SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / x /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Oppenheimer Growth Fund
- ------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------
Jefferson-Pilot Capital Appreciation Fund, Inc., Inc.
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- ------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
- ------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- ------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------
(4) Date Filed:
- -----------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
As filed with the Securities and Exchange Commission on September 13, 1996
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. / /
OPPENHEIMER GROWTH FUND
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York, 10048-0203
(Address of Principal Executive Offices)
212-323-0200
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)
<PAGE>
It is proposed that this filing will become effective on October 18, 1996,
pursuant to Rule 488.
No filing fee is due because the Registrant has previously registered an
indefinite number of shares under Rule 24f-2; a Rule 24f-2 notice for the
year ended June 30, 1996 was filed on August 23, 1996.
Pursuant to Rule 429, this Registration Statement relates to shares
previously registered by the Registrant on Form N-1A (Reg. No. 2-45272;
811-2306).
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A
Proxy Statement for Jefferson-Pilot Capital Appreciation Fund, Inc.
and
Prospectus for Oppenheimer Growth Fund
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
<PAGE>
FORM N-14
OPPENHEIMER GROWTH FUND
Cross Reference Sheet
Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title of Document
- --------- ---------------------------------------------------------------
1 (a)Cross Reference Sheet
(b)Front Cover Page
(c)*
2 (a)*
(b)Table of Contents
3 (a)Comparative Fee Tables
(b)Synopsis
(c)Principal Risk Factors
4 (a)Synopsis; Approval or Disapproval of the Reorganization; Comparison
between Growth Fund and JP Fund; Miscellaneous
(b)Approval or Disapproval of the Reorganization - Capitalization
Table
5 (a)Registrant's Prospectus; Comparison Between Growth Fund and JP Fund
(b)*
(c)*
(d)*
(e)Miscellaneous
(f)Miscellaneous
6 (a)Prospectus of Jefferson-Pilot Capital Appreciation Fund, Inc.;
Annual Report of Jefferson-Pilot Capital Appreciation Fund, Inc.;
Comparison Between Growth Fund and JP Fund
(b)Miscellaneous
(c)*
(d)*
7 (a)Synopsis; Information Concerning the Meeting
(b)*
(c)Synopsis; Information Concerning the Meeting
8 (a)Proxy Statement
(b)*
9 *
Part B of
Form N-14
Item No.Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 (a)Registrant's Statement of Additional Information
(b)*
(c)*
13 (a)Statement of Additional Information about Jefferson-Pilot Capital
Appreciation Fund, Inc.
(b)*
(c)*
14 Registrant's Statement of Additional Information; Statement of
Additional Information about Jefferson-Pilot Capital Appreciation
Fund, Inc.; Annual Report of Jefferson-Pilot Capital Appreciation
Fund, Inc. at 12/31/95; Semi-Annual Report of Jefferson-Pilot Capital
Appreciation Fund, Inc. at 6/30/96; Registrant's Annual Report at
6/30/96
Part C of
Form N-14
Item No.Other Information Heading
- --------- -------------------------
15 Indemnification
16 Exhibits
17 Undertakings
_______________
* Not Applicable or negative answer
<PAGE>
PRELIMINARY COPY
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
100 North Greene Street, Greensboro, North Carolina 27420
1-800-458-4498
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held December 3, 1996
To the Shareholders of Jefferson-Pilot Capital Appreciation Fund, Inc.:
Notice is hereby given that a Special Meeting of the Shareholders of
Jefferson-Pilot Capital Appreciation Fund, Inc. ("JP Fund"), an open-end,
management investment company, will be held at the Jefferson-Pilot
Building (4th Floor, Room B-2), 100 North Greene Street, Greensboro, North
Carolina 27420 at 10:00 A.M., local time, on December 3, 1996, and any
adjournments thereof (the "Meeting"), for the following purposes:
1. To consider and vote upon the approval or disapproval of the
Agreement and Plan of Reorganization dated as of _________, 1996 (the
"Reorganization Agreement") by and among JP Fund, Jefferson-Pilot
Corporation, Oppenheimer Growth Fund ("Oppenheimer Fund") and
OppenheimerFunds, Inc., and the transactions contemplated thereby
(the "Reorganization"), including (i) the transfer of substantially
all the assets of JP Fund to Oppenheimer Fund in exchange for Class
A shares of Oppenheimer Fund, (ii) the distribution of such shares
of Oppenheimer Fund to shareholders of JP Fund in liquidation of JP
Fund, and (iii) the cancellation of the outstanding shares of JP Fund
("Proposal 1");
2. To elect to the Board of Directors five (5) directors to hold office
until the earlier of (i) the dissolution of JP Fund or (ii) the next
annual meeting of shareholders of JP Fund called for the purpose of
electing directors, or until their successors are elected and
qualified ("Proposal 2");
3. To ratify or reject the selection of McGladrey & Pullen LLP as JP
Fund's independent auditors for the current fiscal year ("Proposal
3"); and
4. To act upon such other matters as may properly come before the
Meeting.
The Proposals are more fully described in the accompanying Proxy Statement
and Prospectus and a copy of the Reorganization Agreement is attached as
Exhibit A thereto. JP Fund shareholders of record at the close of
business on October 10, 1996 are entitled to notice of, and to vote at,
the Meeting. Please read the Proxy Statement and Prospectus carefully
before telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Directors of JP Fund recommends a vote
in favor of each Proposal and to elect each of the nominees as Director.
WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
J. Gregory Poole, Secretary
October __, 1996
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid unnecessary
duplicate mailings, we ask your cooperation in promptly mailing your proxy
no matter how large or small your holdings may be.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED REORGANIZATION
1. What is the Reorganization?
The proposed Reorganization provides for the transfer of substantially all
the assets of Jefferson-Pilot Capital Appreciation Fund, Inc. ("JP Fund")
to Oppenheimer Growth Fund ("Oppenheimer Fund"), the issuance of Class A
shares of Oppenheimer Fund to JP Fund for distribution to its shareholders
and the cancellation of the outstanding shares of JP Fund. The number of
Class A shares of Oppenheimer Fund that will be received by shareholders
of JP Fund will be determined on the basis of the relative net asset
values of Oppenheimer Fund and JP Fund. Although the number of shares of
Oppenheimer Fund issued to a shareholder of JP Fund may be greater or
fewer than the number of JP Fund shares that he or she holds, the value
of the shares of Oppenheimer Fund issued in the Reorganization will be
equal to the value of his or her JP Fund shares.
The Reorganization has been proposed in connection with a proposed
acquisition by OppenheimerFunds, Inc. ("OFI") of the assets of JP
Investment Management Company ("JPM"), the investment adviser to JP Fund.
OFI is discussed in greater detail below.
Shareholders are directed to read the accompanying Proxy Statement and
Prospectus for further information about the Reorganization and related
matters. Additional information about Oppenheimer Fund is set forth in
its accompanying Prospectus.
2. What are the reasons for the Reorganization?
Jefferson-Pilot Corporation ("JPC"), in the course of a review of its
business, concluded that it should invest its capital resources in its
core insurance business and communications operations rather than
investing in the expansion of mutual fund assets being managed by JPM (or
another investment management subsidiary). Because managing mutual fund
investment portfolios in an efficient and profitable manner can only be
achieved by managing aggregate assets significantly in excess of the
amount of assets currently being managed by JPM, JPC has decided to sell
the assets of JPM and thereby leave the business of managing mutual fund
investment portfolios. This decision requires that alternative
arrangements be made for the management of the assets of the four mutual
funds (including JP Fund) managed by JPM. The Reorganization would result
in OFI taking over management of the investment portfolio of JP Fund when
JPM is sold.
3. What benefits to shareholders may result from this Reorganization?
The Board of Directors of JP Fund has determined that, among other things,
the Reorganization would afford the shareholders of JP Fund: 1) the
capabilities and resources of OFI and its affiliates in the area of equity
investment management, distribution, shareholder services and marketing,
and 2) the ability to exchange their Oppenheimer Fund shares for shares
of a wider variety of funds and portfolios within the OppenheimerFunds
family.
4. Who is paying the expenses of the Reorganization?
All expenses of the Reorganization will be paid by the respective
investment advisers to JP Fund and Oppenheimer Fund and not JP Fund or
Oppenheimer Fund.
5. Who is OppenheimerFunds, Inc.?
OFI and its subsidiaries are engaged principally in the business of
managing, distributing and servicing registered investment companies. OFI
has operated as an investment adviser since 1959. OFI is indirectly
controlled by Massachusetts Mutual Life Insurance Company. As of June 30,
1996, OFI and a subsidiary had assets of more than $50 billion under
management in more than 60 mutual funds.
6. Do the Oppenheimer funds have a sales charge?
Yes, the Oppenheimer funds impose a sales charge, other than their money
market funds (with one exception). However, there will be no commission
or sales load of any kind charged in connection with the Class A shares
issued in this Reorganization. Purchases of Class A shares of Oppenheimer
Fund in addition to those received in exchange for JP Fund shares in the
Reorganization will, nonetheless, be assessed any applicable sales charge.
See the accompanying documents for further details.
7. May I exchange between other Oppenheimer funds without a sales charge
or exchange fee?
Yes. As a shareholder of Oppenheimer Fund after this Reorganization, you
will be able to exchange your Class A shares for Class A shares of other
Oppenheimer funds without payment of any sales charges or exchange fees.
Exchange privileges may be modified or discontinued at any time.
8. Where can I get prospectuses and other information on the Oppenheimer
funds?
Call OppenheimerFunds Distributor, Inc. at 1-(800) 255-2755. They will
be pleased to supply you with prospectuses and other documentation with
respect to the Oppenheimer funds.
9. After the Reorganization, whom do I contact about my new Oppenheimer
Fund account or to initiate a transaction in that account?
Once the Reorganization is approved and effected, you will become a
shareholder of Oppenheimer Fund. For information about your new
Oppenheimer Fund account or to initiate a transaction in that account, you
may continue to contact your registered representative at your
broker/dealer or, in the alternative, OppenheimerFunds Services at 1-(800)
525-7048.
10. Will this Reorganization result in any tax liability to JP Fund,
Oppenheimer Fund or to me as a shareholder?
The Reorganization is structured in a manner that is intended to qualify
for federal income tax purposes as a tax-free reorganization. The
aggregate tax basis of Oppenheimer Fund shares received by you will be the
same as the aggregate tax basis of your JP Fund shares prior to the
Reorganization, and the holding period of the shares of Oppenheimer Fund
received by you will include the period during which you held your JP Fund
shares provided that those JP Fund shares were held as capital assets.
Shareholders of JP Fund should consult their tax advisors regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing only relates to the federal income tax
consequences of the Reorganization, shareholders of JP Fund should also
consult their tax advisors as to state and local tax consequences, if any,
of the Reorganization.
<PAGE>
PRELIMINARY COPY
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
100 North Greene Street, Greensboro, North Carolina 27420
1-800-458-4498
PROXY STATEMENT
OPPENHEIMER GROWTH FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROSPECTUS
This Proxy Statement and Prospectus is being furnished to shareholders of
Jefferson-Pilot Capital Appreciation Fund, Inc. ("JP Fund"), an open-end,
management investment company, in connection with the solicitation by the
Board of Directors of JP Fund (the "Board") of proxies to be used at the
Special Meeting of Shareholders of JP Fund, to be held at the Jefferson-
Pilot Building (4th Floor, Room B-2), 100 North Greene Street, Greensboro,
North Carolina 27420 at 10:00 A.M., local time, on December 3, 1996, and
any adjournments thereof (the "Meeting"). The Board has set October 10,
1996, as the date for the determination of JP Fund shareholders entitled
to notice of, and to vote at, the Meeting (the "Record Date"). It is
expected that this Proxy Statement and Prospectus will be mailed to
shareholders on or about October __, 1996.
At the Meeting, shareholders of JP Fund will be asked to consider and vote
upon the approval or disapproval of the Agreement and Plan of
Reorganization, dated as of ________, 1996 (the "Reorganization
Agreement"), by and among JP Fund, Jefferson-Pilot Corporation ("JPC"),
Oppenheimer Growth Fund ("Oppenheimer Fund") and OppenheimerFunds, Inc.,
and the transactions contemplated by the Reorganization Agreement (the
"Reorganization"). The Reorganization Agreement provides for the transfer
of substantially all the assets of JP Fund to Oppenheimer Fund in exchange
for Class A shares of Oppenheimer Fund having a value equal to the
aggregate net asset value of the outstanding shares of JP Fund, the
distribution of such Class A shares of Oppenheimer Fund to the
shareholders of JP Fund in liquidation of JP Fund and the cancellation of
the outstanding shares of JP Fund. A copy of the Reorganization Agreement
is attached hereto as Exhibit A and is incorporated by reference herein.
As a result of the proposed Reorganization, each shareholder of JP Fund
will receive that number of Class A shares of Oppenheimer Fund having an
aggregate net asset value equal to the net asset value of such
shareholder's shares of JP Fund. This transaction has been structured in
a manner intended to qualify as a tax-free reorganization for federal
income tax purposes. See "Approval or Disapproval of the Reorganization."
At the Meeting, shareholders of JP Fund will also be asked to elect five
Directors and ratify the selection of independent auditors.
Oppenheimer Fund currently offers the individual investor Class A, Class
B and Class C shares. A fourth class of shares, Class Y shares, is
offered only to certain institutional investors and is not discussed
herein. Class A shares are usually sold with a sales charge imposed at
the time of purchase (certain purchases aggregating $1.0 million or more
($500,000 as to purchases by OppenheimerFunds prototype 401(k) plans) are
not subject to a sales charge, but may be subject to a contingent deferred
sales charge ("CDSC") if redeemed within 18 months of the date of
purchase). Class B shares are sold without a front-end sales charge but
may be subject to a CDSC if redeemed within six years of the date of
purchase. Class C shares are sold without a front-end sales charge but may
be subject to a CDSC if not held for one year. As a result of the
Reorganization, shareholders of JP Fund will receive Class A shares of
Oppenheimer Fund and no sales charge will be imposed on the Oppenheimer
Fund Class A shares received by JP Fund's shareholders. Because JP Fund
has only one class of shares outstanding, Oppenheimer Fund will not issue
Class B or Class C shares in the Reorganization. Accordingly, complete
information on Class B and Class C shares of Oppenheimer Fund is not
included in this Proxy Statement and Prospectus, and no offering of Class
B or Class C shares is made hereby.
Oppenheimer Fund, formerly named "Oppenheimer Special Fund," is a mutual
fund that seeks capital appreciation. Oppenheimer Fund does not invest
to earn current income to distribute to shareholders. Oppenheimer Fund
seeks its investment objective by primarily investing in common stocks and
convertible securities of established growth companies as more fully
described herein. JP Fund's primary investment objective is to seek long
term capital appreciation; current income through the receipt of interest
or dividends from investments is only a secondary objective. JP Fund
proposes to achieve these objectives by investing substantially all of its
assets in common stocks of companies recognized as leaders in their
respective industries as more fully described herein. Shareholders of JP
Fund should consider the differences in investment objectives and policies
of Oppenheimer Fund and JP Fund. See "Investment Objectives and
Policies," "Principal Risk Factors" and "Comparison Between Oppenheimer
Fund and JP Fund -Comparison of Investment Objectives, Policies and
Restrictions."
Oppenheimer Fund has filed with the Securities and Exchange Commission
(the "SEC") a Registration Statement on Form N-14 (the "Registration
Statement") relating to the registration of Class A shares of Oppenheimer
Fund to be offered to the shareholders of JP Fund pursuant to the
Reorganization Agreement. This Proxy Statement and Prospectus relating
to the Reorganization also constitutes a Prospectus of Oppenheimer Fund
filed as part of such Registration Statement. Information contained or
incorporated by reference herein relating to Oppenheimer Fund has been
prepared by and is the responsibility of Oppenheimer Fund. Information
contained or incorporated by reference herein relating to JP Fund has been
prepared by and is the responsibility of JP Fund.
This Proxy Statement and Prospectus sets forth concisely information about
Oppenheimer Fund that a prospective investor should know before voting on
the Reorganization. The following documents have been filed with the SEC
and are available without charge upon written request to Jefferson-Pilot
Investor Services, Inc. ("JPIS"), the distributor for JP Fund, at P.O. Box
22086, Greensboro, North Carolina 27420, or by calling 1-800-458-4498 (a
toll-free number): (i) a Prospectus for JP Fund, dated May 1, 1996
(information about JP Fund is incorporated herein by reference to JP
Fund's May 1, 1996 Prospectus), and (ii) a Statement of Additional
Information about JP Fund, dated May 1, 1996 (the "JP Fund Additional
Statement"). The most recent Annual Report and Semi-Annual Report for JP
Fund, dated as of December 31, 1995 and June 30, 1996, respectively, are
also available without charge upon request to JPIS by calling 1-800-458-
4498 (toll-free).
The following documents have been filed with the SEC and are available
without charge upon written request to the transfer and shareholder
servicing agent for Oppenheimer Fund, OppenheimerFunds Services ("OFS"),
at P.O. Box 5270, Denver, Colorado 80217, or by calling 1-800-525-7048 (a
toll free number): (i) a Prospectus for Oppenheimer Fund, dated November
1, 1995, as supplemented November 1, 1995, January 1, 1996 and January 5,
1996, which is incorporated herein by reference and a copy of which also
accompanies this Proxy Statement and Prospectus; (ii) a Statement of
Additional Information about Oppenheimer Fund, dated November 1, 1995 (the
"Oppenheimer Fund Additional Statement"), which contains more detailed
information about Oppenheimer Fund and its management, and (iii) a
Statement of Additional Information relating to the Reorganization
described in this Proxy Statement and Prospectus (the "Reorganization
Additional Statement"), dated ______, 1996, incorporated herein by
reference and filed as part of the Registration Statement, which includes,
among other things, the Prospectus for JP Fund, the JP Fund Additional
Statement and the Oppenheimer Fund Additional Statement.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
Shares of Oppenheimer Fund are not deposits or obligations of any bank,
are not guaranteed or endorsed by any bank, and are not insured by the
F.D.I.C. or any other agency, and involve investment risks, including the
possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated October __, 1996.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
COMPARATIVE FEE TABLES
SYNOPSIS
Purpose of the Meeting
Parties to the Reorganization
The Reorganization
Vote Required
Tax Consequences of the Reorganization
Dissenters' Rights
Investment Objectives and Policies
Investment Advisory and Distribution Plan Fees
Purchases, Exchanges and Redemptions
PRINCIPAL RISK FACTORS
Stock Investment Risks
Foreign Securities
Small, Unseasoned Companies
Borrowing for Leverage
Warrants and Rights
Options, Futures and Interest Rate Swaps; Derivatives
APPROVAL OR DISAPPROVAL OF THE REORGANIZATION (Proposal 1)
Background
Acquisition Agreement
Board Approval of the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Dissenters' Rights
Capitalization Table (Unaudited)
COMPARISON BETWEEN Oppenheimer Fund AND JP FUND
Comparison of Investment Objectives, Policies and Restrictions
Special Investment Methods
Investment Restrictions
Oppenheimer Fund Performance
Additional Comparative Information
ELECTION OF DIRECTORS (Proposal 2)
Information Concerning the Board
Officers of JP Fund
Other Information
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS (Proposal
3)
INFORMATION CONCERNING THE MEETING
The Meeting
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization
MISCELLANEOUS
Financial Information
Public Information
SHAREHOLDER PROPOSALS
OTHER BUSINESS
EXHIBIT A - Agreement and Plan of Reorganization, dated as of ________,
1996, by and among Oppenheimer Growth Fund, Jefferson-Pilot
Capital Appreciation Fund, Inc., OppenheimerFunds, Inc. and
Jefferson-Pilot Corporation
ENCLOSURE- Prospectus of Oppenheimer Growth Fund, dated November 1, 1995,
as supplemented November 1, 1995, January 1, 1996 and January
5, 1996
<PAGE>
COMPARATIVE FEE TABLES
Transaction Charges
Shareholders pay certain expenses directly, such as sales charges and
account transaction charges. The schedule of such charges for both JP
Fund and Oppenheimer Fund is noted below.
<TABLE>
<CAPTION>
JP Fund Oppenheimer Fund
Class A Class B Class C Class Y
<S> <C> <C> <C> <C> <C>
Maximum Initial Sales Load
Imposed on Purchases (as a %
of offering price) 4.50% 5.75% None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None None
Maximum Deferred Sales
Load(as a % of the lower
of the original purchase
price or redemption
proceeds) None None(1) 5.00%(2) 1.00%(3)None
Redemption Fee None None None None None
Exchange Fee None None None None None
</TABLE>
1. If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, although you
will generally not pay an initial sales charge, you may have to pay a
sales charge of up to 1.0% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares.
2. If you redeem Class B shares within six years of the beginning of the
month in which you purchase them, you may have to pay a contingent
deferred sales charge starting at 5.0% in the first year and declining
thereafter.
3. If you redeem Class C shares within 12 months of the beginning of the
calendar month of buying them, you may have to pay a 1.0% contingent
deferred sales charge.
Expenses of Oppenheimer Fund and JP Fund; Pro Forma Expenses
Each fund pays a variety of expenses directly for management of its
assets, administration, distribution of shares and other services, and
those expenses are reflected in the net asset value per share of each of
Oppenheimer Fund and JP Fund. The following calculations are based on the
annualized expenses of JP Fund for the six months ended June 30, 1996 and
the expenses of Class A shares of Oppenheimer Fund for the 12 months ended
June 30, 1996. These amounts are shown as a percentage of the average net
assets of JP Fund and of Class A shares of Oppenheimer Fund for that
period. The pro forma expenses reflect what the fee schedules would have
been at June 30, 1996 if the Reorganization had occurred 12 months prior
to that date.
<TABLE>
<CAPTION>
Oppenheimer Fund ProForma
JP Fund(1)Class A Combined Fund
<S> <C> <C> <C>
Management Fees 0.50% 0.68% 0.67%
12b-1 Fees ---- 0.17% 0.17%
Other Expenses 0.36% 0.21% 0.21%
Total Fund Operating
Expenses(1) 0.86% 1.06% 1.05%
<FN>
_________
(1) Annualized
</TABLE>
Examples
To attempt to show these expenses over time, the examples shown below have
been created. Assume that you make a $1,000 investment in either JP Fund
or Oppenheimer Fund or the new combined fund and that the annual return
is 5% and that the operating expenses for each fund are the ones shown in
the chart above. If you were to redeem your shares at the end of each
period shown below, your investment would incur the following expenses by
the end of 1, 3, 5 and 10 years:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C>
Oppenheimer Fund
Class A Shares $68 $89 $113 $179
JP Fund $53 $71 $ 91 $146
Pro Forma Combined
Fund
Class A Shares $68 $89 $112 $178
If you did not redeem your investment, it would incur the following
expenses by the end of the applicable period:
1 year 3 years 5 years 10 years
Oppenheimer Fund
Class A Shares $68 $89 $113 $179
JP Fund $53 $71 $ 91 $146
Pro Forma Combined
Fund
Class A Shares $68 $89 $112 $178
</TABLE>
<PAGE>
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of JP Fund to assist them in
determining whether to approve or disapprove the Reorganization. This
synopsis is only a summary and is qualified in its entirety by the more
detailed information contained in or incorporated by reference in this
Proxy Statement and Prospectus and the Reorganization Agreement which is
Exhibit A hereto. Shareholders should carefully review this Proxy
Statement and Prospectus and the Reorganization Agreement in their
entirety and, in particular, the current Prospectus of Oppenheimer Fund
which accompanies this Proxy Statement and Prospectus and is incorporated
by reference herein.
Purpose of the Meeting
At the Meeting, shareholders of JP Fund will be asked to approve or
disapprove the Reorganization. In addition, shareholders will be
requested to elect five Directors of JP Fund and ratify the selection of
JP Fund's independent auditors.
Parties to the Reorganization
Oppenheimer Fund is a diversified, open-end, management investment company
initially organized in 1972 as a Maryland corporation and was reorganized
in 1985 as a Massachusetts business trust. Oppenheimer Fund is located
at Two World Trade Center, New York, New York 10048-0203.
OppenheimerFunds, Inc. ("OFI") acts as investment adviser to Oppenheimer
Fund. OppenheimerFunds Distributor, Inc. ("OFDI"), a subsidiary of OFI,
acts as the distributor of Oppenheimer Fund's shares. OFI and OFDI are
also located at Two World Trade Center, New York, New York 10048-0203.
Additional information about Oppenheimer Fund is set forth below.
JP Fund is a diversified, open-end, management investment company
organized in 1970 as a North Carolina corporation. JP Fund is located at
100 North Greene Street, Greensboro, North Carolina 27420. JP Investment
Management Company ("JPM") acts as investment adviser to JP Fund.
Jefferson-Pilot Investor Services, Inc. ("JPIS") acts as the distributor
of JP Fund's shares. JPM and JPIS are located at P.O. Box 21008 and P.O.
Box 22086, respectively, Greensboro, North Carolina 27420. Additional
information about JP Fund is set forth below.
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of JP Fund to Oppenheimer Fund in exchange for the issuance
of Class A shares of Oppenheimer Fund and the assumption by Oppenheimer
Fund of certain liabilities of JP Fund. JP Fund will retain a small Cash
Reserve sufficient to pay any liabilities and expenses of dissolution.
The Reorganization Agreement also provides for the distribution by JP Fund
of these shares of Oppenheimer Fund to JP Fund shareholders in liquidation
of JP Fund. As a result of the Reorganization, each JP Fund shareholder
will receive that number of full and fractional Oppenheimer Fund Class A
shares equal in value to such shareholder's pro rata interest in the net
assets transferred to Oppenheimer Fund as of the Valuation Date (as
hereinafter defined). For further information about the Reorganization
see "Approval or Disapproval of the Reorganization" below.
For the reasons set forth below under "Approval or Disapproval of the
Reorganization -Board Approval of the Reorganization," the Board,
including the Directors who are not "interested persons" of JP Fund (the
"Independent Directors"), as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), has concluded that the
Reorganization is in the best interests of JP Fund and its shareholders
and that the interests of existing JP Fund shareholders will not be
diluted as a result of the Reorganization, and recommends approval of the
Reorganization by JP Fund shareholders. The Board of Trustees of the
Trust has also approved the Reorganization and determined that the
interests of existing Oppenheimer Fund shareholders will not be diluted
as a result of the Reorganization. If the Reorganization is not approved,
JP Fund will continue in existence and the Board will determine whether
to pursue alternative actions. The section below entitled "Approval or
Disapproval of the Reorganization" sets forth certain information with
respect to the background of the Reorganization, including other
transactions and agreements entered into, or contemplated to be entered
into, by OFI, JPM and certain affiliates of JPM.
Vote Required
Approval of the Reorganization will require the affirmative vote of a
majority of the shares of JP Fund entitled to vote at the Meeting. See
"Information Concerning the Meeting - Record Date; Vote Required; Share
Information."
Tax Consequences of the Reorganization
As a condition to the closing of the Reorganization, JP Fund and
Oppenheimer Fund will have received an opinion to the effect that the
Reorganization will qualify as a tax-free reorganization for federal
income tax purposes. As a result of such tax-free reorganization, no gain
or loss would be recognized by JP Fund, Oppenheimer Fund, or the
shareholders of either fund for federal income tax purposes. For further
information about the tax consequences of the Reorganization, see
"Approval or Disapproval of the Reorganization -Tax Aspects of the
Reorganization" below.
Dissenters' Rights
Dissenters' rights of appraisal are generally not available to
shareholders of JP Fund with respect to the Reorganization. See, "The
Reorganization - Dissenters' Rights."
Investment Objectives and Policies
Oppenheimer Fund's investment objective is a fundamental policy, and JP
Fund's investment objectives and policies are also fundamental policies.
Fundamental policies are those that cannot be changed without the approval
of shareholders of that fund. Oppenheimer Fund's investment policies
described below are not fundamental unless this Proxy Statement and
Prospectus indicates a particular policy is fundamental.
Oppenheimer Fund invests its assets to seek capital appreciation; it does
not seek current income. Oppenheimer Fund emphasizes investment in common
stocks and convertible securities issued by established "growth companies"
that, in the opinion of OFI, have better-than-expected earnings prospects
but are selling at below-normal valuations. During times of market
volatility, defensive investment methods may be stressed. 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).
JP Fund's primary investment objective is long-term capital appreciation.
Current income through the receipt of interest or dividends from
investments is a secondary objective. JP Fund proposes to achieve these
objectives by investing substantially all its assets in publicly-held
common stocks of companies recognized as leaders in their respective
industries with proven and capable management and that are providing
significant products and services to their customers. Investments may be
made in other equity securities, including preferred stock and those debt
securities convertible into or carrying rights, warrants, or options to
purchase common stock or to participate in earnings. JP Fund may also hold
cash or invest in short-term securities.
Oppenheimer Fund's and JP Fund's investments may also include securities
of foreign governments and companies (limited, in the case of JP Fund, to
securities issued by Canadian companies), warrants and rights.
Oppenheimer Fund and JP Fund may also enter into repurchase agreements,
subject to certain limitations. Oppenheimer Fund may also write covered
call options and use certain derivative investments, including options and
futures, to attempt to seek income or total return and may use hedging
instruments to try to manage investment risks.
Shareholders of JP Fund should consider the differences in investment
objectives and policies between JP Fund and Oppenheimer Fund, including
the fact that, unlike JP Fund, Oppenheimer Fund does not seek current
income as an investment objective. See "Principal Risk Factors" and
"Comparison Between Oppenheimer Fund and JP Fund - Comparison of
Investment Objectives, Policies and Restrictions."
Investment Advisory and Distribution Plan Fees
Oppenheimer Fund and JP Fund each obtain investment management services
from their respective investment advisers pursuant to the terms of their
respective investment advisory agreements. Each agreement provides that
a management fee is payable to the investment adviser monthly.
Oppenheimer Fund pays a management fee to OFI computed on its net asset
value as of the close of business each day, which fee declines on
additional assets as Oppenheimer Fund increases its asset base, at the
annual rate of 0.75% of the first $200 million of net assets, 0.72% of the
next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, and 0.60% of net assets over $800 million. The management fee
payable by JP Fund to JPM is at an annual rate of 1/2 of 1% of JP Fund's
average daily net asset value. JPM is reimbursed by JP Fund for
performing certain shareholder accounting services. Oppenheimer Fund pays
OFI to prepare tax returns. JPM has contractually agreed that if in any
fiscal year the total of JP Fund's ordinary business expenses (with
specified exceptions) exceeds 1% of JP Fund's average daily net asset
value, JPM will pay the excess by reducing its management fee by a
corresponding amount. OFI has voluntarily undertaken to reimburse
Oppenheimer Fund (and reduce Oppenheimer Fund's management fees) to the
extent its aggregate expenses (with specified exceptions) in any fiscal
year exceed the most stringent state regulatory limit on fund expenses.
OFI's undertaking to Oppenheimer Fund is revocable and may be changed or
eliminated at any time. Neither fund's management fees were reduced
during the past fiscal year.
Oppenheimer Fund has adopted a shareholder Service Plan under Rule 12b-1
of the 1940 Act for Class A shares to reimburse OFDI 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 1.25% of the average annual net assets of
Class A shares of Oppenheimer Fund. OFDI 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
Board of Trustees authorizes such reimbursements, which it has not yet
done) for its other expenditures under the Service Plan. Services to be
provided include, among others, answering customer inquiries about
Oppenheimer Fund, assisting in establishing and maintaining accounts in
Oppenheimer Fund, making Oppenheimer Fund's investment plans available and
providing other services at the request of Oppenheimer Fund or OFDI. A
description of Oppenheimer Fund's distribution and service plans for Class
B and Class C shares is set forth in Oppenheimer Fund's Prospectus. JP
Fund has not adopted a plan pursuant to Rule 12b-1 under the 1940 Act.
Purchases, Exchanges and Redemptions
Purchases. Purchases of shares of Oppenheimer Fund and JP Fund may be
made directly through OFDI and JPIS, respectively, or through any dealer,
broker or financial institution that has a sales agreement with the
respective distributor. Subsequent to an initial purchase, additional
purchases of JP Fund shares may be made directly from Investors Fiduciary
Trust Company, JP Fund's stock transfer and dividend paying agent. A
shareholder of Oppenheimer Fund may purchase shares automatically from an
account at a domestic bank or other financial institution under the
"OppenheimerFunds AccountLink" service. Class A shares of Oppenheimer
Fund and shares of JP Fund generally are sold subject to an initial sales
charge. The maximum sales charge rate is 1.25% higher (as a percent of the
offering price) for Oppenheimer Fund Class A shares than for JP Fund
shares. Oppenheimer Fund Class B and Class C shares generally are sold
without a front-end sales charge but may be subject to a contingent
deferred sales charge ("CDSC") upon redemption. See "Comparative Fee
Tables -- Transaction Charges" above for a complete description of such
sales charges.
Class A shares of Oppenheimer Fund and shares of JP Fund may be purchased
at reduced sales charges, or may be purchased at net asset value, as
described in that fund's Prospectus. Class A shares of Oppenheimer Fund
to be issued under the Reorganization Agreement will be issued by
Oppenheimer Fund at net asset value without a sales charge. The sales
charge on Class A shares of Oppenheimer Fund will only affect shareholders
of JP Fund to the extent that they desire to make additional purchases of
Class A shares of Oppenheimer Fund in addition to the shares which they
will receive as a result of the Reorganization. Future dividends and
capital gain distributions of either fund, if any, may be reinvested
without sales charge.
Exchanges. Shareholders of Oppenheimer Fund may exchange their shares at
net asset value for shares of the same class issued by other mutual funds
within the Oppenheimer funds family (over 60 other portfolios), subject
to certain conditions. Oppenheimer Fund offers an automatic exchange plan
providing for systematic exchanges from Oppenheimer Fund of a specified
amount for shares of the same class of other funds within the Oppenheimer
funds family. In contrast, holders of JP Fund shares may only exchange
such shares for shares issued by Jefferson-Pilot Investment Grade Bond
Fund, Inc. ("JP Bond Fund").
Redemptions. Class A shares of Oppenheimer Fund and shares of JP Fund may
be redeemed without charge at their respective net asset values per share
calculated after the redemption order is received and accepted; however,
Class A shares of Oppenheimer Fund that were exempt from the front-end
sales charge upon purchase in amounts of more than $1 million (more than
$500,000 for purchases by OppenheimerFunds prototype 401(k) plans) may be
subject to a CDSC of up to 1.0% upon redemption within 18 months from the
end of the calendar month during which such shares were purchased. Such
CDSC will be waived for shares issued pursuant to the Reorganization. See
"Comparative Fee Tables -- Transaction Charges" above.
Shareholders of Oppenheimer Fund may reinvest redemption proceeds of Class
A shares on which an initial sales charge was paid, or the redemption
proceeds of Class A or Class B shares on which a CDSC was paid, without
imposition of a sales charge, within six months of a redemption at net
asset value in Class A shares of Oppenheimer Fund or any of numerous
mutual funds within the Oppenheimer funds family. Shareholders of JP Fund
may reinvest all or part of the redemption proceeds of shares of JP Fund
in shares of JP Fund or JP Appreciation Fund within 30 days after the date
of the redemption without the imposition of a sales charge. Former JP Fund
shareholders would be permitted to exercise this reinvestment privilege
once each calendar year.
Shareholders of both funds may redeem their shares by written request or
by telephone request in certain stated amounts, and shareholders of
Oppenheimer Fund may arrange to have share redemption proceeds transmitted
to a pre-designated account at a U.S. bank or other financial institution
that is an automated clearing house ("ACH") member. Oppenheimer Fund may
redeem accounts valued at less than $500 if the account has fallen below
such stated amount for reasons other than market value fluctuations. For
JP Fund, the corresponding minimum is $250 once the account has been open
at least 12 months. The funds offer automatic withdrawal plans providing
for systematic withdrawals of a specified amount from the fund account.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in
Oppenheimer Fund, JP Fund shareholders should carefully consider the
following summary of risk factors, relating to both Oppenheimer Fund and
JP Fund, in addition to the other information set forth in this Proxy
Statement and Prospectus. Additional information on risk factors for each
fund is set forth in the respective Prospectus of each fund and in
addition for Oppenheimer Fund, the Oppenheimer Fund Additional Statement.
As a general matter, Oppenheimer Fund and JP Fund are intended for
investors seeking capital appreciation (and, as a secondary objective for
JP Fund, current income) who are willing to accept greater risks of loss
in the hopes of greater gains. Oppenheimer Fund is not intended for
investors seeking assured income. There is no assurance that either
Oppenheimer Fund or JP Fund will achieve its investment objectives and
investment in the funds is subject to investment risks, including the
possible loss of the principal invested.
Stock Investment Risks
Since the funds may invest a substantial portion of their assets in
stocks, the value of a fund's portfolio will be affected by changes in the
stock markets. At times, the stock markets can be volatile, and stock
prices can change substantially. This market risk will affect a fund's
net asset value per share, which will fluctuate as the values of the
fund's portfolio securities change.
Foreign Securities
Oppenheimer Fund may invest in equity (and debt) securities issued or
guaranteed by foreign governments or foreign companies or other agencies;
JP Fund may not invest in foreign securities other than securities issued
by Canadian companies. In summary, foreign securities markets may be less
liquid and more volatile than the markets in the U.S. Risks of foreign
securities investing may include foreign withholding taxation, currency
blockage, currency exchange costs, difficulty in obtaining and enforcing
judgments against foreign issuers, relatively greater brokerage and
custodial costs, risk of expropriation or nationalization of assets, less
publicly available information, and differences between domestic and
foreign legal, auditing, brokerage and economic standards. In addition,
there are risks of changes in foreign currency values. A change in value
of a foreign currency against the U.S. dollar will result in a change in
the U.S. dollar value of a fund's securities denominated in a foreign
currency. Although both funds' investment income from foreign securities
may be received in foreign currencies, the funds are required to absorb
the cost of currency fluctuations. If a fund suffers a loss on foreign
currencies after it has distributed its income during the year, the fund
may find that it has distributed more income than was available from
actual investment income, and the shareholders will have received a return
of capital. The foreign securities Oppenheimer Fund may invest in, such
as securities of issuers in underdeveloped countries, have speculative
characteristics and involve more risk than other foreign securities,
including extended settlement periods for securities transactions,
increased illiquidity and increased volatility.
Small, Unseasoned Companies
The funds may invest in securities of companies that have been in
operation for less than three years (including the operations of
predecessors). Securities of these companies may have limited liquidity
(which means that a fund may have difficulty selling them at an acceptable
price when it wants to) and the prices of these securities may be
volatile. Oppenheimer Fund currently intends to invest no more than 5%
of its net assets in the next year in the securities of small, unseasoned
issuers. JP Fund is prohibited from investing more than 5% of its assets
in the securities of such issuers.
Borrowing for Leverage
Oppenheimer Fund may borrow from banks to buy securities, but 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 Oppenheimer Fund to greater risks and costs than
funds that do not borrow. These risks may include the possibility that
Oppenheimer Fund's net asset value per share will fluctuate more than the
net asset value of funds that do not borrow, since Oppenheimer Fund pays
interest on borrowings and interest expense affects Oppenheimer Fund's
share price. JP Fund is not permitted to borrow for leverage and may only
borrow money for extraordinary or emergency purposes.
Warrants and Rights
The Funds may purchase 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 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.
Options, Futures and Interest Rate Swaps; Derivatives
Oppenheimer Fund may purchase and sell certain kinds of futures contracts,
put and call options, forward contracts and options on securities,
broadly-based stock indices, stock index futures and foreign currency;
Oppenheimer Fund may also enter into interest rate swap transactions. The
foregoing instruments, referred to as "hedging instruments," are
considered derivative investments. Oppenheimer Fund may also invest in
certain derivative investments to attempt to seek income or total return.
Hedging instruments and derivative investments and their special risks are
described below in "Comparison Between Oppenheimer Fund and JP Fund."
APPROVAL OR DISAPPROVAL OF THE REORGANIZATION
(Proposal 1)
Background
JPC, in the course of a review of its business, concluded that it should
concentrate on its core insurance business and communications operations
and not continue, through its existing subsidiaries, in the business of
managing mutual fund investment portfolios. JPC is a publicly-held
holding company that is the parent of JPM and JPIS. In addition to JP
Fund and JP Bond Fund, JPM manages two mutual funds (the "Insurance
Funds") that sell their shares exclusively to certain separate accounts
of Jefferson-Pilot Life Insurance Company ("JPLIC") that support variable
annuity contracts. In aggregate, these four mutual funds had net assets
at June 30, 1996 of approximately $172 million. Managing mutual fund
investment portfolios in an efficient and profitable manner requires
significant assets per fund and in the aggregate. Usually several billion
dollars in aggregate net assets is necessary to cover normal operating
costs and provide resources for capital investment in new products and
services. With regard to retail mutual funds (such as JP Fund and JP Bond
Fund), financing certain classes of shares and providing sales support to
dealers are additional expenses that can only be supported from a
relatively large asset base. Consequently, it has become increasingly
difficult for a relatively small mutual fund operation such as that
managed by JPM and JPIS to compete. JPC evaluated the capital investment
that would be required of it or its subsidiaries to achieve such an asset
base and determined that: (1) the best investment of its resources would
not be in expanding the mutual fund assets under JPM's management, and (2)
if, through JPM (or another subsidiary), it could not be extremely
competitive in the business of managing mutual fund investment portfolios,
it should sell the assets of JPM and facilitate making other arrangements
for the management of the assets of the four mutual funds (including JP
Fund) managed by JPM. Sometime after these determinations by JPC were
made, representatives of JPC and JPM met with OFI to discuss OFI acquiring
JPM's mutual fund-related assets. Representatives of OFI and JPM held
meetings beginning in December 1995. Following the negotiation of the
terms of an acquisition agreement and related agreements, an acquisition
agreement (the "Acquisition Agreement") was executed by OFI, JPC, JPM and
JPLIC on _______________, 1996.
The Reorganization described in this Proxy Statement and Prospectus is one
aspect of the overall Acquisition (as hereinafter defined) contemplated
by the Acquisition Agreement described below. The consummation of the
Reorganization is one condition, among others, to the closing of the
Acquisition. Likewise, the consummation of the Acquisition is one
condition, among others, to the closing of the Reorganization.
Accordingly, unless the parties otherwise agree, the Reorganization may
not be effected, despite shareholder approval, if the Acquisition does not
close. In such case, JP Fund will continue in existence and the Board
will take such further action as it, in its discretion, deems necessary
or advisable. The description of the Acquisition Agreement set forth
below is a summary only.
Acquisition Agreement
The Acquisition Agreement contemplates the sale to OFI of all the assets
of JPM (the "Purchased Assets") and the assumption by OFI of certain
liabilities of JPM and JPC relating to the Purchased Assets ("Assumed
Liabilities") (the foregoing sale and assumption constitute the
"Acquisition"). The Acquisition Agreement contemplates that each of the
four mutual funds advised by JPM (including JP Fund) (each, a "Reorganized
Fund") will be reorganized with a mutual fund currently advised by OFI.
A condition to the obligation of the parties to close under the
Acquisition Agreement (the "Acquisition Closing") is the approval of the
reorganizations of the Reorganized Funds (including the Reorganization
described in this Proxy Statement and Prospectus) by their respective
shareholders and the approval of the reorganizations of the Insurance
Funds by applicable state insurance regulatory authorities. The
Acquisition Agreement sets forth certain other conditions to each party's
obligation to close.
JPM, JPC and JPLIC have agreed pursuant to an Agreement Not to Compete not
to, among other things, sell or offer to sell shares of or other security
interests in investment companies or investment oriented insurance
policies to persons who were shareholders of JP Fund or JP Bond Fund or
owned variable annuity contracts issued by JPLIC invested in the Insurance
Funds, in each case, immediately prior to the reorganization of such fund
for a period to end on the fourth anniversary of the Acquisition Closing.
Further, JPM, JPC and JPLIC may not act as an investment adviser to funds
established, formed, sold, sponsored or distributed by them and their
affiliates with certain exceptions. OFI, on the one hand, and JPM, JPC
and JPLIC, on the other, have agreed to indemnify the other for certain
liabilities.
Board Approval of the Reorganization
At its meeting on August 26, 1996, the Board, including the Independent
Directors, unanimously approved the Reorganization and the Reorganization
Agreement, determined that the Reorganization is in the best interests of
JP Fund and its shareholders and resolved to recommend that JP Fund
shareholders vote for approval of the Reorganization. The Board further
determined that the Reorganization would not result in dilution of JP
Fund's shareholders' interests.
In evaluating the Reorganization, the Board requested and reviewed, with
the assistance of independent legal counsel, materials furnished by OFI
and JPM. These materials included financial statements as well as other
written information regarding OFI and its personnel, operations and
financial condition. The Board also reviewed the same type of information
about JPM. Consideration was given to comparative information concerning
other mutual funds with similar investment objectives to JP Fund and
Oppenheimer Fund. The Board also considered information with respect to
the relative historical performance of JP Fund, Oppenheimer Fund and other
mutual funds having similar investment objectives. The Board also
reviewed and discussed the terms and provisions of the investment advisory
agreement pursuant to which OFI provides investment management services
to Oppenheimer Fund and compared and contrasted them to the existing
management arrangements for JP Fund as well as the management arrangements
of other similar mutual funds, particularly with respect to the allocation
of various types of expenses, levels of fees and resulting expense ratios.
In reaching its determination, the Board gave careful consideration to the
following factors, among others: (1) because JPC intends to sell JPM or
otherwise leave the business of managing mutual fund investment
portfolios, new arrangements for the management of JP Fund's assets were
necessary; (2) the Reorganization would afford the shareholders of JP Fund
the capabilities and resources of OFI and its affiliates in the area of
investment management, distribution, shareholder servicing and marketing;
(3) the ability of the shareholders of JP Fund to exchange their
Oppenheimer Fund shares for a wider variety of portfolios within the
Oppenheimer funds family with differing investment objectives than are
currently available to shareholders of JP Fund; (4) the terms and
conditions of the Reorganization, including that (a) there would be no
sales charge imposed in effecting the Reorganization, (b) the
Reorganization is intended to qualify as a tax-free exchange, and (c) all
expenses of the Reorganization would be paid by OFI and JPM and not by
Oppenheimer Fund or JP Fund; and (5) the similarities and differences of
the investment objectives, policies and methods of JP Fund and Oppenheimer
Fund. The Board also considered that the annual operating expenses for
Oppenheimer Fund are higher, as a percentage of net assets, and would be
higher on a pro forma basis after giving effect to the Reorganization,
than the operating expenses of JP Fund due to the fact that Oppenheimer
Fund is subject to a higher management fee rate than JP Fund and
Oppenheimer Fund Class A shares pay a service fee to OFDI. For operating
expenses and other expense information relating to Oppenheimer Fund and
JP Fund, see "Comparative Fee Tables - Expenses of Oppenheimer Fund and
JP Fund; Pro Forma Expenses."
The Board was also advised regarding the provisions of Section 15(f) of
the 1940 Act as they relate to the Acquisition. Section 15(f) of the 1940
Act provides, in effect, that an investment adviser of a registered
investment company, or an affiliated person of such adviser, may receive
any amount or benefit in connection with the sale of the adviser's
business provided that two conditions are satisfied. First, an "unfair
burden" must not be imposed on the investment company for which the
investment adviser acts in such capacity as a result of the sale, or any
express or implied terms, conditions or understandings applicable thereto.
The term "unfair burden" as defined in the 1940 Act, includes any
arrangement during the two-year period after the transaction whereby the
investment adviser (or predecessor or successor advisers), or any
interested person of such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from any person in connection with
the purchase or sale of securities or other property to, from or on behalf
of the investment company (other than ordinary fees for bona fide
principal underwriting services), or from the investment company or its
securities holders (other than fees for bona fide investment advisory and
other services).
Management of the Reorganized Funds (including JP Fund) and management of
the mutual funds managed by OFI into which the Reorganized Funds will be
reorganized (including Oppenheimer Fund) are aware of no circumstances
arising from the Acquisition or preparatory transactions to the
Acquisition that might result in the imposition of an "unfair burden" on
the Reorganized Funds (including JP Fund) or the mutual funds managed by
OFI into which the Reorganized Funds will be reorganized (including
Oppenheimer Fund). Moreover, the Acquisition Agreement provides that OFI,
JPM and JPC will conduct their businesses (and use their reasonable
efforts to cause their respective affiliates to conduct their businesses)
so as to assure, insofar as is in their control, that no "unfair burden"
will be imposed on the Reorganized Fund (including JP Fund) or any mutual
fund managed by OFI into which a Reorganized Fund would be reorganized
(including Oppenheimer Fund) as a result of the transactions contemplated
by the Acquisition Agreement.
The second condition of Section 15(f) is that during the three-year period
immediately following a transaction to which Section 15(f) is applicable,
at least 75% of the subject investment company's board of directors must
not be "interested persons" (as defined in the 1940 Act) of the investment
company's investment adviser or predecessor adviser. The current
composition of the Board of Trustees of each mutual fund managed by OFI
into which a Reorganized Fund would be organized (including Oppenheimer
Fund) is in compliance with such condition.
After consideration of the above factors, and such other factors and
information as the directors deemed relevant, the Board, including the
Independent Directors, unanimously approved the Reorganization and the
Reorganization Agreement and voted to recommend its approval to the
shareholders of JP Fund.
The Board of Trustees of Oppenheimer Fund, including the trustees who are
not "interested persons" of Oppenheimer Fund, unanimously approved the
Reorganization and the Reorganization Agreement and determined that the
Reorganization is in the best interests of Oppenheimer Fund and its
shareholders. The Board of Trustees further determined that the
Reorganization would not result in dilution of the Oppenheimer Fund
shareholders' interests. The Board of Trustees considered, among other
things, that an increase in Oppenheimer Fund's asset base as a result of
the Reorganization could benefit Oppenheimer Fund shareholders due to the
economies of scale available to a larger fund. Over time, these economies
of scale may result in slightly lower costs per account for each
Oppenheimer Fund shareholder through lower operating expenses and transfer
agency expenses.
The Reorganization
The following summary of the Reorganization Agreement is qualified in its
entirety by reference to the Reorganization Agreement (a copy of which is
set forth in full as Exhibit A to this Proxy Statement and Prospectus).
The Reorganization Agreement contemplates a reorganization under which (1)
substantially all of the assets of JP Fund would be transferred to
Oppenheimer Fund in exchange for Class A shares of Oppenheimer Fund having
a value equal to the value of the JP Fund assets transferred, (2) these
Class A shares would be distributed among shareholders of JP Fund in
liquidation of JP Fund and (3) the outstanding shares of JP Fund would be
cancelled. Prior to the Closing Date (as hereinafter defined), JP Fund
will endeavor to discharge all of its liabilities and obligations when and
as due prior to such date. Oppenheimer Fund will not assume any
liabilities or obligations of JP Fund except for portfolio securities
purchased which have not settled in the ordinary course of business. In
this regard, JP Fund will retain a cash reserve (the "Cash Reserve") in
an amount which is deemed sufficient in the discretion of the Board for
the payment of (a) JP Fund's expenses of liquidation (if any) and (b) JP
Fund's liabilities, other than those assumed by Oppenheimer Fund. The
Cash Reserve will be accounted for as a liability of JP Fund in
determining its net asset value. The number of full and fractional Class
A shares of Oppenheimer Fund to be issued to JP Fund will be determined
on the basis of Oppenheimer Fund's and JP Fund's relative net asset values
per share, computed as of the close of business of The New York Stock
Exchange Inc. on the business day preceding the Closing Date (the
"Valuation Date"). The Closing Date for the Reorganization will be the
date of the closing of the Acquisition under the Acquisition Agreement or
such other date as may be mutually agreed upon in writing.
