OppenheimerFunds AccountLink is a means to link a
shareholder's Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House ("ACH") member.
AccountLink can be used to transmit funds by electronic funds transfers
for account transactions, including subsequent share purchases. The
minimum investment by AccountLink is $25. Purchases of up to $250,000 may
be made by telephone using AccountLink (the maximum is $100,000 if the
transaction is done by PhoneLink, described below). To speak to service
operators to initiate such purchases, call the Distributor at 1-800-852-
8457. All such calls will be recorded. To initiate such purchases
automatically using PhoneLink, call 1-800-533-3310. Shares will be
purchased on the regular business day the Distributor is instructed to
initiate the ACH transfer to buy the shares. Dividends will begin to
accrue on such shares on the day the Fund receives Federal Funds for such
purchase through the ACH system before 4:00 P.M., which is normally three
days after the ACH transfer is initiated. If such Federal Funds are
received after that time, dividends will begin to accrue on the next
regular business day after such Federal Funds are received.
AccountLink may also be used as a means of transmitting redemption
proceeds to a designated bank account (see "How To Redeem Shares") or to
transmit distributions paid by the Fund directly to a bank account (see
"Dividends and Distributions"). AccountLink privileges must be requested
on the application used to buy shares or the dealer settlement
instructions establishing the account, or on subsequent
signature-guaranteed instructions to the Transfer Agent from all
shareholders of record for an account, and such privileges thereupon apply
to each shareholder of record and the dealer representative of record
unless and until the Transfer Agent receives written instructions from a
shareholder of record canceling such privileges. Changes of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent by all shareholders of record for an account. The Transfer
Agent, the Fund and the Distributor have adopted reasonable procedures to
confirm that telephone instructions under AccountLink (described above)
and "PhoneLink," "Telephone Redemptions" or the "Exchange Privilege"
(described below) are genuine, by requiring callers to provide tax
identification number(s) and other account data and by recording calls and
confirming such transactions in writing. If the Transfer Agent and the
Distributor do not use such procedures, they may be liable for losses due
to unauthorized transactions, but otherwise they will not be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. The Fund reserves the right to amend, suspend or
discontinue AccountLink privileges at any time without prior notice.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system which enables shareholders of the Fund to initiate account
transactions automatically by telephone, including exchanges between
existing accounts (see "Exchange Privilege," below), redemptions (see "How
To Redeem Shares - Telephone Redemptions," below) and purchases (see
"AccountLink," above). PhoneLink transactions may be done automatically
using a touchtone telephone provided that the shareholder uses a Personal
Identification Number ("PIN") which may be obtained through PhoneLink by
calling 1-800-533-3310. If an account has multiple owners, the Transfer
Agent or the Distributor may rely on any instructions initiated through
PhoneLink using a PIN. The Fund reserves the right to amend, suspend or
discontinue PhoneLink privileges at any time without prior notice.
-- Asset Builder Plans. Investors may purchase shares of the Fund
(and up to four other Eligible Funds) automatically under Asset Builder
Plans. With AccountLink, Asset Builder Plans may be used to make regular
monthly investments ($25 minimum) from the investor's account at a bank
or other financial institution. See "AccountLink" above for details. 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 Redeem
Shares." Asset Builder Plans also enable shareholders of Oppenheimer Tax-
Exempt Cash Reserves or Oppenheimer Cash Reserves to use those accounts
for monthly automatic purchases of shares of up to five Eligible Funds.
There is a sales charge on the purchase of certain Eligible Funds,
and an application should be obtained from the Transfer Agent and
completed and a prospectus of the selected fund(s) (available from the
Distributor) should be obtained before initiating payments. The amount
of the Asset Builder investment may be changed or the automatic
investments terminated at any time by writing to the Transfer Agent. A
reasonable period (approximately 15 days) is required after 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.
Class Y Shares
Class Y Shares are sold at net asset value per share without the
imposition of a sales charge at the time of purchase to separate accounts
of insurance companies and other institutional investors ("Class Y
Sponsors") having an agreement ("Class Y Agreements") with the Manager or
the Distributor. The intent of Class Y Agreements is to allow tax
qualified institutional investors to invest indirectly (through separate
accounts of the Class Y Sponsor) in Class Y Shares of the Fund and to
allow institutional investors to invest directly in Class Y shares of the
Fund. Individual investors are not permitted to invest directly in Class
Y Shares. As of the date of this Prospectus, it is anticipated that
Massachusetts Mutual Life Insurance Company (an affiliate of the Manager
and the Distributor) will act as Class Y Sponsor for any outstanding Class
Y Shares of the Fund. While Class Y shares are not subject to a
contingent deferred sales charge, asset-based sales charge or service fee,
a Class Y sponsor may impose charges on separate accounts investing in
Class Y shares.
None of the instructions described elsewhere in this Prospectus or
the Additional Statement for the purchase, redemption, reinvestment,
exchange or transfer of shares of the Fund or the reinvestment of
dividends apply to its Class Y shares. Clients of Class Y Sponsors must
request their Sponsor to effect all transactions in Class Y shares on
their behalf.
How To Redeem Shares
Regular Redemption Procedures
To redeem some or all shares in an account (whether or not
represented by certificates) under the Fund's regular redemption
procedures, a shareholder must send the following to the Fund's transfer
agent, Oppenheimer Shareholder Services (the "Transfer Agent"), P.O. Box
5270, Denver, Colorado 80217 [send courier or Express Mail deliveries to
10200 E. Girard Avenue, Building D, Denver, Colorado 80231]: (1) a written
request for redemption signed by all registered owners exactly as the
account is registered, including fiduciary titles, if any, and specifying
the account number and the dollar amount or number of shares to be
redeemed; (2) a guarantee of the signatures of all registered owners on
the redemption request or on the endorsement on the share certificate or
accompanying stock power, by a U.S. bank, trust company, credit union or
savings association, or a foreign bank having 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, registered securities association or clearing agency; (3) any
share certificates issued for any of the shares to be redeemed; and (4)
any additional documents which may be required by the Transfer Agent for
redemption by corporations, partnerships or other organizations,
executors, administrators, trustees, custodians, guardians, or from an
OppenheimerFunds-sponsored IRA or other retirement plan, or if the
redemption is requested by anyone other than the shareholder(s) of record.
Transfers of shares are subject to similar requirements.
A signature guarantee is not required for redemptions of $50,000 or
less, requested by and payable to all shareholders of record, to be sent
to the address of record for that account. To avoid delay in redemption
or transfer, shareholders having questions about these requirements should
contact the Transfer Agent in writing or by calling 1-800-525-7048 before
submitting a request. From time to time the Transfer Agent in its
discretion may waive any or certain of the foregoing requirements in
particular cases. Redemption or transfer requests will not be honored
until the Transfer Agent receives all required documents in the proper
form.
Telephone Redemptions
To redeem shares by telephone through a service representative, call
the Transfer Agent at 1-800-852-8457. To use PhoneLink to redeem shares
automatically, without a service representative, call 1-800-533-3310.
Under either method of telephone redemption, proceeds may be paid through
check or through AccountLink as described below. The Transfer Agent may
record any calls. Telephone redemptions may not be available if all lines
are busy, and shareholders would have to use the Fund's regular redemption
procedure described above. Requests received by the Transfer Agent prior
to 4:00 P.M. on a regular business day will be processed at the net asset
value per share determined that day. Telephone redemption privileges are
not available for newly-purchased (within the prior 15 days) shares, for
OppenheimerFunds-sponsored retirement plans, or for shares represented by
certificates.
Telephone redemption privileges apply automatically to each
shareholder and the dealer representative of record unless the Transfer
Agent receives cancellation instructions from a shareholder of record.
If an account has multiple owners, the Transfer Agent may rely on the
instructions of any one owner.
-- Telephone Redemptions Paid by Check. If redemption proceeds are
paid by check, up to $50,000 may be redeemed by telephone, once in every
seven day period, and the check must be payable to the shareholder(s) of
record and sent to the address of record for the account. Telephone
redemptions paid by check are not available within 30 days of a change of
address of record.
-- Redemptions by AccountLink. If AccountLink privileges have been
established for an account, any amount may be redeemed by telephone, wire
or written instructions to the Transfer Agent, and the ACH transfer of the
redemption proceeds to the designated bank account normally will be
initiated by the Transfer Agent on the next bank business day after the
redemption. There are no dollar or frequency limitations on telephone
redemptions sent to a designated bank account through AccountLink. No
dividends are paid on the proceeds of redeemed shares awaiting transmittal
by ACH transfer. See "AccountLink" under "How To Buy Shares" for
instructions on establishing this privilege.
Distributions from Retirement Plans
Requests for distributions from OppenheimerFunds-sponsored IRAs,
403(b)(7) custodial plans, or pension or profit-sharing plans for which
the Manager or its affiliates act as sponsors should be addressed to
"First Interstate Bank of Denver, N.A., c/o Oppenheimer Shareholder
Services" at the above address, and 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 redemption requirements above. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts; the employer or plan administrator must sign the request.
Distributions from such plans are subject to additional 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 penalties assessed.
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 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 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 wired to the bank account designated
on the OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of the payment on the
date requested and reserves the right to amend, suspend or discontinue
offering such plans at any time without prior notice. Because of the
sales charge assessed on Class A share purchases, shareholders should not
make regular additional Class A purchases while participating in an
Automatic Withdrawal Plan. Class B shareholders normally should not
establish withdrawal plans, because of the imposition of the Class B CDSC
on such withdrawals (except where the Class B CDSC is waived as described
in "Class B Contingent Deferred Sales Charge"). For further details,
refer to "Automatic Withdrawal Plan Provisions" in the Additional
Statement.
Shareholders can also authorize the Transfer Agent to exchange a pre-
determined amount (minimum $25) of shares of the Fund for shares of up to
four other "Eligible Funds" automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. Exchanges made
pursuant to such Plans are subject to the conditions and terms applicable
to exchanges described in "Exchange Privilege" below.
Repurchase
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received by the Distributor from dealers or
brokers after 4:00 P.M. on a regular business day will be processed at
that day's net asset value if such orders were received by the dealer or
broker from its customers prior to 4:00 P.M. and are 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 documents, with
signature(s) guaranteed as described above.
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 CDSC when redeemed, in Class A
shares of the Fund or any of the Eligible Funds into which shares of the
Fund are exchangeable as described below, at the net asset value next
computed after receipt by the Transfer Agent of the reinvestment order.
The shareholder must ask the Distributor for such entitlement at the time
of reinvestment. A realized gain on the redemption is taxable, and
reinvestment will not alter any capital gains tax payable. If there has
been a loss on the redemption, some or all of the loss may not be tax
deductible, depending on the timing and the amount reinvested in the Fund.
Under the Internal Revenue Code, if the redemption proceeds of Fund shares
on which sales charges were paid are reinvested in shares of the Fund or
another Eligible Fund within 90 days of payment of the sales charge, the
shareholder's basis in the Fund shares redeemed may not include the amount
of the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption. The Fund may amend, suspend or cease
offering this privilege at any time as to shares redeemed after the date
of such amendment, suspension or cessation.
General Information on Redemptions
The redemption price will be the Fund's net asset value per share
next determined after the Transfer Agent receives redemption instructions
in proper form. The market value of the securities in the Fund's
portfolio is subject to daily fluctuations and the net asset value of each
class of the Fund's shares will fluctuate accordingly. Therefore, the
redemption value may be more or less than the investor's cost. Under
certain unusual circumstances, shares may be redeemed in kind (i.e., by
payment in portfolio securities). The Fund may involuntarily redeem small
accounts (if the account has fallen below $500 in value for reasons other
than market value fluctuations) and may redeem shares in amounts
sufficient to compensate the Distributor for any loss due to cancellation
of a share purchase order; for details, see "Purchase, Redemption and
Pricing of Shares" in the Additional Statement. Under the Internal
Revenue Code, the Fund may be required to impose "backup" withholding of
Federal income tax at the rate of 31% from dividends, distributions and
redemption proceeds (including exchanges), if the shareholder has not
furnished the Fund a certified tax identification number or has not
complied with provisions of the Code relating to reporting dividends.
Payment for redeemed shares is made ordinarily in cash and forwarded
within seven days of receipt by the Transfer Agent of redemption
instructions in proper form, except under unusual circumstances as
determined by the SEC. The Transfer Agent may delay forwarding a
redemption check for recently purchased shares only until the purchase
payment has cleared, which may take up to 15 or more days from the
purchase date. Such delay may be avoided if the shareholder arranges
telephone or written assurance satisfactory to the Transfer Agent from the
bank on which payment is drawn. The Fund makes no charge for redemption.
Dealers or brokers may charge a fee for handling redemption transactions,
but such charge can be avoided by requesting the redemption directly by
the Fund through the Transfer Agent. Under certain circumstances, the
Class A and Class B CDSCs described under "How to Buy Shares" may apply
to the proceeds of redemptions.
Exchanges of Shares and Retirement Plans for Class A or Class B Shares
Exchange Privilege
Shares of the Fund and of the other Eligible Funds listed in "Right
of Accumulation" may be exchanged at net asset value per share at the time
of exchange, without sales charge, if all of the following conditions are
met: (1) shares of the fund selected for exchange are available for sale
in the shareholder's state of residence; (2) the respective prospectuses
of the funds whose shares are to be exchanged and acquired offer the
Exchange Privilege to the investor; (3) newly-purchased (by initial or
subsequent investment) shares are held in an account for at least 7 days
and all other shares at least 1 day prior to the exchange; and (4) the
aggregate net asset value of shares surrendered for exchange is at least
equal to the minimum investment requirements of the fund whose shares are
to be acquired.
In addition to the conditions stated above, shares of a particular
class of an Eligible Fund may be exchanged only for shares of the same
class of another Eligible Fund. If a Fund has only one class of shares
that is not otherwise denominated, its shares shall be considered "Class
A" shares for this purpose. All of the Eligible Funds offer Class A
shares, but only certain Eligible Funds offer Class B shares and/or Class
Y shares and a list can be obtained by calling the Distributor at 1-800-
525-7048, or by referring to "Purchase, Redemption and Pricing of Shares"
in the Additional Statement.
In addition, Class A shares of Eligible Funds may be exchanged for
shares of any Money Market Fund; shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Eligible Funds
offered with a sales charge upon payment of the sales charge or, if
applicable, may be used to purchase shares of Eligible Funds subject to
a CDSC; and shares of this Fund acquired by reinvestment of dividends or
distributions from any other Eligible Fund 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 Eligible
Fund. No CDSC is imposed on exchanges of shares of any class purchased
subject to a CDSC. However, when Class A shares acquired by exchange of
Class A shares purchased subject to a Class A CDSC are redeemed within
eighteen months of the end of the calendar month of the initial purchase
of the exchanged Class A shares, the Class A CDSC is imposed on the
redeemed shares (see "Class A Contingent Deferred Sales Charge," above),
and the Class B CDSC is imposed on class B shares redeemed within six
years of the end of the calendar month of this initial purchase of the
exchanged Class B shares (see "Class B Contingent Deferred Sales Charge,"
above).
How to Exchange Shares. An exchange may be made by either: (1)
submitting an OppenheimerFunds Exchange Authorization Form to the Transfer
Agent, signed by all registered owners, or (2) telephone exchange
instructions to the Transfer Agent by a shareholder or the dealer
representative of record for an account. The Fund may modify, suspend or
discontinue either of these exchange privileges at any time on 60 days'
notice, if such notice is required by regulations adopted under the
Investment Company Act. The Fund reserves the right to reject telephone
or written exchange requests submitted in bulk on behalf of 10 or more
accounts. Telephone and written exchange requests must be received by the
Transfer Agent by 4:00 P.M. on a regular business day to be effected that
day. The number of shares exchanged may be less than the number requested
if the number requested would include shares subject to a restriction
cited above or shares covered by a certificate that is not tendered with
such request. Only the shares available for exchange without restriction
will be exchanged.
When Class B shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" for the imposition of the
Class B CDSC will be followed in determining the order in which shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any CDSC that may 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.
-- Telephone Exchanges. Telephone exchange requests may either be
placed through a service representative by calling the Transfer Agent at
1-800-852-8457 or automatically by PhoneLink, by calling 1-800-533-3310.
If all telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), shareholders might not be
able to request telephone exchanges and would have to submit written
requests. Telephone exchange calls may be recorded by the Transfer Agent.
Telephone exchanges are subject to the rules described above. By
exchanging shares by telephone, the shareholder is acknowledging receipt
of a prospectus of the fund to which the exchange is made and that for
full or partial exchanges, any special account features such as Asset
Builder Plans, Automatic Withdrawal or Exchange Plans and retirement plan
contributions will be switched to the new account unless the Transfer
Agent is otherwise instructed. Telephone exchange privileges
automatically apply to each shareholder of record and the dealer
representative of record unless and until the Transfer Agent receives
written instructions from a shareholder of record canceling such
privileges. If an account has multiple owners, the Transfer Agent may
rely on the instructions of any one owner. The Transfer Agent and the
Fund will not be responsible for the authenticity of telephone
instructions and will not be responsible for any loss, damage, cost or
expense arising out of any telephone instructions received for an account
that the Transfer Agent reasonably believes to be authentic. The Transfer
Agent reserves the right to require shareholders to confirm in writing
their election of telephone exchange privileges for an account. Shares
acquired by telephone exchange must be registered exactly as the account
from which the exchange was made. Certificated shares are not eligible
for telephone exchange.
-- General Information on Exchanges. Shares to be exchanged are
redeemed on the 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 in its discretion reserves the right to refuse any
exchange request that will disadvantage it.
The Eligible Funds have different investment objectives and policies.
For complete information, including charges and expenses, a prospectus of
the fund into which the exchange is being made should be read prior to an
exchange. A $5 service charge will be deducted from the account into
which the exchange is made to help to defray administrative costs. That
charge is waived for telephone exchanges made by PhoneLink between
existing accounts. Dealers or brokers who process exchange orders on
behalf of their customers may charge for their services. Those charges
may be avoided by requesting the Fund directly to exchange shares. For
Federal tax purposes, an exchange is treated as a redemption and purchase
of shares. (See "How to Redeem Shares - Reinvestment Privilege" for a
discussion of certain tax effects of exchanges.) No sales commissions are
paid by the Distributor on exchanges of shares (unless a front-end sales
charge is assessed on the exchange).
Pursuant to telephone exchange agreements with the Distributor,
certain dealers, brokers and investment advisers may exchange their
clients' Fund shares by telephone, subject to the terms of the agreements
and the Distributor's right to reject or suspend such telephone exchanges
at any time. Because of the restrictions and procedures under such
agreement, such exchanges may be subject to timing limitations and other
restrictions that do not apply to exchanges requested by shareholders
directly, as described above.
Retirement Plans
The Distributor has available: (i) pension and profit-sharing plans
for corporations and self-employed individuals, (ii) Individual Retirement
Accounts (IRAs), including Simplified Employee Pension Plans ("SEP IRAs"),
and (iii) 403(b)(7) custodial plans for employees of qualified employers.
Loans are permitted only from OppenheimerFunds 403(b)(7) plan accounts
holding Class A shares. The minimum initial investment for pension and
profit-sharing plans is $250, and is $250 for IRAs unless made under an
Asset Builder Plan. The Fund reserves the right to amend, suspend or
discontinue offering such plans at any time without prior notice. For
further details, including the administrative fees, the appropriate
retirement plan should be requested from the Distributor.
Dividends, Distributions and Taxes
This discussion relates solely to Federal tax laws and is not
exhaustive; a qualified tax advisor should be consulted. Dividends and
distributions may also be subject to state and local taxation. See
"Covered Calls and Hedging" and "Tax Status of the Fund's Dividends and
Distributions" in the Additional Statement for more information on the tax
aspects of the Fund's investment in Hedging Instruments and other tax
matters.
Dividends and Distributions
The Fund intends to declare dividends separately for Class A and
Class B and Class Y shares on an annual basis in December each year, on
a date set by the Board of Trustees. As current income is not an
objective of the Fund, the amount of dividends from net investment income
will likely be small. In addition, distributions may be made annually in
December out of any net short-term or long-term capital gains realized
from the sale of securities, premiums from expired calls written by the
Fund, and net profits from hedging transactions realized in the twelve
months ending on October 31 of that year. Any difference in the net asset
values of Class A, Class B and Class Y shares will be reflected in such
distribution. The Fund may make a supplemental distribution of capital
gains and ordinary income following the end of its fiscal year. Any long-
term capital gains distribution and any non-taxable return of capital will
be identified separately when paid and when tax information is distributed
by the Fund. There is no fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
gains.
All dividends and capital gains distributions are automatically
reinvested in Fund shares at net asset value, as of a date selected by the
Board of Trustees, unless the shareholder asks the Transfer Agent in
writing to pay dividends and capital gains distributions in cash, or to
reinvest them in another Eligible Fund, as described in "Total Return,
Dividends and Tax Information" in the Additional Statement. That request
must be received prior to the record date for a dividend to be effective
as to that dividend. Under AccountLink, dividends and distributions may
be automatically transferred to a designated account at a financial
institution that is an ACH member. See "AccountLink" in "How To Buy
Shares" and the OppenheimerFunds New Account Application for more details.
For existing accounts, such privileges may be established only by
signature-guaranteed instructions from all shareholders to the Transfer
Agent. 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 are reinvested in shares of Oppenheimer
Money Market Fund, Inc. as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending upon market conditions, the composition of the Fund's portfolio,
expenses borne by the Fund, or borne separately by that class as described
in "Purchase, Redemption and Pricing of Shares - Multiple Class
Methodology" in the Additional Statement. 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 than
on Class A or Class Y shares on a pro rata basis as a result of the asset-
based sales charge on Class B shares, and such dividends also will differ
in amount as a consequence of any difference between the net asset values
of Class A, Class B and Class Y shares.
Tax Status of the Fund's Dividends and Distributions
Dividends paid by the Fund derived from net investment income or net
short-term capital gains are taxable to shareholders as ordinary income,
whether received in cash or reinvested. Long-term capital gains
distributions, if any, are taxable as long-term capital gains whether
received in cash or reinvested and regardless of how long Fund shares have
been held. A shareholder purchasing Fund shares immediately prior to the
declaration of a capital gains distribution will receive a distribution
subject to income tax, and the distribution will have the effect of
reducing the Fund's net asset value per share by the amount of the
distribution. For information as to "backup" withholding on dividends,
see "How to Redeem Shares," above.
Tax Status of the Fund
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified
during its last fiscal year and intends to qualify in the current and
future years but reserves the right not to do so. However, the Code
contains a number of complex tests relating to qualification which the
Fund possibly might not meet in any particular year. For example, if the
Fund derives 30% or more of its gross income from the sale of securities
held less than three months, it may fail to qualify (see "Investment
Objective and Policies - Tax Aspects of Covered Calls and Hedging
Instruments" in the Additional Statement). If it did not so qualify, it
would be treated for tax purposes as an ordinary corporation and receive
no tax deduction for dividends and distributions made to shareholders.
Fund Performance Information
Total Return Information
From time to time the "average annual total return," "total return"
and "total return at net asset value" of an investment in each class of
shares of the Fund may be advertised. Total return is the change in value
of a hypothetical investment in a class of shares of the Fund over a given
period, assuming that all dividends and capital gains distributions are
reinvested. 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 actual year-by-year
performance of a class of shares. When total returns are quoted for Class
A shares, they reflect the payment of the maximum initial sales charge.
Total returns may be quoted as "net asset value," without considering the
sales charge, and those returns would be reduced if sales charges were
deducted. When total returns are shown for Class B shares, they reflect
the effect of the contingent deferred sales charge that applies to the
period for which the total return is shown, or else they may be shown
based on the change in net asset value without considering the sale
charge. All total returns are based on historical earnings and are not
intended to predict future performance. The Additional Statement contains
more information about the calculation of the performance data used by the
Fund.
