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. 47 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X
/
AMENDMENT NO. 28 / X /
OPPENHEIMER GROWTH FUND
(formerly named "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 October 21, 1994, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a) (i)
/ / On ____________, pursuant to paragraph (a) (i)
/ / 75 days after filing pursuant to paragraph (a) (ii)
/ / On ____________, pursuant to (a) (ii)
of Rule (485).
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended June 30, 1994, was filed on August 30, 1994.
<PAGE>
FORM N-1A
OPPENHEIMER GROWTH FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
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1 Front Cover Page
2 Expenses
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies
5 How the Fund is Managed; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special Investor
Services; Service Plan for Class A Shares; Distribution and
Service Plan for Class B Shares; How to Sell Shares
8 How to Sell Shares
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
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10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment Techniques
and Strategies; Additional Investment Restrictions
14 How the Fund is Managed; Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders; Additional
Investment
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information about the Fund
19 Your Investment Account; How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 *
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* Not applicable or negative answer.
<PAGE>
Oppenheimer Growth Fund
Prospectus dated October 21, 1994
Oppenheimer Growth Fund (formerly named "Oppenheimer Special Fund")
is a mutual fund that seeks capital appreciation as its investment
objective. The Fund emphasizes investment in securities of established
growth companies that the Fund's investment manager believes have better
than expected earnings prospects but are selling at below-normal
valuations. The Fund does not invest to earn current income to distribute
to shareholders.
The Fund invests primarily in common stocks or convertible securities.
The Fund also uses "hedging" instruments to seek to reduce the risks of
market fluctuations that affect the value of the securities the Fund
holds. Some investment techniques the Fund uses may be considered to be
speculative investment methods that may increase the risks of investing
in the Fund and may also increase the Fund's operating costs. You should
carefully review the risks associated with an investment in the Fund.
Please refer to "Investment Policies and Strategies" for more information
about the types of securities the Fund invests in and the risks of
investing in the Fund.
The Fund offers three classes of shares: (1) Class A shares, which are
sold at a public offering price that includes a front-end sales charge;
(2) Class B shares,which are sold without a front-end sales charge,
although you may pay a sales charge when you redeem your shares, depending
on how long you hold them. A contingent deferred sales charge is imposed
on most Class B shares redeemed within six years of purchase. Class B
shares are also subject to an annual "asset-based sales charge"; and (3)
Class Y shares, which may be purchased only by certain institutional
investors at net asset value per share. Each class of shares bears
different expenses. In deciding which class of shares to buy, you should
consider how much you plan to purchase, how long you plan to keep your
shares, and other factors discussed in "How to Buy Shares" starting on
page ___.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the October 21, 1994, Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
Because of the Fund's investment policies and practices, the Fund's shares
may be considered to be speculative.
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
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.
<PAGE>
Contents
Page
ABOUT THE FUND
Expenses
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
Class Y Shares
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are reflected in the Fund's net asset value per share. As
a shareholder, you pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's operating expenses that you might expect
to bear indirectly. The calculations are based on the Fund's expenses
during its fiscal year ended June 30, 1994.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages 13 through 22 for an
explanation of how and when these charges apply.
Class A Class B Class Y
Shares Shares Shares
------- ------- -------
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 5% in the None
first year,
declining to
1% in the
sixth year
and eliminated
thereafter
Exchange Fee $5.00(2) $5.00(2) $5.00(2)
(1) If you invest more than $1 million in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares," below.
(2) Fee is waived for automated exchanges as described in "How to
Exchange Shares."
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager"), and other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses. The following numbers are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The "12b-1 Distribution Plan Fees"
for Class A shares are the Service Plan Fees (which are a maximum of 0.25%
of average annual net assets of that class), and for Class B shares are
the Distribution and Service Plan Fee (maximum of 0.25% for the service
fee) and the asset-based sales charge of 0.75%. The "Annual Fund
Operating Expenses" in the table below 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, 1994 had the 0.15% 12b-1 fee on assets representing pre-April 1,
1991 Class A shares been in effect during that entire fiscal year. At the
prior 12b-1 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, 1994 were 0.14% of average annual net assets and total Fund
operating expenses were 1.07% of average annual net assets. See
"Distribution and Service Plans" in the Statement of Additional
Information for further details. The actual expenses for each class of
shares in future years may be more or less, depending on a number of
factors, including the actual amount of the assets represented by each
class of shares. Class Y shares were not publicly sold before June 1,
1994. Therefore the Annual Fund Operating Expenses shown for Class Y
shares are based on expenses for the period from June 1, 1994 through June
30, 1994.
Class A Class B Class Y
Shares Shares Shares
------- ------- -------
Management Fees 0.71% 0.71% 0.71%
12b-1 Distribution Plan Fees 0.16%* 1.00%** None
(restated as to Class A shares)
Other Expenses 0.22% 0.27% 0.54%
Total Fund Operating Expenses 1.09% 1.98% 1.25%
_______________________________
*Service Plan fees only
**Includes Service Plan Fee and
asset-based sales charge
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the chart above.
If you were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of each
period shown:
1 year 3 years 5 years 10 years(1)
------ ------- ------- -----------
Class A Shares $68 $90 $114 $183
Class B Shares $70 $92 $127 $186
Class Y Shares $13 $40 $69 $151
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $68 $90 $114 $183
Class B Shares $20 $62 $107 $186
Class Y Shares $13 $40 $69 $151
_________________
(1) The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Long-term Class
B shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable regulations,
because of the effect of the asset-based sales charge and contingent
deferred sales charge. The automatic
conversion is designed to minimize the likelihood that this will
occur. Please refer to "How to Buy Shares - Class B Shares" for more
information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns
of the Fund, all of which will vary.
<PAGE>
Financial Highlights
The table on this page presents selected financial information about
the Fund, including per share data and expense ratios and other data based
on the Fund's average net assets. This information has been audited by
KPMG Peat Marwick LLP, the Fund's independent auditors, whose report on
the Fund's financial statements for the fiscal year ended June 30, 1994,
is included in the Statement of Additional Information. Class Y shares
were publicly offered only during a portion of that period, commencing
June 1, 1994.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
1994 1993 1992 1991 1990 1989 1988
1987
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<S> <C> <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 $ 20.37 $ 23.82
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .16 .19 .29 .47 .64 .62
.67 .93
Net realized and unrealized
gain (loss) on investments (.05) 4.03 3.13 1.36 1.76 1.78
(.89) .59
-------- -------- -------- -------- -------- -------- -------- -------
Total income (loss) from
investment operations .11 4.22 3.42 1.83 2.40 2.40
(.22) 1.52
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.16) (.25) (.36) (.55) (.70) (.59)
(1.27) (.77)
Distributions in excess
of net investment income --(6) -- -- -- -- -- --
--
Distributions from net realized
gain on investments (.64) (1.57) -- -- -- (.04)
(1.75) (4.20)
-------- -------- -------- -------- -------- -------- -------- -------
Total dividends and distributions
to shareholders (.80) (1.82) (.36) (.55) (.70) (.63)
(3.02) (4.97)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.65 $ 27.34 $ 24.94 $ 21.88 $ 20.60 $
18.90 $ 17.13 $ 20.37
======== ======== ========
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TOTAL RETURN, AT NET ASSET VALUE(3) .27% 16.88% 15.69% 9.39%
12.98% 14.54%
(1.03)% 9.48%
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RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $656,934 $743,830 $630,767 $550,480 $551,295
$542,250 $552,863 $690,326
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $720,765 $710,391 $624,527 $520,335 $547,090
$529,699 $570,250
$717,115
- ------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 24,654 27,210 25,287 25,155 26,760
28,687 32,277 33,890
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .56% .72% 1.14% 2.20% 3.07%
3.31% 3.78% 4.32%
Expenses 1.07% .93% .90% .94% .92% .97%
.95% .93%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 19.8% 23.2% 36.7% 31.1% 27.6%
27.1% 120.3% 371.2%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
- ----------------------------------------------------------------- --------------- ------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED JUNE 30, JUNE 30, JUNE 30,
1986 1985 1994(2) 1994(1)
=============================================
=============
========================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 20.46 $ 19.45 $27.02 $28.08
- --------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .75 .60 (.04) .02
Net realized and unrealized
gain (loss) on investments 3.70 1.87 .21 (1.46)
-------- -------- ------ ------
Total income (loss) from
investment operations 4.45 2.47 .17 (1.44)
- --------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.61) (.39) (.11) --
Distributions in excess
of net investment income -- -- --(6) --
Distributions from net realized
gain on investments (.48) (1.07) (.64) --
-------- -------- ------ ------
Total dividends and distributions
to shareholders (1.09) (1.46) (.75) --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.82 $ 20.46 $26.44 $26.64
======== ======== ======
======
=============================================
=============
========================================
TOTAL RETURN, AT NET ASSET VALUE(3) 22.77% 14.24% (.20)%
(5.13)%
=============================================
=============
========================================
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $772,619 $834,054 $8,747 $ 9
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $783,491 $765,214 $5,119 $ 10
- --------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 32,437 40,759 331 --
- --------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 3.03% 3.28% (.22)%(4) 1.09%(4)
Expenses .95% .94% 1.98%(4) 1.25%(4)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 67.4% 16.8% 19.8% 19.8%
</TABLE>
(1) For the period from June 1, 1994 (inception of offering) to June 30, 1994.
(2) For the period from August 17, 1993 (inception of offering) to June 30,
1994. Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
(3) 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.
(4) Annualized
(5) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended June 30, 1994 were $134,329,584 and $246,835,478,
respectively.
(6) Less than $.005 per share.
<PAGE>
Investment Objective and Policies
Objective. The Fund invests its assets to seek capital appreciation for
shareholders. The Fund does not invest to seek current income to pay
shareholders.
Investment Policies and Strategies. The Fund seeks its investment
objective by emphasizing investment 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 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.
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.
- What Are "Growth" Companies? These tend to be newer companies that
may be developing new products or services, or expanding into new markets
for their products. While they may have what the Manager believes to be
favorable prospects for the long-term, they normally retain a large part
of their earnings for research, development and investment in capital
assets. Therefore, they tend not to emphasize the payment of dividends.
- Investment Risks. Because of the types of companies the Fund
invests in and the investment techniques the Fund uses, some of which may
be speculative, the Fund is designed for investors who are investing for
the long-term and who are willing to accept greater risks of loss of their
capital in the hope of achieving capital appreciation. It is not intended
for investors seeking assured income and preservation of capital.
Investing for capital appreciation entails the risk of loss of all or part
of your principal. Because there is no assurance that the Fund will
achieve its objective, when you redeem your shares, they may be worth more
or less than what you paid for them.
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and strategies
in carrying out those policies. The Fund's investment policies and
practices are not "fundamental" unless the Prospectus or Statement of
Additional Information says that a particular policy is "fundamental."
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's
investment objective is a fundamental policy. The Fund's Board of
Trustees may change non-fundamental policies without shareholder approval,
although significant changes will be described in amendments to this
Prospectus.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
information about these practices, including limitations designed to
reduce some of the risks.
- Small, Unseasoned Companies. The Fund may invest in securities of
small, unseasoned companies. These are companies that have been in
operation for less than three years, even after including the operations
of predecessors. Securities of these companies may have limited liquidity
(which means that the Fund may have difficulty selling them at an
acceptable price when it wants to) and the prices of these securities may
be volatile. 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 such companies. The Fund currently
intends to invest no more than 5% of its net assets in the next year in
the securities of small, unseasoned issuers.
- Warrants and Rights. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time. The Fund
may invest up to 5% of its total assets in warrants and rights. That 5%
excludes warrants the Fund has acquired in units or that are attached to
other securities. No 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 about these investments, see "Warrants and
Rights" in the Statement of Additional Information.
- Foreign Securities. The Fund may purchase equity (and debt)
securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The Fund may purchase securities in any
country, developed or underdeveloped. There is no limit on the amount of
the Fund's assets that may be invested in foreign securities. Foreign
currency will be held by the Fund only in connection with the purchase or
sale of foreign securities. If the Fund's securities are held abroad, the
countries in which they are held and the sub-custodians holding them must
be approved by the Fund's Board of Trustees.
Foreign securities have special risks. For example, foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be
affected by changes in foreign currency rates, exchange control
regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or other
political and economic factors. More information about the risks and
potential rewards of investing in foreign securities is contained in the
Statement of Additional Information.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction
on its resale or which cannot be sold publicly until it is registered
under the Securities Act of 1933. The Fund will not invest more than 10%
of its net assets in illiquid or restricted securities (that limit may
increase to 15% if certain state laws are changed or the Fund's shares are
no longer sold in those states). Certain restricted securities, eligible
for resale to qualified institutional purchasers, are not subject to that
limit.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." In general, a "derivative
investment" is a specially designed investment whose performance is linked
to the performance of another investment or security, such as an option,
future, index or currency. In the broadest sense, derivative investments
include exchange-traded options and futures contracts (see "Writing
Covered Calls" and "Hedging With Options and Futures Contracts"). The
risks of investing in derivative investments include not only the ability
of the company issuing the instrument to pay the amount due on the
maturity of the instrument, but also the risk that the underlying
investment or security might not perform the way the Manager expected it
to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of this
can mean that the Fund will realize less income than expected. Certain
derivative investments held by the Fund may trade in the over-the-counter
markets and may be illiquid. See "Illiquid and Restricted Securities."
Examples of derivative investments the Fund may invest in include, among
others, "index-linked" notes. These are debt securities of companies that
call for payment on the maturity of the note in different terms than the
typical note where the borrower agrees to pay a fixed sum on the maturity
of the note. The payment on maturity of an index-linked note depends on
the performance of one or more market indices, such as the S&P 500 Index.
Other examples of derivative investments the Fund may invest in are
currency-indexed securities. These are typically short-term or
intermediate-term debt securities whose maturity values or interest rates
are determined by reference to one or more specified foreign currencies.
Further examples of derivative investments the Fund may invest in include
"debt exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the principal amount of the debt
security is exchanged for common stock of the issuer or is payable in an
amount based on the issuer's common stock price at the time of maturity.
In either case there is a risk that the amount payable at maturity will
be less than the principal amount of the debt.
Other examples of derivative investments the Fund may invest in are
currency-indexed securities. These are typically short-term or
intermediate-term debt securities whose maturity values or interest rates
are determined by reference to one or more specified foreign currencies.
Certain currency-indexed securities purchased by the Fund may have a
payout factor tied to a multiple of the movement of the U.S. dollar (or
the foreign currency in which the security is denominated) against the
movement in the U.S. dollar, the foreign currency, another currency, or
an index. Such securities may be subject to increased principal risk and
increased volatility than comparable securities without a payout factor
in excess of one, but the Manager believes the increased yield justifies
the increased risk.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. There is no limit on the amount of the Fund's net assets that
may be subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor of the
securities under a repurchase agreement fails to pay the resale price on
the delivery date, the Fund may incur costs in disposing of the collateral
and may experience losses if there is any delay in its ability to do so.
The Fund will not enter into a repurchase agreement which causes more than
10% of its net assets to be subject to repurchase agreements having a
maturity beyond seven days.
- Loans of Portfolio Securities. To raise cash for liquidity purposes,
the Fund may lend its portfolio securities to certain types of eligible
borrowers approved by the Board of Trustees. Each loan must be
collateralized in accordance with applicable regulatory requirements.
After any loan, the value of the securities loaned must not exceed 25% of
the value of the Fund's net assets. There are some risks in connection
with securities lending. The Fund might experience a delay in receiving
additional collateral to secure a loan, or a delay in recovery of the
loaned securities. The Fund presently does not intend to engage in loans
of securities that will exceed 5% of the value of the Fund's total assets
in the coming year.
- Special Risks - Borrowing for Leverage. The Fund may borrow from
banks to buy securities. The Fund will borrow only if it can do so
without putting up assets as security for a loan. This is a speculative
investment method known as "leverage." This investment technique may
subject the Fund to greater risks and costs than funds that do not borrow.
These risks may include the possibility that the Fund's net asset value
per share will fluctuate more than the net asset value of funds that do
not borrow, since the Fund pays interest on borrowings and interest
expense affects the Fund's share price. Borrowing for leverage is subject
to limits under the Investment Company Act, described in more detail in
"Borrowing for Leverage" in the Statement of Additional Information.
- Writing Covered Calls. The Fund may write (that is, sell) covered
call options (calls) to raise cash for liquidity purposes (for example,
to meet redemption requirements) or for defensive reasons. The Fund
receives cash (called a premium) when it writes a call. The call gives
the buyer the ability to buy the security from the Fund at the call price
during the period in which the call may be exercised. If the value of the
security does not rise above the call price, it is likely that the call
will lapse without being exercised, while the Fund keeps the cash premium
(and the security).
The Fund may write calls only if certain conditions are met: (1)
after writing any call, not more than 25% of the Fund's total assets may
be subject to calls; (2) the calls must be listed on a domestic securities
exchange, or quoted on the Automated Quotation System of the National
Association of Securities Dealers, Inc. or traded in the over-the-counter
market; and (3) each call must be "covered" while it is outstanding; that
means the Fund must own the securities on which the call is written or it
must own other securities that are acceptable for the escrow arrangements
required for calls. The Fund can also write covered calls on Futures
Contracts it owns (these are described in the next section), but these
calls must be covered by securities or other liquid assets the Fund owns,
which the Fund must segregate from its other assets so that it will be
able to satisfy its delivery obligations if the call is exercised.
If a covered call written by the Fund is exercised on a security that
has increased in value, the Fund will be required to sell the security at
the call price and will not be able to realize any profit on the security
above the call price.
- Hedging With Options and Futures Contracts. The Fund may buy and
sell options and futures contracts to try to manage its exposure to
declining prices on its portfolio securities or to establish a position
in the equity securities market as a temporary substitute for purchasing
individual securities. Some of these strategies, such as selling futures,
buying puts and writing covered calls, hedge the Fund's portfolio against
price fluctuations. Other hedging strategies, such as buying futures and
buying call options, tend to increase the Fund's exposure to the market.
The Fund may buy and sell futures contracts only if they relate to
broadly-based stock indices (these are referred to as "Stock Index
Futures"), as described in the Statement of Additional Information. The
Fund may purchase certain kinds of put and call options, Stock Index
Futures (described below), options on Stock Index Futures and enter into
Interest Rate Swap transactions. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for speculative
purposes. The hedging instruments the Fund may use are described below
and in greater detail in "Other Investment Techniques and Strategies" in
the Statement of Additional Information.