The valuation procedures set forth in Oppenheimer Fund's Prospectus and
the Oppenheimer Fund Additional Statement will be utilized to determine
the value of JP Fund's assets to be transferred to Oppenheimer Fund
pursuant to the Reorganization, the value of Oppenheimer Fund's assets and
the net asset value of shares of Oppenheimer Fund. Such values will be
computed by JPM and OFI, respectively, as of the Valuation Date in a
manner consistent with OFI's regular practice in pricing Oppenheimer Fund.
The Reorganization Agreement provides for coordination between the funds
as to their respective portfolios so that, on and after the Closing Date,
Oppenheimer Fund will be in compliance with all of its investment policies
and restrictions. JP Fund will recognize capital gain or loss on any
sales made pursuant to this condition. If JP Fund realizes net gain from
the sale of securities, such gain, to the extent not offset by capital
loss carry-forwards, will be distributed to shareholders prior to the
Closing Date and will be taxable to shareholders as long-term capital gain
or, if the assets disposed of had not been held for more than one year,
as ordinary income.
Contemporaneously with the closing, JP Fund will be liquidated (except for
the Cash Reserve) and JP Fund will distribute or cause to be distributed
pro rata to JP Fund shareholders of record on the Valuation Date the full
and fractional Class A shares of Oppenheimer Fund received by JP Fund.
Upon such liquidation, all issued and outstanding shares of the JP Fund
will be cancelled on JP Fund's books and JP Fund shareholders will have
no further rights as shareholders of JP Fund. To assist JP Fund in the
distribution of Oppenheimer Fund shares, Oppenheimer Fund will, in
accordance with a shareholder list supplied by JP Fund, cause Oppenheimer
Fund's transfer agent to credit and confirm an appropriate number of Class
A shares of Oppenheimer Fund to each shareholder of JP Fund. Certificates
for shares of Oppenheimer Fund will be issued upon written request of a
former shareholder of JP Fund but only for whole shares with fractional
shares credited to the name of the shareholder on the books of Oppenheimer
Fund. Former shareholders of JP Fund who wish certificates representing
their shares of Oppenheimer Fund must, after receipt of their
confirmations, make a written request to OppenheimerFunds Services, P.O.
Box 5270, Denver, Colorado 80217. Shareholders of JP Fund holding
certificates representing their shares will not be required to surrender
their certificates to anyone in connection with the Reorganization. After
the Reorganization, however, it will be necessary for such shareholders
to surrender such certificates in order to redeem, transfer, pledge or
exchange any shares of Oppenheimer Fund, or obtain a certificate for
Oppenheimer Fund shares to replace a certificate for former JP Fund
shares. After the closing of the Reorganization, JP Fund will not conduct
any business except in connection with the winding up of its affairs.
Under the Reorganization Agreement, within one year after the Closing
Date, JP Fund shall either (i) transfer any remaining amount of the Cash
Reserve to Oppenheimer Fund, if such remaining amount (as reduced by the
estimated cost of distributing it to shareholders) is not material (as
defined below), or (ii) distribute such remaining amount to the
shareholders of JP Fund who were such on the Valuation Date. Such
remaining amount shall be deemed to be material if the amount to be
distributed, after deducting the estimated expenses of the distribution,
equals or exceeds one cent per share of JP Fund outstanding on the
Valuation Date. After this transfer or distribution, and after all final
reports and tax returns have been filed and the winding up of JP Fund's
affairs has been completed, JP Fund will be dissolved as a corporation
under North Carolina law.
The consummation of the Reorganization is subject to the conditions set
forth in the Reorganization Agreement, including, without limitation,
approval of the Reorganization by JP Fund's shareholders. Notwithstanding
approval of JP Fund's shareholders, the Reorganization may be terminated
at any time prior to the Closing Date (1) by mutual written consent of JP
Fund and Oppenheimer Fund, (2) by JP Fund or Oppenheimer Fund, if the
Closing shall not have occurred on or before December 31, 1996, (3) by
JP Fund or Oppenheimer Fund, if the other party shall fail to perform in
any material respect its agreements contained in the Reorganization
Agreement required to be performed on or prior to the Closing Date, the
other party materially breaches any representation, warranty, or covenant
contained in the Reorganization Agreement, the JP Fund shareholders fail
to approve the Reorganization Agreement, or if a condition in the
Reorganization Agreement expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it
will not or cannot be met prior to the Closing Date, or (4) if a
suspension in the redemption of shares shall continue for 60 days beyond
the Valuation Date. The Reorganization Agreement will automatically
terminate prior to the Closing if the Acquisition Agreement is terminated
or the Acquisition is not consummated. Termination of the Reorganization
Agreement pursuant to (1), (2) or (4) above, or an automatic termination
as described in the preceding sentence, will terminate all obligations of
the parties thereto and there will be no liability for damages. In such
case JP Fund and Oppenheimer Fund will be reimbursed for its expenses
incurred with respect to the Reorganization by JPM and OFI, respectively.
In the event of a termination pursuant to (3) above, all obligations of
Oppenheimer Fund and JP Fund under the Reorganization Agreement will be
terminated without liability for damages except that the party in breach
(other than a breach due to JP Fund shareholders not approving the
Reorganization) of the Reorganization Agreement will, upon demand,
reimburse (such reimbursement to be made by such party's investment
adviser) the non-breaching party for all expenses and reasonable out-of-
pocket fees (if any) incurred in connection with the transactions
contemplated by the Reorganization Agreement.
Pursuant to the Reorganization Agreement, JPC has agreed to indemnify and
hold harmless JP Fund, Oppenheimer Fund, their investment advisers and
their respective trustees, officers and shareholders against claims
resulting from certain actions or a failure to act by JP Fund and OFI has
agreed to indemnify and hold harmless JP Fund and its investment adviser
and their respective directors, officers and shareholders against claims
resulting from certain actions or a failure to act by Oppenheimer Fund.
In addition, JPC has separately agreed with JP Fund and the Independent
Directors that, if indemnification from the assets of JP Fund or liability
insurance is not available to the Independent Directors after the Closing
Date, JPC will indemnify and hold the Independent Directors harmless to
the same extent as provided under the JP Fund's Articles of Incorporation.
Approval of the Reorganization will require the vote specified below in
"Information Concerning the Meeting - Record Date; Vote Required; Share
Information." If the Reorganization is not approved by the shareholders
of JP Fund, the Board will consider other possible courses of action.
Tax Aspects of the Reorganization
At or prior to the Closing Date, JP Fund will declare a dividend in an
amount large enough so that it will have declared a dividend of all of its
investment company taxable income and net capital gain, if any, for the
taxable period ending on the Closing Date (determined without regard to
any deduction for dividends paid). Such dividends will be included in the
taxable income of JP Fund's shareholders as ordinary income and long-term
capital gain, respectively.
The exchange of the assets of JP Fund for Class A shares of Oppenheimer
Fund and the assumption by Oppenheimer Fund of certain liabilities of JP
Fund is intended to qualify for federal income tax purposes as a
reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code"). JP Fund has represented to Sutherland,
Asbill & Brennan, tax counsel to JP Fund, that there is no plan or
intention by any JP Fund shareholder who owns 5% or more of JP Fund's
outstanding shares and, to JP Fund's best knowledge, there is no plan or
intention on the part of the remaining JP Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Oppenheimer Fund shares
received in the transaction that would reduce JP Fund shareholders'
ownership of Oppenheimer Fund Class A shares to a number of shares having
a value, as of the Closing Date, of less than 50% of the value of all the
formerly outstanding JP Fund shares as of the same date. JP Fund has also
represented that Oppenheimer Fund will acquire at least 90% of the fair
market value of the net assets and at least 70% of the fair market value
of the gross assets held by JP Fund immediately prior to the
Reorganization. JP Fund and Oppenheimer Fund have each further
represented to Sutherland, Asbill & Brennan the fact that, as of the
Closing Date, JP Fund and Oppenheimer Fund will qualify as regulated
investment companies or will meet the diversification test of Section
368(a)(2)(F)(ii) of the Code. As of the Record Date, JPLIC owned _____
shares of JP Fund, representing ___% of the outstanding shares of JP Fund
as of such date. JPLIC has informed OFI and Oppenheimer Fund that it
intends to redeem all Class A Oppenheimer Fund shares received pursuant
to the Reorganization soon after the Reorganization.
As a condition to the closing of the Reorganization, Oppenheimer Fund and
JP Fund will receive the opinion of Sutherland, Asbill & Brennan to the
effect that, based on the Reorganization Agreement, information given by
JPC, the above representations and other representations as such firm
shall reasonably request, existing provisions of the Code, Treasury
Regulations issued thereunder, current Revenue Rulings, Revenue Procedures
and court decisions, for federal income tax purposes:
(a) The reorganization contemplated by the Reorganization Agreement
will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code and JP Fund and Oppenheimer Fund will each
be a "party to the reorganization" within the meaning of Section
368(b) of the Code.
(b) No gain or loss will be recognized by Oppenheimer Fund upon the
receipt of the assets transferred to it by JP Fund in exchange for
Class A shares of Oppenheimer Fund and the assumption by Oppenheimer
Fund of certain identified liabilities of JP Fund. (Section 1032)
(c) No gain or loss will be recognized by JP Fund upon the transfer
of its assets to Oppenheimer Fund in exchange solely for Class A
shares of Oppenheimer Fund and the assumption by Oppenheimer Fund of
certain identified liabilities of JP Fund (if any) and the subsequent
distribution by JP Fund of such Class A shares to the shareholders
of JP Fund. (Section 361)
(d) No gain or loss will be recognized by JP Fund shareholders upon
the exchange of the JP Fund shares solely for the Class A shares of
Oppenheimer Fund. (Section 354)
(e) The basis of the Class A shares of Oppenheimer Fund received by
each JP Fund shareholder pursuant to the reorganization will be the
same as the adjusted basis of that shareholder's JP Fund shares
surrendered in exchange therefor. (Section 358)
(f) The holding period of Class A shares of Oppenheimer Fund to be
received by each JP Fund shareholder will include the shareholder's
holding period for the JP Fund shares surrendered in exchange
therefor, provided such JP Fund shares were held as capital assets
on the Closing Date. (Section 1223)
(g) Oppenheimer Fund's basis for the assets transferred to it by JP
Fund will be the same as JP Fund's tax basis for the assets
immediately prior to the reorganization. (Section 362(b))
(h) Oppenheimer Fund's holding period for the transferred assets will
include JP Fund's holding period therefor. (Section 1223)
(i) Oppenheimer Fund will succeed to and take into account the items
of JP Fund described in Section 381(c) of the Code, including the
earnings and profits, or deficit therein, of JP Fund as of the
Closing Date, subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code.
Shareholders of JP Fund should consult their tax advisers regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the federal
income tax consequences of the Reorganization, shareholders of JP Fund
should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
Dissenters' Rights
Under the North Carolina Business Corporation Act (the "NCBCA"), the state
statute governing JP Fund, shareholders of a company acquired in a
reorganization who do not vote to approve the reorganization could have,
under certain circumstances, "appraisal rights" (where they may elect to
have the "fair value" of their shares as of the day prior to such
reorganization, determined in accordance with the NCBCA, judicially
appraised and paid to them). The Division of Investment Management of the
SEC has taken the position that Rule 22c-1 under the 1940 Act preempts
certain appraisal provisions in state statutes that conflict with the
Rule. Rule 22c-1 provides that no open-end investment company, such as
JP Fund, may redeem its shares other than at net asset value computed
after receipt of a tender of such security for redemption. Accordingly,
dissenters' rights of appraisal are amended for shareholders of JP Fund
with respect to the Reorganization insofar as shareholders may only
receive the "fair value" of their JP Fund shares or Oppenheimer Fund Class
A shares, as the case may be, as of the date that they tender such shares
for redemption.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of Oppenheimer Fund and JP
Fund and indicates the pro forma combined capitalization as of June 30,
1996 as if the Reorganization had occurred on that date.
<TABLE>
<CAPTION>
Net Asset
Shares Value
Oppenheimer Fund Net Assets Outstanding Per Share
<S> <C> <C> <C>
Class A Shares $1,120,045,776 33,508,383 $33.43
Class B Shares* 129,484,414 3,955,435 32.74
Class C Shares* 3,592,867 108,160 33.22
Class Y Shares* 16,110,476 482,038 33.42
JP Fund $ 40,517,630 2,346,524 $17.27
Pro Forma Combined
Fund**
Class A Shares $1,160,563,406 34,720,397 $33.43
Class B Shares* 129,484,414 3,955,435 32.74
Class C Shares* 3,592,867 108,160 33.22
Class Y Shares* 16,110,476 482,038 33.42
</TABLE>
- ------------------
* No Oppenheimer Fund Class B, Class C or Class Y shares are being issued
in the Reorganization because JP Fund does not have Class B, Class C or
Class Y shares.
**Reflects issuance of 1,212,014 Class A shares of Oppenheimer Fund in a
tax-free exchange for the net assets of JP Fund, aggregating $40,517,630
for shares of JP Fund.
The pro forma ratio of expenses to average annual net assets of the
combined funds at June 30, 1996 would have been 1.05% with respect to
Class A shares.
COMPARISON BETWEEN OPPENHEIMER FUND AND JP FUND
Comparative information about Oppenheimer Fund and JP Fund is presented
below. More complete information about Oppenheimer Fund and JP Fund is
set forth in their respective Prospectuses (which, as to Oppenheimer Fund,
accompanies this Proxy Statement and Prospectus and is incorporated herein
by reference) and Statements of Additional Information. To obtain copies
of either Prospectus, see "Miscellaneous - Public Information."
Comparison of Investment Objectives, Policies and Restrictions
As its investment objective, Oppenheimer Fund seeks capital appreciation;
it does not seek current income. JP Fund's primary investment objective
is long-term capital appreciation; a secondary objective is current
income. In seeking their investment objectives, which are fundamental
policies, Oppenheimer Fund and JP Fund employ the investment policies as
described in detail below.
Oppenheimer Fund. Oppenheimer Fund seeks its investment objective by
emphasizing investment in common stocks issued by established "growth
companies" that, in the opinion of OFI, have better-than-expected earnings
prospects but are selling at below-normal valuations. Growth companies
tend to be companies that may be developing new products or services, or
expanding into new markets for their products. 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 OFI wishes to increase the portion of the
portfolio invested in securities selected for appreciation possibilities.
JP Fund. JP Fund proposes to achieve its investment objectives by
investing substantially all its assets in common stocks of companies
recognized as leaders in their respective industries with proven and
capable management and that are providing significant products and
services to their customers. JP Fund's investments will be made
predominantly in securities listed on registered securities exchanges, but
it may purchase securities traded in the over-the-counter market.
Investments may be made in other equity securities, including rights,
warrants, preferred stock and those debt securities convertible into or
carrying rights, warrants, or options to purchase common stock or to
participate in earnings. JP Fund may also hold cash or invest in short-
term securities.
Special Investment Methods
Oppenheimer Fund and JP Fund may use certain special investment methods
as summarized below.
Loans of Portfolio Securities. Oppenheimer Fund may lend its portfolio
securities to brokers, dealers and other financial institutions, subject
to certain conditions. Oppenheimer Fund must receive collateral for the
loans. Oppenheimer Fund presently does not intend that the value of
portfolio securities loaned will exceed 5% of the value of the total
assets of Oppenheimer Fund in the coming year and is otherwise subject to
a 25% limit with respect to such loans. JP Fund is prohibited from making
loans except to the extent of investing in repurchase agreements or
purchasing a portion of an issue of a debt security distributed to the
public.
Repurchase Agreements and Illiquid Securities. Both Oppenheimer Fund and
JP Fund may enter into repurchase agreements. Repurchase agreements must
be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the funds may experience costs or delays in
disposing of the collateral and may experience losses to the extent that
the proceeds from the sale of the collateral is less than the repurchase
price.
There is no limit on the amount of either fund's net assets that may be
invested subject to repurchase agreements of seven days or less because
these investments are liquid and may be disposed of promptly. Neither
fund will purchase illiquid or restricted securities (which are subject
to legal or contractual restrictions on resale) that will cause more than
10% of its net assets to be invested in such securities. As to
Oppenheimer Fund, this percentage limit may increase to 15% with respect
to all illiquid or restricted securities if certain state laws are changed
or Bond Fund's shares are no longer sold in those states. Repurchase
agreements with maturities longer than seven days are considered illiquid.
JP Fund has no present intention of acquiring restricted securities. For
Oppenheimer Fund, certain restricted securities, eligible for resale to
qualified institutional purchasers, are not subject to the foregoing
limitation. However, investing in such restricted securities could have
the effect of increasing the level of fund illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in
purchasing these securities.
Hedging. Oppenheimer Fund may purchase and sell: futures contracts that
relate to broadly-based securities indices; certain put and call options;
and options on securities, stock index futures, broadly-based stock
indices, and foreign currency. Oppenheimer Fund may also enter into
interest rate swap transactions. These are all referred to as "hedging
instruments." Oppenheimer Fund does not use hedging instruments for
speculative purposes. Up to 25% of Oppenheimer Fund's total assets may
be subject to covered calls. Oppenheimer Fund may only purchase a call
or put if, after such purchase, the value of all call and put options held
by Oppenheimer Fund would not exceed 5% of Oppenheimer Fund's total
assets. Other limits on the use of hedging instruments are described in
Oppenheimer Fund's Prospectus and the Oppenheimer Fund Additional
Statement. JP Fund does not invest in hedging instruments.
Hedging instruments may be used to manage Oppenheimer Fund's exposure to
the possibility that the prices of its portfolio securities may decline,
or to establish a position in the securities market as a temporary
substitute for purchasing individual securities; to hedge the Fund's
portfolio against price fluctuations; and to increase the Fund's exposure
to the securities market. Forward contracts are used to try to manage
foreign currency risks on the Fund's foreign investments. Oppenheimer
Fund's foreign currency options are used to try to protect against
declines in the dollar value of foreign securities Oppenheimer Fund owns,
or to protect against an increase in the dollar cost of buying foreign
securities. Oppenheimer Fund may write covered call options to provide
income for liquidity purposes or defensive reasons.
The use of hedging instruments requires special skills and knowledge of
investment techniques that are different than those required for normal
portfolio management. If Oppenheimer Fund uses a hedging instrument at
the wrong time or judges market conditions incorrectly, hedging strategies
may reduce the Fund's return. Oppenheimer 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 options, futures and forward
contracts are subject to special tax rules that may affect the amount,
timing and character of Oppenheimer Fund's distributions to its
shareholders. There are also special risks in particular hedging
strategies. If a covered call written by Oppenheimer Fund is exercised
on an investment that has increased in value, Oppenheimer Fund will be
required to sell the investment at the call price and will not be able to
realize any profit if the investment has increased in value above the call
price. Interest rate swaps are subject to credit risks (if the other
party fails to meet its obligations) and also to interest rate risks. The
Fund could be obligated to pay more under its swap agreements than it
receives under them, as a result of interest rate changes.
Derivative Investments. Oppenheimer Fund can invest in a number of
different kinds of "derivative investments." Some types of derivatives
are hedging instruments and may be used for hedging purposes, as described
above. Oppenheimer Fund may invest in others because they offer the
potential for income or total return. In general, a "derivative
investment" is a specially-designed security or contract the performance
of which is linked to the performance of another investment or security,
such as an option contract, futures contract, index, currency or
commodity. In the broadest sense, derivative investments include the
hedging instruments in which Oppenheimer Fund may invest. Other types of
derivatives in which Oppenheimer Fund may invest include index-linked or
commodity-linked notes, debt exchangeable for common stock, equity-linked
debt securities and currency indexed securities. JP Fund does not have
a policy with regard to investments in such other types of derivatives
investments such as hedging instruments. Nonetheless, JP Fund has never
invested in such derivative investments and JPM has no intention of having
JP Fund invest in such investments.
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the investment adviser expected it to
perform. The performance of derivative investments may also be influenced
by interest rate changes in the U.S. and abroad. All of these risks can
mean that Oppenheimer Fund will realize less income than expected from its
investments, or that it can lose part or all of the value of its
investments, which will affect its share price.
When-Issued and Delayed Delivery Transactions. JP Fund and Oppenheimer
Fund may purchase securities on a "when-issued" basis and may purchase or
sell such securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but which
are not available for immediate delivery or are to be delivered at a later
date. There may be a risk of loss to either fund if the value of the
security changes prior to the settlement date. Although JP Fund may
purchase securities on a "when-issued" basis and may purchase or sell such
securities on a "delayed delivery" basis, it has not done so to date and
JPM has no intention of having JP Fund do so in the foreseeable future.
Investment Restrictions
Both Oppenheimer Fund and JP Fund have certain investment restrictions
that, together with their respective investment objectives are fundamental
policies changeable only by shareholder approval. The investment
restrictions of Oppenheimer Fund and JP Fund are set forth below.
Oppenheimer Fund cannot: (1) as 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 Oppenheimer Fund's total assets would be invested in securities of that
issuer, or (b) Oppenheimer Fund would then own more than 10% of that
issuer's voting securities; (2) concentrate investments in any particular
industry; therefore Fund will not purchase the securities of companies in
any one industry if, thereafter, more than 25% of the value of Oppenheimer
Fund's assets would consist of securities of companies in that industry;
(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," in Oppenheimer Fund's
Prospectus; (4) lend money, but Oppenheimer Fund may invest in all or a
portion of an issue of bonds, debentures, commercial paper, or other
similar corporate obligations; Oppenheimer Fund may also make loans of
portfolio securities subject to the restrictions set forth in Oppenheimer
Fund's Prospectus and the Oppenheimer Fund Additional Statement; (5)
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; (6) invest in or
hold securities of any issuer if those officers and trustees or directors
of Oppenheimer Fund or OFI owning individually more than 1/2 of 1% of the
securities of such issuer together own more than 5% of the securities of
such issuer; (7) invest in commodities or commodity contracts other than
the hedging instruments permitted by any of its other fundamental
policies, whether or not any such hedging instrument is considered to be
a commodity or commodity contract; (8) invest in real estate or interests
in real estate, but may purchase readily marketable securities of
companies holding real estate or interests therein; (9) purchase
securities on margin; however, Oppenheimer Fund may make margin deposits
in connection with any of the hedging instruments permitted by any of its
other fundamental policies; (10) 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 permitted by any of its other
fundamental policies; and (11) 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 accordance with certain non-fundamental policies and guidelines
changeable without shareholder approval, Oppenheimer Fund may not: (i)
invest in interests in oil, gas, or other mineral exploration or
development programs, or (ii) 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, or (iii) invest more than 10% of
its net assets in illiquid or restricted securities, including Rule 144A
securities.
JP Fund cannot: (1) issue senior securities; (2) purchase securities on
margin or sell short, except it may obtain such short-term credits as are
necessary for the clearance of transactions; (3) write, purchase or sell
puts, calls or combinations thereof; (4) borrow money except that, as a
temporary measure for extraordinary or emergency purposes and not for
investment purposes, JP Fund may borrow up to 5% of the value of its total
assets; (5) act as an underwriter of securities of other issuers, except
JP Fund may invest up to 10% of the value of its net assets (at time of
investment) in portfolio securities which JP Fund might not be free to
sell to the public without registration of such securities under the
Securities Act of 1933; (6) purchase or sell real estate or interests in
real estate, nor interests in real estate investment trusts or real estate
limited partnerships (however, JP Fund may purchase interests in real
estate investment trusts whose securities are registered under the
Securities Act of 1933 and are readily marketable); (7) engage in the
purchase and sale of commodities or commodity contracts; (8) make loans,
except to the extent that either of the following is deemed to constitute
a loan: (a) purchases of a portion of an issue of a debt security
distributed to the public; or (b) investment in "repurchase agreements";
(9) purchase the securities (except U.S. Government securities) of any one
issuer if immediately after and as a result of such purchase (a) the value
of the holdings of JP Fund in the securities of such issuer exceeds 5% of
the value of JP Fund's total assets, or (b) JP Fund owns more than 10% of
the outstanding voting securities of any one class of securities of such
issuer; (10) purchase the securities of open-end investment companies
(except JP Fund may purchase the securities of other investment companies
provided that (a) immediately after such purchase JP Fund and companies
controlled by JP Fund, or other investment companies having the same
investment adviser as JP Fund, do not own more than 10% of the investment
company whose securities are being purchased; (b) JP Fund cannot invest
more than 10% of its total assets in the securities of other investment
companies; and (c) such purchases are made in the open market where no
commission or profit to a sponsor or dealer results other than the
customary broker's commission; notwithstanding the foregoing, restrictions
10(a), 10(b) and 10(c) do not apply in connection with a merger,
consolidation, or plan of reorganization; (11) mortgage, pledge,
hypothecate, or in any manner transfer, as security for indebtedness, any
securities owned or held by JP Fund; (12) participate on a joint or joint
and several basis in any trading account in securities or effect a short
sale of any security, except in connection with an underwriting in which
it is a participant in the circumstances specified in "5" above; and (13)
purchase or retain the securities of any issuer if those officers and
directors of JP Fund, its adviser or underwriter owning individually more
than 0.5% of the securities of such issuer together own more than 5% of
the securities of such issuer. As non-fundamental policies changeable
without shareholder approval, JP Fund cannot: (a) invest in companies for
the purpose of exercising control or management; (b) invest in foreign
securities other than securities issued by Canadian companies; and (c)
invest in interests of oil, gas or other mineral exploration or
development programs (including oil, gas or mineral leases).
Oppenheimer Fund Performance
Oppenheimer Fund does not maintain a fixed dividend rate and there can be
no assurance as to the payment of any dividends or the realization of any
capital gains.
During Oppenheimer Fund's fiscal year ended June 30, 1996, the stock
markets continued to set new records. In OFI's view, investor confidence
in the market was influenced by the outlook for sustainable growth with
low inflation and declining interest rates. Oppenheimer Fund benefited
from the stock market's upward trend and its focus on investments in the
strong technology and financial service sectors. Where OFI felt that
particular issues had become over-valued or fairly valued, they were sold
and the proceeds from those sales were invested in stocks that OFI
believed had appreciation potential, including cyclical companies.
Oppenheimer Fund maintained its cash position for defensive purposes.
Oppenheimer Fund's investment performance will vary over time depending
on market conditions, the composition of the portfolio, expenses and which
class of shares an investor owns. Past performance should not be
considered a prediction of future performance.
The performance graph below depicts the performance of a hypothetical
$10,000 investment in Class A shares of Oppenheimer Fund over a ten-year
period through to June 30, 1996. Class B and Class C shares are not being
offered in the Reorganization, and thus no performance information about
Class B and Class C shares is given.
Oppenheimer 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, Oppenheimer Fund's
performance data reflects the deduction of the current maximum sales
charge of 5.75% for Class A shares, reinvestment of all dividends and
capital gains distributions, and the effect of fund business and operating
expenses. While index comparisons may be useful to provide a benchmark
for Oppenheimer Fund's performance, it must be noted that Oppenheimer
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 Oppenheimer Fund
principally invests. Moreover, the index data does not reflect any
assessment of the risk of the investments included in the index.
Information on JP Fund performance is set forth in JP Fund's current
Prospectus and in its Annual Report as of December 31, 1995 which may be
obtained without charge as set forth in "Miscellaneous - Public
Information." Such information is incorporated herein by reference.
Additional Comparative Information
General. For a discussion of the organization and operation of
Oppenheimer Fund, including brokerage practices, see "Investment Objective
and Policies" and "How the Fund is Managed" in Oppenheimer Fund's current
Prospectus and "Brokerage Policies of the Fund" in the Oppenheimer Fund
Additional Statement. For a discussion of the organization and operation
of JP Fund, including brokerage practices, see "Investment Objectives and
Policies," "Portfolio Managers" and "Who Manages The Funds" in JP Fund's
current Prospectus and "Brokerage" in the JP Fund Additional Statement.
Financial Information. For certain financial information about
Oppenheimer Fund and JP Fund, see as to Oppenheimer Fund "Financial
Highlights" and "Performance of the Fund" in Oppenheimer Fund's current
Prospectus and as to JP Fund "Condensed Financial Information" and
"Performance" in JP Fund's current Prospectus.
Management of Oppenheimer Fund and JP Fund. For information about the
management of Oppenheimer Fund and JP Fund, including their respective
Boards of Trustees or Directors, investment adviser, portfolio managers
and distributor, see as to Oppenheimer Fund, "Expenses" and "How the Fund
is Managed" in the Oppenheimer Fund current Prospectus and "How the Fund
is Managed," "Trustees and Officers of the Fund" and "The Manager and Its
Affiliates" in the Oppenheimer Fund Additional Statement, and, as to JP
Fund, "Portfolio Managers" and "Who Manages the Funds" in JP Fund's
current Prospectus and "The Investment Adviser," "The Fund's Distributor"
and "The Fund's Directors and Officers" in the JP Fund Additional
Statement.
Description of Shares of Oppenheimer Fund and JP Fund. Oppenheimer Fund
is a Massachusetts business trust. Oppenheimer Fund and its shareholders
are governed principally by its Declaration of Trust, its By-laws and
other governing documents. Each share of Oppenheimer Fund represents an
interest in Oppenheimer Fund proportionately equal to the interest of each
other share of the same class and entitles the holder to one vote per
share (and a fractional vote for a fractional share) on matters submitted
to a vote at shareholder meetings. Shares of Oppenheimer Fund and of the
Trust's other series vote together in the aggregate on certain matters at
shareholder meetings, such as the election of Trustees and ratification
of appointment of auditors. Shareholders of a particular series or class
vote separately on proposals which affect that series or class, and
shareholders of a series or class which is not affected by that matter are
not entitled to vote on the proposal. Shareholders of Oppenheimer Fund
have the right, under certain circumstances, to remove a Trustee and will
be assisted in communicating with other shareholders for such purpose.
Oppenheimer Fund is authorized to issue an unlimited number of shares of
beneficial interest. Shares are freely transferable and shares do not
have cumulative voting rights or preemptive or subscription rights.
Oppenheimer Fund is governed by a Board of Trustees that has the power,
without shareholder approval, to establish and designate one or more
series and to divide unissued shares into two or more classes. The Board
of Trustees has established four classes of shares for Oppenheimer Fund,
Class A, Class B Class C and Class Y. Each class invests in the same
investment portfolio. Each class has its own dividends and distributions,
and pays certain expenses which may be different for the different
classes. Under certain circumstances, a shareholder of Oppenheimer Fund
may be held personally liable as a partner for the obligations of
Oppenheimer Fund, and under the Trust's Declaration of Trust, such a
shareholder is entitled to indemnification rights by Oppenheimer Fund; the
risk of a shareholder incurring any such loss is limited to the remote
circumstances in which Oppenheimer Fund is unable to meet its obligations.
For further information about the shares of Oppenheimer Fund, see "How the
Fund is Managed" in the Oppenheimer Fund current Prospectus and
Oppenheimer Fund Additional Statement.
JP Fund is a North Carolina corporation with 100,000,000 shares of common
stock, par value $1.00 per share, authorized, which shares are divided
initially into two classes, consisting of 50,000,000 shares of Class A and
50,000,000 shares of Class B. JP Fund and its shareholders are governed
by its Articles of Incorporation and ByLaws and by the NCBCA. The shares
of common stock issued and outstanding on the date Class B shares are
first issued will be reclassified as Class A; no Class B shares have been
issued as of the date hereof. Each share entitles the holder to
participate equally in dividends and distributions declared by JP Fund and
in its remaining net assets on liquidation after satisfaction of
outstanding liabilities. JP Fund shares are fully paid and nonassessable
when issued; have no preemptive or conversion rights; are transferable
without restriction; and are redeemable at net asset value. On matters
submitted for a shareholder vote, each shareholder is entitled to one vote
for each share owned. Fractional shares have proportionately the same
rights as do full shares.
Oppenheimer Fund is not required to hold, and does not plan to hold,
regular annual meetings of shareholders. In contrast, JP Fund is required
to hold an annual meeting of shareholders each year or in lieu thereof,
a special meeting of shareholders.
Dividends, Distributions and Taxes. Oppenheimer Fund declares dividends
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. As Oppenheimer Fund does not have an objective of
seeking current income, the amounts of dividends it pays, if any, will
likely be small. Any net long-term and short-term capital gains may be
distributed by Oppenheimer Fund annually in December. JP Fund's policy
is to pay dividends from net investment income semi-annually in February
and August. Each December JP Fund makes a distribution of the capital
gains, if any realized during the 12-month period ended the preceding
October 31. For a discussion of the policies of Oppenheimer Fund and JP
Fund with respect to dividends and distributions, and a discussion of the
tax consequences of an investment in Oppenheimer Fund and JP Fund, see as
to Oppenheimer Fund "Dividends, Capital Gains and Taxes" in the
Oppenheimer Fund current Prospectus and as to JP Fund "Dividends,
Distribution and Taxes" in the JP Fund current Prospectus.
Purchases, Redemptions and Exchanges of Shares. Information on purchases,
exchanges, and redemptions of shares of Oppenheimer Fund and JP Fund is
provided under "Synopsis -- Purchases, Exchanges and Redemptions" in this
Proxy Statement and Prospectus. For an additional discussion of how shares
of Oppenheimer Fund and JP Fund may be purchased, redeemed and exchanged,
see, as to Oppenheimer Fund, "How to Buy Shares," "How to Sell Shares,"
"Exchanges of Shares," "Special Investor Services," "Service Plan for
Class A Shares," and "Distribution and Service Plans for Class B and Class
C Shares" in Oppenheimer Fund's current Prospectus and the Oppenheimer
Fund Additional Statement, and as to JP Fund, "How to Purchase Shares,"
"Shareholder Services" and "How to Redeem Shares" in JP Fund's current
Prospectus.
Shareholder Inquiries. For a description of how shareholder inquiries
should be made, see (as to Oppenheimer Fund, "How the Fund is Managed" in
the Oppenheimer Fund current Prospectus and, as to JP Fund, "Additional
Information" in the JP Fund current Prospectus.
The Board of Directors recommends that shareholders approve the
Reorganization Agreement.
ELECTION OF DIRECTORS
(Proposal 2)
The Board of Directors of JP Fund recommends that shareholders elect the
following nominees to serve as the 5 directors of the full Board of
directors of JP Fund: John C. Ingram, J. Lee Lloyd, Richard W. McEnally,
William E. Moran and E.J. Yelton. Each of the nominees is presently a
Director of JP Fund and has been previously elected by shareholders of JP
Fund. If elected, the directors will serve until the earlier of the
dissolution of JP Fund or the next shareholder meeting called for the
purpose of electing directors, or until the election and qualification of
their successors. If the enclosed Proxy is duly executed and received in
time for the Meeting, and if no contrary specification is made as provided
therein, it will be voted in favor of the election as directors of the
foregoing nominees. If any nominee should be unwilling or unable to
serve, which is not now anticipated, the Proxy may be voted with
discretionary authority for a substitute or substitutes as shall be
designated by the Board of Directors. Certain information concerning the
directors and executive officers of JP Fund is set forth below.
Information Concerning the Board
JP Fund's current Board of Directors consists of 5 directors, all of whom
are elected at annual meetings. The Board of Directors does not have a
standing audit, nominating or compensation committee. The following list
of JP Fund's directors and executive officers, all of whom are also
directors and/or officers of Jefferson-Pilot Investment Grade Bond Fund,
Inc., JP Investment Grade Bond Fund, Inc., and JP Capital Appreciation
Fund, Inc. (collectively with JP Fund, the "Jefferson-Pilot Funds"),
includes information as to their principal occupations during the past
five years and their principal affiliations.
<TABLE>
<CAPTION>
Name and Other Position/Office Principal Occupation(s) Officer or
Information with JP Fund During the Past 5 Years Director Since
<S> <C> <C> <C>
John C. Ingram* Director Senior Vice President, 1989
3802 Woodcote Dr. JPLIC since November 1988.
Greensboro, N.C.
Age-52
J. Lee Lloyd Director Managing Director, Lloyd & Company1994
16 Irving Park Lane since April 1991.
Greensboro, NC 27455
Age-36
Richard W. McEnally Director Professor of Investment Banking,1984
401 Brookside Drive University of North Carolina at
Chapel Hill, NC at Chapel Hill.
Age-54
William E. Moran Director Senior Vice President, Connors1983
5206 Barnfield Road Investor Service, Inc.
Greensboro, NC since January 1995; prior thereto, Chancellor
Age-64 University of North Carolina at
Greensboro.
W. Hardee Mills, Jr.Vice President Vice President of JPLIC 1987
5 St. Francis Court since February 1994; prior
Greensboro, NC 27408 thereto, Second Vice President,
Age-46 JPLIC.
J. Gregory Poole Secretary Assistant Secretary of JPC and1994
1805 Gate Post Drive Associate Counsel and Assistant
Greensboro, NC 27455 Secretary of JPLIC since February
Age-31 1994; prior thereto, various
positions at JPC and JPLIC.
E.J. Yelton* Director, Senior Vice President - Investments1994
3204 St. Regis Road President, of JPC and Executive Vice President
Greensboro, NC 27408Treasurer - Investments of JPLIC since October
Age-57 1993; prior thereto, President and
CEO, ING North America
Investment Centre/Member of
ING Group (investment banking firm).
</TABLE>
* Messrs. Ingram and Yelton are directors that are "interested persons"
(as that term is defined in the 1940 Act) of JP Fund due to the following
positions with JPM and JPC: Mr. Ingram -Senior Vice President, Treasurer
and Director of JPM, and Mr. Yelton - President and Director, JPM and
Senior Vice President - Investments, JPC.
The nominees for directors are beneficial owners of the following
shares in JPC, the parent of JP Fund's investment adviser: Yelton, _____;
Ingram, ______; Moran, ____; Lloyd, ____; and McEnally, ____. During the
period January 1, 1995 to December 31, 1995, the Directors of JP Fund
purchased and/or sold shares of JPM, JPC and subsidiaries of JPC as
follows: (identify only if securities purchased/sold exceed 1% of
outstanding shares of entity)
Officers of JP Fund
The following officers of JP Fund also serve as officers and/or directors
of JPM and JPIS: E.J. Yelton, President and Treasurer of JP Fund, is
President and a Director of JPM and a Director of JPIS; W. Hardee Mills,
Jr., Vice President of JP Fund, is Vice President of JPM and J. Gregory
Poole, Secretary of JP Fund, is Secretary of JPIS and JPM. Messrs.
Yelton, Poole and Mills hold positions with the other Jefferson-Pilot
Funds similar to the positions held with JP Fund. The other Jefferson-
Pilot Funds have the same investment adviser as JP Fund.
The following table provides information regarding the compensation each
nominee for director was paid by JP Fund and the other Jefferson-Pilot
Funds for the year ended December 31, 1995.
<TABLE>
<CAPTION>
COMPENSATION TABLE
(1) (2) (3) (4) (5)
Name of Aggregate Pension or RetirementEstimated AnnualTotal Compensation
Person, CompensationBenefits Accrued asBenefits upon From
Position from JP FundPart of JP Fund ExpensesRetirement______Jefferson-Pilot Funds
<S> <C> <C> <C> <C>
John C. Ingram $0 $0 $0 $0
Director
J. Lee Lloyd 1,220 0 0 4,880
Director
Richard W. McEnally 1,220 0 0 4,880
Director
William E. Moran 1,220 0 0 4,880
Director
E.J. Yelton 0 0 0 0
Director,
President,
Treasurer
</TABLE>
Other Information
The Board of Directors met five items during the fiscal year ended
December 31, 1995 and all of the Directors were present for at least 75%
of those meetings. During the year ended December 31, 1995, directors who
are not employed by JP Fund or its affiliates received a $100 director's
fee for each meeting attended, amounting to an aggregate of $500. In
addition, each of the Independent Directors receives a fee of $720 per
year payable in equal monthly installments.
JP Fund's Board does not have a standing audit committee, compensation
committee or nominating committee.
As of the Record Date, JP Fund's directors and officers owned JP Fund
shares in the amounts indicated: John C. Ingram,______ shares; J. Lee
Lloyd, None; Richard W. McEnally, _____ shares; William E. Moran,
______shares; E.J. Yelton, ______shares; W. Hardee Mills, Jr., None; J.
Gregory Poole, _______shares; and all directors and officers as a
group,_____shares.
The percentage of shares beneficially owned by each such individual, and
all directors and officers as a group, did not exceed 1% of JP Fund's
outstanding shares.
JP Fund's investment adviser and accounting agent is JPM, P.O. Box 21008,
Greensboro, North Carolina 27420, a North Carolina corporation organized
on January 13, 1970. JPM is a wholly-owned subsidiary of JPC, an
insurance holding company. JPM serves the other Jefferson-Pilot Funds in
these capacities as well. JPIS, a North Carolina corporation, with
offices at the same location as JPM, serves as JP Fund's distributor.
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, MO
64105-1716 (phone: 1-800-292-6701), serves as JP Fund's transfer agent and
dividend paying agent.
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors of JP Fund recommends that the shareholders ratify
the selection of McGladrey & Pullen LLP ("McGLadrey & Pullen"), Certified
Public Accountants, to continue to serve as the independent auditors of
JP Fund for the fiscal year ending December 31, 1996. That firm or its
predecessor has served as JP Fund's independent auditors from the time of
JP Fund's incorporation on January 13, 1970. JP Fund has been advised by
McGladrey & Pullen that neither the said firm nor any of its members have
a direct or indirect financial interest in JP Fund. McGladrey & Pullen
also serves as independent auditors for JPM.
INFORMATION CONCERNING THE MEETING
The Meeting
The Meeting will be held at the Jefferson-Pilot Building (4th Floor, Room
B-2), 100 North Greene Street, Greensboro, North Carolina 27420 at 10:00
A.M., local time, on December 3, 1996. At the Meeting, JP Fund
shareholders will be asked to consider and vote upon approval or
disapproval of the Reorganization Agreement, and the transactions
contemplated thereby, including the transfer of substantially all the
assets of JP Fund to Oppenheimer Fund in exchange for Class A shares of
Oppenheimer Fund, the distribution by JP Fund of such shares to its
shareholders in liquidation of JP Fund and the cancellation of the
outstanding shares of JP Fund. At the meeting, shareholders of JP Fund
will also be asked to elect five directors and ratify or reject the
selection of independent accountants.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on October 10, 1996 as the
Record Date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting. The affirmative vote of a majority of the
JP Fund shares entitled to vote at the Meeting is required for approval
of Proposal 1. The affirmative vote of a majority of JP Funds shares
voted (in person or by proxy) at the Meeting, if a quorum is present at
the Meeting, is required to approve Proposal 3. A plurality of all the
votes cast at the Meeting, if a quorum is present at the Meeting, is
sufficient to elect the nominees for director (Proposal 2). Each
shareholder will be entitled to one vote for each share and a fractional
vote for each fractional share held of record at the close of business on
the Record Date. Only JP Fund shareholders will vote on the
Reorganization and the other Proposals. The vote of shareholders of
Oppenheimer Fund is not being solicited.
At the close of business on the Record Date, there were approximately
_________ shares of JP Fund issued and outstanding. The presence in
person or by proxy of the holders of one-third of JP Fund's shares
constitutes a quorum for the transaction of business at the Meeting. To
the knowledge of JP Fund, as of the Record Date, no person owned of record
or beneficially 5% or more of the outstanding JP Fund shares except for
the following JP Fund shareholders (the numbers shown parenthetically are
the approximate percentage of the outstanding shares of JP Fund): (to be
supplied) As indicated above, JPLIC owned ____% of the issued and
outstanding JP Fund shares as of the Record Date. JPLIC has informed JP
Fund that it intends to vote all of these shares in favor of each Proposal
and for each nominee as Director. JPLIC, a North Carolina corporation,
is a wholly-owned subsidiary of JPC.
As of the close of business on the Record Date, there were approximately
__________ Class A, _________ Class B, _______ Class C and ______ Class
Y shares of Oppenheimer Fund issued and outstanding. To the knowledge of
Oppenheimer Fund, as of the Record Date, the only person who owned of
record or was known by Oppenheimer Fund to own beneficially 5% or more of
Oppenheimer Fund's outstanding shares was (Merrill Lynch Pierce Fenner &
Smith, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, Florida 32246,
who owned of record ___________ Class B shares (approximately ____% of the
Fund's outstanding shares of that class). As of that same date the only
person who owned of record or was known by Oppenheimer Fund to own
beneficially 5% or more of Oppenheimer Fund's outstanding Class Y shares
was Massachusetts Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, which owned ___________ Class Y shares
(representing 100% of the Class Y shares then outstanding).)
Massachusetts Mutual Life Insurance Company controls the parent of OFI.
As of the Record Date, the officers and Trustees of Oppenheimer Fund
beneficially owned as a group less than 1% of the outstanding shares of
Oppenheimer Fund and less than 1% of the outstanding shares of each class
of Oppenheimer Fund.
In the event a quorum does not exist on the date originally scheduled for
the Meeting, or, subject to approval of the Board, for other reasons, one
or more adjournments of the Meeting may be sought by the Board. Any
adjournment would require a vote in favor of the adjournment by the
holders of a majority of the shares cast at the Meeting (or any
adjournment thereof) in person or by proxy. The persons named as proxies
will vote all shares represented by proxies which they are required to
vote in favor of any Proposal, in favor of an adjournment, and will vote
all shares which they are required to vote against any Proposal, against
an adjournment. In the event that a quorum is present at the Meeting but
the shareholders do not approve the Reorganization, the Reorganization
will be deemed to have not been approved and the Board will consider what
further action, if any, to take.
If a Proxy that is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote"
(that is, a Proxy from a broker or nominee indicating that such person has
not received instructions from the beneficial owner or other person
entitled to vote shares on a particular matter with respect to which the
broker or nominee does not have discretionary power), the shares
represented thereby will be considered not to be present at the Meeting
for purposes of determining the existence of a quorum for the transaction
of business and be deemed not cast with respect to such proposal. A
properly executed and returned Proxy marked with an abstention will be
considered present at the Meeting for proposes of determining the
existence of a quorum for the transaction of business. However,
abstentions and broker "non-votes" do not constitute a vote "for" or
"against" the matter. Nevertheless, as to Proposal 1, abstentions and
broker non-votes have the same effect as a vote against the matter and as
to Proposal 3, they have the effect of reducing the number of votes
necessary to approve a matter.
Proxies
The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in accordance
with the choices specified thereon, and will be included in determining
whether there is quorum to conduct the Meeting. If a shareholder executes
and returns a proxy but fails to indicate how the votes should be cast,
the proxy will be voted in favor of the Proposals, and for the election
of each nominee as Director. The proxy is revocable (a) upon receipt by
JP Fund of written notice of revocation at any time before the proxy is
exercised, (b) upon return to the shareholder, at his or her request, of
the proxy or (c) submission of a revised proxy.
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing and
mailing this Proxy Statement and Prospectus, will be borne by OFI and JPM.
Similarly, any costs associated with documents included in that mailing,
such as existing prospectuses or annual reports, will be borne by OFI and
JPM. In addition to the solicitation of proxies by mail, proxies may be
solicited by officers and employees of JPM or JPM affiliates, personally
or by telephone or telecopy. JPM may retain a proxy solicitor to assist
in the solicitation of proxies primarily by contacting shareholders by
telephone and telecopy for a fee not to exceed $_______, plus reasonable
out-of-pocket expenses. The cost of such proxy solicitor will be borne
by JPM.
Brokerage houses, banks and other fiduciaries may be requested to forward
soliciting material to the beneficial owners of shares of JP Fund and to
obtain authorization for the execution of proxies. For those services,
if any, they will be reimbursed by JPIS for their reasonable out-of-pocket
expenses.
In addition to the proxy solicitation expenses (as described above), OFI
and JPM will bear the cost of the tax opinion, as well as any other
expenses associated with the Reorganization, including legal and
accounting expenses.
MISCELLANEOUS
Financial Information
The Reorganization will be accounted for by Oppenheimer Fund in its
financial statements similar to a pooling without restatement. Further
financial information as to JP Fund is contained in JP Fund's current
Prospectus, which is available without charge upon written request to JPIS
at P.O. Box 22086, Greensboro, North Carolina 27420, and in its audited
financial statements as of December 31, 1995, which are included in the
JP Fund Additional Statement. Financial information for Oppenheimer Fund
is contained in its current Prospectus accompanying this Proxy Statement
and Prospectus and incorporated herein, and in its audited financial
statements as of June 30, 1996, which are included in the Oppenheimer Fund
Additional Statement.
Public Information
Additional information about Oppenheimer Fund and JP Fund is available,
as applicable, in the following documents: (1) Oppenheimer Fund's
Prospectus dated November 1, 1995, supplemented November 1, 1995, January
1, 1996 and January 5, 1996, accompanying this Proxy Statement and
Prospectus and incorporated by reference herein, (2) JP Fund's Prospectus
dated May 1, 1996, which may be obtained without charge by writing to JPIS
at the address indicated above; (3) Oppenheimer Fund's Annual Report as
of June 30, 1996, which may be obtained without charge by writing to OFS
at the address on the cover of this Proxy Statement and Prospectus; and
(4) JP Fund's Annual Report as of December 31, 1995 and Semi-Annual Report
as of June 30, 1996, which may be obtained without charge by writing to
JPIS at the address indicated above. All of the foregoing documents may
be obtained by calling the toll-free number for Oppenheimer Fund and JP
Fund, as applicable, on the cover of this Proxy Statement and Prospectus.
Additional information about the following matters is contained in the
Reorganization Additional Statement, which is incorporated herein by
reference and includes Oppenheimer Fund's Additional Statement, the JP
Fund Prospectus dated May 1, 1996, the JP Fund Additional Statement and
the Annual Reports and Semi-Annual Report described in the preceding
paragraph: the organization and operation of Oppenheimer Fund and JP Fund;
more information on investment policies, practices and risks; information
about the Board of Trustees of the Trust and the Board of Directors of JP
Fund, and their responsibilities; a further description of the services
provided by Oppenheimer Fund's and JP Fund's respective investment
adviser, distributor, and transfer and shareholder servicing agent;
dividend policies; tax matters; an explanation of the method of
determining the offering price of the shares of Oppenheimer Fund and JP
Fund; purchase, redemption and exchange programs; and distribution
arrangements. The Reorganization Additional Statement may be obtained by
calling 1-800-525-7048 (a toll free number).