The Fund's "average annual total return," "total return" and "total
return at net asset value" indicate the investment results an investor
would have experienced over the stated period from changes in share price
and reinvestment of dividends and distributions. All such performance
information is based on historical per share earnings and is not intended
to indicate future performance. Performance is calculated separately for
each class and will differ for shares of each class, and the higher
anticipated expenses of Class B shares should result in shares of that
class having lower yields than Class A shares for the same period of time.
"Performance and Tax Information" in the Additional Statement contains
more detailed information on calculating the Fund's returns and other
performance information.
Management's Discussion of Performance
During the Fund's prior fiscal year ended June 30, 1993, the Fund
continued to emphasize stocks in the financial services, technology and
healthcare sectors, focusing on companies with strong earnings
fundamentals and that are, in the opinion of the Manager, well-positioned
to benefit from an improving economy. The Fund limited its exposure to
energy, utility and other more risky deep cyclical stocks that do well in
the early stages of economic expansion. This limited exposure caused the
Fund's return to lag that of the market earlier in its fiscal year, but
later positioned the Fund well as those stocks began to falter. The Fund
sold a number of positions that the Manager believed were fully valued or
overvalued, particularly in consumer cyclicals and in certain sectors of
financial services, such as insurance. As the economy improves, the Fund
expects to further reduce its exposure to the financial sector and move
into stocks with better prospects for price gains.
Oppenheimer Special Fund
and S & P 500 Index
Comparison of Change
In Value of $10,000
Hypothetical Investment
Average Annual Total Return at 6/30/93
1 Year 5 Year 10 Year
10.16% 12.53% 9.34%
Indices
Year S&P 500 Investment Special
Ended Reinvested $10,000 Fund
06/30/83 $10,000 $ 9,425
06/30/84 -4.65% $ 9,535 $ 8,393
06/30/85 30.96% $12,487 $ 9,588
06/30/86 35.82% $16,960 $11,772
06/30/87 25.16% $21,227 $12,887
06/30/88 -6.93% $19,756 $12,754
06/30/89 20.52% $23,810 $14,608
06/30/90 16.45% $27,727 $16,505
06/30/91 7.37% $29,770 $18,055
06/30/92 13.39% $33,756 $20,888
06/30/93 13.61% $38,351 $24,413
Past performance is not predictive of future performance.
The performance graph set forth above depicts the performance of a
hypothetical investment of $10,000 in Class A shares of the Fund ten years
ago at the offering price including the sales charge in effect on June 30,
1983 held through June 30, 1993, with all dividends and distributions
reinvested in additional shares at net asset value on the reinvestment
date, without sales charge. The graph compares the total return of the
Fund's Class A shares over a ten year period against the performance of
the Standard & Poor's ("S&P") 500 Index, an unmanaged index of common
stocks frequently used as a measure of general stock market performance.
The performance of the S&P 500 Index includes a factor for the
reinvestment of income dividends, but does not reflect reinvestment of
capital gains or take sales charges or other initial or ongoing expenses
of such stocks into consideration. The Fund's Class A total return
reflects the deduction of the current maximum sales charge of 5.75% and
includes reinvestment of all dividends and capital gains distributions,
but does not consider taxes. Comparable graphs are not shown for the
Fund's Class B or Class Y shares as they were not publicly offered during
this ten year period.
Additional Information
Description of the Fund and Its Shares
The Fund's Board of Trustees is empowered to issue full and fractional
shares of one or more series and classes of series. Shares of one series
having three classes (Class A, Class B and Class Y shares) have been
authorized, which are the shares of beneficial interest described herein.
Series have separate assets and liabilities. Classes of series represent
an identical interest in a particular series but, as explained in this
Prospectus, each class has different dividends, distributions and
expenses, and may have different net asset values.
Each shareholder is entitled to one vote per share held (and a
fractional vote for a fractional share) on matters submitted to his or her
vote. Only shareholders of a particular class vote on matters determined
by the Board to affect only that class. On all other matters submitted
to a vote of the shareholders, the holders of separate classes vote
together as a single class. Shares do not have preemptive or subscription
or cumulative voting rights. The Trustees may divide or combine the
shares of a class into a greater or lesser number of shares without
thereby changing the proportionate beneficial interest in the Fund. The
Fund does not anticipate holding annual meetings. Class B shares will
automatically convert to Class A shares seventy-two months after an
investor's purchase order for Class B shares is accepted. See "How to Buy
Shares - Class B Conversion Feature."
Under certain circumstances, shareholders of the Fund have the right
to remove a Trustee. The Fund's shares are transferable without
restriction and, when issued, are fully-paid and nonassessable (except as
described in "Additional Information" in the Additional Statement).
Shareholders may be held personally liable as "partners" for the Fund's
obligations; however, the risk of a shareholder incurring any financial
loss is limited to the relatively remote circumstances in which the Fund
is unable to meet its obligations. See "Additional Information" in the
Additional Statement for details.
The Custodian and The Transfer Agent
The Custodian of the assets of the Fund is The Bank of New York. The
Manager and its affiliates have banking relationships with the Custodian.
See "Additional Information" in the Additional Statement for further
information. The Fund's cash balances in excess of $100,000 held by the
Custodian are not protected by Federal deposit insurance. Such uninsured
balances at times may be substantial.
The Transfer Agent, a division of the Manager, acts as transfer agent
and shareholder servicing agent on an at-cost basis for the Fund and
certain other open-end funds advised by the Manager. Shareholders should
direct any inquiries to the Transfer Agent at the address or toll-free
phone number listed on the back cover of this Prospectus.
<PAGE>
Investment Adviser Prospectus
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder
Servicing Agent O P P E H E I M E R
Oppenheimer Shareholder Services Special
P.O. Box 5270 Fund
Denver, Colorado 80217
1-800-525-7048 Effective April 1, 1994
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
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 Additional
Statement, and if given or made, such information
and representations must not be relied upon as
having been authorized by the Fund, Oppenheimer
Management Corporation, Oppenheimer Funds
Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the
securities offered hereby in any state to any
person to whom it is unlawful to make such an
offer in such state.
OppenheimerFunds
PR271 (4/94) Printed on recycled paper
<PAGE>
Investment Adviser Prospectus and
Oppenheimer Management Corporation New Account Application
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder
Servicing Agent O P P E H E I M E R
Oppenheimer Shareholder Services Special
P.O. Box 5270 Fund
Denver, Colorado 80217
1-800-525-7048 Effective April 1, 1994
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
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 Additional
Statement, and if given or made, such information
and representations must not be relied upon as
having been authorized by the Fund, Oppenheimer
Management Corporation, Oppenheimer Funds
Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the
securities offered hereby in any state to any
person to whom it is unlawful to make such an
offer in such state.
OppenheimerFunds
PR270 (4/94) Printed on recycled paper
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OPPENHEIMER SPECIAL FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read together
with the Prospectus dated April 1, 1994 (the "Prospectus") of Oppenheimer
Special Fund (the "Fund"), which may be obtained by written request to
Oppenheimer Shareholder Services ("OSS"), P.O. Box 5270, Denver, Colorado
80217 or by calling OSS at the toll-free number shown above.
TABLE OF CONTENTS
Page
Investment Objective and Policies
Investment Restrictions
Trustees and Officers
Investment Management Services
Brokerage
Purchase, Redemption and Pricing of Shares
Distribution and Service Plans
Performance and Tax Information
Additional Information
Automatic Withdrawal Plan Provisions
Letters of Intent
Report of Independent Auditors
Financial Statements
The date of this Additional Statement is April 1, 1994.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in
the Prospectus. Set forth below is supplemental information about those
policies. Certain capitalized terms used in this Additional Statement are
defined in the Prospectus.
Small, Unseasoned Companies. The securities of small, unseasoned
companies may have a limited trading market, which may adversely affect
their disposition and can result in their being priced lower than might
otherwise be the case. If other investors holding the same such
securities as the Fund sell them when the Fund attempts to dispose of its
holdings, the Fund may receive lower prices than might otherwise be
obtained.
Warrants and Rights. Warrants are options to purchase equity
securities at specific prices valid for a specific period of time. Their
prices do not necessarily move parallel to the prices of the underlying
securities. The price paid for a warrant will be foregone unless the
warrant is exercised prior to expiration. Rights are similar to warrants,
but normally have a short duration and are distributed directly by the
issuer to its shareholders. Warrants and rights have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
Investments in Foreign Securities. Investments in foreign securities
offer potential benefits not available from investing solely in securities
of domestic issuers, by offering the opportunity to invest in the
securities of 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
investing in the securities of foreign stock markets that do not move in
a manner parallel to U.S. markets. In buying foreign securities, the Fund
may convert U.S. dollars into foreign currency, but only to effect
securities transactions on foreign securities exchanges and not to hold
such currency as an investment.
Investing in foreign securities involves special additional risks and
considerations not typically associated with investing in securities of
issuers traded in the U.S. These include: reduction of income by foreign
taxes; fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
issuers; less volume on foreign securities exchanges than on U.S.
exchanges; greater volatility and less liquidity in foreign markets than
in the U.S.; less regulation of foreign issuers, stock exchanges and
brokers than in the U.S.; greater difficulties in commencing lawsuits
against foreign issuers; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio transactions;
possibilities in some countries of expropriation or nationalization of
assets, confiscatory taxation, political, financial or social instability
or adverse diplomatic developments; and differences between the U.S.
economy and foreign economies. In the past, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through
taxation or other restrictions, and it is possible that such restrictions
could be re-imposed.
Illiquid and Restricted Securities. The expenses of registration of
restricted securities that are subject to legal restriction on resale
(excluding securities that may be resold by the Fund pursuant to Rule
144A, as explained in the Prospectus) may be negotiated at the time such
securities are purchased by the Fund. When registration is required
before such securities may be sold, a considerable period may elapse
between the decision to sell the securities and the time the Fund would
be permitted to sell them. Thus, the Fund may not be able to obtain as
favorable a price as that prevailing at the time of the decision to sell.
The Fund also may acquire, through private placements, securities with
contractual resale restrictions, which might prevent their resale by the
Fund at a time when such sale would be desirable.
Repurchase Agreements. In a repurchase transaction, the Fund
purchases a security from, and simultaneously resells it to, an approved
vendor (a U.S. commercial bank or the U.S. branch of a foreign bank with
total domestic assets of at least $1 billion or a broker-dealer with a net
capital of at least $50 million and which has been designated a primary
dealer in government securities), 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 the resale
typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act,
collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase
price to fully collateralize the repayment obligation. Additionally, the
Manager will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the collateral's
value.
Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus, to
attempt to increase the Fund's income for liquidity purposes. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, be at least equal to the value of
the loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities),
or other cash equivalents in which the Fund is permitted to invest. To
be acceptable as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Fund if the demand meets the terms of the letter.
Such terms and the issuing bank must be satisfactory to the Fund. The
Fund receives an amount 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, or (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 and will not lend
its portfolio securities to any officer, trustee, employee or affiliate
of the Fund or the Manager. The terms of the Fund's loans must meet
certain tests under the Internal Revenue Code and permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on any
important matter.
Borrowing. From time to time, the Fund may increase its ownership
of securities by borrowing from banks on a unsecured basis and investing
the borrowed funds, subject to the restrictions stated in the Prospectus.
Any such borrowing will be made only from banks, and pursuant to the
requirements of the Investment Company Act, will be made only to the
extent that the value of the Fund's assets, less its liabilities other
than borrowings, is equal to at least 300% of all borrowings including the
proposed borrowing. If the value of the Fund's assets so computed should
fail to meet the 300% asset coverage requirement, the Fund is required
within three days to reduce its bank debt to the extent necessary to meet
such requirement and may have to sell a portion of its investments at a
time when independent investment judgment would not dictate such sale.
Interest on money borrowed is an expense the Fund would not otherwise
incur, so that it may have little or no net investment income during
periods of substantial borrowings. Borrowing for investment increases
both investment opportunity and risk. Since substantially all of the
Fund's assets fluctuate in value whereas borrowing obligations are fixed,
when the Fund has outstanding borrowings, its net asset value per share
will tend to increase and decrease more when its portfolio assets
fluctuate in value than would otherwise be the case.
Covered Calls and Hedging. As described in the Prospectus, the Fund
may write covered calls or employ one or more types of Hedging Instruments
for temporary defensive purposes. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, to permit
the Fund to retain unrealized gains in the value of portfolio securities
which have appreciated, or to facilitate selling securities for investment
reasons, the Fund may: (i) sell Stock Index Futures, (ii) buy puts on such
Futures or securities, or (iii) write covered calls on securities held by
it or on Stock Index Futures. When hedging to permit the Fund to
establish a position in the securities market as a temporary substitute
for purchasing particular securities (which the Fund will normally
purchase, and then terminate that hedging position), the Fund may: (i)
buy Stock Index Futures, or (ii) buy calls on such Futures or on
securities held by it. 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 and options on Futures if, after any such purchase or sale,
the sum of margin deposits on Futures and premiums paid on Futures options
exceeds 5% of the value of the Fund's total assets. Additional
information about the Hedging Instruments the Fund may use is provided
below. In the future, the Fund may employ Hedging Instruments and
strategies that are not presently contemplated but which may be developed,
to the extent such investment methods are consistent with the Fund's
investment objective, legally permissible and adequately disclosed.
Writing Covered Call Options. When the Fund writes a call on a
security, it receives a premium and agrees to sell the callable investment
to a purchaser of a corresponding call 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 option transaction costs and the premium previously received on
the call written is more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses unexercised,
because the Fund retains the related investments and the premium received.
Any such profits are considered short-term capital gains for Federal
income tax purposes, and when distributed by the Fund as ordinary income.
An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for a particular
option. If the Fund could not effect a closing purchase transaction due
to a 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. 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 foregoes 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 Funds, are taxable as ordinary income.
Purchasing Calls and Puts. When the Fund purchases a call (other
than in a closing purchase transaction), it pays a premium and, except as
to calls on stock indices or Stock Index Futures, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. When the
Fund purchases a call on a stock index or Stock Index Future, it pays a
premium, but settlement is in cash rather than by delivery of the
underlying investment to the Fund. The Fund benefits only if the call is
sold at a profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the
transaction costs and the premium paid and the call is exercised. If the
call is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.
When the Fund purchases a put, it pays a premium and, except as to
puts on stock indices, has the right to sell the underlying investment to
a seller of a corresponding put on the same investment during the put
period at a fixed exercise price. Buying a put on an investment the Fund
owns enables the Fund to protect itself during the put period against a
decline in the value of the underlying investment below the exercise price
by selling such underlying investment at the exercise price to a seller
of a corresponding put. If the market price of the underlying investment
is equal to or above the exercise price and as a result the put is not
exercised or resold, the put will become worthless at its expiration date,
and the Fund will lose its premium payment and the right to sell the
underlying investment. The put may, however, be sold prior to expiration
(whether or not at a profit).
Buying a put on an investment it does not own, either a put on a
stock index or a put on a Stock Index Future not held by the Fund, permits
the Fund either to resell the put or buy the underlying investment and
sell it at the exercise price. The resale price of the put will vary
inversely with the price of the underlying investment. If the market
price of the underlying investment is above the exercise price and, as a
result, the put is not exercised, the put will become worthless on its
expiration date. When the Fund purchases a put on a stock index, or on
a Stock Index Future not held by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities held.
In the case of a put on a stock index or Stock Index Future, settlement
is in cash rather than by the Fund's delivery of the underlying
investment.
Stock Index Futures. The Fund may buy and sell futures contracts
relating to broadly-based stock indices ("Stock Index Futures"). A stock
index, which cannot be purchased or sold directly, assign relative values
to the common stocks included in the index and fluctuates with the changes
in the market value of those stocks. A Stock Index Future obligates 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 underlying stocks in the index is made. Generally,
contracts are closed out with offsetting transactions prior to the
expiration date of the contract. 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 certain specified conditions. As the Future is marked to market to
reflect changes in its market value, subsequent margin payments, called
variation margin, will be paid to or by the futures broker on a daily
basis.
Prior to 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 and additional cash is required to be paid by
or released to the Fund. Any gain or loss is then realized. Although
Stock Index Futures by their terms call for settlement by the delivery of
cash, in most cases the obligation is fulfilled without such delivery by
entering into an offsetting transaction. All Futures transactions are
effected through a clearinghouse associated with the exchange on which the
contracts are traded.
Options on Foreign Currencies. The Fund intends to write and
purchase both covered and uncovered calls and puts on foreign currencies.
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. Normally this will be
effected by the sale of a security denominated in the relevant currency
at a price higher or lower than the original acquisition price of the
security. This will result in a loss or a gain in addition to that
resulting from the currency option position. An uncovered call may be
written by the Fund on a foreign currency to provide a hedge against a
decline 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 due to an adverse change in the exchange rate. 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 Government Securities in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked-to-market daily.
Forward Contracts. A Forward Contract involves bilateral obligations
of one party to purchase, and another party to sell, a specific currency
at a future date (which may be any fixed number of days from the date of
the contract agreed upon by the parties), at a price set at the time the
contract is entered into. These contracts are traded in the interbank
market conducted directly between currency traders (usually large
commercial banks) and their customers.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase. The Fund will not speculate with Forward Contracts or foreign
currency exchange rates.
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. 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. 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 depends 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 will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities or other assets denominated
in that currency. The Fund, however, in order to avoid excess
transactions and transaction costs, may maintain a net exposure to Forward
Contracts in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency provided the excess amount is
"covered" by liquid, high-grade debt securities, denominated in any
currency, at least equal at all times to the amount of such excess. As
an alternative, the Fund may purchase a call option permitting the Fund
to purchase the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price or the Fund
may purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price as high
or higher than the forward contract price. Unanticipated changes in
currency prices may result in poorer overall performance for the Fund than
if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value
of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense
of such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs.
At or before the maturity of a Forward Contract requiring the Fund
to sell a currency, the Fund may either sell a portfolio security and use
the sale proceeds to make delivery of the currency or retain the security
and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on
the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund may close out a Forward
Contract requiring it to purchase a specified currency by entering into
a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would
realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange rate
or rates between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions,
the net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."
Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent through the facilities of the Options
Clearing Corporation ("OCC"), as to the securities on which the Fund has
written options traded or exchanged, 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 entering into a closing purchase transaction. An option position may
be closed out only on a market that provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option.
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 will establish a formula price at which the Fund would have
the absolute right to repurchase that OTC option. This 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 ("in-the-money"). For any OTC
option the Fund writes, it will treat as illiquid (for purposes of its
restriction on illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities and
Exchange Commission is evaluating the general issue of whether or not OTC
options should be considered as liquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond the Fund's control. The exercise by the
Fund of puts on securities 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 or sells a put,
a call, or an underlying investment in connection with the exercise of a
put or call. Such commissions may be higher than those which would apply
to direct purchases or sales of 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.
Regulatory Aspects of Hedging Instruments. The Fund must operate
within certain restrictions as to its positions in Futures and options
thereon under a rule ("CFTC Rule") adopted by the Commodity Futures
Trading Commission ("CFTC") under the Commodity Exchange Act (the "CEA"),
which exempts the Fund from registration with the CFTC as a "commodity
pool operator" (as defined under the CEA), if it complies with the CFTC
Rule. Under those restrictions, the Fund will not, as to any positions,
whether long, short or a combination thereof, enter into Futures and
options thereon for which the aggregate initial margins and premiums
exceed 5% of the fair market value of its net assets, with certain
exclusions as defined in the CFTC Rule. Under the restrictions, the Fund
also must, as to its short position, use Futures and options thereon
solely for bona fide hedging purposes within the meaning and intent of the
applicable provisions under the CEA.
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 different 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 adviser as the Fund 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 provisions under
the Investment Company Act, when the Fund purchases a Future, the Fund
will maintain in a segregated account or accounts with its Custodian, cash
or readily marketable short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the securities
underlying such Future, less the margin deposit applicable to it.
Tax Aspects of Hedging Instruments and Covered Calls. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. One of the tests for such qualification is that less than
30% of its gross income (irrespective of losses) must be derived from
gains realized on the sale of securities held for less than three months.
Due to this limitation, 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 Futures, held for less than three months,
whether or not they were purchased on the exercise of a call held by the
Fund; (ii) writing calls on investments held for less than three months;
(iii) purchasing calls or puts which expire in less than three months;
(iv) effecting closing transactions with respect to calls or puts
purchased less than three months previously; and (v) exercising puts or
calls held by the Fund for less than three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including foreign currency
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 Code. An election can be made by the Fund to
exempt these transactions from this marked-to-market treatment.
Certain foreign currency 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(s) 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.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which 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 Futures and options discussed in the Prospectus and above,
there is a risk in using short hedging by: (i) selling Stock Index Futures
or (ii) purchasing puts on stock indices or Stock Index Futures, that the
prices of the Futures or the applicable index will correlate imperfectly
with the behavior of the cash (i.e., market value) prices of the Fund's
portfolio 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 market
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close future
contracts through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity
of the futures market depends 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
market could be reduced, thus producing distortion. Third, from the point
of view of speculators, the deposit requirements in the futures market are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures market
may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the portfolio securities being hedged and movements in the price
of the Hedging Instruments, the Fund may use Hedging Instruments in a
greater dollar amount than the dollar amount of portfolio securities being
hedged if the historical volatility of the prices of such portfolio
securities being hedged is more than the historical volatility of the
applicable index. It is also possible that where the Fund has used
Hedging Instruments in a short hedge, the market may advance and the value
of the securities held in the Fund's portfolio may decline. If this
occurred, the Fund would lose money on the Hedging Instruments and also
experience a decline in value in its portfolio securities. If the Fund
uses Hedging Instruments to establish a position in the securities markets
as a temporary substitute for the purchase of particular securities (long
hedging) by buying Futures and/or calls on such Futures, on securities or
on stock indices, it is possible that the market may decline. If the Fund
then concludes not to invest in 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 such securities.
Short Sales Against-the-Box. In such short sales, while the short
position is open, the Fund must own an equal amount of such securities,
or by virtue of ownership of 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.
INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions are described in the
Prospectus. The following are also fundamental policies, and together
with the fundamental policies described in the Prospectus, cannot be
changed without the approval of a "majority" of the Fund's outstanding
voting securities as such term is defined in the Investment Company Act.
Such a "majority" vote is defined under the Investment Company Act as the
vote of the holders of the lesser of: (i) 67% or more of the shares
present or represented by proxy at a shareholders meeting, if the holders
of more than 50% of the outstanding shares are present or represented by
proxy; or (ii) more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot: (1) Lend
money, but the Fund may invest in all or a portion of an issue of bonds,
debentures, commercial paper, or other similar corporate obligations; the
Fund may also make loans of portfolio securities subject to the
restrictions set forth in the Prospectus and above under the caption
"Loans of Portfolio Securities"; (2) Underwrite securities of other
companies, except insofar as it might be deemed to be an underwriter for
purposes of the Securities Act of 1933 in the resale of any securities
held in its own portfolio; (3) Invest in or hold securities of any issuer
if those officers and trustees or directors of the Fund or its adviser
owning individually more than .5% of the securities of such issuer
together own more than 5% of the securities of such issuer; (4) Invest in
commodities or commodity contracts other than the Hedging Instruments
which it may use as permitted by any of its other fundamental policies,
whether or not any such Hedging Instrument is considered to be a commodity
or commodity contract; (5) Invest in real estate or interests in real
estate, but may purchase readily marketable securities of companies
holding real estate or interests therein; (6) Purchase securities on
margin; however, the Fund may make margin deposits in connection with any
of the Hedging Instruments which it may use as permitted by any of its
other fundamental policies; (7) Mortgage, hypothecate or pledge any of its
assets; however, this does not prohibit the escrow arrangements or other
collateral or margin arrangements in connection with covered call writing
or any of the Hedging Instruments which it may use as permitted by any of
its other fundamental policies; or (8) Invest in other open-end investment
companies, or invest more than 5% of the value of its net assets in
closed-end investment companies, including small business investment
companies, nor make any such investments at commission rates in excess of
normal brokerage commissions.