The Fund may purchase put options ("puts"). Buying a put on an
investment gives the Fund the right to sell the investment to a seller of
a put on that investment at a set price. The Fund can only buy puts that
relate to (1) securities that the Fund owns, (2) Stock Index Futures,
whether or not the Fund owns the particular Stock Index Future in its
portfolio, or (3) broadly-based stock indices. The Fund may sell puts on
securities indices or Futures only if such puts are covered by segregated
liquid assets. The Fund may purchase calls only on securities, broadly-
based stock indices or Stock Index Futures, or to terminate its obligation
on a call the Fund has previously written. A call or a put may not be
purchased if the value of all of the Fund's put and call options would
exceed 5% of the Fund's total assets. The Fund may purchase and sell 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. The Fund may
also enter into foreign currency exchange contracts 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. The Fund may
enter into interest rate swaps only as to security positions held by the
Fund, provided that all swap transactions do not exceed 50% of its total
assets. The Fund will not use interest rate swaps for leverage.
Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, in writing puts, there is a risk that the Fund
may be required to buy the underlying security at a disadvantageous price.
These risks and the hedging strategies the Fund may use are described in
greater detail in the Statement of Additional Information.
- Short Sales Against-the-Box. In a short sale, the seller does not
own the security that is sold, but normally borrows the security to
fulfill the delivery obligation. The seller later buys the security to
repay the loan, in the expectation that the price of the security will be
lower when the purchase is made, resulting in a gain. The Fund may not
sell securities short except in collateralized transactions referred to
as "short sales against-the-box," where the Fund owns an equivalent amount
of the securities sold short. This technique is primarily used for tax
purposes. No more than 15% of the Fund's net assets will be held as
collateral for such short sales at any one time.
Other Investment Restrictions. The Fund has other investment restrictions
which are fundamental policies. Under these fundamental policies, the
Fund cannot do any of the following: (1) 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
"Other Investment Techniques and Strategies" under "Small, Unseasoned
Companies," "Warrants and Rights," "Loans of Portfolio Securities,"
"Special Risks - Borrowing For Leverage" and "Short Sales Against-the-
Box."
All of the percentage restrictions described above and elsewhere in this
Prospectus (other than the percentage limits that apply to borrowing,
described in the Statement of Additional Information) apply only at the
time the Fund purchases a security, and the Fund need not dispose of a
security merely because the Fund's assets have changed or the security has
increased in value relative to the size of the Fund. There are other
fundamental policies discussed in the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was initially organized as a Maryland
corporation in 1972 but was reorganized in 1985 as a Massachusetts
business trust. The Fund is an open-end, diversified management
investment company, with an unlimited number of authorized shares of
beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Fund. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class Y. Only certain institutional investors may elect to
purchase Class Y shares. Each class has its own dividends and
distributions and pays certain expenses which may be different for the
different classes. Each class may have a different net asset value. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote together on
matters that affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager, which
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Board of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities and its fees, and describes the expenses that
the Fund pays to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manage investment companies,
including other OppenheimerFunds, with assets of more than $28 billion as
of June 30, 1994, and with more than 1.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
- Portfolio Manager. The Portfolio Manager of the Fund is Robert C.
Doll, Jr. He has been the person principally responsible for the day-to-
day management of the Fund's portfolio since September, 1987. Mr. Doll
is an Executive Vice President and Director of Equity Investments of the
Manager. He is also the portfolio manager of Oppenheimer Target Fund.
- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.75% of the first $200 million of
aggregate 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. The Fund's management fee for its last fiscal year was
0.71% of average annual net assets for Class A shares, 0.71% for Class
B shares and 0.71% for Class Y shares (for the period June 1, 1994
(commencement of the Class) through June 30, 1994), which may be higher
than the rate paid by some other mutual funds.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the investment advisory
agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed by
the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return" and "average annual total
return." These terms are used to show the performance of each class of
shares separately, because the performance of each class of shares will
usually be different, as a result of the different kinds of expenses each
class bears. This performance information may be useful to help you see
how well your investment has done and to compare it to other funds or
market indices, as we have done below.
It is important to understand that the fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. This performance data is described below, but
more detailed information about how total returns are calculated is
contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary, depending on
market conditions, the composition of the portfolio, expenses and which
class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may also be
quoted "at net asset value," without considering the effect of the sales
charge, and those returns would be reduced if sales charges were deducted.
When total returns are shown for a one-year period for Class B shares,
they reflect the effect of the contingent deferred sales charge. They may
also be shown based on the change in net asset value, without considering
the effect of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended June 30, 1994,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's past
fiscal year, the U.S. economy was in a period of gradual growth, and
interest rates declined to a record low before rising in response to the
Federal Reserve's increase in short-term interest rates. In that economic
climate, the Manager focused on financial, technological and healthcare
stocks which are expected to benefit from an improving economy and have
reasonable valuations. The Manager also used market upturns to take
profits in companies whose prices seemed to have reached their peak. The
proceeds of those sales were used, in turn, to invest in companies whose
earnings potential hasn't been fully reflected in their stock prices. In
light of a gradually growing economy, the Manager looked for stocks that
offered cyclical as well as long-term growth opportunities, and found them
in the technology sector.
- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund held until June 30, 1994; in the case of Class A
shares, over a ten-year period, and in the case of Class B shares, from
the inception of the Class on August 17, 1993, with all dividends and
capital gains distributions for each class reinvested in additional
shares, and in the case of Class Y shares, from the inception of the class
on June 1, 1994, with all dividends and capital gains reinvested in
additional shares. The graph reflects the deduction of the 5.75% maximum
initial sales charge on Class A shares and the 5.0% contingent deferred
sales charge on Class B shares.
The Fund's performance is compared to the performance of the S&P 500
Index, a broad-based index of equity securities widely regarded as a
general measurement of the performance of the U.S. equity securities
market. Index performance reflects the reinvestment of dividends but does
not consider the effect of capital gains or transaction costs, and none
of the data below shows the effect of taxes. Also, the Fund's performance
data reflects the effect of Fund business and operating expenses. While
index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited
to the securities in the S&P 500 index, which tend to be securities of
larger, well-capitalized companies, as contrasted to the smaller growth-
type companies in which the Fund principally invests. Moreover, the index
data does not reflect any assessment of the risk of the investments
included in the index.
Oppenheimer Growth Fund
Comparison of Change in Value
of $10,000 Hypothetical Investment to the
S&P 500 Index
(Graph)
Past performance is not predictive of future performance.
Oppenheimer Growth Fund
Average Annual Total Returns at 06/30/94
1-Year 5-Year 10-Year
------ ------ -------
Class A: (5.50%) 9.57% 10.64%
Class B:(1) (5.19%) N/A N/A
Class Y:(2) (5.13%) N/A N/A
_________________________________________
(1) Reflects Cumulative Total Return for the period from inception of the
class (08/17/93) and is not annualized.
(2) Reflects Cumulative Total Return for the period from inception of the
class (06/01/94) and is not annualized.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices. A third class of shares is offered
only to certain institutional investors. See "Class Y Shares" below.
- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, you will not pay any initial sales charge, but
if you sell any of those shares within 18 months after your purchase, you
will pay a contingent deferred sales charge, which will vary depending on
the amount you invested.
- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years, you
will normally pay a contingent deferred sales charge that varies depending
on how long you own your shares.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisors:
- How Much Do You Plan to Invest? If you plan to invest a
substantial amount over the long term, the reduced sales charges available
for larger purchases of Class A shares may be more beneficial to you than
purchasing Class B shares, because of the higher annual expenses Class B
shares will likely bear. For purchases over $1 million, the contingent
deferred sales charge on Class A shares may be more beneficial. The
Distributor will not accept any order for $1 million or more for Class B
shares on behalf of a single investor for that reason.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, investors who prefer
not to pay an initial sales charge and who plan to hold their shares for
more than five years might consider Class B shares. Investors who plan
to redeem shares before the end of five years might consider whether the
front-end sales charge on Class A shares would result in higher net
expenses after redemption.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. Additionally, the dividends payable to Class B shareholders will be
reduced by the additional expenses borne solely by that class, such as the
asset-based sales charge to which Class B shares are subject, as described
below and in the Statement of Additional Information.
- How Does It Affect Payments to My Broker? A salesperson or any
other person who is entitled to receive compensation for selling Fund
shares may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the contingent deferred sales charge and asset-based sales
charge for Class B shares is the same as the purpose of the front-end
sales charge on sales of Class A shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways -- through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure
to specify Class A or Class B shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your order
with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer
Funds Distributor, Inc." Mail it to
P.O. Box 5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the shares.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to send
redemption proceeds, and to transmit dividends and distributions. Shares
are purchased for your account on the regular business day the Distributor
is instructed by you to initiate the ACH transfer to buy shares. You can
provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You must request AccountLink privileges
on the application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up to
four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value that is next determined after
the Distributor receives the purchase order in Denver. In most cases, to
enable you to receive that day's offering price, the Distributor must
receive your order by 4:00 P.M., New York time (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day"). If you buy shares
through a dealer, the dealer must receive your order by 4:00 P.M., on a
regular business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which is
normally 5:00 P.M. The Distributor may reject any purchase order for the
Fund's shares, in its sole discretion.
Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer. The current sales charge rates
and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
as Percentage as Percentage as Percentage
of Offering of Offering of Offering
Amount of Purchase Price Price Price
- ------------------ ------------- ------------- -------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- --------------
<FN>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
</TABLE>
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of the Fund and
other OppenheimerFunds that offer only one class of shares that has no
class designation are considered "Class A shares" for this purpose).
However, the Distributor pays dealers of record commissions on such
purchases in an amount equal to the sum of 1.0% of the first $2.5 million,
plus 0.50% of the next $2.5 million, plus 0.25% of share purchases over
$5 million. That commission will be paid only on the amount of those
purchases in excess of $1 million that were not previously subject to a
front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. You and your spouse can cumulate Class A
shares you purchase for your own accounts, or jointly, or on behalf of
your children who are minors, under trust or custodial accounts. A
fiduciary can cumulate shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can cumulate current purchases of Class A shares of
the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, you may purchase Class
A shares of the Fund and other OppenheimerFunds during a 13-month period
at the reduced sales charge rate that applies to the aggregate amount of
the intended purchases, including purchases made up to 90 days before the
date of the Letter. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients; or (7) dealers, brokers or
registered investment advisers that have entered into an agreement with
the Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administrative services.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party, or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates acts as sponsor, or (c) purchased by
the reinvestment of dividends or other distributions reinvested from the
Fund or other OppenheimerFunds (other than Oppenheimer Cash Reserves) or
unit investment trusts for which reinvestment arrangements have been made
with the Distributor. There is a further discussion of this policy in
"Reduced Sales Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge does not apply to
purchases at net asset value described above and is also waived if shares
are redeemed in the following cases: (1) retirement distributions or loans
to participants or beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans ("Retirement Plans"),
(2) returns of excess contributions made to Retirement Plans, (3)
Automatic Withdrawal Plan payments that are limited to no more than 12%
of the original account value annually, (4) involuntary redemptions of
shares by operation of law or under the procedures set forth in the Fund's
Declaration of Trust or adopted by the Board of Trustees and (5) if, at
the time an order is placed for Class A shares that would otherwise be
subject to the Class A contingent deferred sales charge, the dealer agrees
to accept the dealers portion of the commission payable on the sale in
installments of 1/18th of the commission per month (with no further
commission payable if the shares are redeemed within 18 months of
purchase).
- Service Plan for Class A Shares. The Fund has adopted a Service Plan
for Class A shares to reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer 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. The payments under
the Plan increase the annual expenses of Class A shares. For more details,
please refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within six years of their purchase, a contingent deferred sales charge
will be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on
the amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over six years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Years Since Beginning of Contingent Deferred Sales Charge
Month in Which Purchase on Redemptions in that Year
Order Was Accepted (As % of Amount Subject to Charge)
- ------------------------ ----------------------------------
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) distributions to participants or beneficiaries
from Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2, as
long as the payments are no more than 10% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary; (2) redemptions from accounts
other than Retirement Plans following the death or disability of the
shareholder (i.e., a natural person) (you must provide evidence of a
determination of disability by the Social Security Administration), (3)
returns of excess contributions to Retirement Plans and (4) distributions
from IRAs (including SEP-IRAs and SAR/SEP accounts) before the participant
is age 591/2, and distributions from 403(b)(7) custodial plans or pension
or profit sharing plans before the participant is age 591/2, but only
after the participant has separated from service, if the distributions are
made in substantially equal periodic payments over the life (or life
expectancy) of the participant or the joint lives (or joint life and last
survivor expectancy) of the participant and the participant's designated
beneficiary (and the distributions must comply with other requirements for
such distributions under the Internal Revenue Code and may not exceed 10%
of the account value annually, measured from the date the Transfer Agent
receives the request).
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.
- Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
Plan, described below. The conversion is based on the relative net asset
value of the two classes, and no sales load or other charge is imposed.
When Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted shares
will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative
Sales Arrangements - Class A and Class B Shares" in the Statement of
Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to
buy Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class B shares. Those services
are similar to those provided under the Class A Service Plan, described
above. The asset-based sales charge and service fees increase Class B
expenses by up to 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for the
first year after Class B shares have been sold by the dealer. After the
shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
Because the Distributor's actual expenses in selling Class B shares
may be more than payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class B shares, those expenses may be
carried over and paid in future years. At June 30, 1994, the end of the
Plan year, the Distributor had incurred unreimbursed expenses under the
Class B Plan of $24,345 (equal to 0.42% of the Fund's net assets
represented by Class B shares on that date), which have been carried over
into the present Class B Plan year. If the Plan is terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for certain expenses it
incurred before the Plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions, including purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by telephone
only after your account has been established. To purchase shares in
amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly
to your AccountLink bank account. Please refer to "How to Sell Shares,"
below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other OppenheimerFunds on a monthly, quarterly, semi-annual or
annual basis under an Automatic Exchange Plan. The minimum purchase for
each other OppenheimerFunds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund
shares, you have up to 6 months to reinvest all or part of the redemption
proceeds in Class A shares of the Fund or other OppenheimerFunds without
paying sales charge. This privilege applies to Class A shares that you
purchased with an initial sales charge or on which you paid a Class A
contingent deferred sales charge when you redeemed them, and Class B
shares on which you paid a contingent deferred sales charge when you
redeemed them. You must be sure to ask the Distributor for this privilege
when you send your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of
different retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR-SEP IRAs
- Pension and Profit-Sharing Plans for self-employed persons and small
business owners
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
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
Statement of Additional Information 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 Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive a
check
- The check is not payable to all shareholders listed on the account
statement
- The check is not sent to the address of record on your statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing as a fiduciary or on behalf of a corporation, partnership or
other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by 4:00 P.M. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on
the account, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs. That
charge is waived for automated exchanges made by brokers on Fund/SERV and
for automated exchanges made by brokers on Fund/SERV and for automated
exchanges between already established accounts on PhoneLink, described
below. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open
7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. In some
cases, sales charges may be imposed on exchange transactions. Certain
OppenheimerFunds offer Class A shares and either Class B or Class C shares
and/or Class Y shares, and a list can be obtained by calling the
Distributor at 1-800-525-7048.
Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the
same name(s) and address. Shares held under certificates may not be
exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request by 4:00 P.M. that
is in proper form, but either fund may delay the purchase of shares of the
fund you are exchanging into if it determines it would be disadvantaged
by a same-day transfer of the proceeds to buy shares. For example, the
receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a
result, those exchanges may be subject to notice requirements, delays and
other limitations that do not apply to shareholders who exchange their
shares directly by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares as
of 4:00 P.M. each day The New York Stock Exchange is open by dividing the
value of the Fund's net assets attributable to a class by the number of
shares of that class that are outstanding. The Fund's Board of Trustees
has established procedures to value the Fund's securities to determine net
asset value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities, obligations for which market values cannot be readily
obtained, and call options and hedging instruments. These procedures are
described more completely in the Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class Y shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer
Agent receives redemption instructions in proper form, except under
unusual circumstances determined by the Securities and Exchange Commission
delaying or suspending such payments. The Transfer Agent may delay
forwarding a check or processing a payment via AccountLink for recently
purchased shares, but only until the purchase payment has cleared. That
delay may be as much as 15 days from the date the shares were purchased.
That delay may be avoided if you purchase shares by certified check or
arrange with your bank to provide telephone or written assurance to the
Transfer Agent that your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a certified Social Security or
taxpayer identification number when you sign your application, or if you
violate Internal Revenue Service regulations on tax reporting of
dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class B shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same address and surname on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B and
Class Y shares from net investment income on an annual basis and normally
pays those dividends to shareholders in December, but the Board of
Trustees can change that date. The Board may also cause the Fund to
declare dividends after the close of the Fund's fiscal year (which ends
June 30th). Because the Fund does not have an objective of seeking
current income, the amounts of dividends it pays, if any, will likely be
small. Also, dividends paid on Class A and Class Y shares generally are
expected to be higher than for Class B shares because expenses allocable
to Class B shares will generally be higher.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the
year. Short-term capital gains are treated as dividends for tax purposes.
There can be no assurances that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account. You
can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. Dividends paid from short-term capital gains
and net investment income are taxable as ordinary income. Distributions
are subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund will
send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is
the difference between the price you paid for the shares and the price you
received when you sold them.
- Returns of Capital: In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If
that occurs, it will be identified in notices to shareholders.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GROWTH FUND
Graphic material included in Prospectus of Oppenheimer Growth Fund:
"Comparison of Total Return of Oppenheimer Growth Fund with the S&P 500
Index - Change in Value of a $10,000 Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer
Growth Fund (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in the Fund.
In the case of the Fund's Class A shares, that graph will cover each of
the Fund's last ten fiscal years from 6/30/84 through 6/30/94, in the case
of the Fund's Class B shares will cover the period from the inception of
the class (August 17, 1993) through 6/30/94 and in the case of the Fund's
Class Y shares will cover the period from the inception of the Class (June
1, 1994) through 6/30/94. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the S&P 500
Index. Set forth below are the relevant data points that will appear on
the linear graph. Additional information with respect to the foregoing,
including a description of the S&P 500 Index, is set forth in the
Prospectus under "Performance of the Fund - Comparing the Fund's
Performance to the Market."