Oppenheimer Fund and JP Fund are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and in accordance
therewith, file reports and other information with the SEC. Proxy
material, reports and other information about Oppenheimer Fund and JP Fund
which are of public record can be inspected and copied at public reference
facilities maintained by the SEC in Washington, D.C. and certain of its
regional offices, and copies of such materials can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer
Affairs and Information Services, SEC, Washington, D.C. 20549.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to present a proposal for action at the next
annual meeting of shareholders and who wishes to have it set forth in a
proxy statement and identified in the form of proxy prepared by JP Fund
must notify JP Fund in such a manner so that such notice is received by
JP Fund by ___________, and in such form as is required under the rules
and regulations promulgated by the SEC.
OTHER BUSINESS
Management of JP Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not
known at the time of the solicitation may come before the Meeting, the
proxy as solicited confers discretionary authority with respect to such
matters as properly come before the Meeting, and it is the intention of
the persons named as attorneys-in-fact in the proxy to vote this proxy in
accordance with their judgment on such matters if no voting instructions
are provided.
By Order of the Board of Directors
J. Gregory Poole, Secretary
October __, 1996
<PAGE>
APPENDIX
Graphic material included in Proxy Statement and Prospectus:
"Comparison of Total Return of Oppenheimer Fund with the S&P 500 Index -
Change in Value of a $10,000 Hypothetical Investment"
A linear graph will be included in the Proxy Statement and Prospectus
depicting the initial account value and subsequent account value of a
hypothetical $10,000 investment in Oppenheimer Growth Fund (the "Fund")
that, with respect to the Fund's Class A shares, will cover each of the
Fund's last ten fiscal years from 6/30/86 through 6/30/96. Class B, C and
Y shares are not being offered in the reorganization and, accordingly,
information for such classes will not be presented in the graph. 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. Class B, C and
Y shares are not being offered in the reorganization and, accordingly,
information for such classes will not be presented in the graph.
Additional information with respect to the foregoing, including a
description of the S&P 500 Index, is set forth in the Proxy Statement and
Prospectus under "Oppenheimer Fund Performance".
<TABLE>
<CAPTION>
Fiscal Year Oppenheimer S&P 500
Ended Growth Fund A Index
<S> <C> <C>
06/30/86 $ 9,425 $10,000
06/30/87 $10,318 $12,266
06/30/88 $10,212 $10,578
06/30/89 $11,696 $12,933
06/30/90 $13,215 $14,576
06/30/91 $14,456 $15,730
06/30/92 $16,724 $16,759
06/30/93 $19,547 $18,165
06/30/94 $19,599 $18,420
06/30/95 $25,371 $21,523
06/30/96 $30,696 $26,999
</TABLE>
<PAGE>
EXHIBIT A
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
________________, 1996 by and between Jefferson-Pilot Capital Appreciation
Fund, Inc. ("JP Fund"), a North Carolina corporation, Oppenheimer Growth
Fund ("Oppenheimer Fund"), a Massachusetts business trust, and (solely for
purposes of Section 21 of this Agreement) Jefferson-Pilot Corporation
("JPC"), a North Carolina corporation, and OppenheimerFunds, Inc. ("OFI"),
a Colorado corporation.
W I T N E S S E T H:
WHEREAS, JP Fund and Oppenheimer Fund are each open-end investment
companies of the management type; and
WHEREAS, JP Fund and Oppenheimer Fund desire to provide for the
reorganization pursuant to Section 368(a)(1) of the Internal Revenue Code
of 1986, as amended (the "Code"), of JP Fund through the acquisition by
Oppenheimer Fund of substantially all of the assets of JP Fund in exchange
solely for voting shares of beneficial interest ("shares") of Class A of
Oppenheimer Fund and the assumption by Oppenheimer Fund of certain
liabilities of JP Fund, which Class A shares of Oppenheimer Fund are
thereafter to be distributed by JP Fund pro rata to its shareholders in
complete liquidation of JP Fund and complete cancellation of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. JP Fund and Oppenheimer Fund hereby adopt this Agreement and
Plan of Reorganization (the "Agreement") pursuant to Section 368(a)(1) of
the Code as follows: The reorganization will be comprised of the
acquisition by Oppenheimer Fund of substantially all of the assets of JP
Fund in exchange for the issuance of Class A shares of Oppenheimer Fund
to JP Fund and the assumption by Oppenheimer Fund of certain liabilities
of JP Fund, followed by the distribution by JP Fund of such Class A shares
of Oppenheimer Fund to the shareholders of JP Fund in exchange for their
shares of JP Fund, all upon and subject to the terms hereinafter set
forth.
2. On the Closing Date (as hereinafter defined) (i) JP Fund shall
transfer and deliver (or cause to be so transferred and delivered) to
Oppenheimer Fund, free and clear of all liens, encumbrances, restrictions
and claims (other than Assumed Liabilities (as hereinafter defined)), the
assets of JP Fund including but not limited to portfolio securities, cash
(excluding the Cash Reserve as defined below), cash equivalents and
receivables as the same shall exist on that date (the "Assets") and (ii)
Oppenheimer Fund shall deliver to JP Fund (in accordance with Section 5
hereof) in exchange therefor, the Class A shares of Oppenheimer Fund to
be issued hereunder. The Assets shall exclude a cash reserve (the "Cash
Reserve") which shall be retained by JP Fund for the payment by it in
respect of the Liabilities (as hereinafter defined) of JP Fund, if any,
and which Cash Reserve shall not exceed the amount contemplated by Section
10E. The aggregate number of Class A shares of Oppenheimer Fund to be
delivered by Oppenheimer Fund at the Closing (as hereinafter defined)
shall be such number as shall have, as of the Valuation Date, an aggregate
net asset value equal to the value of the Assets so transferred and
delivered. Such Oppenheimer Fund Class A shares shall be issued without
the imposition of any sales charge or load and holders of such Class A
shares shall be entitled to all exchange privileges afforded to holders
of other Class A shares of Oppenheimer Fund pursuant to the terms set
forth in its current Prospectus and Statement of Additional Information.
Oppenheimer Fund agrees that, if the reorganization becomes effective,
Oppenheimer Fund will treat each shareholder of JP Fund who received any
of Oppenheimer Fund's shares as a result of the reorganization as having
made the minimum initial purchase of shares of Oppenheimer Fund received
by such shareholder for the purpose of making additional investments in
shares of Oppenheimer Fund, regardless of the value of the shares of
Oppenheimer Fund received. Promptly following the execution of the
Agreement, JP Fund shall provide Oppenheimer Fund with a list of the
Assets including, as to portfolio securities, a description thereof, units
held and their value, as of the most reasonably practicable date.
3. The net asset value of Class A shares of Oppenheimer Fund and
the value of the Assets shall in each case be determined as of the close
of business of The New York Stock Exchange on the business day immediately
preceding the Closing Date (the "Valuation Date"). The foregoing
valuations shall be prepared using the procedures set forth in Oppenheimer
Fund's then current prospectus and statement of additional information and
shall be computed in accordance with the regular practice and pricing
services utilized by OppenheimerFunds, Inc. in pricing the Oppenheimer
Fund. In accordance with the foregoing, Oppenheimer Fund and JP Fund
shall each respectively prepare a report setting forth, as of the
Valuation Date, its respective total net assets, the number of its shares
outstanding, the net asset value of Oppenheimer Fund Class A shares or the
net asset value of JP Fund shares, respectively, and as to each of its
portfolio securities, the cusip or ticket number, description thereof,
units held and value determined as aforesaid (the "Valuation Report").
A Valuation Report shall be delivered by each of Oppenheimer Fund and JP
Fund to the other on the Closing Date.
JP Fund shall declare and pay, immediately prior to the
Valuation Date, a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to JP Fund's
shareholders all of JP Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without
regard to any dividends paid) and all of its net capital gain, if any,
realized in taxable years ending on or prior to the Closing Date (after
reduction for any capital loss carry-forward).
4. The closing of the transactions contemplated herein (the
"Closing") shall be at the office of OppenheimerFunds, Inc., Two World
Trade Center, Suite 3400, New York, New York 10048, at the date and time
of the closing of the acquisition contemplated by that certain Acquisition
Agreement (the "Acquisition Agreement") dated (the date of the Agreement)
by and among OppenheimerFunds, Inc., JP Investment Management Company,
Jefferson-Pilot Life Insurance Company and Jefferson-Pilot Corporation (or
such other date, time and place as JP Fund and Oppenheimer Fund may
otherwise designate) (the "Closing Date").
In the event that on the Valuation Date either party has,
pursuant to the Investment Company Act of 1940, as amended (the "1940
Act"), or any rule, regulation or order thereunder, suspended the
redemption of its shares or postponed payment therefor, the Closing Date
shall be postponed until the first business day after the date when JP
Fund and Oppenheimer Fund have ceased such suspension or postponement;
provided, however, that if such suspension shall continue for a period of
60 days beyond the Valuation Date, then the other party to the Agreement
shall be permitted to terminate the Agreement as set forth in Section 20.
5. Class A shares of Oppenheimer Fund representing the number of
Class A shares of Oppenheimer Fund being delivered against the Assets,
registered in the name of JP Fund, shall be transferred to JP Fund on the
Closing Date. In connection with the Closing, JP Fund shall distribute
on a pro rata basis to the shareholders of JP Fund on the Valuation Date
the Class A shares of Oppenheimer Fund received by JP Fund on the Closing
Date in exchange for the Assets in complete liquidation of JP Fund; for
the purpose of the distribution by JP Fund of Class A shares of
Oppenheimer Fund to its shareholders, Oppenheimer Fund will promptly cause
its transfer agent to: (a) credit an appropriate number of Class A shares
of Oppenheimer Fund on the books of Oppenheimer Fund to each shareholder
of JP Fund in accordance with a list (the "Shareholder List") of JP Fund
shareholders received from JP Fund; and (b) confirm an appropriate number
of Class A shares of Oppenheimer Fund to each shareholder of JP Fund;
certificates for Class A shares of Oppenheimer Fund will be issued upon
written request of a former shareholder of JP Fund and surrender of the
JP Fund certificates but only for whole shares, with fractional shares
credited to the name of the shareholder on the books of Oppenheimer Fund.
JP Fund covenants and agrees to cause the cancellation of all of its
outstanding shares upon the Closing.
The Shareholder List shall be certified by the Secretary of JP Fund
and by an authorized signatory of Investors Fiduciary Trust Company, JP
Fund's transfer agent, and shall indicate, as of the Valuation Date, the
name, address and taxpayer identification number of each shareholder of
JP Fund, indicating his or her share balance. JP Fund agrees to supply
the Shareholder List to Oppenheimer Fund not later than the Closing Date
in such form (including computer diskette) as Oppenheimer Fund shall
request. JP Fund further agrees to deliver to Oppenheimer Fund or its
designee (i) on or before the Closing Date all such other information and
documents available to JP Fund relating to such shareholders as may be
necessary for Oppenheimer Fund and its designee to perform all necessary
shareholder accounting, communication and related services subsequent to
the Closing and (ii) as soon as practicable after the Closing all original
documentation (including Internal Revenue Service forms, certificates and
correspondence) relating to the taxpayer identification numbers of JP Fund
shareholders on the Shareholder List and their liability for or exemption
from backup withholding. Shareholders of JP Fund holding certificates
representing their shares shall not be required to surrender their
certificates to anyone in connection with the reorganization. After the
Closing Date, however, it will be necessary for such shareholders to
surrender their certificates in order to redeem, transfer, exchange or
pledge the shares of Oppenheimer Fund which they received.
The share transfer books of JP Fund will be permanently closed
as of the Valuation Date and only redemption requests received in proper
form on or prior to the Valuation Date shall be fulfilled by JP Fund;
redemption requests received by JP Fund after that date shall be treated
as requests for the redemption of the shares of Oppenheimer Fund that
shall have been distributed to the shareholder in question as set forth
in this Section 5.
6. Within one year after the Closing Date, JP Fund shall (a) either
pay or make provision for payment of all of its Liabilities (other than
Assumed Liabilities) and (b) either (i) transfer any remaining amount of
the Cash Reserve to Oppenheimer Fund, if such remaining amount (as reduced
by the estimated cost of distributing it to shareholders) is not material
(as defined below) or (ii) distribute such remaining amount to the
shareholders of JP Fund on the Valuation Date. Such remaining amount
shall be deemed to be material if the amount to be distributed, after
deduction of the estimated expenses of the distribution, equals or exceeds
one cent per share of JP Fund outstanding on the Valuation Date.
7. Prior to the Closing Date, there shall be coordination between
JP Fund and Oppenheimer Fund as to their respective portfolios so that,
after the Closing, Oppenheimer Fund will not hold assets inconsistent with
its investment objectives and will be in compliance with all of its
investment policies and restrictions.
8. Portfolio securities or written evidence acceptable to
Oppenheimer Fund of record ownership thereof by The Depository Trust
Company or through the Federal Reserve Book Entry System or any other
depository approved by JP Fund pursuant to Rule 17f-4 and Rule 17f-5 under
the 1940 Act shall be endorsed and delivered, or transferred by
appropriate transfer or assignment documents, by JP Fund on the Closing
Date to Oppenheimer Fund, or at its direction, to Oppenheimer Fund's
custodian bank, in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers
and shall be accompanied by all necessary state transfer stamps, if any.
The cash of JP Fund shall be delivered on the Closing Date to Oppenheimer
Fund by bank wire or inter-bank transfer of immediately available funds
to Oppenheimer Fund's custodian bank payable to the order of Oppenheimer
Fund for the account of Oppenheimer Fund.
If, at the Closing Date, JP Fund is unable to make delivery
under this Section 8 to Oppenheimer Fund of any of its portfolio
securities or cash for the reason that any of such securities purchased
by JP Fund, or the cash proceeds of a sale of portfolio securities, prior
to the Closing Date have not yet been delivered in the ordinary course of
business to it or JP Fund's custodian, then the delivery requirements of
this Section 8 with respect to said undelivered securities or cash will
be waived and JP Fund will deliver to Oppenheimer Fund by or on the
Closing Date and with respect to said undelivered securities or cash
executed copies of an agreement or agreements of assignment as to such
securities or cash proceeds in a form reasonably satisfactory to
Oppenheimer Fund, together with such other documents, including a due bill
or due bills and brokers' confirmation slips as may reasonably be required
by Oppenheimer Fund.
9. Oppenheimer Fund shall not assume and shall not otherwise be
responsible for any liabilities (except the obligations, if any, to pay
the purchase price of portfolio securities purchased by JP Fund which have
not settled in the ordinary course of business ("Assumed Liabilities")),
taxes, obligations, expenses, contracts, claims, commitments, agreements
and arrangements relating to (i) the Assets or (ii) JP Fund, its
predecessors, affiliates, directors, officers, employees and agents, in
each case whether fixed, contingent, accrued or otherwise ("Liabilities").
JP Fund expressly agrees to remain liable for and discharge all its
Liabilities whether incurred prior to or subsequent to the Closing Date.
With respect to any expenses applicable to, or incurred by JP Fund and
Oppenheimer Fund hereto in connection with entering into and carrying out
the provisions of the Agreement ("Expenses"), including legal, accounting
and registration fees and Blue Sky expenses and expenses of the proxy
solicitation, including the cost of printing and mailing the Proxy
Statement and Prospectus (as hereinafter defined) and related proxy
materials, it is hereby agreed that except as otherwise provided in
Section 20 of the Agreement, the respective investment adviser for
Oppenheimer Fund and JP Fund shall reimburse the Fund for which it acts
as investment adviser for such Fund's Expenses and, as to the rights and
obligations of said investment advisers inter se, the terms of the
Acquisition Agreement shall govern. It is understood and acknowledged
that in no event shall JP Fund or Oppenheimer Fund be liable for the
payment of any Expenses.
10. As soon as practicable after it fulfills its obligations set
forth in Section 6 hereof, JP Fund shall file Articles of Dissolution with
the North Carolina Secretary of State (the "Department") and shall file
an application for an order of the Securities and Exchange Commission
("SEC") pursuant to Section 8(f) of the 1940 Act, declaring that it has
ceased to be an investment company, and shall take, in accordance with
North Carolina law and the 1940 Act, all such other actions as may be
necessary or appropriate to effect a complete liquidation and dissolution
of JP Fund and to deregister JP Fund under the 1940 Act.
11. Any reporting, filing or other obligation of JP Fund under the
federal securities laws and state laws shall remain the responsibility of
JP Fund until it is deregistered under the 1940 Act or liquidated and
dissolved, respectively.
12. The obligations of Oppenheimer Fund hereunder shall be subject
to the following conditions:
A. The shareholders of JP Fund shall have approved the
Agreement and the transactions contemplated herein; such shareholder
approval shall have been by the affirmative vote of a majority of the
outstanding voting shares of JP Fund in conformity with the provisions of
the North Carolina Business Corporation Act ("NCBCA") at a meeting for
which proxies have been solicited by the Proxy Statement and Prospectus
(as hereinafter defined); and JP Fund shall have furnished to Oppenheimer
Fund copies of resolutions with respect to each of the foregoing and
copies of resolutions of the Board of Directors of JP Fund with respect
to approvals of the Agreement and the transactions contemplated herein,
in each case certified by the Secretary or an Assistant Secretary of JP
Fund.
B. Oppenheimer Fund shall have received an opinion of counsel
to JP Fund dated the Closing Date, to the effect that: (i) JP Fund is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of North Carolina with full powers to carry on its
business as described by its charter and then being conducted and to enter
into and perform the Agreement (North Carolina counsel may be relied upon
in delivering such opinion); (ii) all action necessary to make the
Agreement, according to its terms, valid, binding and enforceable on JP
Fund and to authorize effectively the transactions contemplated by the
Agreement have been taken by JP Fund; (iii) the Agreement has been duly
authorized, executed and delivered by JP Fund and, assuming due
authorization, execution and delivery of the Agreement by Oppenheimer
Fund, constitutes a valid and binding obligation of JP Fund, enforceable
against JP Fund in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
and similar laws affecting creditors rights and remedies generally and
subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity (the
"Bankruptcy Exception")); and (iv) the execution and delivery of the
Agreement does not, and the consummation of the transactions contemplated
by the Agreement will not, conflict with, or result in any violation of,
or constitute a default (with or without notice or lapse of time, or both)
under (a) the Certificate of Incorporation or By-Laws of JP Fund, (b) any
loan, credit agreement, note, bond, mortgage, indenture, lease or contract
applicable to JP Fund, its assets and properties (other than any such
conflicts, violations or defaults that individually or in the aggregate
would not have a material adverse effect on JP Fund or prevent
consummation of the transactions contemplated hereby), or (c) any
judgment, order or decree to which JP Fund is subject or any state or
federal law or regulation applicable to JP Fund or its assets and
properties.
C. The representations and warranties of JP Fund contained
herein shall be true and correct at and as of the Closing Date (with all
representations and warranties that were made as of the date of the
Agreement or as of another date being made again as of the Closing Date)
and JP Fund shall have performed, in all material respects, each of the
covenants required to be performed by JP Fund at or prior to Closing, and
Oppenheimer Fund shall have been furnished with a certificate of the
President, or a Vice President, or the Secretary or the Assistant
Secretary or the Treasurer of JP Fund, dated the Closing Date, to that
effect.
D. On the Closing Date, JP Fund shall have furnished to
Oppenheimer Fund a certificate of the Treasurer or Assistant Treasurer of
JP Fund as to the amount of the capital loss carry-over, if any, and net
unrealized appreciation or depreciation, if any, with respect to JP Fund
as of the Closing Date.
E. The Cash Reserve shall not exceed 1% of the value of the
net assets, nor 10% in value of the gross assets, of JP Fund at the close
of business on the Valuation Date.
F. A Registration Statement on Form N-14 (the "N-14
Registration Statement") filed by Oppenheimer Fund under the Securities
Act of 1933, as amended (the "1933 Act"), containing a preliminary form
of the proxy statement and prospectus required under the 1940 Act to
request the approval of shareholders of JP Fund of the reorganization
contemplated in the Agreement, shall have become effective under the 1933
Act not later than _________________, 1996.
G. On the Closing Date, Oppenheimer Fund shall have received
a letter of a senior executive officer of JP Investment Management Company
(JP Fund's investment adviser) in form acceptable to Oppenheimer Fund,
stating that between the date of the Agreement and the Closing Date there
has been no material adverse change in the Assets, the operations or the
financial condition of JP Fund (it being understood that a decrease in the
size of JP Fund due to a diminution in the value of its portfolio and/or
redemption of its shares shall not be considered a material adverse
change) and that nothing has come to his or her attention which would
indicate that as of the Closing Date there were any Liabilities of JP Fund
not fully covered by the Cash Reserve or expected not to be so covered or
pending or threatened claims, actions, suits, proceedings or
investigations with respect to or affecting JP Fund, or any director,
officer, employee or agent of JP Fund.
H. Oppenheimer Fund shall have received an opinion, dated the
Closing Date, of Sutherland, Asbill & Brennan, to the same effect as the
opinion contemplated by Section 13E of the Agreement.
I. Except as otherwise provided in the last paragraph of
Section 8, Oppenheimer Fund shall have received at the Closing all of the
Assets to be conveyed hereunder, free and clear of all liens,
encumbrances, security interests, restrictions and limitations whatsoever
except the Assumed Liabilities.
J. At or prior to the Closing Date, JP Fund shall have
delivered to Oppenheimer Fund two copies of a list setting forth the
securities, cash and receivables then owned by JP Fund and the respective
federal income tax bases thereof.
13. The obligations of JP Fund hereunder shall be subject to the
following conditions:
A. Oppenheimer Fund shall have furnished to JP Fund copies of
resolutions of the Board of Trustees of Oppenheimer Fund with respect to
approvals of the Agreement and the transactions contemplated herein
certified by the Secretary or an Assistant Secretary of Oppenheimer Fund.
B. JP Fund's shareholders shall have approved the Agreement
and the transactions contemplated hereby, by an affirmative vote of a
majority of the outstanding voting shares of JP Fund.
C. JP Fund shall have received an opinion of counsel to
Oppenheimer Fund dated the Closing Date, to the effect that (i)
Oppenheimer Fund is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts with
full powers to carry on its business as then being conducted and to enter
into and perform the Agreement (Massachusetts counsel may be relied upon
in delivering such opinion); (ii) all action necessary to make the
Agreement, according to its terms, valid, binding and enforceable upon
Oppenheimer Fund and to authorize effectively the transactions
contemplated by the Agreement have been taken by Oppenheimer Fund; (iii)
the shares of Oppenheimer Fund to be issued hereunder are duly authorized
and when issued as provided for herein will be validly issued, fully-paid
and non-assessable, except as otherwise set forth on Schedule 13C hereto
with respect to potential liability of shareholders of a Massachusetts
business trust (Massachusetts counsel may be relied upon in delivering
such opinion); (iv) the Agreement has been duly authorized, executed and
delivered by Oppenheimer Fund and, assuming due authorization, execution
and delivery of the Agreement by JP Fund, constitutes a valid and binding
obligation of Oppenheimer Fund, enforceable against Oppenheimer Fund in
accordance with its terms, subject to the Bankruptcy Exception and (v) the
execution and delivery of the Agreement does not, and consummation of the
transactions contemplated by the Agreement will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under: (a) the Declaration of Trust or
By-Laws of Oppenheimer Fund, (b) any loan, credit agreement, note, bond,
mortgage, indenture, lease, or contract applicable to Oppenheimer Fund,
its assets and properties (other than any such conflicts, violations or
defaults that individually or in the aggregate would not have a material
adverse effect on Oppenheimer Fund or prevent consummation of the
transactions contemplated hereby), or (c) any judgment, order of decree
to which Oppenheimer Fund is subject or any state or federal law or
regulation applicable to Oppenheimer Fund or its assets and properties.
D. The representations and warranties of Oppenheimer Fund
contained herein shall be true and correct at and as of the Closing Date
(with all representations and warranties that were made as of the date of
the Agreement or as of another date being made again as of the Closing
Date), and Oppenheimer Fund shall have performed, in all material
respects, each of the covenants required to be performed by Oppenheimer
Fund at or prior to Closing, and JP Fund shall have been furnished with
a certificate of the President, a Vice President or the Secretary or an
Assistant Secretary or the Treasurer of Oppenheimer Fund to that effect
dated the Closing Date.
E. JP Fund shall have received an opinion of Sutherland,
Asbill & Brennan to the effect that the Federal tax consequences of the
transaction, if carried out in the manner outlined in the Agreement and
in accordance with (i) JP Fund's representation that there is no plan or
intention by any JP Fund shareholder who owns 5% or more of JP Fund's
outstanding shares, and, to JP Fund's best knowledge, there is no plan or
intention on the part of the remaining JP Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Oppenheimer Fund shares
received in the transaction that would reduce JP Fund shareholders'
ownership of Oppenheimer Fund shares to a number of shares having a value,
as of the Closing Date, of less than 50% of the value of all of the
formerly outstanding JP Fund shares as of the same date, (ii) the
representation that Oppenheimer Fund will acquire at least 90% of the fair
market value of the net assets and at least 70% of the fair market value
of the gross assets held by JP Fund immediately prior to the
reorganization, (iii) the representation by each of JP Fund and
Oppenheimer Fund that, as of the Closing Date, JP Fund and Oppenheimer
Fund will qualify as regulated investment companies and will meet the
diversification test of Section 368(a)(2)(F)(ii) of the Code, and (iv)
such other representations as shall be made by each of JP Fund and
Oppenheimer Fund to Sutherland, Asbill & Brennan and accompany or be set
forth in the opinion, will generally be as follows:
(a) The reorganization contemplated by the Agreement will constitute
a "reorganization" within the meaning of Section 368(a)(1)(C) of the
Code and JP Fund and Oppenheimer Fund will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by Oppenheimer Fund upon the
receipt of the assets transferred to it by JP Fund in exchange for
Class A shares of Oppenheimer Fund and the assumption by Oppenheimer
Fund of certain identified liabilities of JP Fund. (Section 1032)
(c) No gain or loss will be recognized by JP Fund upon the transfer
of its assets to Oppenheimer Fund in exchange solely for Class A
shares of Oppenheimer Fund and the assumption by Oppenheimer Fund of
certain identified liabilities of JP Fund (if any) and the subsequent
distribution by JP Fund of such Class A shares to the shareholders
of JP Fund. (Section 361)
(d) No gain or loss will be recognized by JP Fund shareholders upon
the exchange of the JP Fund shares solely for the Class A shares of
Oppenheimer Fund. (Section 354)
(e) The basis of the Class A shares of Oppenheimer Fund received by
each JP Fund shareholder pursuant to the reorganization will be the
same as the adjusted basis of that shareholder's JP Fund shares
surrendered in exchange therefor. (Section 358)
(f) The holding period of Class A shares of Oppenheimer Fund to be
received by each JP Fund shareholder will include the shareholder's
holding period for the JP Fund shares surrendered in exchange
therefor, provided such JP Fund shares were held as capital assets
on the Closing Date. (Section 1223)
(g) Oppenheimer Fund's basis for the assets transferred to it by JP
Fund will be the same as JP Fund's tax basis for the assets
immediately prior to the reorganization. (Section 362(b))
(h) Oppenheimer Fund's holding period for the transferred assets will
include JP Fund's holding period therefor. (Section 1223)
(i) Oppenheimer Fund will succeed to and take into account the items
of JP Fund described in Section 381(c) of the Code, including the
earnings and profits, or deficit in earnings and profits, of JP Fund
as of the date of the transaction, subject to the conditions and
limitations specified in Sections 381, 382, 383 and 384 of the Code.
Notwithstanding anything herein to the contrary, neither Oppenheimer Fund
nor JP Fund may waive the material conditions set forth in this Section
13E although the actual wording of such opinion may differ to the extent
agreed to by Oppenheimer Fund and JP Fund.
F. The Cash Reserve shall not exceed 1% of the value of the
net assets, nor 10% in value of the gross assets, of JP Fund at the close
of business on the Valuation Date.
G. The N-14 Registration Statement shall have become effective
under the 1933 Act not later than ______________________, 1996.
H. JP Fund shall acknowledge receipt of the shares of
Oppenheimer Fund.
I. On the Closing Date, JP Fund shall have received a letter
of a senior officer of OppenheimerFunds, Inc. (Oppenheimer Fund's
investment adviser) in form acceptable to it, stating that between the
date of the Agreement and the Closing Date there has been no material
adverse change in the operations or financial condition of Oppenheimer
Fund (it being understood that a decrease in the size of Oppenheimer Fund
due to a diminution in the value of its portfolio and/or redemption of its
shares shall not be considered a material adverse change) and that nothing
has come to his or her attention that would indicate that as of the
Closing Date there were any pending or threatened litigation or claims
with respect to Oppenheimer Fund.
14. JP Fund hereby represents and warrants that:
A. The financial statements of JP Fund as at December 31, 1995
(audited) and June 30, 1996 (unaudited) heretofore furnished to
Oppenheimer Fund, present fairly the financial position, results of
operations, and changes in net assets of JP Fund as of such dates, in
conformity with generally accepted accounting principles applied on a
basis consistent with the preceding year and six-month period; and that
from December 31, 1995 through the date hereof there has not been any
material adverse change in the Assets, the operations or financial
condition of JP Fund, it being agreed that a decrease in the size of JP
Fund due to a diminution in the value of its portfolio and/or redemption
of its shares shall not be considered a material adverse change.
B. JP Fund has good and valid title to the Assets, subject to
no liens, security interests or other encumbrances, and contingent upon
approval of the Agreement and the transactions contemplated hereby by JP
Fund's shareholders, JP Fund has authority to transfer the Assets to be
conveyed hereunder free and clear of all liens, encumbrances, security
interests, restrictions and limitations whatsoever (excluding the Assumed
Liabilities).
C. The Prospectus of JP Fund dated May 1, 1996, as amended and
supplemented on __________, 1996, and Statement of Additional Information
of JP Fund dated May 1, 1996, contained in JP Fund's Registration
Statement under the 1933 Act, as amended, are true, correct and complete,
conform to the requirements of the 1933 Act and the 1940 Act and do not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement of JP Fund,
as amended, was, as of the date of the filing of the last Post-Effective
Amendment, true, correct and complete, conformed to the requirements of
the 1933 Act and the 1940 Act, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
was, as of its filing, and continues to be, in full force and effect.
D. There is no material Liability of JP Fund in existence
except as set forth in the financial statements of JP Fund as at December
31, 1995 and June 30, 1996 and as of such dates there were no Liabilities
of JP Fund (contingent or otherwise) not disclosed therein that would be
required in conformity with generally accepted accounting principles to
be disclosed therein. No such material Liability of JP Fund has arisen
since December 31, 1995 and June 30, 1996 except as set forth on Exhibit
14D hereto. There are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of JP Fund, threatened by,
against or involving JP Fund or any director, officer, employee, or agent
of JP Fund. JP Fund knows of no facts that might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body that materially and adversely affects, or is likely to materially and
adversely affect, its business or its ability to consummate the
transactions herein contemplated.
E. There are no contracts, agreements or commitments in
existence, whether written or oral, to which JP Fund (or a predecessor)
is a party or has succeeded to a party by assumption or assignment or in
which it has a beneficial interest other than the Agreement and those
entered into by JP Fund in the ordinary conduct of its business and JP
Fund has delivered or made available to Oppenheimer Fund, as to each such
contract, agreement or other commitment, a true and complete copy or
description thereof and as to any oral contract, agreement or other
commitment, a true and complete description thereof.
F. JP Fund is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of North
Carolina, with the requisite corporate power and authority to enter into
and perform the Agreement and, subject to approval of its shareholders,
to consummate the transactions contemplated hereby; all corporate action
necessary to make the Agreement, according to its terms, valid, binding
and enforceable on JP Fund and to authorize the transactions contemplated
by the Agreement, including without limitation necessary approvals of the
Board of Directors of JP Fund, have been taken by JP Fund subject to
approval of the Agreement by the shareholders of JP Fund; the Agreement
has been duly executed and delivered by JP Fund and constitutes a valid
and binding obligation of JP Fund, enforceable against JP Fund in
accordance with its terms, subject to the approval of its shareholders and
the Bankruptcy Exception; and the execution and delivery of the Agreement
does not, and the consummation of the transactions contemplated by the
Agreement will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both)
under (a) the Certificate of Incorporation or By-Laws of JP Fund, or (b)
any loan, credit agreement, note, bond, mortgage, indenture, lease or
contract applicable to JP Fund, its assets and properties (other than any
such conflicts, violations or defaults that individually or in the
aggregate would not have a material adverse effect on JP Fund or prevent
consummation of the transactions contemplated hereby), or (c) any
judgment, order or decree to which JP Fund is subject or any state or
federal law or regulation applicable to JP Fund or its assets and
properties.
G. All Federal and other tax returns and reports of JP Fund
required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the
knowledge of JP Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of JP Fund ended
December 31, 1995 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when
due. There are no claims, levies, liabilities or amounts due for
corporate, excise, income or other federal, state or local taxes
outstanding or threatened against JP Fund (other than those reflected in
its most recent audited financial statements) and to the best of JP Fund's
knowledge there are no facts that might form the basis for such claims,
levies, liabilities or amounts due.
H. JP Fund has elected to be treated as a regulated investment
company and, for each fiscal year of its operations, JP Fund has met the
requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and JP Fund intends to meet such
requirements with respect to its current taxable year.
I. All issued and outstanding shares of common stock of JP
Fund, par value $1.00 per share, are, and at the Closing Date will be,
duly authorized and validly issued and outstanding, fully paid and non-
assessable with no personal liability attaching to the ownership thereof.
All such shares will, at the time of Closing, be held by the persons or
entities and in the amounts set forth on the Shareholder List submitted
to Oppenheimer Fund pursuant to Section 5. There are no outstanding
rights, options, warrants, conversion rights, preemptive rights or
agreements with respect to shares of JP Fund. Set forth on Exhibit 14I
hereto are the names, addresses and share ownership amounts of each
shareholder of JP Fund that beneficially (as that term is defined pursuant
to Section 13(d) of the Securities Exchange Act of 1934, as amended, and
the rules thereunder) owns 1% or more of JP Fund's outstanding shares.
J. The copies of the Certificate of Incorporation and By-laws
of JP Fund, and all amendments thereto, previously delivered to
Oppenheimer Fund are true, complete and correct.
K. There is no plan or intention by any JP Fund shareholder
who owns 5% or more of JP Fund's outstanding shares, and, to JP Fund's
best knowledge, there is no plan or intention on the part of the remaining
JP Fund shareholders, to redeem, sell, exchange or otherwise dispose of
a number of Oppenheimer Fund shares received in the transaction that would
reduce JP Fund shareholders' ownership of Oppenheimer Fund shares to a
number of shares having a value, as of the Closing Date, of less than 50%
of the value of all of the formerly outstanding JP Fund shares as of the
same date. With respect to the foregoing representation, attached hereto
as Exhibit 14K are true and complete copies of representation letters
signed by each such 5% or greater shareholder.
L. There are no unresolved or outstanding shareholder claims
or complaints related to JP Fund other than as disclosed by JP Fund in
writing to Oppenheimer Fund and which are determined by Oppenheimer Fund
to not be material with respect to the Agreement and the transactions
contemplated herein.
M. Except as previously disclosed to Oppenheimer Fund in
writing, and except as have been corrected as required by applicable law,
there have been no miscalculations of the net asset value of JP Fund
during the twelve-month period preceding the Closing Date and all such
calculations have been done in accordance with the applicable provisions
of the 1940 Act.
N. All of the issued and outstanding shares of JP Fund have
been offered and sold in compliance with applicable registration
requirements of the 1933 Act and state securities laws, are registered
under the 1933 Act, the 1940 Act and in all jurisdictions in which they
are required to be registered under state securities laws and other laws,
and said registrations, including any periodic reports or supplemental
filings, are complete, current and have been continuously effective, all
fees required to be paid have been paid, and JP Fund is not subject to any
stop order and is fully qualified to sell its shares in each state in
which its shares have been registered.
O. JP Fund has maintained or has caused to be maintained on
its behalf all books and accounts as required of a registered investment
company in compliance with the requirements of Section 31 of the 1940 Act
and the Rules thereunder.
P. No violation of applicable federal, state and local
statute, law or regulation, exists that individually, or in the aggregate,
would have a material adverse effect on the business or operations of JP
Fund.
Q. JP Fund is in compliance with its investment objectives,
policies and restrictions as described in its current Prospectus and
Statement of Additional Information.
R. JP Fund is duly registered under the 1940 Act and such
registration has not been revoked or rescinded and is in full force and
effect.
S. Except for the shareholder approvals specified in Section
12F, no consent, approval, governmental filing, authorization or permit
from any person or entity is necessary for the execution and delivery of
the Agreement and the consummation of the transactions contemplated by the
Agreement.
15. Oppenheimer Fund hereby represents and warrants that:
A. The financial statements of Oppenheimer Fund as at June 30,
1996 (audited) heretofore furnished to JP Fund, present fairly the
financial position, results of operations, and changes in net assets of
Oppenheimer Fund, as of that date, in conformity with generally accepted
accounting principles applied on a basis consistent with the preceding
year; and that from June 30, 1996 through the date hereof there have not
been, any material adverse changes in the business or financial condition
of Oppenheimer Fund, it being understood that a decrease in the size of
Oppenheimer Fund due to a diminution in the value of its portfolio and/or
redemption of its shares shall not be considered a material or adverse
change.
B. The Prospectus, dated November 1, 1995, as amended and
supplemented, and the Statement of Additional Information, dated November
1, 1995, contained in Oppenheimer Fund's Registration Statement under the
1933 Act, are true, correct and complete, conform to the requirements of
the 1933 Act and the 1940 Act and do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Registration Statement of Oppenheimer Fund, as amended, was, as of the
date of the filing of the last Post-Effective Amendment, true, correct and
complete, conformed to the requirements of the 1933 Act and the 1940 Act
and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
C. Oppenheimer Fund is a Massachusetts business trust duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts with the requisite power and authority
granted to business trusts to enter into and perform the Agreement and
consummate the transactions contemplated hereby; all necessary action
necessary to make the Agreement, according to its terms, valid, binding
and enforceable on Oppenheimer Fund and to authorize the transactions
contemplated by the Agreement, including without limitation necessary
approvals of the Board of Trustees of Oppenheimer Fund, have been taken
by Oppenheimer Fund; the Agreement has been duly executed and delivered
by Oppenheimer Fund and constitutes a valid and binding obligation of
Oppenheimer Fund, enforceable against Oppenheimer Fund in accordance with
its terms, subject to the Bankruptcy Exception; and the execution and
delivery of the Agreement does not, and the consummation of the
transactions contemplated by the Agreement will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under (a) the Declaration of Trust or
By-Laws of Oppenheimer Fund, or (b) any loan, credit agreement, note,
bond, mortgage, indenture, lease or contract applicable to Oppenheimer
Fund, its assets and properties (other than any such conflicts, violations
or defaults that individually or in the aggregate would not have a
material adverse effect on Oppenheimer Fund or prevent consummation of the
transactions contemplated hereby), or (c) any judgment, order or decree
to which Oppenheimer Fund is subject or any state or federal law or
regulation applicable to Oppenheimer Fund or its assets and properties.
D. All Federal and other tax returns and reports of
Oppenheimer Fund required by law to be filed have been filed, and all
Federal and other taxes shown due on said returns and reports have been
paid or provision shall have been made for the payment thereof and to the
best of the knowledge of Oppenheimer Fund no such return is currently
under audit and no assessment has been asserted with respect to such
returns and to the extent such tax returns with respect to the taxable
year of Oppenheimer Fund ended June 30, 1996 have not been filed, such
returns will be filed when required and the amount of tax shown as due
thereon shall be paid when due.
E. Oppenheimer Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations,
Oppenheimer Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and
Oppenheimer Fund intends to meet such requirements with respect to its
current taxable year.
F. Oppenheimer Fund (i) at the time of the reorganization will
have no plan or intention to dispose of any of the assets transferred by
JP Fund, other than in the ordinary course of business, and (ii) has no
plan or intention to redeem or reacquire any of the shares issued by it
in the reorganization other than pursuant to valid requests of
shareholders.
G. After consummation of the transactions contemplated by the
Agreement and for a period of one year thereafter, Oppenheimer Fund
intends to operate its business in a substantially unchanged manner
subject to such changes as may be required in the ordinary course of its
business or as may be approved by the Board of Trustees of Oppenheimer
Fund.
H. The copies of the Declaration of Trust and By-Laws of
Oppenheimer Fund, and any amendments thereto, previously delivered to JP
Fund by Oppenheimer Fund are true, complete and correct.
I. The Class A shares of Oppenheimer Fund which it issues to
JP Fund pursuant to the Agreement will be duly authorized, validly issued,
fully-paid and non-assessable, except as otherwise set forth in Schedule
13C hereto with respect to potential liability of shareholders of a
Massachusetts business trust; will conform to the description thereof
contained in Oppenheimer Fund's Registration Statement and will be duly
registered under the 1933 Act and in the states where registration is
required.
J. All of the issued and outstanding shares of Oppenheimer
Fund have been offered and sold in compliance in all material respects
with applicable registration requirements of the 1933 Act and state
securities laws, are registered in all jurisdictions in which they are
required to be registered under state securities laws and other laws and
such registrations, including any periodic reports or supplemental
filings, are complete and current, all fees required to be paid have been
paid, and Oppenheimer Fund is not subject to any stop order and is fully
qualified to sell its shares in each state in which its shares have been
registered.
K. Oppenheimer Fund is duly registered under the 1940 Act and
such registration has not been revoked or rescinded and is in full force
and effect.
16. (a) Each party hereby represents to the other that no broker
or finder has been employed by it with respect to the Agreement or the
transactions contemplated hereby.
(b) Oppenheimer Fund represents and warrants that the
information concerning it in the Proxy Statement and Prospectus will not
as of the date of the Proxy Statement and Prospectus contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements concerning it
therein in light of the circumstances in which they are made not
misleading. Oppenheimer Fund represents and warrants that its financial
statements in the N-14 Registration Statement (described below) fairly
present the information shown in accordance with generally accepted
accounting principles applied on a basis consistent with previous periods.
(c) JP Fund represents and warrants that the information
concerning it in the Proxy Statement and Prospectus will not as of the
date of the Proxy Statement and Prospectus contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements concerning it therein in light
of the circumstances in which they are made not misleading. JP Fund
represents and warrants that its financial statements in the N-14
Registration Statement fairly present the information shown in accordance
with generally accepted accounting principles applied on a basis
consistent with previous periods.
17. Oppenheimer Fund agrees that it will prepare and file the N-14
Registration Statement which shall contain a preliminary form of Proxy
Statement and Prospectus contemplated by Rule 145 under the 1933 Act. JP
Fund shall be responsible for preparation of the notice of meeting, Proxy
Statement and Prospectus and form of proxy to be sent to JP Fund
shareholders. The final form of such Proxy Statement and Prospectus is
referred to in the Agreement as the "Proxy Statement and Prospectus."
Each party agrees that it will use its best efforts to have the N-14
Registration Statement declared effective and to supply such information
concerning itself for inclusion in the Proxy Statement and Prospectus as
may be necessary or desirable in this connection. JP Fund covenants and
agrees to deregister, or cause to have deregistered, the shares of JP Fund
under the 1940 Act as soon as practicable.
18. (a) JP Fund covenants and agrees to afford to Oppenheimer Fund,
its counsel, accountants and other representatives reasonable access,
during normal business hours throughout the period prior to the Closing
Date, to the books, records, employees and representatives of JP Fund.
(b) JP Fund covenants and agrees that during the period from
the date hereof until the Closing Date its investment objectives,
investment policies and investment restrictions, as disclosed in its most
current Prospectus dated May 1, 1996, as amended and supplemented on
__________, 1996, and Statement of Additional Information, dated May 1,
1996, will not be changed in any manner whatsoever except pursuant to a
statutory amendment or regulatory requirement during such time and upon
prior notice to Oppenheimer Fund.
(c) JP Fund covenants that during the period from the date
hereof until the Closing Date, except as approved in writing by
Oppenheimer Fund or expressly provided for in the Agreement, JP Fund (i)
will not conduct its business other than in the ordinary course
substantially in the manner heretofore conducted and consistent with JP
Fund's investment objectives, policies and restrictions as set forth in
its most current Prospectus dated May 1, 1996, as amended and supplemented
on _____________, 1996, and Statement of Additional Information, dated May
1, 1996, (ii) will not permit or allow any of the Assets to be subjected
to any encumbrance, (iii) will not enter into any material transaction or
otherwise incur any material Liability other than in the normal course of
business consistent with past practice, (iv) will not declare, set aside
or pay any dividend or make any other distribution except for payment of
its dividends in ordinary course consistent with past practice and except
for the final dividend and distribution to be made pursuant to Section 3
of the Agreement, and (v) will not agree, whether in writing or otherwise,
to do any of the foregoing. Notwithstanding the foregoing, JP Fund
covenants that (x) between the date of the Agreement and the Closing Date,
promptly following any transaction involving an acquisition or disposition
by JP Fund of portfolio securities, JP Fund shall provide to Oppenheimer
Fund a written report detailing such transaction and (y) upon the written
request of Oppenheimer Fund, to promptly sell one or more portfolio
securities acquired by JP Fund between the date of the Agreement and the
Closing Date and (z) to transfer to Oppenheimer Fund on the Closing Date
only those Assets the acquisition of which will permit Oppenheimer Fund
to be in compliance with all of its investment policies and restrictions.
(d) JP Fund covenants and agrees to comply with all applicable
laws, rules and regulations.
(e) JP Fund covenants and agrees to maintain in the ordinary
course of business consistent with past practice its books and records
through to the date of its dissolution and liquidation and to prepare and
file all documents, reports and instruments and take such action,
including, without limitation, under the federal securities laws and state
laws, that is required or appropriate to be filed or taken by it prior to,
and/or in connection with, its dissolution and liquidation.
19. (a) Oppenheimer Fund covenants that during the period from the
date hereof until the Closing Date it will conduct its business in the
ordinary course, it being understood that such ordinary course of business
will include customary dividends and other distributions and such changes,
if any, that have been approved by trustees of Oppenheimer Fund of which
JP Fund has been advised.
(b) Oppenheimer Fund covenants and agrees to comply with all
applicable laws, rules and regulations.
20. The Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing (i)
by the mutual written consent of Oppenheimer Fund and JP Fund, (ii) by
either Oppenheimer Fund or JP Fund, by notice in writing to the other, if
the Closing shall not have occurred on or before December 31, 1996, (iii)
by either Oppenheimer Fund or JP Fund, by notice in writing to the other,
if (A) the other party shall fail to perform in any material respect its
agreements contained herein required to be performed on or prior to the
Closing Date, (B) the other party materially breaches or shall have
breached any of its representations, warranties or covenants contained
herein, (C) the JP Fund shareholders fail to approve the Agreement or (D)
any other condition herein expressed to be precedent to the obligations
of the terminating party has not been met (other than through the failure
of the terminating party to comply with its obligations under the
Agreement) and it reasonably appears that it will not or cannot be met or
(iv) pursuant to Section 4 of the Agreement. Termination of the Agreement
pursuant to (i), (ii) or (iv) shall terminate all obligations of the
parties hereunder and there shall be no liability for damages on the part
of Oppenheimer Fund, JP Fund or their respective trustees, directors or
officers to any other party or its trustees, directors, or officers and
it is understood and agreed that each party shall be reimbursed for its
Expenses pursuant to Section 9 of the Agreement. Termination of the
Agreement pursuant to (iii) shall terminate all obligations of Oppenheimer
Fund and JP Fund hereunder and there shall be no liability for damages on
the part of Oppenheimer Fund or JP Fund or their respective trustees,
directors or officers to any other party or its trustees, directors or
officers, except that the party in breach of the Agreement shall, upon
demand, reimburse the non-breaching party for all Expenses, including
reasonable out-of-pocket expenses and fees incurred in connection with the
transactions contemplated by the Agreement, and the provisions of Section
9 as to Expenses shall be of no force or effect. For the purposes of the
foregoing sentence, the non-fulfillment of the condition requiring
approval of JP Fund shareholders set forth in Sections 10A and 11B shall
not be deemed a breach entitling a party to reimbursement of fees and
expenses.
The Agreement shall automatically terminate prior to the Closing in
the event the Acquisition Agreement is terminated or the acquisition
contemplated by the Acquisition Agreement is not consummated, and in such
event all obligations of Oppenheimer Fund and JP Fund shall terminate and
there shall be no liability on the part of Oppenheimer Fund or JP Fund or
their respective trustees, directors or officers to the other or its
respective trustees, directors or officers, it being understood and agreed
that each party shall be reimbursed for its Expenses pursuant to Section
9 of the Agreement.
21. (a) JPC shall indemnify and hold harmless JP Fund and
Oppenheimer Fund, their investment advisers and their respective
trustees, officers and shareholders, against any and all claims to the
extent such claims are based upon, arise out of or relate to (i) any
untruthful or inaccurate representation made by JP Fund in the Agreement
or any breach by JP Fund of any warranty or any failure by JP Fund to
perform or comply with any of its obligations, covenants, conditions or
agreements set forth in the Agreement or (ii) the failure of JP Fund to
comply with applicable legal requirements, including, without limitation,
registration under the 1933 Act and the 1940 Act and state securities
laws. Notwithstanding the foregoing, JPC shall not be obligated to so
indemnify any officer or director of JP Fund if such claims result from
such person's willful misfeasance, bad faith or gross negligence.
(b) OppenheimerFunds, Inc. shall indemnify and hold harmless
JP Fund and its investment adviser and their respective trustees, officers
and shareholders, against any and all claims to the extent such claims are
based upon, arise out of or relate to any untruthful or inaccurate
representation made by Oppenheimer Fund in the Agreement or any breach by
Oppenheimer Fund of any warranty or any failure by Oppenheimer Fund to
perform or comply with any of its obligations, covenants, conditions or
agreements set forth in the Agreement. Notwithstanding the foregoing,
OppenheimerFunds, Inc. shall not be obligated to so indemnify any officer
or director of JP Fund or its investment adviser if such claims result
from such person's willful misfeasance, bad faith or gross negligence.
(c) As used in this section, the word "claim" means any and all
liabilities, obligations, losses, damages, deficiencies, demands, claims,
penalties, assessments, judgments, actions, proceedings and suits of
whatever kind and nature and all costs and expenses (including, without
limitation, reasonable attorneys' fees).
22. The Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all taken together shall constitute
one Agreement. The rights and obligations of each party pursuant to the
Agreement shall not be assignable.
23. All prior or contemporaneous agreements and representations are
merged into the Agreement, which constitutes the entire contract between
the parties hereto. No amendment or modification hereof shall be of any
force and effect unless in writing and signed by the parties and no party
shall be deemed to have waived any provision herein for its benefit unless
it executes a written acknowledgement of such waiver.
24. JP Fund understands that the obligations of Oppenheimer Fund
under the Agreement are not binding upon any Trustee or shareholder of
Oppenheimer Fund personally, but bind only Oppenheimer Fund and
Oppenheimer Fund's property. JP Fund represents that it has notice of the
provisions of the Declaration of Trust of Oppenheimer Fund disclaiming
shareholder and Trustee liability for acts or obligations of Oppenheimer
Fund.