In addition to the above, the Fund has undertaken to comply with
certain restrictions which are not fundamental policies and which may be
changed without shareholder approval. Under those restrictions, the Fund
will not: (1) Invest in interests in oil, gas, or other mineral
exploration or development programs; or (2) Invest more than 5% of its
total assets in securities of unseasoned issuers (including predecessors)
which have been in operation for less than three years.
TRUSTEES AND OFFICERS
The Fund's Trustees and officers and their principal occupations and
business affiliations during the past five years are listed below. The
address of each, except as noted, is Two World Trade Center, New York, New
York 10048-0203. Except for Mr. Doll, each serves in similar capacities
with Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Tax-Free Bond
Fund, Oppenheimer Time Fund, Oppenheimer Money Market Fund, Inc.,
Oppenheimer Target Fund, Oppenheimer Gold & Special Minerals Fund,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer Asset Allocation Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Global Bio-Tech Fund,
Oppenheimer Global Environment Fund, Oppenheimer Global Growth & Income
Fund, Oppenheimer Discovery Fund, Oppenheimer Mortgage Income Fund,
Oppenheimer California Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer Florida Tax-Exempt Fund, Oppenheimer Multi-Sector
Income Trust and Oppenheimer Multi-Government Trust (collectively, the
"New York OppenheimerFunds"). As of September 3, 1993, the Trustees and
officers in the aggregate owned less than 1% of the Fund's outstanding
shares.
LEON LEVY, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership);
Chairman of Avatar Holdings, Inc. (real estate development).
LEO CHERNE, Trustee
386 Park Avenue South, New York, New York 10016
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America, Inc.
ROBERT G. GALLI, Trustee
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC") the Manager's parent holding
company; formerly he held the following positions: a director of
Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management Corporation
("HarbourView") and Centennial Asset Management Corporation
("Centennial"), investment adviser subsidiaries of the Manager, a
director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of
the Manager, an officer of other OppenheimerFunds and Executive Vice
President & General Counsel of the Manager and the Distributor.
EDMUND T. DELANEY, Trustee
5 Gorham Road, Chester, Connecticut 06412
Attorney-at-law; formerly a member of the Connecticut State
Historical Commission and Counsel to Copp, Berall & Hempstead (a law
firm).
BENJAMIN LIPSTEIN, Trustee
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
ELIZABETH B. MOYNIHAN, Trustee
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the American Schools
of Oriental Research and of the Freer Gallery of Art, Smithsonian
Institution; a member of the Indo-U.S. Sub-Commission on Education
and Culture.
KENNETH A. RANDALL, Trustee
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Northeast Bancorp, Inc. (bank holding company),
Dominion Resources, Inc. (electric utility holding company) and
Kemper Corporation (insurance and financial services company);
formerly Chairman of the Board of ICL, Inc. (information systems).
EDWARD V. REGAN, Trustee
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute; a Member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and
trustee, New York State and Local Retirement Fund.
RUSSELL S. REYNOLDS, JR., Trustee
200 Park Avenue, New York, New York 10166
Founder and Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House
and the Greenwich Historical Society.
SIDNEY M. ROBBINS, Trustee
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting Professor
of Finance, University of Hawaii; a director of The Korea Fund, Inc.
and The Malaysia Fund, Inc. (closed-end investment companies); a
member of the Board of Advisors, Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
DONALD W. SPIRO, President and Trustee*
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and of Oppenheimer Funds Distributor, Inc. (the
"Distributor").
PAULINE TRIGERE, Trustee
550 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
CLAYTON K. YEUTTER, Trustee
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), FMC
Corp. (chemicals and machinery), Lindsay Manufacturing Co. and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Deputy Chairman, Bush/Quayle Presidential
Campaign, Counsellor to the President (Bush) for Domestic Policy,
Chairman of the Republican National Committee, Secretary of the U.S.
Department of Agriculture, and U.S. Trade Representative, Executive
Office of the President.
ROBERT C. DOLL, JR., Vice President and Portfolio Manager
Executive Vice President of the Manager; an officer of other
OppenheimerFunds.
ANDREW J. DONOHUE, Secretary
Executive Vice President and General Counsel of Oppenheimer
Management Corporation ("OMC") (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, Partner of Kraft
& McManimon (a law firm), an officer of First Investors Corporation
(a broker-dealer) and First Investors Management Company, Inc.
(broker-dealer and investment adviser), and director and an officer
of First Investors Family of Funds and First Investors Life Insurance
Company.
GEORGE C. BOWEN, Treasurer
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, SFSI; an
officer of other OppenheimerFunds; formerly Senior Vice
President/Comptroller and Secretary of Oppenheimer Asset Management
Corporation, a former investment advisory subsidiary of the
Manager.
LYNN M. COLUCCY, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Vice President and Assistant Treasurer of the Manager; an officer of
other OppenheimerFunds; formerly Vice President/Director of Internal
Audit of the Manager.
ROBERT G. ZACK, Assistant Secretary
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI, SFSI; an officer of other
OppenheimerFunds.
[FN]
_________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Remuneration of Trustees. The officers of the Fund (including Mr.
Spiro) are officers or directors of the Manager or its affiliates and
receive no salary or fee from the Fund. During the Fund's fiscal year
ended June 30, 1993, the remuneration (including expense reimbursements)
paid by the Fund to all Trustees of the Fund (excluding Messrs. Spiro and
Galli) for services as Trustees and as members of one or more committees
totaled $60,412 The Fund has adopted a retirement plan that provides for
payment to a retired Trustee of up to 80% of the average compensation paid
during that Trustee's five years of service in which the highest
compensation was received. A Trustee must serve in that capacity for any
of the New York OppenheimerFunds at least 15 years to be eligible for the
maximum payment. No Trustee has retired since the adoption of the program
and no payments by the Fund have been made under it. In the fiscal year
ended June 30, 1993, the Fund accrued $35,000 for its benefit obligations
under the plan.
Major Shareholders. As of September 3, 1993, the only persons known
by the Fund to own of record or beneficially 5% or more of the Fund's
outstanding shares of any class of the Fund were: (1) Paine Webber for the
benefit of Paine Webber CDN FBO Robert F. Branscomb, P.O. Box 3321,
Weelawker, NJ 07087-8154 which owned of record 1,162.216 Class B shares
of the Fund, representing approximately 5.89% of the Fund's then
outstanding Class B shares; (2) FIDN Cust San Diego Unified School Dist.
403-R Plan FBO Richard H. Lord, 3850 Via Escuda, La Mesa CA 91941-7315
which owned of record 1,178.753 Class B shares of the Fund, representing
approximately 5.98% of the Fund's then-outstanding Class B shares; and (3)
FIDN TR Rollover IRA FBO Kathy E.B. Davis, 434 Mammoth Oaks Dr.,
Charlotte, NC 28270-5242 which owned of record 3,100,660 Class B shares,
representing approximately 15.73% of the Fund's then-outstanding Class B
shares.
INVESTMENT MANAGEMENT SERVICES
The Manager is 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 may also serve as officers of the Fund, and one of
whom (Mr. Donald W. Spiro) also serves as a Trustee of the Fund.
The management fee is payable monthly to the Manager under the terms
of the Investment Advisory Agreement between the Manager and the Fund (the
"Agreement"), and is computed on the net assets of the Fund as of the
close of business each day. The Agreement 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
administration for the Fund, including the compilation and maintenance
of records with respect to its operations, the preparation and filing of
specified reports, and the 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 Agreement or by the Distributor
are paid by the Fund. The Agreement lists examples of expenses paid by
the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to independent Trustees, legal and audit
expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs, and non-recurring expenses,
including litigation. During the Fund's fiscal years ended June 30, 1991,
1992 and 1993, the management fees paid by the Fund to the Manager were
$3,770,175, $4,481,264 and $5,048,548, respectively.
The Agreement contains no expense limitation. However, independently
of the Agreement, the Manager has voluntarily undertaken that the total
expenses of the Fund in any fiscal year (including the management fee but
excluding taxes, interest, brokerage commissions, distribution plan
payments and extraordinary non-recurring 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 regulatory limitation on fund expenses. At present,
that limitation is imposed by California and limits expenses (with
specified exclusions) to 2.5% of the first $30 million of average annual
net assets, 2% of the next $70 million of average annual net assets and
1.5% of average annual net assets in excess of $100 million. The payment
of the management fee at the end of any month will be reduced so that
there will not be any accrued but unpaid liability under this expense
limitation. Any assumption of the Fund's expenses under this undertaking
would lower the Fund's overall expense ratio and increase its total return
during any period in which expenses are limited. The Manager reserves the
right to vary the amount of expenses assumed or eliminate the assumption
of expenses altogether.
The Agreement provides that in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard for its obligations
thereunder, 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
under the Agreement. The 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.
BROKERAGE
Provisions of the Investment Advisory Agreement. One of the duties of the
Manager under the Agreement is to arrange the portfolio transactions for
the Fund. In doing so, the Manager is authorized by the 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 Manager need not seek competitive commission bidding
or base its selection "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 Agreement and the
interests and policies of the Fund as established by its Board of
Trustees.
Under the Agreement, the Manager is authorized to select brokers
which provide brokerage and/or research services for the Fund and/or the
other accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged, if a good faith determination
is made by the Manager that the commission is fair and reasonable in
relation to the services provided. There is no formula under which any
of the brokers selected for the Fund's portfolio transactions are entitled
to the allocation of a particular amount of commissions. Subject to the
foregoing considerations, the Manager may also consider sales of shares
of the Fund and of other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the
Agreement when brokers are used for the Fund's portfolio transactions,
allocations of brokerage are made by portfolio managers under the
supervision of executive officers of the Manager. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities 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. When possible, concurrent orders to purchase or sell the
same security by more than one of the accounts managed by the Manager or
its affiliates are combined. Transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account. 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. For those transactions, instead of
using a broker the Fund normally deals directly with the selling or
purchasing principal or market maker unless it is determined 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, and purchases from dealers include a spread
between the bid and asked price. The Fund seeks to obtain prompt
execution of such orders at the most favorable net price.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of these
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The research services provided by brokers broaden the
scope and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and enabling
the Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The Board
of Trustees, including the independent Trustees of the Fund, annually
reviews information furnished by the Manager as to the commissions paid
to brokers furnishing such services in an effort to ascertain that the
amount of such commissions was reasonably related to the value or benefit
of such services.
During the fiscal years ended June 30, 1991, 1992, and 1993, total
brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) amounted to
$665,086, $810,645 and $523,738, respectively. During the fiscal year
ended June 30, 1993, $344,341 was paid to brokers as commissions in return
for research services (including special research, statistical information
and execution); the aggregate dollar amount of those transactions was
$131,337,510. The transactions giving rise to those commissions were
allocated in accordance with the internal allocation procedures described
above.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Net Asset Value Per Share. The net asset values per
share of Class A, Class B and Class Y shares of the Fund is determined as
of 4:00 P.M., New York time each day the New York Stock Exchange (the
"NYSE") is open (a "regular business day"), by dividing the value of the
Fund's net assets by the number of Fund shares outstanding. The NYSE's
most recent annual holiday schedule (which is subject to change) states
that it will close New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It
may also close on other days. The Fund may invest a portion of its assets
in debt securities or in foreign securities primarily traded on foreign
exchanges or in foreign over-the-counter markets which trade on weekends
or other customary U.S. business holidays or other days on which the NYSE
is closed. Because the Fund's offering price and net asset value will not
be calculated on those days, if debt securities or foreign securities held
in the Fund's portfolio are traded on those days, the Fund's net asset
value per share of Class A, Class B and Class Y shares may be
significantly affected on such days, when shareholders do not have the
ability to purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of its securities: (i) equity securities traded on a securities
exchange or on NASDAQ for which last sale information is regularly
reported are valued at the last reported sale prices on their primary
exchange or NASDAQ that day (or, in the absence of sales that day, at
values based on the last sales prices of the preceding trading day, or
closing bid and asked prices); (ii) 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) debt securities having a 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 Fund's Board of Trustees or
obtained from active market makers in the security; (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 are valued at the closing
or last reported sales prices or, if none, at the mean between closing bid
and asked prices and reflect prevailing rates of exchange at the closing
price on the London foreign exchange market that day.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities traded in such markets
that occur between the time their prices are determined and the close of
the NYSE will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures
established by the Board, determines that the particular event would
materially affect the Fund's net asset value, in which case an adjustment
would be made. 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 and
corporate bonds, where 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 Trustees will monitor the accuracy of
pricing services by comparing prices used for portfolio evaluation to
actual sales prices of selected securities.
Puts, calls and Futures are valued at the last sale prices on the
principal exchanges on which they are traded or on NASDAQ, as applicable,
or, if there were no sales that day, in accordance with (i) above. 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.
Multi-Class Methodology. The methodology for calculating the net
asset value, dividends and distributions of the Fund's Class A, Class B
and Class Y shares recognizes two types of expenses. General expenses
that do not pertain specifically to either class are allocated pro rata
to the shares of each class, based on the ratio of the net assets of such
class to the Fund's total net assets, and then equally to each outstanding
share within a given class. General expenses include (i) management fees,
(ii) legal, bookkeeping and audit fees, (iii) printing and mailing costs
of shareholder reports, Prospectuses, Additional Statements 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 (a) Distribution Plan
fees, (b) incremental transfer agent and shareholder servicing agent fees
and expenses, (c) registration fees, and (d) shareholder meeting expenses,
to the extent that such expenses pertain to a specific class rather than
to the Fund as a whole.
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 reduction in 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,
parents, grandparents, parents-in-law, brothers and sisters, brothers- and
sisters-in-law, and sons- and daughters-in-law.
Redemptions. Information on how to redeem shares of the Fund is
stated in the Prospectus. The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, if the Board
of Trustees determines that it would be detrimental to the best interests
of the remaining shareholders of the Fund to make payment wholly or partly
in cash, the Fund may pay the redemption price 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 SEC rules. The Fund has elected
to be governed by Rule 18f-1 under the Investment Company Act, pursuant
to which it is obligated to redeem shares of the Fund 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
converting the assets to cash. The method of valuing securities used to
make redemptions in kind will be the same as the method of valuing
portfolio securities described above under "Determination of Net Asset
Value Per Share," and such valuation will be made as of the same time the
redemption price is determined.
The Fund'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 such shares is less than $500 or such lesser amount as the Board
may decide. The Board of Trustees will not cause the involuntary
redemption of shares in an account if the aggregate net asset value of
such shares has fallen below the stated minimum solely as a result of
market fluctuations. Should the Board elect to exercise the right to
redeem small accounts, 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 may set requirements
for permission to allow the shareholder to increase the investment so that
the shares would not be involuntarily redeemed.
Cancellation of Purchase Orders. Cancellation of purchase orders for
Fund shares (for example, when checks submitted to purchase shares are
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 difference in net asset
values 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 by seeking other redress.
Transfers of Shares. Shareholders owning shares of both Class A and
Class B must specify whether they intend to transfer Class A or Class B
shares. Shares are not subject to the payment of a CDSC of either class
at the time of transfer (by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred shares
will remain subject to the CDSC, 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 not all shares in the account
would be subject to a CDSC if redeemed at the time of transfer, then
shares will be transferred in the order described in "How to Buy Shares -
Class B Contingent Deferred Sales Charge" in the Prospectus for the
imposition of the Class B CDSC on redemptions.
Exchanges of Class B and Class Y Shares. As stated in the
Prospectus, shares of a particular class of Eligible Funds having more
than one class of shares may be exchanged only for shares of the same
class or another eligible Fund. All of the Eligible Funds offer Class A
shares but only certain Eligible Funds offer Class B and Class Y shares.
The following other Eligible Funds 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 Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Government Securities Fund
Oppenheimer High Yield Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
Oppenheimer Main Street California Tax-Exempt Fund
The following other Eligible Funds offer Class Y shares:
Oppenheimer Discovery Fund
Oppenheimer Total Return Fund, Inc.
DISTRIBUTION AND SERVICE PLANS
The Fund has adopted a separate Plan of Distribution for Class A and
Class B shares of the Fund under Rule 12b-1 of the Investment Company Act,
pursuant to which the Fund will reimburse the Distributor quarterly for
all or a portion of its costs incurred in connection with the distribution
and/or servicing of the shares of that class, as described in the
Prospectus. No such Plan has been adopted for Class Y shares. Each Plan
has been approved: (i) by a vote of the Board of Trustees of the Fund,
including a majority of the "Independent Trustees" (those Trustees of the
Fund who are not "interested persons," as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the Plans or in any agreements relating to the Plans) cast
in person at a meeting called for the purpose of voting on the Plan; and
(ii) by the vote of the holders of a "majority" (as defined under the
Investment Company Act) of the Fund's outstanding voting securities (such
vote on the Class B Plan was cast by the Manager as the sole initial
shareholder). In approving each Plan, the Board determined that it is
likely that the Plan will benefit the shareholders of the respective class
of the Fund.
Each Plan shall, unless terminated as described below, continue in
effect from year to year only as long as such 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 the respective 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 Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to the Plan, the
purpose for which the payment was made and the identity of each Recipient
that received any such payment. The report for the Class B Plan shall
also include the distribution costs for that quarter, and such costs for
previous fiscal periods that are 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 Fund who are not "interested persons" of the Fund
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 any such 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
fee at the maximum rate and set no minimum amount. The Plans permit the
Distributor and the Manager to make additional distribution payments to
Recipients from their own resources (including profits from advisory fees)
at no cost to the Fund. The Distributor and the Manager may, in their
sole discretion, increase or decrease the amount of distribution
assistance payments they make to Recipients from their own assets.
For the fiscal year ended June 30, 1993, payments under the Rule
12b-1 Class A Plan of Distribution totaled $244,389, all of which was paid
by the Distributor to Recipients, including $9,029 paid to an affiliate
of the Distributor. Payments received by the Distributor under the Class
A Plan will not be used to pay any interest expense, carrying charge, or
other financial costs, or allocation of overhead by the Distributor. Any
unreimbursed expenses incurred with respect to Class A shares for any
fiscal quarter by the Distributor may not be recovered under the Class A
Plan in subsequent fiscal quarters. No payments were made under the Class
B Plan during that fiscal period, as no Class B shares were publicly
offered during that period.
The Class B Plan 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. The advance payment is based on the net assets of the Class
B shares sold. 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 such shares are outstanding, the Recipient will be
obligated to repay a pro rata portion of such advance payment to the
Distributor. Although the Class B Plan permits the Distributor to retain
both the asset-based sales charges 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 on such plans
imposed by the National Association of Securities Dealers, Inc. Rules of
Fair Practice. 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.
The Fund believes that current accounting standards do not require
the Fund to record as a current liability its obligation under the Class
B Plan to carry over and continue payments of the asset-based sales charge
to the Distributor in the future to reimburse it for expenses incurred as
to Class B shares sold prior to the termination of the plan. Those
accounting standards are currently being reviewed by the AICPA, as
discussed in the prospectus. If those accounting standards should be
changed to require the Fund to recognize that obligation for future
payments as a current liability, the Fund's Board would consider other
alternatives to that provision of the Class B Plan, because otherwise the
treatment of such expenses as a current liability could result in a
decrease in the net asset value per Class B share. Such decrease would
affect all then-outstanding Class B shares regardless of how long they had
been held. Furthermore, Class B shareholders whose shares had not matured
would continue to remain subject to the Class B CDSC.
The Glass-Steagall Act and other applicable laws and regulations,
among other things, generally prohibit Federally-chartered or supervised
banks from engaging in the business of underwriting, selling or
distributing securities as principals. Accordingly, the Distributor may
pay banks only for sales made on an agency basis or for the performance
of administrative and shareholder servicing functions. In addition,
certain banks and financial institutions may be required to register as
dealers under state law. While the matter is not free from doubt, the
Manager understands that such laws do not preclude a bank from performing
services required of a Recipient. However, judicial or administrative
decisions or interpretations of such laws, as well as changes in either
Federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries or affiliates, could prevent
certain banks from continuing to perform all or a part of these services.
The Fund's Board of Trustees will consider appropriate modifications to
the Fund's operations, including the discontinuance of payments under the
Plans to such institutions, in the event of future changes in such laws
or regulations that may adversely affect the ability of such institutions
to provide such services. If a bank were so prohibited, shareholders of
the Fund who were clients of such bank would be permitted to remain as
shareholders, and if a bank could no longer provide those service
functions, alternate means for continuing the servicing of such
shareholders would be sought. In such event, shareholders serviced by
such bank might no longer be able to avail themselves of any automatic
investment or other services then being provided by such bank. It is not
expected that shareholders would suffer any adverse financial consequences
as a result of any of those occurrences.
PERFORMANCE AND TAX INFORMATION
Total Return and Other Performance Information. As described in the
Prospectus, from time to time the "average annual total return," "total
return" and "total return at net asset value" of an investment in each
class of the Fund may be advertised. An explanation of how yield, average
annual total return and total return are calculated and the components of
those calculations are set forth below. No yields or returns are
presented below for Class B and Class Y shares because Class B shares were
not publicly issued prior to August 17, 1993 and Class Y shares were not
publicly issued prior to April 1, 1994.
The "average annual total return" of a class is an average annual
compounded rate of return. It is the rate of return based on factors
which include a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") with an Ending Redeemable
Value ("ERV") of that investment, according to the following formula:
1/n
( ERV )
(-----) -1 = Average Annual Total Return
( P )
The "total return" calculation uses the same factors, but does not
average the rate of return on an annual basis. Total return measures the
cumulative (rather than average) change in value of a hypothetical
investment over a stated period. Total return is determined as follows:
ERV - P
------- = Total Return
P
The formulas for average annual total return and for total return for
Class A shares assume the payment of the current maximum sales charge of
5.75% (as a percentage of the offering price) on the initial investment
("P"). The formulas for Class B shares assume the payment of the
contingent deferred sales charge 5% for the first year, 4% for the second
year, 3% for the third and fourth years, 2% for the fifth year, 1% for the
sixth year and none thereafter, applied as described in "How To Buy
Shares" in the Prospectus. The formulas also assume that all dividends
and capital gain distributions during the period are reinvested at net
asset value per share, and that the investment is redeemable at the end
of the period. The "average annual total return" on an investment in
Class A shares (using the method described above) for the one, five and
ten-year periods ended June 30, 1993 was 10.16%, 12.53% and 9.34%,
respectively. The "total return" for the ten-year period ended June 30,
1993 was 144.13%. During a portion of the period for which total returns
are shown, the Fund's maximum sales charge rate was higher. As a result,
returns on actual investments during those periods may be lower than the
results shown.
From time to time the Fund may also quote a "total return at net
asset value" may be quoted for a class of shares. It is based on the
difference in net asset value per share at the beginning and the end of
the period for that class (without considering sales charge) and takes
into consideration the reinvestment of dividends and capital gains (as
with total return, described above). The Fund's total return at net asset
value on Class A shares for the one year period ended June 30, 1993, was
16.88%.
From time to time the return on an investment in Class A, Class B or
Class Y shares of the Fund may be compared to the returns on other
investments at specified fixed rates of return over a 10-year period. The
chart below illustrates the returns on hypothetical investments having the
fixed rates of return illustrated, assuming (i) there is no sales charge
on the investment, (ii) earnings are reinvested at the end of each year
and (iii) each investment is made on the first day of each year in the
periods shown:
<TABLE>
<CAPTION>
Value on June 30, 1993 at
Investment Assumed Average Annual Return:
<S> <C> <C> <C> <C>
5% 10% 15% 20%
Single $1,000 $ 1,629 $ 2,594 $ 4,046 $ 6,192
Annual $1,000 13,208 17,533 23,350 31,151
</TABLE>
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class Y shares. However,
certain factors should be taken into account before using this
information as a basis for comparison with other investments. No
adjustment is made for taxes payable on distributions. An investment in
the Fund is not insured; its total return is not guaranteed and will
fluctuate over time. Total return for any given past period is not an
indication or representation by the Fund of future rates of return on its
shares. Total return of each class is affected by portfolio quality,
portfolio maturity, type of investment held and operating expenses. The
total return on an investment in the Fund's Class A, Class B or Class Y
shares may be compared with performance for the same period of either the
Dow Jones Industrial Average ("Dow") or the Standard & Poor's 500 Index,
both of which are widely recognized indices of stock market performance.