Fiscal Year Oppenheimer S&P 500
(Period) Ended Growth Fund A Index
-------------- ------------- -------
06/30/84 $ 9,425 $10,000
06/30/85 $10,767 $13,096
06/30/86 $13,219 $17,787
06/30/87 $14,471 $22,262
06/30/88 $14,322 $20,719
06/30/89 $16,404 $24,971
06/30/90 $18,534 $29,079
06/30/91 $20,275 $31,222
06/30/92 $23,456 $35,403
06/30/93 $27,415 $40,221
06/30/94 $27,489 $40,785
Fiscal Oppenheimer S&P
Period Ended Growth Fund B 500 Index
------------ ------------- ---------
08/17/93(1) $10,000 $10,000
06/30/94 $ 9,505 $ 9,810
Fiscal Oppenheimer S&P
Period Ended Growth Fund Y 500 Index
------------ ------------- ---------
06/01/94(2) $10,000 $10,000
06/30/94 $ 9,487 $ 9,755
- ----------------------
(1) Class B shares of the Fund were first publicly offered on August 17,
1993.
(2) Class Y shares of the Fund were first publicly offered on June 1,
1994.
<PAGE>
Oppenheimer Growth Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
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 OPPENHEIMER
Oppenheimer Shareholder Services Growth Fund
P.O. Box 5270 Prospectus
Denver, Colorado 80217 Effective October 21, 1994
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 LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street OppenheimerFunds
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.
<PAGE>
Oppenheimer Growth Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated October 21, 1994
This Statement of Additional Information of Oppenheimer Growth Fund
is not a Prospectus. This document contains additional information about
the Fund and supplements information in the Prospectus dated October 21,
1994. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, Oppenheimer Shareholder
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the
Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Restrictions 14
How the Fund is Managed 15
Organization and History 15
Trustees and Officers of the Fund 16
The Manager and Its Affiliates 19
Brokerage Policies of the Fund 20
Performance of the Fund 22
Distribution and Service Plans 24
About Your Account 26
How To Buy Shares 26
How To Sell Shares 32
How To Exchange Shares 35
Dividends, Capital Gains and Taxes 37
Additional Information About the Fund 38
Independent Auditors' Report 39
Financial Statements 40
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as the strategies the Fund may use to
try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meaning as those terms have in the
Prospectus.
In selecting securities for the Fund's portfolio, the Fund's investment
advisor, Oppenheimer Management Corporation (the "Manager"), evaluates the
merits of securities primarily through the exercise of its own investment
analysis. This may include, among other things, evaluation of the history
of the issuer's operations, prospects for the industry of which the issuer
is part, the issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general market
and economic conditions on the issuer's business, and legislative
proposals or new laws that might affect the issuer. Current income is not
a consideration in the selection of portfolio securities for the Fund,
whether for appreciation, defensive or liquidity purposes. The fact that
a security has a low yield or does not pay current income will not be an
adverse factor in selecting securities to try to achieve the Fund's
investment objective of capital appreciation unless the Manager believes
that the lack of yield might adversely affect appreciation possibilities.
- Investing in Small, Unseasoned Companies. The securities of small,
unseasoned companies may have a limited trading market, which may
adversely affect the Fund's ability to dispose of them and can reduce the
price the Fund might be able to obtain for them. If other investment
companies and investors that invest in these types of securities trade the
same securities when the Fund attempts to dispose of its holdings, the
Fund may receive lower prices than might be obtained, because of the
thinner market for such securities.
- Warrants and Rights. Warrants basically are options to purchase
equity securities at set prices valid for a specific period of time. The
prices of warrants do not necessarily move in a manner parallel to the
prices of the underlying securities. The price the Fund pays for a
warrant will be lost unless the warrant is exercised prior to its
expiration. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its shareholders.
Warrants and rights have no voting rights, receive no dividends and have
no rights with respect to the assets of the issuer.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offer potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business
cycles different from those of the U.S., or to reduce fluctuations in
portfolio value by taking advantage of foreign stock markets that do not
move in a manner parallel to U.S. markets. If the Fund's portfolio
securities are held abroad, the countries in which they may be held and
the sub-custodians holding them must be approved by the Fund's Board of
Trustees under applicable rules of the Securities and Exchange Commission.
- Risks of Foreign Investing. Investments in foreign securities
present special additional risks and considerations not typically
associated with investments in domestic securities: reduction of income
by foreign taxes; fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing
and financial reporting standards comparable to those applicable to
domestic issuers; less volume on foreign exchanges than on U.S. exchanges;
greater volatility and less liquidity on 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; higher brokerage
commission rates than in the U.S.; increased risks of delays in settlement
of portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse diplomatic
developments; and unfavorable differences between the U.S. economy and
foreign economies. In the past, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through taxation
or other restrictions, and it is possible that such restrictions could be
re-imposed.
- Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund, if
such registration is required before such securities may be sold publicly.
When registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the decision
is made to sell the securities and the time the Fund would be permitted
to sell them. The Fund would bear the risks of any downward price
fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Trustees of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the value of the
loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities).
To be acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved vendor"
is a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in government
securities, which must meet credit requirements set by the Fund's Board
of Trustees from time to time. 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.
- 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, 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 of 1940 (the "Investment
Company Act"), will only be made 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, when computed in that manner, 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 that
requirement. To do so, the Fund 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 during periods of substantial
borrowings, its expenses may increase more than funds that do not borrow.
- 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 Calls. As described in the Prospectus, the Fund may
write covered calls. When the Fund writes a call on an investment, it
receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying investment) regardless of market price changes
during the call period. 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
received on the call the Fund has written is more or less than the price
of the call the Fund subsequently purchased. A profit may also be
realized if the call lapses unexercised because the Fund retains the
underlying investment and the premium received. Those profits are
considered short-term capital gains for Federal income tax purposes, as
are premiums on lapsed calls, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar value 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 as to
a Future put the Fund in a short futures position.
- Hedging With Options and Futures Contracts. The Fund may use
hedging instruments for the purposes described in the Prospectus. When
hedging to attempt to protect against declines in the market value of the
Fund's portfolio, or 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, or (iii) write covered calls on securities
held by it or on Stock Index Futures (as described in the Prospectus).
When hedging to establish a position in the equity securities markets as
a temporary substitute for the purchase of individual equity securities
the Fund may: (i) buy Stock Index Futures, or (ii) buy calls on Stock
Index Futures or securities. Normally, the Fund would then purchase the
equity securities and terminate the hedging portion. A stock index
assigns relative values to the common stocks included in the index and
fluctuates with the changes in the market value of those stocks. Stock
indices cannot be purchased or sold directly.
The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's investment activities in the underlying cash
market. 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, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments the Fund
may use is provided below.
- 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 expires unexercised, the Fund
(as the writer of the put) realizes a gain in the amount of the premium
less transaction costs. 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 sale price 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 or on foreign currencies, 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 underlying securities. 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 stated above
for writing covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax purposes, and
when distributed by the Fund, are taxable as ordinary income.
- Purchasing Puts and Calls. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund purchases a
call (other than in a closing purchase transaction), it pays a premium
and, except as to calls on stock indices, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. In
purchasing a call, the Fund benefits only if the call is sold at a profit
or if, during the call period, the market price of the underlying
investment is above the sum of the call price, transaction costs, and the
premium paid, and the call is exercised. If the call is not exercised or
sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment. When the Fund purchases a call on
a stock index, it pays a premium, but settlement is in cash rather than
by delivery of the underlying investment to the Fund.
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
(a "protective put") enables the Fund to attempt to protect itself during
the put period against a decline in the value of the underlying investment
below the exercise price by selling the underlying investment at the
exercise price to a seller of a corresponding put. If the market price
of the underlying investment is equal to or above the exercise price and
as a result the put is not exercised or resold, the put will become
worthless at its expiration and the Fund will lose the premium payment and
the right to sell the underlying investment. However, the put may be sold
prior to expiration (whether or not at a profit).
Puts and calls on broadly-based stock indices or Stock Index Futures are
similar to puts and calls on securities or futures contracts except that
all settlements are in cash and gain or loss depends on changes in the
index in question (and thus on price movements in the stock market
generally) rather than on price movements of individual securities or
futures contracts. When the Fund buys a call on a stock index or Stock
Index Future, it pays a premium. If the Fund exercises the call during
the call period, a seller of a corresponding call on the same investment
will pay the Fund an amount of cash to settle the call if the closing
level of the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to the
difference between the closing price of the call and the exercise price
of the call times a specified multiple (the "multiplier") which determines
the total dollar value for each point of difference. When the Fund buys
a put on a stock index or Stock Index Future, it pays a premium and has
the right during the put period to require a seller of a corresponding
put, upon the Fund's exercise of its put, to deliver cash to the Fund to
settle the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price of the
put. That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock Index
Future not owned by it, the put protects the Fund to the extent that the
index moves in a similar pattern to the securities the Fund holds. The
Fund can either resell the put or, in the case of a put on a Stock Index
Future, buy the underlying investment and sell it at the exercise price.
The resale price of the put will vary inversely with the price of the
underlying investment. If the market price of the underlying investment
is above the exercise price, and as a result the put is not exercised, the
put will become worthless on the expiration date. In the event of a
decline in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on
its portfolio securities.
The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate. The exercise by the Fund of puts on securities will cause
the sale of underlying investments, increasing portfolio turnover.
Although the decision whether to exercise a put it holds is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons that would not exist in the absence of the put.
The Fund will pay a brokerage commission each time it buys or sells a
call, put or an underlying investment in connection with the exercise of
a put or call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market value of
the underlying investments and, consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes
in the value of the underlying investments.
- Stock Index Futures. As described in the Prospectus, the Fund may
invest in Stock Index Futures only if they relate to broadly-based stock
indices. A stock index is considered to be broadly-based if it includes
stocks that are not limited to issuers in any particular industry or group
of industries.
Stock index futures are contracts based on the future value of the
basket of securities that comprise the underlying stock index. The
contracts obligate the seller to deliver, and the purchaser to take, cash
to settle the futures transaction or to enter into an offsetting contract.
No physical delivery of the securities underlying the index is made on
settling the futures obligation. No monetary amount is paid or received
by the Fund on the purchase or sale of a Stock Index Future. Upon
entering into a Futures transaction, the Fund will be required to deposit
an initial margin payment, in cash or U.S. Treasury bills, with the
futures commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures broker can
gain access to that account only under certain specified conditions. As
the Future is marked to market (that is, its value on the Fund's books is
changed) to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures
broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position, at which time
a final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized by the Fund on the Future for tax purposes. Although Stock Index
Futures by their terms call for settlement by the delivery of cash, in
most cases the settlement obligation is fulfilled without such delivery
by entering into an offsetting transaction. All futures transactions are
effected through a clearing house associated with the exchange on which
the contracts are traded.
- Options on Foreign Currencies. The Fund intends to write and
purchase 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 gain in addition to that resulting from the currency
option position. The Fund will not engage in writing options on foreign
currencies unless the Fund has sufficient liquid assets denominated in the
same currency as the option or in a currency that, in the judgment of the
Manager, will experience substantially similar movements against the U.S.
dollar as the option currency.
- 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, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross-hedge").
The Fund will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities 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 denominated in that currency
provided the excess amount is "covered" by liquid, high grade debt
securities, denominated in either that foreign currency or U.S. dollars,
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 incur
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. As 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,
by 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 the 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." The Fund will not
invest more than 25% of its assets in interest rate swap transactions.
- Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges, or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities covering a call on the expiration of the calls
or upon the Fund entering into a closing purchase transaction. Call
writing affects the Fund's turnover rate and the brokerage commissions it
pays. Commissions, normally higher than on general securities
transactions, are payable on writing or purchasing a call.
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. That formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is exercisable below the market price
of the underlying security (that is, to the extent to which the option is
"in-the-money"). For any OTC option the Fund writes, it will treat as
illiquid (for purposes of the limit on its assets that may be invested in
illiquid securities, stated in the Prospectus) an amount of assets used
to cover written OTC options, equal to the formula price for the
repurchase of the OTC option less the amount by which the OTC option is
"in-the-money." The Fund will also treat as illiquid 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 a put or a
call, or sells a call. Such commissions may be higher than those which
would apply to direct purchases or sales of such underlying investments.
Premiums paid for options are small in relation to the market value of the
related investments, and consequently, 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 long and short 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"). The CEA excludes the Fund from registration with the CFTC as a
"commodity pool operator" (as defined under the CEA), if the Fund complies
with the CFTC Rule. Under these restrictions, the Fund will not, as to
any positions, whether long, short or a combination thereof, enter into
Futures transactions and options thereon for which the aggregate initial
margins and premiums exceed 5% of the fair market value of the Fund's
assets, with certain exclusions as defined in the CFTC Rule. Under the
restrictions, the Fund also must, as to its short positions, use Futures
and options thereon solely for "bona fide hedging purposes" within the
meaning and intent of the applicable provisions of the CEA.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same adviser as the Fund (or an adviser
that is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Stock Index Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, cash or readily-marketable, short-
term (maturing in one year or less) debt instruments in an amount equal
to the market value of the securities underlying such Future, less the
margin deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. That qualification enables the Fund to "pass through" its
income and realized capital gains to shareholders without having to pay
tax on them. This avoids a "double tax" on that income and capital gains,
since shareholders normally will be taxed on the dividends and capital
gains they receive from the Fund. One of the tests for the Fund's
qualification as a regulated investment company is that less than 30% of
its gross income must be derived from gains realized on the sale of
securities held for less than three months. To comply with that 30% cap,
the Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including Stock Index Futures, held for less than three months, whether
or not they were purchased on the exercise of a call held by the Fund;
(ii) purchasing options which expire in less than three months; (iii)
effecting closing transactions with respect to calls or puts written or
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; or (v) writing calls on
investments held less than three months.
Certain foreign currency exchange contracts (Forward Contracts) in which
the Fund may invest are treated as "section 1256 contracts." Gains or
losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including 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.
- Risks of Hedging With Options and Futures. An option position may
be closed out only on a market that provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option. In addition to the risks
associated with hedging that are discussed in the Prospectus and above,
there is a risk in using short hedging by (i) selling Stock Index Futures
or (ii) purchasing puts on stock indices or Stock Index Futures to attempt
to protect against declines in the value of the Fund's equity securities.
The risk is that the prices of Stock Index Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's equity securities. The ordinary spreads between prices in the
cash and futures markets are subject to distortions, due to differences
in the natures of those markets. First, all participants in the futures
markets are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may
close out futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures markets.
Second, the liquidity of the futures markets 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 markets could be reduced, thus producing
distortion. Third, from the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the equity securities being hedged and movements in the price of
the hedging instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of equity securities being hedged if
the historical volatility of the prices of the equity securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position in the
equities markets as a temporary substitute for the purchase of individual
equity securities (long hedging) by buying Stock Index Futures and/or
calls on such Futures, on securities or on stock indices, it is possible
that the market may decline. If the Fund then concludes not to invest in
equity securities at that time because of concerns as to a possible
further market decline or for other reasons, the Fund will realize a loss
on the hedging instruments that is not offset by a reduction in the price
of the equity securities purchased.
- Short Sales Against-the-Box. In this type of short sale, while the
short position is open, the Fund must own an equal amount of the
securities sold short, or by virtue of ownership of other securities have
the right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may be
made to defer, for Federal income tax purposes, recognition of gain or
loss on the sale of securities "in the box" until the short position is
closed out.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in the
Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of (1) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (2) 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.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the 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 at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the 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 set
forth under Section 16(c) of the Investment Company Act.
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 the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
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 Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. 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 Trustee and officer is
Two World Trade Center, New York, New York 10048-0203, unless another
address is listed below. All of the Trustees are also trustees of
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Time Fund,
Oppenheimer Target Fund, Oppenheimer Discovery Fund, Oppenheimer Global
Growth & Income Fund, Oppenheimer Global Emerging Growth Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer
New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt Fund,
Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset Allocation
Fund, Oppenheimer Mortgage Income Fund, Oppenheimer U.S. Government Trust,
Oppenheimer Multi-Sector Income Trust and Oppenheimer Multi-Government
Trust (the "New York-based OppenheimerFunds"). Messrs. Spiro, Bishop,
Bowen, Donohue, Farrar and Zack respectively hold the same offices with
the other New York-based OppenheimerFunds as with the Fund. As of October
3, 1994, the Trustees and officers of the Fund as a group owned less than
1% of the outstanding shares of the Fund.
Leon Levy, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership) and
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.
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).
Robert G. Galli, Trustee*
Vice Chairman of the Manager and Vice President and Counsel of Oppenheimer
Acquisition Corp., the Manager's parent holding company; formerly he held
the following positions: a director of the Manager and Oppenheimer Funds
Distributor, Inc. (the "Distributor"), Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and Centennial
Asset Management Corporation ("Centennial"), investment advisory
subsidiaries of the Manager, a director of Shareholder Financial Services,
Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent
subsidiaries of the Manager, an officer of other OppenheimerFunds and
Executive Vice President and General Counsel of the Manager and the
Distributor.
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, DC 20004
Author and architectural historian; a trustee of the American Schools of
Oriental Research, the Freer Gallery of Art (Smithsonian Institution); the
Institute of Fine Arts (New York University) and Preservation League of
New York State; 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 or GranCare, Inc. (healthcare
provider); formerly New York State Comptroller and a trustee, New York
State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Hospital 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 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), Farmers Insurance Company
(insurance), FMC Corp. (chemicals and machinery), Lindsay Manufacturing
Co. (irrigation equipment) and Texas Instruments, Inc. (electronics) and
the Vigoro Corporation (fertilizer manufacturer); formerly (in descending
chronological order) Counsellor to the President (Bush) for Domestic
Policy, Chairman of the Republican National Committee, Secretary of the
U.S. Department of Agriculture, and U.S. Trade Representative.
Andrew J. Donohue, Secretary
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior Vice
President and Associate General Counsel of the Manager and the
Distributor; Partner in Kraft & McManimon (a law firm); an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser); director
and an officer of First Investors Family of Funds and First Investors Life
Insurance Company.
Robert Doll, Jr., Vice President and Portfolio Manager
Executive Vice President and Director of Equity Investments of the
Manager; an officer and Portfolio Manager of other OppenheimerFunds.
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 and SFSI; an officer of other
OppenheimerFunds.
Robert G. Zack, Assistant Secretary
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other OppenheimerFunds.