25. Neither of the parties shall make any press release of the
transactions contemplated by the Agreement, or any discussion in
connection therewith, without the prior written consent of the other
party, which consent shall not be unreasonably withheld. The preceding
sentence shall not apply to any disclosures required to be made by
applicable laws, as determined by counsel; however, the applicable party
shall consult with the other party concerning the timing and content of
such disclosure before making it.
26. The representations, warranties and covenants set forth in the
Agreement shall survive the closing.
<PAGE>
27. The Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflicts of
laws principles of such State.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to
be executed and attested by its officers thereunto duly authorized on the
date first set forth above.
Attest: JEFFERSON-PILOT CAPITAL APPRECIATION
FUND, INC.
__________________________ By: _____________________________
Attest: OPPENHEIMER GROWTH FUND
__________________________ By: _____________________________
Attest: For purposes of Section 21 only:
JEFFERSON-PILOT CORPORATION
___________________________ By: ______________________________
Attest: For purposes of Section 21 only:
OPPENHEIMERFUNDS, INC.
____________________________ By: __________________________
<PAGE>
Preliminary Copy
Jefferson-Pilot Capital Appreciation Fund, Inc.
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD DECEMBER 3, 1996
The undersigned shareholder of Jefferson-Pilot Capital Appreciation Fund,
Inc. ("JP Fund"), does hereby appoint Richard W. McEnally and E.J. Yelton
and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Special Meeting of
Shareholders of JP Fund to be held on December 3, 1996, at the Jefferson
Building (4th Floor, Room B-2), 100 North Greene Street, Greensboro, North
Carolina 27420 at 10:00 A.M., local time, and at all adjournments
thereof, and to vote the shares held in the name of the undersigned on the
record date for said meeting on the Proposals specified on the reverse
side. Said attorneys-in-fact shall vote in accordance with their best
judgment as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHO RECOMMENDS A VOTE
FOR THE PROPOSALS ON THE REVERSE SIDE AND THE ELECTION OF EACH NOMINEE AS
DIRECTOR. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED ON THE
REVERSE SIDE OR FOR EACH PROPOSAL AND THE ELECTION OF EACH NOMINEE AS
DIRECTOR IF NO CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
Proposal 1:
To consider and vote upon the approval or disapproval of the Agreement and
Plan of Reorganization dated as of _________, 1996 (the "Reorganization
Agreement") by and among JP Fund, Jefferson-Pilot Corporation, Oppenheimer
Growth Fund ("Oppenheimer Fund"), and OppenheimerFunds, Inc., and the
transactions contemplated thereby, including (i) the transfer of
substantially all the assets of JP Fund to Oppenheimer Fund in exchange
for Class A shares of Oppenheimer Fund, (ii) the distribution of such
shares of Oppenheimer Fund to shareholders of JP Fund in liquidation of
JP Fund, and (iii) the cancellation of the outstanding shares of JP Fund.
FOR____ AGAINST____ ABSTAIN____
Proposal 2:
To elect to the Board of Directors the following five (5) directors to
hold office until the earlier of (i) the dissolution of JP Fund or (ii)
the next annual meeting of shareholders of JP Fund called for the purpose
of electing directors, or until their successors are elected and
qualified.
A) E.J. Yelton D) William Edward Moran
B) John C. Ingram E) J. Lee Lloyd
C) Richard Wolcott McEnally
_______For all nominees listed ____WITHHOLD AUTHORITY
except as marked to the contrary at to vote for all nominees
left. Instruction: To withhold listed at left.
authority to vote for any individual
nominee, line out that nominee's name
at left.
Proposal 3:
To ratify or reject the selection of McGladrey & Pullen LLP as JP Fund's
independent auditors for the current fiscal year.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1996
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give his or her title.
<PAGE>
OPPENHEIMER GROWTH FUND
Supplement dated November 1, 1995, to the
Prospectus dated November 1, 1995
The Prospectus is amended as follows:
1. The following text is added to the paragraph immediately following
the Class A sales charge table on page 27 of the Prospectus:
In addition to paying dealers the regular commission for
sales of Class A shares stated in the sales charge table in
"Class A Shares," and the commissions for Class B shares
described in the third paragraph in "Distribution and Service
Plan for Class B Shares" on page 18 of this Prospectus, the
Distributor will pay additional commission to each participating
broker, dealer and financial institution that has a sales
agreement with the Distributor (these are referred to as
"participating firms") for shares of the Fund sold in
"qualifying transactions" from September 1, 1995, through
November 30, 1995 (that period is referred to as the
"promotion"). The additional commission will be 1.00% of the
offering price of Class A shares and 0.75% of the offering price
of Class B shares of the Fund sold by a registered
representative or sales representative of a participating firm.
"Qualifying transactions" are sales by a registered
representative or sales representative in the amount of $100,000
or more (calculated at offering price) of Class A and/or Class
B shares (if offered) of any one or more of the following funds:
the Fund, Oppenheimer Global Fund, Oppenheimer Global Growth &
Income Fund, Oppenheimer Global Emerging Growth Fund,
Oppenheimer Main Street Income & Growth Fund, Oppenheimer
International Bond Fund, Oppenheimer Limited-Term Government
Fund, and Oppenheimer Strategic Income Fund. The amount of
additional commissions paid on sales of shares of some of the
other Oppenheimer funds listed is different than the additional
commissions paid for sales of shares of the Fund. "Qualifying
transactions" do not include sales of Class A shares (a) at net
asset value without sales charge, or (b) subject to a contingent
deferred sales charge, or (c) intended but not yet transacted
under a Letter of Intent. However, if Class A shares of the
Fund or any of the other Oppenheimer funds listed above are
purchased at net asset value without sales charge during the
promotion with the proceeds of shares redeemed within the prior
12 months from another mutual fund (other than a fund managed
by Oppenheimer Management Corporation or one of its
subsidiaries) on which an initial sales charge or contingent
sales charge was paid, the amount of the purchase will count
toward the $100,000 qualifying amount described above (but not
for the payment of additional commission).
November 1, 1995 PS0270.005
OPPENHEIMER GROWTH FUND
Supplement dated January 1, 1996 to the
Prospectus dated November 1, 1995
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1) sales
of Class A shares stated in the sales charge table in "Buying Class A
Shares" on page 27, (2) sales of Class B shares described in the third
paragraph in "Distribution and Service Plan for Class B Shares" on page
32, or (3) sales of Class C shares described in the third paragraph in
"Distribution and Service Plan for Class C Shares" on page 33, the
Distributor will pay additional commission to each participating broker,
dealer and financial institution that has a sales agreement with the
Distributor (these are referred to as "participating firms") for Class A,
B and C shares of the Fund sold in "qualifying transactions" (the
"promotion"). The additional commission will be .75% of the offering
price of shares of the Fund sold by a registered representative or sales
representative of a participating firm during the promotion. If the
additional commission is paid on the sale of Class A shares of $1 million
or more and those shares are redeemed within 13 months from the end of the
month in which they were purchased, the participating firm will be
required to return the additional commission.
"Qualifying transactions" are sales of Class A, Class B and/or Class
C shares of any one or more of the Oppenheimer funds (except money market
funds and tax-exempt funds) for (1) new Individual Retirement Accounts
("IRAs"), using the OppenheimerFunds prototype IRA agreement, including
rollover IRAs, SEP IRAs and SAR-SEP IRAs, where the IRA is established and
the purchase payment is received during the period from January 1, 1996
through April 15, 1996 (the "promotion period") or, (2) IRAs using the
A.G. Edwards & Sons, Inc. prototype IRA agreement, including rollover
IRAs, SEP IRAs and SAR-SEP IRAs, where the purchase payment is received
during the promotion period. "Qualifying transactions" also include
purchases of shares of Oppenheimer funds for existing OppenheimerFunds
or A.G. Edwards & Sons, Inc. prototype IRAs, rollover IRAs, SEP IRAs and
SAR-SEP IRAs effected through a rollover from an investor, or through a
direct rollover or trustee-to-trustee transfer from another retirement
plan trustee, of IRA assets or other employee benefit plan assets from an
account or investment other than an account or investment in the
Oppenheimer funds. To qualify, the payment for the shares purchased for
a rollover to an OppenheimerFunds prototype IRA or for a rollover, direct
rollover or trustee-to-trustee transfer to an A.G. Edwards & Sons, Inc.
prototype IRA must be received during the promotion period, or the
acceptance of a direct rollover or trustee-to-trustee transfer to an
OppenheimerFunds prototype IRA must be acknowledged by the trustee of the
OppenheimerFunds prototype IRA during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares intended but
not yet made under a Letter of Intent, and (2) purchases of Class A,
Class B and/or Class C shares with the redemption proceeds from an
existing OppenheimerFunds account.
January 1, 1996 PS0270.006
OPPENHEIMER GROWTH FUND
Supplement Dated January 5, 1996 to the
Prospectus dated November 1, 1995
The following changes are made to the Prospectus:
1. The name "Oppenheimer Management Corporation" is changed to
"OppenheimerFunds, Inc." in "Expenses - Annual Fund Operating Expenses,"
"A Brief Overview of the Fund - Who Manages The Fund, "The Manager and Its
Affiliates" and the back cover page of the Prospectus. The name
"Oppenheimer Funds Distributor, Inc." is changed to "OppenheimerFunds
Distributor, Inc." in "How the Fund is Managed - The Distributor," "How
to Buy Shares - Buying Shares Through the Distributor" and the back cover
page of the Prospectus. The name "Oppenheimer Shareholder Services" is
changed to "OppenheimerFunds Services" on the front and back cover pages
of the Prospectus, in "How the Fund is Managed - the Transfer Agent" and
in "How to Sell Shares - Selling Shares by Mail."
2. In "How to Buy Shares," a new section is added before the section
entitled "Buying Class A Shares," on page 27 as follows:
Special Sales Charge Arrangements for Certain Persons. Appendix
A to this Prospectus sets forth conditions for the waiver of,
or exemption from, sales charges or the special sales charge
rates that apply to purchases of shares of the Fund (including
purchases by exchange) by a person who was a shareholder of one
of the Former Quest for Value Funds (as defined in that
Appendix).
3. In "How to Buy Shares - Buying Class A Shares - Reduced Sales Charges
for Class A Share Purchases - Waivers of Initial and Contingent Deferred
Sales Charges for Certain Purchasers," on pages 29 and 30 the following
is added to the end of that section:
- directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
- accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement)
and persons who are directors or trustees of the company or
trust which is the beneficial owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former
Quest for Value Fund were exchanged for Class A shares of that
Fund due to the termination of the Class B and C TRAC-2000
program on November 24, 1995; or
- qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to
be held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated
and share purchases commence by March 31, 1996.
4. In "How to Buy Shares - Buying Class A Shares - Reduced Sales Charges
for Class A Share Purchases - Waivers of Initial and Contingent Deferred
Sales Charges in Certain Transactions," on page 30 the following is added
to the end of that section:
- purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series;
5. The following "Appendix A" is added to the Prospectus after the
section entitled "Dividends, Capital Gains and Taxes" on page 44:
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for Class
A, Class B and Class C shares of the Fund described elsewhere in this
Prospectus are modified as described below for those shareholders of (i)
Quest for Value Fund, Inc., Quest for Value Growth and Income Fund, Quest
for Value Opportunity Fund, Quest for Value Small Capitalization Fund and
Quest for Value Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and
(ii) Quest for Value U.S. Government Income Fund, Quest for Value
Investment Quality Income Fund, Quest for Global Income Fund, Quest for
Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund
and Quest for Value California Tax-Exempt Fund when those funds merged
into various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for Value
Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by
such shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds or (ii)
received by such shareholder pursuant to the merger of any of the Former
Quest for Value Funds into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
- - Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- - Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for
Class A shares purchased by a "Qualified Retirement Plan" through a single
broker, dealer or financial institution, or by members of "Associations"
formed for any purpose other than the purchase of securities if that
Qualified Retirement Plan or that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
<TABLE>
<CAPTION>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
__________________________________________________________________
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
__________________________________________________________________
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations having
50 or more eligible employees or members, there is no initial sales charge
on purchases of Class A shares, but those shares are subject to the Class
A contingent deferred sales charge described on pages 27 and 28 of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above
in the Prospectus. In addition, purchases by 401(k) plans that are
Qualified Retirement Plans qualify for the waiver of the Class A initial
sales charge if they qualified to purchase shares of any of the Former
Quest For Value Funds by virtue of projected contributions or investments
of $1 million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations, or
as eligible employees in Qualified Retirement Plans also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Fund's Distributor.
- - Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of Former
Quest for Value Funds into those Oppenheimer funds, and which shares were
subject to a Class A contingent deferred sales charge prior to November
24, 1995 will be subject to a contingent deferred sales charge at the
following rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to 1.0% if
the redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent six
months. Class A shares of any of the Former Quest for Value Funds
purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- - Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified Funds.
- - Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to redemptions
of Class A shares of the Fund purchased by the following investors who
were shareholders of any Former Quest for Value Fund:
- Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted
under that law.
- Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
- - Waivers for Redemptions of Shares Purchased Prior to March 6, 1995
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest for Value Fund or into which
such fund merged, if those shares were purchased prior to March 6, 1995:
in connection with (i) distributions to participants or beneficiaries of
plans qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457 of the
Code, and other employee benefit plans, and returns of excess
contributions made to each type of plan, (ii) withdrawals under an
automatic withdrawal plan holding only either Class B or C shares if the
annual withdrawal does not exceed 10% of the initial value of the account,
and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum value of such accounts.
- - Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into which
such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants
or beneficiaries from Individual Retirement Accounts under Section 408(a)
of the Internal Revenue Code or retirement plans under Section 401(a),
401(k), 403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from service
or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as evidenced by
a determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan (but
only for Class B or C shares) where the annual withdrawals do not exceed
10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in
the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, B or C shares
of the Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares in this
Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and that were transferred to an OppenheimerFunds
prototype 401(k) plan shall be eligible for an additional one-time payment
by the Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and (i) the shares held by those plans were exchanged
for Class A shares, or (ii) the plan assets were transferred to an
OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of the
plan assets transferred, but that payment may not exceed $5,000.
January 5, 1996 PS0270.007
<PAGE>
OPPENHEIMER GROWTH FUND
Prospectus dated November 1, 1995
Oppenheimer Growth 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 may also use "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.
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 November 1, 1995, Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(OppenheimerFunds logo)
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 the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
Page
ABOUT THE FUND
3 Expenses
5 A Brief Overview of the Fund
7 Financial Highlights
10 Investment Objective and Policies
16 How the Fund is Managed
18 Performance of the Fund
ABOUT YOUR ACCOUNT
22 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
34 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
Class Y Shares
36 How to Sell Shares
By Mail
By Telephone
38 How to Exchange Shares
41 Shareholder Account Rules and Policies
42 Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. 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 will expect to bear indirectly. The numbers
below are based on the Fund's expenses during its fiscal year ended June
30, 1995.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages 22 through 34 for an
explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares Class Y Shares
<S> <C> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None None
Sales Charge on Reinvested DividendsNone None None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds)None(1)5% in the first1% if sharesNone
year, declining toare redeemed
1% in the sixthwithin 12
year and eliminatedmonths of
thereafter(2) purchase(2)
Exchange Fee None None None None
(1) If you invest $1 million or more ($500,000 or more for purchases by OppenheimerFunds prototype 401(k) plans) in Class
A shares, you may have to pay a sales charge of up to 1% if you sell your shares within 18 calendar months from the
end of the calendar month during which you purchased those shares. See "How to Buy Shares - Class A Shares," below.
(2) See "How to Buy Shares," below for more information on the contingent deferred sales charge.
</TABLE>
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed," below. The Fund has other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses. Those expenses are detailed in the Fund's Financial Statements
in the Statement of Additional Information.
The numbers in the chart below are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The 12b-1 Distribution Plan Fees for
Class A shares are service fees. For Class B and Class C shares the 12b-1
Distribution Plan Fees are service fees and asset-based sales charges.
The service fee for each class is a maximum of 0.25% of average annual net
assets of that class and the asset-based sales charge for Class B and
Class C shares is 0.75%. These plans are described in greater detail in
"How to Buy Shares," below. The actual expenses for each class of shares
in future years may be more or less than the numbers in the table,
depending on a number of factors, including changes in the actual value
of the Fund's assets represented by each class of shares. Class C shares
were not publicly sold during the fiscal year ended June 30, 1995.
Therefore the Annual Fund Operating Expenses shown for Class C shares are
estimates based on amounts that would have been payable if Class C shares
had been outstanding during that fiscal year.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees .71% .71% .71% .71%
12b-1 Distribution Plan Fees .15% 1.00% 1.00% -0-%
Other Expenses .19% .31% .31% .33%
Total Fund Operating Expenses1.05% 2.02% 2.02% 1.04%
</TABLE>
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, that the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses chart above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $68 $89 $112 $178
Class B Shares $71 $93 $129 $187
Class C Shares $31 $63 $109 $235
Class Y Shares $11 $33 $57 $127
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $68 $89 $112 $178
Class B Shares $21 $63 $109 $187
Class C Shares $21 $63 $109 $235
Class Y Shares $11 $33 $57 $127
* 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. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge imposed
on Class B and Class C shares, long-term holders of Class B and Class C
shares could pay the economic equivalent of more than the maximum
front-end sales charge allowed under applicable regulations. For Class
B shareholders, the automatic conversion of Class B shares to Class A
shares is designed to minimize the likelihood that this will occur.
Please refer to "How to Buy Shares - Buying 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.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation.
- What Does the Fund Invest In? To seek capital appreciation, the Fund
primarily invests in common stocks and convertible securities. The Fund
may also write covered calls and use certain types of "hedging
instruments" and "derivative investments" to seek to reduce the risks of
market fluctuations that affect the value of the securities the Fund holds
or to seek total return. These investments are more fully explained in
"Investment Objective and Policies" starting on page 10.
- Who Manages the Fund? The Fund's investment adviser (the "Manager")
is Oppenheimer Management Corporation, which (including a subsidiary)
manages investment company portfolios currently having over $35 billion
in assets. The Manager is paid an advisory fee by the Fund, based on its
assets. The Fund's portfolio manager, who is employed by the Manager and
is primarily responsible for the selection of the Fund's securities, is
Robert C. Doll, Jr. The Fund's Board of Trustees, elected by
shareholders, oversees the investment adviser and the portfolio manager.
Please refer to "How the Fund is Managed," starting on page 16 for more
information about the Manager and its fees.
- How Risky Is the Fund? All investments carry risks to some degree.
The Fund's investments in stocks are subject to changes in their value
from a number of factors such as changes in general stock market
movements. A change in value of particular stocks may result from an
event affecting the issuer. These changes affect the value of the Fund's
investments and its share prices for each class of its shares. In the
Oppenheimer funds spectrum, the Fund is generally considered a growth
fund, considerably more aggressive than money market or growth and income
funds because it invests for capital appreciation in common stocks
emphasizing "growth" stocks that tend to be more volatile than other
investments. While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are purchased
for the portfolio, and in some cases by using hedging techniques, there
is no guarantee of success in achieving the Fund's objectives and your
shares may be worth more or less than their original cost when you redeem
them. Please refer to "Investment Objective and Policies" starting on
page 10 for a more complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page 22 for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers the
individual investor three classes of shares. All classes have the same
investment portfolio but different expenses. Class A shares are offered
with a front-end sales charge, starting at 5.75% and reduced for larger
purchases. Class B shares and Class C shares are offered without a front-
end sales charge, but may be subject to a contingent deferred sales charge
if redeemed within 6 years or one year, respectively, of purchase. There
is also an annual asset-based sales charge on Class B shares and Class C
shares. Please review "How to Buy Shares" starting on page 22 for more
details, including a discussion about factors you and your financial
advisor should consider in determining which class may be appropriate for
you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How to Sell Shares" on page 36. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How
to Exchange Shares" on page 38.
- How Has the Fund Performed? The Fund measures its performance by
quoting its average annual total return and cumulative total return, which
measure historical performance. Those returns can be compared to the
returns (over similar periods) of other funds. Of course, other funds may
have different objectives, investments, and levels of risk. The Fund's
performance can also be compared to a broad market index, which we have
done on page 20. Please remember that past performance does not guarantee
future results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial information
about the Fund, including per share data and expense ratios and other data
based on the Fund's average net assets. This information has been audited
by KPMG Peat Marwick LLP, the Fund's independent auditors, whose report
on the Fund's financial statements for the fiscal year ended June 30,
1995, is included in the Statement of Additional Information. Class C
shares were not publicly offered during the periods shown, and
accordingly, no information on Class C shares is included in the table
below or in the Fund's financial statements for the fiscal year ended June
30, 1995.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A
--------------------------------------------------------------------------------------
Year Ended June 30,
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $26.65 $27.34 $24.94 $21.88 $20.60
---------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) .36 .16 .19 .29 .47
Net realized and unrealized gain
(loss) on investments 6.83 (.05) 4.03 3.13 1.36
------ ------ ------ ------ -----
Total income (loss) from
investment operations 7.19 .11 4.22 3.42 1.83
---------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.24) (.16) (.25) (.36) (.55)
Distributions in excess
of net investment income -- --(3) -- -- --
Distributions from net realized
gain on investments (2.80) (.64) (1.57) -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (3.04) (.80) (1.82) (.36) (.55)
---------------------------------------------------------------------------------------
Net asset value, end of period $30.80 $26.65 $27.34 $24.94 $21.88
------ ------ ------ ------ ------
------ ------ ------ ------ ------
---------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(4) 29.45% .27% 16.88% 15.69% 9.39%
----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $860,741 $656,934 $743,830 $630,767 $550,480
---------------------------------------------------------------------------------------
Average net assets (in thousands) $727,102 $720,765 $710,391 $624,527 $520,335
---------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 27,946 24,654 27,210 25,287 25,155
----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.31% .56% .72% 1.14% 2.20%
Expenses 1.05% 1.07% .93% .90% .94%
----------------------------------------------------------------------------------------
Portfolio turnover rate(6) 35.6% 19.8% 23.2% 36.7% 31.1%
<FN>
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. Less than $.005 per share.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date
at the time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended June 30, 1995 were $216,295,555 and $320,810,773, respectively.
</TABLE>
<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 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, 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 the Statement of Additional
Information says that a particular policy is "fundamental." The Fund's
investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's Board
of Trustees may change non-fundamental policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus.
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 on their use that
are 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 net 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 net 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. Investments in securities of
issuers in underdeveloped countries generally involve more risk and may
be considered highly speculative. 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.
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. See "Restricted and Illiquid Securities" in the Statement of
Additional Information for further details.
- Derivative Investments. The Fund can invest in a number of different
kinds of "derivative investments." They are used in some cases for
hedging purposes and in other cases to attempt to seek income or total
return. In general, a "derivative investment" is a specially designed
investment whose performance is linked to the performance of another
investment or security, such as an option, future, index, currency or
commodity. In the broadest sense, exchange-traded options and futures
contracts (discussed in "Hedging," below) may be considered "derivative
investments."
The Fund may invest in different types of derivatives. "Index-linked"
or "commodity-linked" notes are debt securities of companies that call for
interest payments and/or payment on the maturity of the note in different
terms than the typical note where the borrower agrees to make fixed
payments and/or to pay a fixed sum on the maturity of the note. Principal
and/or interest payments on an index-linked note depend on the performance
of one or more market indices, such as the S & P 500 Index or a weighted
index of commodity futures, such as crude oil, gasoline and natural gas.
The Fund will invest in commodity-linked notes for hedging purposes only.
The Fund may invest in debt exchangeable for common stock of an issuer or
"equity-linked" debt securities of an issuer. At maturity, the principal
amount of the debt security is exchanged for common stock of the issuer
or is payable in an amount based on the issuer's common stock price at the
time of maturity. In either case there is a risk that the amount payable
at maturity will be less than the principal amount of the debt.
The Fund may also invest in currency-indexed securities. Typically,
these are short-term or intermediate-term debt securities having a value
at maturity and/or an interest rate determined by reference to one or more
foreign currencies. The currency-indexed securities purchased by the Fund
may make payments based on a formula. The payment of principal or
periodic interest may be calculated as a multiple of the movement of one
currency against another currency, or against an index. These investments
may entail increased risk to principal and increased price volatility.
There are special risks in investing in derivative investments. The
company issuing or providing credit support for the instrument may fail
to make payments as they become due on the maturity of the instrument.
Also, the underlying investment or security might not perform the way the
Manager expected it to perform. Markets, underlying securities and
indices may move in a direction not anticipated by the Manager. The
performance of derivative investments may also be influenced by interest
rate and stock market changes in the U.S. and abroad. All of this can
mean that the Fund will realize less principal or income from the
investment than expected. Certain derivative investments held by the Fund
may be or become illiquid. Please refer to "Illiquid and Restricted
Securities."
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
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 that 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 brokers, dealers and other
financial institutions. The Fund must receive collateral for such loans.
These loans are limited to not more than 25% of the value of the Fund's
net assets and are subject to other conditions described in the Statement
of Additional Information. The Fund presently does not intend that the
value of securities loaned will exceed 5% of its 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.
- Hedging. The Fund may purchase and sell certain kinds of futures
contracts, put and call options, forward contracts, Stock Index Futures,
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, and has
limits on the use of them, described below. The hedging instruments the
Fund may use are described below and in greater detail in "Other
Investment Techniques and Strategies" in the Statement of Additional
Information.
The Fund may buy and sell options, futures and forward contracts for a
number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options, tend
to increase the Fund's exposure to the securities market as a temporary
substitute for purchasing individual securities. Forward contracts are
used to try to manage foreign currency risks on the Fund's foreign
investments. Foreign currency options are used to try to protect against
declines in the dollar value of foreign securities the Fund owns, or to
protect against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income to the
Fund for liquidity purposes or defensive reasons.
- Futures. The Fund may buy and sell futures contracts that relate to
broadly-based securities indices (these are referred to as Stock Index
Futures).
- Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls).
The Fund may purchase calls only on securities, Stock Index Futures,
broadly-based securities indices and foreign currencies, or to terminate
its obligation on a call the Fund previously wrote. The Fund may write
(that is, sell) covered call options. When the Fund writes a call, it
receives cash (called a premium). The call gives the buyer the ability
to buy the investment on which the call was written from the Fund at the
call price during the period in which the call may be exercised. If the
value of the investment does not rise above the call price, it is likely
that the call will lapse without being exercised, while the Fund keeps the
cash premium (and the investment). There is no limit on the amount of the
Fund's total assets that may be subject to covered calls.
The Fund may purchase put options. Buying a put on an investment gives
the Fund the right to sell the investment at a set price to a seller of
a put on that investment. The Fund can only purchase puts that relate to
(1) securities the Fund owns, (2) Stock Index Futures (whether or not the
Fund owns the particular Stock Index Future in its portfolio), (3)
broadly-based stock indices, or (4) foreign currencies.
The Fund may write puts on securities, broadly-based stock indices,
foreign currencies or Stock Index Futures. Writing puts requires the
segregation of liquid assets to cover the put.
The Fund may buy and sell calls if certain conditions are met. Calls
the Fund buys or sells must be listed on a domestic or foreign securities
or commodities exchange or quoted on the Automated Quotation System of the
National Association of Securities Dealers, Inc. Each call the Fund
writes must be "covered" while it is outstanding; that means the Fund must
own the securities on which the call is written or it must own other
securities that are acceptable for the escrow arrangements required for
calls. After the Fund writes a call, not more than 25% of the Fund's total
assets may be subject to calls. In the case of puts and calls on foreign
currency, they must be traded on a securites or commodities exchange, or
the over-the-counter market or quoted by recognized dealers in these
options. The Fund may also write calls on Futures Contracts it owns, but
those calls must be covered by securities or other liquid assets the Fund
owns and segregates to enable it to satisfy its obligations if the call
is exercised. A call or put option may not be purchased if the value of
all of the Fund's put and call options would exceed 5% of the Fund's total
assets.
- Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund may use them to try to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that the
Fund has bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and foreign currency.
The Fund limits its net exposure under forward contracts in a particular
foreign currency to the amount of its assets denominated in that currency
or denominated in a closely-correlated currency.
- 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, 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 from the increase in value above the call price. The
use of forward contracts may reduce the gain that would otherwise result
from a change in the relationship between the U.S. dollar and a foreign
currency. To limit its exposure in foreign currency exchange contracts,
the Fund limits its exposure to the amount of its assets denominated in
the foreign currency. Interest Rate Swaps are subject to credit risks (if
the other party fails to meet its obligations) and also to interest rate
risks. The Fund could be obligated to pay more under its swap agreements
than it receives under them, as a result of interest rate changes. These
risks are described in greater detail in the Statement of Additional
Information.
- 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:
- As 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;
- 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
- 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 four classes of shares, Class A,
Class B, Class C and Class Y. All classes invest in the same investment
portfolio. 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 as a class on matters that affect
that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting the
Fund's investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board
of 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 (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $35 billion
as of June 30, 1995, and with more than 2.6 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.
- 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.
- 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 fiscal year ended June 30, 1995 was .71%
of average annual net assets for each class of shares that were offered.
Class C shares were not publicly sold during the last fiscal year, and
accordingly, no management fee expense was incurred by this class of
shares.
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 Fund's Distributor.
The Distributor also distributes the shares of the other "Oppenheimer
funds" 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 Oppenheimer funds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return," "cumulative total return" and "average annual total return" to
illustrate its performance. The performance of each class of shares is
shown separately, because the performance of each class of shares will
usually be different, as a result of the different kinds of expenses each
class bears. These returns measure the performance of a hypothetical
account in the Fund over various periods, and do not show the performance
of each shareholder's account (which will vary if dividends are received
in cash or shares are sold or purchased). The Fund's performance
information may help you see how well your investment has done over time
and to compare it to other funds or a market index, as we have done below.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. This performance data is described below, but
more detailed information about how total returns are calculated is
contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally they include
the payment of the current maximum initial sales charge. When total
returns are shown for Class B shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown. Total returns may also be quoted "at net asset
value," without including the sales charge, and those returns would be
reduced if sales charges were deducted. When total returns are shown for
a one-year period or less for Class C shares, they include the effect of
the contingent deferred sales charge. They may also be shown based on the
change in net asset value, without including 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, 1995,
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 fiscal
year ended June 30, 1995, the stock market rallied to record highs. In
the Manager's view, investor confidence in the market was influenced by
the outlook for sustainable growth with low inflation, falling interest
rates, and possible deficit reduction. The focused new investments in
companies in the technology, financial, and consumer non-cyclical sectors
and in U.S. companies with broad international exposure. Those
investments appreciated as the stock market rose. Where the Manager felt
that particular issues had become over-valued or fairly valued, they were
sold, and the proceeds from those sales were invested in stocks that the
Manager believed had appreciation potential. As U.S. economic growth
slowed in mid-1995, the Manager purchased stocks in the basic materials
sector -chemical, paper and metal producers. The Fund also increased its
cash position for defensive purposes to reduce the effects of any short-
term market volatility.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in three classes
of shares of the Fund held until June 30, 1995. In the case of Class A
shares, performance is measured over a ten-year period, in the case of
Class B shares, performance is measured from the inception of the class
on August 17, 1993, and in the case of Class Y shares, from the inception
of the class on June 1, 1994. Since Class C shares were not outstanding
before June 30, 1995, no historical performance information is available.
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 deduction of the current maximum sales charge of 5.75%
for Class A shares, the maximum contingent deferred sales charge of 5% on
Class B shares, reinvestment of all dividends and capital gains
distributions, and 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.
Comparison of Change in Value
of $10,000 Hypothetical Investment in Class A, Class B and Class Y Shares
of Oppenheimer Growth Fund to the
S&P 500 Index
(Graph)
Past performance is not predictive of future performance.
Oppenheimer Growth Fund
Average Annual Total Returns at 06/30/95
1-Year 5-Year 10-Year
Class A:(1) 22.0% 12.59% 12.03%
Class B:(2) 23.96% -- --
Class Y:(3) 22.99% -- --
_________________________________________
(1) The ten-year average annual total returns for Class A shares and the
ending account value in the graph reflect reinvestment of all dividends
and capital gains distributions and are shown net of the 5.75% maximum
initial sales charge.
(2) Class B shares were first publicly offered on 8/17/93. The average
annual total returns reflect reinvestment of all dividends and capital
gains distributions and are shown net of the applicable 5% and 4%
contingent deferred sales charges, respectively, for the one-year period
and life of the class. The ending account value in the graph is net of
the applicable 4% contingent deferred sales charge.
(3) Class Y shares of the Fund were first offered on 6/1/94.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers non-institutional investors three
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 fourth
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 may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase Class A
shares as part of an investment of at least $1 million or more ($500,000
or more for OppenheimerFunds prototype 401(k) plans) in shares of one or
more Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you may pay
a contingent deferred sales charge. The amount of that sales charge will
vary depending on the amount you invested. Sales charges are described
in "Buying Class A Shares," below.
- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years of
buying them, you will normally pay a contingent deferred sales charge,
described below, that varies depending on how long you own your shares.
Sales charges are described in "Buying Class B Shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of
buying them, you will normally pay a contingent deferred sales charge of
1%. Sales charges are described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest and how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other Oppenheimer funds
(not all of which currently offer Class B and/or Class C shares). If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We assumed you
are an individual investor, and therefore ineligible to purchase Class Y
shares. We used the sales charge rates that apply to Class A, Class B and
Class C shares and considered the effect of the annual asset-based sales
charge on Class B and Class C expenses (which, like all expenses, will
affect your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot be
predicted and will vary, based on the Fund's actual investment returns and
the operating expenses borne by each class of shares, and which class of
shares you invest in. The factors discussed below are not intended to be
investment advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to
consider in purchasing a particular class of shares assumes that you will
purchase only one class of shares and not a combination of shares of
different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on shares of Class B or
C for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases
toward six years, Class C shares might not be as advantageous as Class A
shares. That is because the annual asset-based sales charge on Class C
shares will have a greater impact on your account over the longer term
than the reduced front-end sales charge available for larger purchases of
Class A shares. For example, Class A might be more advantageous than
Class C (as well as Class B) for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments over
$250,000 expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and B). If investing $500,000 or
more, Class A may be more advantageous as your investment horizon
approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or $1 million or more of Class
B or C shares respectively from a single investor. Of course, these
examples are based on approximations of the effect of current sales
charges and expenses on a hypothetical investment over time, using the
assumed annual performance return stated above, and therefore should not
be relied on as rigid guidelines.
- Investing for the Longer Term. If you are investing for the longer-
term, for example, for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or C shares, as discussed above,
because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in
Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the effect of
current sales charges and expenses on a hypothetical investment over time,
using the assumptions stated above. Therefore, these examples should not
be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B or Class
C shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. For example, share certificates are not available for Class B or
Class C shares and if you are considering using your shares as collateral
for a loan, that may be a factor to consider. Additionally, the dividends
payable to Class B and Class C shareholders will be reduced by the
additional expenses borne solely by those classes, such as the asset-based
sales charges described below and in the Statement of Additional
Information.
- How Does It Affect Payments to My Broker? A salesperson such as a
broker or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class of shares than for selling another class. It is important that
investors understand that the purposes of the Class B or Class C
contingent deferred sales charge and asset-based sales charge are the same
as the purpose of the front-end sales charge on sales of Class A shares,
that is, to compensate the Distributor for commissions it pays to dealers
and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under
special investment plans.
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (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, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your order
with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer
Funds Distributor, Inc." Mail it to
P.O. Box 5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the shares.
However, it is recommended that you discuss your investment first with a
financial advisor, to be sure that it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to have the Transfer Agent send redemption proceeds, and to transmit
dividends and distributions.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You 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 Oppenheimer funds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your order
by the time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all references
to time in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of the close of The New York Stock
Exchange on each day the Exchange is open (which is a "regular business
day").
If you buy shares through a dealer, the dealer must receive your order
by the close of The New York Stock Exchange on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, purchases are not subject to an initial
sales charge, and the offering price will be the net asset value. In some
cases, reduced sales charges may be available, as described below. Out
of the amount you invest, the Fund receives the net asset value to invest
for your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
___________________________________________________________________________
Front-End Sales ChargeCommission as
As a Percentage of:Percentage of
Amount of PurchaseOffering PriceAmount InvestedOffering Price
_________________________________________________________________________________
<S> <C> <C> <C>
Less than $25,0005.75% 6.10% 4.75%
$25,000 or more but
less than $50,0005.50% 5.82% 4.75%
$50,000 or more but
less than $100,0004.75% 4.99% 4.00%
$100,000 or more but
less than $250,0003.75% 3.90% 3.00%
$250,000 or more but
less than $500,0002.50% 2.56% 2.00%
$500,000 or more but
less than $1 million2.00% 2.04% 1.60%
________________________________________________________________________________
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 of the
Oppenheimer funds in the following cases:
- purchases aggregating $1 million or more; or
- purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more, or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more.
Shares of any Oppenheimer fund that offers only one class of shares that
has no class designation are considered "Class A shares" for this purpose.
The Distributor pays dealers of record commissions on those 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 purchases over $5 million. That
commission will be paid only on the amount of those purchases in excess
of $1 million ($500,000 for purchases by OppenheimerFunds 401(k) prototype
plans) that were not previously subject to a front-end sales charge and
dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer
on all Class A shares of all Oppenheimer funds 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 Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also count Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales charge to
reduce the sales charge rate for current purchases of Class A shares,
provided that you still hold that investment in one of the Oppenheimer
funds. 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 Oppenheimer funds 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, if you purchase Class
A shares or Class A shares and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the sales
charge rate that applies to your purchases of Class A shares. The total
amount of your intended purchases of both Class A and Class B shares will
determine the reduced sales charge rate for the Class A shares purchased
during that period. This can include purchases made up to 90 days before
the date of the Letter. More information is contained in the Application
and in "Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of
this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- 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;
- registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- 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;
- 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);
- 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 (those clients may be charged a transaction fee by their
dealer, broker or adviser for the purchase or sale of Fund shares); or
- 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.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party,
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor,
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor, or
- shares purchased and paid for with the proceeds of shares redeemed in
the prior 12 months from a mutual fund (other than a fund managed by the
Manager or any of its affiliates) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge does not apply
to purchases of Class A shares at net asset value without sales charge as
described in the two sections above. It is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
- for retirement distributions or loans to participants or beneficiaries
from qualified retirement plans, deferred compensation plans or other
employee benefit plans, including OppenheimerFunds prototype 401(k) plans
(these are all referred to as "Retirement Plans"); or
- to return excess contributions made to Retirement Plans; or
- to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value; or
- involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and
Policies," below); or
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees in writing to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans for any
of the following cases or purposes: (1) following the death or disability
(as defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
- 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. 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.
Buying 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 contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges"
below.
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.
- Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
and Service Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements -Class A, Class B and Class C 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 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 fee 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.
The Distributor's actual expenses in selling Class B shares may be more
than payments it receives from contingent deferred sales charges collected
on redeemed shares and from the Fund under the Distribution and Service
Plan for Class B shares. Therefore, those expenses may be carried over
and paid in future years. At June 30, 1995, the end of the Plan year, the
Distributor had incurred unreimbursed expenses under the Class B Plan of
$1,092,806 (equal to 2.53% 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.
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if the Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% 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 C 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 C 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 12 months, and (3) shares held the longest during the
12-month period.
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to compensate
the Distributor for distributing Class C 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 C shares. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. The asset-based sales charge allows
investors to buy Class C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class C 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 C
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 C 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 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares.
Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and
other costs of distributing and selling Class C shares, including
compensating personnel of the Distributor who support distribution of
Class C shares. 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 distributing Class C shares before the Plan
was terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and Class
C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to Class B
and Class C shares redeemed in certain circumstances as described below.
The reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for redemptions
of shares in the following cases:
- 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 (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by
the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit-sharing plans before the participant
is age 59-1/2 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);
- shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- 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; or
- shares issued in plans of reorganization to which the Fund is a party.
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 by sending 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 Oppenheimer fund 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
Oppenheimer fund account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments
of at least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other Oppenheimer fund 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 Class A or
Class B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or of other
Oppenheimer funds without paying a sales charge. This privilege applies
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. It does not apply to Class C shares.
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
- 401(k) prototype retirement plans for businesses
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 redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
account 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 account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. You may not redeem
shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call 1-800-
852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account statement. This service is not available within 30 days of
changing the address on an account.
- Telephone Redemptions Through AccountLink. 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 Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open
7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of
shares, which are considered "Class A" shares for exchange purposes. In
some cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the
same name(s) and address. Shares held under certificates may not be
exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into up
to seven days 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 sale of portfolio 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 client's 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 the close of The New York Stock Exchange, which is normally 4:00 P.M.
but may be earlier on some days, on each day the 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 and obligations for which market values cannot be
readily obtained. These procedures are described more completely in the
Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor the Fund will be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to complete
a telephone transaction and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
- The redemption price for shares will vary from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B, Class C 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. For accounts registered in the name
of a broker-dealer, payment will be forwarded within 3 business days. The
Transfer Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the purchase
payment has cleared. That delay may be as much as 10 days from the date
the shares were purchased. That delay may be avoided if you purchase
shares by certified check or arrange to have your bank provide telephone
or written assurance to the Transfer Agent that your purchase payment has
cleared.
- Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a certified Social Security or
Employer Identification Number when you sign your application, or if you
violate Internal Revenue Service regulations on tax reporting of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B,
Class C 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 and Class C shares because expenses
allocable to Class B and Class C 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 for Federal income tax purposes. It does not
matter how long you hold your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary income.
Distributions are subject to federal income tax and may be subject to
state or local taxes. Your distributions are taxable when paid, whether
you reinvest them in additional shares or take them in cash. Every year
the Fund will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is
the difference between the price you paid for the shares and the price you
received when you sold them.
- Returns of Capital: In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If
that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital will reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER 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 6/30/85 through 6/30/95, in the case of
the Fund's Class B shares will cover the period from the inception of the
class (August 17, 1993) through 6/30/95 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 6/30/95. 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
06/30/85 $ 9,425 $10,000
06/30/86 $11,572 $13,600
06/30/87 $12,669 $17,000
06/30/88 $12,537 $15,800
06/30/89 $14,360 $19,100
06/30/90 $16,224 $22,200
06/30/91 $17,748 $23,900
06/30/92 $20,533 $27,100
06/30/93 $23,998 $30,700
06/30/94 $24,062 $31,200
06/30/95 $31,147 $39,300
Fiscal Oppenheimer S&P
Period Ended Growth Fund B 500 Index
08/17/93(1) $10,000 $10,000
06/30/94 $ 9,980 $ 9,805
06/30/95 $12,396 $12,022
Fiscal Oppenheimer S&P
Period Ended Growth Fund Y 500 Index
06/01/94(2) $10,000 $10,000
06/30/95 $12,295 $11,904
- ----------------------
(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 Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
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
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information
and, if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate thereof.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
PR0270.001.11/95 * Printed on recycled paper
<PAGE>
Oppenheimer Growth Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
________, 1996
___________________________________
This Statement of Additional Information of Oppenheimer Growth Fund
consists of this cover page and the following documents:
1. Statement of Additional Information of Oppenheimer Growth Fund dated
November 1, 1995, filed herewith and incorporated herein by reference.
2. Oppenheimer Growth Fund's Annual Report as of June 30, 1996, filed
herewith and incorporated herein by reference.
3. Prospectus of Jefferson Pilot Family of Funds dated May 1, 1996, filed
herewith and incorporated by reference.
4. Statement of Additional Information of Jefferson-Pilot Capital
Appreciation Fund, Inc., dated May 1, 1996, filed herewith and
incorporated herein by reference.
5. Jefferson Pilot Family of Funds Annual Report as of December 31, 1995,
filed herewith and incorporated herein by reference.
6. Jefferson Pilot Family of Funds Semi-Annual Report as of June 30, 1996,
filed herewith and incorporated herein by reference.
This Statement of Additional Information (the "Statement of
Additional Information") is not a Prospectus. This Statement of
Additional Information should be read in conjunction with the Proxy
Statement and Prospectus, which may be obtained by written request to
OppenheimerFunds Services ("OFS"), P.O. Box 5270, Denver, Colorado 80217,
or by calling OFS at the toll-free number shown above.
<PAGE>
Oppenheimer Growth Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated November 1, 1995
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 November 1,
1995. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, Oppenheimer Shareholder
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the
Transfer Agent at the toll-free number shown above.
Contents Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Restrictions 16
How the Fund is Managed 17
Organization and History 17
Trustees and Officers of the Fund 18
The Manager and Its Affiliates 23
Brokerage Policies of the Fund 24
Performance of the Fund 26
Distribution and Service Plans 29
About Your Account
How To Buy Shares 31
How To Sell Shares 37
How To Exchange Shares 40
Dividends, Capital Gains and Taxes 42
Additional Information About the Fund 43
Financial Information About the Fund
Independent Auditors' Report 44
Financial Statements 45
Appendix: Industry Classifications A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund may invest, as well as the strategies the Fund may use
to try to achieve its objective. Certain capitalized terms used in this
Statement of Additional Information have the same meanings 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 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 offers the Fund 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. Investing 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 against foreign issuers;
higher brokerage commission rates than in the U.S.; increased risks of
delays in settlement of portfolio transactions or loss of certificates for
portfolio securities; possibilities in some countries of expropriation or
nationalization of assets, confiscatory taxation, political, financial or
social instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the past,
U.S. Government policies have discouraged certain investments abroad by
U.S. investors, through taxation or other restrictions, and it is possible
that such restrictions could be re-imposed.
- 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.
Other Investment Techniques and Strategies
- 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 For Leverage. 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, 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.
- Hedging. As described in the Prospectus, the Fund may employ one
or more types of hedging instruments. Hedging instruments may be used to
attempt to: (i) protect against possible declines in the market value of
the Fund's portfolio resulting from downward trends in the securities
markets, (ii) protect unrealized gains in the value of the Fund's
securities which have appreciated, (iii) facilitate selling securities for
investment reasons, (iv) establish a position in the securities markets
as a temporary substitute for purchasing particular debt securities, or
(v) reduce the risk of adverse currency fluctuations.
The Fund may use hedging to attempt to protect against declines in the
market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons.
To do so, the Fund may: (i) purchase Futures or (ii) purchase calls on
such Futures or securities. Normally, the Fund would then purchase the
equity securities and terminate the hedging position. When hedging to
protect against declines in the dollar value of a foreign currency-
denominated security, the Fund may: (a) purchase puts on that foreign
currency or on foreign currency Futures, (b) write calls on that currency
or on such Futures, or (c) enter into Forward Contracts at a lower rate
than the spot ("cash") rate.
The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's activities in the underlying cash market. At
present, the Fund does not intend to enter into Futures, Forward Contracts
and options on Futures if, after any such purchase, the sum of margin
deposits on Futures and premiums paid on Futures options exceeds 5% of the
value of the Fund's total assets. In the future, the Fund may employ
hedging instruments and strategies that are not presently contemplated but
which may be developed, to the extent such investment methods are
consistent with the Fund's investment objective, legally permissible and
adequately disclosed. Additional Information about the hedging
instruments the Fund may use is provided below
- Writing Call Options. The Fund may write (that is, sell) call
options ("calls"). All calls written by the Fund must be "covered" while
the call is outstanding (that means, the Fund must own the securities
subject to the call or other securities acceptable for applicable escrow
requirements). Calls on Futures (discussed below) must be covered by
deliverable securities or by liquid assets segregated to satisfy the
Futures contract.
When the Fund writes a call on an investment it receives a premium and
agrees to sell the callable investment to a purchaser of a corresponding
call during the call period (usually not more than 9 months) at a fixed
exercise price (which may differ from the market price of the underlying
investment), regardless of market price changes during the call period.
The Fund has retained the risk of loss should the price of the underlying
security decline during the call period, which may be offset to some
extent by the premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call the Fund has written is more or less than the price of the call the
Fund has subsequently purchased. A profit may also be realized if the
call lapses unexercised, because the Fund retains the underlying
investment and the premium received. Those profits are considered short-
term capital gains for Federal income tax purposes, and when distributed
by the Fund are taxable as ordinary income. If the Fund could not effect
a closing purchase transaction due to lack of a market, it would have to
hold the callable investments until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar amount of deliverable securities or liquid assets. The Fund will
segregate additional liquid assets if the value of the escrowed assets
drops below 100% of the current value of the Future. In no circumstances
would an exercise notice require the Fund to deliver a futures contract;
it would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.
- 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 Calls and Puts. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not fully
participate in an anticipated rise in the securities market. When the
Fund purchases a call (other than in a closing purchase transaction), it
pays a premium and, except as to calls on stock indices, has the right to
buy the underlying investment from a seller of a corresponding call on the
same investment during the call period at a fixed exercise price. When
the Fund purchases a call on an index, it pays a premium, but settlement
is in cash rather than by delivery of the underlying investment to the
Fund. In purchasing a call, the Fund benefits only if the call is sold
at a profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the
transaction costs and the premium paid and the call is exercised. If the
call is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.
The Fund may purchase put options ("puts") which relate to securities,
foreign currencies or Futures. When the Fund purchases a put, it pays a
premium and, except as to puts on stock indices, has the right to sell the
underlying investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying a put
on an investment the Fund owns enables the Fund to protect itself during
the put period against a decline in the value of the underlying investment
below the exercise price by selling the underlying investment at the
exercise price to a seller of a corresponding put. If the market price
of the underlying investment is equal to or above the exercise price and
as a result the put is not exercised or resold, the put will become
worthless at its expiration date, and the Fund will lose its premium
payment and the right to sell the underlying investment. The put may,
however, be sold prior to expiration (whether or not at a profit.)
Buying a put on an investment it does not own, either a put on an index
or a put on a Stock Index Future not held by the Fund, permits the Fund
either to resell the put or buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary inversely with
the price of the underlying investment. If the market price of the
underlying investment is above the exercise price and as a result the put
is not exercised, the put will become worthless on its expiration date.
In the event of a decline in the stock market, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on
its portfolio securities. When the Fund purchases a put on an index, or
on a Future not held by it, the put protects the Fund to the extent that
the index moves in a similar pattern to the securities held. In the case
of a put on an index or Future, settlement is in cash rather than by
delivery by the Fund of the underlying investment.
Puts and calls on broadly-based stock indices or Stock Index Futures
are similar to puts and calls on securities or futures contracts except
that all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock market
generally) rather than on price movements in individual securities or
futures contracts. When the Fund buys a call on an index or Future, it
pays a premium. During the call period, upon exercise of a call by the
Fund, a seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of the
index or Future upon which the call is based is greater than the exercise
price of the call. That cash payment is equal to the difference between
the closing price of the index and the exercise price of the call times
a specified multiple (the "multiplier") which determines the total dollar
value for each point of difference. When the Fund buys a put on an index
or Future, it pays a premium and has the right during the put period to
require a seller of a corresponding put, upon the Fund's exercise of its
put, to deliver to the Fund an amount of cash to settle the put if the
closing level of the index or Future upon which the put is based is less
than the exercise price of the put. That cash payment is determined by the
multiplier, in the same manner as described above as to calls.