Both indices consist of unmanaged groups of common stocks; the Dow
consists of thirty such issues. The performance of both indices includes
a factor for the reinvestment of income dividends. Neither index reflects
reinvestment of capital gains or takes sales charges into consideration
as these items are not applicable to indices.
Investors may wish to compare the Fund's Class A, Class B or Class
Y return to the return on investments with returns which remain relatively
constant over time, including insured 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 as well as annuities issued by
insurance companies and various money market instruments such as Treasury
bills and commercial paper. When comparing the Fund's Class A, Class B
or Class Y total return and investment risks with that of other
alternatives, investors should understand that as the Fund is an equity
fund seeking capital appreciation, its shares may be subject to greater
market risks than other investments including shares of funds having other
investment objectives. The current price per share is listed daily in
many newspaper financial sections.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class Y shares by Lipper Analytical Services,
Inc. ("Lipper"), a widely-recognized independent service, 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 of shares
is ranked against (i) all other funds, (ii) all other capital appreciation
funds and (iii) all other capital appreciation funds in a specific size
category. The Lipper performance analysis includes the reinvestment of
capital gain distributions and income dividends but does not take sale
charges into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class Y shares by Morningstar, Inc., an
independent mutual fund monitoring service, that ranks various mutual
funds, including the Fund, based upon the fund's three, five and ten-year
average annual total returns (when available) and a risk factor that
reflects fund performance relative to three-month U.S. Treasury bill
monthly returns. Such returns are adjusted for fees and sales loads.
There are five ranking categories with a corresponding number of stars:
highest (5 stars); above-average (4); neutral (3); below average (2); and
lowest (1). Morningstar ranks the Fund in relation to other equity
funds.
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 funds listed in the Prospectus as
"Eligible Funds," at net asset value without sales charge. All of the
Eligible Funds offer Class A shares, but only certain Eligible Funds offer
Class B and Class Y shares. For a list of other Eligible Funds currently
offering Class B and/or Class Y shares, see "Purchases, Redemption and
Pricing of Shares," above. To elect this option, a shareholder must
notify the Transfer Agent in writing, and have an existing account in the
fund selected for investment or must obtain a prospectus for that fund and
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.
Tax Status of the Fund's Dividends and Distributions. Under the
Internal Revenue Code, by December 31 each year the Fund, in general, must
distribute 98% of its taxable investment income earned from January 1
through December 31 of the current year and 98% of its capital gains
realized in the period from the prior November 1 through October 31 of
that year or else pay an excise tax on the amounts not distributed. While
it is presently anticipated that the Fund will meet those requirements,
the Manager might determine that in a particular year that it might be in
the best interest of the shareholders not to distribute income or capital
gains at the mandated levels and to pay the excise tax on the
undistributed amounts, which would reduce the amount available for
distribution to shareholders.
ADDITIONAL INFORMATION
Description of the Fund. The Fund's Declaration of Trust contains
an express disclaimer of shareholder or Trustee liability for the Fund'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 a 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 trust
(such as the Fund) to be held personally liable as a "partner" under
certain circumstances, the risk of a Fund 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 Fund, and
any shareholder of the Fund agrees under the Fund's Declaration of Trust
to look solely to the assets of the Fund for satisfaction of any claim or
demand that may arise out of any dealings with the Fund, and the Trustees
shall have no personal liability to any such person, to the extent
permitted by law.
It is not contemplated that regular annual meetings of shareholders
will be held. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the 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 Fund, 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 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 Fund valued at $25,000 or more or
holding 1% or more of the Fund's outstanding shares, whichever is less,
that they wish to communicate with other shareholders to request a meeting
to remove a Trustee, the Trustees will then either make the Fund's
shareholder list available to the applicants or mail their communication
to all other shareholders at the applicants' expense, or the Trustees may
take such other action as is set forth in Section 16(c) of the Investment
Company Act.
The Custodian and the Transfer Agent. 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 its banking relationships with the Custodian
have been and will continue to be unrelated to and unaffected by the
relationship between the Fund and the Custodian. It will be the practice
of the Fund to deal with the Custodian in a manner uninfluenced by any
banking relationship the Custodian may have with the Manager and its
affiliates.
Oppenheimer Shareholder Services, as Transfer Agent, is responsible
for maintaining the Fund's shareholder registry and shareholder accounting
records, and for shareholder servicing and administrative functions.
General Distributor's Agreement. Under the General Distributor's
Agreement between the Fund and the Distributor, the Distributor acts as
the Fund's principal underwriter in the continuous public offering of the
Fund's Class A, Class B and Class Y shares, but it is not obligated to
sell a specific number of shares. Expenses normally attributable to sales
(other than paid under the of Distribution 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 June 30, 1991, 1992 and 1993, the aggregate
amount of sales charges on sales of the Fund's Class A shares was
$978,757, $1,331,379 and $2,826,831, respectively, of which the
Distributor (and an affiliated broker-dealer) retained $200,343, $364,125
and $806,143 in those respective years. Class B shares were not available
prior to August 17, 1993 and Class Y shares were not available prior to
April 1, 1994.
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 certain other funds advised by the Manager.
AUTOMATIC WITHDRAWAL PLAN PROVISIONS
By requesting an Automatic Withdrawal Plan, the Class A or Class B
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and elsewhere in the Application for such Plans, the
Prospectus and this Additional Statement as they may be amended from time
to time by the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing 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
distributions followed by shares acquired with a sales charge will be
redeemed to the extent necessary to meet withdrawal payments. Depending
upon the amount withdrawn, the investor's principal may be depleted.
Payments made to shareholders under such plans should not be considered
as a yield or income on an investment. Purchases of additional shares
concurrently with withdrawals are undesirable because of sales charges on
purchases. Accordingly, a shareholder may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases. The Fund
reserves the right to amend, suspend or cease offering such plans at any
time without prior notice.
1. Oppenheimer Shareholder Services, the transfer agent of the Fund
(the "Transfer Agent"), will administer the Automatic Withdrawal Plan (the
"Plan") as agent for the person (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent.
2. 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 now held by the 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. Those
shares will be carried on the Planholder's Plan Statement.
3. 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 may be paid in cash or reinvested.
4. Redemptions of shares in connection with disbursement payments
will be made at the net asset value per share in effect on the redemption
date.
5. Checks or ACH payments will be transmitted approximately three
business days prior to the date selected for receipt of the monthly or
quarterly payment (the date of receipt is approximate), according to the
choice specified in writing by the Planholder.
6. The amount and the interval of disbursement payments and the
address to which checks are to be mailed may be changed at any time by the
Planholder on written notification to the Transfer Agent. The Planholder
should allow at least two weeks' time in mailing such notification before
the requested change can be put in effect.
7. 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 such 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 of such redemption to the Planholder.
8. The Plan may, at any time, be terminated by the Planholder on
written notice to the Transfer Agent, or by the Transfer Agent upon
receiving directions to that effect from the Fund. The Transfer Agent
will also terminate the Plan upon receipt of evidence satisfactory to it
of the death or legal incapacity of the Planholder. Upon termination of
the Plan by the Transfer Agent or the Fund, shares remaining unredeemed
will be held in an uncertificated account 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, his executor or guardian, or as otherwise appropriate.
9. For purposes of using shares held under the Plan as collateral,
the Planholder may request issuance of a portion of his shares in
certificated form. Upon written request from the Planholder, the Transfer
Agent will determine the number of shares as to which a certificate may
be issued, so as not to cause the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. Should
such uncertificated shares become exhausted, Plan withdrawals will
terminate.
10. The Transfer Agent shall incur no liability to the Planholder
for any action taken or omitted by the Transfer Agent in good faith.
11. In the event that the Transfer Agent shall cease to act as
transfer agent for the Fund, the Planholder will be deemed to have
appointed any successor transfer agent to act as his agent in
administering the Plan.
LETTERS OF INTENT
In submitting a Letter of Intent ("Letter") to purchase shares of the
Fund and other OppenheimerFunds at a reduced sales charge, the investor
agrees to the terms of the Prospectus, the Application used to buy such
shares and the language of this Additional Statement as to Letters of
Intent, as they may be amended from time to time by the Fund. Such
amendments will apply automatically to existing Letters.
A Letter is the investor's statement of intention to purchase Class
A shares of the Fund (and other eligible OppenheimerFunds sold with a
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 investor states the intention to make the
aggregate amount of purchases (excluding any reinvestments of dividends
or distributions or purchases made at net asset value without sales
charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the
date of the Letter) will equal or exceed the amount specified in the
Letter to obtain the reduced sales charge rate (as set forth in "How to
Buy Shares" in the Prospectus) applicable to purchases of shares in that
amount (the "intended 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 amount, as described in the applicable
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 such fund shares on the last day of that period,
do not equal or exceed the intended 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 amount will be held in escrow by the Fund's transfer agent
subject to the Terms of Escrow.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during
the Letter of Intent period exceed the intended amount and exceed the
amount 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 refer to 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
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 amount specified in the Letter shall be held in
escrow by the Fund's transfer agent. For example, if the minimum 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 total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period,
the total purchases pursuant to the Letter are less than the intended
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released 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 of the Fund as attorney-in-fact to surrender
for redemption any or all escrowed shares.
5. The funds whose shares are eligible for purchase under the
Letter (or the holding of which may be counted toward completion of the
Letter) do not include any fund whose shares are 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 a fund (described as a "Eligible Fund" in the
Prospectus) 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.
<PAGE>
<Audit-Report>
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer Special Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Special Fund as of June 30, 1993, and the
related statement of operations for the year then ended, the statements
of changes in net assets for each of the years in the two-year period then
ended and the financial highlights for each of the years in the ten-year
period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of June 30, 1993,
by correspondence with the custodian and brokers; and where confirmations
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, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Oppenheimer Special Fund as of June 30, 1993, the results of its
operations for the year then ended, the changes in its net assets for each
of the years in the two-year period then ended, and the financial
highlights for each of the years in the ten-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick
- ---------------------
KPMG PEAT MARWICK
Denver, Colorado
July 22, 1993
</Audit-Report>
<PAGE>
Statement of Investments June 30, 1993
<TABLE>
<Caption
Face Market Value
Amount See Note 1
<S> <C> <C>
Repurchase Agreements -- 5.2%
Repurchase agreement with First Chicago Capital Markets, Inc.,
3.27%, dated 6/30/93 and maturing 7/1/93, collateralized by
U.S. Treasury Notes, 5%, 6/30/94, with a value of
$39,384,187 (Cost $38,600,000) $38,600,000 $38,600,000
Shares
Common Stocks -- 94.7%
Basic Materials -- 1.1%
Chemicals -- .4%
Great Lakes Chemical Corp. 45,000 3,088,125
Chemicals-Diversified -- .7%
FMC Corp.* 110,000 4,977,500
Consumer Cyclicals -- 15.6%
Auto Parts-After Market -- 1.1%
Cooper Tire & Rubber Co. 250,000 6,312,500
Goodyear Tire & Rubber Co. 40,000 1,690,000
SPX Corp. 40,000 630,000
8,632,500
Automobiles -- .1%
Harley-Davidson, Inc.* 5,000 208,750
Broadcast Media -- .6%
Multimedia, Inc.* 45,000 1,496,250
Tele-Communications, Inc., Cl. A* 125,000 2,843,750
4,340,000
Entertainment -- 1.0%
King World Productions, Inc.* 235,000 7,843,125
Publishing -- .0%
Marvel Entertainment Group, Inc.* 1,000 37,875
Restaurants -- 1.5%
Brinker International, Inc.* 30,000 1,027,500
McDonald's Corp. 60,000 2,947,500
Pancho's Mexican Buffet, Inc. 65,000 487,500
Shoney's, Inc.* 390,000 7,215,000
11,677,500
Retail-Specialty -- 6.0%
Circuit City Stores, Inc. 475,000 15,318,750
Edison Brothers Stores, Inc. 130,000 4,663,750
Home Depot, Inc. (The) 353,333 15,458,319
Michaels Stores, Inc.* 77,500 2,373,438
Rocky Mountain Chocolate Factory, Inc.* (1) 100,000 512,500
Service Merchandise Co., Inc.* 330,000 3,753,750
Sotheby's Holdings, Inc., Cl. A 200,000 2,575,000
44,655,507
Retail-Specialty Apparel -- .8%
Gap, Inc. (The) 195,800 5,922,950
Retail Stores-Department Stores -- .1%
50-Off Stores, Inc.* 80,000 550,000
Retail Stores-General Merchandise Chains -- 1.6%
Wal-Mart Stores, Inc. 450,000 11,756,250
Shoes -- 1.2%
Reebok International Ltd. 280,000 7,805,000
Stride Rite Corp. 70,000 1,093,750
8,898,750
Textiles-Apparel Manufacturers -- 1.2%
Fruit of the Loom, Inc., Cl. A * 275,000 9,178,125
<PAGE>
Market Value
Shares See Note 1
Common Stocks (continued)
Consumer Cyclicals (continued)
Toys -- .4%
Galoob (Lewis) Toys, Inc.* 335,000 $ 1,130,625
Hasbro, Inc. 60,000 2,265,000
3,395,625
Consumer Non-Cyclicals -- 29.6%
Beverages-Soft Drinks -- 2.6%
Coca-Cola Co. (The) 170,000 7,310,000
PepsiCo, Inc. 330,000 12,168,750
19,478,750
Drugs -- 5.9%
Forest Laboratories, Inc.* 110,000 3,836,250
Lilly (Eli) & Co. 15,000 738,750
Marion Merrell Dow, Inc. 225,000 3,825,000
Merck & Co., Inc. 225,000 7,987,500
Mylan Laboratories, Inc. 210,000 5,722,500
Pfizer, Inc. 75,000 5,025,000
Schering-Plough Corp. 155,000 10,830,625
Syntex Corp. 80,000 1,460,000
Upjohn Co. 150,000 4,481,250
43,906,875
Food Processing -- 2.6%
ConAgra, Inc. 155,000 3,933,125
General Mills, Inc. 35,000 2,384,375
Gerber Products Co. 60,000 1,672,500
Sara Lee Corp. 150,000 3,712,500
Tyson Foods, Inc., Cl. A 340,000 7,480,000
19,182,500
Healthcare-Diversified -- 5.2%
Abbott Laboratories 390,000 9,993,750
American Home Products Corp. 95,000 6,127,500
Bristol-Myers Squibb Co. 160,000 9,260,000
Healthdyne, Inc.* 15,000 125,625
IVAX Corp. 265,000 6,658,125
Johnson & Johnson 40,000 1,650,000
Warner-Lambert Co. 65,000 4,606,875
38,421,875
Healthcare-Miscellaneous -- 4.7%
Invacare Corp.* 10,000 230,000
National Health Laboratories, Inc. 400,000 7,350,000
United Healthcare Corp. 190,000 12,207,500
U.S. Healthcare, Inc. 325,000 15,437,500
35,225,000
Hospital Management -- .2%
Novacare, Inc.* 80,000 1,080,000
Surgical Care Affiliates, Inc. 20,000 357,500
1,437,500
<PAGE>
Statement of Investments (continued)
Market Value
Shares See Note 1
Common Stocks (continued)
Consumer Non-Cyclicals (continued)
Household Products -- .5%
Clorox Co. (The) 40,000 $ 2,085,000
Colgate-Palmolive Co. 30,000 1,747,500
3,832,500
Medical Products -- 4.9%
Becton, Dickinson & Co. 60,000 2,400,000
Cordis Corp.* 345,000 11,040,000
Medtronic, Inc. 110,000 7,425,000
Rhone-Poulenc Rorer, Inc. 60,000 2,820,000
SciMed Life Systems, Inc.* 165,000 10,230,000
United States Surgical Corp. 85,000 2,337,500
36,252,500
Retail Stores-Food Chains -- .3%
Vons Cos., Inc. (The)* 105,000 2,428,125
Tobacco -- 2.7%
American Brands, Inc. 195,000 6,508,125
Philip Morris Cos., Inc. 200,000 9,675,000
UST, Inc. 129,000 3,805,500
19,988,625
Energy -- 1.3%
Oil-Exploration and Production -- .9%
Maxus Energy Corp.* 515,000 4,635,000
Pogo Producing Co.* 110,000 2,007,500
6,642,500
Oil-Integrated Domestic -- .2%
Quaker State Corp. 120,000 1,410,000
Oil Well Services and Equipment -- .2%
McDermott International, Inc. 50,000 1,437,500
Financial -- 20.5%
Financial Services-Miscellaneous -- 9.5%
Advanta Corp., Cl. A 65,000 2,973,750
Bear Stearns Cos., Inc. (The) 215,000 5,079,375
Countrywide Credit Industries, Inc. 51,500 1,577,188
Federal Home Loan Mortgage Corp. 40,000 2,235,000
Federal National Mortgage Assn. 165,000 13,612,500
Green Tree Financial Corp. 135,000 5,670,000
Household International, Inc. 20,000 1,382,500
MBIA, Inc. 15,000 988,125
Morgan Stanley Group, Inc. 60,000 4,147,500
PaineWebber Group, Inc. 265,000 7,651,875
Primerica Corp. 307,500 16,259,063
Schwab (Charles) Corp. (The) 150,000 4,256,250
Student Loan Marketing Assn. 105,000 4,541,250
70,374,376
Insurance-Life -- 3.8%
AFLAC, Inc. 71,875 2,039,453
Conseco, Inc. 290,000 18,125,000
Torchmark Corp. 85,000 4,515,625
UNUM Corp. 60,000 3,240,000
27,920,078
<PAGE>
Market Value
Shares See Note 1
Common Stocks (continued)
Financial (continued)
Insurance-Property and Casualty -- 1.9%
Loews Corp. 60,000 $ 5,677,500
Progressive Corp. 65,000 2,128,750
USF&G Corp. 360,000 6,525,000
14,331,250
Insurance Brokers -- .1%
Alexander & Alexander Services, Inc. 39,300 1,085,659
Major Banks-Other -- 1.8%
Bank of Boston Corp. 400,000 9,900,000
Continental Bank Corp. 55,000 1,313,125
Mellon Bank Corp. 45,000 2,542,500
13,755,625
Major Banks-Regional -- 3.2%
BANC ONE CORP. 60,000 3,375,000
KeyCorp 115,000 4,801,250
Midlantic Corp.* 175,000 3,696,875
Shawmut National Corp. 185,000 4,416,875
Signet Banking Corp. 100,000 6,037,500
SouthTrust Corp. 67,500 1,307,813
23,635,313
Money Center Banks -- .2%
Chemical Banking Corp. 40,000 1,635,000
Industrial -- 2.8%
Commercial Services -- .4%
Comdisco, Inc. 215,000 3,144,375
Mercury Air Group, Inc.* 100,000 300,000
3,444,375
Conglomerates -- .1%
Hanson PLC, Sponsored ADR 40,000 680,000
Electrical Equipment -- 1.5%
General Electric Co. 115,000 10,996,875
Machinery-Diversified -- .3%
Varity Corp.* 76,300 2,289,000
Pollution Control -- .3%
Rollins Environmental Services, Inc. 270,000 1,991,250
Yellowstone Environmental Services, Inc.* 100,000 6,250
1,997,500
Transportation-Miscellaneous -- .2%
American President Cos. Ltd. 20,000 1,137,500
Technology -- 23.8%
Aerospace/Defense -- 2.2%
Boeing Co. (The) 135,000 4,995,000
Grumman Corp. 120,000 4,770,000
Northrop Corp. 160,000 6,680,000
16,445,000
Computer Software and Services -- 8.0%
Adobe Systems, Inc. 40,000 2,470,000
Automatic Data Processing, Inc. 206,800 9,874,700
Ceridian Corp.* 150,000 2,250,000
Computer Associates International, Inc. 375,000 11,109,375
Computer Sciences Corp.* 50,000 4,168,750
General Motors Corp., Cl. E 360,000 10,530,000
Microsoft Corp.* 160,000 14,080,000
Novell, Inc.* 190,000 4,940,000
59,422,825
<PAGE>
Statement of Investments (continued)
Market Value
Shares See Note 1
Common Stocks (continued)
Technology (continued)
Computer Systems -- 7.6%
Applied Magnetics Corp.* 10,000 $ 97,500
AST Research, Inc.* 237,500 3,532,813
Cabletron Systems, Inc.* 135,000 14,242,500
Cisco Systems, Inc.* 25,000 1,368,750
Compaq Computer Corp.* 20,000 980,000
Conner Peripherals, Inc.* 155,000 1,491,875
Data General Corp.* 176,500 1,698,813
Dell Computer Corp.* 250,000 4,687,500
Maxtor Corp.* 330,000 2,062,500
Micropolis Corp.* 145,000 942,500
QMS, Inc.* 30,000 262,500
Quantum Corp.* 325,000 3,656,250
Scitex Corp. Ltd. 40,000 1,535,000
Seagate Technology* 660,000 10,477,500
Synoptics Communications, Inc.* 30,000 1,080,000
Unisys Corp.* 670,400 8,044,800
56,160,801
Electronics-Instrumentation -- .1%
American Power Conversion Corp.* 25,000 950,000
Electronics-Semiconductors -- 2.9%
Advanced Micro Devices, Inc.* 195,000 4,704,375
Intel Corp. 300,000 16,500,000
21,204,375
Telecommunications -- 3.0%
American Telephone & Telegraph Co. 95,000 5,985,000
Telefonica de Espana SA, Sponsored ADR 210,000 6,720,000
Telefonos de Mexico SA, Sponsored ADR 210,000 9,817,500
22,522,500
Total Common Stocks (Cost $488,147,317) 704,794,884
Total Investments, at Value (Cost $526,747,317) 99.9% 743,394,884
Other Assets Net of Liabilities .1 435,155
Net Assets 100.0% $743,830,039
<FN>
* Non-income producing security.