Robert J. Bishop, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions Supervisor
for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co., a bank, and previously a Senior Fund Accountant
for State Street Bank & Trust Company, before which he was a sales
representative for Central Colorado Planning.
_____________________________________
* 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 are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Mr. Galli and Mr. Spiro are both an officer and Trustee)
receive no salary or fee from the Fund. During the Fund's fiscal year
ended June 30, 1994, the remuneration (including expense reimbursements)
paid to all Trustees of the Fund (excluding Mr. Galli and Mr. Spiro) as
a group for services as trustees and as members of one or more committees
of the Board, totalled $66,717. 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-based OppenheimerFunds for at least 15 years to
be eligible for the maximum payment. No Trustee has retired since the
adoption of the plan and no payments have been made by the Fund under the
plan. The accumulated liability for the Fund's projected benefit
obligations under the plan was $127,168 as of June 30, 1994.
- Major Shareholders. As of October 3, 1994, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
Fund's Class A or Class B shares. As of that same date the only person
who owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class Y shares was Massachusetts Mutual
Life Insurance Company, 1295 State Street, Springfield, Massachusetts
01111, which owned 3637.281 Class Y shares (representing 100% of the Class
Y shares then outstanding). Massachusetts Mutual Life Insurance
Company's affiliation with the Manager is described below.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Messrs. Galli and Spiro)
serve as Trustees of the Fund.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributors Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs and non-recurring expenses, including
litigation costs. For the Fund's fiscal years ended June 30, 1992, 1993
and 1994, the management fees paid by the Fund to the Manager were
$4,481,264, $5,048,548, and $5,149,361, respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of
average annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting from
a good faith error or omission on its part with respect to any of its
duties thereunder. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class Y
shares but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales, 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, 1992, 1993 and 1994, the aggregate sales charges on
sales of the Fund's Class A shares were $1,331,379, $2,826,831, and
$1,831,787, respectively, of which the Distributor and an affiliated
broker-dealer retained in the aggregate $346,125, $806,143 and $495,180
in those respective years. During the Fund's fiscal year ended June 30,
1994, the contingent deferred sales charges collected on the Fund's Class
B shares totalled $22,883, of which the Distributor retained $22,883 for
that fiscal year. There were no contingent deferred sales charges
collected by the Distributor on the redemption of Class Y shares during
the period from June 1, 1994 (the commencement of the offering of those
shares) through June 30, 1994. For additional information about
distribution of the Fund's shares and the expenses connected with such
activities, please refer to "Distribution and Service Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors, implement
the policy of the Fund to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution at the most favorable price
obtainable) of such transactions. The Manager need not seek competitive
commission bidding but is expected to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as
established by its Board of Trustees.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager and the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, the procedures and rules
described above, allocations of brokerage are made by portfolio managers
of the Manager under the supervision of the Manager's executive officers.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers.
Brokerage commissions are paid primarily for effecting transactions in
listed securities and are otherwise paid only if it appears likely that
a better price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account. Option commissions may be relatively higher than those that
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 those other
accounts may be useful both to the Fund and one or more of such other
accounts. Such research, which may be supplied by a third party at the
instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars.
The research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (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 advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
During the Fund's fiscal years ended June 30, 1992, 1993 and 1994,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $810,645,
$523,738 and $706,547, respectively. During the fiscal year ended June
30, 1994, $344,590 was paid to brokers as commissions in return for
research services; the aggregate dollar amount of those transactions was
$164,561,750. The transactions giving rise to those commissions were
allocated in accordance with the Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to
time the "average annual total return," "cumulative total return,"
"average annual total return at net asset value" and "total return at net
asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for
each class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under applicable
rules of the Securities and Exchange Commission, include the average
annual total returns for each class of shares of the Fund for the 1, 5,
and 10-year periods (or the life of the class, if less) ending as of the
most recently-ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's performance
to the performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a basis
for comparison with other investments. An investment in the Fund is not
insured; its returns and share prices are not guaranteed and normally will
fluctuate on a daily basis. When redeemed, an investor's shares may be
worth more or less than their original cost. Returns for any given past
period are not a prediction or representation by the Fund of future
returns. The returns of Class A, Class B and Class Y shares of the Fund
are affected by portfolio quality, the type of investments the Fund holds
and its operating expenses allocated to the particular class.
- Average Annual Total Returns. The "average annual total return" of
each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over
an entire period of years. Its calculation uses some of the same factors
as average annual total return, but it does not average the rate of return
on an annual basis. Cumulative total return is determined as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). In calculating total returns for Class B
shares, 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 is applied
to the investment result. Total returns also assume that all dividends
and capital gains distributions during the period are reinvested to buy
additional shares at net asset value per share, and that the investment
is redeemed at the end of the period. The "average annual total returns"
on an investment in Class A shares of the Fund for the one, five and ten
year periods ended June 30, 1994 were (5.50%), 9.57% and 10.64%,
respectively. The cumulative "total return" on Class A shares for the ten
year period ended June 30, 1994 was 174.88%. During a portion of the
periods for which total returns are shown for Class A shares, the Fund's
maximum initial sales charge rate was higher; as a result, performance
returns on actual investments during those periods may be lower than the
results shown. The cumulative total return on Class B and Class Y shares
for the period from August 17, 1993 (the commencement of the offering of
the Class B shares) through June 30, 1994 and for the period June 1, 1994
(the commencement of the offering of Class Y shares) through June 30,
1994, were (5.19%) and (5.13%), respectively.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or Class
Y shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions. The cumulative total return
at net asset value of the Fund's Class A shares for the ten-year period
ended June 30, 1994 was 191.65%. The average annual total returns at net
asset value for the one, five and ten-year periods ended June 30, 1994,
for Class A shares were 0.27%, 10.88% and 11.30%, respectively.
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,
when comparing total return of an investment in Class A, Class B or Class
Y shares of the Fund with that of other alternatives, investors should
understand that as the Fund is an aggressive equity fund seeking capital
appreciation, its shares are subject to greater market risks and
volatility than shares of funds having other investment objectives and
that the Fund is designed for investors who are willing to accept greater
risk of loss in the hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B or Class Y shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent service.
Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods based
on categories relating to investment objectives. The performance of the
Fund is ranked against (i) all other funds (excluding money market funds),
(ii) all other capital appreciation funds and (iii) all other capital
appreciation funds in a specific size category. The Lipper performance
rankings are based on total returns that include the reinvestment of
capital gain distributions and income dividends but do not take sales
charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class Y shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures the Fund's three, five and ten-year
average annual total returns (when available) in excess of 91-day Treasury
bill returns after considering sales charges and expenses. Risk reflects
fund performance below 91-day U.S. Treasury bill monthly returns. Risk
and return are combined to produce star rankings reflecting performance
relative to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next 22.5%),
three stars is "average" (next 35%), two stars is "below average" (next
22.5%) and one star is "lowest" (bottom 10%). Morningstar ranks the Fund
in relation to other equity funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class B or
Class Y shares may be compared with performance for the same period of
either the Dow-Jones Industrial Average ("Dow") or the Standard & Poor's
500 Index ("S&P 500"), both of which are widely recognized indices of
stock market performance. Both indices consist of unmanaged groups of
common stocks; the Dow consists of thirty such issues. The performance
of both indices includes a factor for the reinvestment of income
dividends. Neither index reflects reinvestment of capital gains or takes
transaction charges or taxes into consideration as these items are not
applicable to indices.
Investors may also wish to compare the Fund's Class A, Class B or Class
Y return to the returns on fixed income investments available from banks
and thrift institutions, such as certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed
or variable time deposits, and various other instruments such as Treasury
bills. However, the Fund's returns and share price are not guaranteed by
the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide fixed
rates of return, and Treasury bills are guaranteed as to principal and
interest by the U.S. government.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plan for Class B shares under Rule 12b-1 of the
Investment Company Act pursuant to which the Fund will reimburse the
Distributor quarterly for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that
class, as described in the Prospectus. Each Plan has been approved by a
vote of (i) the Board of Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose
of voting on that Plan, and (ii) the holders of a "majority" (as defined
in the Investment Company Act) of the shares of each class. For the
Distribution and Service Plan for Class B shares, that vote was cast by
the Manager as the sole initial holder of Class B shares of the Fund.
In addition, under the Plans the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in
the case of the Manager, may include profits from the advisory fee it
receives from the Fund) to make payments to brokers, dealers or other
financial institutions (each is referred to as a "Recipient" under the
Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each Plan continues in effect from
year to year but only as long as its continuance is specifically approved
at least annually by the Fund's Board of Trustees and its Independent
Trustees by a vote cast in person at a meeting called for the purpose of
voting on such continuance. Either Plan may be terminated at any time by
the vote of a majority of the Independent Trustees or by the vote of the
holders of a "majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. Neither Plan may be amended to increase
materially the amount of payments to be made unless such amendment is
approved by shareholders of the class affected by the amendment. All
material amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the 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 each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. The report for the Class B Plan shall also
include the distribution costs for that quarter, and such costs for
previous fiscal periods that have been carried forward, as explained in
the Prospectus and below. Those reports, including the allocations on
which they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the 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 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. For the fiscal year
ended June 30, 1994, payments under the Class A Plan totalled $979,081,
all of which was paid by the Distributor to Recipients, including $23,576
paid to MML Investor Services, Inc., an affiliate of the Distributor.
Payments made under the Class B Plan during that fiscal period totalled
$44,228.
Any unreimbursed expenses incurred by the Distributor with respect to
Class A shares for any fiscal year may not be recovered in subsequent
years. Payments received by the Distributor under the Plan for Class A
shares will not be used to pay any interest expense, carrying charge, or
other financial costs, or allocation of overhead by the Distributor. 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 asset value of the
Class C 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 that the shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance
payment for those shares to the Distributor.
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 imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees.
The Class B Plan allows for the carry-forward of distribution expenses,
to be recovered from asset-based sales charges in subsequent fiscal
periods, as described in the Prospectus. The asset-based sales charge
paid to the Distributor by the Fund under the Class B Plan is intended to
allow the Distributor to recoup the cost of sales commissions paid to
authorized brokers and dealers at the time of sale, plus financing costs,
as described in the Prospectus. Such payments may also be used to pay for
the following expenses in connection with the distribution of Class B
shares: (i) financing the advance of the service fee payment to Recipients
under the Class B Plan, (ii) compensation and expenses of personnel
employed by the Distributor to support distribution of Class B shares, and
(iii) costs of sales literature, advertising and prospectuses (other than
those furnished to current shareholders) and state "blue sky" registration
fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A and Class B Shares. The
availability of two classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B shares are the same as
those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling
Fund shares may receive different compensation with respect to one class
of shares than the other. A third class of shares may be purchased only
by certain institutional investors at net asset value per share (the
"Class Y shares"). The Distributor will not accept any order for $1
million or more of Class B shares on behalf of a single investor (not
including dealer "street name" or omnibus accounts) because generally it
will be more advantageous for that investor to purchase Class A shares of
the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.
The 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 any one class are allocated pro rata to the shares of each class, based
on the percentage of the net assets of such class to the Fund's total
assets, and then equally to each outstanding share within a given class.
Such general expenses include (i) management fees, (ii) legal, bookkeeping
and audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to Independent Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution Plan
fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses,
to the extent that such expenses pertain to a specific class rather than
to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class Y shares of the Fund are determined
each day The New York Stock Exchange (the "NYSE") is open, as of 4:00
P.M., New York time, that 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 NYSE's most recent annual announcement (which is subject
to change) states that it will close on New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. It may also close on other days. The Fund may invest
a portion of its assets in foreign securities primarily listed on foreign
exchanges which may trade on Saturdays or customary U.S. business holidays
on which the NYSE is closed. Because the Fund's price and net asset value
will not be calculated on those days, the Fund's net asset values per
share may be significantly affected on such days when shareholders may not
purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
traded on NASDAQ and other unlisted equity securities for which last sale
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) debt securities having a maturity
in excess of 60 days are valued at the mean between the bid and asked
prices determined by a portfolio pricing service approved by the Board or
obtained from active market makers on the basis of reasonable inquiry;
(iv) 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; (v) securities (including restricted securities)
not having readily-available market quotations are valued at fair value
under the Board's procedures; and (vi) securities traded on foreign
exchanges are valued at the closing or last sales prices reported on a
principal exchange, or, if none, at the mean between closing bid and asked
prices and reflect prevailing rates of exchange taken from the closing
price on the London foreign exchange market that day.
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 stock 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 of Trustees, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made. Foreign currency will be valued as close to the
time fixed for the valuation date as is reasonably practicable. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at the prevailing rates of exchange at the time of valuation.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ,
as applicable, or, if there are no sales that day, in accordance with (i),
above. Forward currency contracts are valued at the closing price on the
London foreign exchange market. 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 "marked-to-market" to reflect the current market value of the option.
In determining the Fund's gain on investments, if a call written by the
Fund is exercised, the proceeds are increased by the premium received.
If a call or put written by the Fund expires, the Fund has a gain in the
amount of the premium; if the Fund enters into a closing purchase
transaction, it will have a gain or loss depending on whether the premium
was more or less than the cost of the closing transaction. If the Fund
exercises a put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by the
Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy 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 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.
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 other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
and a spouse's siblings.
- The OppenheimerFunds. The OppenheimerFunds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and
include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of
each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent ("Letter") is the investor's
statement of intention to purchase Class A shares of the Fund (and other
eligible OppenheimerFunds) sold with a front-end sales charge during the
13-month period from the investor's first purchase pursuant to the Letter
(the "Letter of Intent period"), which may, at the investor's request,
include purchases made up to 90 days prior to the date of the Letter. The
Letter states the investor's intention to make the aggregate amount of
purchases (excluding any purchases made by reinvestments of dividends or
distributions or purchases made at net asset value without sales charge),
which together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of the
Letter) will equal or exceed the amount specified in the Letter. This
enables the investor to obtain the reduced sales charge rate (as set forth
in the Prospectus) applicable to purchases of shares in that amount (the
"intended purchase amount"). Each purchase under the Letter will be made
at the public offering price applicable to a single lump-sum purchase of
shares in the intended purchase amount, as described in the Prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent
period will be deducted. It is the responsibility of the dealer of record
and/or the investor to advise the Distributor about the Letter in placing
any purchase orders for the investor during the Letter of Intent period.
All of such purchases must be made through the Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended purchase amount specified in the Letter shall be held in escrow
by the Transfer Agent. For example, if the intended purchase amount is
$50,000, the escrow shall be shares valued in the amount of $2,500
(computed at the public offering price adjusted for a $50,000 purchase).
Any dividends and capital gains distributions on the escrowed shares will
be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of the Letter) do not include any
shares sold without a front-end sales charge or without being subject to
a Class A contingent deferred sales charge unless (for the purpose of
determining completion of the obligation to purchase shares under the
Letter) the shares were acquired in exchange for shares of one of the
OppenheimerFunds whose shares were acquired by payment of a sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
OppenheimerFunds.
There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions
for redemptions set forth in the Prospectus.
- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board
of Trustees of the Fund may determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash. In that case the Fund may
pay the redemption proceeds in whole or in part by a distribution "in
kind" of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value it portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
- Involuntary Redemptions. 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 those shares is less than $500 or such
lesser amount as the Board may fix. The Board of Trustees will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other
OppenheimerFunds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares
of the Fund or another of the OppenheimerFunds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of transfer
to the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SAR-SEPs, 403(b)(7) custodial
plans, or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons) in OppenheimerFunds-
sponsored pension or profit-sharing plans may not directly request
redemption of their accounts. The employer or plan administrator must
sign the request. Distributions from pension and profit sharing plans are
subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be completed
before the distribution may be made. Distributions from retirement plans
are subject to withholding requirements under the Internal Revenue Code,
and IRS Form W-4P (available from the Transfer Agent) must be submitted
to the Transfer Agent with the distribution request, or the distribution
may be delayed. Unless the shareholder has provided the Transfer Agent
with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the
shareholder elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no responsibility
to determine whether a distribution satisfies the conditions of applicable
tax laws and will not be responsible for any tax penalties assessed in
connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received 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 were transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00 P.M.).
Payment ordinarily will be made within seven days after the Distributor's
receipt of the required redemption documents, with signature(s) guaranteed
as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B shareholders should not establish withdrawal
plans that would require the redemption of shares held less than 12
months, because of the imposition of the Class B contingent deferred sales
charge on such withdrawals (except where the Class B contingent deferred
sales charge is waived as described in the Prospectus under "Class B
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated
below and in the provisions of the OppenheimerFunds Application relating
to such Plans, as well as the Prospectus. These provisions may be amended
from time to time by the Fund and/or the Distributor. When adopted, such
amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically on
a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who
executed the Plan authorization and application submitted to the Transfer
Agent. The Transfer Agent shall incur no liability to the Planholder for
any action taken or omitted by the Transfer Agent in good faith to
administer the Plan. Certificates will not be issued for shares of the
Fund purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the records of
the Fund. Any share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that the
shares represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may
be changed at any time by the Planholder by writing to the Transfer Agent.
The Planholder should allow at least two weeks' time in mailing such
notification for the requested change to be put in effect. The Planholder
may, at any time, instruct the Transfer Agent by written notice (in proper
form in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under the
Plan. In that case, the Transfer Agent will redeem the number of shares
requested at the net asset value per share in effect in accordance with
the Fund's usual redemption procedures and will mail a check for the
proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to
the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent
to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
OppenheimerFunds that have a single class without a class designation are
deemed "Class A" shares for this purpose, and all OppenheimerFunds offer
"Class A" shares (except for Oppenheimer Strategic Diversified Income
Fund), but only the following other OppenheimerFunds offer Class B shares:
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by
exchange)
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
The following other OppenheimerFunds offer Class Y shares:
Oppenheimer Discovery Fund
Oppenheimer Total Return Fund, Inc.
Class A shares of OppenheimerFunds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund
purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may
be exchanged at net asset value for shares of any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
B contingent deferred sales charge is imposed on Class B shares acquired
by exchange if they are redeemed within six years of the initial purchase
of the exchanged Class B shares.
When Class B shares are redeemed to effect an exchange, the priorities
described in "How To Buy Shares" in the Prospectus for the imposition of
the Class B contingent deferred sales charge will be followed in
determining the order in which the shares are exchanged. Shareholders
should take into account the effect of any exchange on the applicability
and rate of any contingent deferred sales charge that might be imposed in
the subsequent redemption of remaining shares. Shareholders owning shares
of both classes must specify whether they intend to exchange Class A or
Class B shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts.