- Stock Index Futures. The Fund may buy and sell Stock Index Futures.
No monetary amount is paid or received upon the purchase or sale of a
Stock Index Future or a foreign currency exchange contract ("Forward
Contract"), discussed below. This is a type of financial future for which
the index used as the basis for trading is a broadly-based stock index
(including stocks that are not limited to issuers in a particular industry
or group of industries). A stock index assigns relative values to the
stocks included in the index and fluctuates with the changes in the market
value of these stocks. Stock indices cannot be purchased or sold
directly. Financial Futures are contracts based on the future value of
the basket of securities that comprise the underlying index. The contracts
obligate the seller to deliver, and the purchaser to take, cash to settle
the futures transaction, or to enter into an offsetting contract. No
physical delivery of the securities underlying the index is made on
settling futures obligations.
Upon entering into a Futures transaction, the Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin
will be deposited with the Funds's Custodian in an account registered in
the futures broker's name; however the futures broker can gain access to
that account only under specified conditions. As the future is marked to
market (that is, as the value on the Fund's books is changed) to reflect
changes in its market value, subsequent margin payments, called variation
margin, will be made to or by the futures broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any loss or gain is then
realized for tax purposes. Although Stock Index Futures by their terms
call for cash settlement or delivery of cash, in most cases the obligation
is fulfilled by entering into an offsetting position. All futures
transactions are effected through a clearinghouse associated with the
exchange on which to 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. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. A Forward Contract involves
bilateral obligations of one party to purchase, and another party to sell,
a specific currency at a future date (which may be any fixed number of
days from the date of the contract agreed upon by the parties), at a price
set at the time the contract is entered into. These contracts are traded
in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The Fund may enter
into a Forward Contract in order to "lock in" the U.S. dollar price of a
security denominated in a foreign currency which it has purchased or sold
but which has not yet settled, or to protect against a possible loss
resulting from an adverse change in the relationship between the U.S.
dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the gain that
would otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. To attempt to limit its exposure to loss
under Forward Contracts in a particular foreign currency, the Fund limits
its use of these contracts to the amount of its net assets denominated in
that currency or denominated in a closely-correlated foreign currency.
Forward contracts include standardized foreign currency futures contracts
which are traded on exchanges and are subject to procedures and
regulations applicable to other Futures. The Fund may also enter into a
forward contract to sell a foreign currency denominated in a currency
other than that in which the underlying security is denominated. This is
done in the expectation that there is a greater correlation between the
foreign currency of the forward contract and the foreign currency of the
underlying investment than between the U.S. dollar and the foreign
currency of the underlying investment. This technique is referred to as
"cross hedging." The success of cross hedging is dependent on many
factors, including the ability of the Manager to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar.
To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the cross
currency hedge.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's assets that
may be committed to foreign currency exchange contracts. The Fund does
not enter into such forward contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency, or enter into a "cross hedge," unless it is
denominated in a currency or currencies that the Manager believes will
have price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated. See "Tax Aspects of
Covered Calls and Hedging Instruments" below for a discussion of the tax
treatment of foreign currency exchange contracts.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross hedge").
The Fund's Custodian will place cash or U.S. Government securities or
other liquid high-quality debt securities in a separate account of the
Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If the
value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the Fund's
commitments with respect to such contracts. Unanticipated changes in
currency prices may result in poorer overall performance for the Fund than
if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.
- 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 from the Fund for such
transactions. OCC will release the securities on the expiration of the
option or upon the Fund's entering into a closing transaction. An option
position may be closed out only on a market which provides secondary
trading for options of the same series, and there is no assurance that a
liquid secondary market will exist for any particular option.
The Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise by the Fund of puts on securities will cause
the sale of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might cause the
Fund to sell the related investments for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a put or call, sells a call, or buys or sells an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those which would apply to direct purchases
or sales of such underlying investments. Premiums paid for options are
small in relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options could result in the Fund's net
asset value being more sensitive to changes in the value of the underlying
investments.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer,
which would establish a formula price at which the Fund would have the
absolute right to repurchase that OTC option. That formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is exercisable below the market price
of the underlying security (that is, the extent to which the option is
"in-the-money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be invested in
illiquid securities, stated in the Prospectus) the mark-to-market value
of any OTC option held by it. The Securities and Exchange Commission
("SEC") is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.
- Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use
of Futures and options on Futures established by the Commodity Futures
Trading Commission ("CFTC"). In particular the Fund is exempted from
registration with the CFTC as a "commodity pool operator" if the Fund
complies with the requirements of Rule 4.5 adopted by the CFTC. The Rule
does not limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its aggregate
initial futures margin and related option premiums to no more than 5% of
the Fund's net assets for hedging strategies that are not considered bona
fide hedging strategies under the Rule. Under the Rule, the Fund also
must use short Futures and Futures options positions solely for "bona fide
hedging purposes" within the meaning and intent of the applicable
provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by each of the option exchanges governing the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Fund may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same advisor as the Fund, or an advisor that is an
affiliate of the Fund's advisor. Position limits also apply to Futures.
An exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Future, the Fund will maintain, in a segregated account or
accounts with its custodian bank, cash or readily-marketable, short-term
(maturing in one year or less) debt instruments in an amount equal to the
market value of the securities underlying such Future, less the margin
deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without the Fund having to pay tax on them.
This avoids a "double tax" on that income and capital gains, since
shareholders normally will be taxed on the dividends and capital gains
they receive from the Fund (unless the Fund's shares are held in a
retirement account or the shareholder is otherwise exempt from tax). One
of the tests for the Fund's qualification as a regulated investment
company is that less than 30% of its gross income must be derived from
gains realized on the sale of securities held for less than three months.
To comply with 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 Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this mark-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent such loss exceeds any
unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
- Possible Risk Factors in Hedging. 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
the use of hedging instruments discussed in the Prospectus and above,
there is a risk in using short hedging by selling Futures to attempt to
protect against decline in value of the Fund's portfolio securities (due
to an increase in interest rates) that the prices of such Futures will
correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's securities. The ordinary spreads between prices in
the cash and futures markets are subject to distortions due to differences
in the natures of those markets. First, all participants in the futures
markets are subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors may close
out futures contracts through offsetting transactions which could distort
the normal relationship between the cash and futures markets. Second, the
liquidity of the futures markets depend on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
If the Fund uses hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying Futures and/or calls on
such Futures or on securities, it is possible that the market may decline.
If the Fund then concludes not to invest in such securities at that time
because of concerns as to possible further market decline or for other
reasons, the Fund will realize a loss on the hedging instruments that is
not offset by a reduction in the price of the equity securities purchased.
- Borrowing for Leverage. 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.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States, and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offers 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 where required under applicable rules of the Securities and
Exchange Commission.
- Risks of Foreign Investing. Investing in foreign securities
involves considerations and possible risks not typically associated with
investing in securities in the U.S. The values of foreign securities will
be affected by changes in currency rates or exchange control regulations
or currency blockage, application of foreign tax laws, including
withholding taxes, changes in governmental administration or economic or
monetary policy (in the U.S. or abroad) or changed circumstances in
dealings between nations. There may be a lack of public information about
foreign issuers. Foreign countries may not have financial reporting,
accounting and auditing standards comparable to those that apply to U.S.
issuers. Costs will be incurred in connection with conversions between
various currencies. Foreign brokerage commissions are generally higher
than commissions in the U.S., and foreign securities markets may be less
liquid, more volatile and less subject to governmental regulation than in
the U.S. They may have increased delays in setting portfolio
transactions. Investments in foreign countries could be affected by other
factors not generally thought to be present in the U.S., including
expropriation or nationalization, confiscatory taxation and potential
difficulties in enforcing contractual obligations, and could be subject
to extended settlement periods.
- 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. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and realize a capital
gain.
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:
- 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";
- 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;
- 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 1/2 of 1% of the securities of such issuer together own more than 5%
of the securities of such issuer;
- invest in commodities or commodity contracts other than the hedging
instruments permitted by any of its other fundamental policies, whether
or not any such hedging instrument is considered to be a commodity or
commodity contract;
- invest in real estate or interests in real estate, but may purchase
readily marketable securities of companies holding real estate or
interests therein;
- purchase securities on margin; however, the Fund may make margin
deposits in connection with any of the hedging instruments permitted by
any of its other fundamental policies;
- 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 permitted by any of its other fundamental policies; or
- 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.
The percentage restrictions described above and in the Prospectus apply
only at the time of investment and require no action by the Fund as a
result of subsequent changes in relative values.
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: (i) invest in interests in oil, gas, or other mineral
exploration or development programs, or (ii) 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, or (iii) invest
more than 10% of its net assets in illiquid or restricted securities,
including Rule 144A securities.
For purposes of the Fund's policy not to concentrate investments as
described in the investment restrictions in the Prospectus, the Fund has
adopted the industry classifications set forth in Appendix A to this
Statement of Additional Information. This is not a fundamental policy.
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.
Each Share of the Fund represents an interest in the Fund
proportionately equal to the interest of each other share of the same
class and entitle the holder to one vote per share (and a fractional vote
for a fractional share) on matters submitted to their vote at
shareholders' meetings. Shareholders of the Fund vote together in the
aggregate on certain matters at shareholders' meetings, such as the
election of Trustees and ratification of appointment of auditors for the
Fund. Shareholders of a particular series or class vote separately on
proposals which affect that series or class, and shareholders of a series
or class which is not affected by that matter are not entitled to vote on
the proposal.
The Trustees are authorized to create new series and classes of series.
The Trustees may reclassify unissued shares of the Fund or its series or
classes into additional series or classes of shares. The Trustees may
also divide or combine the shares of a class into a greater or lesser
number of shares without thereby changing the proportionate beneficial
interest of a shareholder in the Fund. Shares do not have cumulative
voting rights or preemptive or subscription rights. Shares may be voted
in person or by proxy.
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 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 Money Market Fund,
Inc., Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation 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 August 23, 1995, the
Trustees and officers of the Fund as a group owned less than 1% of the
outstanding shares of the Fund. That statement does not reflect shares
held of record by an employee benefit plan for employees of the Manager
(one of the Trustees of the Fund, listed below, Ms. Macaskill, and one of
the officers, Mr. Donohue, are Trustees of that plan), other than the
shares beneficially owned under that plan by the officers of the Fund
listed below.
Leon Levy, Chairman of the Board of Trustees; Age 70
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).
Leo Cherne, Trustee; Age 83
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.
Robert G. Galli, Trustee*; Age 62
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 Oppenheimer funds and Executive Vice
President and General Counsel of the Manager and the Distributor.
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Benjamin Lipstein, Trustee; Age 72
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publications, Inc. (publishers of Psychology Today and Mother Earth
News) and of Spy Magazine, L.P.
Bridget A. Macaskill, Trustee*; Age: 47
President, Chief Executive Officer and a Director of the Manager;
Chairman and a Director of SSI, Vice President and a Director of OAC;
a Director of HarbourView and of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; formerly an
Executive Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age 66
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery of
Art (Smithsonian Institution), the Institute of Fine Arts (New York
University), and the National Building Museum; a member of the
Trustees Council, Preservation League of New York State and of the
Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age 68
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services company) and Fidelity
Life Association (mutual life insurance company); formerly Chairman of
the Board of ICL, Inc. (information systems) and President and Chief
Executive Officer of The Conference Board, Inc. (international
economic and business research).
Edward V. Regan, Trustee; Age 65
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York;
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; Age 63
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.
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Sidney M. Robbins, Trustee; Age 83
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.
(closed-end investment company); 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*; Age 69
Chairman Emeritus and a director of the Manager; formerly Chairman of
the Manager and the Distributor.
Pauline Trigere, Trustee; Age 82
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; Age 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to 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), 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; Age 45
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other Oppenheimer funds; 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; Age 41
Executive Vice President and Director of Equity Investments of the
Manager; an officer and Portfolio Manager of other Oppenheimer funds.
George C. Bowen, Treasurer; Age 59
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 Oppenheimer funds.
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Robert G. Zack, Assistant Secretary; Age 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert J. Bishop, Assistant Treasurer; Age 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; 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.
- 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 (Ms. Macaskill and Messrs. Galli and Spiro; Mr. Spiro is
also an officer of the Fund) receive no salary or fee from the Fund. The
Trustees of the Fund (including Mr. Delaney, a former Trustee, but
excluding Ms. Macaskill and Messrs. Galli and Spiro) received the total
amounts shown below (i) from the Fund during its fiscal year ended June
30, 1995, and (ii) from all 17 of the New York-based Oppenheimer funds
(including the Fund) listed in the first paragraph of this section (and
from Oppenheimer Global Environment Fund, Oppenheimer Time Fund and
Oppenheimer Mortgage Income Fund, which ceased operation following the
acquisition of their assets by certain other Oppenheimer funds), for
services in the positions shown.
<TABLE>
<CAPTION>
Aggregate Retirement BenefitsTotal Compensation
Compensation Accrued as Part From All
Name and from of Fund New York-based
Position Fund Expenses OppenheimerFunds1
<S> <C> <C> <C>
Leon Levy $1,544 $4,611 $141,000.00
Chairman and
Trustee
Leo Cherne $ 754 $2,251 $ 68,800.00
Audit Committee
Member and
Trustee
Edmund T. Delaney$ 944 $2,819 $ 86,200.00
Study Committee
Member and Trustee2
Benjamin Lipstein$ 944 $2,819 $ 86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan$ 664$1,982 $ 60,625.00
Study Committee
Member2 and Trustee
Kenneth A. Randall$ 859 $2,564 $ 78,400.00
Audit Committee
Member and Trustee
Edward V. Regan$ 616 $1,839 $ 56,275.00
Audit Committee
Member2 and Trustee
Russell S. Reynolds, Jr.$ 571$1,705 $ 52,100.00
Trustee
Sidney M. Robbins$1,338 $3,995 $122,100.00
Study Committee
Chairman, Audit
Committee Vice-Chairman
and Trustee
Pauline Trigere$ 571 $1,705 $ 52,100.00
Trustee
Clayton K. Yeutter$ 571 $1,705 $ 52,100.00
Trustee
<FN>
______________________
1For the 1994 calendar year.
2Committee position held during a portion of the period shown.
</TABLE>
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 Oppenheimer funds for at least 15 years to be eligible for the
maximum payment. Because each Trustee's retirement benefits will depend
on the amount of the Trustee's future compensation and length of service,
the amount of those benefits cannot be determined at this time, nor can
the Fund estimate the number of years of credited service that will be
used to determine those benefits.
- Major Shareholders. As of August 23, 1995, the only person who
owned of record or was known by the Fund to own beneficially 5% or more
of the Fund's outstanding shares was Merrill Lynch Pierce Fenner & Smith,
4800 Deer Lake Drive East, 3rd Floor, Jacksonville, Florida 32246, who
owned of record 103,090.945 Class B shares (approximately 7.55% of the
Fund's outstanding shares of that class). 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 139,280.695 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 Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General 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, 1993, 1994
and 1995, the management fees paid by the Fund to the Manager were
$5,048,548, $5,149,361 and $5,274,276, respectively.
The advisory agreement contains no expense limitation. 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, Class C and
Class Y shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than those paid under the
Distribution and Service Plans, but including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders) are borne by the Distributor. During the Fund's fiscal
years ended June 30, 1993, 1994 and 1995, the aggregate sales charges on
sales of the Fund's Class A shares were $2,826,831, $1,831,787 and
$1,238,892, respectively, of which the Distributor and an affiliated
broker-dealer retained in the aggregate $806,143, $495,180 and $370,067
in those respective years. During the Fund's fiscal year ended June 30,
1995, the contingent deferred sales charges collected on the Fund's Class
B shares totalled $35,872, all of which was retained by the Distributor.
Class C shares were not publicly offered during the Fund's fiscal year
ended June 30, 1995, and no contingent deferred sales charges were
collected during this period. 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 that the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the Manager's
portfolio managers.
In certain instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the advisory
agreement and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Manager's executive
officers. Transactions in securities other than those for which an
exchange is the primary market are generally done with principals or
market makers. Brokerage commissions are paid primarily for effecting
transactions in listed securities and/or for certain fixed-income agency
transactions in the secondary market, and are otherwise paid only if it
appears likely that a better price or execution can be obtained. When the
Fund engages in an option transaction, ordinarily the same broker will be
used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders
to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates are combined. The transactions
effected pursuant to such combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed
for each account.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. 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 Board of Trustees has permitted the Manager to
use concessions on fixed-price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
agency trades to obtain research where the broker has represented to the
Manager that: (i) the trade is not from the broker's own inventory, (ii)
the trade was executed by the broker on an agency basis at the stated
commission, and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers 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, 1993, 1994 and 1995,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $523,738,
$706,547 and $1,073,321, respectively. During the fiscal year ended June
30, 1995, $503,758 was paid to brokers as commissions in return for
research services; the aggregate dollar amount of those transactions was
$222,785,607. 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.
No total return calculations are presented below for Class C shares
because no shares of that class were publicly issued during the fiscal
year ended June 30, 1995.
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 each class
of 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, 1995 were 22.0%, 12.59% and 12.03%,
respectively. The "cumulative total return" on Class A shares for the ten
year period ended June 30, 1995 was 211.48%. 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 "average annual total returns" on an investment in
Class B shares of the Fund for the one year period ended June 30, 1995 and
for the period August 17, 1993 (commencement of the offering of Class B
shares) through June 30, 1995 were 23.22% and 12.18%, respectively. The
cumulative total return on Class B shares for the period from August 17,
1993 (the commencement of the offering of the Class B shares) through June
30, 1995 was 23.96%. The average annual total returns on Class Y shares
for the one-year period ended June 30, 1995 and for the period from June
1, 1994 (the commencement of the offering of Class Y shares) through June
30, 1994 were 29.59% and 21.06%, respectively. The cumulative total
return on Class Y shares for the period from June 1, 1994 (the
commencement of the offering of Class Y shares) through June 30, 1995 was
22.94%.
- 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, Class C
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, 1995 was 230.48%. The average annual total
returns at net asset value for the one, five and ten-year periods ended
June 30, 1995, for Class A shares were 29.45%, 13.93% and 12.70%,
respectively. The average annual total returns at net asset value for
Class B shares for the period from August 17, 1993 (commencement of the
offering of the shares) through June 30, 1995 and for the one-year period
ended June 30, 1995 were 14.13% and 28.22%, respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B, Class C or Class Y shares.
However, when comparing total return of an investment in Class A, Class
B, Class C or Class Y shares of the Fund with that of other alternatives,
investors should understand that as the Fund is an 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, Class C or Class Y shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to investment
objectives. The performance of the Fund's classes is ranked against (i)
all other funds (excluding money market funds), (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, Class C 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 90-day Treasury
bill returns after considering sales charges and expenses. Risk measures
fund performance below 90-day U.S. Treasury bill monthly returns. Risk
and return are combined to produce star rankings reflecting performance
relative to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next 22.5%),
three stars is "average" (next 35%), two stars is "below average" (next
22.5%) and one star is "lowest" (bottom 10%). Morningstar ranks the 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,
Class C 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, Class
C 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.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance
rankings of the Oppenheimer funds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
OppenheimerFunds' services to those of other mutual fund families selected
by the rating or ranking services and may be based upon the opinions of
the rating or ranking service itself, based on its research or judgment,
or based upon surveys of investors, brokers, shareholders or others.
The performance of the Fund's Class A, Class B, Class C or Class Y
shares may also be compared in publications to (i) the performance of
various market indices or to other investments for which reliable
performance data is available, and (ii) to averages, performance rankings
or other benchmarks prepared by recognized mutual fund statistical
services.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares under Rule
12b-1 of the Investment Company Act, pursuant to which the Fund makes
payments to the Distributor 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 C
shares, that vote was cast by the Manager as the sole initial holder of
Class C 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, at no
cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of payments they make from
their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each 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. None of the Plans 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. In addition, because Class B shares automatically convert into
Class A shares after six years, the Fund is required to obtain the
approval of Class B as well as Class A shareholders for a proposed
amendment to the Class A plan that would materially increase the amount
to be paid by Class A shareholders under the Class A plan. Such approval
must be by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act) voting separately by class. 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 for its review, detailing 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. Each 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 does 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, 1995, payments under the Class A
Plan totalled $1,121,580, all of which was paid by the Distributor to
Recipients, including $29,144 paid to MML Investor Services, Inc., an
affiliate of the Distributor. Payments made under the Class B Plan during
that fiscal period totalled $186,218, of which $1,767 was paid to an
affiliate and $168,736 was retained by the Distributor. Since no Class
C shares were outstanding during that fiscal year, no payments were made
under the Class C Plan.
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
Plans for Class B and Class C shares allow the service fee payments to be
paid by the Distributor to Recipients in advance for the first year such
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 shares sold. An exchange of shares does not entitle the Recipient to
an advance service fee payment. In the event 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 and Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fee on such
shares, or to pay Recipients the service fee on a quarterly basis, without
payment in advance, the Distributor presently 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 and the Class C
Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B Plan and the Class C 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 C Plan provides for the Distributor to be compensated at a
flat rate, whether the Distributor's distribution expenses are more or
less than the amounts paid by the Fund during that period. Such payments
are made in recognition that the Distributor (i) pays sales commissions
to authorized brokers and dealers at the time of sale and pays service
fees as described in the Prospectus, (ii) may finance such commissions
and/or the advance of the service fee payment to Recipients under those
Plans, or may provide such financing from its own resources, or from an
affiliate, (iii) employs personnel to support distribution of shares, and
(iv) may bear the costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders), state "blue sky"
registration fees and certain other distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three 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 and Class C 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 fourth class of shares may be
purchased only by certain institutional investors at net asset value per
share (the "Class Y shares"). The Distributor normally will not accept
(i) any order for $500,000 or more of Class B shares or (ii) any order for
$1 million or more of Class C 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 three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on Class B and Class C
shares will be reduced by incremental expenses borne solely by that class,
including the asset-based sales charge to which Class B and Class C shares
are subject.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B, Class C 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, Class C and Class Y shares of the Fund are
determined as of the close of business of The New York Stock Exchange (the
"NYSE") on each day that the NYSE is open, by dividing the Fund's net
assets attributable to a class by the number of shares of that class that
are outstanding. The NYSE normally closes at 4:00 P.M., but may close
earlier on some other days (for example, in case of weather emergencies
or days falling before a holiday). 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 U.S. securities exchange or on NASDAQ for which
last sale information is regularly reported are valued at the last
reported sale price on their primary exchange or NASDAQ that day (or, in
the absence of sales that day, at values based on the last sales prices
of the preceding trading day, or closing bid and asked prices); (ii)
securities actively traded on a foreign securities exchange are valued at
the last sales price available to the pricing service approved by the
Fund's Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded; (iii) unlisted foreign
securities or listed foreign securities not actively traded are valued at
the last sale price, or at the mean between "bid" and "asked" prices
determined by a pricing service approved by the Board of Trustees or by
the Manager; (iv) long-term debt securities having a remaining maturity
in excess of 60 days are valued at the mean between the "bid" and "asked"
prices determined by a portfolio pricing service approved by the Fund's
Board of Trustees or obtained from active market makers in the security
on the basis of reasonable inquiry; (v) debt instruments having a maturity
of more than one year when issued, and non-money market type instruments
having a maturity of one year or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained from active market makers in the security
on the basis of reasonable inquiry; (vi) money market-type debt securities
having a maturity of less than one year when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for amortization
of premiums and accretion of discounts; and (vii) securities (including
restricted securities) not having readily-available market quotations are
valued at fair value under the Board's procedures.
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, including forward contracts,
will be valued at the closing price in the London foreign exchange market
that day as provided by a reliable bank, dealer or pricing service. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange market
that day as provided by a reliable bank, dealer or pricing service. In
the case of U.S. government securities and corporate bonds, where last
sale information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield, maturity and other special factors involved.
The Trustees will monitor the accuracy of pricing services by comparing
prices used for portfolio evaluation to actual prices of selected
securities.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ,
as applicable, 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 the close of The New York Stock Exchange that day, which
is normally three days after the ACH transfer is initiated. The
Distributor and the Fund are not responsible for any delays in purchasing
shares resulting from delays in ACH transmissions. 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 Letter 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, siblings, a
sibling's spouse and a spouse's siblings.
- The OppenheimerFunds. The Oppenheimer funds 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 Fund
Oppenheimer Insured Tax-Exempt 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 Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
<PAGE>
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government 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 Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer New Enterprise Fund
<PAGE>
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
<PAGE>
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds 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 (referred to as a "Letter")
is an investor's statement in writing to the Distributor of the intention
to purchase Class A shares of the Fund or Class A and Class B shares of
the Fund and other Oppenheimer funds during a 13-month period (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
of shares which, when added to the investor's holdings of shares of those
funds, will equal or exceed the amount specified in the Letter. Purchases
made by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to
count the Class A and Class B shares purchased under the Letter to obtain
the reduced sales charge rate on purchases of Class A shares of the Fund
(and other Oppenheimer funds) that applies under the Right of Accumulation
to current purchases of Class A shares. 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.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value up to 5% of
the intended purchase amount specified in the Letter shall be held in
escrow by the Transfer Agent. For example, if the intended purchase
amount is $50,000, the escrow shall be shares valued in the amount of
$2,500 (computed at the public offering price adjusted for a $50,000
purchase). Any dividends and capital gains distributions on the escrowed
shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a) Class
A shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge, (b) Class B shares of other Oppenheimer
funds acquired subject to a contingent deferred sales charge, and (c)
Class A or B shares acquired in exchange for either (i) Class A shares of
one of the other Oppenheimer funds that were acquired subject to a Class
A initial or contingent deferred sales charge or (ii) Class B shares of
one of the other Oppenheimer funds that were acquired subject to a
contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "How to Exchange Shares," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, 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 its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
- 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
Oppenheimer funds 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 Oppenheimer funds 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 or Class C
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, 401(k) 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 maintaining a plan account in their own name) in
OppenheimerFunds-sponsored prototype pension, profit-sharing, or 401(k)
plans may not directly redeem or exchange shares held for their account
under those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are subject
to special requirements under the Internal Revenue Code and certain
documents (available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives the order
placed by the dealer or broker, except that if the Distributor receives
a repurchase order from a dealer or broker after the close of The New York
Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker
from its customer prior to the time the Exchange closed (normally, that
is 4:00 P.M., but may be earlier some days) and the order was transmitted
to and received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Ordinarily, for accounts redeemed by a broker-
dealer under this procedure, payment will be made within three business
days after the shares have been redeemed upon the Distributor's receipt
of the required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption documents 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 and Class C shareholders should not establish
withdrawal plans that would require the redemption of shares held less
than 6 years or 12 months, respectively, because of the imposition of the
Class B or Class C contingent deferred sales charge on such withdrawals
(except where the Class B or Class C contingent deferred sales charge is
waived as described in the Prospectus under "Waivers of Class B and Class
C Sales Charges."
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds 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
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares of
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. All of the Oppenheimer funds
offer Class A, B and C shares except Oppenheimer Money Market Fund, Inc.,
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. and Daily Cash
Accumulation Fund, Inc., which only offer Class A shares, and Oppenheimer
Main Street California Tax-Exempt Fund, which only offers Class A and
Class B shares (Class B and Class C shares of Oppenheimer Cash Reserves
are generally available only by exchange from the same class of shares of
other Oppenheimer funds or through OppenheimerFunds sponsored 401(k)
plans).
Class A shares of Oppenheimer funds 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
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc. purchased with the redemption proceeds
of shares of other mutual funds (other than funds managed by the Manager
or its subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or
the investor's dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased, and, if requested, must supply proof of entitlement to this
privilege.
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 Oppenheimer funds. 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 Oppenheimer funds 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. The Class C
contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of
the exchanged Class C shares.
When Class B or Class C 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 more than one class must specify whether they intend to
exchange Class A, Class B or Class C 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 Oppenheimer funds 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.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be reinvested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, in order to enable the investor to earn a return
on otherwise idle funds.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of 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 Oppenheimer funds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. 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 Oppenheimer funds 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>
INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Growth
Fund:
We have audited the accompanying statements of investments and
assets and liabilities of Oppenheimer Growth Fund as of June 30,
1995, 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. Our procedures included confirmation
of securities owned as of June 30, 1995, 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 Growth Fund as of
June 30, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each
of the years in the ten-year period then ended, in conformity
with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Denver, Colorado
July 24, 1995
19 Oppenheimer Growth Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS JUNE 30, 1995
MARKET
VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--74.6%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--6.1%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS--3.1%
FMC Corp.(1) 15,000 $1,008,750
------------------------------------------------------------------------------------------
Georgia Gulf Corp. 290,000 9,461,250
------------------------------------------------------------------------------------------
IMC Global, Inc. 40,000 2,165,000
------------------------------------------------------------------------------------------
Morton International, Inc. 155,000 4,533,750
------------------------------------------------------------------------------------------
PPG Industries, Inc. 25,000 1,075,000
------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.(1) 454,400 5,282,400
------------------------------------------------------------------------------------------
Union Carbide Corp. 130,000 4,338,750
------------------------------------------------------------------------------------------
27,864,900
- -----------------------------------------------------------------------------------------------------------------------------
METALS--1.7%
Asarco, Inc. 150,000 4,575,000
------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co. 67,800 1,932,300
------------------------------------------------------------------------------------------
Freeport-McMoRan, Inc. 55,000 969,375
------------------------------------------------------------------------------------------
LTV Corp.(1) 245,000 3,583,125
------------------------------------------------------------------------------------------
Magma Copper Co.(1) 215,000 3,493,750
------------------------------------------------------------------------------------------
Worthington Industries, Inc. 40,000 817,500
------------------------------------------------------------------------------------------
15,371,050
- -----------------------------------------------------------------------------------------------------------------------------
PAPER--1.3%
Boise Cascade Corp. 120,000 4,860,000
------------------------------------------------------------------------------------------
Chesapeake Corp. 40,000 1,245,000
------------------------------------------------------------------------------------------
Federal Paper Board Co. 20,000 707,500
------------------------------------------------------------------------------------------
Stone Container Corp.(1) 160,000 3,400,000
------------------------------------------------------------------------------------------
Temple-Inland, Inc. 40,000 1,905,000
------------------------------------------------------------------------------------------
12,117,500
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--8.8%
- -----------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--1.1%
Automotive Industries Holdings(1) 60,000 1,627,500
------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 70,000 2,887,500
------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 40,000 975,000
------------------------------------------------------------------------------------------
Navistar International Corp.(1) 320,000 4,840,000
------------------------------------------------------------------------------------------
10,330,000
- -----------------------------------------------------------------------------------------------------------------------------
LEISURE &
ENTERTAINMENT--1.9%
Atlantic Southeast Airlines, Inc. 30,000 903,750
------------------------------------------------------------------------------------------
Brunswick Corp. 140,000 2,380,000
------------------------------------------------------------------------------------------
KLM Royal Dutch Airlines(1) 110,000 3,588,750
------------------------------------------------------------------------------------------
Mattel, Inc. 54,687 1,421,862
------------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1) 20,000 577,500
------------------------------------------------------------------------------------------
Outboard Marine Corp. 235,000 4,611,875
------------------------------------------------------------------------------------------
Pancho's Mexican Buffet, Inc. 100,000 425,000
------------------------------------------------------------------------------------------
Shoney's, Inc.(1) 212,500 2,496,875
------------------------------------------------------------------------------------------
Walt Disney Co. 20,000 1,112,500
------------------------------------------------------------------------------------------
17,518,112
- -----------------------------------------------------------------------------------------------------------------------------
MEDIA--0.2%
Multimedia, Inc.(1) 45,000 1,743,750
</TABLE>
6 Oppenheimer Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--2.9%
Dollar General Corp. 200,000 $6,325,000
------------------------------------------------------------------------------------------
May Department Stores Co. 25,000 1,040,625
------------------------------------------------------------------------------------------
Sears, Roebuck & Co. 30,000 1,796,250
------------------------------------------------------------------------------------------
Waban, Inc.(1) 330,000 4,908,750
------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 450,000 12,037,500
------------------------------------------------------------------------------------------
26,108,125
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--2.7%
Bed Bath & Beyond, Inc.(1) 155,000 3,758,750
------------------------------------------------------------------------------------------
Circuit City Stores, Inc. 100,000 3,162,500
------------------------------------------------------------------------------------------
Gap, Inc. (The) 40,000 1,395,000
------------------------------------------------------------------------------------------
Home Depot, Inc. (The) 120,000 4,875,000
------------------------------------------------------------------------------------------
Intelligent Electronics, Inc. 165,000 2,248,125
------------------------------------------------------------------------------------------
Michaels Stores, Inc.(1) 88,200 1,874,250
------------------------------------------------------------------------------------------
Rocky Mountain Chocolate Factory, Inc.(1) 100,000 1,800,000
------------------------------------------------------------------------------------------
Sotheby's Holdings, Inc., Cl. A 100,000 1,362,500
------------------------------------------------------------------------------------------
Staples, Inc.(1) 16,500 476,438
------------------------------------------------------------------------------------------
Toys 'R' Us, Inc.(1) 120,000 3,510,000
------------------------------------------------------------------------------------------
24,462,563
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--18.7%
- -----------------------------------------------------------------------------------------------------------------------------
BEVERAGES--2.6%
Coca-Cola Co. (The) 225,000 14,343,750
------------------------------------------------------------------------------------------
PepsiCo, Inc. 190,000 8,668,750
----------
23,012,500
FOOD--2.2%
ConAgra, Inc. 80,000 2,790,000
------------------------------------------------------------------------------------------
IBP, Inc. 220,000 9,570,000
------------------------------------------------------------------------------------------
Sara Lee Corp. 125,000 3,562,500
------------------------------------------------------------------------------------------
Smithfield Foods, Inc.(1) 105,000 2,237,813
------------------------------------------------------------------------------------------
Tyson Foods, Inc., Cl. A 75,000 1,734,375
------------------------------------------------------------------------------------------
19,894,688
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--6.1% Abbott Laboratories 215,000 8,707,500
------------------------------------------------------------------------------------------
American Home Products Corp. 60,000 4,642,500
------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 75,000 5,109,375
------------------------------------------------------------------------------------------
Laboratory Corp. of America Holdings, Inc. 97,200 1,287,900
------------------------------------------------------------------------------------------
Merck & Co., Inc. 150,000 7,350,000
------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 90,000 2,767,500
------------------------------------------------------------------------------------------
Pfizer, Inc. 115,000 10,623,125
------------------------------------------------------------------------------------------
Schering-Plough Corp. 300,000 13,237,500
------------------------------------------------------------------------------------------
Warner-Lambert Co. 20,000 1,727,500
------------------------------------------------------------------------------------------
55,452,900
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES
& SERVICES--5.4% Boston Scientific Corp.(1) 60,000 1,912,500
------------------------------------------------------------------------------------------
Collagen Corp. 75,000 1,284,375
------------------------------------------------------------------------------------------
Cordis Corp.(1) 175,000 11,681,250
------------------------------------------------------------------------------------------
HealthCare COMPARE Corp.(1) 263,500 7,905,000
------------------------------------------------------------------------------------------
Medtronic, Inc. 155,000 11,954,375
</TABLE>
7 Oppenheimer Growth Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/SUPPLIES
& SERVICES (CONTINUED) Rotech Medical Corp.(1) 5,000 $ 138,750
------------------------------------------------------------------------------------------
Surgical Care Affiliates, Inc. 20,000 382,500
------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. 250,000 7,656,250
------------------------------------------------------------------------------------------
United Healthcare Corp. 135,000 5,585,625
-----------
48,500,625
- -----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.2%
Colgate-Palmolive Co. 30,500 2,230,313
- -----------------------------------------------------------------------------------------------------------------------------
TOBACCO--2.2%
Philip Morris Cos., Inc. 175,000 13,015,625
------------------------------------------------------------------------------------------
UST, Inc. 242,500 7,214,375
----------
20,230,000
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY--0.1%
- -----------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED--0.1% Repsol SA 30,000 948,750
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL--15.4%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS--6.5% Bank of Boston Corp. 400,000 15,000,000
------------------------------------------------------------------------------------------
California Federal Bank(1) 60,000 787,500
------------------------------------------------------------------------------------------
Chemical Banking Corp. 90,000 4,252,500
------------------------------------------------------------------------------------------
First Interstate Bancorp 85,000 6,821,250
------------------------------------------------------------------------------------------
First Union Corp. 90,000 4,072,500
------------------------------------------------------------------------------------------
KeyCorp 50,000 1,568,750
------------------------------------------------------------------------------------------
Midlantic Corp. 190,000 7,600,000
------------------------------------------------------------------------------------------
NationsBank Corp. 75,000 4,021,875
------------------------------------------------------------------------------------------
Northern Trust Corp. 25,000 1,006,250
------------------------------------------------------------------------------------------
Shawmut National Corp. 240,000 7,650,000
------------------------------------------------------------------------------------------
SouthTrust Corp. 195,000 4,509,375
------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 20,000 1,165,000
----------
58,455,000
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--6.5% Advanta Corp., Cl. A 280,000 11,672,500
------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 110,250 2,356,594
------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 55,000 3,781,250
------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 75,000 7,078,125
------------------------------------------------------------------------------------------
First USA, Inc. 125,000 5,546,875
------------------------------------------------------------------------------------------
Green Tree Financial Corp. 320,000 14,200,000
------------------------------------------------------------------------------------------
PaineWebber Group, Inc. 240,000 4,530,000
------------------------------------------------------------------------------------------
Student Loan Marketing Assn. 100,000 4,687,500
------------------------------------------------------------------------------------------
Travelers, Inc. 120,000 5,250,000
----------
59,102,844
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.4% AFLAC, Inc. 71,875 3,144,531
------------------------------------------------------------------------------------------
Conseco, Inc. 110,000 4,991,250
------------------------------------------------------------------------------------------
MBIA, Inc. 15,000 997,500
------------------------------------------------------------------------------------------
Reliastar Financial Corp. 52,500 2,008,125
------------------------------------------------------------------------------------------
SunAmerica, Inc. 145,000 7,395,000
------------------------------------------------------------------------------------------
USF&G Corp. 190,000 3,087,500
----------
21,623,906
</TABLE>
8 Oppenheimer Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL--4.1%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.5% General Electric Co. 235,000 $13,248,125
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.1% Crown Cork & Seal Co., Inc.(1) 20,000 1,002,500
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.9% Comdisco, Inc. 215,000 6,530,625
------------------------------------------------------------------------------------------
Growth Environmental, Inc.(1) 2,100 4,988
------------------------------------------------------------------------------------------
Manpower, Inc. 30,000 765,000
------------------------------------------------------------------------------------------
Mercury Air Group, Inc. 110,000 921,250
---------
8,221,863
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--0.9% AlliedSignal, Inc. 25,000 1,112,500
------------------------------------------------------------------------------------------
Dover Corp. 5,000 363,750
------------------------------------------------------------------------------------------
Mark IV Industries, Inc. 84,000 1,806,000
------------------------------------------------------------------------------------------
Varity Corp.(1) 120,000 5,280,000
----------
8,562,250
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.7% Canadian Pacific Ltd. 245,000 4,256,875
------------------------------------------------------------------------------------------
Illinois Central Corp. 45,000 1,552,500
------------------------------------------------------------------------------------------
Rollins Truck Leasing Co. 10,000 107,500
----------
5,916,875
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--20.6%
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--6.7% 3Com Corp.(1) 180,000 12,060,000
------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 275,000 14,643,750
------------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 135,000 6,125,625
------------------------------------------------------------------------------------------
EMC Corp.(1) 240,000 5,820,000
------------------------------------------------------------------------------------------
Quantum Corp.(1) 227,200 5,197,200
------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 240,000 9,420,000
------------------------------------------------------------------------------------------
Western Digital Corp.(1) 455,000 7,905,625
-----------
61,172,200
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--8.7% Acclaim Entertainment, Inc.(1) 325,000 5,992,185
------------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 200,000 12,575,000
------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 125,000 9,656,250
------------------------------------------------------------------------------------------
Cerner Corp.(1) 5,000 306,250
------------------------------------------------------------------------------------------
Computer Associates International, Inc. 145,000 9,823,750
------------------------------------------------------------------------------------------
General Motors Corp., Cl. E 40,000 1,740,000
------------------------------------------------------------------------------------------
Informix Corp.(1) 220,000 5,582,500
------------------------------------------------------------------------------------------
Microsoft Corp.(1) 270,000 24,401,250
------------------------------------------------------------------------------------------
Oracle Systems Corp.(1) 130,000 5,021,250
------------------------------------------------------------------------------------------
Sterling Software, Inc.(1) 90,000 3,465,000
-----------
78,563,435
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS--4.1% Advanced Micro Devices, Inc. 35,000 1,273,125
------------------------------------------------------------------------------------------
Arrow Electronics, Inc.(1) 25,000 1,243,750
------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 70,000 2,835,000
------------------------------------------------------------------------------------------
Duracell International, Inc. 32,500 1,405,625
</TABLE>
9 Oppenheimer Growth Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS
(CONTINUED) Intel Corp. 370,000 $ 23,425,625
------------------------------------------------------------------------------------------------
Linear Technology Corp. 20,000 1,320,000
------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 7,500 508,125
------------------------------------------------------------------------------------------------
Tektronix, Inc. 65,000 3,201,250
------------------------------------------------------------------------------------------------
VLSI Technology, Inc.(1) 75,000 2,259,375
------------
37,471,875
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-
TECHNOLOGY--1.1% AT&T Corp. 115,000 6,109,375
------------------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR 60,000 1,192,500
------------------------------------------------------------------------------------------------
Telecom Corp. of New Zealand Ltd., Sponsored ADR 30,000 1,818,750
------------------------------------------------------------------------------------------------
U.S. Long Distance Corp.(1) 50,000 812,500
------------
9,933,125
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.4% Empresa Nacional de Electricidad SA, Sponsored ADR 75,000
3,693,750
------------------------------------------------------------------------------------------------
Tucson Electric Power Co.(1) 29,000 90,625
------------
3,784,375
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--0.4% Telefonos de Mexico SA, Sponsored ADR 125,000
3,703,125
------------
Total Common Stocks (Cost $408,570,390) 676,547,274
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND
CERTIFICATES--0.0% Laboratory Corp. of America Holdings Wts., Exp. 4/00 22,015
33,023
------------------------------------------------------------------------------------------------
Windmere Corp. Wts., Exp. 1/98 9,062 --
------------
Total Rights, Warrants and Certificates (Cost $0) 33,023
Face
Amount
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--25.3% Repurchase agreement with The First Boston Corp., 5.95%, dated
6/30/95, to be repurchased at $40,019,833 on 7/3/95,
collateralized by U.S. Treasury Bills maturing 12/14/95, with a
value of $40,825,131 $ 40,000,000 40,000,000
------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6.125%,
dated 6/30/95, to be repurchased at $190,070,966 on 7/3/95,
collateralized by U.S. Treasury Bonds, 11.25%, 2/15/15, with a
value of $19,380,642, U.S. Treasury Nts., 4.75%-7.875%, 3/31/96-
8/15/01, with a value of $126,772,802, and U.S.Treasury Bills
maturing 9/28/95-12/14/95, with a value
of $47,809,880 189,974,000 189,974,000
------------
Total Repurchase Agreements (Cost $229,974,000) 229,974,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $638,544,390) 99.9% 906,554,297
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.1 643,044
------------ ------------
NET ASSETS 100.0% $907,197,341
------------ ------------
------------ ------------
<FN>
1. Non-income producing security.
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Growth Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (including repurchase agreements
of $229,974,000) (cost $638,544,390)--see accompanying
statement $906,554,297
------------------------------------------------------------------------------------------------
Cash 92,838
------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 2,401,041
Investments sold 1,251,470
Interest and dividends 915,826
------------------------------------------------------------------------------------------------
Other 199,106
------------
Total assets 911,414,578
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 2,185,275
Shares of beneficial interest redeemed 1,295,519
Distribution and service plan fees--Note 4 344,670
Trustees' fees 221,505
Other 170,268
------------
Total liabilities 4,217,237
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $907,197,341
------------
------------
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $564,284,726
NET ASSETS ------------------------------------------------------------------------------------------------
Undistributed net investment income 6,036,689
Accumulated net realized gain from investment transactions 68,866,019
------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 268,009,907
------------
Net assets $907,197,341
------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
Per Share Net asset value and redemption price per share
(based on net assets of $860,741,305 and 27,946,407
shares of beneficial interest outstanding) $30.80
Maximum offering price per share
(net asset value plus sales charge of 5.75% of offering price) $32.68
- -----------------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $43,266,648 and 1,425,337 shares
of beneficial interest outstanding) $30.36
- -----------------------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $3,189,388 and 103,550 shares of beneficial
interest outstanding) $30.80
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Growth Fund
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest $ 7,822,939
------------------------------------------------------------------------------------------------
Dividends 9,802,962
------------
Total income 17,625,901
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 5,274,276
------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 1,121,580
Class B--Note 4 186,218
------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 679,079
------------------------------------------------------------------------------------------------
Shareholder reports 303,450
------------------------------------------------------------------------------------------------
Custodian fees and expenses 76,870
------------------------------------------------------------------------------------------------
Legal and auditing fees 36,008
------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 624
Class B 11,039
Class Y 724
------------------------------------------------------------------------------------------------
Trustees' fees and expenses 37,368
------------------------------------------------------------------------------------------------
Other 278,689
------------
Total expenses 8,005,925
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 9,619,976
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain on investments
85,671,017
GAIN ON INVESTMENTS
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 104,043,105
------------
Net realized and unrealized gain on investments 189,714,122
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$199,334,098
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Growth Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30,
1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $ 9,619,976 $ 3,987,999
------------------------------------------------------------------------------------------------
Net realized gain on investments 85,671,017 52,653,524
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
or depreciation on investments 104,043,105 (52,680,765)
------------ ------------
Net increase in net assets resulting from operations 199,334,098 3,960,758
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.2394 and $.153 per share, respectively) (5,772,443)
(3,966,692)
SHAREHOLDERS Class B ($.1281 and $.105 per share, respectively) (71,931) (17,924)
Class Y ($.2599 per share) (1,224) --
------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.002 per share) -- (59,612)
Class B ($.002 pershare) -- (269)
------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($2.7965 and $.639 per share, respectively) (67,428,961) (16,628,635)
Class B ($2.7965 and $.639 per share, respectively) (1,571,030) (108,539)
Class Y ($2.7965 per share) (13,169) --
- -----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 83,386,522 (70,528,976)
------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 30,660,868 9,199,957
------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class Y
beneficial interest transactions--Note 2 2,984,504 10,000
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase (decrease) 241,507,234 (78,139,932)
------------------------------------------------------------------------------------------------
Beginning of period 665,690,107 743,830,039
------------ -----------
End of period (including undistributed net investment income
of $6,036,689 and $2,259,799, respectively) $907,197,341 $665,690,107
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------------------
Year Ended June 30,
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $26.65 $27.34 $24.94 $21.88 $20.60
---------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) .36 .16 .19 .29 .47
Net realized and unrealized gain
(loss) on investments 6.83 (.05) 4.03 3.13 1.36
------ ------ ------ ------ -----
Total income (loss) from
investment operations 7.19 .11 4.22 3.42 1.83
---------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.24) (.16) (.25) (.36) (.55)
Distributions in excess
of net investment income -- --(3) -- -- --
Distributions from net realized
gain on investments (2.80) (.64) (1.57) -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (3.04) (.80) (1.82) (.36) (.55)
---------------------------------------------------------------------------------------
Net asset value, end of period $30.80 $26.65 $27.34 $24.94 $21.88
------ ------ ------ ------ ------
------ ------ ------ ------ ------
---------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(4) 29.45% .27% 16.88% 15.69% 9.39%
----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $860,741 $656,934 $743,830 $630,767 $550,480
---------------------------------------------------------------------------------------
Average net assets (in thousands) $727,102 $720,765 $710,391 $624,527 $520,335
---------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 27,946 24,654 27,210 25,287 25,155
----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.31% .56% .72% 1.14% 2.20%
Expenses 1.05% 1.07% .93% .90% .94%
----------------------------------------------------------------------------------------
Portfolio turnover rate(6) 35.6% 19.8% 23.2% 36.7% 31.1%
<FN>
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. Less than $.005 per share.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date
at the time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended June 30, 1995 were $216,295,555 and $320,810,773, respectively.
See accompanying Notes to Financial Statements.
</TABLE>
14 Oppenheimer Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class A
Year Ended June 30,
1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $18.90 $17.13 $20.37 $23.82 $20.46
-------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) .64 .62 .67 .93 .75
Net realized and unrealized gain
(loss) on investments 1.76 1.78 (.89) .59 3.70
------ ------ ------ ------ ------
Total income (loss) from
investment operations 2.40 2.40 (.22) 1.52 4.45
-------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.70) (.59) (1.27) (.77) (.61)
Distributions in excess
of net investment income -- -- -- -- --
Distributions from net realized
gain on investments -- (.04) (1.75) (4.20) (.48)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.70) (.63) (3.02) (4.97) (1.09)
------ ------ ------ ------ ------
------ ------ ------ ------ ------
-------------------------------------------------------------------------------------------
Net asset value, end of period $20.60 $18.90 $17.13 $20.37 $23.82
------ ------ ------ ------ ------
------ ------ ------ ------ ------
-------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 12.98% 14.54% (1.03)% 9.48%
22.77%
-------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $551,295 $542,250 $552,863 $690,326 $772,619
-------------------------------------------------------------------------------------------
Average net assets (in thousands) $547,090 $529,699 $570,250 $717,115 $783,491
-------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 26,760 28,687 32,277 33,890 32,437
-------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 3.07% 3.31% 3.78% 4.32% 3.03%
Expenses .92% .97% .95% .93% .95%
--------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 27.6% 27.1% 120.3% 371.2% 67.4%
<CAPTION>
Class B Class Y
Year Ended June 30, Year Ended June 30,
1995 1994(2) 1995 1994(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $26.44 $27.02 $26.64 $28.08
-------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) .20 (.04) .30 .02
Net realized and unrealized gain
(loss) on investments 6.65 .21 6.92 (1.46)
------ ------ ------ ------
Total income (loss) from
investment operations 6.85 .17 7.22 (1.44)
-------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.13) (.11) (.26) --
Distributions in excess
of net investment income -- --(3) -- --
Distributions from net realized
gain on investments (2.80) (.64) (2.80) --
------ ------ ------ ------
Total dividends and distributions
to shareholders (2.93) (.75) (3.06) --
-------------------------------------------------------------------------------------------
Net asset value, end of period $30.36 $26.44 $30.80 $26.64
------ ------ ------ ------
------ ------ ------ ------
--------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 28.22% (.20)% 29.59% (5.13)%
---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $43,267 $8,747 $3,189 $9
----------------------------------------------------------------------------------------------
Average net assets (in thousands) $18,722 $5,119 $536 $10
--------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 1,425 331 1.04 --
--------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .44% (.22)%(5) 1.54% 1.09%(5)
Expenses 2.02% 1.98%(5) 1.04% 1.25%(5)
---------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 35.6% 19.8% 35.6% 19.8%
See accompanying Notes to Financial Statements.