(1) Affiliated company. Represents ownership of at least 5% of
the voting securities of the issuer and is or was an affiliate,
as defined in the Investment Company Act of 1940, at or during
the year ended June 30, 1993. The aggregate fair value of all
securities of affiliated companies as of June 30, 1993 amounted
to $512,500. Transactions during the period in which the issuer
was an affiliate are as follows:
</TABLE>
<TABLE>
<CAPTION>
Balance June 30, 1992 Gross Additions Balance June 30, 1993
Shares Cost Shares Cost Shares Cost
<S> <C> <C> <C> <C> <C> <C>
Rocky Mountain
Chocolate Factory, Inc. -- $ -- 100,000 $494,000 100,000 $494,000
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Assets and Liabilities June 30, 1993
<TABLE>
<S> <S> <C>
Assets Investments, at value (cost $526,747,317) -- see accompanying statement $743,394,884
Cash 477,723
Receivables:
Dividends and interest 1,098,708
Investments sold 617,686
Shares of beneficial interest sold 479,172
Other 206,563
Total assets 746,274,736
Liabilities Payables and other liabilities:
Shares of beneficial interest redeemed 1,321,847
Investments purchased 726,720
Distribution assistance -- Note 4 54,382
Other 341,748
Total liabilities 2,444,697
Net Assets $743,830,039
Composition of Paid-in capital $505,764,907
Net Assets Undistributed net investment income 2,818,869
Accumulated net realized gain from investment transactions 18,598,696
Net unrealized appreciation of investments -- Note 3 216,647,567
Net Assets -- Applicable to 27,209,834 shares of beneficial
interest outstanding $743,830,039
Net Asset Value and Redemption Price Per Share $27.34
Maximum Offering Price Per Share (net asset value plus sales charge of 5.75% of offering price) $29.01
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Operations For the Year Ended June 30, 1993
<TABLE>
<S> <S> <C>
Investment Income Dividends (including $724,271 from foreign securities less $108,837
of foreign tax withheld at source) $ 10,308,131
Interest 1,375,533
Total income 11,683,664
Expenses Management fees -- Note 4 5,048,548
Transfer and shareholder servicing agent fees -- Note 4 836,590
Distribution assistance -- Note 4 244,389
Shareholder reports 204,223
Trustees' fees and expenses 95,412
Custodian fees and expenses 65,451
Legal and auditing fees 60,133
Other 39,660
Total expenses 6,594,406
Net Investment Income 5,089,258
Realized and Net realized gain (loss) on investments:
Unrealized Unaffiliated companies 36,712,138
Gain (Loss) Affiliated companies (902,840)
on Investments Net realized gain 35,809,298
Net change in unrealized appreciation of investments:
Beginning of year 152,228,889
End of year -- Note 3 216,647,567
Net change 64,418,678
Net Realized and Unrealized Gain on Investments 100,227,976
Net Increase in Net Assets Resulting from Operations $105,317,234
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
1993 1992
<S> <S> <C> <C>
Operations Net investment income $ 5,089,258 $7,114,834
Net realized gain on investments 35,809,298 53,583,658
Net change in unrealized appreciation or depreciation
of investments 64,418,678 25,333,202
Net increase in net assets resulting from operations 105,317,234 86,031,694
Dividends and Dividends from net investment income ($.245 and
Distributions to $.355 per share, respectively) (6,227,354) (8,860,743)
Shareholders
Distributions from net realized gain on investments
($1.571 per share) (39,984,953) --
Beneficial Interest Proceeds from sales of shares 149,845,978 140,086,971
Transactions Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions 44,669,529 8,564,414
Cost of shares redeemed (140,557,861) (145,534,591)
Net increase in net assets resulting from
beneficial interest transactions 53,957,646 3,116,794
Net Assets Total increase 113,062,573 80,287,745
Beginning of year 630,767,466 550,479,721
End of year (including undistributed net investment
income of $2,818,869 and $3,956,965, respectively) $743,830,039 $630,767,466
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Year Ended June 30,
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value,
beginning of year $ 24.94 $ 21.88 $ 20.60 $ 18.90 $ 17.13 $ 20.37 $ 23.82 $ 20.46 $ 19.45 $24.04
Income (loss) from investment
operations:
Net investment income .19 .29 .47 .64 .62 .67 .93 .75 .60 .39
Net realized and unrealized
gain (loss) on investments 4.03 3.13 1.36 1.76 1.78 (.89) .59 3.70 1.87 (2.83)
Total income (loss) from
investment operations 4.22 3.42 1.83 2.40 2.40 (.22) 1.52 4.45 2.47 (2.44)
Dividends and distributions
to shareholders:
Dividends from net
investment income (.25) (.36) (.55) (.70) (.59) (1.27) (.77) (.61) (.39) (.52)
Distributions from net realized
gain on investments (1.57) -- -- -- (.04) (1.75) (4.20) (.48) (1.07) (1.63)
Total dividends and
distributions to shareholders (1.82) (.36) (.55) (.70) (.63) (3.02) (4.97) (1.09) (1.46) (2.15)
Net asset value, end of year $ 27.34 $ 24.94 $ 21.88 $ 20.60 $ 18.90 $ 17.13 $ 20.37 $ 23.82 $ 20.46 $ 19.45
Total Return,
At Net Asset Value** 16.88% 15.69% 9.39% 12.98% 14.54% (1.03)% 9.48% 22.77% 14.24%
(10.95)%
Ratios/Supplemental Data:
Net assets, end of
year (in thousands) $743,830 $630,767 $550,480 $551,295 $542,250 $552,863 $690,326 $772,619 $834,054
$644,138
Average net assets
(in thousands) $710,391 $624,527 $520,335 $547,090 $529,699 $570,250 $717,115 $783,491 $765,214
$610,559
Number of shares outstanding
at end of year (in thousands) 27,210 25,287 25,155 26,760 28,687 32,277 33,890 32,437 40,759 33,110
Ratios to average net assets:
Net investment income .72% 1.14% 2.20% 3.07% 3.31% 3.78% 4.32% 3.03% 3.28%
2.19%
Expenses .93% .90% .94% .92% .97% .95% .93% .95% .94% 1.05%
Portfolio turnover rate* 23.2% 36.7% 31.1% 27.6% 27.1% 120.3% 371.2% 67.4% 16.8%
20.8%
<FN>
* The lesser of purchases or sales of portfolio securities for a year,
divided by the monthly average of the market value of portfolio
securities owned during the year. 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 June
30, 1993 were $160,757,743 and $184,132,966, respectively.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal year, 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 year. Sales charges are not reflected in
the total returns.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Significant
Accounting Policies
Oppenheimer Special Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment adviser is Oppenheimer
Management Corporation (the Manager). 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.
Repurchase Agreements -- The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book Entry
System or to have segregated within the custodian's vault, all securities
held as collateral for repurchase agreements. If the seller of the
agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
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.
Trustees' Fees and Expenses -- The Fund has adopted a nonfunded retirement
plan for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during the years of service. During
the year ended June 30, 1993, a provision of $35,000 was made for the
Fund's projected benefit obligations, resulting in an accumulated
liability of $127,168 at June 30, 1993. No payments have been made under
the plan.
Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.
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.
<PAGE>
Notes to Financial Statements (continued)
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
1993 1992
<S> <C> <C>
Sold 5,518,247 5,688,827
Dividends and distributions reinvested 1,627,898 360,913
Redeemed (5,223,558) (5,917,037)
Net increase 1,922,587 132,703
</TABLE>
3. Unrealized Gains
and Losses on
Investments
At June 30, 1993, net unrealized appreciation of investments of
$216,647,567 was composed of gross appreciation of $253,041,081, and gross
depreciation of $36,393,514.
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 .75%
on the first $200 million of net assets with a reduction of .03% on each
$200 million thereafter to $800 million, and .60% on net assets in excess
of $800 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 June 30, 1993, commissions (sales charges paid by
investors) on sales of Fund shares totaled $2,826,831, of which $806,143
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated
broker/dealer.
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 an approved plan of distribution, the Fund reimburses OFDI for costs
incurred in distributing shares of the Fund, including amounts paid to
brokers, dealers, banks and other institutions. Reimbursements are not to
exceed .25% annually of the net asset value of Fund shares sold subsequent
to March 31, 1991. During the year ended June 30, 1993, OFDI paid $9,029
to an affiliated broker/dealer as reimbursement for distribution-related
expenses.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1993 (UNAUDITED)
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-5.5%
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Repurchase agreement with First Chicago Capital Markets, Inc.,
3.13%, dated 12/31/93 and maturing 1/3/94, collateralized by
U.S. Treasury Notes:
9.13%, 5/15/99, with a value of $29,762,525 $29,150,000 $29,150,000
4.63%, 12/31/94, with a value of $12,096,783 11,850,000 11,850,000
-----------
Total Repurchase Agreements (Cost $41,000,000) 41,000,000
Shares
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS-94.1%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS-0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS-0.4% Great Lakes Chemical Corp. 45,000 3,358,125
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS: DIVERSIFIED-0.3% FMC Corp.(1) 40,000 1,885,000
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS-12.6%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTO PARTS: AFTER MARKET-0.7% Cooper Tire & Rubber Co. 105,000
2,625,000
------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 60,000 2,745,000
-----------
5,370,000
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES-0.3% Harley-Davidson, Inc. 40,000 1,765,000
- -----------------------------------------------------------------------------------------------------------------------------------
BROADCAST MEDIA-0.2% Multimedia, Inc.(1) 45,000 1,541,250
- -----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT-1.2% King World Productions, Inc.(1) 235,000
9,018,125
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING-0.0% Marvel Entertainment Group, Inc.(1) 2,000 54,500
- -----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS-1.9% Brinker International, Inc.(1) 30,000 1,380,000
------------------------------------------------------------------------------------------------
McDonald's Corp. 55,000 3,135,000
------------------------------------------------------------------------------------------------
Pancho's Mexican Buffet, Inc. 70,000 857,500
------------------------------------------------------------------------------------------------
Shoney's, Inc.(1) 390,000 9,018,750
-----------
14,391,250
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY-4.7% Circuit City Stores, Inc. 475,000 10,331,250
------------------------------------------------------------------------------------------------
CML Group, Inc. 79,600 1,880,550
------------------------------------------------------------------------------------------------
Edison Brothers Stores, Inc. 80,000 2,380,000
------------------------------------------------------------------------------------------------
Home Depot, Inc. (The) 284,600 11,241,700
------------------------------------------------------------------------------------------------
Michaels Stores, Inc.(1) 90,000 3,217,500
------------------------------------------------------------------------------------------------
Rocky Mountain Chocolate Factory, Inc.(1)(2) 100,000 1,325,000
------------------------------------------------------------------------------------------------
Service Merchandise Co., Inc.(1) 225,000 2,250,000
------------------------------------------------------------------------------------------------
Sotheby's Holdings, Inc., Cl. A 170,000 2,613,750
-----------
35,239,750
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY APPAREL-0.8% GAP, INC. (THE) 140,000
5,512,500
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: DEPARTMENT May Department Stores Co. 25,000
984,375
STORES-0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL Wal-Mart Stores, Inc. 450,000 11,250,000
MERCHANDISE CHAINS-1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
SHOES-0.5% Reebok International Ltd. 125,000 3,750,000
- -----------------------------------------------------------------------------------------------------------------------------------
TEXTILES: APPAREL Fruit of the Loom, Inc., Cl. A(1) 125,000 3,015,625
MANUFACTURERS-0.4%
- -----------------------------------------------------------------------------------------------------------------------------------
TOYS-0.3% Hasbro, Inc. 40,000 1,450,000
------------------------------------------------------------------------------------------------
Mattel, Inc. 35,000 966,875
-----------
2,416,875
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS-28.7%
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
BEVERAGES: SOFT DRINKS-2.8% Coca-Cola Co. (The) 170,000 $
7,586,250
------------------------------------------------------------------------------------------------
PepsiCo, Inc. 330,000 13,488,750
-----------
21,075,000
- -----------------------------------------------------------------------------------------------------------------------------------
DRUGS-5.6% Forest Laboratories, Inc.(1) 110,000 5,238,750
------------------------------------------------------------------------------------------------
Marion Merrell Dow, Inc. 160,000 2,880,000
------------------------------------------------------------------------------------------------
Merck & Co., Inc. 225,000 7,734,375
------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 175,000 4,440,625
------------------------------------------------------------------------------------------------
Pfizer, Inc. 75,000 5,175,000
------------------------------------------------------------------------------------------------
Schering-Plough Corp. 155,000 10,617,500
------------------------------------------------------------------------------------------------
Syntex Corp. 80,000 1,270,000
------------------------------------------------------------------------------------------------
Upjohn Co. 150,000 4,368,750
-----------
41,725,000
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD PROCESSING-2.2% ConAgra, Inc. 150,000 3,956,250
------------------------------------------------------------------------------------------------
General Mills, Inc. 35,000 2,126,250
------------------------------------------------------------------------------------------------
Sara Lee Corp. 150,000 3,750,000
------------------------------------------------------------------------------------------------
Tyson Foods, Inc., Cl. A 270,000 6,480,000
-----------
16,312,500
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: DIVERSIFIED-5.1% Abbott Laboratories 390,000
11,505,000
------------------------------------------------------------------------------------------------
American Home Products Corp. 95,000 6,151,250
------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 140,000 8,137,500
------------------------------------------------------------------------------------------------
IVAX Corp. 265,000 7,618,750
------------------------------------------------------------------------------------------------
Johnson & Johnson 40,000 1,790,000
------------------------------------------------------------------------------------------------
Warner-Lambert Co. 45,000 3,037,500
-----------
38,240,000
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS-5.2% National Health Laboratories, Inc. 400,000
5,700,000
------------------------------------------------------------------------------------------------
United Healthcare Corp. 190,000 14,416,250
------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. 325,000 18,728,125
-----------
38,844,375
- -----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT-0.2% Novacare, Inc.(1) 80,000
1,220,000
------------------------------------------------------------------------------------------------
Surgical Care Affiliates, Inc. 20,000 310,000
-----------
1,530,000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS-0.2% Colgate-Palmolive Co. 30,000
1,871,250
- -----------------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS-5.2% Becton, Dickinson & Co. 40,000
1,435,000
------------------------------------------------------------------------------------------------
Cordis Corp.(1) 345,000 17,034,375
------------------------------------------------------------------------------------------------
Medtronic, Inc. 110,000 9,033,750
------------------------------------------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 60,000 2,190,000
------------------------------------------------------------------------------------------------
Sci-Med Life Systems, Inc.(1) 200,000 7,850,000
------------------------------------------------------------------------------------------------
St. Jude Medical, Inc. 35,000 927,500
-----------
38,470,625
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENT OF INVENTMENTS (unaudited)(continued)
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
RETAIL STORES: FOOD CHAINS-0.2% Vons Cos., Inc. (The)(1) 80,000 $
1,280,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOBACCO-2.0% American Brands, Inc. 100,000 3,325,000
------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 140,000 7,805,000
------------------------------------------------------------------------------------------------
UST, Inc. 129,000 3,579,750
-----------
14,709,750
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY-1.6%
OIL: EXPLORATION AND Maxus Energy Corp.(1) 630,000 3,465,000
------------------------------------------------------------------------------------------------
PRODUCTION-0.7% Pogo Producing Co.(1) 110,000 1,842,500
-----------
5,307,500
- -----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED DOMESTIC-0.2% Quaker State Corp. 120,000
1,605,000
- -----------------------------------------------------------------------------------------------------------------------------------
OIL AND GAS DRILLING-0.2% Pennzoil Co. 30,000 1,597,500
- -----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES AND McDermott International, Inc. 140,000 3,710,000
EQUIPMENT-0.5%
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL-24.4%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS-0.1% UJB Financial Corp. 25,000 593,750
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: Advanta Corp., Cl. A 120,000 3,990,000
------------------------------------------------------------------------------------------------
MISCELLANEOUS-11.1% Bear Stearns Cos., Inc. (The) 374,500 8,192,188
Countrywide Credit Industries, Inc. 215,000 5,401,875
------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 40,000 1,995,000
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 165,000 12,952,500
------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 160,000 7,680,000
------------------------------------------------------------------------------------------------
Household International, Inc. 40,000 1,305,000
------------------------------------------------------------------------------------------------
MBIA, Inc. 15,000 943,125
------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. 60,000 4,245,000
------------------------------------------------------------------------------------------------
PaineWebber Group, Inc. 280,000 7,560,000
------------------------------------------------------------------------------------------------
Primerica Corp. 410,000 15,938,750
------------------------------------------------------------------------------------------------
Raymond James Financial, Inc. 30,000 498,750
------------------------------------------------------------------------------------------------
Salomon Inc. 40,000 1,905,000
------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. (The) 150,000 4,856,250
------------------------------------------------------------------------------------------------
Student Loan Marketing Assn. 105,000 4,711,875
------------------------------------------------------------------------------------------------
Sunamerica, Inc. 15,000 648,750
-----------
82,824,063
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: LIFE-3.3% AFLAC, Inc. 71,875 2,048,438
------------------------------------------------------------------------------------------------
Conseco, Inc. 287,500 15,956,250
------------------------------------------------------------------------------------------------
Jefferson-Pilot Corp. 5,000 234,375
------------------------------------------------------------------------------------------------
Torchmark Corp. 85,000 3,825,000
------------------------------------------------------------------------------------------------
UNUM Corp. 45,000 2,362,500
-----------
24,426,563
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
INSURANCE: PROPERTY AND Loews Corp. 45,000 $ 4,185,000
------------------------------------------------------------------------------------------------
CASUALTY-2.2% Progressive Corp. 125,000 5,062,500
------------------------------------------------------------------------------------------------
USF&G Corp. 495,000 7,301,250
-----------
16,548,750
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE BROKERS-0.0% Alexander & Alexander Services, Inc. 10,000
195,000
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: OTHER-1.7% Bank of Boston Corp. 400,000
9,200,000
------------------------------------------------------------------------------------------------
Continental Bank Corp. 55,000 1,450,625
------------------------------------------------------------------------------------------------
Mellon Bank Corp. 45,000 2,385,000
-----------
13,035,625
- -----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: REGIONAL-5.6% BANC ONE CORP. 75,000
2,934,375
------------------------------------------------------------------------------------------------
First Interstate Bancorp 95,000 6,091,875
------------------------------------------------------------------------------------------------
First Union Corp. 70,000 2,887,500
------------------------------------------------------------------------------------------------
KeyCorp 195,000 6,898,125
------------------------------------------------------------------------------------------------
Midlantic Corp.(1) 190,000 4,845,000
------------------------------------------------------------------------------------------------
Shawmut National Corp. 240,000 5,220,000
------------------------------------------------------------------------------------------------
Signet Banking Corp. 200,000 6,950,000
------------------------------------------------------------------------------------------------
SouthTrust Corp. 170,000 3,230,000
------------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 20,000 900,000
------------------------------------------------------------------------------------------------
Washington Mutual Savings Bank of Seattle 65,000 1,568,125
-----------
41,525,000
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY CENTER BANKS-0.4% Chase Manhattan Corp. 30,000
1,016,250
------------------------------------------------------------------------------------------------
Chemical Banking Corp. 40,000 1,605,000
-----------
2,621,250
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL-3.2%
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES-0.6% Comdisco, Inc. 215,000 4,138,750
------------------------------------------------------------------------------------------------
Mercury Air Group, Inc.(1) 100,000 375,000
-----------
4,513,750
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.6% General Electric Co. 115,000
12,060,625
- -----------------------------------------------------------------------------------------------------------------------------------
MACHINERY: DIVERSIFIED-0.8% Varity Corp.(1) 135,000 6,041,250
- -----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.2% Rollins Environmental Services, Inc. 200,000
1,150,000
------------------------------------------------------------------------------------------------
Yellowstone Environmental Services, Inc.(1) 100,000 6,250
-----------
1,156,250
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY-22.9%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-1.5% Boeing Co. (The) 40,000 1,730,000
------------------------------------------------------------------------------------------------
Gencorp, Inc. 40,000 570,000
------------------------------------------------------------------------------------------------
Grumman Corp. 120,000 4,740,000
------------------------------------------------------------------------------------------------
Northrop Corp. 110,000 4,111,250
-----------
11,151,250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENT OF INVENTMENTS (Unaudited)(continued)
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMPUTER SOFTWARE AND Adobe Systems, Inc. 70,000 $
1,557,500
------------------------------------------------------------------------------------------------
SERVICES-8.4% Automatic Data Processing, Inc. 206,800 11,425,700
------------------------------------------------------------------------------------------------
Ceridian Corp.(1) 150,000 2,850,000
------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 375,000 15,000,000
------------------------------------------------------------------------------------------------
Computer Sciences Corp.(1) 50,000 4,975,000
------------------------------------------------------------------------------------------------
Electronic Arts(1) 25,000 750,000
------------------------------------------------------------------------------------------------
General Motors Corp., Cl. E 320,000 9,360,000
------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 175,000 14,109,375
------------------------------------------------------------------------------------------------
Novell, Inc.(1) 105,000 2,178,750
-----------
62,206,325
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SYSTEMS-6.5% AST Research, Inc.(1) 237,500 5,403,125
------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 135,000 15,187,500
------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 50,000 3,231,250
------------------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 20,000 1,480,000
------------------------------------------------------------------------------------------------
Data General Corp.(1) 156,500 1,467,187
------------------------------------------------------------------------------------------------
Maxtor Corp.(1) 120,000 660,000
------------------------------------------------------------------------------------------------
Quantum Corp.(1) 50,000 706,250
------------------------------------------------------------------------------------------------
Seagate Technology(1) 505,000 11,993,750
------------------------------------------------------------------------------------------------
Unisys Corp.(1) 680,000 8,585,000
-----------
48,714,062
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS-0.1% ADT Ltd.(1) 105,000 945,000
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: INSTRUMENTATION-0.4% American Power Conversion Corp.(1) 140,000
3,325,000
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: SEMICONDUCTORS-3.0% Advanced Micro Devices, Inc.(1) 195,000
3,461,250
------------------------------------------------------------------------------------------------
Intel Corp. 300,000 18,600,000
------------------------------------------------------------------------------------------------
National Semiconductor Corp. 25,000 403,125
-----------
22,464,375
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-3.0% American Telephone & Telegraph Co. 95,000
4,987,500
------------------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR 25,000 1,556,250
------------------------------------------------------------------------------------------------
Telefonica de Espana SA, Sponsored ADR 40,000 1,560,000
------------------------------------------------------------------------------------------------
Telefonos de Mexico SA, Sponsored ADR 210,000 14,175,000
-----------
22,278,750
-----------
Total Common Stocks (Cost $463,739,084) 702,457,513
-----------
TOTAL INVESTMENTS, AT VALUE (COST $504,739,084) 99.6%
743,457,513
OTHER ASSETS NET OF LIABILITIES .4 2,846,379
----------- -----------
NET ASSETS 100.0% $746,303,892
----------- ------------
----------- ------------
<FN>
1. Non-income producing security.
2. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the six months ended December
31, 1993. The aggregate fair value and cost of all securities of
affiliated companies as of December 31, 1993 amounted to $1,325,000 and
$494,000, respectively. There were no transactions with affiliates during
the six months ended December 31, 1993.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1993 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value (cost $504,739,084)-see accompanying statement $743,457,513
------------------------------------------------------------------------------------------------
Cash 439,116
------------------------------------------------------------------------------------------------
Receivables:
Investments sold 2,461,833
Shares of beneficial interest sold 1,504,893
Dividends and interest 911,530
------------------------------------------------------------------------------------------------
Other 470,594
------------
Total assets 749,245,479
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 2,149,230
Distribution assistance-Note 4 303,269
Dividends and distributions 72,501
Other 416,587
------------
Total liabilities 2,941,587
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $746,303,892
------------
------------
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $498,819,696
------------------------------------------------------------------------------------------------
NET ASSETS Undistributed net investment income 443,157
------------------------------------------------------------------------------------------------
Accumulated net realized gain from investment transactions 8,322,610
------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments-Note 3 238,718,429
------------
Net assets $746,303,892
------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of
$741,391,155 and 26,770,494 shares of beneficial interest outstanding) $27.69
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $29.38
------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $4,912,737 and 178,071 shares of beneficial
interest outstanding) $27.59
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1993 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Dividends $ 4,940,709
------------------------------------------------------------------------------------------------
Interest 574,317
------------
Total income 5,515,026
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees-Note 4 2,635,474
------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees-Note 4 434,285
------------------------------------------------------------------------------------------------
Distribution assistance:
Class A-Note 4 413,568
Class B-Note 4 9,648
------------------------------------------------------------------------------------------------
Shareholder reports 207,915
------------------------------------------------------------------------------------------------
Trustees' fees and expenses 31,922
------------------------------------------------------------------------------------------------
Custodian fees and expenses 27,606
------------------------------------------------------------------------------------------------
Legal and auditing fees 24,735
------------------------------------------------------------------------------------------------
Registration and filing fees-Class B 1,014
------------------------------------------------------------------------------------------------
Other 50,375
------------
Total expenses 3,836,542
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,678,484
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain on investments
6,470,679
------------------------------------------------------------------------------------------------
GAIN ON INVESTMENTS Net change in unrealized appreciation on investments:
Beginning of period 216,647,567
End of period-Note 3 238,718,429
------------
Net change 22,070,862
------------
Net realized and unrealized gain on investments 28,541,541
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 30,220,025
------------
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
DECEMBER 31, 1993 YEAR ENDED
(UNAUDITED) JUNE 30, 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
OPERATIONS Net investment income $ 1,678,484 $ 5,089,258
------------------------------------------------------------------------------------------------
Net realized gain on investments 6,470,679 35,809,298
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 22,070,862 64,418,678
----------- ------------
Net increase in net assets resulting from operations 30,220,025 105,317,234
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income:
TO SHAREHOLDERS Class A ($.155 and $.245 per share, respectively) (4,036,019)
(6,227,354)
Class B ($.107 per share) (18,177) -
------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($.639 and $1.571 per share, respectively) (16,638,213) (39,984,953)
Class B ($.639 per share) (108,552) -
- -----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from
Class A beneficial interest transactions-Note 2 (11,888,872) 53,957,646
------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions-Note 2 4,943,661 -
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 2,473,853 113,062,573
------------------------------------------------------------------------------------------------
Beginning of period 743,830,039 630,767,466
----------- ------------
End of period (including undistributed net investment
income of $443,157 and $2,818,869, respectively) $746,303,892 $743,830,039
------------ ------------
------------ ------------
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A CLASS B
--------------------------------------------------------------------------- ------------
SIX MONTHS ENDED YEAR ENDED PERIOD
ENDED
DECEMBER 31, 1993 JUNE 30, DECEMBER 31, 1993
(UNAUDITED) 1993 1992 1991 1990 1989 (UNAUDITED)(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $27.34 $24.94 $21.88 $20.60 $18.90 $17.13 $27.02
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .07 .19 .29 .47 .64 .62 (.02)
Net realized and unrealized
gain (loss) on investments 1.08 4.03 3.13 1.36 1.76 1.78 1.34
------- ------ ------ ------ ------ ------ ------
Total income from
investment operations 1.15 4.22 3.42 1.83 2.40 2.40 1.32
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.16) (.25) (.36) (.55) (.70) (.59) (.11)
Distributions from net realized
gain on investments (.64) (1.57) - - - (.04) (.64)
------- ------- ------ ------ ------ ------ ------
Total dividends and
distributions to shareholders (.80) (1.82) (.36) (.55) (.70) (.63) (.75)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.69 $27.34 $24.94 $21.88 $20.60 $18.90 $27.59
------- ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(2) 4.18% 16.88% 15.69% 9.39% 12.98% 14.54% 4.14%
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $741,391 $743,830 $630,767 $550,480 $551,295 $542,250 $4,913
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $735,616 $710,391 $624,527 $520,335 $547,090 $529,699 $2,606
- ------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 26,770 27,210 25,287 25,155 26,760 28,687 178
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .45%(3) .72% 1.14% 2.20% 3.07% 3.31% (.47)%(3)
Expenses 1.03%(3) .93% .90% .94% .92% .97% 2.01%(3)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 9.3% 23.2% 36.7% 31.1% 27.6% 27.1% 9.3%
<FN>
1. For the period from August 17, 1993 (inception of offering) to December
31, 1993.
2. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal year, 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.
3. Annualized.
4. 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 six months ended December 31, 1993 were
$64,997,857 and $96,187,847, respectively.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
- -------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Special Fund (the Fund) is registered under the Investment
Company Act of 1940, as
amended, as a diversified, open-end management investment company. 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 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.
- --------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession,
to have legally segregated in the Federal Reserve Book Entry System or to
have segregated within the custodian's vault, all securities held as
collateral for repurchase agreements. If the seller of the agreement
defaults and the value of the collateral declines, or if the seller enters
an insolvency proceeding, realization of the value of the collateral by
the Fund may be delayed or limited.
- --------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class. Federal Income Taxes. The Fund intends to
continue to comply with provisions of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its taxable
income, including any net realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income tax provision
is required.
- --------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement
plan for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during the years of service. The
accumulated liability for the Fund's projected benefit obligations was
$127,168 at December 31, 1993. No payments have been made under the plan.
- --------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
- --------------------------------------------------
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.
<PAGE>
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (Continued)
- ------------------------------------------------------------
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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1993(1) YEAR ENDED JUNE 30, 1993
----------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A:
Sold 1,548,655 $ 42,915,730 5,518,247 $149,845,978
Dividends and distributions reinvested 720,452 19,970,949 1,627,898 44,669,529
Redeemed (2,708,447) (74,775,551) (5,223,558) (140,557,861)
Net increase (decrease) (439,340) $(11,888,872) 1,922,587 $ 53,957,646
Class B:
Sold 189,067 $ 5,254,243 - $ -
Dividends and distributions reinvested 4,452 122,908 - -
Redeemed (15,448) (433,490) - -
------------ ----------- --------- -------------
Net increase 178,071 $ 4,943,661 - $ -
------------ ----------- --------- -------------
------------ ----------- --------- -------------
<FN>
1. For the six months ended December 31, 1993 for Class A shares and for
the period from August 17, 1993 (inception of offering) to December 31,
1993 for Class B shares.
</TABLE>
- -------------------------------------------------------------
3. Unrealized Gains and Losses on Investments
At December 31, 1993, net unrealized appreciation on investments of
$238,718,429 was composed of gross appreciation of $260,861,318, and gross
depreciation of $22,142,889.
- ------------------------------------------------------------
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 .75%
on the first $200 million of net assets with a reduction of .03% on each
$200 million thereafter to $800 million, and .60% on net assets in excess
of $800 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 six months ended December 31, 1993, commissions (sales
charges paid by investors) on sales of Class A shares totaled $1,024,599,
of which $281,527 was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an
affiliated broker/dealer. During the six months ended December 31, 1993,
OFDI received contingent deferred sales charges of $2,427 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 of distribution, each class may
expend up to .25% of its net assets annually to reimburse OFDI for costs
incurred in distributing shares of the Fund (prior to October 1, 1993,
Class A reimbursements were made with respect to shares sold subsequent
to March 31, 1991), 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 of distribution, the Fund would be contractually
obligated to pay OFDI for any expenses not previously reimbursed or
recovered through contingent deferred sales charges. During the six months
ended December 31, 1993, OFDI paid $11,072 to an affiliated broker/dealer
as reimbursement for distribution-related expenses and retained $9,648 as
reimbursement for Class B distribution-related expenses and sales
commissions.
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder
Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80201
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 W. 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER SPECIAL FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Highlights at 6/30/93 (audited) and 12/31/93
(unaudited) (see Part A, Prospectus): Filed herewith.
(2) Report of Independent Auditors at 6/30/93 (see Part B,
Statement of Additional Information): Filed herewith.
(3) Statement of Investments at 6/30/93 (audited) and 12/31/93
(unaudited) (see Part B): Filed herewith.
(4) Statement of Assets and Liabilities at 6/30/93 (audited)
and 12/31/93 (unaudited) (see Part B): Filed herewith.
(5) Statement of Operations at 6/30/93 (audited) and 12/31/93
(unaudited) (see Part B): Filed herewith.
(6) Statements of Changes in Net Assets for the years ended
6/30/92 and 6/30/93 (audited) and six months ended 12/31/93 (unaudited)
(see Part B): Filed herewith.
(7) Notes to Financial Statements at 6/30/93 (audited) and
12/31/93 (unaudited) (see Part B): Filed herewith.
(b) Exhibits
(1) Amended and Restated Declaration of Trust dated
February 10, 1994: Filed herewith. (CE)
(2) By-Laws (amended as of 8/6/87): Previously filed with
Registrant's Post-Effective Amendment No. 30, 10/28/88, and incorporated
herein by reference. (P)
(3) Not applicable.
(4) (i) Specimen Share Certificate for Registrant's Class
A Shares: Previously filed with Registrant's Post-Effective Amendment No.
42, 9/30/93, and incorporated herein by reference. (CE)
(ii) Specimen Share Certificate for Registrant's Class
B Shares: Previously filed with Registrant's Post-Effective Amendment No.
42, 9/30/93, and incorporated herein by reference. (CE)
(iii) Specimen Share Certificate for Registrant's Class
Y Shares: Filed herewith.
(5) Investment Advisory Agreement dated October 22, 1990:
Previously filed with Registrant's Post-Effective Amendment No. 35,
11/1/90, and incorporated herein by reference. (P)
(6) (i) General Distributor's Agreement dated December 10,
1992: Previously filed with Registrant's Post-Effective Amendment No. 41,
7/30/93, and incorporated herein by reference. (CE)
(ii) Prototype Oppenheimer Fund Management, Inc. Dealer
Agreement: Previously filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer Government Securities Fund (Reg. No.
33-02769), 12/2/92, and incorporated herein by reference. (P)
(iii) Prototype Oppenheimer Fund Management, Inc. Agency
Agreement: Previously filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer Government Securities Fund (Reg. No.
33-02769), 12/2/92, and incorporated herein by reference. (P)
(iv) Broker Agreement between Oppenheimer Fund
Management, Inc. and Newbridge Securities dated 10/1/86: Previously filed
with Registrant's Post-Effective Amendment No. 25, 11/1/86, and
incorporated herein by reference. (P)
(v) Prototype Oppenheimer Fund Management, Inc. Broker
Agreement: Previously filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer Government Securities Fund (Reg.
No. 33-02769), 12/2/92, and incorporated herein by reference. (P)
(7) Retirement Plan for Non-Interested Trustees, 6/7/90:
Previously filed with Registrant's Post-Effective Amendment No. 34,
9/4/90, and incorporated herein by reference. (P)
(8) Custodian Agreement with The Bank of New York dated August
5, 1992: Filed herewith.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 10/4/85: Previously
filed with Registrant's Post-Effective Amendment No. 30, 10/28/88, and
incorporated herein by reference. (P)
(11) Independent Auditors' Consent: Filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) (i) Form of Individual Retirement Account Plan (IRA)
Agreement: Previously filed with Post-Effective Amendment No. 21 to the
Registration Statement of Oppenheimer U.S. Government Trust (File No.
2-76645), 8/25/93, and incorporated herein by reference. (P)
(ii) Form of prototype Standardized and Non-Standardized
Profit-Sharing Plan for self-employed persons and corporations: Previously
filed with Post-Effective Amendment No. 3 of Oppenheimer Global Growth &
Income Fund (File No. 33-33799), 1/30/92, and incorporated herein
reference. (P)
(iii) Form of Tax Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax-exempt Organizations:
Previously filed with Post-Effective Amendment No. 22 of Oppenheimer
Directors Fund (File No. 2-62240), 2/1/90, and incorporated herein by
reference. (P)
(iv) Form of Simplified Employee Pension IRA: Previously
filed with Post-Effective Amendment No. 36 of Oppenheimer Equity Income
Fund (File No. 2-33043), 10/23/91, and incorporated herein by reference.
(P)
(v) Form of SAR-SEP Simplified Employee Pension IRA:
Previously filed with Post-Effective Amendment No. 19 to the Registration
Statement for Oppenheimer Integrity Funds (File No. 2-76547), 3/1/94, and
incorporated herein by reference.
(15) (i) Class A Service Plan and Agreement dated July 1,
1993: Previously filed with Registrant's Post-Effective Amendment No. 41,
7/30/93, and incorporated herein by reference. (CE)
(ii) Class B Service and Distribution Plan and Agreement
under Rule 12b-1 dated July 1, 1993: Previously filed with Registrant's
Post-Effective Amendment No. 42, 9/30/93, and incorporated herein by
reference.
(16) Performance Data Computation Schedule: Previously filed
with Registrant's Post-Effective Amendment No. 42, 9/30/93, and
incorporated herein by reference.
-- Powers of Attorney signed by Registrant's Trustees:
Previously filed with Registrant's Post-Effective
Amendment No. 41, 7/30/93, and incorporated herein by
reference. (CE)
Item 25. Persons Controlled by or under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
Number of
Record Holders as
Title of Class of September 3, 1993
Class A shares of beneficial interest 74,442
Class B shares of beneficial interest 77
Item 27. Indemnification
Reference is made to paragraphs (c) through (g) of Section 12 of
Article SEVENTH of Registrant's Declaration of Trust filed as Exhibit
(b)(1) to the Registration Statement and incorporated herein by reference.
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. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser of
the Registrant; it and certain subsidiaries and affiliates act
in the same capacity to other registered investment companies
as described in Parts A and B of this Registration Statement.
(b) For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of Oppenheimer Management Corporation, reference is
made to Part B of this Registration Statement and to the
registration on Form ADV of Oppenheimer Management Corporation
filed under the Investment Advisers Act of 1940, which is
incorporated herein by reference.
Item 29. Principal Underwriters
(a) Oppenheimer Fund Management, Inc. is the Distributor of
Registrant's shares. It is also the general distributor of
certain of the other registered open-end investment companies
for which Oppenheimer Management Corporation is the investment
adviser, as described in Parts A and B of this Registration
Statement.
(b) The information contained in the registration on Form BD of
Oppenheimer Fund Management, Inc., filed under the Securities
Exchange Act of 1934, is incorporated herein by reference.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State
of New York on the 31st day of March, 1994.
OPPENHEIMER SPECIAL FUND
By: /s/ Donald W. Spiro*
---------------------------
Donald W. Spiro, President
Attest:
/s/ Andrew J. Donohue*
- ----------------------------
Andrew J. Donohue, Secretary
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/ Leon Levy* Chairman of the
- -------------- Board of Trustees March 31, 1994
Leon Levy
/s/ Donald W. Spiro* President, Principal
- -------------------- Executive Officer
Donald W. Spiro and Trustee March 31, 1994
/s/ George Bowen* Treasurer and
- ----------------- Principal Financial
George Bowen and Accounting
Officer March 31, 1994
/s/ Leo Cherne* Trustee March 31, 1994
- ---------------
Leo Cherne
/s/ Edmund T. Delaney* Trustee March 31, 1994
- ----------------------
Edmund T. Delaney
/s/ Robert G. Galli* Trustee March 31, 1994
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee March 31, 1994
- ----------------------
Benjamin Lipstein
/s/ Kenneth A. Randall* Trustee March 31, 1994
- -----------------------
Kenneth A. Randall
/s/ Sidney M. Robbins* Trustee March 31, 1994
- ----------------------
Sidney M. Robbins
/s/ Russell S. Reynolds, Jr.* Trustee March 31, 1994
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee March 31, 1994
- --------------------
Pauline Trigere
/s/ Elizabeth B. Moynihan* Trustee March 31, 1994
- --------------------------
Elizabeth B. Moynihan
/s/ Clayton K. Yeutter* Trustee March 31, 1994
- -----------------------
Clayton K. Yeutter
/s/ Edward V. Regan* Trustee March 31, 1994
- --------------------
Edward V. Regan
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER SPECIAL FUND
Registration No. 2-45272
Post-Effective Amendment No. 44
Index to Exhibits
Exhibit No. Description
24(b)(1) Amended and Restated Declaration of Trust
dated 2/10/94
24(b)(4)(iii) Specimen Class Y Share Certificate
24(b)(8) Custodian Agreement with The Bank of New York
dated 8/5/92
24(b)(11) Independent Auditor's Consent
<PAGE>
Exhibit 24(b)(1)
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER SPECIAL FUND
This AMENDED AND RESTATED DECLARATION OF TRUST, made as of February
10, 1994, by and among the individuals executing this Amended and Restated
Declaration of Trust as the Trustees.
WHEREAS, the Trustees established Oppenheimer Special Fund (the
"Fund" or the "Trust"), 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 October 7, 1985, as amended
pursuant to an Amended and Restated Declaration of Trust dated August 3,
1993;
WHEREAS, the Board has authorized the issuance of a third class of
shares, to be designated Class Y; and
WHEREAS, the Trustees desire to make certain permitted changes to
said Declaration of Trust pursuant to part four of ARTICLE THIRD;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall henceforth be held and
managed under this Amended and Restated Declaration of Trust IN TRUST as
herein set forth below.
FIRST: This Trust shall be known as OPPENHEIMER SPECIAL FUND. The
address of the Trust is Two World Trade Center, New York, New York 10048-
0203. The Registered Agent for Service in Massachusetts is Massachusetts
Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111, Attention: Stephen Kuhn, Esq.
SECOND: Whenever used herein, unless otherwise required by the
context or specifically provided:
1. All terms used in this Declaration of Trust that are defined in
the 1940 Act (defined below) shall have the meanings given to them in the
1940 Act.
2. "Board" or "Board of Trustees" or the "Trustees" means the Board
of Trustees of the Trust.
3. "By-Laws" means the By-Laws of the Trust as amended from time
to time.
4. "Class" means 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 FOURTH.
5. "Commission" means the Securities and Exchange Commission.
6. "Declaration of Trust" means this Amended and Restated
Declaration of Trust as it may be amended or restated from time to time.
7. The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations of the Commission thereunder, all as amended
from time to time.
8. "Series" refers to series of Shares of the Trust established and
designated under or in accordance with the provisions of Article FOURTH.
9. "Shareholder" means a record owner of Shares of the Trust.
10. "Shares" refers to the 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.
11. The "Trust" refers to the Massachusetts business trust created
by this Declaration of Trust, as amended or restated from time to time.
12. "Trustees" refers to the individual trustees in their capacity
as trustees hereunder of the Trust and their successor or successors for
the time being in office as such trustees.
THIRD: The purpose or purposes for which the Trust is formed and the
business or objects to be transacted, carried on and promoted by it are
as follows:
1. To hold, invest or reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, sell short,
assign, negotiate, transfer, exchange or otherwise dispose of or turn to
account or realize upon, securities (which term "securities" shall for the
purposes of this Declaration of Trust, without limitation of the
generality thereof, be deemed to include any stocks, shares, bonds,
financial futures contracts, indexes, debentures, notes, mortgages or
other obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests therein,
or in any property or assets) created or issued by any issuer (which term
"issuer" shall for the purposes of this Declaration of Trust, without
limitation of the generality thereof be deemed to include any persons,
firms, associations, corporations, syndicates, combinations,
organizations, governments, or subdivisions thereof) and in financial
instruments (whether they are considered as securities or commodities);
and to exercise, as owner or holder of any securities or financial
instruments, all rights, powers and privileges in respect thereof; and to
do any and all acts and things for the preservation, protection,
improvement and enhancement in value of any or all such securities or
financial instruments.
2. To borrow money and pledge assets in connection with any of the
objects or purposes of the Trust, and to issue notes or other obligations
evidencing such borrowings, to the extent permitted by the 1940 Act and
by the Trust's fundamental investment policies under the 1940 Act.
3. To issue and sell its Shares in such Series and Classes and
amounts and on such terms and conditions, for such purposes and for such
amount or kind of consideration (including without limitation thereto,
securities) now or hereafter permitted by the laws of the Commonwealth of
Massachusetts and by this Declaration of Trust, as the Trustees may
determine.
4. To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel its Shares, or to classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any
Series or Class into one or more Series or Classes that may have been
established and designated from time to time, all without the vote or
consent of the Shareholders of the Trust, in any manner and to the extent
now or hereafter permitted by this Declaration of Trust.
5. To conduct its business in all its branches at one or more
offices in New York, Colorado and elsewhere in any part of the world,
without restriction or limit as to extent.
6. To carry out all or any of the foregoing objects and purposes
as principal or agent, and alone or with associates or to the extent now
or hereafter permitted by the laws of Massachusetts, as a member of, or
as the owner or holder of any stock of, or share of interest in, any
issuer, and in connection therewith to make or enter into such deeds or
contracts with any issuers and to do such acts and things and to exercise
such powers, as a natural person could lawfully make, enter into, do or
exercise.
7. To do any and all such further acts and things and to exercise
any and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out
or attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause of this or any other
Article of this Declaration of Trust, and shall each be regarded as
independent and construed as powers as well as objects and purposes, and
the enumeration of specific purposes, objects and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or the general powers of the Trust now or hereafter conferred by the laws
of the Commonwealth of Massachusetts nor shall the expression of one thing
be deemed to exclude another, though it be of a similar or dissimilar
nature, not expressed; provided, however, that the Trust shall not carry
on any business, or exercise any powers, in any state, territory, district
or country except to the extent that the same may lawfully be carried on
or exercised under the laws thereof.
FOURTH:
1. 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 part 3 of this Article FOURTH, and to divide
the shares of any Series into two or more Classes pursuant to Part 2 of
this Article FOURTH, 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
Series 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.
(a) 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.
(b) The establishment and designation of any Series or any
Class of any Series in addition to those established and designated in
part 3 of this Article FOURTH 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.
(c) 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.
2. 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 Article FIFTH,
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 parts 2 and 3 of this Article FOURTH); and
(iii) pursuant to paragraph 10 of Article NINTH, 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.
3. Without limiting the authority of the Trustees set forth in part
1 of this Article FOURTH to establish and designate any further Series,
the Trustees hereby divide the single Series of Shares of the Trust having
the same name as the Trust into three Classes, with the Shares of the
third Class hereby authorized pursuant to this Amended and Restated
Declaration of Trust designated as "Class Y" Shares and the other two
Classes retaining their designation as "Class A" and "Class B" Shares,
respectively. 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 or reserves of the Trust which are not identifiable as
belonging 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
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 or Class, 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 or 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 whether (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.
FIFTH: The following provisions are hereby adopted with respect to
voting Shares of the Trust and certain other rights:
1. The Shareholders shall have the power to vote (a) for the
election of Trustees when that issue is submitted to them, (b) with
respect to the amendment of this Declaration of Trust except where the
Trustees are given authority to amend the Declaration of Trust without
shareholder approval, (c) to the same extent as the shareholders of a
Massachusetts business corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, and (d) with
respect to those matters relating to the Trust as may be required by the
1940 Act or required by law, by this Declaration of Trust, or the By-Laws
of the Trust or any registration statement of the Trust filed with the
Commission or any State, or as the Trustees may consider desirable.
2. The Trust will not hold shareholder meetings unless required by
the 1940 Act, the provisions of this Declaration of Trust, or any other
applicable law. The Trustees may call a meeting of Shareholders.
3. At all meetings of Shareholders, each Shareholder shall be
entitled to one vote on each matter submitted to a 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 in accordance with the By-
Laws, for determination of Shareholders of the affected Series 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 separately
("Individual Series 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 Series Voting as described above. If
the shares of a Series shall be divided into Classes as provided in
Article FOURTH, 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 Class. 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. The presence in person or by proxy of the holders of one-third
of the Shares, or of the Shares of any Series or Class of any Series,
outstanding and entitled to vote thereat shall constitute a quorum at any
meeting of the Shareholders or of that Series or Class, respectively;
provided however, that if any action to be taken by the Shareholders or
by a Series or Class at a meeting requires an affirmative vote of a
majority, or more than a majority, of the shares outstanding and entitled
to vote, then in such event the presence in person or by proxy of the
holders of a majority of the shares outstanding and entitled to vote at
such a meeting shall constitute a quorum for all purposes. If at any
meeting of the Shareholders there shall be less than a quorum present, the
Shareholders or the Trustees 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.
4. Each Shareholder of a Series or Class, upon request to the Trust
in proper form determined by the Trust, shall be entitled to require the
Trust to redeem from the net assets of that Series or Class all or part
of the Shares of such Series or Class standing in the name of such
Shareholder. The method of computing such net asset value, the time at
which such net asset value shall be computed and the time within which the
Trust shall make payment therefor, shall be determined as hereinafter
provided in Article SEVENTH of this Declaration of Trust. Notwithstanding
the foregoing, the Trustees, when permitted or required to do so by the
1940 Act, may suspend the right of the Shareholders to require the Trust
to redeem Shares.
5. No Shareholder shall, as such holder, have any right to purchase
or subscribe for any security of the Trust which it may issue or sell,
other than such right, if any, as the Trustees, in their discretion, may
determine.
6. All persons who shall acquire Shares shall acquire the same
subject to the provisions of the Declaration of Trust.
SIXTH:
1. The persons who shall act as initial Trustees until the first
meeting or until their successors are duly chosen and qualify are the
initial trustees executing this Declaration of Trust or any counterpart
thereof. However, the By-Laws of the Trust may fix the number of Trustees
at a number greater or lesser than the number of initial Trustees and may
authorize the Trustees to increase or decrease the number of Trustees, to
fill any vacancies on the Board which may occur for any reason including
any vacancies created by any such increase in the number of Trustees, to
set and alter the terms of office of the Trustees and to lengthen or
lessen their own terms of office or make their terms of office of
indefinite duration, all subject to the 1940 Act. Unless otherwise
provided by the By-Laws of the Trust, the Trustees need not be
Shareholders.
2. A Trustee at any time may be removed either with or without
cause by resolution duly adopted by the affirmative vote of the holders
of two-thirds of the outstanding Shares, present in person or by proxy at
any meeting of Shareholders called for such purpose; such a meeting shall
be called by the Trustees when requested in writing to do so by the record
holders of not less than ten per centum of the outstanding Shares. A
Trustee may also be removed by the Board of Trustees as provided in the
By-Laws of the Trust.