The Fund may accept requests for exchanges of up to 50 accounts per day
from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the
number requested would include shares subject to a restriction cited in
the Prospectus or this Statement of Additional Information or would
include shares covered by a share certificate that is not tendered with
the request. In those cases, only the shares available for exchange
without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund must
distribute 98% of its taxable investment income earned from January 1
through December 31 of that year and 98% of its capital gains realized in
the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other OppenheimerFunds listed in
"Reduced Sales Charges," above, at net asset value without sales charge.
Class B and Class Y shareholders should be aware that as of the date of
this Statement of Additional Information, not all of the OppenheimerFunds
offer Class B and/or Class Y shares. To elect this option, a shareholder
must notify the Transfer Agent in writing and either have an existing
account in the fund selected for reinvestment or must obtain a prospectus
for that fund and an application from the Distributor to establish an
account. The investment will be made at the net asset value per share in
effect at the close of business on the payable date of the dividend or
distribution. Dividends and/or distributions from certain of the
OppenheimerFunds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
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
and its affiliates.
<PAGE>
Oppenheimer Special Fund
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, 1994, 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, 1994, 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, 1994, 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.
KPMG PEAT MARWICK LLP
Denver, Colorado
July 22, 1994
STATEMENT OF INVESTMENTS JUNE 30, 1994
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
=============================================
=============
=============================================
=============
============
<S> <C> <C>
<C>
REPURCHASE AGREEMENTS--11.1%
- -------------------------------------------------------------------------------------------------------------------------
- -------
Repurchase agreement with The First
Boston Corp., 4.125% dated 6/30/94,
to be repurchased at $74,108,491
on 7/1/94, collateralized by U.S.
Treasury Nts., 4%, 1/31/96, with a
value of $75,668,951 (Cost $74,100,000)
$74,100,000 $74,100,000
</TABLE>
<TABLE>
<CAPTION>
SHARES
=============================================
=============
=====================<S> <C>
<C> <C>
COMMON STOCKS--89.0%
- -------------------------------------------------------------------------------------------------------------------------
- -------
BASIC MATERIALS--0.7%
- -------------------------------------------------------------------------------------------------------------------------
- -------
CHEMICALS--0.6% Great Lakes Chemical Corp.
45,000 2,435,625
- -------------------------------------------------------------------------------------
Sigma Aldrich Corp. 40,000
1,600,000
- -----------
4,035,625
- -------------------------------------------------------------------------------------------------------------------------
- -------
CHEMICALS: DIVERSIFIED--0.1% FMC Corp.(1)
15,000 811,875
- -------------------------------------------------------------------------------------------------------------------------
- -------
CONSUMER CYCLICALS--10.8%
- -------------------------------------------------------------------------------------------------------------------------
- -------
AUTO PARTS: AFTER MARKET--0.4% Goodyear Tire & Rubber Co.
70,000
2,520,000
- -------------------------------------------------------------------------------------------------------------------------
- -------
AUTOMOBILES--0.3% Harley-Davidson, Inc.
40,000 1,830,000
- -------------------------------------------------------------------------------------
Navistar International Corp.(1) 15,000
200,625
- -----------
2,030,625
- -------------------------------------------------------------------------------------------------------------------------
- -------
BROADCAST MEDIA--0.2% Multimedia, Inc.(1)
45,000 1,305,000
- -------------------------------------------------------------------------------------------------------------------------
- -------
ENTERTAINMENT--0.3% King World Productions, Inc.(1)
5,000 199,375
- -------------------------------------------------------------------------------------
WMS Industries, Inc.(1) 80,000
1,520,000
- -----------
1,719,375
- -------------------------------------------------------------------------------------------------------------------------
- -------
HOMEBUILDING--0.0% Webb (Del E.) Corp.
11,300 177,975
- -------------------------------------------------------------------------------------------------------------------------
- -------
LEISURE TIME--0.3% Acclaim Entertainment, Inc.(1)
130,000 2,108,444
- -------------------------------------------------------------------------------------------------------------------------
- -------
PUBLISHING--0.1% Marvel Entertainment Group, Inc.(1)
50,000 912,500
- -------------------------------------------------------------------------------------------------------------------------
- -------
RESTAURANTS--1.6% Brinker International, Inc.(1)
45,000 945,000
- -------------------------------------------------------------------------------------
McDonald's Corp. 110,000
3,176,250
- -------------------------------------------------------------------------------------
Pancho's Mexican Buffet, Inc. 100,000
925,000
- -------------------------------------------------------------------------------------
Shoney's, Inc.(1) 360,000
5,490,000
- -----------
10,536,250
- -------------------------------------------------------------------------------------------------------------------------
- -------
RETAIL: SPECIALTY--3.6% Blockbuster Entertainment Corp.
15,000 388,125
- -------------------------------------------------------------------------------------
Circuit City Stores, Inc. 245,000
5,022,500
- -------------------------------------------------------------------------------------
Claire's Stores, Inc. 75,000
768,750
- -------------------------------------------------------------------------------------
CML Group, Inc. 79,600
935,300
- -------------------------------------------------------------------------------------
Edison Brothers Stores, Inc. 55,000
1,388,750
- -------------------------------------------------------------------------------------
Home Depot, Inc. (The) 120,000
5,055,000
- -------------------------------------------------------------------------------------
Intelligent Electronics, Inc. 170,000
2,571,250
- -------------------------------------------------------------------------------------
Michaels Stores, Inc.(1) 90,000
3,026,250
- -------------------------------------------------------------------------------------
Rocky Mountain Chocolate Factory, Inc.(2) 100,000
1,325,000
- -------------------------------------------------------------------------------------
Service Merchandise Co., Inc.(1) 180,000
1,147,500
- -------------------------------------------------------------------------------------
Sotheby's Holdings, Inc., Cl. A 170,000
2,103,750
- -----------
23,732,175
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C>
<C>
RETAIL: SPECIALTY APPAREL--1.0% Gap, Inc. (The)
140,000 $ 5,985,000
- -------------------------------------------------------------------------------------
Lands' End, Inc. 20,000
347,500
- -----------
6,332,500
- -------------------------------------------------------------------------------------------------------------------------
- -------
RETAIL STORES: May Department Stores Co.
25,000 981,250
DEPARTMENT STORES--0.2%
- -------------------------------------------------------------------------------------------------------------------------
- -------
RETAIL STORES: GENERAL Wal-Mart Stores, Inc.
450,000 10,912,500
MERCHANDISE CHAINS--1.6%
- -------------------------------------------------------------------------------------------------------------------------
- -------
SHOES--0.3% Reebok International Ltd.
60,000 1,792,500
- -------------------------------------------------------------------------------------------------------------------------
- -------
TEXTILES: APPAREL Fruit of the Loom, Inc., Cl. A(1)
160,000 4,180,000
MANUFACTURERS--0.6%
- -------------------------------------------------------------------------------------------------------------------------
- -------
TOYS--0.3% Hasbro, Inc. 40,000
1,185,000
- -------------------------------------------------------------------------------------
Mattel, Inc. 43,750
1,110,156
- -----------
2,295,156
- -------------------------------------------------------------------------------------------------------------------------
- -------
CONSUMER NON-CYCLICALS--25.1%
- -------------------------------------------------------------------------------------------------------------------------
- -------
BEVERAGES: SOFT DRINKS--3.1% Coca-Cola Co. (The)
255,000 10,359,375
- -------------------------------------------------------------------------------------
PepsiCo, Inc 330,000
10,106,250
- -----------
20,465,625
- -------------------------------------------------------------------------------------------------------------------------
- -------
DRUGS--5.3% Forest Laboratories, Inc.(1)
45,000 1,957,500
- -------------------------------------------------------------------------------------
Merck & Co., Inc. 212,500
6,321,875
- -------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 140,000
2,975,000
- -------------------------------------------------------------------------------------
Pfizer, Inc. 120,000
7,575,000
- -------------------------------------------------------------------------------------
Schering-Plough Corp. 200,000
12,250,000
- -------------------------------------------------------------------------------------
Upjohn Co. 148,400
4,322,150
- -----------
35,401,525
- -------------------------------------------------------------------------------------------------------------------------
- -------
FOOD PROCESSING--1.9% ConAgra, Inc.
125,000 3,812,500
- -------------------------------------------------------------------------------------
General Mills, Inc. 20,000
1,092,500
- -------------------------------------------------------------------------------------
IBP, Inc. 40,000
1,065,000
- -------------------------------------------------------------------------------------
Kellog Co. 15,000
815,625
- -------------------------------------------------------------------------------------
Sara Lee Corp. 150,000
3,187,500
- -------------------------------------------------------------------------------------
Tyson Foods, Inc., Cl. A 120,000
2,805,000
- -----------
12,778,125
- -------------------------------------------------------------------------------------------------------------------------
- -------
HEALTHCARE: DIVERSIFIED--3.9% Abbott Laboratories
450,000 13,050,000
- -------------------------------------------------------------------------------------
American Home Products Corp. 90,000
5,107,500
- -------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 75,000
4,021,875
- -------------------------------------------------------------------------------------
IVAX Corp. 50,000
818,750
- -------------------------------------------------------------------------------------
Warner-Lambert Co. 45,000
2,970,000
- -----------
25,968,125
- -------------------------------------------------------------------------------------------------------------------------
- -------
HEALTHCARE: National Health Laboratories, Inc.
400,000 4,850,000
MISCELLANEOUS--4.7%
- -------------------------------------------------------------------------------------
United Healthcare Corp. 300,000
13,762,500
- -------------------------------------------------------------------------------------
U.S. Healthcare, Inc. 340,000
12,580,000
- ------------
31,192,500
</TABLE>
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C>
<C>
HOSPITAL MANAGEMENT--0.2% Novacare, Inc.(1)
50,100 $ 801,600
- -------------------------------------------------------------------------------------
Surgical Care Affiliates, Inc. 20,000
265,000
- -----------
1,066,600
- -------------------------------------------------------------------------------------------------------------------------
- -------
HOUSEHOLD PRODUCTS--0.2% Colgate-Palmolive Co.
30,000 1,560,000
- -------------------------------------------------------------------------------------------------------------------------
- -------
MEDICAL PRODUCTS--3.9% Cordis Corp.(1)
275,000 10,673,437
- -------------------------------------------------------------------------------------
Medtronic, Inc. 135,000
10,816,875
- -------------------------------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 10,000
305,000
- -------------------------------------------------------------------------------------
Sci-Med Life Systems, Inc.(1) 150,000
3,900,000
- -----------
25,695,312
- -------------------------------------------------------------------------------------------------------------------------
- -------
RETAIL STORES: Vons Cos., Inc. (The)(1)
25,000 425,000
FOOD CHAINS--0.1%
- -------------------------------------------------------------------------------------------------------------------------
- -------
TOBACCO--1.8% American Brands, Inc.
25,000 790,625
- -------------------------------------------------------------------------------------
Phillip Morris Cos., Inc. 155,000
7,982,500
- -------------------------------------------------------------------------------------
UST, Inc. 129,000
3,499,125
- -----------
12,272,250
- -------------------------------------------------------------------------------------------------------------------------
- -------
ENERGY--0.6%
- -------------------------------------------------------------------------------------------------------------------------
- -------
OIL: EXPLORATION & Maxus Energy Corp.(1)
214,700 1,073,500
PRODUCTION--0.2%
- -------------------------------------------------------------------------------------------------------------------------
- -------
OIL: INTEGRATED DOMESTIC--0.1% Quaker State Corp.
60,000 840,000
- -------------------------------------------------------------------------------------------------------------------------
- -------
OIL WELL SERVICES McDermott International, Inc.
90,000 2,250,000
AND EQUIPMENT--0.3%
- -------------------------------------------------------------------------------------------------------------------------
- -------
FINANCIAL--25.4%
- -------------------------------------------------------------------------------------------------------------------------
- -------
FINANCIAL SERVICES: Advanta Corp., Cl. A
215,000 7,659,375
MISCELLANEOUS--12.2%
- -------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 404,250
6,872,250
- -------------------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 322,500
4,635,938
- -------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 40,000
2,420,000
- -------------------------------------------------------------------------------------
Federal National Mortgage Assn. 160,000
13,360,000
- -------------------------------------------------------------------------------------
Green Tree Financial Corp. 160,000
8,960,000
- -------------------------------------------------------------------------------------
Household International, Inc. 25,000
850,000
- -------------------------------------------------------------------------------------
MBIA, Inc. 15,000
860,625
- -------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. 60,000
3,412,500
- -------------------------------------------------------------------------------------
PaineWebber Group, Inc. 420,000
6,562,500
- -------------------------------------------------------------------------------------
Raymond James Financial, Inc. 17,500
253,750
- -------------------------------------------------------------------------------------
Salomon, Inc. 40,000
1,910,000
- -------------------------------------------------------------------------------------
Schwab (Charles) Corp. (The) 150,000
3,712,500
- -------------------------------------------------------------------------------------
Student Loan Marketing Assn. 130,000
4,680,000
- -------------------------------------------------------------------------------------
Sunamerica, Inc. 65,000
2,656,875
- -------------------------------------------------------------------------------------
Travelers, Inc. 374,600
12,080,850
- -----------
80,887,163
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C>
<C>
INSURANCE: LIFE--2.7% AFLAC, Inc.
71,875 $ 2,425,781
- -------------------------------------------------------------------------------------
Conseco, Inc. 255,000
11,889,375
- -------------------------------------------------------------------------------------
Lincoln National Corp. 40,000
1,695,000
- -------------------------------------------------------------------------------------
Torchmark Corp. 20,000
780,000
- -------------------------------------------------------------------------------------
UNUM Corp. 30,000
1,342,500
- -----------
18,132,656
- -------------------------------------------------------------------------------------------------------------------------
- -------
INSURANCE: MULTI-LINE--0.1% Allstate Corp.
30,000 712,500
- -------------------------------------------------------------------------------------------------------------------------
- -------
INSURANCE: PROPERTY Continental Corp.
30,000 465,000
AND CASUALTY--1.4%
- -------------------------------------------------------------------------------------
Loews Corp. 25,000
2,131,250
- -------------------------------------------------------------------------------------
Progressive Corp. 40,000
1,330,000
- -------------------------------------------------------------------------------------
USF&G Corp. 450,000
5,512,500
- -----------
9,438,750
- -------------------------------------------------------------------------------------------------------------------------
- -------
MAJOR BANKS: OTHER--1.5% Bank of Boston Corp.
400,000 9,850,000
- -------------------------------------------------------------------------------------------------------------------------
- -------
MAJOR BANKS: REGIONAL--6.8% Banc One Corp.
82,500 2,825,625
- -------------------------------------------------------------------------------------
First Interstate Bancorp. 95,000
7,315,000
- -------------------------------------------------------------------------------------
First Union Corp. 70,000
3,228,750
- -------------------------------------------------------------------------------------
KeyCorp. 234,975
7,489,828
- -------------------------------------------------------------------------------------
Midlantic Corp. 190,000
5,557,500
- -------------------------------------------------------------------------------------
NationsBank Corp. 10,000
513,750
- -------------------------------------------------------------------------------------
Shawmut National Corp. 240,000
5,280,000
- -------------------------------------------------------------------------------------
Signet Banking Corp. 200,000
8,075,000
- -------------------------------------------------------------------------------------
SouthTrust Corp. 170,000
3,463,750
- -------------------------------------------------------------------------------------
SunTrust Banks, Inc. 20,000
967,500
- -------------------------------------------------------------------------------------
Washington Mutual Savings Bank of Seattle 35,000
721,875
- -----------
45,438,578
- -------------------------------------------------------------------------------MONEY CENTER BANKS--0.7%
Chase
Manhattan Corp. 30,000 1,147,500
- -------------------------------------------------------------------------------------
Chemical Banking Corp. 90,000
3,465,000
- -----------
4,612,500
- -------------------------------------------------------------------------------------------------------------------------
- -------
INDUSTRIAL--3.5%
- -------------------------------------------------------------------------------------------------------------------------
- -------
COMMERCIAL SERVICES--0.7% Comdisco, Inc.
215,000 4,111,875
- -------------------------------------------------------------------------------------
Mercury Air Group, Inc.(1) 100,000
537,500
- -----------
4,649,375
- -------------------------------------------------------------------------------------------------------------------------
- -------
CONTAINERS: METAL Crown Cork & Seal Co., Inc.(1)
20,000 745,000
AND GLASS--0.1%
- -------------------------------------------------------------------------------------------------------------------------
- -------
ELECTRICAL EQUIPMENT--1.8% General Electric Co.
250,000 11,656,250
- -------------------------------------------------------------------------------------------------------------------------
- -------
MACHINERY: DIVERSIFIED--0.7% Varity Corp.(1)
135,000 4,910,625
- -------------------------------------------------------------------------------------------------------------------------
- -------
POLLUTION CONTROL--0.0% Yellowstone Environmental Services, Inc.(1)
100,000
6,250
- -------------------------------------------------------------------------------------------------------------------------
- -------
TRANSPORTATION: American President Cos. Ltd.
60,000 1,342,500
MISCELLANEOUS--0.2%
</TABLE>
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C>
<C>
TECHNOLOGY--20.9%
- -------------------------------------------------------------------------------------------------------------------------
- -------
AEROSPACE/DEFENSE--0.6% Northrop Corp.
90,000 $ 3,341,250
- -------------------------------------------------------------------------------------------------------------------------
- -------
COMPUTER SOFTWARE Adobe Systems, Inc.