</TABLE>
15 Oppenheimer Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Growth Fund (the Fund), formerly
ACCOUNTING POLICIES named Oppenheimer Special 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 certain 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. No such plan has been adopted
for Class Y shares. 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 the close of the New York Stock
Exchange on each trading day. Listed and
unlisted securities for which such
information is regularly reported are valued
at the last sale price of the day or, in the
absence of sales, at values based on the
closing bid or asked price or the last sale
price on the prior trading day. Long-term and
short-term "non-money market" debt
securities are valued by a portfolio pricing
service approved by the Board of Trustees.
Such securities which cannot be valued by the
approved portfolio pricing service are valued
using dealer-supplied valuations provided
the Manager is satisfied that the firm
rendering the quotes is reliable and that the
quotes reflect current market value, or under
consistently applied procedures established
by the Board of Trustees to determine fair
value in good faith. Short-term "money
market type" 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.
---------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the
custodian to take possession, to have legally
segregated in the Federal Reserve Book Entry
System or to have segregated within the
custodian's vault, all securities held as
collateral for repurchase agreements. The
market value of the underlying securities is
required to be at least 102% of the resale
price at the time of purchase. If the seller
of the agreement defaults and the value of
the collateral declines, or
if the seller enters an insolvency
proceeding, realization of the value of the
collateral by the Fund may be delayed or
limited.
---------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND
LOSSES. Income, expenses (other than those
attributable to a specific class) and gains
and losses are allocated daily to each class
of shares based upon the relative proportion
of net assets represented by such class.
Operating expenses directly attributable to a
specific class are charged against the
operations of that class.
---------------------------------------------
FEDERAL 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 or excise tax provision is
required.
---------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has
adopted a nonfunded retirement plan for the
Fund's independent trustees. Benefits are
based on years of service and fees paid to
each trustee during the years of service.
During the year ended June 30, 1995, a
provision of $30,781 was made for the Fund's
projected benefit obligations, and a payment
of $2,786 was made to a retired trustee,
resulting in an accumulated liability of
$155,163 at June 30, 1995.
---------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on
the ex-dividend date.
16 Oppenheimer Growth Fund
<PAGE>
- -------------------------------------------------------------------------------
1. SIGNIFICANT CLASSIFICATION OF DISTRIBUTIONS TO
ACCOUNTING POLICIES SHAREHOLDERS. Net investment income (loss)
(continued) and net realized gain (loss) may differ for
financial statement and tax purposes
primarily because of excise taxes. The
character of the distributions made during
the year from net investment income or net
realized gains may differ from their ultimate
characterization for federal income tax
purposes. Also, due to timing of dividend
distributions, the fiscal year in which
amounts are distributed may differ from the
year that the income or realized gain (loss)
was recorded by the Fund.
During the year ended June 30, 1995, 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, amounts have been
reclassified to reflect a decrease in paid-in
capital of $2,512 and an increase in
undistributed net investment income of
$2,512.
---------------------------------------------
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.
- -------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited
BENEFICIAL INTEREST number of no par value shares of beneficial
interest. Transactions in shares of
beneficial interest were as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30, 1995 Year Ended June 30, 1994(1)
----------------------------- ---------------------------
Shares Amount Shares Amount
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 5,288,654 $147,552,419 3,332,175 $ 92,525,655
Dividends
and distributions
reinvested 2,803,654 70,904,457 719,996 19,958,287
Redeemed (4,799,772) (135,070,354) (6,608,134) (183,012,918)
---------- ------------ ---------- ------------
Net increase (decrease) 3,292,536 $ 83,386,522 (2,555,963) $(70,528,976)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
-----------------------------------------------------------------------------------------
Class B:
Sold 1,407,470 $ 39,568,793 398,782 $ 11,048,394
Dividends and
distributions
reinvested 64,577 1,618,927 4,391 121,221
Redeemed (377,530) (10,526,852) (72,353) (1,969,658)
---------- ------------ ---------- ------------
Net increase 1,094,517 $ 30,660,868 330,820 $ 9,199,957
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
-----------------------------------------------------------------------------------------
Class Y:
Sold 113,317 $ 3,284,040 356 $ 10,000
Dividends and
distributions reinvested 569 14,393 -- --
Redeemed (10,692) (313,929) -- --
---------- ------------ ---------- ------------
Net increase 103,194 $2,984,504 356 $10,000
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<FN>
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.
</TABLE>
- -------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At June 30, 1995, net unrealized
LOSSES ON INVESTMENTS appreciation on investments of $268,009,907
was composed of gross appreciation of
$276,705,331, and gross depreciation of
$8,695,424.
17 Oppenheimer Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager were in
AND OTHER TRANSACTIONS accordance with the investment advisory
WITH AFFILIATES agreement with the Fund which provides for a
fee of .75% on the first $200 million of
average annual 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, 1995,
commissions (sales charges paid by investors)
on sales of Class A shares totaled
$1,238,892, of which $370,067 was retained by
Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general
distributor, and by an affiliated
broker/dealer. Sales charges advanced to
broker/dealers by OFDI on sales of the
Fund's Class B shares totaled $798,408, of
which $43,438 was paid to an affiliated
broker/dealer. During the period ended June
30, 1995, OFDI received contingent deferred
sales charges of $35,872 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, 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 and sold prior to termination
or discontinuance of the plan. During the
year ended June 30, 1995, OFDI paid $29,144
and $1,767 to an affiliated broker/dealer as
reimbursement for Class A and Class B
personal service and maintenance expenses,
respectively, and retained $169,736 as
reimbursement for Class B sales commissions
and service fee advances, as well as
financing costs.
<PAGE>
Appendix
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
<PAGE>
____________________________
* For purposes of the Fund's policy not to concentrate in securities of
issuers in the same industry, gas utilities and gas transmission utilities
will each be considered a separate industry.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
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
PX0270.001
<PAGE>
Oppenheimer Growth Fund
Annual Report June 30, 1996
[Picture of Couple Talking]
"We have
a lot of
important goals,
so we need
our money
to grow solidly
over time."
<PAGE>
This Fund is for people who want their money to
grow for long-term needs and feel most comfortable
investing in well-known, established companies.
News
Beat the Average
Cumulative Total Return for the
5-Year Period Ended 6/30/96:
Oppenheimer Growth Fund
Class A (at net asset value)(1)
112.36%
S&P 500(3)
107.39%
Lipper Growth Funds Average(4)
100.05%
How Your Fund Is Managed
Oppenheimer Growth Fund invests in stocks to seek capital appreciation. The Fund
focuses on a diversified portfolio of medium- and large-sized companies that the
managers believe have prospects for better-than-expected earnings and whose
stock is selling at attractive valuations. Simply put, the Fund's managers
invest in companies they believe have excellent growth potential at bargain
prices.
Growth Fund investments are primarily in high-quality, well-known growth
companies, whose earnings have tended to increase consistently in all types of
market conditions.
Performance
Total return at net asset value for the twelve months ended 6/30/96 for Class A,
B and Y shares were 21.00%, 19.95% and 21.10%, respectively. Cumulative total
return at net asset value for Class C shares since inception on 11/1/95 was
10.07%.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-, 5-, and 10-year periods ended 6/30/96 were 14.04%,
14.89% and 11.87%, respectively. For Class B shares, average annual total
returns for the 1-year period ended 6/30/96 and since inception of the Class on
8/17/93 were 14.95% and 15.31%, respectively. For Class C shares, cumulative
total return since inception on 11/1/95 was 9.08%.(2)
Outlook
"We believe the outlook for the Fund is extremely positive. As you know, we look
for companies with strong long-term growth potential, and then buy them when
their prices are below what we believe they're worth. Using this strategy, we
think the Fund is well-positioned to outperform the market over the long term."
Robert Doll, Portfolio Manager
June 30, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future results.
Investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than the original cost. For more complete information, please review the
prospectus carefully before you invest.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower for
Class A, B, and C shares if sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 6/30/95, 6/30/91
and 6/30/86, after deducting the current maximum initial sales charge of 5.75%.
Class A shares were first publicly offered on 3/15/73. Prior to 4/1/94, the
Fund's maximum sales charge for Class A shares was higher, so that actual
account performance would have been less. Class B returns show results of
hypothetical investments on 6/30/95 and 8/17/93 (inception of class), after the
deduction of the applicable contingent deferred sales charge of 5% (1-year) and
3% (since inception). Class C shares show results of a hypothetical investment
on 11/1/95 after the 1% contingent deferred sales charge. For Class Y shares,
average annual total returns for the 1-year period and since inception of the
Class on 6/1/94 were 21.10% and 21.08%, respectively. An explanation of the
different performance calculations is in the Fund's prospectus.
3. The S&P 500 Index is an unmanaged index of common stocks that is widely
recognized as an indicator of overall market performance. The S&P 500 Index
includes dividend reinvestments but does not take capital gains distributions
into consideration.
4. Source: Lipper Analytical Services. The Lipper total return average
for the 5-year period was for 246 growth funds. The average is shown for
comparative purposes only. Oppenheimer Growth Fund is characterized by
Lipper as a growth fund. Lipper performance does not take sales charges
into consideration.
2 Oppenheimer Growth Fund
<PAGE>
Bridget A. Macaskill
President
Oppenheimer
Growth Fund
Dear Shareholder,
Against all odds, the stock market showed remarkable strength during the first
five months of 1996. However, in the few months that followed, the market
experienced significant volatility that resulted in a decline in the Dow of
about 7 percent.
Many experts said the stock market, having advanced to record heights in
1995 and void of any real market correction since 1990, was due for a downturn.
This was, after all, the longest bull market of the post-World War II era.
Thanks to the 10% rise in blue chip stocks during the first half of 1996 and the
early success of small stocks, the decline that occurred recently was somewhat
cushioned. While it's impossible to tell what will happen next, we are
optimistic that this turn was a correction within a bull market rather than the
onset of a bear market.
What made the market perform so well during the first part of the year? It
was another surprise: corporate profits. Between 1992 and 1995, corporate
profits of U.S. companies advanced at a double-digit rate. Investors widely
expected this year's profit tallies to be flat compared to 1995. After all, the
economy had been sluggish--growing at an annual rate of just 2.3% in the first
quarter of 1996. But corporate America continued to perform.
The reason corporate profits were so strong is that many U.S. companies
continued to suc-cessfully reduce costs. Often when a company achieves a small
increase in sales, the benefit goes straight to the bottom line. Indeed, the
U.S. Commerce Department reports indicated that corporate profits rose 15% for
the four quarters ended March 1996, while the economy grew only marginally.
Still, profits are not what they were in the early 1990s. That's why
investors are seeking out companies that can grow earnings regardless of the
fortunes of the economy. Which is just what many small companies in such fields
as technology, healthcare and specialty retailing have been doing, growing
earnings at double-digit--and even triple-digit rates. So it's not surprising
that the stocks of many of these small fast-growing companies have been such
strong performers.
The early strength of the stock market is all the more remarkable when you
consider that during the same period, interest rates moved up sharply. The yield
on the benchmark 30-year U.S. Treasury bond rose from about 6% in January to
over 7% today. Interest rates have been rising partly because investors are
concerned that the economy is growing fast enough to generate higher inflation.
However, we are watching this very closely, and would become very cautious
regarding the stock market's performance if inflation were to flare up.
As always, remember stock investments are generally meant for long-term
growth objectives, and often involve short-term volatility. So, it's critical
for investors to keep their focus on long-term goals and to put near-term
setbacks in proper prospective.
Your portfolio managers discuss the outlook for your Fund in light of these
broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/Bridget A. Macaskill
Bridget A. Macaskill
July 22, 1996
3 Oppenheimer Growth Fund
<PAGE>
Q + A
Q What is the Fund currently targeting?
An interview with your Fund's managers.
How did the Fund perform over the past year?
The Fund has performed very well. This can primarily be attributed to having
invested in the right stocks, within the right sectors of the market, at the
right times.
What investments made positive contribution to performance?
As always, we search for companies we believe have the potential to grow faster
than the market and are priced at a discount to what we think they're worth. And
of course, we use in-depth research to select only those companies whose
earnings estimates are going up.
With many foreign economies experiencing higher growth rates than the U.S.,
companies with exposure to overseas markets have been well-positioned to
realize above-average earnings growth. And over the past six months, we've found
that many companies located overseas have met these criteria.
Additionally, we were fortunate to have had a large percentage of the
portfolio in the technology, healthcare and financial services industries, which
happened to be the top three performing industries in the U.S. last year.(1)
Were there any investments that didn't perform as you'd expected?
Generally, the investments in our portfolio performed very well. After last
year's run-up in stock prices, however, we had some difficulty finding stocks
selling at what we'd consider low-to-reasonable price levels. As a consequence,
our cash position was slightly higher than normal. While having a high level of
cash can protect a portfolio when the stock market is declining, having a
fully-invested portfolio is an obvious benefit when the market is going up.
1. The Fund's portfolio is subject to change.
4 Oppenheimer Growth Fund
<PAGE>
[Picture captions]
Facing page
Top left: Robert Doll, Portfolio
Manager and Executive VP,
Director of Equity Investments
Top right: Michael Levine, Member
of Equity Investments Team
Bottom: Bruce Bartlett, Member
of Equity Investments Team
This page
Top: Jay Tracey, Member of Equity
Investments Team
Bottom: Jane Putnam, Member
of Equity Investments Team
A We look
for companies
with long-
term growth
potential that
are priced low.
What areas of the market are you currently targeting?
We continue to hold higher-than-average weightings in both technology and
financial services companies, while we've reduced our holdings in healthcare.
Although prices have risen dramatically for all three sectors, the earnings of
many technology and financial services firms are rising faster.
For this reason, we believe the stocks of technology and financial
services companies are still excellent growth investments. On the other hand,
the healthcare industry may have reached peak valuations. In other words, with a
lot of the good news already realized, we see limited upside potential.
While we've sold healthcare firms, we've also begun to invest in some basic
materials companies, such as paper, chemicals and metals firms. Because these
businesses tend to be cyclical--meaning their profitability is linked to how
well the economy is doing--their prices suffered when the economy was at its
slowest. So, at the end of 1995, we were able to buy the stocks of these
companies at a discount.
What is your outlook for the Fund?
We believe the outlook for the Fund is extremely positive. As you know, we
look for companies with strong long-term growth potential, and then buy them
when their prices are below what we believe they're worth. Using this
strategy, we think the Fund is well-positioned to outperform the market over
the long term.[solid box]
5 Oppenheimer Growth Fund
<PAGE>
Financials
Contents
Statement of Investments 7
Statement of Assets and Liabilities 13
Statement of Operations 14
Statements of Changes in Net Assets 15
Financial Highlights 16
Notes to Financial Statements 18
Independent Auditors' Report 21
Federal Income Tax Information 22
6 Oppenheimer Growth Fund
<PAGE>
Statement of Investments June 30, 1996
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
================================================================
===================================================================
Short-Term Notes--31.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Broker/Dealers--4.5%
Dean Witter, Discover & Co., 5.30%, 7/1/96 $17,000,000 $ 17,000,000
---------------------------------------------------------------------------------------------------
Dean Witter, Discover & Co., 5.30%, 7/2/96 15,000,000 14,997,792
---------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.35%, 7/9/96 25,000,000 24,970,278
-----------
56,968,070
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Finance--3.1% Countrywide Home Loan, 5.40%, 7/16/96 40,000,000 39,910,000
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Finance--2.0% Island Finance Puerto Rico, Inc., 5.31%, 7/12/96 24,800,000 24,759,307
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--9.4% Associates Corp. of North America, 5.60%, 7/1/96 33,900,000 33,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.34%, 7/8/96 45,000,000 44,953,275
---------------------------------------------------------------------------------------------------
Household Finance Corp., 5.35%, 7/10/96 40,000,000 39,946,500
-----------
118,799,775
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--3.4% PHH Corp., 5.38%, 7/22/96 43,200,000 43,064,424
- -----------------------------------------------------------------------------------------------------------------------------------
Leasing & Factoring--3.8% The Hertz Corp., 5.31%, 7/17/96 48,000,000 47,885,653
- -----------------------------------------------------------------------------------------------------------------------------------
Special Purpose Financial--5.3% New Center Asset Trust, 5.36%, 7/11/96 40,000,000 39,940,444
- -----------------------------------------------------------------------------------------------------------------------------------
Sheffield Receivables Corp., 5.28%, 7/2/96 27,685,000 27,680,940
-----------
67,621,384
-----------
Total Short-Term Notes (Cost $399,008,613) 399,008,613
Shares
================================================================
===================================================================
Common Stocks--68.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--6.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.5% FMC Corp.(1) 25,000 1,631,250
---------------------------------------------------------------------------------------------------
Georgia Gulf Corp. 245,000 7,166,250
---------------------------------------------------------------------------------------------------
IMC Global, Inc. 80,000 3,010,000
---------------------------------------------------------------------------------------------------
Morton International, Inc. 180,000 6,705,000
---------------------------------------------------------------------------------------------------
Praxair, Inc. 30,000 1,267,500
---------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.(1) 490,000 5,696,250
---------------------------------------------------------------------------------------------------
Terra Industries, Inc. 112,500 1,392,187
---------------------------------------------------------------------------------------------------
Union Carbide Corp. 130,000 5,167,500
-------------
32,035,937
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--1.3% Asarco, Inc. 300,000 8,287,500
---------------------------------------------------------------------------------------------------
British Steel PLC, ADR 95,000 2,410,625
---------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co. 140,000 3,167,500
---------------------------------------------------------------------------------------------------
LTV Corp. 195,000 2,218,125
-------------
16,083,750
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--2.2% Boise Cascade Corp. 185,000 6,775,625
---------------------------------------------------------------------------------------------------
Bowater, Inc. 285,000 10,723,125
---------------------------------------------------------------------------------------------------
Chesapeake Corp. 80,000 2,100,000
---------------------------------------------------------------------------------------------------
Georgia-Pacific Corp. 45,000 3,195,000
---------------------------------------------------------------------------------------------------
Stone Container Corp. 210,000 2,887,500
---------------------------------------------------------------------------------------------------
Weyerhaeuser Co. 25,000 1,062,500
---------------------------------------------------------------------------------------------------
Willamette Industries, Inc. 15,000 892,500
-------------
27,636,250
7 Oppenheimer Growth Fund
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--5.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--0.6% Kaufman & Broad Home Corp. 20,000 $ 290,000
---------------------------------------------------------------------------------------------------
Navistar International Corp.(1) 555,000 5,480,625
---------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 110,000 1,801,250
-------------
7,571,875
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.2% British Airways PLC, Sponsored ADR 5,000 428,750
---------------------------------------------------------------------------------------------------
Brunswick Corp. 220,000 4,400,000
---------------------------------------------------------------------------------------------------
Disney (Walt) Co. 60,000 3,772,500
---------------------------------------------------------------------------------------------------
KLM Royal Dutch Airlines NV 112,682 3,577,653
---------------------------------------------------------------------------------------------------
Mattel, Inc. 68,358 1,956,748
---------------------------------------------------------------------------------------------------
McDonald's Corp. 50,000 2,337,500
---------------------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1) 115,000 3,965,703
---------------------------------------------------------------------------------------------------
Outboard Marine Corp. 275,000 4,984,375
---------------------------------------------------------------------------------------------------
Pancho's Mexican Buffet, Inc. 100,000 256,250
---------------------------------------------------------------------------------------------------
Shoney's, Inc.(1) 150,000 1,631,250
-------------
27,310,729
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--1.5% Dollar General Corp. 293,750 8,592,187
---------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(1) 20,000 982,500
---------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(1) 25,000 718,750
---------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 60,000 3,217,500
---------------------------------------------------------------------------------------------------
Waban, Inc.(1) 165,000 3,939,375
---------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 75,000 1,903,125
-------------
19,353,437
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--1.4% Bed Bath & Beyond, Inc.(1) 310,000 8,292,500
---------------------------------------------------------------------------------------------------
Claire's Stores, Inc. 97,500 2,693,437
---------------------------------------------------------------------------------------------------
Micro Warehouse, Inc.(1) 200,000 4,000,000
---------------------------------------------------------------------------------------------------
Rocky Mountain Chocolate Factory, Inc.(1) 100,000 1,150,000
---------------------------------------------------------------------------------------------------
Sotheby's Holdings, Inc., Cl. A 95,000 1,377,500
-------------
17,513,437
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--15.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages--2.1% Coca-Cola Co. (The) 250,000 12,218,750
---------------------------------------------------------------------------------------------------
PepsiCo, Inc. 390,000 13,796,250
-------------
26,015,000
- -----------------------------------------------------------------------------------------------------------------------------------
Food--1.6% IBP, Inc. 360,000 9,945,000
---------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 150,000 4,950,000
---------------------------------------------------------------------------------------------------
Sara Lee Corp. 125,000 4,046,875
---------------------------------------------------------------------------------------------------
Smithfield Foods, Inc.(1) 60,000 1,515,000
-------------
20,456,875
8 Oppenheimer Growth Fund
<PAGE>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--5.7% Abbott Laboratories 200,000 $ 8,700,000
---------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 75,000 6,750,000
---------------------------------------------------------------------------------------------------
Johnson & Johnson 225,840 11,179,080
---------------------------------------------------------------------------------------------------
Merck & Co., Inc. 150,000 9,693,750
---------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 60,000 1,035,000
---------------------------------------------------------------------------------------------------
Pfizer, Inc. 233,000 16,630,375
---------------------------------------------------------------------------------------------------
Schering-Plough Corp. 300,000 18,825,000
-------------
72,813,205
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Becton, Dickinson & Co. 10,000 802,500
Services--3.7% ---------------------------------------------------------------------------------------------------
Boston Scientific Corp.(1) 60,000 2,700,000
---------------------------------------------------------------------------------------------------
Collagen Corp. 75,000 1,434,375
---------------------------------------------------------------------------------------------------
HealthCare COMPARE Corp.(1) 273,500 13,333,125
---------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 105,000 3,780,000
---------------------------------------------------------------------------------------------------
Medtronic, Inc. 310,000 17,360,000
---------------------------------------------------------------------------------------------------
Nellcor Puritan Bennett, Inc.(1) 30,000 1,455,000
---------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc.(1) 20,000 822,500
---------------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(1) 50,000 1,387,500
---------------------------------------------------------------------------------------------------
Summit Technology, Inc.(1) 235,000 3,290,000
-------------
46,365,000
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--2.5% Philip Morris Cos., Inc. 195,000 20,280,000
---------------------------------------------------------------------------------------------------
UST, Inc. 350,000 11,987,500
-------------
32,267,500
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services & Producers--0.4%
Tidewater, Inc. 120,000 5,265,000
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--0.6% Repsol SA, Sponsored ADR 90,000 3,127,500
---------------------------------------------------------------------------------------------------
USX-Marathon Group 250,000 5,031,250
-------------
8,158,750
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--16.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--5.4% Bank of Boston Corp. 355,000 17,572,500
---------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 19,300 989,125
---------------------------------------------------------------------------------------------------
BankAmerica Corp. 15,000 1,136,250
---------------------------------------------------------------------------------------------------
Bankers Trust New York Corp. 10,000 738,750
---------------------------------------------------------------------------------------------------
Cal Fed Bancorp, Inc.(1) 55,000 1,003,750
---------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 110,000 7,768,750
---------------------------------------------------------------------------------------------------
First Tennessee National Corp. 45,000 1,378,125
---------------------------------------------------------------------------------------------------
First Union Corp. 90,000 5,478,750
---------------------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 124,996 5,437,326
---------------------------------------------------------------------------------------------------
Golden West Financial Corp. 10,000 560,000
---------------------------------------------------------------------------------------------------
Great Western Financial Corp. 150,000 3,581,250
---------------------------------------------------------------------------------------------------
NationsBank Corp. 75,000 6,196,875
---------------------------------------------------------------------------------------------------
Northern Trust Corp. 25,000 1,443,750
9 Oppenheimer Growth Fund
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
Banks (continued) PNC Bank Corp. 307,500 $ 9,148,125
---------------------------------------------------------------------------------------------------
SouthTrust Corp. 155,000 4,359,375
---------------------------------------------------------------------------------------------------
Standard Federal Bancorporation 5,000 192,500
---------------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 40,000 1,480,000
-------------
68,465,201
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--7.7% Advanta Corp., Cl. A 360,000 18,360,000
---------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. 115,762 2,734,877
---------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 70,000 5,985,000
---------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 300,000 10,050,000
---------------------------------------------------------------------------------------------------
First USA, Inc. 170,000 9,350,000
---------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 640,000 20,000,000
---------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 128,000 3,168,000
---------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates 27,000 830,250
---------------------------------------------------------------------------------------------------
Salomon, Inc. 137,500 6,050,000
---------------------------------------------------------------------------------------------------
Student Loan Marketing Assn. 100,000 7,400,000
---------------------------------------------------------------------------------------------------
Travelers Group, Inc. 315,000 14,371,875
-------------
98,300,002
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--3.4% AFLAC, Inc. 184,500 5,511,938
---------------------------------------------------------------------------------------------------
Allstate Corp. 95,000 4,334,375
---------------------------------------------------------------------------------------------------
American International Group, Inc. 15,000 1,479,375
---------------------------------------------------------------------------------------------------
Conseco, Inc. 80,000 3,200,000
---------------------------------------------------------------------------------------------------
Loews Corp. 65,000 5,126,875
---------------------------------------------------------------------------------------------------
MGIC Investment Corp. 15,000 841,875
---------------------------------------------------------------------------------------------------
Reliastar Financial Corp. 135,000 5,821,875
---------------------------------------------------------------------------------------------------
SunAmerica, Inc. 242,500 13,701,250
---------------------------------------------------------------------------------------------------
USF&G Corp. 190,000 3,111,250
-------------
43,128,813
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--4.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--1.4% General Electric Co. 30,000 2,595,000
---------------------------------------------------------------------------------------------------
Kemet Corp.(1) 460,000 9,200,000
---------------------------------------------------------------------------------------------------
Vishay Intertechnology, Inc. 273,000 6,449,625
-------------
18,244,625
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Materials--0.1% Owens Corning 35,000 1,505,000
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--0.7% Comdisco, Inc. 307,500 8,187,188
---------------------------------------------------------------------------------------------------
Growth Environmental, Inc.(1) 2,100 32
---------------------------------------------------------------------------------------------------
Mercury Air Group, Inc. 121,000 968,000
-------------
9,155,220
10 Oppenheimer Growth Fund
<PAGE>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--1.1% Giddings & Lewis, Inc. 60,000 $ 975,000
---------------------------------------------------------------------------------------------------
Kulicke & Soffa Industries, Inc.(1) 225,000 3,290,625
---------------------------------------------------------------------------------------------------
Mark IV Industries, Inc. 88,200 1,995,525
---------------------------------------------------------------------------------------------------
Textron, Inc. 15,000 1,198,125
---------------------------------------------------------------------------------------------------
U.S. Filter Corp.(1) 20,000 695,000
---------------------------------------------------------------------------------------------------
Varity Corp.(1) 125,000 6,015,625
-------------
14,169,900
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--0.8% Canadian Pacific Ltd. 245,000 5,390,000
---------------------------------------------------------------------------------------------------
CSX Corp. 25,000 1,206,250
---------------------------------------------------------------------------------------------------
Illinois Central Corp. 105,000 2,979,375
-------------
9,575,625
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--19.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--6.4% Adaptec, Inc.(1) 55,000 2,605,625
---------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 265,000 18,185,625
---------------------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 280,000 13,790,000
---------------------------------------------------------------------------------------------------
EMC Corp.(1) 240,000 4,470,000
---------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(1) 500,000 17,000,000
---------------------------------------------------------------------------------------------------
Intergraph Corp. 210,000 2,546,250
---------------------------------------------------------------------------------------------------
International Business Machines Corp. 40,000 3,960,000
---------------------------------------------------------------------------------------------------
Quantum Corp.(1) 240,000 3,510,000
---------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 215,000 9,675,000
---------------------------------------------------------------------------------------------------
Western Digital Corp.(1) 220,000 5,747,500
-------------
81,490,000
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software--6.5% Acclaim Entertainment, Inc.(1) 130,000 1,251,250
---------------------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 250,000 9,656,250
---------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 280,000 16,730,000
---------------------------------------------------------------------------------------------------
Broderbund Software, Inc.(1) 30,000 967,500
---------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 155,000 11,043,750
---------------------------------------------------------------------------------------------------
GTech Holdings Corp.(1) 35,000 1,036,875
---------------------------------------------------------------------------------------------------
HBO & Co. 40,000 2,710,000
---------------------------------------------------------------------------------------------------
Informix Corp.(1) 140,000 3,150,000
---------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 160,000 19,220,000
---------------------------------------------------------------------------------------------------
Oracle Corp.(1) 100,000 3,943,750
---------------------------------------------------------------------------------------------------
Peoplesoft, Inc.(1) 10,000 712,500
---------------------------------------------------------------------------------------------------
Sterling Software, Inc.(1) 90,000 6,930,000
---------------------------------------------------------------------------------------------------
System Software Associates, Inc. 325,000 5,525,000
-------------
82,876,875
11 Oppenheimer Growth Fund
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--4.5% Arrow Electronics, Inc.(1) 215,000 $ 9,271,875
---------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 610,000 7,320,000
---------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 15,000 1,494,375
---------------------------------------------------------------------------------------------------
Intel Corp. 115,000 8,445,313
---------------------------------------------------------------------------------------------------
International Rectifier Corp.(1) 167,500 2,700,938
---------------------------------------------------------------------------------------------------
Linear Technology Corp. 70,000 2,100,000
---------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 245,000 8,820,000
---------------------------------------------------------------------------------------------------
Philips Electronics NV, ADR 80,000 2,610,000
---------------------------------------------------------------------------------------------------
Tektronix, Inc. 65,000 2,908,750
---------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 20,000 997,500
---------------------------------------------------------------------------------------------------
Varian Associates, Inc. 60,000 3,105,000
---------------------------------------------------------------------------------------------------
VLSI Technology, Inc.(1) 355,000 4,925,625
---------------------------------------------------------------------------------------------------
Wyle Electronics 60,000 1,987,500
-------------
56,686,876
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications- 3Com Corp.(1) 220,000 10,065,000
Technology--1.8% ---------------------------------------------------------------------------------------------------
AT&T Corp. 100,000 6,200,000
---------------------------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., Cl. B, ADR 90,000 1,935,000
---------------------------------------------------------------------------------------------------
Telecom Corp. of New Zealand Ltd., Sponsored ADR 75,000 5,006,250
-------------
23,206,250
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--0.4% Empresa Nacional de Electricidad SA, Sponsored ADR 75,000 4,696,875
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone Utilities--0.3% Telefonos de Mexico SA, Sponsored ADR 100,000 3,350,000
---------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $540,004,420) 873,698,007
Units
================================================================
===================================================================
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Windmere Corp. Wts., Exp. 1/98 (Cost $0) 9,062 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $939,013,033) 100.3% 1,272,706,620
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.3) (3,473,087)
----- --------------
Net Assets 100.0% $1,269,233,533
===== ==============
1. Non-income producing security.
See accompanying Notes to Financial Statements
12 Oppenheimer Growth Fund
<PAGE>
Statement of Assets and Liabilities June 30, 1996
================================================================
===================================================================
Assets Investments, at value (cost $939,013,033)--see accompanying statement $1,272,706,620
---------------------------------------------------------------------------------------------------
Receivables:
Investments sold 2,424,085
Shares of beneficial interest sold 1,189,276
Interest and dividends 920,353
---------------------------------------------------------------------------------------------------
Other 151,004
-------------
Total assets 1,277,391,338
================================================================
===================================================================
Liabilities Bank overdraft 23,988
---------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,015,348
Shares of beneficial interest redeemed 1,938,972
Distribution and service plan fees 553,350
Trustees' fees 278,142
Shareholder reports 175,955
Transfer and shareholder servicing agent fees 85,699
Dividends 30,352
Other 55,999
--------------
Total liabilities 8,157,805
================================================================
===================================================================
Net Assets $1,269,233,533
==============
================================================================
===================================================================
Composition of Paid-in capital $ 837,674,129
Net Assets ---------------------------------------------------------------------------------------------------
Undistributed net investment income 8,210,351
---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 89,655,466
---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 333,693,587
--------------
Net assets $1,269,233,533
==============
================================================================
===================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $1,120,045,776 and 33,508,383 shares of beneficial interest outstanding) $33.43
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $35.47
---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $129,484,414 and 3,955,435 shares of beneficial interest outstanding) $32.74
---------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $3,592,867 and 108,160 shares of beneficial interest outstanding) $33.22
---------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $16,110,476 and 482,038 shares of beneficial interest outstanding) $33.42
See accompanying Notes to Financial Statements.
13 Oppenheimer Growth Fund
<PAGE>
Statement of Operations For the Year Ended June 30, 1996
================================================================
===================================================================
Investment Income Interest $ 17,120,681
---------------------------------------------------------------------------------------------------
Dividends 10,705,764
-------------
Total income 27,826,445
================================================================
===================================================================
Expenses Management fees--Note 4 7,558,069
---------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,726,845
Class B 904,437
Class C 11,561
---------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,619,012
---------------------------------------------------------------------------------------------------
Shareholder reports 356,339
---------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 134,218
---------------------------------------------------------------------------------------------------
Legal and auditing fees 70,515
---------------------------------------------------------------------------------------------------
Custodian fees and expenses 64,836
---------------------------------------------------------------------------------------------------
Insurance expenses 48,839
---------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 626
Class B 25,101
Class C 1,191
Class Y 3,930
---------------------------------------------------------------------------------------------------
Other 98,330
-------------
Total expenses 12,623,849
================================================================
===================================================================
Net Investment Income 15,202,596
================================================================
===================================================================
Realized and Unrealized Net realized gain on investments 123,112,424
Gain on Investments ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 65,683,680
-------------
Net realized and unrealized gain 188,796,104
================================================================
===================================================================
Net Increase in Net Assets Resulting From Operations $ 203,998,700
=============
See accompanying Notes to Financial Statements.
14 Oppenheimer Growth Fund
<PAGE>
Statements of Changes in Net Assets
Year Ended June 30,
1996 1995
================================================================
===================================================================
Operations Net investment income $ 15,202,596 $ 9,619,976
---------------------------------------------------------------------------------------------------
Net realized gain 123,112,424 85,671,017
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 65,683,680 104,043,105
-------------- -------------
Net increase in net assets resulting from operations 203,998,700 199,334,098
================================================================
===================================================================
Dividends and Dividends from net investment income:
Distributions to Class A (12,145,385) (5,772,443)
Shareholders Class B (763,600) (71,931)
Class C (8,006) --
Class Y (111,943) (1,224)
---------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (92,881,153) (67,428,961)
Class B (8,596,317) (1,571,030)
Class C (61,792) --
Class Y (783,715) (13,169)
---------------------------------------------------------------------------------------------------
Beneficial Interest Net increase in net assets resulting from beneficial interest
Transactions transactions--Note2:
Class A 176,397,622 83,386,522
Class B 81,183,295 30,660,868
Class C 3,526,653 --
Class Y 12,281,833 2,984,504
================================================================
===================================================================
Net Assets Total increase 362,036,192 241,507,234
---------------------------------------------------------------------------------------------------
Beginning of period 907,197,341 665,690,107
-------------- -------------
End of period (including undistributed net investment
income of $8,210,351 and $6,036,689, respectively) $1,269,233,533 $ 907,197,341
============== =============
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Growth Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
----------------------------------------------------
Year Ended June 30,
1996 1995 1994 1993 1992
================================================================
=================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $30.80 $26.65 $27.34 $24.94 $21.88
- -------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .44 .36 .16 .19 .29
Net realized and unrealized gain (loss)
on investments 5.70 6.83 (.05) 4.03 3.13
---------- ------- ------- ------- -------
Total income (loss) from
investment operations 6.14 7.19 .11 4.22 3.42
- -------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.41) (.24) (.16) (.25) (.36)
Distributions from net realized gain
on investments (3.10) (2.80) (.64) (1.57) --
---------- ------- ------- ------- -------
Total dividends and distributions
to shareholders (3.51) (3.04) (.80) (1.82) (.36)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $33.43 $30.80 $26.65 $27.34 $24.94
========== ======= ======= ======= =======
================================================================
=================================
Total Return, at Net Asset Value(4) 21.00% 29.45% 0.27% 16.88% 15.69%
================================================================
=================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $1,120,046 $860,741 $656,934 $743,830 $630,767
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,018,022 $727,102 $720,765 $710,391 $624,527
- -------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.43% 1.31% 0.56% 0.72% 1.14%
Expenses 1.06% 1.05% 1.07% 0.93% 0.90%
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 38.0% 35.6% 19.8% 23.2% 36.7%
Average brokerage commissions(7) $0.0583 -- -- -- --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to June 30, 1994.
2. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
3. 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.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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. Total
returns are not annualized for periods of less than one full year.
16 Oppenheimer Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C Class Y
------------------------------ ------------ ----------------------------
Period Ended
Year Ended June 30, June 30, Year Ended June 30,
1996 1995 1994(3) 1996(2) 1996 1995 1994(1)
================================================================
============================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $30.36 $26.44 $27.02 $33.44 $30.80 $26.64 $28.08
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .23 .20 (.04) .40 .46 .30 .02
Net realized and unrealized gain (loss)
on investments 5.53 6.65 .21 2.88 5.70 6.92 (1.46)
------- ------- ------ ------- ------- ----- ------
Total income (loss) from
investment operations 5.76 6.85 .17 3.28 6.16 7.22 (1.44)
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.28) (.13) (.11) (.40) (.44) (.26) --
Distributions from net realized gain
on investments (3.10) (2.80) (.64) (3.10) (3.10) (2.80) --
------- ------- ------ ------- ------- ----- ------
Total dividends and distributions
to shareholders (3.38) (2.93) (.75) (3.50) (3.54) (3.06) --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.74 $30.36 $26.44 $33.22 $33.42 30.80 $26.64
======= ======= ====== ======= ======= =====
======
================================================================
===========================================================
Total Return, at Net Asset Value(4) 19.95% 28.22% (0.20)% 10.07% 21.10% 29.59% (5.13)%
================================================================
===========================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $129,484 $43,267 $8,747 $3,593 $16,110 $3,189 $ 9
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 90,501 $18,722 $5,119 $1,804 $ 9,384 $ 536 $10
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.60% 0.44% (0.22)%(5) 0.65%(5) 1.56% 1.54% 1.09%(5)
Expenses 1.89% 2.02% 1.98%(5) 1.81%(5) 0.94% 1.04% 1.25%(5)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 38.0% 35.6% 19.8% 38.0% 38.0% 35.6% 19.8%
Average brokerage commissions(7) $0.0583 -- -- $0.0583 $0.0583 -- --
</TABLE>
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended June 30, 1996 were $317,162,338 and $308,722,352, respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold. See accompanying Notes to Financial Statements.
17 Oppenheimer Growth Fund
<PAGE>
Notes to Financial Statements
================================================================
================
1. Significant
Accounting Policies
Oppenheimer Growth 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 objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B, Class C and Class Y shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All 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, B and C have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. 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 the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Such securities which cannot be
valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" 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.
- --------------------------------------------------------------------------------
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 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 or excise tax provision is required.
- --------------------------------------------------------------------------------
Trustees' Fees and Expenses. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
June 30, 1996, a provision of $102,655 was made for the Fund's projected benefit
obligations and payments of $6,672 were made to retired trustees, resulting in
an accumulated liability of $251,146 at June 30, 1996.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain (loss) was recorded by the
Fund.
- --------------------------------------------------------------------------------
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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
18 Oppenheimer Growth Fund
<PAGE>
================================================================
================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1996(1) Year Ended June 30, 1995
------------------------------- -------------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A:
Sold 8,407,775 $ 275,835,781 5,288,654 $ 147,552,419
Dividends and distributions reinvested 3,323,811 101,576,179 2,803,654 70,904,457
Redeemed (6,169,610) (201,014,338) (4,799,772) (135,070,354)
---------- ------------- ---------- -------------
Net increase 5,561,976 $ 176,397,622 3,292,536 $ 83,386,522
========== ============= ==========
=============
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 3,119,546 $ 100,609,679 1,407,470 $ 39,568,793
Dividends and distributions reinvested 288,253 8,664,821 64,577 1,618,927
Redeemed (877,701) (28,091,205) (377,530) (10,526,852)
---------- ------------- ---------- -------------
Net increase 2,530,098 $ 81,183,295 1,094,517 $ 30,660,868
========== ============= ==========
=============
- -----------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 111,265 $ 3,624,375 -- $ --
Dividends and distributions reinvested 2,287 69,761 -- --
Redeemed (5,392) (167,483) -- --
---------- ------------- ---------- -------------
Net increase 108,160 $ 3,526,653 -- $ --
========== ============= ==========
=============
- -----------------------------------------------------------------------------------------------------------------------------------
Class Y:
Sold 439,359 $ 14,330,346 113,317 $ 3,284,040
Dividends and distributions reinvested 29,328 895,658 569 14,393
Redeemed (90,199) (2,944,171) (10,692) (313,929)
---------- ------------- ---------- -------------
Net increase 378,488 $ 12,281,833 103,194 $ 2,984,504
========== ============= ==========
=============
</TABLE>
1. For the year ended June 30, 1996 for Class A, B and Y shares, and for the
period from November 1, 1995 (inception of offering) to June 30, 1996 for Class
C shares.
================================================================
================
3. Unrealized Gains and
Losses on Investments
At June 30, 1996, net unrealized appreciation on investments of $333,693,587 was
composed of gross appreciation of $350,414,322, and gross depreciation of
$16,720,735.
19 Oppenheimer Growth Fund
<PAGE>
Notes to Financial Statements (Continued)
================================================================
================
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 a fee of 0.75% on the first
$200 million of average annual net assets with a reduction of 0.03% on each $200
million thereafter to $800 million, and 0.60% on net assets in excess of $800
million. The Manager has voluntarily undertaken to waive a portion of its
management fee, whereby the Fund shall pay an annual management fee of 0.58% of
its net assets in excess of $1.5 billion. 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, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $3,426,100, of which $956,285 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $2,653,893 and $29,603, of which $130,924 was paid to an
affiliated broker/dealer for Class B shares. During the year ended June 30,
1996, OFDI received contingent deferred sales charges of $157,312 upon
redemption of Class B shares as reimbursement for sales commissions advanced by
OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
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. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the year ended June 30, 1996, OFDI paid $48,287 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted a reimbursement type Distribution and Service Plan
for Class B shares to reimburse OFDI for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B shares that are
outstanding for 6 years or less. OFDI also receives a service fee of 0.25% per
year to reimburse dealers for providing personal services for accounts that hold
Class B shares. Both fees are computed on the average annual net assets of Class
B shares, determined as of the close of each regular business day. 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 OFDI for certain expenses it
incurred before the Plan was terminated. During the year ended June 30, 1996,
OFDI paid $5,467 to an affiliated broker/dealer as reimbursement for Class B
personal service and maintenance expenses and retained $808,757 as reimbursement
for Class B sales commissions and service fee advances, as well as financing
costs. As of June 30, 1996, OFDI had incurred unreimbursed expenses of
$3,621,450 for Class B.
The Fund has adopted a compensation type Distribution and Service Plan
for Class C shares to compensate OFDI for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class C shares. Both fees are computed
on the average annual net assets of Class C shares, determined as of the close
of each regular business day. 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 OFDI for certain expenses it incurred before the Plan was terminated.
During the year ended June 30, 1996, OFDI retained $11,561 as compensation for
Class C sales commissions and service fee advances, as well as financing costs.
As of June 30, 1996, OFDI had incurred unreimbursed expenses of $55,221 for
Class C.
20 Oppenheimer Growth Fund
<PAGE>
Independent Auditors' Report
================================================================
================
The Board of Trustees and Shareholders of Oppenheimer Growth Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Growth Fund as of June 30, 1996, 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 five-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. Our procedures included confirmation of securities owned as of June
30, 1996, 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 Growth Fund as of June 30, 1996, 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 five-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
July 22, 1996
21 Oppenheimer Growth Fund
<PAGE>
Federal Income Tax Information (Unaudited)
================================================================
================
In early 1997, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1996. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $3.5073, $3.3773, $3.5037 and $3.5449 per share were
paid to Class A, Class B, Class C and Class Y shareholders, respectively, on
December 28, 1995, of which $2.9244 was designated as a "capital gain
distribution" for federal income tax purposes. Whether received in stock or
cash, the capital gain distribution should be treated by shareholders as a gain
from the sale of capital assets held for more than one year (long-term capital
gains).
Dividends paid by the Fund during the fiscal year ended June 30, 1996
which are not designated as capital gain distributions should be multiplied by
30.61% to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
22 Oppenheimer Growth Fund
<PAGE>
Oppenheimer Growth Fund
================================================================
================
Officers and Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert C. Doll, Jr., Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================
================
Investment Advisor OppenheimerFunds, Inc.
================================================================
================
Distributor OppenheimerFunds Distributor, Inc.
================================================================
================
Transfer and Shareholder
Servicing Agent
OppenheimerFunds Services
================================================================
================
Custodian of
Portfolio Securities The Bank of New York
================================================================
================
Independent Auditors KPMG Peat Marwick LLP
================================================================
================
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer Growth Fund. This
report must be preceded or accompanied by a Prospectus of Oppenheimer Growth
Fund. For material information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.
23 Oppenheimer Growth Fund
<PAGE>
[BACK COVER]
<PAGE>
JEFFERSON-PILOT
FAMILY OF FUNDS
_____________________________________
PROSPECTUS
______________________________________
May 1, 1996
Jefferson-Pilot Capital Appreciation Fund
Jefferson-Pilot Investment Grade Bond Fund
Jefferson-Pilot Capital Appreciation Fund, Inc. has as its primary objective
long term capital appreciation. A secondary objective is current income
through the receipt of interest or dividends.
Jefferson-Pilot Investment Grade Bond Fund, Inc. has as its primary objective
the maximum level of current income as is consistent with prudent risk. A
secondary objective is growth of income and capital.
This Prospectus sets forth concisely information about the above mentioned
companies that a prospective investor ought to know before investing.
Investors are advised to read and retain this Prospectus for future reference.
A Statement of Additional Information dated May 1, 1996 for each of the
above mentioned companies on file with the Securities and Exchange Commission
is, in its entirety, incorporated by reference in and made a part of this
Prospectus and is available without charge upon request to Jefferson-Pilot
Investor Services, Inc., PO Box 22086, Greensboro, NC 27420.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Table of Contents
Shareholder Transaction Expenses . . . . . . . . . . . . . . . . . . . . .3
Condensed Financial Information. . . . . . . . . . . . . . . . . . . . . .4
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
General Description. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . .7
Portfolio Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
How To Purchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . 9
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Who Manages The Funds. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . 13
How To Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
Jefferson-Pilot Capital Appreciation Fund, Inc.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.50%
(as a percentage of the Offering Price)
Maximum Sales Load Imposed on Reinvested .0%
Dividends (as a percentage of Offering Price)
Exchange Fee None
Annual Fund Operating Expenses
(as percentage of average net assets)
Management Fees .50%
Other Expenses .37%
Total Fund Operating Expenses .87%
Example
You would pay the following expenses 1 year 3 years 5 years 10 years
on a $1,000 investment assuming (1) a 5%
annual return and (2) redemption at the
end of each time period:
$33 $72 $91 $147
Jefferson-Pilot Investment Grade Bond Fund, Inc.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.50%
(as a percentage of the Offering Price)
Maximum Sales Load Imposed on Reinvested .0%
Dividends (as a percentage of Offering Price)
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .50%
Other Expenses .46%
Total Fund Operating Expenses .96%
<PAGE>
Example
1 year 3 years 5 years 10 years
You would pay the following expenses
on a $1,000 investment assuming (1) a
5% annual return and (2) redemption
at the end of each time period: $54 $74 $96 $158
The purpose of the preceding tables is to assist the prospective investor with
a more detailed understanding of the various cost and expenses that will be
charged, directly or indirectly, against the investment to be made in the Funds.
These costs and expenses are more fully described in Sections entitled "How to
Purchase Shares", "Shareholder Services" and "Who Manages The Funds" found
elsewhere in this Prospectus. THE EXPENSES SET FORTH IN THE TABLE ABOVE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE COST, AND ACTUAL EXPENSES
MAY BE GREATER OR LESSER THAN THOSE SHOWN ABOVE.
Condensed Financial Information
The following selected per share data and ratios of Jefferson-Pilot Capital
Appeciation Fund, Inc. and Jefferson-Pilot Investment Grade Bond Fund, Inc.
(the "Funds") have been audited by McGladrey & Pullen, LLP, Independent
Certified Public Accountants, as set forth in their opinion appearing in the
Statement of Additional Information for each of the Funds.
Jefferson-Pilot Investment Grade Bond Fund, Inc.
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Per share operating performance (for a
share outstanding throughout the year)
Net asset value, beginning of year $8.70 $9.89 $9.57 $9.65 $ 9.23 $ 9.48 $ 9.21 $ 9.32 $ 9.96 $ 9.34
Income from investment operations
Net investment income .60 0.62 0.64 0.66 0.76 0.82 0.83 0.82 0.83 0.84
Net realized and unrealized gain (loss)
on investments .96 (1.21) 0.32 (0.06) 0.44 (0.25) 0.28 (0.11) (0.63) 0.63
Total from investment operations 1.56 ( .59) .96 0.60 1.20 0.57 1.11 0.71 0.20 1.47
Less distributions
Dividends from net investment income (0.60) (0.60) (0.64) (0.68) ( 0.78) (0.82) (0.84) (0.82) (0.84) (0.85)
Distributions from net realized gains - - - - - - - - - -
Total distributions (0.60) (0.60) (0.64) (0.68) ( 0.78) (0.82) (0.84) (0.82) (0.84) (0.85)
Net asset value, end of year $9.66 $8.70 $9.89 $9.57 $ 9.65 $ 9.23 $ 9.48 $ 9.21 $ 9.32 $ 9.96
Total return (without deduction of
sales load) 18.39% (5.97)% 10.24% 6.53% 13.76% 6.54% 12.60% 7.94% 2.31% 16.49%
Ratios/supplemental data:
Net assets, end of year (000 omitted) $22,290 $21,032 $23,632 $21,359 $19,313 $18,083 $18,209 $17,665 $17,850 $19,602
Ratios to average net assets:
Expenses 0.96% 0.85% 0.86% 0.93% 0.93% 0.91% 0.85% 0.85% 0.82% 0.91%
Net investment income 6.40% 8.32% 6.46% 6.99% 8.18% 8.96% 8.90% 8.87% 8.77% 8.63%
Portfolio turnover rate 33.91% 41.01% 21.34% 25.53% 23.65% - 7.60% 6.45% 6.34% 6.05%
</TABLE>
<PAGE>
Jefferson-Pilot Capital Appreciation Fund, Inc.