3. The Trustees shall make available a list of 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) holding in the aggregate
shares of the Trust valued at not less than $25,000 at current offering
price (as defined in the Trust's Prospectus and\or Statement of Additional
Information) or holding not less than 1% in amount of the entire amount
of Shares issued and outstanding; such request must state that such
Shareholders wish to communicate with other shareholders with a view to
obtaining signatures to a request for a meeting to take action pursuant
to part 2 of this Article SIXTH and be accompanied by a form of
communication to the Shareholders. The Trustees may, in their discretion,
satisfy their obligation under this part 3 by either making 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 by mailing a copy of such communication and form of
request, at the expense of such requesting Shareholders, to all other
Shareholders, and the Trustees may also take such other action as may be
permitted under Section 16(c) of the 1940 Act.
4. If and when the Trust has outstanding two or more series of
Shares pursuant to Article FOURTH of this Declaration of Trust, each
Series shall be considered as if it were a separate common law trust
covered by Section 16(c) of the 1940 Act and parts 2 and 3 of this Article
SIXTH. However, the Trust may at any time or from time to time apply to
the Commission for one or more exemptions from all or part of said Section
16(c) of the 1940 Act, and, if an exemptive order or orders are issued
by the Commission, such order or orders shall be deemed part of said
Section 16(c) for the purposes of parts 2 and 3 of this Article SIXTH.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Trust, the Trustees
and the Shareholders.
1. As soon as any Trustee is duly elected by the Shareholders or
the Trustees and shall have accepted this Trust, the Trust estate shall
vest in the new Trustee or Trustees, together with the continuing
Trustees, without any further act or conveyance, and he or she shall be
deemed a Trustee hereunder.
2. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms
of this Declaration of Trust.
3. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets
of the Trust shall at all times be considered as vested in the Trustees.
No Shareholder shall have, as a holder of beneficial interest in the
Trust, any authority, power or right whatsoever to transact business for
or on behalf of the Trust, or on behalf of the Trustees, in connection
with the property or assets of the Trust, or in any part thereof.
4. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute, and to authorize the officers and agents of the Trust to make and
execute, any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
The Trustees shall not in any way be bound or limited by present or future
laws or customs in regard to Trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Subject to any applicable limitation in this Declaration of
Trust or by the By-Laws of the Trust, the Trustees shall have power and
authority:
(a) to adopt By-Laws not inconsistent with this Declaration of
Trust providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint and terminate
such officers as they consider appropriate with or without cause;
(c) to employ a bank or trust company as custodian of any
assets of the Trust subject to any conditions set forth in this
Declaration of Trust or in the By-Laws;
(d) To retain a transfer agent and shareholder servicing agent,
or both;
(e) To provide for the distribution of Shares either through
a principal underwriter or the Trust itself or both;
(f) To set record dates in the manner provided for in the By-
Laws of the Trust;
(g) to delegate such authority as they consider desirable to
any officers of the Trust and to any agent, custodian or underwriter;
(h) to vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property held in
Trust hereunder; and to execute and deliver powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to securities
or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities held in trust
hereunder;
(j) to hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form,
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts business trusts or investment companies;
(k) to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern,
and to pay calls or subscriptions with respect to any security held in the
Trust;
(l) 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;
(m) to make, in the manner provided in the By-Laws,
distributions of income and of capital gains to Shareholders;
(n) to borrow money to the extent and in the manner permitted
by the 1940 Act and the Trust's fundamental policy thereunder as to
borrowing;
(o) to enter into investment advisory or management contracts,
subject to the 1940 Act, with any one or more corporations, partnerships,
trusts, associations or other persons; and
(p) to change the name of the Trust or any Class or Series of
the Trust as they consider appropriate without prior shareholder approval.
5. No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see
to the application of any payments made or property transferred to the
Trustees or upon their order.
6. (a) The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription to any Shares or
otherwise. There is hereby expressly disclaimed shareholder liability for
the acts and obligations of the Trust. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust shall include a recitation limiting the obligation
represented thereby to the Trust and its assets (but the omission of such
recitation shall not operate to bind any Shareholder).
(b) Whenever this Declaration of Trust calls for or permits any
action to be taken by the Trustees hereunder, such action shall mean that
taken by the Board of Trustees by vote of the majority of a quorum of
Trustees as set forth from time to time in the By-Laws of the Trust or as
required by the 1940 Act.
(c) The Trustees shall possess and exercise any and all such
additional powers as are reasonably implied from the powers herein
contained such as may be necessary or convenient in the conduct of any
business or enterprise of the Trust, to do and perform anything necessary,
suitable, or proper for the accomplishment of any of the purposes, or the
attainment of any one or more of the objects, herein enumerated, or which
shall at any time appear conducive to or expedient for the protection or
benefit of the Trust, and to do and perform all other acts and things
necessary or incidental to the purposes herein before set forth, or that
may be deemed necessary by the Trustees.
(d) The Trustees shall have the power, to the extent not
inconsistent with the 1940 Act, to determine conclusively whether any
moneys, securities, or other properties of the Trust are, for the purposes
of this Trust, to be considered as capital or income and in what manner
any expenses or disbursements are to be borne as between capital and
income whether or not in the absence of this provision such moneys,
securities, or other properties would be regarded as capital or income and
whether or not in the absence of this provision such expenses or
disbursements would ordinarily be charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees into classes
and prescribe the tenure of office of the several classes, but no class
of Trustee shall be elected for a period shorter than that from the time
of the election following the division into classes until the next meeting
and thereafter for a period shorter than the interval between meetings or
for a period longer than five years, and the term of office of at least
one class shall expire each year.
8. The Shareholders shall have the right to inspect the records,
documents, accounts and books of the Trust, subject to reasonable
regulations of the Trustees, not contrary to Massachusetts law, as to
whether and to what extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any officer elected or appointed by the Trustees or by any
committee of the Trustees may be removed at any time, with or without
cause, by vote of the Trustees.
10. If the By-Laws so provide, the Trustees shall have power to hold
their meetings, to have an office or offices and, subject to the
provisions of the laws of Massachusetts, to keep the books of the Trust
outside of said Commonwealth at such places as may from time to time be
designated by them. Action may be taken by the Trustees without a meeting
by unanimous written consent or by telephone or similar method of
communication.
11. Securities held by the Trust shall be voted in person or by
proxy by the President or a Vice-President, or such officer or officers
of the Trust as the Trustees shall designate for the purpose, or by a
proxy or proxies thereunto duly authorized by the Trustees, except as
otherwise ordered by vote of the holders of a majority of the Shares
outstanding and entitled to vote in respect thereto.
12. (a) Subject to the provisions of the 1940 Act, any Trustee,
officer or employee, individually, or any partnership of which any
Trustee, officer or employee may be a member, or any corporation or
association of which any Trustee, officer or employee may be an officer,
director, trustee, employee or stockholder, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
Trust, and in the absence of fraud no contract or other transaction shall
be thereby affected or invalidated; provided that in case a Trustee, or
a partnership, corporation or association of which a Trustee is a member,
officer, director, trustee, employee or stockholder is so interested, such
fact shall be disclosed or shall have been known to the Trustees
or a majority thereof; and any Trustee who is so interested, or who is
also a director, officer, trustee, employee or stockholder of such other
corporation or a member of such partnership or association which is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Trustees which shall authorize any such contract or
transaction, and may vote thereat to authorize any such contract or
transaction, with like force and effect as if he or she were not such
director, officer, trustee, employee or stockholder of such other trust
or corporation or association or a member of a partnership so interested.
(b) Specifically, but without limitation of the foregoing, the
Trust may enter into a management or investment advisory contract or
underwriting contract and other contracts with, and may otherwise do
business with any manager or investment adviser for the Trust and/or
principal underwriter of the Shares of the Trust or any subsidiary or
affiliate of any such manager or investment adviser and/or principal
underwriter and may permit any such firm or corporation to enter into any
contracts or other arrangements with any other firm or corporation
relating to the Trust notwithstanding that the Trustees of the Trust may
be composed in part of partners, directors,
officers or employees of any such firm or corporation, and officers of the
Trust may have been or may be or become partners, directors, officers or
employees of any such firm or corporation, and in the absence of fraud the
Trust and any such firm or corporation may deal freely with each other,
and no such contract or transaction between the Trust and any such firm
or corporation shall be invalidated or in any way affected thereby, nor
shall any Trustee or officer of the Trust be liable to the Trust or to any
Shareholder or creditor thereof or to any other person for any loss
incurred by it or him or her solely because of the existence of any such
contract or transaction; provided that nothing herein shall protect any
director or officer of the Trust against any liability to the Trust
or to its security holders to which he or she 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 or her office.
(c) As used in this paragraph the following terms shall have
the meanings set forth below:
(i) the term "indemnitee" shall mean any present or former
Trustee, officer or employee of the Trust, any present or former Trustee
or officer of another trust or corporation whose securities are or were
owned by the Trust or of which the Trust is or was a creditor and who
served or serves in such capacity at the request of the Trust, and the
heirs, executors, administrators, successors and assigns of any of the
foregoing; however, whenever conduct by an indemnitee is referred to, the
conduct shall be that of the original indemnitee rather than that of the
heir, executor, administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which an indemnitee
is or was a party or is threatened to be made a party by reason of the
fact or facts under which he or she or it is an indemnitee as defined
above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by an indemnitee in connection
with a covered proceeding; and
(v) the term "adjudication of liability" shall mean, as
to any covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent.
(d) The Trust shall not indemnify any indemnitee for any
covered expenses in any covered proceeding if there has been an
adjudication of liability against such indemnitee expressly based on a
finding of disabling conduct.
(e) Except as set forth in paragraph (d) above, the Trust shall
indemnify any indemnitee for covered expenses in any covered proceeding,
whether or not there is an adjudication of liability as to such indemnitee
if a determination has been made that the indemnitee was not liable by
reason of disabling conduct by (1) a final decision on the merits of the
court or other body before which the covered proceeding was brought; or
(2) in the absence of such decision, a reasonable determination, based on
a review of the facts, by either (A) the vote of a majority of a quorum
of Trustees who are neither "interested persons" as defined in the 1940
Act nor parties to the covered proceedings, or (B) an independent legal
counsel in a written opinion; provided that such Trustees or counsel, in
making such determination, may but need not presume the absence of
disabling conduct on the part of the indemnitee by reason of the manner
in which the covered proceeding was terminated.
(f) Covered expenses incurred by an indemnitee in connection
with a covered proceeding shall be advanced by the Trust to an indemnitee
prior to the final disposition of a covered proceeding upon the request
of the indemnitee for such advance and the undertaking by or on behalf of
the indemnitee to repay the advance unless it is ultimately determined
that the indemnitee is entitled to indemnification hereunder, but only if
one or more of the following is the case: (i) the indemnitee shall
provide a security for such undertaking; (ii) the Trust shall be insured
against losses arising out of any lawful advances; or (iii) there shall
have been a determination, based on a review of the readily available
facts (as opposed to a full trial-type inquiry) that there is a reason to
believe that the indemnitee ultimately will be found entitled to
indemnification by either independent legal counsel in a written opinion
or by the vote of a majority of a quorum of trustees who are neither
"interested persons" as defined in the 1940 Act nor parties to the covered
proceeding.
(g) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any insurance covering
any or all indemnitees to the extent permitted by the 1940 Act or to
affect any other indemnification rights to which any indemnitee may be
entitled to the extent permitted by the 1940 Act.
13. 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 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 basis 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 paragraph 4 of
Article FIFTH 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.
(b) The Trustees are empowered, in their absolute discretion,
to establish other bases or times, or both, for determining the net asset
value per Share of any Series or Class in accordance with the 1940 Act and
to authorize the voluntary purchase by any Series or Class either directly
or through an agent, of Shares of any Series or Class upon such terms and
conditions and for such consideration as the Trustees shall deem advisable
in accordance with any such provision, rule or regulation.
14. Payment of the net asset value per Share of any Class and Series
properly surrendered to it for redemption shall be made by the Trust
within seven days, or as specified in any applicable law or regulation,
after tender of such stock or request for redemption to the Trust for such
purpose together with any additional documentation that may reasonably be
required by the Trust or its transfer agent to evidence the authority of
the tenderor to make such requests plus any period of time during which
the right of the holders of the shares of such Class of that Series to
require the Trust to redeem such shares has been suspended. Any such
payment may be made in portfolio securities of such Class of that Series
and/or in cash, as the Trustees shall deem advisable, and no Shareholder
shall have a right, other than as determined by the Trustees, to have
Shares redeemed in kind.
15. The Trust shall have the right, at any time and without prior
notice to the Shareholder, to redeem Shares of the Class and Series held
by such Shareholder held in any account registered in the name of such
Shareholder for its current net asset value, if and to the extent that
such redemption is necessary to reimburse either that Series or Class of
the Trust or the distributor (i.e., principal underwriter) of the Shares
for any loss either has sustained by reason of the failure of such
Shareholder to make timely and good payment for Shares purchased or
subscribed for by such Shareholder, regardless of whether such Shareholder
was a Shareholder at the time of such purchase or subscription, subject
to and upon such terms and conditions as the Trustees may from time to
time prescribe.
EIGHTH: The name "Oppenheimer" included in the name of the Trust and
of any Series 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.
NINTH:
1. 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 his acts or omissions or for some other
reason, the Shareholder or former Shareholder (or the Shareholder's 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 Trust estate to be held harmless
from and indemnified against all loss and expense arising from such
liability. The Trust shall, upon request by the Shareholder, assume the
defense of any such claim made against any Shareholder for any act or
obligation of the Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and not a
partnership is created hereby. No individual Trustee hereunder shall have
any power to bind the Trust, the Trust's officers or any Shareholder. All
persons extending credit to, doing business with, contracting with or
having or asserting any claim against the Trust or the Trustees shall look
only to the assets of the Trust for payment under any such credit,
transaction, contract or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future, shall
be personally liable therefor; notice of such disclaimer shall be given
in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. Nothing in this Declaration of Trust shall
protect a Trustee
against any liability to which such Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
3. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to
the provisions of paragraph 2 of this Article NINTH, the Trustees shall
not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the
meaning and operations of this Declaration of Trust, applicable laws,
contracts, obligations, transactions or any other business the Trust may
enter into, and subject to the provisions of paragraph 2 of this Article
NINTH, shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The Trustees shall
not be required to give any bond as such, nor any surety if a bond is
required.
4. This Trust shall continue without limitation of time but subject
to the provisions of sub-sections (a), (b), (c) and (d) of this paragraph
4.
(a) The Trustees, with the favorable vote of the holders of a
majority as defined in the 1940 Act, of the outstanding Shares of any one
or more Series entitled to vote, may sell and convey the assets of that
Series (which sale may be subject to the retention of assets for the
payment of liabilities and expenses) to another issuer for a consideration
which may be or include securities of such issuer. Upon making provision
for the payment of liabilities, by assumption by such issuer or otherwise,
the Trustees shall distribute the remaining proceeds ratably among the
holders of the outstanding Shares of the Series the assets of which have
been so transferred.
(b) The Trustees, with the favorable vote of the holders of
a majority, as defined in the 1940 Act, of the outstanding Shares of any
one or more Series entitled to vote, may at any time sell and convert into
money all the assets of that Series. Upon making provisions for the
payment of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of that Series, the Trustees shall distribute the
remaining assets of that Series ratably among the holders of the
outstanding Shares of that Series.
(c) The Trustees, with the favorable vote of the holders of a
majority, as defined in the 1940 Act, of the outstanding Shares of any one
or more Series entitled to vote, may otherwise alter, convert or transfer
the assets of the Series.
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in sub-sections (a) and (b),
and in subsection (c) where applicable, the Series the assets of which
have been so transferred shall terminate, and if all the assets of the
Trust have been so transferred, the Trust shall terminate and the Trustees
shall be discharged of any and all further liabilities and duties
hereunder and the right, title and interest of all parties shall be
cancelled and discharged.
5. The original or a copy of this instrument and of each restated
declaration of trust or instrument supplemental hereto shall be kept at
the office of the Trust where it may be inspected by any Shareholder. A
copy of this instrument and of each supplemental or restated declaration
of trust shall be filed with the Secretary of State of Massachusetts, as
well as any other governmental office where such filing may from time to
time be required. Anyone dealing with the Trust may rely on a certificate
by an officer of the Trust as to whether or not any such supplemental or
restated declarations of trust have been made and as to any matters in
connection with the Trust hereunder, and, with the same effect as if it
were the original, may rely on a copy certified by an officer of the Trust
to be a copy of this instrument or of any such supplemental or restated
declaration of trust. In this instrument or in any such supplemental or
restated declaration of trust, references to this instrument, and all
expressions like "herein", "hereof" and "hereunder" shall be deemed to
refer to this instrument as amended or affected by any such supplemental
or restated declaration of trust. This instrument may be executed in any
number of counterparts, each of which shall be deemed an original.
6. The Trust set forth in this instrument is created under and is
to be governed by and construed and administered according to the laws of
the Commonwealth of Massachusetts. The Trust shall be of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
7. The Board of Trustees is empowered to cause the redemption of
the Shares held in any account if the aggregate net asset value of such
Shares (taken at cost or value, as determined by the Board) has been
reduced to $500 or less upon such notice to the shareholder in question,
with such permission to increase the investment in question and upon such
other terms and conditions as may be fixed by the Board of Trustees in
accordance with the 1940 Act.
8. In the event that any person advances the organizational
expenses of the Trust, such advances shall become an obligation of the
Trust subject to such terms and conditions as may be fixed by, and on a
date fixed by, or determined with criteria fixed by the Board of Trustees,
to be amortized over a period or periods to be fixed by the Board.
9. Whenever any action is taken under this Declaration of Trust
under any authorization to take action which is permitted by the 1940 Act
or any other applicable law, such action shall be deemed to have been
properly taken if such action is in accordance with the construction of
the 1940 Act or such other applicable law then in effect as expressed in
"no action" letters of the staff of the Commission or any release, rule,
regulation or order under the 1940 Act or any decision of a court of
competent jurisdiction, notwithstanding that any of the foregoing shall
later be found to be invalid or otherwise reversed or modified by any of
the foregoing.
10. 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.
11. Whenever under this Declaration of Trust, the Board of Trustees
is permitted or required to place a value on assets of the Trust, such
action may be delegated by the Board, and/or determined in accordance with
a formula determined by the Board, to the extent permitted by the 1940
Act.
12. If authorized by vote of the Trustees and, if a vote of
Shareholders is required under this Declaration of Trust, the favorable
vote of the holders of a "majority", as defined in the 1940 Act, of the
outstanding Shares entitled to vote, or by any larger vote which may be
required by applicable law in any particular case, the Trustees shall
amend or otherwise supplement this instrument, by making a Declaration of
Trust supplemental hereto, which thereafter shall form a part hereof; any
such Supplemental or Restated Declaration of Trust may be executed by and
on behalf of the Trust and the Trustees by an officer or officers of the
Trust. Amendments having the purpose of changing the name of the Trust,
or any Series or Class of Shares, or of adding or designating Series or
Classes of Series or of supplying any omission, curing any ambiguity, or
curing, correcting or supplementing any provision that is defective or
inconsistent with the 1940 Act or with the requirements of the Internal
Revenue Code and the regulations thereunder for the Trust's obtaining the
most favorable treatment thereunder available to regulated investment
companies or of taking such other actions permitted hereunder without the
necessity of obtaining Shareholder approval or action shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 10th day of February, 1994.
/s/ Leo Cherne /s/ Benjamin Lipstein
- ------------------------------ ------------------------------
Leo Cherne Benjamin Lipstein
50 East 79 Street 591 Breezy Hill Road
New York, NY 10021 Hillsdale, NY 12529
/s/ Edmund T. Delaney /s/ Donald W. Spiro
- ------------------------------ ------------------------------
Edmund T. Delaney Donald W. Spiro
5 Gorham Road 399 Ski Trail
Chester, CT 06412 Kinnelon, NJ 07405
/s/ Leon Levy /s/ Pauline Trigere
- ------------------------------ ------------------------------
Leon Levy Pauline Trigere
One Sutton Place South 525 Park Avenue
New York, NY 10022 New York, NY 10021
/s/ Sidney M. Robbins /s/ Kenneth A. Randall
- ------------------------------ ------------------------------
Sidney M. Robbins Kenneth A. Randall
50 Overlook Road 6 Whittaker's Mill
Ossining, NY 10562 Williamsburg, VA 23185
/s/ Russell S. Reynolds /s/ Elizabeth B. Moynihan
- ------------------------------ ------------------------------
Russell S. Reynolds Elizabeth B. Moynihan
39 Clapboard Ridge Road 801 Pennsylvania Avenue
Greenwich, CT 06830 Washington, D.C. 20004
/s/ Clayton K. Yeutter /s/ Edward V. Regan
- ------------------------------ ------------------------------
Clayton K. Yeutter Edward V. Regan
1325 Merrie Ridge Road 40 Park Avenue
McLean, VA 22101 New York, NY 10016
/s/ Robert G. Galli
- ------------------------------
Robert G. Galli
11-54 Shearwater Court
Jersey City, NJ 07305
<PAGE>
Exhibit 24(b)(4)(iii)
OPPENHEIMER SPECIAL FUND
Class Y Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) share certificate no.
(upper right box with heading: CLASS Y SHARES
below cert. no.)
(centered
below boxes) OPPENHEIMER SPECIAL FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID CLASS Y SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER SPECIAL FUND
(hereinafter called the "Fund," transferable only on the
books of the Fund By the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by acceptance
hereof assents. This certificate is not valid until
countersigned by the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER SPECIAL FUND
SEAL
1972
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMER MANAGEMENT
CORPORATION)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class Y Shares of
beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint ___________________________ Attorney
to transfer the said shares on the books of the within named Fund with
full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
Exhibit 24(b)(8)
OPPENHEIMER SPECIAL FUND
CUSTODY AGREEMENT
Agreement made as of this 5th day of August, 1992, between
OPPENHEIMER SPECIAL FUND, a business trust organized and existing under
the laws of the Commonwealth of Massachusetts, having its principal office
and place of business at 2 World Trade Center, New York, New York 10048
(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. Section 270.17f-5)
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended.
31. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over
the counter Options on Securities, common stocks and other securities
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or rights to any property or assets.
32. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as
a segregated account, by recordation or otherwise, within the custody
account in which certain Securities and/or other assets of the Fund
specifically allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may from time
to time determine.
33. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for
the Fund, except that if the Fund does not have more than one portfolio,
"Series" shall mean the Fund or be ignored where a requirement would be
imposed on the Fund or the Custodian which is unnecessary if there is only
one portfolio.
34. "Shares" shall mean the shares of beneficial interest of the
Fund and its Series.
35. "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use
of the Terminal Link the use of an authorization code provided by the
Custodian and at least two access codes established by the Fund, provided,
that the Fund shall have delivered to the Custodian a Certificate
substantially in the form of Appendix C.
36. "Transfer Agent" shall mean Oppenheimer Shareholder Services,
a division of Oppenheimer Management Corporation, its successors and as-
signs.
37. "Transfer Agent Account" shall mean any account in the name of
the Fund, or the Transfer Agent, as agent for the Fund, maintained with
United Missouri Bank or such other Bank designated by the Fund in a
Certificate.
38. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the Custodian
from an Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such system
whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the identity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned or held by the
Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer Agent
Account, or as otherwise provided in paragraph 7 of this Article or in
Article VIII or XV, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during
the period of this Agreement, and shall specify with respect to such
Securities and money the Series to which the same are specifically
allocated, and the Custodian shall not be responsible for any Securities
or money not so delivered. Except for assets held at DTC, the Custodian
shall physically segregate, keep and maintain the Securities of the Series
separate and apart from each other Series and from other assets held by
the Custodian. Except as otherwise expressly provided in this Agreement,
the Custodian will not be responsible for any Securities and moneys not
actually received by it, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Custodian will
be entitled to reverse any credit of money made on the Fund's behalf where
such credits have been previously made and moneys are not finally col-
lected, unless the Custodian has been negligent or has engaged in willful
misconduct with respect thereto; provided that if such reversal is thirty
(30) days or more after the credit was issued, the Custodian will give
five (5) days' prior notice of such reversal. The Fund shall deliver to
the Custodian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit
in the Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated and
to utilize the Book-Entry System to the extent possible in connection with
its performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of Securities
and deliveries and returns of Securities collateral. Prior to a deposit
of Securities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the Board
of Trustees of the Fund, substantially in the form of Exhibit B hereto,
approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate to deposit
in such Depository all Securities specifically allocated to such Series
eligible for deposit therein, and to utilize such Depository to the extent
possible with respect to such Securities in connection with its per-
formance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys
deposited in either the Book-Entry System or a Depository will be
represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custo-
dian acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate account
for the applicable Series. Prior to the Custodian's accepting, utilizing
and acting with respect to Clearing Member confirmations for Options and
transactions in Options for a Series as provided in this Agreement, the
Custodian shall have received a certified resolution of the Fund's Board
of Trustees, substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All Securities are to be held or
disposed of by the Custodian for, and subject at all times to the
instructions of, the Fund pursuant to the terms of this Agreement. The
Custodian shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any Securities except as provided by the terms of
this Agreement, and shall have the sole power to release and deliver
Securities held pursuant to this Agreement.
2. The Custodian shall establish and maintain separate accounts,
in the name of each Series, and shall credit to the separate account for
each Series all moneys received by it for the account of the Fund with
respect to such Series. Money credited to a separate account for a Series
shall be subject only to drafts, orders, or charges of the Custodian
pursuant to this Agreement and shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the Fund's Board
of Trustees certified by an Officer and by the Secretary or Assistant
Secretary of the Fund setting forth the name and address of the person to
whom the payment is to be made, the Series account from which payment is
to be made, the purpose for which payment is to be made, and declaring
such purpose to be a proper corporate purpose; provided, however, that
amounts representing dividends, distributions, or redemptions proceeds
with respect to Shares shall be paid only to the Transfer Agent Account;
(c) In payment of the fees and in reimbursement of the expenses
and liabilities of the Custodian attributable to such Series and
authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes, management
fees or operating expenses (including, without limitation thereto, Board
of Trustees' fees and expenses, and fees for legal accounting and auditing
services), which Certificates set forth the name and address of the person
to whom payment is to be made, state the purpose of such payment and
designate the Series for whose account the payment is to be made.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series,
either hereunder or with any co-custodian or subcustodian appointed in
accordance with this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series but held in a
Depository, the Custodian shall upon such transfer also by book-entry or
otherwise identify such Securities as belonging to such Series in a
fungible bulk of Securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the Book-
Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per
Series basis, of the Securities and moneys held under this Agreement for
the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held hereunder may be registered in the name of the Fund,
in the name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of the Book-
Entry System or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or a Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in a Depository in a separate account in the name of
such Series physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or a Depository with
respect to Securities held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Promptly collect all income, dividends and distributions
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 declarations
or certificates of ownership under the Federal Income Tax Laws or the laws
or regulations of any other taxing authority now or hereafter in effect;
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account
of a Series, all rights and similar securities issued with respect to any
Securities held by the Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, proxies, proxy
soliciting materials, consents and other written information (including,
without limitation, notices of tender offers and exchange offers, pendency
of calls, maturities of Securities and expiration of rights) relating to
Securities held pursuant to this Agreement which are actually received by
the Custodian, such proxies and other similar materials to be executed by
the registered holder (if Securities are registered otherwise than in the
name of the Fund), but without indicating the manner in which proxies or
consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:
(a) Promptly execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as owner of any
Securities held hereunder for the Series specified in such Certificate may
be exercised;
(b) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any right, warrant or conversion privilege and receive
and hold hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold hereunder
specifically allocated to such Series in exchange therefor such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such
Securities as may be issued upon such delivery; and
(d) Promptly present for payment and collect the amount payable
upon Securities which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have
received a Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the Custodian
such a Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940 in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer, or
futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures
Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise in the name the
Custodian (or any nominee of the Custodian) as custodian for the Fund;
provided, however, that notwithstanding the foregoing, payments to or
deliveries from the Margin Account and payments with respect to Securities
to which a Margin Account relates, shall be made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for
which such instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such certificate, and
deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt
by the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract, a Futures
Contract Option, a Repurchase Agreement, a Reverse Repurchase Agreement
or a Short Sale, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money Market
Securities, a Certificate, oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the Series to which
such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom
or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker or other party to
whom payment is to be made. Custodian shall, upon receipt of such
Securities purchased by or for the Fund, pay to the broker specified in
the Certificate out of the moneys held for the account of such Series the
total amount payable upon such purchase, provided that the same conforms
to the total amount payable as set forth in such Certificate, oral
Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures Contract
Option, Repurchase Agreement, Reverse Repurchase Agreement or Short Sale,
the Fund shall deliver such to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each sale of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale and settlement; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the name of the
broker through whom or the person to whom the sale was made, and the name
of the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian
shall deliver the Securities specifically allocated to such Series to the
broker in accordance with generally accepted street practices and as
specified in the Certificate upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the total
amount payable as set forth in such Certificate, oral Instructions or
Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option by the
Fund other than a closing purchase transaction, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each Option
purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the name of
the in the case of an Index Option, the index to which such Option relates
and the number of Index Options purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; and (h)
the name of the Clearing Member through whom such Option was purchased.
The Custodian shall pay, upon receipt of a Clearing Member's written
statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as Custodian for the Fund, out of
moneys held for the account of the Series to which such Option is to be
specifically allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that the same
conforms to the amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option purchased
by the Fund, other than a closing sale transaction, pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a Certificate specifying
with respect to each such sale: (a) the Series to which such Option was
specifically allocated; (b) the type of Option (put or call); (c) the
instrument, currency, or Security underlying such Option and the number
of Options, or the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Index Option, the index to
which such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph of
this Article with respect to such Option upon receipt by the Custodian of
the total amount payable to the Fund, provided that the same conforms to
the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Call Option was exercised. The Custo-
dian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the
Series to which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call Option was ex-
ercised, provided that the same conforms to the total amount payable as
set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct a Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Index Option: (a) the Series to which such Index Option was specifically
allocated; (b) the type of Index Option (put or call) (c) the number of
Options being exercised; (d) the index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be
received by the Fund in connection with such exercise; and (h) the
Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Covered Call Option: (a) the Series for which such Covered Call
Option was written; (b) the name of the issuer and the title and number
of shares for which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the premium
is to be received. The Custodian shall deliver or cause to be delivered,
upon receipt of the premium specified in the Certificate with respect to
such Covered Call Option, such receipts as are required in accordance with
the customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct a Depository to impose, upon the
underlying Securities specified in the Certificate specifically allocated
to such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior
written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate instructing the Custodian
to deliver, or to direct the Depository to deliver, the Securities subject
to such Covered Call Option and specifying: (a) the Series for which such
Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing
Member to whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund upon such delivery. Upon the return
and/or cancellation of any receipts delivered pursuant to paragraph 6 of
this Article, the Custodian shall deliver, or direct a Depository to
deliver, the underlying Securities as specified in the Certificate upon
payment of the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the
name of the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the Clearing Member
through whom the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such Series; and
(i) the amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the deposits
into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the Clearing Member
specified in the Certificate upon receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be under
no obligation to issue any Put Option guarantee letter or similar document
if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put
Option was written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the amount and
kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically allocated to such
series, if any, to be withdrawn from the Senior Security Account. Upon
the return and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the account of
the series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set
forth in such Certificate, upon delivery of such Securities, and shall
make the withdrawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) whether such Index Option is a put or a call; (c) the number
of Options written; (d) the index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received by the Fund;
(i) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; (j) the amount of cash and/or the amount
and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount
of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name
in which such account is to be or has been established. The Custodian
shall, upon receipt of the premium specified in the Certificate, make the
deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the
Custodian has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Index Options and make
the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certi-
ficate.
11. Whenever an Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) such information as may be necessary to identify the Index
Option being exercised; (c) the Clearing Member through whom such Index
Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be with-
drawn from the Margin Account; and (f) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Collateral Account for
such Series. Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series
to which such Stock Index Option was specifically allocated to the Clear-
ing Member specified in the Certificate the total amount payable, if any,
as specified therein.
12. Promptly after the execution of a purchase or sale by the Fund
of any Option identical to a previously written Option described in
paragraphs, 6, 8 or 10 of this Article in a transaction expressly
designated as a "Closing Purchase Transaction" or a "Closing Sale
Transaction", the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Option being purchased: (a)
that the transaction is a Closing Purchase Transaction or a Closing Sale
Transaction; (b) the Series for which the Option was written; (c) the
instrument, currency, or Security subject to the Option, or, in the case
of an Index Option, the index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by or
the amount to be paid to the Fund; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase or sale; (i) the
name of the Clearing Member to whom the premium is to be paid or from whom
the amount is to be received; and (j) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for
such Series. Upon the Custodian's payment of the premium or receipt of
the amount, as the case may be, specified in the Certificate and the
return and/or cancellation of any receipt issued pursuant to paragraphs
6, 8 or 10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction or the Closing Sale Transaction,
the Custodian shall remove, or direct a Depository to remove, the pre-
viously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or written by
the Fund and described in this Article, the Custodian shall delete such
Option from the statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of any
receipts issued by the Custodian, shall make such withdrawals from the
Collateral Account, and the Margin Account and/or the Senior Security
Account as may be specified in a Certificate received in connection with
such expiration, exercise, or consummation.
14. Securities acquired by the Fund through the exercise of an
Option described in this Article shall be subject to Article IV hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
such Futures Contract, (or with respect to any number of identical Futures
Contract (s)): (a) the Series for which the Futures Contract is being
entered; (b) the category of Futures Contract (the name of the underlying
index or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were) entered into
and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) such Futures Contract(s); (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker,
dealer, or futures commission merchant through whom the Futures Contract
was entered into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the deposits,
if any, to the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make payment out of
the moneys specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and kind of
Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment required
to be made by the Fund to a broker, dealer, or futures commission merchant
with respect to an outstanding Futures Contract shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund with respect
to an outstanding Futures Contract shall be received and dealt with by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian prior to the delivery
or settlement date a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to an Index Futures
Contract, the total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities and/or amount
of cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn
from the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and delete such
Futures Contract from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset
a Futures Contract held by the Custodian hereunder, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the items of information
required in a Certificate described in paragraph 1 of this Article, and
(b) the Futures Contract being offset. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant
to paragraph 3 of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in the Cer-
tificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a)
the Series to which such Option is specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the amount of premium to be paid by the Fund upon such
purchase; (h) the name of the broker or futures commission merchant
through whom such Option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Cus-
todian shall pay out of the moneys specifically allocated to such Series
the total amount to be paid upon such purchase to the broker or futures
commissions merchant through whom the purchase was made, provided that the
same conforms to the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or
call); (c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the date
of settlement; (g) the total amount payable to the Fund upon such sale;
and (h) the name of the broker of futures commission merchant through whom
the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of
the total amount payable to the Fund, provided the same conforms to the
total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to
which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the
type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised; (f) the
net total amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund; and (h) the amount of cash and/or the amount and
kind of Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if any, and
the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Futures Contract Option: (a) the Series for which such
Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g) the name
of the broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified
in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account,
if any, as specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is
a call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract
Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited in the
Senior Security Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any, specified in
such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The de-
posits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Option
was specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
and kind of Securities and/or cash to be withdrawn from or deposited in,
the Senior Security Account for such Series, if any. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account,
if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
7. Promptly after the execution by the Fund of a purchase of any
Futures Contract Option identical to a previously written Futures Contract
Option described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall deliver to the
Custodian a Certificate specifying with respect to the Futures Contract
Option being purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate.
The withdrawals, if any, to be made from the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall
(a) delete such Futures Contract Option from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein and (b) make such
withdrawals from and/or in the case of an exercise such deposits into the
Senior Security Account as may be specified in a Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of
a Futures Contract Option described in this Article shall be subject to
Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of Securities
by any Series of the Fund, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was
made; (b) the name of the issuer-and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited
in a Senior Security Account, and (i) the name of the broker through whom
such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or
any nominee of the Custodian) as custodian of the Fund, issue a receipt
or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any
short sale of Securities, the Fund shall promptly deliver to the Custodian
a Certificate specifying with respect to each such closing out: (a) the
Series for which such transaction is being made; (b) the name of the
issuer and the title of the Security; (c) the number of shares or the
principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net
total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account; and
(j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect
to the short sale being closed-out, pay out of the moneys held for the
account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or a
Reverse Repurchase Agreement with respect to Securities and money held by
the Custodian hereunder, the Fund shall deliver to the Custodian a Certi-
ficate, or in the event such Repurchase Agreement or Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which the
Repurchase Agreement or Reverse Repurchase Agreement is entered; (b) the
total amount payable to or by the Fund in connection with such Repurchase
Agreement or Reverse Repurchase Agreement and specifically allocated to
such Series; (c) the broker, dealer, or financial institution with whom
the Repurchase Agreement or Reverse Repurchase Agreement is entered; (d)
the amount and kind of Securities to be delivered or received by the Fund
to or from such broker, dealer, or financial institution; (e) the date of
such Repurchase Agreement or Reverse Repurchase Agreement; and (f) the
amount of cash and/or the amount and kind of Securities, if any, specifi-
cally allocated to such Series to be deposited in a Senior Security Ac-
count for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable
to or by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions make or accept the delivery to or from the broker,
dealer, or financial institution and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Repurchase Agreement or a Reverse
Repurchase Agreement described in preceding paragraph 1 of this Article,
the Fund shall promptly deliver a Certificate or, in the event such
Repurchase Agreement or Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions, or Written Instructions to the
Custodian specifying: (a) the Repurchase Agreement or Reverse Repurchase
Agreement being terminated and the Series for which same was entered; (b)
the total amount payable to or by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received or
delivered by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the
name of the broker, dealer, or financial institution with whom the Repur-
chase Agreement or Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt or delivery of the amount and kind of
Securities or cash to be received or delivered by the Fund specified in
the Certificate, Oral Instructions, or Written Instructions, make or
receive the payment to or from the broker, dealer, or financial
institution and make the withdrawals, if any, from the Senior Security
Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
3. The Certificates, Oral Instructions, or Written Instructions
described in paragraphs 1 and 2 of this Article may with respect to any
particular Repurchase Agreement or Reverse Repurchase Agreement be
combined and delivered to the Custodian at the time of entering into such
Repurchase Agreement or Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall
deliver or cause to be delivered to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned
Securities are specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the principal amount
loaned, (d) the date of loan and delivery, (e) the total amount to be
delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately iden-
tified, and (f) the name of the broker, dealer, or financial institution
to which the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or a Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds.
2. In connection with each termination of a loan of Securities by
the Fund, the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying with respect to each such loan termination and
return of Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the principal
amount to be returned, (d) the date of termination, (e) the total amount
to be delivered by the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institution from
which the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial institution to
which such Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and from
time to time make such deposits thereto, or withdrawals therefrom, as
specified in a Certificate. Such Certificate shall specify the Series for
which such deposit or withdrawal is to be made and the amount of cash
and/or the amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such
deposit has been made.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing
Member in whose name, or for whose benefit, the account was established
as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall to the extent permitted by the Fund's
Declaration of Trust, investment restrictions and the Investment Company
Act of 1940 have a continuing lien and security interest in and to any
property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the Custodian;
provided, however, that the Custodian shall not be required to issue any
Put Option guarantee letter unless it shall have received an opinion of
counsel to the Fund or its investment adviser that the issuance of such
letters is authorized by the Fund and that the Custodian's continuing lien
and security interest is valid, enforceable and not limited by the
Declaration of Trust, any investment restrictions or the Investment
Company Act of 1940. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's obligations
under any Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund within the
scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with
a statement with respect to each Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind
of Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker, dealer, or
futures commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such Margin
Account.
6. The Custodian shall establish a Collateral Account and from time
to time shall make such deposits thereto as may be specified in a
Certificate. Promptly after the close of business on each business day
in which cash and/or Securities are maintained in a Collateral Account for
any Series, the Custodian shall furnish the Fund with a statement with
respect to such Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later than the close
of business next succeeding the delivery to the Fund of such statement,
the Fund shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities described
in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding
Put Option guarantee letter or similar document, the Fund shall promptly
specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Secretary or any
Assistant Secretary, either (i) setting forth with respect to the Series
specified therein the date of the declaration of a dividend or distribu-
tion, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and
the total amount payable to the Transfer Agent Account and any sub-
dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein and the
declaration of dividends and distributions thereon the Custodian to rely
on Oral Instructions, Written Instructions, or a Certificate setting forth
the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of such Series
to the shareholders of record as of that date and the total amount payable
to the Transfer Agent Account on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may be,
the Custodian shall pay to the Transfer Agent Account out of the moneys
held for the account of the Series specified therein the total amount
payable to the Transfer Agent Account and with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or
cause to be delivered, to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian for the
sale of such Shares and specifically allocated to the separate account in
the name of such Series.
2. Upon receipt of such money from the Fund's General Distributor,
the Custodian shall credit such money to the separate account in the name
of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian shall
pay, out of the money held for the account of such Series, all original
issue or other taxes required to be paid by the Fund in connection with
such issuance upon the receipt of a Certificate specifying the amount to
be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder
in connection with a redemption of any Shares, it shall furnish, or cause
to be furnished, to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting
forth the Series and number of Shares received by the Transfer Agent for
redemption and that such Shares are in good form for redemption, the
Custodian shall make payment to the Transfer Agent Account out of the
moneys held in the separate account in the name of the Series the total
amount specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held
by the Custodian in the separate account for such Series shall be insuffi-
cient to pay the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a Certificate, Oral
Instructions, or Written Instructions or which results in an overdraft in
the separate account of such Series for some other reason, or if the Fund
is for any other reason indebted to the Custodian with respect to a Ser-
ies, (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement
and subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to the Federal Funds
Rate plus 1/2%, such rate to be adjusted on the effective date of any change
in such Federal Funds Rate but in no event to be less than 6% per annum.
In addition, unless the Fund has given a Certificate that the Custodian
shall not impose a lien and security interest to secure such overdrafts
(in which event it shall not do so), the Custodian shall have a continuing
lien and security interest in the aggregate amount of such overdrafts and
indebtedness as may from time to time exist in and to any property
specifically allocated to such Series at any time held by it for the
benefit of such Series or in which the Fund may have an interest which is
then in the Custodian's possession or control or in possession or 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; 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 SPECIAL FUND
By: /s/ Robert G. Galli
----------------------------------
Robert G. Galli, Secretary
[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/ Joseph Keenan
- ----------------------------
Joseph Keenan
<PAGE>
APPENDIX A
I, George C. Bowen, Treasurer, and I, Robert G. Zack, Assistant Secretary,
of Oppenheimer Special 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
Robert G. Galli Secretary /s/ Robert G. Galli
George C. Bowen Treasurer /s/ George C. Bowen
Andrew J. Donohue Senior Vice President OMC /s/ Andrew J. Donohue
Robert G. Zack Assistant Secretary /s/ Robert G. Zack
Scott Farrar Controller OMC /s/ Scott Farrar
Cindy Antonson Controller OMC /s/ Cindy Antonson
Lynn M. Coluccy Assistant Treasurer /s/ Lynn M. Coluccy
Mitchell J. Lindauer Vice President OMC /s/ Mitchell J. Lindauer
Katherine P. Feld Vice President OMC /s/ Katherine P. Feld
Barbara J. Anderson Vice President OMC /s/ Barbara Anderson
Kurt Braitberg Controller OMC /s/ Kurt Braitberg
David Mabry Controller OMC /s/ David Mabry
Sharon Deines Controller OMC /s/ Sharon Deines
Robert Bishop Controller OMC /s/ Robert Bishop
Debra Lyons Controller OMC /s/ Debra Lyons
Thomas A. Hejl Controller OMC /s/ Thomas A. Hejl
Brian White Supervisor OMC /s/ Brian White
Mark Binning Fund Accounting OMC /s/ Mark Binning
Janette Aprilante Executive Secretary OMC /s/ Janette Aprilante
IN WITNESS WHEREOF, I hereunto set my hand in the seal of Oppenheimer
Special Fund, as of the 5th day of August 1992.
/s/ George C. Bowen
-----------------------------------
George C. Bowen, Treasurer
/s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
<PAGE>
APPENDIX B
I, George C. Bowen, Treasurer, and I, Robert G. Zack, Assistant Secretary,
of Oppenheimer Special 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
Robert G. Galli Secretary /s/ Robert G. Galli
George C. Bowen Treasurer /s/ George C. Bowen
Andrew J. Donohue Senior Vice President OMC /s/ Andrew J. Donohue
Robert G. Zack Assistant Secretary /s/ Robert G. Zack
Scott Farrar Controller OMC /s/ Scott Farrar
Cindy Antonson Controller OMC /s/ Cindy Antonson
Lynn M. Coluccy Assistant Treasurer /s/ Lynn M. Coluccy
Mitchell J. Lindauer Vice President OMC /s/ Mitchell J. Lindauer
Katherine P. Feld Vice President OMC /s/ Katherine P. Feld
Barbara J. Anderson Vice President OMC /s/ Barbara Anderson
Kurt Braitberg Controller OMC /s/ Kurt Braitberg
David Mabry Controller OMC /s/ David Mabry
Sharon Deines Controller OMC /s/ Sharon Deines
Robert Bishop Controller OMC /s/ Robert Bishop
Debra Lyons Controller OMC /s/ Debra Lyons
Thomas A. Hejl Controller OMC /s/ Thomas A. Hejl
Brian White Supervisor OMC /s/ Brian White
Mark Binning Fund Accounting OMC /s/ Mark Binning
Janette Aprilante Executive Secretary OMC /s/ Janette Aprilante
IN WITNESS WHEREOF, I hereunto set my hand in the seal of Oppenheimer
Special Fund, as of the 5th day of August 1992.
/s/ George C. Bowen
-----------------------------------
George C. Bowen, Treasurer
/s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
<PAGE>
APPENDIX C
The undersigned, George C. Bowen, hereby certifies that he is the duly
elected and acting Treasurer of Oppenheimer Special 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 June 18, 1992, 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 Oppenheimer
Special Fund, as of the 5th day of August, 1992.
/s/ George C. Bowen
--------------------------------
George C. Bowen, Treasurer
<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:
None
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, Robert G. Zack, hereby certifies that he is the duly
elected and acting Assistant Secretary of Oppenheimer Special 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 June 18, 1992, 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 August 5, 1992 (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 pur-
chases 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
Oppenheimer Special Fund, as of the 5th day of August, 1992.
/s/ Robert G. Zack
-------------------------------------
Robert G. Zack, Assistant Secretary
[SEAL]
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, Robert G. Zack, hereby certifies that he is the duly
elected and acting Assistant Secretary of Oppenheimer Special 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 June 18, 1992, 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 August 5, 1992 (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 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
Oppenheimer Special Fund as of the 5th day of August, 1992.
/s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
[SEAL]
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, Robert G. Zack, hereby certifies that he is the duly
elected and acting Assistant Secretary of Oppenheimer Special 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 June 18, 1992, 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 August 5, 1992, (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
Oppenheimer Special Fund, as of the 5th day of August, 1992.
/s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, Robert G. Zack, hereby certifies that he is the duly
elected and acting Assistant Secretary of Oppenheimer Special 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 June 28, 1992, 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 August 5, 1992 (the "Custody Agreement") is authorized and in-
structed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary, to accept, 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
Oppenheimer Special Fund, as of the 5th day of August, 1992.
/s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
[SEAL]
<PAGE>
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer Special Fund:
We consent to the use of our report dated July 22, 1993 included herein
and to the reference to our firm under the heading "Financial Highlights"
in the Prospectus.
/s/ KPMG Peat Marwick
---------------------
KPMG Peat Marwick
Denver, Colorado
March 30, 1994