35,000 953,750
AND SERVICES--9.6%
- -------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 206,800
10,986,250
- -------------------------------------------------------------------------------------
BMC Software, Inc.(1) 40,000
1,750,000
- -------------------------------------------------------------------------------------
Ceridian Corp.(1) 60,000
1,477,500
- -------------------------------------------------------------------------------------
Computer Associates International, Inc. 375,000
15,000,000
- -------------------------------------------------------------------------------------
Computer Sciences Corp.(1) 150,000
6,243,750
- -------------------------------------------------------------------------------------
Electronic Arts, Inc.(1) 165,000
2,310,000
- -------------------------------------------------------------------------------------
General Motors Corp., Cl. E 200,000
6,975,000
- -------------------------------------------------------------------------------------
Microsoft Corp.(1) 350,000
18,025,000
- -------------------------------------------------------------------------------------
Oracle Systems Corp.(1) 10,000
375,000
- -----------
64,096,250
- -------------------------------------------------------------------------------------------------------------------------
- -------
COMPUTER SYSTEMS--6.6% AST Research, Inc.(1)
237,500 3,384,375
- -------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 135,000
13,044,375
- -------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 90,000
2,103,750
- -------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 60,000
1,935,000
- -------------------------------------------------------------------------------------
Data General Corp.(1) 126,500
980,375
- -------------------------------------------------------------------------------------
Maxtor Corp.(1) 19,500
97,500
- -------------------------------------------------------------------------------------
Quantum Corp.(1) 110,000
1,423,125
- -------------------------------------------------------------------------------------
Seagate Technology(1) 280,000
5,530,000
- -------------------------------------------------------------------------------------
3Com Corp.(1) 95,000
4,880,625
- -------------------------------------------------------------------------------------
Unisys Corp.(1) 680,000
6,290,000
- -------------------------------------------------------------------------------------
Western Digital Corp.(1) 325,000
4,143,750
- -----------
43,812,875
- -------------------------------------------------------------------------------------------------------------------------
- -------
ELECTRONICS: American Power Conversion Corp.(1)
140,000 2,257,500
INSTRUMENTATION--0.4%
- -------------------------------------------------------------------------------------
Linear Technology Corp. 7,000
308,000
- -----------
2,565,500
- -------------------------------------------------------------------------------------------------------------------------
- -------
ELECTRONICS: Advanced Micro Devices, Inc.(1)
35,000 870,625
SEMICONDUCTORS--2.8%
- -------------------------------------------------------------------------------------
Intel Corp. 300,000
17,550,000
- -------------------------------------------------------------------------------------
VLSI Technology, Inc.(1) 15,000
205,313
- -----------
18,625,938
- -------------------------------------------------------------------------------------------------------------------------
- -------
TELECOMMUNICATIONS--1.0% American Telephone & Telegraph Co.
95,000
5,165,625
- -------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR
75,000 1,406,250
- -----------
6,571,875
- -------------------------------------------------------------------------------------------------------------------------
- -------
UTILITIES--2.0%
- -------------------------------------------------------------------------------------------------------------------------
- -------
TELEPHONE--2.0% Telefonica de Espana SA, Sponsored ADR
40,000 1,610,000
- -------------------------------------------------------------------------------------
Telefonos de Mexico SA, Sponsored ADR
210,000 11,733,750
- ------------
13,343,750
- ------------
Total Common Stocks (Cost $428,145,095)
592,111,897
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
- -------
<S> <C>
<C>
TOTAL INVESTMENTS, AT VALUE (COST $502,245,095)
100%
$666,211,897
- -------------------------------------------------------------------------------------------------------------------------
- -------
LIABILITIES IN EXCESS OF OTHER ASSETS
(.1) (521,790)
- ------------
NET ASSETS 100.00%
$665,690,107
======
============
</TABLE>
(1) Non-income producing security.
(2) Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and was an affiliate, as defined in the Investment
Company Act of 1940, during the year ended June 30, 1994. The aggregate fair
value and cost of all securities of affiliated companies as of June 30, 1994
amounted to $1,325,000. There were no transactions with affiliates during the
year ended June 30, 1994. Rocky Mountain Chocolate Factory, Inc. is no longer an
affiliate as of June 30, 1994.
See accompanying Notes to Financial Statements.
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES June 30, 1994
<TABLE>
<S> <C>
<C>
=============================================
=============
=============================================
=============
============
ASSETS Investments, at value (cost $502,245,095)--see accompanying
statement $666,211,897
- -------------------------------------------------------------------------------------
Cash
1,033,763
- -------------------------------------------------------------------------------------
Receivables:
Dividends and interest
826,173
Investments sold
577,625
Shares of beneficial interest sold
306,693
- -------------------------------------------------------------------------------------
Other
294,070
- ------------
Total assets
669,250,221
=============================================
=============
=============================================
=============
============
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed
1,885,026
Investments purchased
926,762
Distribution and service plan fees--Note 4
295,348
Other
452,978
- ------------
Total liabilities
3,560,114
=============================================
=============
=============================================
=============
============
NET ASSETS
$665,690,107
============
=============================================
=============
=============================================
=============
============
COMPOSITION OF Paid-in capital
$447,255,344
NET ASSETS
- -------------------------------------------------------------------------------------
Undistributed net investment income
2,259,799
- -------------------------------------------------------------------------------------
Accumulated net realized gain from investment transactions
52,208,162
- -------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3
163,966,802
- ------------
Net assets
$665,690,107
============
=============================================
=============
=============================================
=============
============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on
net assets
of $656,933,970 and 24,653,871 shares of beneficial interest
outstanding)
$26.65
Maximum offering price per share (net asset value plus sales
charge
of 5.75% of offering price)
$28.28
- -------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based
on net assets of $8,746,652 and 330,820 shares of beneficial
interest
outstanding)
$26.44
- -------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based
on net assets of $9,485 and 356 shares of beneficial interest
outstanding)
$26.64
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 11
STATEMENT OF OPERATIONS For the Year Ended June 30, 1994
<TABLE>
<S> <C>
<C>
=============================================
=============
=============================================
=============
============
INVESTMENT INCOME Dividends
$ 10,278,573
- -------------------------------------------------------------------------------------
Interest
1,494,078
- -----------
Total income
11,772,651
=============================================
=============
=============================================
=============
============
EXPENSES Management fees--Note 4
5,149,361
- -------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4
979,081
Class B--Note 4
44,228
- -------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4
824,213
- -------------------------------------------------------------------------------------
Shareholder reports
471,400
- -------------------------------------------------------------------------------------
Trustees' fees and expenses
66,717
- -------------------------------------------------------------------------------------
Custodian fees and expenses
63,460
- -------------------------------------------------------------------------------------
Legal and auditing fees
48,937
- -------------------------------------------------------------------------------------
Registration and filing fees:
Class B
2,265
Class Y
3
- -------------------------------------------------------------------------------------
Other
134,987
- -----------
Total expenses
7,784,652
=============================================
=============
=============================================
=============
============
NET INVESTMENT INCOME
3,987,999
=============================================
=============
=============================================
=============
============
REALIZED AND UNREALIZED Net realized gain on investments
52,653,524
GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on
investments
(52,680,765)
- -----------
Net realized and unrealized loss on investments
(27,241)
=============================================
=============
=============================================
=============
============
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$ 3,960,758
============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 12
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1994 1993
=============================================
=============
=============================================
=============
============
<S> <C> <C>
<C>
OPERATIONS Net Investment income $
3,987,999 $ 5,089,258
- -------------------------------------------------------------------------------------
Net realized gain on investments 52,653,524
35,809,298
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on investments (52,680,765)
64,418,678
------------
- ------------
Net increase in net assets resulting from
operations 3,960,758
105,317,234
=============================================
=============
=============================================
=============
============
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.153 and $.245 per share, respectively)
(3,966,692) (6,227,354)
SHAREHOLDERS Class B ($.105 per share)
(17,924) --
- -------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.002 per share) (59,612)
--
Class B ($.002 per share) (269)
--
- -------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($.639 and $1.571 per share, respectively)
(16,628,635) (39,984,953)
Class B ($.639 per share) (108,539)
--
=============================================
=============
=============================================
=============
============
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS Class A beneficial interest transactions--Note 2
(70,528,976) 53,957,646
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 9,199,957
--
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from Class Y
beneficial interest transactions--Note 2 10,000
--
=============================================
=============
=============================================
=============
============
NET ASSETS Total increase (decrease)
(78,139,932) 113,062,573
- -------------------------------------------------------------------------------------
Beginning of year 743,830,039
630,767,466
------------
- ------------
End of year (including undistributed net investment
income of $2,259,799 and $2,818,869, respectively)
$665,690,107 $743,830,039
============
============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
1994 1993 1992 1991 1990 1989 1988
1987
=============================================
=============
=============================================
=============
==========
<S> <C> <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 $ 20.37 $ 23.82
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .16 .19 .29 .47 .64 .62
.67 .93
Net realized and unrealized
gain (loss) on investments (.05) 4.03 3.13 1.36 1.76 1.78
(.89) .59
-------- -------- -------- -------- -------- -------- -------- -------
Total income (loss) from
investment operations .11 4.22 3.42 1.83 2.40 2.40
(.22) 1.52
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.16) (.25) (.36) (.55) (.70) (.59)
(1.27) (.77)
Distributions in excess
of net investment income --(6) -- -- -- -- -- --
--
Distributions from net realized
gain on investments (.64) (1.57) -- -- -- (.04)
(1.75) (4.20)
-------- -------- -------- -------- -------- -------- -------- -------
Total dividends and distributions
to shareholders (.80) (1.82) (.36) (.55) (.70) (.63)
(3.02) (4.97)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.65 $ 27.34 $ 24.94 $ 21.88 $ 20.60 $
18.90 $ 17.13 $ 20.37
======== ======== ========
======== ========
======== ======== =======
=============================================
=============
=============================================
=============
==========
TOTAL RETURN, AT NET ASSET VALUE(3) .27% 16.88% 15.69% 9.39%
12.98% 14.54%
(1.03)% 9.48%
=============================================
=============
=============================================
=============
==========
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $656,934 $743,830 $630,767 $550,480 $551,295
$542,250 $552,863 $690,326
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $720,765 $710,391 $624,527 $520,335 $547,090
$529,699 $570,250
$717,115
- ------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 24,654 27,210 25,287 25,155 26,760
28,687 32,277 33,890
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .56% .72% 1.14% 2.20% 3.07%
3.31% 3.78% 4.32%
Expenses 1.07% .93% .90% .94% .92% .97%
.95% .93%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 19.8% 23.2% 36.7% 31.1% 27.6%
27.1% 120.3% 371.2%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
- ----------------------------------------------------------------- --------------- ------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED JUNE 30, JUNE 30, JUNE 30,
1986 1985 1994(2) 1994(1)
=============================================
=============
========================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 20.46 $ 19.45 $27.02 $28.08
- --------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .75 .60 (.04) .02
Net realized and unrealized
gain (loss) on investments 3.70 1.87 .21 (1.46)
-------- -------- ------ ------
Total income (loss) from
investment operations 4.45 2.47 .17 (1.44)
- --------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.61) (.39) (.11) --
Distributions in excess
of net investment income -- -- --(6) --
Distributions from net realized
gain on investments (.48) (1.07) (.64) --
-------- -------- ------ ------
Total dividends and distributions
to shareholders (1.09) (1.46) (.75) --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.82 $ 20.46 $26.44 $26.64
======== ======== ======
======
=============================================
=============
========================================
TOTAL RETURN, AT NET ASSET VALUE(3) 22.77% 14.24% (.20)%
(5.13)%
=============================================
=============
========================================
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $772,619 $834,054 $8,747 $ 9
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $783,491 $765,214 $5,119 $ 10
- --------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 32,437 40,759 331 --
- --------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 3.03% 3.28% (.22)%(4) 1.09%(4)
Expenses .95% .94% 1.98%(4) 1.25%(4)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 67.4% 16.8% 19.8% 19.8%
</TABLE>
(1) For the period from June 1, 1994 (inception of offering) to June 30, 1994.
(2) For the period from August 17, 1993 (inception of offering) to June 30,
1994. Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
(3) 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.
(4) Annualized
(5) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended June 30, 1994 were $134,329,584 and $246,835,478,
respectively.
(6) Less than $.005 per share.
See accompanying Notes to Financial Statements.
<PAGE> 14
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 advisor
is Oppenheimer Management Corporation (the
Manager). The Fund offers Class A, Class B and
Class Y shares. Class A shares are sold with a
front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge.
All three classes of shares have identical rights
to earnings, assets and voting privileges, except
that each class has its own expenses directly
attributable to a particular class and exclusive
voting rights with respect to matters affecting a
single class. Classes A and B have separate
distribution and/or service plans. Class B shares
will automatically convert to Class A shares six
years after the date of purchase. The following
is a summary of significant accounting policies
consistently followed by the Fund.
------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are
valued at 4:00 p.m. (New York time) on each
trading day. Listed and unlisted securities for
which such information is regularly reported are
valued at the last sale price of the day or, in
the absence of sales, at values based on the
closing bid or asked price or the last sale price
on the prior trading day. 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 June 30, 1994. No payments have been
made under the plan.
------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
------------------------------------------------
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO
SHAREHOLDERS. Effective July 1, 1993, the Fund
adopted Statement of Position 93-2:
Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment
Companies. As a result, the Fund changed the
classification of distributions to shareholders
to better disclose the differences between
financial statement amounts and distributions
determined in accordance with income tax
regulations. Accordingly, subsequent to June 30,
1993, amounts have been reclassified to reflect
an increase in paid-in capital of $2,809,456, a
decrease in undistributed net investment income
of $502,572, and a decrease in undistributed
capital gain on investments of $2,306,884.
------------------------------------------------
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> 15
=============================================
=============
=====================
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>
YEAR ENDED JUNE 30, 1994(1) YEAR
ENDED JUNE 30, 1993
---------------------------
- --------------------------
SHARES AMOUNT SHARES
AMOUNT
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C>
Class A
Sold 3,332,175 $ 92,525,655 5,518,247
$149,845,978
Dividends and distributions
reinvested 719,996 19,958,287 1,627,898
44,669,529
Redeemed (6,608,134) (183,012,918)
(5,223,558) (140,557,861)
---------- ------------ ----------
- ------------
Net increase (decrease) (2,555,963) $(70,528,976)
1,922,587 $ 53,957,646
==========
============
========== ============
- -------------------------------------------------------------------------------------------------
Class B
Sold 398,782 $ 11,048,394 --
$ --
Dividends and distributions
reinvested 4,391 121,221 --
--
Redeemed (72,353) (1,969,658) --
--
---------- ------------ ----------
- ------------
Net increase 330,820 $ 9,199,957 --
$ --
==========
============
========== ============
- -------------------------------------------------------------------------------------------------
Class Y
Sold 356 $ 10,000 -- $
--
==========
============
========== ============
</TABLE>
(1) For the year ended June 30, 1994 for Class A
shares, for the period from August 17, 1993
(inception of offering) to June 30, 1994 for
Class B shares, and for the period from June 1,
1994 (inception of offering) to June 30, 1994 for
Class Y shares.
=============================================
=============
=====================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS At June 30, 1994, net unrealized appreciation on
investments of $163,966,802 was composed of gross
appreciation of $195,419,407, and gross
depreciation of $31,452,605.
=============================================
=============
=====================
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, 1994,
commissions (sales charges paid by investors) on
sales of Class A shares totaled $1,831,787, of
which $495,180 was retained by Oppenheimer Funds
Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an
affiliated broker/dealer. During the period ended
June 30, 1994, OFDI received contingent deferred
sales charges of $22,883 upon redemption of Class
B shares, as reimbursement for sales commissions
advanced by OFDI at the time of sale of such
shares.
Oppenheimer Shareholder Services (OSS),
a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for
other registered investment companies. OSS's
total costs of providing such services are
allocated ratably to these companies.
Under separate approved plans, Class A
and Class B may expend up to .25% of net assets
annually to reimburse OFDI for costs incurred in
connection with the personal service and
maintenance of accounts that hold shares of the
Fund (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, the Board of Trustees may allow the
Fund to continue payment of the asset-based sales
charge to OFDI for distribution expenses incurred
on Class B shares sold prior to termination or
discontinuance of the plan. During the year ended
June 30, 1994, OFDI paid $23,576 to an affiliated
broker/dealer as reimbursement for Class A
personal service and maintenance expenses and
retained $44,228 as reimbursement for Class B
sales commissions and service fee advances, as
well as financing costs.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, NY 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER GROWTH FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
--------------------
(1) Financial Highlights (see Part A, Prospectus): Filed herewith.
(2) Report of Independent Auditors (see Part B, Statement of Additional
Information): Filed herewith.
(3) Statement of Investments (see Part B): Filed herewith.
(4) Statement of Assets and Liabilities (see Part B): Filed herewith.
(5) Statement of Operations (see Part B): Filed herewith.
(6) Statements of Changes in Net Assets (see Part B): Filed herewith.
(7) Notes to Financial Statements (see Part B): Filed herewith.
(b) Exhibits
--------
(1) Amended and Restated Declaration of Trust dated October 21, 1994:
Filed herewith.
(2) By-Laws (amended as of 8/6/87): Previously filed with Registrant's
Post-Effective Amendment No. 30, 10/28/88, refiled with Post-
Effective Amendment No. 45 of Registrant's Registration Statement,
8/30/94 pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(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.
(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.
(iii) Specimen Share Certificate for Registrant's Class Y Shares:
Previously filed with Registrant's Post-Effective Amendment No.
44, 3/31/94, and incorporated herein by reference.
(5) Investment Advisory Agreement dated October 22, 1990: Previously
filed with Registrant's Post-Effective Amendment No. 35, 11/1/90,
refiled with Post-Effective Amendment No. 45 of Registrant's
Registration Statement, 8/30/94, pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(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.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Previously filed with Post-Effective Amendment No.
14 to the Registration Statement of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated
herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Previously filed with Post-Effective Amendment No.
14 to the Registration Statement of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated
herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement: Previously filed with Post-Effective Amendment No.
14 to the Registration Statement of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated
herein by reference.
(v) Broker Agreement between Oppenheimer Fund Management, Inc. and
Newbridge Securities dated 10/1/86: Previously filed with
Registrant's Post-Effective Amendment No. 25, 11/1/86, refiled
with Registrant's Registration Statement, 8/30/94, pursuant
to Item 102 of Regulation S-T, and incorporated herein by
reference.
(7) Retirement Plan for Non-Interested Trustees, 6/7/90: Previously
filed with Registrant's Post-Effective Amendment No. 30, 10/28/88,
refiled with Post-Effective Amendment No. 45 of Registrant's
Registration Statement, 8/30/94, pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(8) Custodian Agreement with The Bank of New York dated August 5, 1992:
Previously filed with Registrant's Post-Effective Amendment No. 44,
3/31/94, and incorporated herein by reference.
(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,
refiled with Post-Effective Amendment No. 45 of Registrant's
Registration Statement, 8/30/94, pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(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.
(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.
(iii) Form of Tax Sheltered Retirement Plan and Custody Agreement
for employees of public schools and tax-exempt organizations:
Filed herewith.