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Per share operating performance
(for a share outstanding throughout
the year)
Net asset value, beginning of year $ 12.56 $ 17.05 $ 17.44 $ 18.02 $ 14.09 $ 14.81 $ 12.31 $ 11.79 $ 13.62 $ 15.94
Income from investment operations
Net investment income 0.25 0.29 0.23 0.23 0.32 0.36 0.39 0.30 0.33 0.42
Net realized and unrealized gain
(loss) on investments 4.03 (1.12) 1.04 0.75 4.13 (0.57) 3.38 0.55 (0.26) 1.53
Total from investment operations 4.28 (0.83) 1.27 0.98 4.45 (0.21) 3.77 0.85 0.07 1.95
Less distributions
Dividends from net investment income (0.24) (0.28) (0.22) (0.27) (0.33) (0.35) (0.40) (0.30) (0.36) (0.50)
Distributions from net realized gains (0.64) (3.38) (1.44) (1.29) (0.19) (0.16) (0.87) (0.03) (1.54) (3.77)
Total distributions (0.88) (3.66) (1.66) (1.56) (0.52) (0.51) (1.27) (0.33) (1.90) (4.27)
Net asset value, end of year $ 15.96 $ 12.56 $ 17.05 $ 17.44 $ 18.02 $ 14.00 $ 14.81 $ 12.31 $ 11.79 $ 13.62
Total return (without deduction
of sales load) 34.47% (4.63) 7.68% 5.60% 32.22% (1.42%) 31.28% 7.29% 0.88% 13.80%
Ratios/supplemental data:
Net assets, end of year (000 omitted) $37,831 $32,383 $38,045 $34,898 $33,836 $25,840 $26,705 $23,649 $23,147 $23,625
Ratios to average net assets:
Expenses 0.87% 0.83% 0.84% 0.87% 0.87% 0.88% 0.89% 0.88% 0.79% 0.89%
Net investment income 1.66% 1.74% 1.30% 1.30% 1.98% 2.52% 2.75% 2.51% 2.16% 2.70%
Portfolio turnover rate 65.27% 143.81% 26.89% 53.38% 36.70% 30.55% 59.88% 73.63% 79.56% 63.99%
</TABLE>
<PAGE>
Performance
Capital Appreciation Fund
[Line Chart showing Comparison of Change in Value of $10,000
Investment In The Capital Appreciation Fund and S&P 500 for
the ten year period 1985 through 1995]
For the 12-month period ended December 31, 1995, Jefferson-Pilot Capital
Appreciation Fund had an annual total return of 34.47% (35.34% before expenses)
versus a total return for the S&P 500 of 37.53%. The Capital Appreciation Fund
continues to purchase stocks of those companies considered industry leaders,
that are attractively valued in relation to their earnings growth rate.
Convertible bonds and preferred stocks are purchased when appropriate. The
fund will pursue a future strategy of being fully invested and seeking superior
performance through stock selection with a neutral economic sector tilt relative
to the S&P 500.
Investment Grade Bond Fund
[Line Chart showing Comparison of Change in Value of
$10,000 Investment in Investment Grade Bond Fund and
Lehman Brothers Government/Corporate Index for the
ten year period 1985 through 1995.]
During the 12-month period December 31, 1995, the Bond Funds performance was
generally less than the Lehman Government/Corporate Index before expenses. After
adjusting performance for expenses, the Bond Funds total return of 18.39%
compared to the Index's total return of 19.24%. During 1995, the Bond Funds
performance was hampered by a duration position that was generally longer than
the duration of Lehman Government/Corporate Index. In response to last year's
underperformance, the Bond Fund reduced the duration of the portfolio to more
closely correspond to that of the Index. From a credit standpoint, the Bond
Fund employs a conservative strategy designed to maximize performance with the
context of investing primarily in A - rated or higher corporate and government
securities. All of the Fund's holdings at December 31, 1995 were rated
"investment grade" Moody's Investor Service, Inc. and Standard & Poor's
Corporation.
<PAGE>
General Description
Jefferson-Pilot Capital Appreciation Fund, Inc., formerly JP Growth Fund, Inc.
("Capital Appreciation") and Jefferson-Pilot Investment Grade Bond Fund, Inc.,
formerly JP Income Fund, Inc. ("Bond Fund") are corporations organized under
the laws of North Carolina on January 13, 1970 and January 24, 1978,
respectively. Each is registered under the Investment Company Act of 1940 as
an open-end diversified investment company.
Investment Objectives and Policies.
Capital Appreciation Fund The Capital Appreciation Fund's primary investment
objective is long-term capital appreciation. Current income through the
receipt of interest or dividends from investments is only a secondary
objective. The Capital Appreciation Fund proposes to achieve these objectives
by investing substantially all its assets in common stocks of companies
recognized as leaders in their respective industries with proven and capable
management and that are providing significant products and services to their
customers. The Capital Appreciation Fund's investments will be made
predominantly in securities listed on registered securities exchanges, but it
may purchase securities traded in the over-the-counter market. Investments
may be made in other equity securities, including rights, warrants, preferred
stock and those debt securities convertible into or carrying rights, warrants,
or options to purchase common stock or to participate in earnings. Not more
than five percent of the Fund's net assets may be invested in warrants (valued
at the lower of cost or market value) and not more than two percent of its net
assets may be invested in warrants not listed on the New York Stock Exchange.
The Capital Appreciation Fund may also hold cash or invest in short-term
securities and may purchase U. S. government obligations with a simultaneous
agreement by the seller to repurchase the securities at the original price
plus accrued interest; provided that not more than 10% of the Capital
Appreciation Fund's net assets may be invested in such repurchase agreements
that mature in more than seven days. Repurchase agreements involve certain
risks in the event of a default by the other party.
The percentage of assets invested in different types of securities will vary
from time to time depending upon the judgment of the management as to general
market and economic conditions, fiscal and monetary policy and trends in
interest rates and yields.
The Capital Appreciation Fund's investments (other than cash and U. S.
Government securities) are diversified among the securities issued by
different companies and governments to the extent that no more than 5% of its
total assets may be invested in securities issued by any one issuer. In
addition, management generally selects investments for the Fund from among
many different industries and may invest up to 25% of the Fund's assets in a
single industry. The investment restrictions (page 1, Statement of Additional
Information) include: limitations on borrowing money; no more than 10% of
assets may be invested in securities with a limited trading market; and no
more than 5% of assets may be invested in companies having a record of less
than three years of continuous operation. These restrictions, and the
investment objectives and policies described above, as well as most of the
additional restrictions described in the Statement of Additional Information,
cannot be changed without the approval of a majority of the Fund's outstanding
voting stock. While the Capital Appreciation Fund invests for long term growth
of capital and does not intend to place emphasis upon short-term trading
profits, it will sell securities held short term to take advantage of special
opportunities which might arise. Accordingly, the Capital Appreciation Fund
has historically had a portfolio turnover rate of less than 100%. The Capital
Appreciation Fund's portfolio turnover rates are shown in its respective table
under the caption "Condensed Financial Information".
<PAGE>
Generally, the Capital Appreciation Fund's expenses will increase in relative
proportion to an increase in its portfolio turnover rate and may result in
taxes on realized capital gains to be borne by the Fund or its shareholders.
See "Dividends, Distributions, and Taxes" in this prospectus and "Brokerage"
on page B-4 of the Statement of Additional Information of each Fund.
The Capital Appreciation Fund's investments are subject to market fluctuations
and risks inherent in all securities. There is no assurance that the Fund's
stated objectives will be realized.
Bond Fund The Bond Fund's primary investment objective is the maximum level
of current income as is consistent with prudent risk. A secondary objective
is growth of income and capital. The Bond Fund proposes to achieve these
objectives by investing primarily in fixed income securities rated A or
better by Standard & Poor's Corporation ("S&P") or Moody's Investors Service,
Inc. ("Moody's"). The Bond Fund will also purchase dividend paying common
stocks. Fixed income securities will include debt securities and preferred
stocks, some of which may have a call on common stock by means of conversion
privilege or attached warrants. When the incremental investment yield
available on corporate securities is small compared to that available on U. S.
Treasury securities, the Bond Fund may invest substantially in U. S. Treasury
securities. The Bond Fund may also hold cash or invest in short-term securities
and may purchase U. S. Government obligations with a simultaneous agreement by
the seller to repurchase the securities at the original price plus accrued
interest; provided that not more than 10% of the Fund's net assets may be
invested in such repurchase agreements that mature in more than seven days.
Repurchase agreements involve certain risks in the event of a default by the
other party.
The percentage of assets invested in different types of securities will vary
from time to time depending upon the judgment of the management as to general
market and economic conditions, fiscal and monetary policy and trends in
interest rates and yields.
The Bond Fund's investments (other than cash and U. S. Government securities)
are diversified among the securities issued by different companies and
governments to the extent that no more than 5% of its total assets may be
invested in securities issued by any one issuer. In addition, management
generally selects investments for the Bond Fund from among many different
industries and may invest up to 25% of the Bond Fund's assets in a single
industry. The investment restrictions (page 1, Statement of Additional
Information) include: limitations on borrowing money; no more than 10% of
assets may be invested in securities with a limited trading market; and no
more than 5% of assets may be invested in companies having a record of less
than three years of continuous operation. These restrictions, and the
investment objectives and policies described above, as well as most of the
additional restrictions described in the Statement of Additional Information,
cannot be changed without the approval of the majority of the Fund's
outstanding stock. While the Bond Fund does not intend to place emphasis upon
short-term trading profits, it will sell securities held short term to take
advantage of special opportunities which might arise. Accordingly, the Bond
Fund has historically had a portfolio turnover rate of less than 50%. The
Bond Fund's portfolio turnover rates are shown in its respective table under
the caption "Condensed Financial Information".
The Bond Fund's investments are subject to market fluctuations and risks
inherent in all securities. There is no assurance that the Bond Fund's stated
objectives will be realized.
<PAGE>
Portfolio Managers
The following individuals are the portfolio managers for the Funds:
Capital Appreciation Fund. Gregory D. Walker, Equity Portfolio Manager and
Second Vice President of Jefferson-Pilot Life Insurance Company. Mr. Walker
has worked in the Jefferson-Pilot Life Insurance Company's Securities
Department for the past 2 years as an Equity Analyst and Portfolio Manager.
Prior to his employment with Jefferson-Pilot, Mr. Walker was an Equity
Portfolio Manager and Analyst at North Carolina Trust Company of Greensboro,
North Carolina.
Bond Fund. H. Lusby Brown, Portfolio Manager, Second Vice President -
Securities, Jefferson-Pilot Life Insurance Company. Mr. Brown has spent
the last ten years in Jefferson- Pilot's Securities Department focusing on
the public equity and public and private fixed income markets. He was named
portfolio manager of Jefferson-Pilot Investment Grade Bond Fund in July of
1994. Prior to joining Jefferson-Pilot, Mr. Brown earned his graduate business
degree from the University of North Carolina at Chapel Hill.
How To Purchase Shares
Shares are offered continuously for sale by the Fund's distributor,
Jefferson-Pilot Investor Services, Inc. ("Investor Services"), P.O. Box 22086,
Greensboro, North Carolina 27420, and are also available through authorized
investment dealers. Except under regular investment plans and under certain
qualified retirement plans and other similarly administered plans, the minimum
initial investment is $300 and subsequent investments must be at least $25.
Such additional investments may be made directly to the Fund's stock transfer
and dividend paying agent, Investors Fiduciary Trust Company ("IFTC"), 127 West
10th Street, Kansas City, MO 64105-1716.
Volume Discount. The size of investment shown in the table on the top of page
10 applies to the total amount being invested by any person in shares in
either Fund alone or both Funds jointly. A person eligible for a volume
discount includes an individual, his spouse, and their children under the age
of 21; a trustee or other fiduciary purchasing shares for a single fiduciary
account, including employee benefit plans; and an organized group of persons,
provided the organization has been in existence for at least six months and
has some purpose other than the purchase of redeemable securities of a
registered investment company at a discount, and provided that its purchases
are made through a central administration by means which result in economy of
sales effort or expense. IFTC must be given notice of the account number of
any account to be included for the purpose of determining volume discounts.
Shares are offered at the net asset value per share plus a sales commission,
as hereinafter described. The offering price so determined becomes effective
at the New York Stock Exchange closing time. Orders received prior to that
time are confirmed at the offering price effective at that time, provided the
order is received by Investor Services or IFTC prior to their close of
business. The net asset value per share is calculated as hereinafter
described. The sales charge, expressed as a percentage of the public offering
price and as a percentage of the new amount invested, is described in the
following table. The table also discloses the commission allowed other
broker-dealers as a percentage of the offering price.
<PAGE>
Amount of Purchase Sales Charge as % As % of the Sales Charge Allowed
of the Amount Offering Price to Dealer As % of
Invested Offering Price
Less than $50,000 4.71% 4.50% 4.50%
$50,000 but less
than $100,000 4.17% 4.00% 4.00%
$100,000 but less
than $250,000 3.09% 3.00% 3.00%
$250,000 but less than
$500,000 2.04% 2.00% 2.00%
$500,000 or more 1.01% 1.00% 1.00%
Cumulative Purchase Discount. The size of investment shown in the above table
may also be determined by combining the amount being invested plus the current
offering price of all shares of either Fund or of both Funds which have been
previously purchased and are still owned by the purchaser. IFTC must be given
notice of each purchase that is eligible for the cumulative purchase discount.
Statement of Intention. A Statement of Intention gives the investor an
opportunity to obtain a reduced sales charge by aggregating his investments
over a 13-month period to determine the sales charge as outlined in the
preceding table. The size of the investment as shown in the table includes
purchases of shares of either Fund or both Funds previously purchased and still
owned. Each investment made during the period receives the reduced sales
commission applicable to the total amount of the investment goal. If the goal
is not achieved within the period, the investor must pay the difference between
the commissions applicable to the purchases made and the commissions previously
paid. An investor is not required to purchase shares designated in a Statement
of Intention.
Special Sales. See page B-5 of the Statement of Additional Information of each
Fund for information relating to sales without a sales commission to current or
retired directors and officers of that Fund; current or retired employees of
Jefferson-Pilot Corporation and its affiliates; certain related persons or
family members of the above persons; bona fide full time employees or sales
representatives of that Fund; and to tax qualified employee benefit plans
covering employees of that Fund, its investment adviser or distributor.
Shares are also offered at net asset value to investors where the amounts
invested represent redemption proceeds from investment companies whose shares
are distributed by some entity other than Investor Services provided (a) such
redemption has occurred no more than 15 days prior to the purchase of shares
of the particular Fund, and (b) the investor paid an initial sales charge or
was subject to a deferred sales charge on the redeemed shares. Shares are
offered at net asset value to such persons because of the anticipated economies
in sales efforts and sales related expenses. Each Fund reserves the right to
terminate or amend the terms of its offering of its shares at net asset value
to such persons at any time.
How To Determine Net Asset Value. Net asset value per share is computed as of
the close of each day on which the New York Stock Exchange is open (4:00 p.m.
New York time) and on any other day in which there is a sufficient degree of
trading in the Fund's portfolio securities to materially affect net asset
value. Net asset value is determined by dividing the value of the Fund's
securities, plus any cash and other assets (including dividends accrued but
not collected) less all liabilities (including accrued expenses), by the number
of shares outstanding.
<PAGE>
A security listed or traded on an exchange is valued at its last sale price
on that exchange where it is principally traded or, if there were no sales on
that exchange, the last quoted sale on other exchanges or on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
Lacking any sales the security is valued at the mean of the last bid and ask
prices reported on the exchange where the security is principally traded. All
other securities for which over-the-counter market quotations are readily
available are valued at their last sale price on NASDAQ or at the mean of the
last bid and ask prices as of the close of trading. Fixed income securities
are valued by using market quotations, or independent pricing services which
use prices provided by market makers or estimates of market values obtained
from yield data relating to similar classes of instruments or securities.
Certain short-term debt securities are valued at amortized cost. Other
securities, including restricted securities, and other assets are valued at
fair value as determined in good faith and under authority by the Board of
Directors.
Shareholder Services
Automatic Investment Plan. If a shareholder's bank agrees to participate, the
shareholder may authorize the Fund's shareholder service agent to charge a bank
account on a regular basis or to draw monthly checks to invest predetermined
amounts in the Funds. Purchases are made at the offering price on the date the
shareholder service agent charges the bank account or deposits the
preauthorized check. A shareholder wishing to invest in such manner should so
indicate on the application form and execute any other necessary authorization
forms. The minimum monthly investment is $25.00.
Open Accounts. An open account will be created for each investor so that
additional investments may be made at any time without completing a new
application. Full and fractional Fund shares purchases will be credited to
the investor's account. Share certificates will be issued by the Funds only
upon specific request and then only for full shares. Whenever there is a
transaction in his account, the investor will receive a written statement
concerning the current status of the account, including the number of Fund
shares then owned.
Systematic Withdrawal Plan. An investor with shares of either Fund having a
net asset value of at least $10,000 may participate in a systematic withdrawal
plan of that Fund. Under this plan, the investor chooses to have payments made
on a monthly or quarterly basis to himself or another designated person. The
minimum payment that may be designated (whether monthly or quarterly) is $50.
All dividends and capital gains distributions are automatically reinvested in
additional shares of that Fund at net asset value as of the record date
without a sales charge. Under this plan, sufficient shares of the Fund are
redeemed to provide the amount of the periodic withdrawal payment. If
periodic withdrawals continuously exceed reinvested dividends and capital
gains distributions, the investor's original investment will be
correspondingly reduced and ultimately exhausted.
Withdrawals made concurrently with purchase of additional shares ordinarily
will be disadvantageous to the investor because of the duplication of sales
charges. Any taxable gain or loss will be recognized by the investor upon
redemption of shares.
<PAGE>
Exchange Privilege. Shareholders residing in those states in which shares
of both Funds are registered, may exchange their shares of either Fund for
shares of the other at their respective net asset values per share without
any sales or exchange charge. Shares exchanged must have a current value of
at least $500. Exchanges will be effected by redemption of shares of the
Fund held and purchase of shares of the other Fund, which for federal income
tax purposes is a taxable transaction. Exchange instructions must be given
to IFTC by telephoning 1-800-292-6701. Exchanges may be made by telephone only
if share certificates have not been issued and if the shareholder elects such
option on the initial application, in which event the signature(s) on the
application must be guaranteed as described in the section captioned "How To
Redeem Shares."
Shareholders wishing to exercise an exchange privilege should so notify IFTC,
which will send a prospectus for the Fund to be purchased and instructions.
Such an exchange is not a tax-free exchange.
Investing By Telephone. Shareholders who have elected such option in the
application and who have completed any other necessary authorization forms
may, by telephoning IFTC at 1-800- 292-6701, purchase shares of either Fund
from a bank account designated in the authorization form. The shareholder's
bank must be a participant in the Automated Clearing House system. The bank,
upon receiving a shareholder's telephone request for a purchase, will instruct
the shareholder's designated bank to withdraw from the shareholder's account
at that bank the amount to be transferred to purchase shares. The investment
will normally be credited to the shareholder's Fund account the day following
the day of the telephone request.
Tax Qualified Retirement Plans. Shares of either Fund may be purchased by all
types of retirement plans receiving favorable federal income tax treatment,
including Individual Retirement Accounts (IRA) (for individuals and their
non-employed spouses who desire to make limited tax deductible contributions
to a tax deferred retirement program); Simplified Employee Pension (SEP-IRA)
Plans; 403(b) Plans (arrangements for employees of public school systems,
universities and certain other non-profit organizations); and other corporate
pension and profit sharing plans. For additional information on these plans,
see page B-5 of the Statement of Additional Information of each Fund or
contact Investor Services. Investors should consult with their tax advisor
before establishing any of the tax deferred retirement plans described above.
Who Manages The Funds
The Board of Directors of each Fund is responsible for the overall supervision
of the conduct of the Fund's business. Each Fund's investment adviser is JP
Investment Management Company ("JP Management"), P.O. Box 21008, Greensboro,
North Carolina 27420, a North Carolina corporation organized on January 13,
1970. JP Management is a wholly-owned subsidiary of Jefferson-Pilot
Corporation, an insurance holding company. JP Management has served as an
investment adviser to the Capital Appreciation Fund, since its inception in
1970; to the Bond Fund, since its inception in 1978; and to JP Capital
Appreciation Fund, Inc., and JP Investment Grade Bond Fund, Inc. since the
inception of those companies in 1982.
<PAGE>
In addition to providing investment advice, JP Management or persons
employed by or associated with JP Management are, subject to the authority of
the Board of Directors, responsible for the overall management of the Funds'
business affairs. As compensation for its services, JP Management receives
from each Fund a fee at an annual rate of one-half of 1% of the Fund's
average
net asset value. The fee is Payable monthly, on the basis of the Fund's
average
sset value during the monthly period computed in the manner used in
determining the public offering price of Fund shares. The ratio of the
management fee to average net assets for the year ended December 31, 1995
was 0.5%. For the same period, the Capital Appreciation Fund's total operating
expenses were .87% of average net assets and the Bond Fund's total operating
expenses were .96% of average net assets.
Under a Service Agreement between each Fund, JP Management, Jefferson-Pilot
Life Insurance Company and Jefferson-Pilot Investments, Inc. ("Companies"),
the Companies have agreed to furnish such personnel, services and facilities
as may be reasonably needed by JP Management in connection with its performance
under the Investment Advisory Agreement, and JP Management has agreed to
reimburse the Companies for their expenses in this regard.
Under accounting agreements, JP Management also serves as the Fund's accounting
agent. Each of the Funds has agreed to reimburse JP Management for its
expenses incurred in serving as such agent, provided such expenses do not exceed
the amount for which the Funds could have obtained such services from some third
party.
Dividends, Distributions and Taxes
The Capital Appreciation Fund's policy is to pay dividends from net investment
income semi-annually in February and August. The Bond Fund's policy is to pay
dividends from net investment income quarterly in February, May, August and
November. In addition, if the Capital Appreciation or Bond Fund has not paid
out 98% of its net investment income by the end of the calendar year, its
policy is to pay a dividend near the end of the calendar year which will, when
added to the dividends previously paid in the year, equal or exceed 98% of its
net investment income for the year. Each December the Capital Appreciation and
Bond Funds make a distribution of the capital gains, if any, each realized
during the 12-month period ended the preceding October 31. Unless the investor
requests that payments be made in cash, dividends and distributions will be
reinvested in additional Fund shares at net asset value as of the record date.
The investor may, if he also owns shares of both Funds, request that all such
dividends and/or distributions be used to purchase additional shares in
either Fund at net asset value as of the record date.
Each Fund qualified in 1995 and plans to qualify in 1996 for the special tax
treatment afforded a "regulated investment company" under Subchapter M of the
Internal Revenue Code (the"Code"). In any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund (but
not shareholders) will be relieved of federal income tax on the income
distributed. Dividends (i.e., distributions of any net investment income and
any net realized short-term capital gains) are taxable to shareholders as
ordinary income, whether received in cash or additional shares. Distributions
of long-term capital gains (i.e., the excess of any net long-term capital gains
over net short-term capital losses), if any, are taxable as long-term capital
gains whether received in cash or shares without regard to how long a
shareholder has held his shares. Gain or loss realized on a redemption by a
shareholder will be treated as a capital gain or loss unless the shares are
not capital assets in the shareholder's hands. Shareholders will be notified
by each January 31 of the amounts of dividends and distributions for the
preceding year, including the amounts (if any) which have been designated as
long-term capital gains distributions. The Funds may be required by the Code
to withhold at a rate of 31% upon payment of redemptions to shareholders, and
from taxable dividends and capital gain distributions (if any), if provisions
of the law relating to the furnishing of taxpayer identification numbers and
reporting of dividends are not complied with by shareholders.
<PAGE>
The foregoing is a general summary of the applicable provisions of the Code
and Treasury Regulations presently in effect. Dividends and distributions
also may be subject to state or local taxes. Investors should consult their
tax advisors for specific information.
How To Redeem Shares
Shareholders may redeem shares at the per share net asset value next determined
after receipt of certificates endorsed by all parties (or trustees) in whose
name the certificates are issued, and in proper form for transfer, at the
office of IFTC. The certificates must be endorsed by the parties exactly as
the certificates are registered and the signature(s) must be guaranteed by a
bank or trust company or a member firm of a national securities exchange. If no
certificates have been issued to the shareholder, redemption may be accomplished
by signed written request, guaranteed as above, directed to the IFTC; provided,
however, that a shareholder to whom no certificate(s) have been issued may
redeem up to as much as $500 in shares in any one calendar year without the
signature being guaranteed. The signature need not be guaranteed where shares
of one Fund are exchanged for shares of the other Fund. A redemption request
should identify the account by number and should be signed by all parties (or
trustees) in whose name the account is registered in the exact manner in which
the account is registered. It is suggested that all redemption requests by
mail be sent certified with return receipt requested.
Shares may be redeemed by telephoning IFTC at 1-800-292-6701, provided the
shareholder elects such option on the initial application, in which event the
signature(s) on the application must be guaranteed as described above.
Payment will be by check mailed the next day to the bank account designated by
the shareholder in the application. The bank account can be changed only by the
shareholder submitting a written request with the signature guaranteed. Unless
the redemption is a total redemption, a shareholder may not effect a redemption
by telephone for an amount per Fund of less than $500 or greater than $10,000.
Redemption by telephone is not available on accounts where share certificates
are outstanding. During periods of unusual market changes and shareholder
activity, you may experience delays in contacting IFTC by telephone, in which
case you may wish to submit a written redemption request, as described above.
The telephone redemption privilege may be modified or terminated without
notice.
A check for payment for shares redeemed will be issued as early as possible,
but not later than seven days after IFTC's receipt of the certificates or the
written redemption request. However, IFTC will not disburse payment for shares
purchased by check (including payment by certified or casher's check) for up to
fifteen calendar days following the investment date. Redemption of shares may
be suspended or payment postponed at times (a) when the New York Stock Exchange
is closed other than weekends and holiday, (b) when trading on said Exchange
is restricted, (c) when an emergency exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange Commission,
by order, so permits; provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist.
Neither Fund nor Investor Services makes a charge for redemption. Other
broker-dealers may charge for handling redemption transactions but such charge
can be avoided by requesting redemption by the Funds directly or through the
Investor Services.
<PAGE>
The shareholder may, within thirty days of a redemption of shares of either
Fund, reinvest the proceeds in shares of that Fund or the other Fund at net
asset value without a sales charge. This privilege is permitted only once to
each shareholder per year.
Due to the high cost of maintaining accounts, each Fund reserves the right to
redeem any account which has been in existence for at least one year and which
has a balance of less than $250. A shareholder will be notified in writing of
either Fund's intention to redeem and given 60 days to make additional share
purchases before the redemption is processed.
Additional Information
Each Fund has authorized capital stock of 10,000,000 shares of $1.00 par value.
Each share entitles the holder to participate equally in dividends and
distributions declared by the Fund and in its remaining net assets on
liquidation after satisfaction of outstanding liabilities. Fund shares are
fully paid and nonassessable when issued; have no preemptive or conversion
rights; are transferable without restriction; and are redeemable at net asset
value.
On matters submitted for a shareholder vote, each shareholder is entitled to
one vote for each share owned. Fractional shares have proportionally the same
rights as do full shares.
As of April 12, 1996, Jefferson-Pilot Life Insurance Company owned
beneficially 400,000 shares or 16.81% of the Capital Appreciation Fund's
outstanding shares and 730,821 shares or 32.29% of the Bond Fund's outstanding
shares. That Company, like JP Management, is a wholly-owned subsidiary of
Jefferson-Pilot Corporation, Greensboro, North Carolina, which is deemed to
control the Funds.
Shareholder inquires should be directed to Investors Fiduciary Trust Company,
127 West 10th Street, Kansas City, MO 64105-1716, (Phone: 1-800-292-6701)
In the opinion of the staff of the Securities and Exchange Commission, the use
of this combined prospectus may make each Fund liable for any misstatement or
omission in this prospectus regardless of the Fund to which it pertains.
<PAGE>
Jefferson-Pilot Capital Appreciation Fund, Inc.
100 North Greene Street
Greensboro, North Carolina 27401
Telephone 1-800-458-4498
_________________________________________________________________
Statement of Additional Information
May 1, 1996
_________________________________________________________________
Page
Table of Investment Objectives and Policies B-1
Contents Investment Restrictions B-1
The Investment Adviser B-3
Brokerage B-4
Purchase and Redemption of Shares B-5
The Fund's Distributor B-6
The Fund's Directors and Officers B-6
General Information B-7
Financial Statements B-9
_________________________________________________________________
This Statement of Additional Information is not a prospectus
but supplements and should be read in conjunction with the current
Prospectus dated May 1, 1996 of Jefferson-Pilot Capital
Appreciation Fund, Inc. ("Fund"). A copy of the Prospectus may
be obtained by contacting the Fund's principal distributor,
Jefferson-Pilot Investor Services, Inc. ("Investor Services") at the
address or telephone number shown on the cover page.
Investment Objectives and Policies
The Fund's investment objectives and how it hopes to achieve
those objectives are described on page one of the Prospectus.
There can be no assurance that these objectives will be achieved.
The objectives may not be changed without the approval of a
majority of the Fund's shareholders. A majority means: the lesser
of (i) a majority of the Fund's outstanding voting
securities, or (ii) 67 percent of the shares present at a
shareholder's meeting at which more than 50 percent of the
outstanding shares are present or represented by proxy.
Investment Restrictions
In addition to, or amplification of, the investment restrictions
set forth in the Prospectus, the Fund may not:
1. Issue senior securities.
2. Purchase securities on margin or sell short, except it
may obtain such short-term credits as
are necessary for the clearance of transactions.
<PAGE>
3. Write, purchase or sell puts, calls or combinations thereof.
4. Borrow money except that, as a temporary measure for
extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow up to 5% of the value of
its total assets.
5. Act as an underwriter of securities of other issuers,
except that the Fund may invest up to 10% of the value of
its net assets (at time of investment) in portfolio
securities which the Fund might not be free to sell
to the public without registration of such securities
under the Securities Act of 1933.
It may be difficult for the Fund to sell restricted securities at
prices representing their fair market value except pursuant to an
effective registration statement under the Securities Act of
1933. If registration of restricted securities is necessary, a
considerable period of time may elapse between the decision to
sell and the effective date of the registration statement. During
that time the price of securities to be sold may be affected by
adverse market conditions.
In purchasing restricted securities, the Fund will endeavor to
have the issuer agree to register the securities on request and
pay the registration expenses. The Fund may be obliged, however, to
bear all or part of these expenses. The Fund's Board of
Directors will value restricted securities in good faith
in determining the net asset value of Fund shares. The valuations
will be made on an individual basis in light of the particular
circumstances affecting each restricted security, including market
value (if any), the period of time the restrictions are in force, and
other relevant factors. The Fund has not for the past 12 months
owned any restricted securities and has no present intention of
acquiring such securities.
6. Purchase or sell real estate or interests in real
estate, nor interest in real estate investment trusts or real
estate limited partnerships (however, the Fund may purchase
interests in real estate in investment trusts whose securities
are registered under the Securities Act of 1933 and readily
marketable).
7. Engage in the purchase and sale of commodities or commodity contracts.
8. Make loans, except to the extent that either of the following is
deemed to constitute a loan: (a) purchases of a portion of an
issue of a debt security distributed to the public; or (b)
investments in "repurchase agreements".
9. Purchase the securities (except U.S. Government securities) of
any one issuer if immediately after and as a result of such
purchase (a) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's
total assets, or (b) the Fund owns more than 10% of the
outstanding voting securities of any one class of securities
of such issuer.
<PAGE>
10. Purchase the securities of open-end investment companies. The
Fund may purchase the securities of other investment companies
provided that (a) immediately after such purchase the Fund and
companies controlled by the Fund, or other investment companies
having the same investment adviser as the Fund, do not own more
than 10% of the investment company whose securities are being
purchased; (b) the Fund cannot invest more than 10% of its
total assets in the securities of other investment companies;
and (c) such purchases are made in the open market
where no commission or profit to a sponsor or dealer results
other than the customary broker's commission. The restrictions
of the preceding sentence do not apply in connection with a
merger, consolidation, or plan of reorganization.
11. Mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any securities owned or held by the Fund.
12. Participate on a joint or joint and several basis in
any trading account in securities or effect a short sale
of any security, except in connection with an underwriting
in which it is a participant in the circumstances specified
in Paragraph 5.
13. Purchase or retain the securities of any issuer if
those officers and directors of the Fund, its adviser or
underwriter owning individually more than 0.5% of
the securities of such issuer together own more than 5%
of the securities of such issuer.
14. Invest in companies for the purpose of exercising control
or management.
15. Invest in foreign securities other than securities issued by
Canadian companies.
16. Invest in interests of oil, gas, or other mineral exploration
or development programs, (including oil, gas, or mineral leases).
The investment restrictions in Paragraphs 1 through 13 above
and on page one of the Prospectus are fundamental policies
and may not be changed without the approval of a majority
of the Fund's shareholders. The policies mentioned in Paragraphs
14-16 above are not fundamental and my be changed without
shareholder approval.
While the Fund will not purchase illiquid, including restricted,
securities if such purchase would cause its then total investment
in such securities to exceed 10% of the value of its net assets,
the Fund could through the decrease in values of its other
securities, for example, at sometime own illiquid, including
restricted, securities having a value in excess of 10% of the
value of its net assets. In that event, the Fund will promptly
take such action as its Board of Directors deems appropriate to
assure the continued liquidity of the Fund.
<PAGE>
The Investment Adviser
The Fund's investment adviser, JP Investment Management Company
("JP Management"), like Investor Services, is a wholly-owned subsidiary of
Jefferson-Pilot Corporation, an insurance holding company. E.J. Yelton,
John C. Ingram, W. Hardee Mills, and J. Gregory Poole are
officers and/or directors of the Fund and of JP Management.
Their positions with the Fund and/or JP Management are (with the
Fund position shown first) President, Treasurer and
Director/President and Director; Director/Senior Vice President,
Treasurer and Director; Vice President/Vice President; and
Secretary/Secretary, respectively.
JP Management's services are provided under an Investment
Advisory Agreement with the Fund dated January 26, 1971.
Under the terms of the agreement, JP Management provides personnel,
including executive officers for the Fund, and compensates the
Fund's directors who are affiliated with JP Management or its
affiliated companies. JP Management also furnishes, or causes to be
furnished, at its own expense office space, facilities and
necessary executive and other personnel for conducting the Fund's
affairs and pays all expenses incurred by it or the Fund in connection
with the administration of the investment affairs of the Funds.
The Fund pays all other corporate expenses incurred in its
operations except that Investor Services bears the expenses
relating to the continuous public offering of the Fund's shares.
Among others, the Fund pays its taxes (if any), brokerage
commissions on portfolio transactions, expenses relating to the
issue, transfer redemption and pricing of shares, disbursement of
dividends and other distributions, custodian fees, auditing and
legal expenses, compensation of unaffiliated directors, and
expenses in connection with meetings of directors and shareholders.
As compensation for its services, JP Management receives from the
Fund a fee at an annual rate of 1/2 of 1% of the Fund's average
net asset value. The fee is payable monthly, on the basis of
the Fund's average daily net asset value during the monthly
period computed in the manner used in determining the public offering
price of Fund shares (see "How To Determine Net Asset Value" in
the prospectus).
If, in any fiscal year, the total of the fund's ordinary
business expenses (including the investment advisory fee but
excluding taxes, portfolio brokerage commissions and interest)
exceeds 1% of the Fund's average daily net asset value, JP
Management pays the excess. The payment of the investment
advisory fee at the end of any month is reduced or postponed so that
at the end of any month there is not any accrued but unpaid
liability under this expense limitation. The Fund's ordinary
business expenses did not, during fiscal years 1993, 1994, or
1995 exceed 1% of its average daily net asset value.
The amount of JP Management's advisory fee for fiscal year
1993 was $179,854, for fiscal year 1994 was $ 178,839, and for
fiscal year 1995 was $177,665.
<PAGE>
Under a Service Agreement between the Fund, JP Management,
Jefferson-Pilot Life Insurance Company and Jefferson-Pilot
Investments, Inc. ("Companies"), which agreement is
dated January 25, 1984, the Companies have agreed to furnish such
personnel, services and facilities as may be reasonably needed by
JP Management in connection with its performance
under the Investment Advisory Agreement, and JP Management has
agreed to compensate the Companies for their services in this regard.
Because of the arrangements under the Service
Agreement, the Companies might be deemed to be investment
advisers of the Fund, and the Service Agreement an investment
advisory contract, for purposes of the Investment Company
Act of 1940. However, the Companies have been advised by counsel
that they are not by reason of such arrangements investment advisers
under that Act.
For the years ended December 31, 1993, 1994, and 1995 the
aggregate amount paid by JP Management to the Companies under
this Service Agreement and similar service agreements
between JP Management, the Companies and other mutual funds
managed by JP Management was $352,095, $444,313, and $347,048,
respectively.
The Investment Advisory Agreement and the Service Agreement may,
independently of each other, continue in force from year to year
if the continuance of each such agreement is approved
at least annually by the Fund's Board of Directors, including the
specific approval with respect to the continuance of each such
agreement of a majority of the Directors who are not parties to the
particular agreement or interested persons (as the term is
defined in the Investment Company Act of 1940) of any such party,
cast in person at a meeting called for the purpose of voting on
approval of the particular agreement.
The Investment Advisory Agreement and the Service Agreement may
each be terminated at any time without the payment of any penalty
on 60 days' notice to the other parties either by a vote of
the Fund's Board of Directors or by a vote of the majority of the
Fund's shareholders. The Investment Advisory Agreement and the
Service Agreement will automatically terminate in the
event of their assignment.
The Investment Advisory Agreement may be terminated by JP
Management on 90 days' written notice to the Fund. The Service
Agreement may be terminated on 90 days' written notice
to the Fund and the other parties by JP Management or any of the
Companies.
The Fund's name has been adopted with the permission of
Jefferson-Pilot Corporation and its continued use is subject to
the right of Jefferson-Pilot Corporation to withdraw this permission at
any time. If the permission is withdrawn, but JP Management
proposes to continue as the Fund's investment adviser, the
Investment Advisory Agreement will be submitted to Fund shareholders
for approval.
<PAGE>
Brokerage
Transactions on stock exchanges and other agency transactions
involve the payment by the Fund of negotiated brokerage commissions.
Such commissions vary among different brokers. Also, a
particular broker may charge different commissions according to
such factors as the difficulty and size of the transaction.
There is generally no stated commission in the case of securities
traded in the over-the-counter markets, or for fixed income
securities (which currently includes most of the Fund's portfolio
transactions), but the price paid by the Fund usually includes an
undisclosed dealer commission or mark-up. In underwritten
offerings, the price paid by the Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
JP Management, which places all orders for the purchase and
sale of securities for the Fund, has no formula for the allocation
of brokerage business in the purchase and sale of securities for
the Fund. Purchase and sale orders are placed with the primary
objective of obtaining the best execution. Subject to the foregoing,
orders are placed with broker-dealer firms giving
consideration to the quality, quantity and nature of the firms'
professional services which include execution, clearance procedures,
and statistical data and research information to the Fund and JP
Management. In pursuing this objective, JP Management may
purchase securities in the over-the-counter market, utilizing the
services of principal market makers unless better execution can
be obtained elsewhere, and may purchase securities listed on an
exchange from non-exchange members in transactions off the exchange.
Although any statistical, research or other information and services
provided by broker-dealers may be useful to JP Management, its dollar
value is indeterminable and its availability does not serve to
materially reduce JP Management's normal research activities or expenses.
Any such information, which includes such matters as
general economic and security market reviews, industry and
company reviews, evaluations of securities and recommendations as to
the purchase and sale of securities, must still be analyzed
and reviewed by JP Management's personnel. JP Management may, in
recognition of the value of brokerage or research services provided
by the broker, pay such broker a brokerage commission in excess of that
which another broker might have charged for effecting the same
transaction. JP Management will not, however, effect a transaction
at such higher commission unless it determines in good faith that the
amount of the higher commission is reasonable in relation to the value
to the Fund of the brokerage and research services being provided.
Statistical research or other information or services received by
JP Management from broker-dealers may be used by JP Management in
servicing various of its clients (including the Fund),
although not all these services are necessarily useful and of
value in servicing the Fund. The total amount of brokerage commission
on purchase and sale transactions in fiscal year 1993 was
$45,886, in fiscal year 1994 was $141,984, and in fiscal year
1995 was $98,156, one hundred percent of which was paid to brokers
furnishing statistical data research information to JP Management.
<PAGE>
Purchase and Redemption of Shares
Reference is made to the information in the Prospectus under
"How to Purchase Shares" and "How to Redeem Shares" which describes
the manner in which the net asset value of the shares
of the fund is computed as of the close of trading on each day
the New York Stock Exchange is open for trading, and on any other
day in which there is a sufficient degree of trading in the
Fund's portfolio securities to materially affect net asset value,
and how the offering price is determined based on such net asset
value plus a sales commission, and the manner of placing
orders for the purchase of shares, including special purchase
plans and methods. It also sets forth specific directions for the
redemption of shares at net asset value and describes, and tells the
procedures to be followed in exercising, the investment privilege.
The Fund's shares are not valued on New Year's Day, President's Day,
Good Friday, Memorial Day, July 4, Labor Day, Thanksgiving Day or
Christmas Day, as the New York Stock Exchange closes on those days.
Individual Retirement Accounts ("IRA's") are available for
individuals whether or not they are active participants in any
other tax qualified employer plan. Investors Fiduciary Trust Company,
127 W. 10th Street, Kansas City, MO 64105, has agreed to act as
trustee for IRA's which invest in the Fund for a fee of $12 a year
and utilize a model form available from Investor Services. An
employer who has established a pension or profit-sharing plan for
employees may purchase Fund shares for such a program. Forms and
additional information for those individuals and
institutions wishing to purchase shares of the Fund in
conjunction with a tax-deferred retirement plan are available through
Investor Services to be used as a guide for the investor's own tax adviser.
Fund shares may be sold at net asset value to employee benefit
plans qualified under Section 401 of the Internal Revenue Code
covering employees of the Fund, Jefferson-Pilot Corporation
or affiliates thereof. In addition, Fund shares may be sold at
net asset value to (a) current or retired directors and officers of
the Fund; current or retired employees of Jefferson-Pilot Corporation
or affiliates thereof; spouses, minor children and grandchildren
of the above persons; and parents of employees and parents of spouses of
employees of Jefferson-Pilot Corporation or affiliates thereof;
(b) brokers/dealers which have entered into a sales agreement
with Investor Services, and to their bona fide full-time
employees, spouses of such employees and sales representatives who
have acted as such for not less than 180 days; and (c) to any trust,
pension, profit-sharing or other benefit plan (whether or not such
plans are qualified under Section 401 of the Internal Revenue Code)
established for such person, provided written assurance is given that
the purchase is made for investment purposes and that the Fund shares
will not be resold except through redemption or repurchase by or
on behalf of the Fund. Such persons will be given notice that they
are eligible to purchase the Fund's shares at net asset value,
but they will not otherwise be solicited to purchase shares of
the Fund. Investor Services incurs very few, if any, expenses in
selling shares to such persons.
<PAGE>
The Fund's Distributor
Jefferson-Pilot Investor Services, Inc. ("Investor Services"),
formerly Jefferson-Pilot Equity Sales, Inc., is the principal
distributor of the Fund's shares and acts as agent of the Fund in the
sale of its shares. Investor Services may make sales agreements
with dealers to sell Fund shares. In the fiscal year ended
December 31, 1993 sales of Fund shares resulted in gross commissions
of $163,644, in fiscal year 1994 the amount was $98,653, and in
fiscal year 1995 the amount was $66,827. All of these commissions
were retained by Investor Services. Investor Services did not receive,
directly or indirectly, any other compensation from the Fund
during these years.
The Fund's Directors and Officers
The following list of the Fund's directors and executive officers, all
of whom are also directors and/or officers of Jefferson-Pilot Investment
Grade Bond Fund, Inc., JP Capital Appreciation Fund, Inc., and JP
Investment Grade Bond Fund, Inc., includes information as to their principal
occupations during the past five years and their principal affiliations.
Name, Address & Position Principal Occupation
with Fund During Past 5 years
E. J. Yelton* Senior Vice President - Investments,
Director, President and Treasurer Jefferson-Pilot Corporation and
100 North Greene Street Executive Vice President - Investments,
Greensboro, North Carolina Jefferson-Pilot Life Insurance Company
since October 1993; prior thereto,
President and CEO, ING North America
Investment Centre/Member of ING Group;
Director, Jefferson-Pilot Investor
Services; President and Director,
JP Management
John C. Ingram* Senior Vice President, Jefferson-Pilot
Director Life Insurance Company since November
100 North Greene Street 1988 and prior thereto, Vice President;
Greensboro, North Carolina Senior Vice President, Treasurer and
Director, JP Management
Richard Wolcott McEnally Professor of Investment Banking,
Director University of North Carolina at
401 Brookside Drive Chapel Hill
Chapel Hill, North Carolina
William Edward Moran Senior Vice President, Connors Investor
Director Services, Inc. since January 1995;
5206 Barnfield Road prior thereto, Chancellor, University
Greensboro, North Carolina of North Carolina at Greensboro,
J. Lee Lloyd Managing Director, Lloyd & Company
Director since April 1991; prior thereto,
16 Irving Park Lane Vice President, Goldman, Sachs & Co.
Greensboro, North Carolina
J. Gregory Poole Assistant Secretary, Jefferson-Pilot
Secretary Corporation, since January 1994;
100 North Greene Street Associate Counsel and Assistant
Greensboro, North Carolina Secretary, Jefferson-Pilot Life
Insurance Company since February
1994; Attorney and Assistant
Secretary, January 1994, and prior
thereto, Attorney
*Messrs. Yelton and Ingram are interested persons (as that term
is defined in the Investment Company Act of 1940, as amended) of the Fund.
<PAGE>
The following officers of the Fund also serve as officers
and/or directors of JP Management and Investor Services: E. J. Yelton,
President and Treasurer of the Fund, is President and a Director of JP
Management and a Director of Investor Services; W. Hardee Mills, Jr.,
Vice President of the Fund, is Vice President of JP Management; and J.
Gregory Poole, Secretary of the Fund, is Secretary of Investor Services
and JP Management. Each director of the fund also serves as a director
for 3 other funds in the Jefferson-Pilot Investment Management Fund
Complex. Messrs. Yelton, Poole and Mills positions with the
other companies in the Jefferson-Pilot Investment Management Fund
Complex similar to the positions held with the Fund. The
other companies within the Fund Complex have the same investment
adviser as does the Fund.
The following table provides information regarding the
compensation each director was paid by the Fund and the Fund
Complex for the year ended December 31, 1995.
COMPENSATION TABLE
(1) (2) (3) (4) (5)
Pension or Total
Retirement Estimate Compensation
Benefits Annual From Fund
Aggregate Accrued as Benefits and 3 other
Name of Person, Compensation Part of Fund upon funds in
Position from Fund Expenses Retirement Complex
John C. Ingram $ 0 $ 0 $ 0 $ 0
Director
J. Lee Lloyd 1,220 0 0 4,880
Director
Richard W. 1,220 0 0 4,880
McEnally
Director
William E. Moran 1,220 0 0 4,880
Director
E. J. Yelton 0 0 0 0
Director, President,
Treasurer
The Board of Directors met five times during the year.
During the year ended December 31, 1995, directors not
employed by the Fund or its affiliates received a $100 director's
fee for each meeting attended, amounting to an aggregate of
$500. In addition, each of the non-affiliated directors receives
a fee of $720 per year, payable in equal monthly installments.
<PAGE>
General Information
The ownership of the Fund's outstanding securities by
Jefferson-Pilot Life Insurance Company, a North Carolina
corporation with its principal office at 100 North
Greene Street, Greensboro, North Carolina 27401, is disclosed
under "Additional Information" in the Prospectus. That
company is a wholly-owned subsidiary of Jefferson-Pilot
Corporation, a publicly held North Carolina corporation with
its principal office at 100 North Greene Street, Greensboro, North
Carolina 27401. The Fund's officers and directors together own
less than 1% of its securities.
Investors Fiduciary Trust Co., 127 W. 10th Street, 12th Floor,
Kansas City, MO 64105, acting as custodian, has custody of all
the Fund's securities and cash. That company attends to the
collection of principal and income, and payment for and
collection of proceeds of securities bought and sold by the Fund.
The Fund's independent accountants are McGladrey & Pullen, 555
Fifth Avenue , 8th Floor, New York, New York 10017-2416, who audit
and report on the Fund's annual financial statements,
review certain regulatory reports, prepare the Fund's income tax
returns, and perform other professional accounting, auditing, tax and
advisory services when engaged to do so by the Fund.
The selection of independent accountants will be submitted annually
to the Fund's shareholders for approval. Shareholders will receive
annual audited financial statements and quarterly unaudited financial
statements.
<PAGE>
Statement of Assets and Liabilities
December 31, 1995
Assets
Investment in securities at value (cost $29,447,919) $ 37,808,342
Cash 364,199
Receivables:
Capital shares sold 1,970
Dividends 56,055
Total Assets 38, 230,566
Liabilities
Payables:
Capital shares redeemed 66,990
Securities purchased 258,090
Accrued expenses 74,406
Total Liabilities 399,486
Net Assets
Net Assets, equivalent to $15.96 per share on 2,370,053
shares of capital stock outstanding (Note 2) $ 37,831,080
Computation of public offering price:
Net asset value per share $ 15.96
Offering price per share (100/95.5 x $15.96)
(reduced on sales of $25,000 or more) $ 16.71
See Notes to Financial Statements.
<PAGE>
Statement of Operations
Year Ended December 31, 1995
Investment Income:
Interest $ 53,147
Dividends 828,748
Total income 881,895
Expenses:
Investment Adviser's fee (Note 3) 177,665
Custodian and Transfer Agent fees 67,583
Directors' fees 3,660
Professional fees 25,511
Shareholder accounting services (Note 3) 21,600
Printing and mailing 13,200
Other 1,297
Total expenses 310,516
Less expenses offset (Note 5) ( 18,240)
Net expenses 292,276
Investment income - net 589,619
Realized and Unrealized Gain on Investments:
Net realized gain on investments 2,251,129
Unrealized appreciation of investments for the year 7,655,872
Net gain on investments 9,907,001
Net increase in net assets from operations $10,496,620
See Notes to Financial Statements.