(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.
(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.
(ii) Class B Service and Distribution Plan and Agreement dated
February 10, 1994: Previously filed with Registrant's
Post-Effective Amendment No. 45, 8/30/94, and incorporated
herein by reference.
(16) Performance Data Computation Schedule: Filed herewith.
(17) (i) Financial Data Schedule for Class A Shares: Filed herewith
(ii) Financial Data Schedule for Class B Shares: Filed herewith
(iii) Financial Data Schedule for Class Y Shares: Filed herewith
- -- 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.
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 October 3, 1994
-------------- --------------------
Class A shares of beneficial interest 66,103
Class B shares of beneficial interest 1,893
Class Y shares of beneficial interest 1
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 Funds Distributor, 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 Funds Distributor, 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
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 21st day of October, 1994.
OPPENHEIMER GROWTH FUND
BY: /s/ Donald W. Spiro*
--------------------------
Donald W. Spiro, President
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 October 21, 1994
- ---------------------- of Trustees
Leon Levy
/s/ Donald W. Spiro* Chief Executive Officer October 21, 1994
- ---------------------- and Trustee
Donald W. Spiro
/s/ George Bowen* Chief Financial and October 21, 1994
- ---------------------- Accounting Officer
George Bowen
/s/ Leo Cherne* Trustee October 21, 1994
- ----------------------
Leo Cherne
/s/ Robert G. Galli* Trustee October 21, 1994
- ----------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee October 21, 1994
- ----------------------
Benjamin Lipstein
/s/Elizabeth B. Moynihan* Trustee October 21, 1994
- ----------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee October 21, 1994
- ----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee October 21, 1994
- ----------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee October 21, 1994
- ------------------------
Russell S. Reynolds, Jr.
/s/Sidney M. Robbins* Trustee October 21, 1994
- -----------------------
Sidney M. Robbins
/s/ Pauline Trigere* Trustee October 21, 1994
- ----------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee October 21, 1994
- ------------------------
Clayton K. Yeutter
*By:/s/ Robert G. Zack
________________________________
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER GROWTH FUND
Registration No. 2-45272
Post-Effective Amendment No. 47
Index to Exhibits
- -----------------
Exhibit No. Description
- ----------- -----------
24(b)(1) Amended and Restated Declaration of Trust dated
10/21/94
24(b)(11) Independent Auditors' Consent
24(b)(14)(iii) Form of Tax Sheltered Retirement Plan and Custody
Agreement for Employees of Public Schools and Tax-
Exempt Organizations
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A Shares
24(b)(17)(ii) Financial Data Schedule for Class B Shares
24(b)(17)(iii) Financial Data Schedule for Class Y Shares
- -- Resignation of Trustee
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER GROWTH FUND
This AMENDED AND RESTATED DECLARATION OF TRUST, made as of October
21, 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 and further amended pursuant to an Amended and Restated Declaration
of Trust dated February 10, 1994, respectively;
WHEREAS, the Trustees desire to make a permitted change to said
Declaration of Trust without shareholder approval to change the name of
the Fund to "Oppenheimer Growth Fund";
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 GROWTH 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, designated Class A, Class
B and Class Y. 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.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as
of this 21st day of October, 1994.
/s/ Leo Cherne /s/ Kenneth A. Randall
- ------------------------------ ----------------------------
Leo Cherne Kenneth A. Randall
50 East 79 Street 6 Whittaker's Mill
New York, NY 10021 Williamsburg, VA 23185
/s/ Robert G. Galli /s/ Edward V. Regan
- ------------------------------ -----------------------------
Robert G. Galli Edward V. Regan
111-54 Shearwater Court 40 Park Avenue
Jersey City, NJ 07305 New York, NY 10016
/s/ Leon Levy /s/ Russell Reynolds
- ------------------------------ -----------------------------
Leon Levy Russell Reynolds
One Sutton Place South 39 Clapborad Ridge Road
New York, NY 10022 Greenwich, CT 06830
/s/ Benjamin Lipstein /s/ Donald W. Spiro
- ------------------------------ -----------------------------
Benjamin Lipstein Donald W. Spiro
591 Breezy Hill Road Two World Trade Center
Hillsdale, NY 12529 New York, NY 10048
/s/ Elizabeth B. Moynihan /s/ Pauline Trigere
- ------------------------------ -----------------------------
Elizabeth B. Moynihan Pauline Trigere
801 Pennsylvania Avenue, NW 525 Park Avenue
Washington, DC 20004 New York, NY 10021
/s/ Sidney M. Robbins /s/ Clayton K. Yeutter
- ------------------------------ -----------------------------
Sidney M. Robbins Clayton K. Yeutter
50 Overlook Road 1325 Merrie Ridge Road
Ossining, NY 10562 McLean, VA 22101
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer Growth Fund (formerly named "Oppenheimer Special Fund"):
We consent to the use of our report dated July 22, 1994 included herein
and to the reference to our firm under the heading "Financial Highlights"
in the prospectus.
KPMG Peat Marwick LLP
Denver, Colorado
October 20, 1994
Exhibit 24(b)(14)(iii)
CUSTODIAL AGREEMENT
Article I: Introduction
1.1 The Custodian, upon acceptance of the Account Application,
agrees to hold the assets invested hereunder for the benefit of the
Participant signing the Account Application.
1.2 The Custodial Agreement is intended to provide for the
establishment and administration of one or more Custodial Accounts to
receive and administer payments made by an Employer to such Custodial
Accounts in accordance with Section 403(b)(7) of the Internal Revenue Code
of 1986, as amended.
1.3 This Custodial Agreement may be used in connection with a
Custodial Account Application signed by a Participant, whether or not such
application is executed in accordance with an Employer's Plan, or may be
used pursuant to an Employer's Plan and Master Account Application. In
either case, a separate Custodial Account shall be established for each
Participant, and only such Participant shall have any right, title,
interest or authority to issue (or cause the Employer to issue) directions
with respect to his respective Custodial Account. When a Custodial
Account is established, this Custodial Agreement shall operate as an
agreement between the Custodian, the Employer and the Participant.
Article II: Definitions
As used hereunder, the bold terms below shall have the following
meanings:
2.1 Beneficiary shall mean the beneficiary or beneficiaries selected
by the Participant (including contingent beneficiaries) set forth in a
written notice received by the Custodian or any agent thereof.
2.2 Account Application shall mean the individual application
provided by the Sponsor for the establishment of a Custodial Account and
signed by the Participant.
2.3 Master Application shall mean a single account application
signed by the Employer under which Custodial Accounts will be established
from time to time for Participants who are employees of the Employer, upon
direction of the Employer.
2.4 Custodial Account shall mean the account established for a
Participant under this Custodial Agreement through the submission of an
Account Application and Salary Reduction and/or Transfer Form provided by
the Sponsor in accordance with Section 403(b)(7), or any successor section
thereof, of the Internal Revenue Code of 1986, any amendments thereto, and
the regulations promulgated thereunder from time to time (such legislation
and regulations being collectively referred to hereunder as the "Code")
upon the acceptance by the Custodian of such Account Application or Master
Application.
2.5 Eligible Rollover Distribution shall mean any distribution from
the Custodial Account on or after January 1, 1993, to the Participant, the
Participant's surviving spouse, or the Participant's spouse or former
spouse who is an alternate payee (within the meaning of Section 414(p)(8)
of the Code) with respect to the Custodial Account, other than:
(i) any distribution which is one of a series of substantially
equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Participant, the Participant's surviving spouse or
alternate payee, the joint lives (or joint life
expectancies) of the Participant and the Participant's
designated Beneficiary, or for a specified period of 10
years or more,
(ii) any distribution to the extent such distribution is a
required minimum distribution under Section 403(b)(10) of
the Code, and
(iii) any distribution that is not includible in gross
income (without regard to Section 403(b)(8) of the
Code);
provided, however, that if the Custodial Account is established for an
employee of a state, a political subdivision of a state, or an agency or
instrumentality of either, and if, as of July 1, 1992, the state's law
prohibits a direct transfer from the Custodial Account, an "Eligible
Rollover Distribution" shall not include any distribution made before the
earlier of 90 days after the first day after July 1, 1992 on which a
direct transfer is allowed under the state's law or January 1, 1994.
2.6 Plan shall mean a written plan maintained by the Employer.
2.7 Employer shall mean the public school, organization described
under Section 501(c)(3) of the Code, or other employer eligible to
contribute to a Custodial Account for that employer's employee and have
such contributions excluded from such employee's taxable income pursuant
to Section 403(b) of the Code.
2.8 Sponsor shall mean Oppenheimer Funds Distributor, Inc.
2.9 Participant shall mean an individual who submits an Account
Application, or who is subject to a Master Application, for the
establishment of a Custodial Account hereunder and who is an employee of
an Employer.
2.10 Regulated Investment Company shall have the same meaning as
provided in Section 403(b)(7) of the Code.
2.11 Custodian shall mean First National Bank of Boston, National
Association, or any successor thereto, or any successor custodian named
pursuant to Article IX hereof.
Article III: Investments
3.1 Each Participant for whom a Custodial Account is established
shall have the power to direct the Custodian, on forms satisfactory to the
Custodian, as to the investment or reinvestment of all assets held in his
or her Custodial Account, subject to the provisions of this Custodial
Agreement, provided that such investment conforms to the requirements of
Section 3.2 hereof.
3.2 All amounts allocated to a Custodial Account, together with
earnings, if any, thereon, shall be invested in the shares of one or more
Regulated Investment Companies for which Oppenheimer Management
Corporation or an affiliate thereof is investment manager or distributor,
whether directly or through the purchase of shares through a unit
investment trust.
3.3 Regardless of the provisions of Section 3.2 hereof, and solely
for the purpose of making a distribution from a Custodial Account as
elected by the respective Participant, the Custodian may invest a portion
or all of the assets of such Custodial Account in one or more fixed or
variable annuities, and the Custodian shall transfer such assets, free of
the Custodial Account, to the Participant.
3.4 With respect to any Regulated Investment Company investment held
for a Custodial Account, if the Custodian shall have the option to receive
any dividend or capital gain distribution thereon in shares or in cash,
it shall elect to receive such distribution in shares.
3.5 If any amounts are received by the Custodian from an Employer
without proper written instruction from the Employer as to the
identification of the Custodial Account for which such amount is submitted
or as to the Regulated Investment Company selected for the investment,
such amounts may be held in cash or its equivalent until the Employer
sends appropriate written instructions to the Custodian, and neither the
Custodian nor the Sponsor shall be responsible to the respective
Participant or to the Employer as to any losses which might result from
the absence of such Employer instructions or from incorrect instructions
which are believed genuine.
Article IV: Ownership of Assets
4.1 All shares of Regulated Investment Companies held as investments
for Custodial Accounts subject hereto shall be registered in the name of
the Custodian as Custodian for the benefit of the respective Participant.
The beneficial owner of such shares shall be such Participant. Proxy
material of such Regulated Investment Companies shall be transmitted to
the Participant for instructions and shall be voted in accordance with the
Participant's written instructions.
4.2 The Participant's rights to, or derived from, the contribution
made on his behalf hereunder are immediately, and at all times shall
remain, fully vested in the Participant and nonforfeitable.
4.3 Except as expressly provided in Article X hereof, and as
provided by law or by a qualified domestic relations order as defined in
Section 414(p) of the Code, neither the interest of the Participant in the
Participant's Custodial Account nor the assets held thereunder may be
assigned, transferred, pledged as security for a loan or otherwise
alienated, either voluntarily or involuntarily, by the Participant, nor
shall they be subject to levy, attachment, lien or other form of legal
process which seeks the use of the account or assets therein to satisfy
a claim against the Participant. Such interest and assets shall not be
"transferable" within the meaning of Section 401(g) of the Code. At no
time shall it be possible on the part of the Participant for any part of
the assets of the Custodial Account to be used for, or directed to,
purposes other than the exclusive benefit of the Participant or the
Participant's Beneficiaries.
Article V: Distribution of Assets
5.1 Assets held under a Custodial Account shall be distributed at
such time in such manner as the Participant (or Beneficiary, if
applicable) shall in writing direct, subject to the rules of this Article
and to the then-applicable provisions of the Code or other law relating
to such distribution, including without limitation, any requirements as
to the withholding of any amounts from such distributions for federal
income tax purposes.
5.2 No amounts may be paid or made available to a Participant from
the Custodial Account before the Participant dies, attains age 59 1/2,
separates from service, becomes "disabled" within the meaning of Section
72(m)(7) of the Code, or encounters financial hardship. Subject to such
limitation, the Participant shall have the right to direct the Custodian
to pay benefits as determined under Section 5.3 hereof, provided, however,
that any provision of this Custodial Agreement reflecting Section
401(a)(9) of the Code shall override any distribution option in this
Custodial Agreement to the extent it is inconsistent with Section
401(a)(9) of the Code. Distributions from this Custodial Account shall
be made in accordance with the minimum distribution requirements, as well
as the minimum distribution incidental benefit requirements, within the
meaning of Section 401(a)(9)(G) of the Code. Distributions on account of
financial hardship will be permitted only from the balance of the
Custodial Account as of December 31, 1988, and from salary reduction
contributions made subsequent to that date, but not from earnings or other
contributions subsequent thereto. The Custodian or its agents may refuse
to honor any request for transfer of any assets of, or payment of any
amount from, the Custodial Account if such request does not conform to the
then-applicable requirements for the liquidation or exchange of shares of
the Regulated Investment Company in which the assets of the Custodial
Account are invested and as to which such request relates, and unless the
records of the Custodian or the written request by the Participant
indicate or specify the existence of one or more of the conditions
specified in this Custodial Agreement under which such distribution or
transfer may be made.
5.3 Distributions may be in cash or in kind at the discretion of the
Custodian, subject to the requirements of the Regulated Investment Company
whose shares are held for investment by the Custodial Account and are
liquidated for such distribution. Distributions may be made in a lump-sum
payment or in periodic payments or in a combination thereof, by the
purchase and delivery of an annuity providing for payment over the life
of the Participant or the joint-and- survivor lives of the Participant and
the Participant's spouse, or by transfer (subject to the terms and
conditions of Section 403(b) of the Code) to an individual retirement
account.
Notwithstanding the provisions of this Section 5.3, the following
minimum distribution rules shall apply to the Custodial Account.
(a) The entire value of the Custodial Account will be distributed
or commence to be distributed, no later than the Participant's "Required
Beginning Date," over (i) the life of the Participant, or the lives of the
Participant and his or her designated Beneficiary, or (ii) a period
certain not extending beyond the life expectancy of the Participant, or
the joint and last survivor expectancy of the Participant and his or her
designated Beneficiary.
(b) The amount to be distributed for each year, beginning with the
calendar year prior to the year in which the Participant attains the
Required Beginning Date and for each succeeding calendar year, shall not
be less than the quotient obtained by dividing the Participant's Custodial
Account balance at the beginning of such year by the lesser of (i) the
applicable life expectancy or (ii) if the Participant's spouse is not the
designated Beneficiary, the applicable divisor determined from the table
set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Distributions after the death of the Participant shall be
distributed using the applicable life expectancy as the relevant divisor
without regard to proposed Income Tax Regulations Section 1.401(a)(9)-2.
(c) Life expectancy is computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. Unless otherwise elected by the Participant by the time
distributions are required to begin, life expectancies shall not be
recalculated annually. Such election shall be irrevocable by the
Participant and shall apply to all subsequent years. The life expectancy
of a non-spouse Beneficiary may not be recalculated. Instead, life
expectancy will be calculated using the attained age of such Beneficiary
during the calendar year prior to the year in which the Participant
attains the Required Beginning Date, and payments for subsequent years
shall be calculated based on such life expectancy reduced by one for each
calendar year which has elapsed since the calendar year life expectancy
was first calculated.
(d) For purposes of this Article V, the Participant's Required
Beginning Date shall mean April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2; except that if
the Participant attained age 70 1/2 before January 1, 1988 or in the case
of a Custodial Account established pursuant to a governmental plan or a
plan maintained by a church or a qualified church-controlled organization
(within the meaning of Section 3121(W)(3)(A) or (B) of the Code), the
Required Beginning Date shall be April 1 of the calendar year following
the later of the calendar year in which the Participant attains age 70 1/2
or the calendar year in which he or she retires.
5.4 The Participant may designate, in writing to the Custodian, a
Primary and a Contingent Beneficiary. The Participant's Primary
Beneficiary shall be entitled to the proceeds of the Custodial Account
upon submission of satisfactory proof of the Participant's death, and the
Contingent Beneficiary shall be entitled to the proceeds of the Custodial
Account upon satisfactory proof of the death of the Participant and the
Primary Beneficiary (preceding the death of the Participant). Payments
to a Beneficiary will be in a single sum payment, in cash or in kind
(subject to the same discretionary requirements stated in Section 5.3
above, and the requirements stated in Section 5.5 below) unless the
Beneficiary and the Custodian agree on another form of distribution of the
Custodial Account assets, or unless otherwise directed in the Beneficiary
designation submitted by the Participant to the Custodian.
5.5 In the event the Participant dies prior to the complete
distribution of the assets of the Custodial Account, all assets remaining
in the Custodial Account shall be distributed to the Participant's
Beneficiary in a lump-sum payment or in periodic payments, as the
Custodian is directed by the Beneficiary in a form acceptable to the
Custodian, subject to the requirements of the Regulated Investment Company
whose shares are held for investment by the Custodial Account and in
accordance with the following rules:
(a) If the Participant dies after distribution of his or her
interest has begun, the remaining portion of such interest will continue
to be distributed at least as rapidly as under the method of distribution
being used prior to the Participant's death.
(b) If the Participant dies before distribution of his or her
interest begins, distribution of the Participant's entire interest shall
be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made to receive distribution in accordance with (i) or (ii)
below:
(i) If the Participant's interest is payable to a designated
Beneficiary, then the entire interest of the Participant
must be distributed over a period certain not greater than
the life expectancy of the designated Beneficiary
commencing on or before December 31 of the calendar year
immediately following the calendar year in which the
Participant died.
(ii) If the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to
begin in accordance with (i) above shall not be earlier
than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
Participant died or (2) December 31 of the calendar year
in which the Participant would have attained age 70 1/2.
(c) Life expectancy is computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations. For purposes of distributions beginning after the
Participant's death, unless otherwise elected by the surviving spouse by
the time distributions are required to begin, life expectancies shall not
be recalculated annually. Such election shall be irrevocable by the
surviving spouse and shall apply to all subsequent years. In the case of
any other designated Beneficiary, life expectancies shall be calculated
using the attained age of such Beneficiary during the calendar year in
which distributions are required to begin pursuant to this Section, and
payments for any subsequent calendar year shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
(d) Distributions under this Section 5.5 are considered to have
begun for purposes of paragraph (a) above if the distributions are made
on account of the Participant reaching his or her Required Beginning Date.
If the Participant receives distributions prior to the Required Beginning
Date and the Participant dies, distributions will not be considered to
have begun.
(e) If the designated Beneficiary is the Participant's surviving
spouse, the surviving spouse may elect to treat the Custodial Account as
his or her own for purposes of this Section 5.5.
(f) If the Beneficiary dies while receiving payments from the
Custodial Account, all remaining assets in the Custodial Account shall,
upon notice to the Custodian, be distributed to the Beneficiary previously
designated by the Participant to the Custodian or, if none, to the
Participant's estate.
Article VI: Powers and Duties of the Custodian
6.1 The Custodian shall be responsible for the safekeeping of the
assets of the Custodial Account. The Custodian shall hold all shares of
the Regulated Investment Company which are assets of the Custodial Account
in unissued form, registered in the Custodian's name as Custodian.
6.2 The Custodian shall be responsible to transmit to the
Participant at the address given to the Custodian all notices,
confirmations, shareholder reports, proxies and prospectuses delivered to
it as Custodian.
6.3 The Custodian shall file such forms with the Labor Department
or the Internal Revenue Service as may be required of it under ERISA or
the Code.
6.4 The Custodian may delegate any of its duties under this
Custodial Agreement to an agent, including without limitation the transfer
agent for a Regulated Investment Company whose shares are held in the
Custodial Account.
6.5 Notwithstanding any other provision hereof, neither the
Custodian, its agent, the Sponsor, any Regulated Investment Company the
shares of which are distributed by the Sponsor, nor any of them, shall
have the responsibility for:
(a) the initial or continued qualification of this Custodial Account
under Section 403(b)(7) of the Code;
(b) determining the amount of, or collecting any contribution for,
the Custodial Account;
(c) determining the amount, character, or timing of (i) any
distribution to the Participant other than as instructed by the
Participant, or (ii) the minimum distribution requirements under
applicable Code provisions;
(d) determining the amount of any limitation applicable to the
Participant under Sections 402(g), 403(b) or 415 of the Code;
(e) determining whether any person or persons other than the
Participant's designated Beneficiary may be entitled, under applicable
law, to receive amounts from the Custodial Account on account of the death
of the Participant, and
(f) any actions taken hereunder by the Custodian, its agent or the
Sponsor, in good faith, without gross negligence, willful misfeasance or
misconduct.
Article VII: Duties of the Participant
7.1 The Participant shall prepare and file with the Internal Revenue
Service and/or other appropriate governmental agency, such returns, forms
and other information as may be required of the Participant which relate
to the Custodial Account.
7.2 The Participant shall indemnify and hold harmless, jointly and
severally, the Sponsor, the Custodian, each Regulated Investment Company
whose shares are held in the Custodial Account, such Regulated Investment
Company's adviser, general distributor and transfer agent, and the agents,
employees, directors, officers, successors, and assigns of the foregoing,
from any and all liability which may arise in connection with (i) this
Custodial Agreement (except the obligations to perform the things
specifically required to be done by it hereunder); (ii) any agreement
between the Sponsor and the Employer; or (iii) any actions by the Sponsor
and/or the Custodian (including its agent as designated under Section 6.4
above) taken with respect to the Custodial Account upon instructions
believed to be genuine.
Article VIII: Amendment
8.1 This Custodial Agreement may be amended at any time and from
time to time by the Sponsor, and any amendments prepared by the Sponsor
shall be effective as to Employers and Participants after the date of the
amendment and shall become effective as to Custodial Accounts in existence
prior to the date of such amendment upon consent, expressed or implied,
of the Employer and the Participant. Notwithstanding the foregoing, any
amendments prepared by the Sponsor which change the Custodial Account or
this Custodial Agreement to conform to the requirements of applicable laws
and regulations, including without limitation the Code and ERISA, shall
be effective immediately upon promulgation by the Sponsor, with respect
to the Custodian and all Employers and Participants.
8.2 The Employer, Participant and the Custodian delegate to the
Sponsor the power to amend this Custodial Agreement, provided that no such
amendment shall be made except in accordance with Section 8.1 above.
Article IX: Termination and Change of Custodian
9.1 This Agreement shall continue until:
(a) The Participant delivers to the Custodian a written notice of
termination executed by the Participant specifying the date as of which
the Custodial Agreement shall terminate and specifying the distribution
of assets in a manner conforming to the requirement of Article V hereof;
(b) All assets held under the Custodial Account have been
distributed hereunder; or
(c) The Custodian resigns, in which case such termination shall
occur 90 days after the custodian transmits written notification of its
intentions to resign to the Participant.
9.2 At any time and from time to time, the Sponsor may, upon written
notice to the Custodian, remove the Custodian and name a Successor
Custodian, who shall succeed to all of the rights and responsibilities of
the Custodian hereunder, and such designation by the Sponsor shall not be
deemed an Amendment to this Agreement and shall not terminate this
Agreement as to the Participant, the Sponsor and the Employer, unless
otherwise designated by the Participant pursuant to Section 9.1 above.
Upon such removal of the Custodian and designation of a Successor
Custodian by the Sponsor, the Custodian shall transfer the assets held in
the Custodial Account on the date specified in the notice hereof by the
Sponsor. If, upon notice to the Custodian of its termination as
Custodian, a successor has not been chosen, the Custodian at its option
shall designate a successor and transfer such assets to such successor.
The Custodian shall render to the Participant an accounting of its
administration under this Custodial Agreement during the period following
that covered by its last accounting date. For purposes of this section,
the term "Successor Custodian" shall include only a person who has agreed
to and is qualified to act under this Custodial Agreement or under another
agreement having the same force or effect as this Custodial Agreement.
9.3 If a Participant so directs in writing in a notice conforming
to the provisions of Section 9.1 hereof, the Custodian shall transfer the
assets of the Custodial Account held hereunder, or the redemption proceeds
thereof, to the custodian of another custodial account or to a specified
issuer of an annuity, which account or annuity is qualified under Section
403(b)(7) of the Code.
Article X: Loans
10.1 Upon written application to the Custodian by a Participant, the
Custodian may make a loan to such Participant from the Participant's
Custodial Account if the following conditions are satisfied:
(a) The Custodian shall prescribe rules regarding the maximum loan
amounts permitted, which may be changed from time to time without notice,
provided, however, that in no event shall the total of any outstanding
loan or loans to any Participant exceed the lesser of (1) $50,000, reduced
by the highest outstanding balance of loans from the Custodial Account
during the one year period ending on the day before the date on which such
loan was made or (2) the greater of (x) 50% of the balance in the
Participant's Custodial Account or (y) $10,000.
(b) All loans shall be secured by the Participant's Custodial
Account balance, and interest payments on the loan shall be credited to
the Participant's Custodial Account. All such loans shall bear a
reasonable rate of interest and shall be made available to all
Participants on a reasonably equivalent basis, subject to the Custodian's
right to limit the number of outstanding loans pursuant to Section 10.2
hereof.
(c) Any such loan or loans shall be repaid by the Participant over
a specified period of time, not exceeding five years from the date of the
loan. A loan may be paid back over a period longer than five years if the
loan is used to acquire any dwelling unit which within a reasonable time
is to be used as principal residence of the Participant. Any loan must
be amortized on a substantially level basis with payments not less
frequently than quarterly. In the event the Participant does not repay
all or any portion of the principal amount on such loan within the time
prescribed, that Participant shall continue to be liable for any balance
on the loans not paid in addition to interest owed on principal payments
not made.
10.2 The Custodian shall prescribe any such rules as from time to
time it may deem proper under this Article X (including, but not limited
to, rules regarding the frequency of making loans and the minimum amount
of a loan). The Custodian reserves the right to charge an administrative
fee for processing and maintaining such loans.
Article XI: Miscellaneous
11.1 Any income taxes or other taxes of any kind whatsoever that may
be levied or assessed upon or in respect to the Custodial Account, and any
other expenses or fees incurred by or on behalf of the Custodial Account,
shall be paid from the assets held in the Custodial Account. Any transfer
taxes incurred in connection with the investment and reinvestment of the
assets of the Custodial Account, and all other administrative expenses
incurred by the Custodian in the performance of its duties, including
without limitation fees for legal services rendered to the Custodian,
shall constitute a charge upon the assets of the Custodial Account and be
paid as provided above.
11.2 No provisions of this Custodial Agreement shall be construed
to conflict with any provisions of a U.S. Labor Department, Treasury
Department or Internal Revenue Service regulation, ruling, release or
other order which affect, or could affect the terms of this Custodial
Agreement or its qualifications under Section 403(b)(7) of the Code or,
if applicable, ERISA. For this sole purpose, all of the provisions of
this Custodial Agreement shall be deemed conditional and this Custodial
Agreement shall be amended to conform at the earliest practical date after
promulgation or publication of such regulation, ruling or order. This
Custodial Agreement shall not be effective until the Account Application
or Master Application is accepted by the Custodian, and shall be
construed, administered and enforced in accordance with the laws of the
state of Colorado.
11.3 The Participant shall notify the Custodian or its agents in
writing of any change of address within 30 days of such change. Any
notice from the Custodian to the Participant pursuant to this Custodial
Agreement shall be effective if sent by mail to the Participant's last
address of record. Any notice to the Custodian pursuant to this Custodial
Agreement shall be sent by mail addressed to:
Custodian
c/o Oppenheimer Shareholder Services
Attn.: 403(b)(7) Department
P.O. Box 5390
Denver, CO 80217-5390
11.4 The execution by a Participant of an Account Application and
by a Participant and/or Employer of a Salary Reduction Agreement and/or
Transfer Form in connection with the establishment of a Custodial Account
shall be deemed to be acceptance by said parties of this Custodial
Agreement.
11.5 In no event shall the Participant's elective deferrals, within
the meaning of Section 402(g)(3) of the Code, in any calendar year to the
Custodial Account, and to all other plans, contracts or arrangements of
the Participant's Employer for whom the Custodial Account is maintained,
exceed the limitation in effect under Section 402(g) for such year.
11.6 Unless the Employer is a church or a qualified church-
controlled organization, within the meaning of Section 3121(w)(3)(A) or
(B) of the Code, respectively:
(a) the Employer must permit all Employees, other than
Employees who may be excluded pursuant to Section 403(b)(12) of the Code,
to elect to make contributions of more than $200 pursuant to a salary
reduction agreement to one or more annuities or custodial accounts
described in Section 403(b) of the Code if any Employee may make
contributions, and
(b) with respect to contributions to this Custodial Account and
other annuities and custodial accounts described in Section 403(b) of the
Code, other than contributions made pursuant to salary reduction
agreements, the Employer's plan pursuant to which this Custodial Account
is established must meet the requirements of Section 401(a)(4), (5), (17)
and (26), Section 401(m) and Section 410(b) of the Code in the same manner
as if such plan were a plan described in Section 401(a) of the Code, in
accordance with the requirements set forth in Section 403(b)(12)(A) of the
Code.
11.7 If a Participant who is entitled to receive an Eligible
Rollover Distribution from the Custodial Account elects, in such form and
in such manner as the Custodian may prescribe, that such distribution be
paid directly to an individual retirement account or individual retirement
annuity described in Section 408 of the Code or to an annuity or custodial
account described in Section 403(b) of the Code, the Custodian shall pay
such distribution in the form of a direct rollover to the individual
retirement account or annuity or custodial account described in Section
403(b) in accordance with regulations, rulings and other administrative
pronouncements issued by the Internal Revenue Service.
<PAGE>
Oppenheimer Special Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are
calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Distribution Amount from Amount from
Reinvestment Ordinary Long and Short-Term Reinvestment
(Ex) Date Income Capital Gains Price
Class A Shares
08/01/83 $0.5200 $1.6300 $21.360
07/30/84 0.3900 1.0700 16.980
07/29/85 0.6100 0.4800 19.980
07/28/86 0.7720 3.9980 17.880
12/19/86 0.0000 0.2000 18.930
07/31/87 0.8800 1.5800 18.360
12/24/87 0.3870 0.1730 14.810
12/23/88 0.5900 0.0400 16.520
12/22/89 0.7000 0.0000 19.130
12/21/90 0.5500 0.0000 18.390
12/20/91 0.3550 0.0000 23.730
12/17/92 0.2450 1.5710 27.440
12/28/93 0.1150 0.6390 27.720
Class B Shares
12/28/93 0.1070 0.6390 27.610
Class Y Shares
No dividends declared to date.
<PAGE>
Oppenheimer Special Fund
Page 2
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 06/30/94:
The formula for calculating average annual total return is as
follows:
1 ERV n
--------= n (---------) - 1 average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year Ten Year
$945.03 1 $1,579.31 0.2 $2,748.83 0.1
(--------) -1 =-5.50% (-----------) -1 =9.57% (---------) -1 =10.64%
$1,000.00 $1,000.00 $1,000.00
Class B Shares
Example, assuming a maximum contingent deferred sales charge of 5.00% for
the first year:
Inception
$948.06 1.1500
(---------) -1 = -5.95%
$1,000.00
Examples at NAV:
Class A Shares
One Year Five Year Ten Year
$1,002.68 1 $1,675.66 0.2 $2,916.53 0.1
(----------) -1 =0.27% (-------) -1 =10.88% (-------) -1 =11.30%
$1,000.00 $1,000.00 $1,000.00
Class B Shares Class Y
Inception Inception
$997.96 1.1500 $948.72 12.4100
(---------) -1 =-0.23% (---------) -1 = -47.97%
$1,000.00 $1,000.00
<PAGE>
Oppenheimer Special Fund
Page 3
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 06/30/94:
The formula for calculating cumulative total return is as follows:
ERV - P
-------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year Ten Year
$945.03 - 1,000 $1,579.31 - 1,000 $2,748.83 - 1,000
- -------------- = -5.50% ------------- = 57.93% ----------- = 174.88%
$1,000 $1,000 $1,000
Class B Shares
Example, assuming a maximum contingent deferred sales charge of 5.00% for
the first year:
Inception
$948.06 - 1,000
- ------------------ = -5.19%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year Ten Year
$1,002.68 - 1,000 $1,675.66 - 1,000 $2,916.53 - 1,000
- -------------- =0.27% ------------------ =67.57% -------------- =191.65%
$1,000 $1,000 $1,000
Class B Shares Class Y Shares
Inception Inception
$997.96 - 1,000 $948.72 - 1,000
- ------------------- = -0.20% --------------- = -5.13%
$1,000 $1,000
Oppenheimer Management Corporation
2 World Trade Center - Suite 3400
New York, NY 10048-0203
October 21, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Oppenheimer Asset Allocation Fund - Reg. No. 2-86903,
File No. 811-3864
Oppenheimer California Tax-Exempt Fund - Reg. No. 33-23566
File No. 811-5586
Oppenheimer Discovery Fund - Reg. No. 33-371, File No. 811-4410
Oppenheimer Global Emerging Growth Fund - Reg. No. 33-18285,
File No. 811-5381
Oppenheimer Global Environment Fund - Reg. No. 33-32270,
File No. 811-5966
Oppenheimer Global Fund - Reg. No. 2-31661, File No. 811-1810
Oppenheimer Global Growth & Income Fund - Reg. No. 33-33799
File No. 811-6001
Oppenheimer Gold & Special Minerals Fund - Reg. No. 2-82590,
File No. 811-3694
Oppenheimer Growth Fund - Reg. No. 2-45272, File No. 811-2306
Oppenheimer Money Market Fund, Inc. - Reg. No. 2-49887,
File No. 811-2454
Oppenheimer Mortgage Income Fund - Reg. No. 33-6614,
File No. 811-4712
Oppenheimer Multi-Government Trust - Reg. No. 33-24885,
File No. 811-5670
Oppenheimer Multi-Sector Income Trust - Reg. No. 33-20191
File No. 811-5473
Oppenheimer Multi-State Tax-Exempt Trust - Reg. No. 33-30198
File No. 811-5867
Oppenheimer New York Tax-Exempt Fund - Reg. No. 2-91683,
File No. 811-4054
Oppenheimer Fund - Reg. No. 2-14586, File No. 811-847
Oppenheimer Target Fund - Reg. No. 2-69719, File No. 811-3105
Oppenheimer Time Fund - Reg. No. 2-39461, File No. 811-02171
Oppenheimer Tax-Free Bond Fund - Reg. No. 2-57116,
File No. 811-2668
Oppenheimer U.S. Government Trust - Reg. No. 2-76645,
File No. 811-3430
To the Securities and Exchange Commission:
Each of the above-captioned registered investment companies (the
"Registrants") hereby represents to the Securities and Exchange
Commission, pursuant to Rule 485(b)(2)(iv) under the Securities Act of
1933, as amended, and in connection with an amendment on Form N-1A to that
Registrant's Registration Statement under the Investment Company Act of
1940, that the resignation of Edmund T. Delaney as a Trustee of the
Registrants as of October 17, 1994, was not due to disagreement with any
Registrant as to any matter relating to any Registrant's operations,
policies or practices.
OPPENHEIMER ASSET ALLOCATION FUND
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
OPPENHEIMER DISCOVERY FUND
OPPENHEIMER GLOBAL EMERGING GROWTH FUND
OPPENHEIMER GLOBAL ENVIRONMENT FUND
OPPENHEIMER GLOBAL FUND
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
OPPENHEIMER GROWTH FUND
OPPENHEIMER MONEY MARKET FUND, INC.
OPPENHEIMER MORTGAGE INCOME FUND
OPPENHEIMER MULTI-GOVERNMENT TRUST
OPPENHEIMER MULTI-SECTOR INCOME TRUST
OPPENHEIMER MULTI-STATE TAX-EXEMPT TRUST
OPPENHEIMER NEW YORK TAX-EXEMPT FUND
OPPENHEIMER FUND
OPPENHEIMER TARGET FUND
OPPENHEIMER TIME FUND
OPPENHEIMER TAX-FREE BOND FUND
OPPENHEIMER U.S. GOVERNMENT TRUST
By: --------------------------------------
Andrew J. Donohue, Secretary
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