<PAGE>
Statements of Changes in Net Assets
Years Ended December 31, 1995 and 1994
1995 1994
Increase (Decrease) in Net Assets from:
Operations:
Investment income - net $ 589,619 $ 622,612
Net realized gain on investments 2,251,129 7,132,162
Unrealized appreciation (depreciation)
for the year 7,655,872 ( 9,494,642)
Net increase (decrease) in net assets
from operations 10,496,620 ( 1,739,868)
Dividends paid to shareholders from:
Investment income - net ( 568,392) ( 596,160)
Net realized gain on investments ( 1,486,668) ( 7,155,326)
Capital share transactions (Note 2) ( 2,993,629) 3,828,530
Total increase (decrease) 5,447,931 ( 5,662,824)
Net Assets
Beginning of year 32,383,149 38,045,973
End of year (including undistributed net
investment income of $48,707 and
$27,480, respectively) $37,831,080 $32,383,149
See Notes to Financial Statements.
<PAGE>
Statement of Investments
December 31, 1995
Number of Shares
Common Stocks - 96.80% or Principal Amount Value
Aerospace/Defense _ 2.05%
Lockheed-Martin Corporation 5,700 $ 450,300
Loral Corporation 9,200 325,450
Auto & Trucks - .22%
Honda Motor Company, Ltd. 2,000 84,000
Banks - 4.41%
Bank of New York Company, Inc 11,000 536,250
Chase Manhattan Corporation 5,700 345,562
Citicorp 11,700 786,825
Biotechnology - 1.85%
Amgen, Inc. 11,800 699,150*
Broadcasting - 2.53%
Capital Cities/ABC, Inc. 6,600 814,275
US West Media Group, Inc. 7,600 144,400*
Chemicals - Major - 4.36%
Dow Chemical Company 6,200 436,325
Monsanto Company 9,900 1,212,750
Computer Software - 1.67%
Informix Corporation 7,000 210,000*
Silicon Graphics Computer System 8,200 225,500*
Sybase, Inc. 5,500 196,625*
Conglomerates - 1.00%
AlliedSignal, Inc. 8,000 380,000
Drugs - 6.41%
Lilly (Eli) & Company 5,708 321,075
Merck & Company, Inc. 5,400 355,050
Mylan Laboratories, Inc. 17,550 412,425
Pharmacia-Upjohn, Inc. 13,000 503,750
Schering-Plough Corporation 15,200 832,200
Electric Equipment - Major - 3.67%
General Electric Company 13,000 936,000
Kuhlman Corporation 36,000 450,000
Electronics - Instrument - 2.78%
General Instrument Corporation 8,300 194,012*
3Com Corporation 10,000 466,250*
Varian Associates, Inc. 8,200 391,550
Electronics - Semi - 1.99%
LSI Logic Corporation 7,200 235,800*
Texas Instruments, Inc. 10,000 517,500
<PAGE>
Entertainment - .94%
Disney, (Walt) & Company 6,000 354,000
Financial Services - .61%
Money Store, Inc. 15,000 232,500
Foods - 1.99%
Sara Lee Corporation 23,600 752,250
Footwear - 1.33%
Nike, Inc. 7,200 501,300
Hospital - Management - 3.73%
Columbia/HCA Healthcare Corporation 9,900 502,425
Medaphis Corporation 14,000 518,000*
Vencor, Inc. 12,000 390,000*
Hospital - Supplies - 3.01%
Baxter International, Inc. 5,700 238,687
Guidant Corporation 5,046 213,194
Johnson & Johnson 8,000 685,000
Information Processing - 2.05%
Equifax, Inc. 36,200 773,775
Insurance - Multi-Line - 4.61%
Aflac, Inc. 9,000 390,375
Allstate Corporation 12,300 505,838
American General Corporation 6,500 226,687
CIGNA Corporation 6,000 619,500
Insurance - Property & Casualty - .96%
Prudential Reinsurance Holdings, Inc. 15,500 362,313
Machinery - Agricultural - .54%
Varity Corporation 5,500 204,188*
Merchandising - Department - 1.92%
Dayton Hudson Corporation 3,800 285,000
Federated Department Stores, Inc. 16,000 440,000*
Merchandising - Drugs - .71%
Eckerd Corporation 6,000 267,750*
Merchandising - Special - 2.54%
Borders Group, Inc. 26,500 490,250*
Circuit City Stores, Inc. 17,000 469,625
Miscellaneous Consumer Cyclical - .44%
Kelly Services, Inc. 6,000 166,500
Miscellaneous Financial - 5.39%
Countrywide Credit Industries, Inc. 42,000 913,500
Dean Witter, Discover & Company 6,300 296,100
Federal Home Loan Mortgage Corporation 4,600 384,100
First USA, Inc. 10,000 443,750
Natural Gas - Diversified - .74%
Questar Corporation 8,300 278,050
<PAGE>
Oils - Integrated Domestic - 5.70%
Amoco Corporation 9,300 668,438
Atlantic Richfield Company 8,400 930,300
Enron Oil & Gas Company 10,500 257,250
Phillips Petroleum Company 8,800 300,300
Oils - Integrated International - 4.17%
Mobil Corporation 6,900 772,800
Royal Dutch Petroleum Company 5,700 804,413
Oil Services - .78%
Oceaneering International, Inc. 23,000 296,125*
Paper & Forest Products - .34%
Sonoco Products Company 4,830 126,787
Railroads - .92%
CSX Corporation 7,600 346,750
Telecommunications - 1.46%
DSC Communications Corporation 15,000 553,125*
Textile - Apparel - 1.35%
Intimate Brands, Inc. 15,000 225,000
Ross Stores, Inc. 15,000 286,875
Tobacco - 1.34%
Philip Morris Companies, Inc. 5,600 506,800
Transportation - Miscellaneous - .51%
Federal Express Corporation 2,600 192,075*
Utilities - Communications - 7.56%
Bell Atlantic Corporation 3,700 247,438
BellSouth Corporation 7,400 321,900
Century Telephone Enterprises, Inc. 8,400 266,700
Frontier Corporation 32,000 960,000
SBC Communications, Inc. 3,600 207,000
Sprint Corporation 14,600 582,175
US West Communications Group, Inc. 7,600 271,700
Utilities - Electric - 8.22%
American Electric Power Company, Inc 6,600 267,300
CMS Energy Corporation 9,800 292,775
Carolina Power & Light Company 4,100 141,450
CINergy Corporation 13,700 419,562
Consolidated Edison Company of
New York, Inc. 5,900 188,800
Dominion Resources, Inc. 4,600 189,750
Entergy Corporation 12,000 351,000
FPL Group, Inc. 8,200 380,275
Illinova Corporation 9,600 288,000
Northeast Utilities 8,650 210,844
PECO Energy Company 4,900 147,612
Public Service Enterprise Group, Inc. 7,500 229,687
Total Common Stocks (Cost - $28,253,464+) 36,598,687
Preferred Stocks - 1.35%
Tobacco - 1.35%
RJR Nabisco Holdings, Inc. Pfd C 80,000 510,000
<PAGE>
Total Preferred Stocks (Cost $494,800+) 510,000
Short-Term Securities - 1.85%
Ford Motor Credit Company, 1/03/96 $ 700,000 699,655
Total Short-Term Securities (Cost $699,655+) 699,655
Total Investments (Cost $29,447,919+) $37,808,342
*Non-income producing.
+Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
<PAGE>
Notes to Financial Statements
Note 1. Significant Accounting Policies:
Jefferson-Pilot Capital Appreciation Fund, Inc., is an open-end
management investment company registered under the Investment Company Act
of 1940. The Fund's primary investment objective is long-term capital
appreciation. The Fund seeks to achieve this objective by investing
substantially all of its assets in common stocks of companies
recognized as leaders in their respective industries, however, other
types of securities may be purchased depending upon the
judgement of management. The following is a summary of
significant accounting policies followed in the preparation of its
financial statements:
Valuation of Securities - Investments are stated at value based
on the closing prices reported on national securities exchanges
on the last business day of the year, or for over-the-counter
securities, at the last bid price, except that short-term
securities are stated at amortized cost which approximates value.
Federal Income Taxes - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to "regulated
investment companies" and to distribute all of its taxable
income to its shareholders. Therefore, no provision for Federal
income tax is required.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could
differ from those estimates.
General - Securities transactions are accounted for on the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is accrued as earned.
Note 2. Capital Stock:
At December 31, 1995, 10,000,000 shares of capital stock ($1.00
par value) were authorized and capital paid-in amounted to $28,499,042.
Transactions in capital stock were as follows:
Year Ended Year Ended
December 31, 1995 December 31, 1994
Shares Amount Shares Amount
Sold 153,009 $ 2,164,646 178,334 $ 2,952,364
Issued on reinvestment
of dividends 109,424 1,662,936 489,064 6,160,598
Redeemed (469,652) ( 6,821,211) (322,174) ( 5,284,432)
Net increase (decrease) (207,219) ($ 2,993,629) 345,224 $ 3,828,530
<PAGE>
Note 3. Investment Advisory Fee and other Transactions with Affiliates:
JP Investment Management Company received investment advisory
fees of $177,665 during the year ended December 31, 1995. This fee is
computed at the annual rate of 0.5% of the Fund's average daily net
asset value. If the Fund's expenses, excluding interest and taxes,
exceed 1% of the average daily net asset value, the Investment Adviser will
pay the excess. No such reimbursement was required during the year.
Expenses include $21,600 of fees paid to JP Investment Management Company
for shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of
$66,827 in its capacity as Principal Distributor for the Fund.
Note 4. Investment Transactions:
Purchases and sales of investment securities, excluding short-term
securities, were $22,431,918 and $27,025,361, respectively.
Realized gains and losses are reported on an identified cost basis.
Accumulated undistributed net realized gain at December 31, 1995 was $922,908.
At December 31, 1995, the aggregate gross unrealized appreciation
and depreciation of portfolio securities was as follows:
Unrealized appreciation $8,565,109
Unrealized depreciation ( 204,686)
Net unrealized appreciation $8,360,423
Note 5. Expense Offset Arrangement:
The Fund has an arrangement with its custodian and transfer agent
whereby credits earned on cash balances maintained at the custodian
are used to offset custody and transfer agent charges.
These credits amounted to $18,240 for the year ended December 31, 1995.
Note 6. Selected Financial Information:
Years Ended December 31,
1995 1994 1993 1992 1991
Per share operating performance
(for a share outstanding throughout the year)
Net asset value,
beginning of year $12.56 $17.05 $17.44 $18.02 $14.09
Income from investment
operations:
Net investment income .25 .29 .23 .23 .32
Net realized and unrealized
gain (loss) on investments 4.03 ( 1.12) 1.04 .75 4.13
Total from investment
operations 4.28 ( .83) 1.27 .98 4.45
Less distributions:
Dividends from net
investment income ( .24) ( .28) ( .22) ( .27) ( .33)
Distributions from net
realized gains ( .64) ( 3.38) ( 1.44) ( 1.29) ( .19)
Total distributions ( .88) ( 3.66) ( 1.66) ( 1.56) ( .52)
Net asset value, end of year $15.96 $12.56 $17.05 $17.44 $18.02
Total return (without
deduction of sales load) 34.47% ( 4.63)% 7.68% 5.60% 32.22%
Ratios/supplemental data:
Net assets, end of year
(000 omitted) $37,831 $32,383 $38,045 $34,898 $33,836
Ratios to average net assets:
Expenses .87% .83% .84% .87% .87%
Net investment income 1.66 1.74 1.30 1.34 1.98
Portfolio turnover rate 65.27 143.81 26.89 53.38 36.70
<PAGE>
Independent Auditor's Report
To the Board of Directors and Shareholders
Jefferson-Pilot Capital Appreciation Fund, Inc.
We have audited the accompanying statement of assets and
liabilities and the statement of investments of Jefferson-Pilot
Capital Appreciation Fund, Inc. as of December 31, 1995, and the
related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in
the period then ended, and the selected financial information for each of
the five years in the period then ended. These financial
statements and selected financial information are the responsibility
of the Fund's management. Our responsibility is to express an
opinion on these financial statements and selected financial
information 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 selected financial
information are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December
31, 1995, by correspondence with the custodian and brokers. 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 selected financial
information referred to above present fairly, in all material respects,
the financial position of Jefferson-Pilot Capital Appreciation Fund,
Inc. as of December 31, 1995, the results of its operations, the
changes in its net assets, and the selected financial information for the
periods indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
/s/ McGladrey & Pullen, LLP
New York, New York
January 11, 1996
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
A MUTUAL FUND SEEKING GROWTH OF CAPITAL
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
<TABLE>
<CAPTION>
<S> <C>
FUND DIRECTORS AND OFFICERS DISTRIBUTOR
E. J. YELTON, PH.D., DIRECTOR, PRESIDENT, Jefferson-Pilot Investor Services, Inc.
AND TREASURER 100 North Greene Street
Greensboro, North Carolina 27401
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR INVESTMENT ADVISER
JP Investment Management Company
RICHARD W. MCENALLY, CFA, DIRECTOR 100 North Greene Street
Greensboro, North Carolina 27401
WILLIAM E. MORAN, DIRECTOR
W. HARDEE MILLS, CFA, VICE PRESIDENT CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
J. GREGORY POOLE, SECRETARY 127 West Tenth Street
Kansas City, Missouri 64105
GREGORY D. WALKER, CFA,
PORTFOLIO MANAGER
CERTIFIED PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017
JEFFERSON-PILOT CAPITAL
APPRECIATION FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
</TABLE>
<PAGE>
INVESTMENT RESULTS
TOTAL RETURN -- 1995 -- DIVIDEND REINVESTMENT PLAN:
Net Asset Value December 31, 1995 $15.96
Investment Income Dividend Paid:
February 10, 1995 $ .011
August 11, 1995 $ .120
December 19, 1995 $ .110
Capital Gains Paid:
February 10, 1995 $ .061
December 19, 1995 $ .580
December 31, 1995 Adjusted Value per Share Assuming
All Dividends Reinvested in Fund Shares $16.89
Net Asset Value December 31, 1994 $12.56
Percent Change During Twelve Months Ended
December 31, 1995:
Jefferson-Pilot Capital Appreciation Fund --
Assuming All Dividends Reinvested in Fund Shares 34.47%
Reinvestment Prices Assuming Dividends were reinvested
in New Fund Shares on the Record Date:
$12.64 per share as of January 30, 1995
$15.20 per share as of July 28, 1995
$15.58 per share as of December 15, 1995
2
<PAGE>
TO SHAREHOLDERS
INVESTMENT ACTIVITY
On December 31, 1995, the net asset value of your Fund was $15.96. Dividends
totaling $.241 from net investment income and $.641 from net capital gains have
been paid year to date. On a total return basis, for 1995, the Jefferson-Pilot
Capital Appreciation Fund increased 34.47% while the S&P 500 increased 37.53%.
The Fund's annual returns for one, three, five and ten-year periods ending
December 31, 1995 are as follows:*
1 Year -- 34.47%
3 Years -- 11.35
5 Years -- 14.03
10 Years -- 11.88
In 1995, your fund outperformed 75% of the Growth and Income mutual funds
tracked by Lipper Analytical Services.
Signs of economic weakness were evident as 1996 ushered in a new year. As
recently as August of last year, upward earnings estimate revisions by stock
analysts outpaced downward revisions by an astounding six to one margin. By
mid-January 1996, earnings estimate revisions have reversed and downward
revisions now outnumber upward revisions by a two to one margin.
With the slowing of profit growth, we have witnessed a concurrent fall in the
breadth of the market. That is, while the stock market is posting new highs,
this performance is driven by fewer and fewer stocks. In fact, calculations by
the Wall Street firm, Smith Barney, reveal that the entire advance of the S&P
500 from September 30, 1995 to December 18 (the date of the study) was
attributable to only 18 of the 500 stocks. In other words, fewer than 5% of the
stocks in the S&P 500 provided 100% of the appreciation.
As referred to in our previous update, we believe that profits will continue to
surprise on the downside as economic growth slows. This is not to say that we
believe that the stock market will provide negative returns for the year. As
inflation continues to remain restrained, the Federal Reserve will have more
leeway to lower interest rates. Lower rates can support higher stock valuations.
We believe that the low volatility of the markets we have experienced in the
recent past will reverse. The Dow Jones Industrial Average's (DJIA) biggest
correction in 1995 was 3.3%, occurring in mid-July. In an average year the DJIA
corrects -9.3%. With the declining market breadth, we expect a more volatile
year as investors attempt to separate the winners from the losers.
1996 stock market performance is unlikely to match that of 1995. In fact, 1995,
as measured by the S&P 500, was the fifth best year in market history. We do see
a positive return for the stock market this year; however, we believe it will be
driven by a relatively few number of stocks. These stocks will likely be of high
quality, stable growth companies. These are the stocks which typically
outperform when the profit cycle has peaked and economic growth begins to slow.
If the Fed lowers interest rates, we can expect the economically sensitive
companies to benefit but with a lag. The positive benefit that cyclical
companies will receive from lower interest rates is not likely to be experienced
this year even if the Fed aggressively lowers rates early.
3
<PAGE>
Portfolio Diversification
SECTOR % OF TOTAL NET ASSETS
Credit Cyclicals 0.00
Financial 15.98
Consumer Services 7.20
Consumer Staples 16.65
Consumer Cyclicals 7.79
Capital Goods--Technology 12.00
Capital Goods 4.20
Energy 11.39
Basic Industries 4.69
Transportation 1.42
Utilities 15.77
Conglomerates 1.00
Cash 1.91
Your continued support and interest in the Jefferson-Pilot Capital Appreciation
Fund are appreciated, and we welcome any questions.
Jefferson-Pilot Capital Appreciation Fund, Inc.
/s/ E. J. Yelton
President
January 29, 1996
*These results do not include the sales charge. If the maximum sales charge of
4.50% of the initial investment is included and with all subsequent
distributions of the Fund reinvested, the average annual total rate of return
of the Fund for the one, three, five, and ten-year periods ended December 31,
1995, were +26.73%, +9.66%, +13.02%, and +11.31% respectively. These results
represent past performance and are not necessarily an indication of future
results.
4
<PAGE>
ABOUT YOUR FUND
As a shareowner of Jefferson-Pilot Capital Appreciation Fund, you have several
valuable benefits and privileges:
- - You may be able to acquire additional shares at a reduced sales charge through
either the Combined Purchases, Accumulated Purchases, or Statement of Intention
provisions of the Fund. (See those sections of your prospectus that describe
these provisions.)
- - You may exchange shares owned at any time for an equal value of shares of
Jefferson-Pilot Investment Grade Bond Fund, subject to certain minimum amounts,
without charge.
- - You may reinvest all income and capital gains distributions in additional Fund
shares at the Fund's net asset value (without a sales charge).
- - Provided you own shares or currently purchase shares having a net asset of at
least $10,000, you may elect to have monthly or quarterly payments made to you
under a Systematic Withdrawal Plan.
Additionally, the Fund provides a printed confirmation of each transaction,
quarterly reports, and other account information, making ownership of Fund
shares easy and convenient.
The cost of purchasing and owning shares is reasonable. The services provided
plus professional management plus diversification of investments would otherwise
be prohibitively expensive for most investors.
We hope that this information will encourage you to increase the level of your
future investments in Jefferson-Pilot Capital Appreciation Fund--or you may
wish to add a Jefferson-Pilot Investment Grade Bond Fund account.
5
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
TEN LARGEST HOLDINGS
December 31, 1995
COMPANY MARKET VALUE PERCENT OF FUND
Monsanto Company $1,212,750 3.2
Frontier Corporation 960,000 2.5
General Electric Company 936,000 2.5
Atlantic Richfield Company 930,300 2.5
Countrywide Credit Industries, Inc. 913,500 2.4
Schering-Plough Corporation 832,200 2.2
Capital Cities/ABC, Inc. 814,275 2.2
Royal Dutch Petroleum Company 804,413 2.1
Citicorp 786,825 2.1
Equifax, Inc. 773,775 2.0
----------- ------
$8,964,038 23.7
6
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS
December 31, 1995
NUMBER OF SHARES
COMMON STOCKS--96.80% OR PRINCIPAL AMOUNT VALUE
Aerospace/Defense--2.05%
Lockheed-Martin Corporation 5,700 $ 450,300
Loral Corporation 9,200 325,450
Auto & Trucks--.22%
Honda Motor Company, Ltd. 2,000 84,000
Banks--4.41%
Bank of New York Company, Inc. 11,000 536,250
Chase Manhattan Corporation 5,700 345,562
Citicorp 11,700 786,825
Biotechnology--1.85%
Amgen, Inc. 11,800 699,150*
Broadcasting--2.53%
Capital Cities/ABC, Inc. 6,600 814,275
US West Media Group, Inc. 7,600 144,400*
Chemicals--Major--4.36%
Dow Chemical Company 6,200 436,325
Monsanto Company 9,900 1,212,750
1,212,750
Computer Software--1.67%
Informix Corporation 7,000 210,000*
Silicon Graphics Computer System 8,200 225,500*
Sybase, Inc. 5,500 196,625*
Conglomerates--1.00%
AlliedSignal, Inc. 8,000 380,000
Drugs--6.41%
Lilly (Eli) & Company 5,708 321,075
Merck & Company, Inc. 5,400 355,050
Mylan Laboratories, Inc. 17,550 412,425
Pharmacia-Upjohn, Inc. 13,000 503,750
Schering-Plough Corporation 15,200 832,200
Electric Equipment--Major--3.67%
General Electric Company 13,000 936,000
Kuhlman Corporation 36,000 450,000
Electronics--Instrument--2.78%
General Instrument Corporation 8,300 194,012*
3Com Corporation 10,000 466,250*
Varian Associates, Inc. 8,200 391,550
7
<PAGE>
Electronics--Semi--1.99%
LSI Logic Corporation 7,200 235,800*
Texas Instruments, Inc. 10,000 517,500
Entertainment--.94%
Disney, (Walt) & Company 6,000 354,000
Financial Services--.61%
Money Store, Inc. 15,000 232,500
Foods--1.99%
Sara Lee Corporation 23,600 752,250
Footwear--1.33%
Nike, Inc. 7,200 501,300
Hospital--Management--3.73%
Columbia/HCA Healthcare Corporation 9,900 502,425
Medaphis Corporation 14,000 518,000*
Vencor, Inc. 12,000 390,000*
Hospital--Supplies--3.01%
Baxter International, Inc. 5,700 238,687
Guidant Corporation 5,046 213,194
Johnson & Johnson 8,000 685,000
Information Processing--2.05%
Equifax, Inc. 36,200 773,775
Insurance--Multi-Line--4.61%
Aflac, Inc. 9,000 390,375
Allstate Corporation 12,300 505,838
American General Corporation 6,500 226,687
CIGNA Corporation 6,000 619,500
Insurance--Property & Casualty--.96%
Prudential Reinsurance Holdings, Inc. 15,500 362,313
Machinery--Agricultural--.54%
Varity Corporation 5,500 204,188*
Merchandising--Department--1.92%
Dayton Hudson Corporation 3,800 285,000
Federated Department Stores, Inc. 16,000 440,000*
Merchandising--Drugs--.71%
Eckerd Corporation 6,000 267,750*
Merchandising--Special--2.54%
Borders Group, Inc. 26,500 490,250*
Circuit City Stores, Inc. 17,000 469,625
Miscellaneous Consumer Cyclical--.44%
Kelly Services, Inc. 6,000 166,500
8
<PAGE>
Miscellaneous Financial--5.39%
Countrywide Credit Industries, Inc. 42,000 913,500
Dean Witter, Discover & Company 6,300 296,100
Federal Home Loan Mortgage Corporation 4,600 384,100
First USA, Inc. 10,000 443,750
Natural Gas--Diversified--.74%
Questar Corporation 8,300 278,050
Oils--Integrated Domestic--5.70%
Amoco Corporation 9,300 668,438
Atlantic Richfield Company 8,400 930,300
Enron Oil & Gas Company 10,500 257,250
Phillips Petroleum Company 8,800 300,300
Oils--Integrated International--4.17%
Mobil Corporation 6,900 772,800
Royal Dutch Petroleum Company 5,700 804,413
Oil Services--.78%
Oceaneering International, Inc. 23,000 296,125*
Paper & Forest Products--.34%
Sonoco Products Company 4,830 126,787
Railroads--.92%
CSX Corporation 7,600 346,750
Telecommunications--1.46%
DSC Communications Corporation 15,000 553,125*
Textile--Apparel--1.35%
Intimate Brands, Inc. 15,000 225,000
Ross Stores, Inc. 15,000 286,875
Tobacco--1.34%
Philip Morris Companies, Inc. 5,600 506,800
Transportation--Miscellaneous--.51%
Federal Express Corporation 2,600 192,075*
Utilities--Communications--7.56%
Bell Atlantic Corporation 3,700 247,438
BellSouth Corporation 7,400 321,900
Century Telephone Enterprises, Inc. 8,400 266,700
Frontier Corporation 32,000 960,000
SBC Communications, Inc. 3,600 207,000
Sprint Corporation 14,600 582,175
US West Communications Group, Inc. 7,600 271,700
9
<PAGE>
Utilities--Electric--8.22%
American Electric Power Company, Inc. 6,600 267,300
CMS Energy Corporation 9,800 292,775
Carolina Power & Light Company 4,100 141,450
CINergy Corporation 13,700 419,562
Consolidated Edison Company of New York, Inc. 5,900 188,800
Dominion Resources, Inc. 4,600 189,750
Entergy Corporation 12,000 351,000
FPL Group, Inc. 8,200 380,275
Illinova Corporation 9,600 288,000
Northeast Utilities 8,650 210,844
PECO Energy Company 4,900 147,612
Public Service Enterprise Group, Inc. 7,500 229,687
----------
Total Common Stocks (Cost--$28,253,464+) 36,598,687
----------
Preferred Stocks--1.35%
Tobacco--1.35%
RJR Nabisco Holdings, Inc. Pfd C 80,000 510,000
---------
Total Preferred Stocks (Cost--$494,800+) 510,000
---------
Short-Term Securities--1.85%
Ford Motor Credit Company, 1/03/96 $ 700,000 699,655
---------
Total Short-Term Securities (Cost--$699,655+) 699,655
---------
Total Investments (Cost--$29,447,919+) $37,808,342
-----------
-----------
*Non-income producing.
+Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
10
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
ASSETS
Investment in securities at value (cost $29,447,919) $ 37,808,342
Cash 364,199
Receivables:
Capital shares sold 1,970
Dividends 56,055
------------
Total Assets 38, 230,566
------------
LIABILITIES
Payables:
Capital shares redeemed 66,990
Securities purchased 258,090
Accrued expenses 74,406
------------
Total Liabilities 399,486
------------
NET ASSETS
Net Assets, equivalent to $15.96 per share on
2,370,053 shares of capital stock outstanding (Note 2) $ 37,831,080
------------
------------
Computation of public offering price:
Net asset value per share $ 15.96
--------
--------
Offering price per share (100/95.5 x $15.96)
(reduced on sales of $25,000 or more) $ 16.71
--------
--------
See Notes to Financial Statements.
11
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
Investment Income:
Interest $ 53,147
Dividends 828,748
-----------
Total income 881,895
-----------
Expenses:
Investment Adviser's fee (Note 3) 177,665
Custodian and Transfer Agent fees 67,583
Directors' fees 3,660
Professional fees 25,511
Shareholder accounting services (Note 3) 21,600
Printing and mailing 13,200
Other 1,297
-----------
Total expenses 310,516
Less expenses offset (Note 5) ( 18,240)
-----------
Net expenses 292,276
-----------
Investment income - net 589,619
-----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments 2,251,129
Unrealized appreciation of investments for the year 7,655,872
Net gain on investments 9,907,001
-----------
Net increase in net assets from operations $10,496,620
-----------
-----------
See Notes to Financial Statements.
12
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31, 1995 and 1994
1995 1994
Increase (Decrease) in Net Assets from:
Operations:
Investment income--net $ 589,619 $ 622,612
Net realized gain on investments 2,251,129 7,132,162
Unrealized appreciation (depreciation)
for the year 7,655,872 ( 9,494,642)
----------- -----------
Net increase (decrease) in net assets
from operations 10,496,620 ( 1,739,868)
Dividends paid to shareholders from:
Investment income -- net ( 568,392) ( 596,160)
Net realized gain on investments ( 1,486,668) ( 7,155,326)
Capital share transactions (Note 2) ( 2,993,629) 3,828,530
----------- -----------
Total increase (decrease) 5,447,931 ( 5,662,824)
Net Assets
Beginning of year 32,383,149 38,045,973
----------- -----------
End of year (including undistributed net
investment income of $48,707 and
$27,480, respectively) $37,831,080 $32,383,149
----------- -----------
----------- -----------
See Notes to Financial Statements.
13
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Jefferson-Pilot Capital Appreciation Fund, Inc., is an open-end management
investment company registered under the Investment Company Act of 1940. The
Fund's primary investment objective is long-term capital appreciation. The Fund
seeks to achieve this objective by investing substantially all of its assets in
common stocks of companies recognized as leaders in their respective industries,
however, other types of securities may be purchased depending upon the judgement
of management. The following is a summary of significant accounting policies
followed in the preparation of its financial statements:
VALUATION OF SECURITIES--Investments are stated at value based on the closing
prices reported on national securities exchanges on the last business day of the
year, or for over-the-counter securities, at the last bid price, except that
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
GENERAL -- Securities transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Interest income is accrued as earned.
NOTE 2. CAPITAL STOCK: At December 31, 1995, 10,000,000 shares of capital stock
($1.00 par value) were authorized and capital paid-in amounted to $28,499,042.
Transactions in capital stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- ---------------------
Shares Amount Shares Amount
------ ------ ------ ------
Sold 153,009 $ 2,164,646 178,334 $ 2,952,364
Issued on reinvestment
of dividends 109,424 1,662,936 489,064 6,160,598
Redeemed (469,652) ( 6,821,211) (322,174) ( 5,284,432)
------- ----------- ------- -----------
Net increase (decrease) (207,219) ($ 2,993,629) 345,224 $ 3,828,530
------- ----------- ------- -----------
------- ----------- ------- -----------
14
<PAGE>
NOTE 3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $177,665
during the year ended December 31, 1995. This fee is computed at the annual rate
of 0.5% of the Fund's average daily net asset value. If the Fund's expenses,
excluding interest and taxes, exceed 1% of the average daily net asset value,
the Investment Adviser will pay the excess. No such reimbursement was required
during the year.
Expenses include $21,600 of fees paid to JP Investment Management Company for
shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of $66,827 in
its capacity as Principal Distributor for the Fund.
NOTE 4. INVESTMENT TRANSACTIONS: Purchases and sales of investment securities,
excluding short-term securities, were $22,431,918 and $27,025,361, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized gain at December 31, 1995 was $922,908.
At December 31, 1995, the aggregate gross unrealized appreciation and
depreciation of portfolio securities was as follows:
Unrealized appreciation $8,565,109
Unrealized depreciation ( 204,686)
----------
Net unrealized appreciation $8,360,423
----------
----------
NOTE 5. EXPENSE OFFSET ARRANGEMENT:
The Fund has an arrangement with its custodian and transfer agent whereby
credits earned on cash balances maintained at the custodian are used to offset
custody and transfer agent charges. These credits amounted to $18,240 for the
year ended December 31, 1995.
15
<PAGE>
NOTE 6. SELECTED FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value,
beginning of year $12.56 $17.05 $17.44 $18.02 $14.09
----- ----- ----- ----- -----
Income from investment
operations:
Net investment income .25 .29 .23 .23 .32
Net realized and unrealized
gain (loss) on investments 4.03 ( 1.12) 1.04 .75 4.13
----- ----- ----- ----- -----
Total from investment
operations 4.28 ( .83) 1.27 .98 4.45
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income ( .24) ( .28) ( .22) ( .27) ( .33)
Distributions from net
realized gains ( .64) ( 3.38) ( 1.44) ( 1.29) ( .19)
----- ----- ----- ----- -----
Total distributions ( .88) ( 3.66) ( 1.66) ( 1.56) ( .52)
----- ----- ----- ----- -----
Net asset value,
end of year $15.96 $12.56 $17.05 $17.44 $18.02
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL RETURN (WITHOUT DEDUCTION OF SALES LOAD) 34.47% ( 4.63)% 7.68% 5.60% 32.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000 omitted) $37,831 $32,383 $38,045 $34,898 $33,836
Ratios to average net assets:
Expenses .87% .83% .84% .87% .87%
Net investment income 1.66 1.74 1.30 1.34 1.98
Portfolio turnover rate 65.27 143.81 26.89 53.38 36.70
</TABLE>
16
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Jefferson-Pilot Capital Appreciation Fund, Inc.
We have audited the accompanying statement of assets and liabilities and the
statement of investments of Jefferson-Pilot Capital Appreciation Fund, Inc. as
of December 31, 1995, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the selected financial information for each of the five
years in the period then ended. These financial statements and selected
financial information are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
selected financial information 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 selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and brokers.
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 selected financial information
referred to above present fairly, in all material respects, the financial
position of Jefferson-Pilot Capital Appreciation Fund, Inc. as of December 31,
1995, the results of its operations, the changes in its net assets, and the
selected financial information for the periods indicated, in conformity with
generally accepted accounting principles.
McGladrey & Pullen, LLP
/s/ McGladrey & Pullen, LLP
New York, New York
January 11, 1996
17
<PAGE>
18
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
A MUTUAL FUND SEEKING MAXIMUM INCOME
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
<TABLE>
<CAPTION>
<S> <C>
FUND DIRECTORS AND OFFICERS DISTRIBUTOR
E. J. YELTON, Ph.D., DIRECTOR, PRESIDENT, Jefferson-Pilot Investor Services, Inc.
AND TREASURER 100 North Greene Street
Greensboro, North Carolina 27401
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR INVESTMENT ADVISER
JP Investment Management Company
RICHARD W. McENALLY, CFA, DIRECTOR 100 North Greene Street
Greensboro, North Carolina 27401
WILLIAM E. MORAN, DIRECTOR
W. HARDEE MILLS, CFA, VICE PRESIDENT CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
J. GREGORY POOLE, SECRETARY 127 West Tenth Street
Kansas City, Missouri 64105
H. LUSBY BROWN, CFA, PORTFOLIO MANAGER
CERTIFIED PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017
JEFFERSON-PILOT INVESTMENT
GRADE BOND FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
</TABLE>
19
<PAGE>
INVESTMENT RESULTS
TOTAL RETURN - 1995 - DIVIDEND REINVESTMENT PLAN:
Net Asset Value December 31, 1995 $ 9.66
Investment Income Dividends Paid:
February 10, 1995 $ .011
May 12, 1995 $ .150
August 11, 1995 $ .160
November 10, 1995 $ .150
December 19, 1995 $ .130
December 31, 1995 Adjusted Value per Share Assuming
All Dividends Reinvested in Fund Shares $10.30
Net Asset Value December 31, 1994 $ 8.70
Percent Change During Twelve Months Ended
December 31, 1995:
Jefferson-Pilot Investment Grade Bond Fund, Inc.
Assuming All Dividends Reinvested in Fund Shares 18.39%
Reinvestment Prices Assuming Dividends were reinvested
in New Fund Shares on the Record Date:
$8.83 per share as of January 30, 1995
$9.08 per share as of April 28, 1995
$9.29 per share as of July 28, 1995
$9.51 per share as of October 27, 1995
$9.55 per share as of December 15, 1995
20
<PAGE>
TO SHAREHOLDERS
INVESTMENT ACTIVITY
On December 31, 1995, the net asset value of your Fund was $9.66. The Fund paid
dividends of $.601 per share from interest income during 1995. The Fund's annual
returns for one, three, five, and ten-year periods ending December 31, 1995 are
as follows:*
Year-to-Date
1 Year -- 18.39%
3 Years -- 7.06%
5 Years -- 8.26%
10 Years -- 8.65%
In 1995, the bond market recovered from one of its worst years in history to
record one of its best years in history. The rally actually began in late 1994
and picked up steam early in 1995, as the Federal Reserve dropped the target for
Federal Funds to 5.75%. A developing picture of mediocre economic growth and low
inflation kept the rally going throughout the summer as the market began to
forecast slower growth in 1996. The bond market rally was led by expectations
that the Fed would continue to ease and, as a result, the yield curve steepened
with the two-year Note rallying over 250 BP while the 30-year Bond only rallied
about 190 BP.
Long-term corporate bonds had the best overall returns in 1995, due to
tightening credit spreads caused by heavy demand for higher yielding assets and
light supply. Mortgage-backed securities generally underperformed the market
during the year as falling interest rates sparked prepayment fears, limiting any
increase in prices for these bonds.
The outlook for the bond market in 1996 is currently clouded by the actions of
the Congress and the White House regarding the Federal budget. The market is
discounting a favorable outcome in budget deliberations which could translate
into lower federal borrowing and fiscal drag from reduced government spending.
The market is also discounting a continuation of Federal Reserve easing in 1996
warranted by slow growth and low inflation. While the prospects for these
scenarios seem very good, the market is at risk to be disappointed. The
risk/reward profile for the bond market clearly favors shorter maturities and a
slightly more defensive stance at this time.
On December 31, 1995, the Fund's assets were invested 86.87% in medium and
long-term bonds.
21
<PAGE>
PORTFOLIO DIVERSIFICATION:
SECTOR % OF TOTAL NET ASSETS
U.S Government 42.68
Industrials 15.90
Financials 10.50
Electric Utilities 3.22
Telephone Utilities 3.59
Gas Utilities 7.53
Cash Equivalents 3.45
Mortgage-Backed Securities 13.13
Your continued support and interest in the Jefferson-Pilot Investment Grade Bond
Fund are appreciated, and we welcome any questions.
Jefferson-Pilot Investment Grade Bond Fund, Inc.
/s/ E. J. Yelton
President
January 29, 1996
*These results do not include the sales charge. If the maximum sales charge of
4.50% of the initial investment is included, the rates of return of the Fund for
the one, three, five, and ten-year periods ended December 31, 1995, were
+13.03%, +5.43%, +7.27%, and +8.15%, respectively. These results represent past
performance and are not necessarily an indication of future results.
22
<PAGE>
ABOUT YOUR FUND
As a shareowner of Jefferson-Pilot Investment Grade Bond Fund, you have several
valuable benefits and privileges:
- - You may be able to acquire additional shares at a reduced sales charge through
either the Combined Purchases, Accumulated Purchases, or Statement of Intention
provisions of the Fund. (See those sections of your prospectus that describe
these provisions.)
- - You may exchange shares owned at any time for an equal value of shares of
Jefferson-Pilot Capital Appreciation Fund, subject to certain minimum amounts,
without charge.
- - You may reinvest all income and capital gains distributions in additional Fund
shares at the Fund's net asset value (without a sales charge).
- - Provided you own shares or currently purchase shares having a net asset of at
least $10,000, you may elect to have monthly or quarterly payments made to you
under a Systematic Withdrawal Plan.
Additionally, the Fund provides a printed confirmation of each transaction,
quarterly reports, and other account information, making ownership of Fund
shares easy and convenient.
The cost of purchasing and owning shares is reasonable. The services provided
plus professional management plus diversification of investments would otherwise
be prohibitively expensive for most investors.
We hope that this information will encourage you to increase the level of your
future investments in Jefferson-Pilot Investment Grade Bond Fund -- or you may
wish to add a Jefferson-Pilot Capital Appreciation Fund account.
23
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF INVESTMENTS
December 31, 1995
FACE
RATINGS* AMOUNT ISSUE VALUE
BONDS - 99.08%
U.S. GOVERNMENT - 43.80%
$ 750,000 U.S. Treasury Notes
5 1/8% due 11/30/98 $ 747,540
750,000 U.S. Treasury Notes
6 3/8% due 8/15/02 786,443
1,000,000 U.S. Treasury Notes
6 1/2% due 4/30/99 1,036,560
1,000,000 U.S. Treasury Notes
6 7/8% due 3/31/00 1,056,410
850,000 U.S. Treasury Notes
7 1/2% due 1/31/96 851,462
750,000 U.S. Treasury Notes
8% due 10/15/96 765,465
500,000 U.S. Treasury Bonds
8 7/8% due 8/15/17 669,685
750,000 U.S. Treasury Notes
9 3/8% due 4/15/96 758,558
1,000,000 U.S. Treasury Bonds
10 3/8% due 11/15/09 1,319,370
1,000,000 U.S. Treasury Bonds
12 3/4% due 11/15/10 1,523,120
MORTGAGE-BACKED SECURITIES - 13.47%
1,000,000 Federal Home Loan Mortgage
Corporation
6% due 3/15/09 945,000
2,000,000 Federal Home Loan Mortgage
Corporation
7% due 9/15/23 1,981,240
INDUSTRIALS - 27.09%
FINANCE - 10.77%
A1 1,000,000 Ford Motor Credit Company
6 3/4% Notes due 8/15/08 1,026,890
24
<PAGE>
A1 750,000 Merrill Lynch & Company, Inc.
6 7/8% Notes due 3/01/03 780,907
A1 500,000 SunTrust Banks, Inc.
8 7/8% Notes due 2/01/98 532,075
FOODS - 3.63%
Aa2 750,000 Archer-Daniels-Midland Company
7 1/8% Debs. due 3/01/13 788,580
MACHINERY -
INDUSTRIAL/SPECIALTY - 2.57%
A2 500,000 Johnson Controls, Inc.
7.70% Debs. due 3/01/15 558,625
NATURAL GAS - 1.63%
Baa2 350,000 Tennessee Gas Pipeline Company
9 1/4% Notes due 5/15/96 354,126
POLLUTION CONTROL - 2.43%
Baa2 500,000 Laidlaw, Inc.
7.70% Debs. due 8/15/02 528,225
RAILROADS - 3.49%
Baa2 750,000 Kansas City Southern
Industries, Inc.
6 5/8% Senior Notes due 3/01/05 757,627
TOBACCO - 2.57%
A2 500,000 Philip Morris Companies, Inc.
8 1/4% Senior Notes due 10/15/03 557,400
UTILITIES - 14.72%
UTILITIES - ELECTRIC - 3.30%
A2 113,000 Carolina Power & Light Company
8 1/8% 1st Mtge. due 11/01/03 115,582
A1 500,000 South Carolina Electric &
Gas Company
9% 1st & Ref. due 7/15/06 601,705
UTILITIES - GAS - 7.73%
Aa3 500,000 Laclede Gas Company
8 1/2% 1st Mtge. due 11/15/04 571,065
A2 500,000 National Fuel Gas Company
7 3/4% Debs. due 2/01/04 542,855
Baa1 500,000 Texas Gas Transmission
8 5/8% Notes due 4/01/04 565,270
25
<PAGE>
UTILITIES - TELEPHONE - 3.69%
A3 750,000 United Telephone Company of
Pennsylvania
7 3/8% 1st Mtge. Ser. Y
due 12/01/02 799,958
----------
Total Bonds
(Cost - $19,342,401+) 21,521,743
----------
SHORT-TERM SECURITIES - .92%
A1 200,000 Ford Motor Credit
Company, 1/03/96 199,901
----------
Total Short-Term Securities
(Cost - $199,901+) 199,901
----------
Total Investments - 100%
(Cost - $19,542,302+) $21,721,644
----------
----------
*Bonds are rated by Moody's Investors Service, Inc. and
Commercial Paper is rated by Standard & Poor's Corporation.
+Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
26
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
ASSETS
Investment in securities at value
(cost $19,542,302) $ 21,721,644
Cash 254,766
Receivables:
Interest 360,833
Capital shares sold 3,401
------------
Total Assets 22,340,644
------------
LIABILITIES
Payables:
Capital shares redeemed 1,585
Accrued expenses 49,130
------------
Total Liabilities 50,715
------------
NET ASSETS
Net Assets, equivalent to $9.66 per
share on 2,307,624 shares of capital
stock outstanding (Note 2) $ 22,289,929
------------
------------
Computation of public offering price:
Net asset value per share $ 9.66
--------
--------
Offering price per share (100/95.5 x $9.66)
(reduced on sales of $25,000 or more) $ 10.12
--------
--------
See Notes to Financial Statements.
27
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
Investment Income:
Interest $ 1,604,710
-----------
Expenses:
Investment Adviser's fee (Note 3) 109,982
Custodian and Transfer Agent fees 48,836
Directors' fees 3,660
Professional fees 24,300
Shareholder accounting services (Note 3) 10,250
Printing and mailing 7,200
Other 6,228
-----------
Total expenses 210,456
Less expenses offset (Note 5) ( 12,830)
-----------
Net expenses 197,626
-----------
Investment income - net 1,407,084
-----------
Realized and Unrealized Gain
(Loss) on Investments:
Net realized loss on investments ( 45,405)
Unrealized appreciation of investments for the year 2,333,056
-----------
Net gain on investments 2,287,651
-----------
Net increase in net assets from operations $ 3,694,735
-----------
-----------
See Notes to Financial Statements.
28
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31, 1995 and 1994
1995 1994
Increase (Decrease) in Net Assets from:
Operations:
Investment income - net $ 1,407,084 $ 1,479,005
Net realized loss on investments ( 45,405) ( 774,526)
Unrealized appreciation (depreciation)
for the year 2,333,056 ( 2,124,538)
----------- -----------
Net increase (decrease) in net assets
from operations 3,694,735 ( 1,420,059)
Dividends paid to shareholders from
investment income - net ( 1,403,096) ( 1,443,508)
Capital share transactions (Note 2) ( 1,033,355) 263,565
----------- -----------
Total increase (decrease) 1,258,284 ( 2,600,002)
Net Assets
Beginning of year 21,031,645 23,631,647
----------- -----------
End of year (including undistributed net
investment income of $39,486 and
$35,497, respectively) $22,289,929 $21,031,645
----------- -----------
----------- -----------
See Notes to Financial Statements.
29
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Jefferson-Pilot Investment Grade Bond Fund, Inc., is an open-end management
investment company registered under the Investment Company Act of 1940. The
Fund's primary investment objective is to seek the maximum level of current
income as is consistent with prudent risk. The Fund attempts to achieve this
objective by investing primarily in high-rated fixed income securities and
dividend paying common stocks, however, other types of securities may be
purchased depending upon the judgement of management. The following is a summary
of significant accounting policies followed in the preparation of its financial
statements:
VALUATION OF SECURITIES - Fixed income securities are valued by using market
quotations or independent pricing services which utilize prices provided by
market makers or estimates based on yield data related to similar securities;
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
GENERAL - Securities transactions are accounted for on the trade date.
Distributions to shareholders are recorded on the ex-dividend date. Interest
income is accrued as earned.
NOTE 2. CAPITAL STOCK:
At December 31, 1995, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $20,960,868. Transactions in capital
stock were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
Sold 36,972 $ 344,257 150,431 $ 1,421,796
Issued on reinvestment
of dividends 94,251 879,674 101,556 909,213
Redeemed (241,492) ( 2,257,286) (224,210) ( 2,067,444)
------- ----------- ------- -----------
Net increase
(decrease) (110,269) ($ 1,033,355) 27,777 $ 263,565
------- ----------- ------- -----------
------- ----------- ------- -----------
30
<PAGE>
NOTE 3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $109,982
during the year ended December 31, 1995. This fee is computed at the annual rate
of 0.5% of the Fund's average daily net asset value. If the Fund's expenses,
excluding interest and taxes, exceed 1% of the average daily net asset value,
the Investment Adviser will pay the excess. No such reimbursement was required
during the year.
Expenses include $10,250 of fees paid to JP Investment Management Company for
shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of $8,656 in
its capacity as Principal Distributor for the Fund.
NOTE 4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $7,023,037 and $7,551,805, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized loss at December 31, 1995 was $889,767. This loss may
be carried forward to offset future capital gains with $69,836 expiring in 2001,
$44,589 expiring in 2002, and $775,342 expiring in 2003.
At December 31, 1995, the aggregate gross unrealized appreciation and
depreciation of portfolio securities was as follows:
Unrealized appreciation $2,180,005
Unrealized depreciation ( 663)
----------
Net unrealized appreciation $2,179,342
----------
----------
NOTE 5. EXPENSE OFFSET ARRANGEMENT:
The Fund has an arrangement with its custodian and transfer agent whereby
credits earned on cash balances maintained at the custodian are used to offset
custody and transfer agent charges. These credits amounted to $12,830 for the
year ended December 31, 1995.
31
<PAGE>
NOTE 6. SELECTED FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value,
beginning of year $ 8.70 $ 9.89 $ 9.57 $ 9.65 $ 9.23
------ ------ ------ ------ ------
Income from investment operations:
Net investment income .60 .62 .64 .66 .76
Net realized and unrealized
gain (loss) on investments .96 ( 1.21) .32 ( .06) .44
------ ------ ------ ------ ------
Total from investment
operations 1.56 ( .59) .96 .60 1.20
------ ------ ------ ------ ------
Less dividends from net
investment income ( .60) ( .60) ( .64) ( .68) ( .78)
------ ------ ------ ------ ------
Net asset value, end of year $ 9.66 $ 8.70 $ 9.89 $ 9.57 $ 9.65
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (WITHOUT DEDUCTION OF SALES LOAD) 18.39% ( 5.97)% 10.24% 6.53% 13.76%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000 omitted) $22,290 $21,032 $23,632 $21,359 $19,313
Ratios to average net assets:
Expenses .96% .85% .86% .93% .93%
Net investment income 6.40 8.32 6.46 6.99 8.18
Portfolio turnover rate 33.91 41.01 21.34 25.53 23.65
</TABLE>
32
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
CHANGES IN INVESTMENT POSITIONS
For the Period October 1, 1995 to December 31, 1995
ADDITIONS ELIMINATIONS
None None
33
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Jefferson-Pilot Investment Grade Bond Fund, Inc.
We have audited the accompanying statement of assets and liabilities and the
statement of investments of Jefferson-Pilot Investment Grade Bond Fund, Inc. as
of December 31, 1995, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the selected financial information for each of the five
years in the period then ended. These financial statements and selected
financial information are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
selected financial information 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 selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian. 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 selected financial
information referred to above present fairly, in all material respects, the
financial position of Jefferson-Pilot Investment Grade Bond Fund, Inc. as of
December 31,1995, the results of its operations, the changes in its net assets,
and the selected financial information for the periods indicated, in conformity
with generally accepted accounting principles.
McGladrey & Pullen, LLP
/s/McGladrey & Pullen, LLP
New York, New York
January 11, 1996
34
<PAGE>
35
<PAGE>
[LOGO]
FAMILY
OF FUNDS
--------------------------------
Jefferson-Pilot
Capital Appreciation Fund
Investment Grade Bond Fund
--------------------------------
Annual Report
December 31, 1995
THIS REPORT AND ACCOMPANYING
FINANCIAL STATEMENTS ARE SUBMITTED
FOR INFORMATION OF THE FUND
SHAREHOLDERS AND ARE NOT TO BE
CONSIDERED AS AN OFFER OR
SOLICITATION OF OFFERS TO BUY OR
SELL ANY SHARES OF THE FUND. SUCH
OFFERING IS MADE ONLY IF PRECEDED
OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
A MUTUAL FUND SEEKING GROWTH OF CAPITAL
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
FUND DIRECTORS AND OFFICERS DISTRIBUTOR
E. J. YELTON, Ph.D., DIRECTOR, Jefferson-Pilot Investor Services, Inc.
PRESIDENT, AND TREASURER 100 North Greene Street
Greensboro, North Carolina 27401
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR INVESTMENT ADVISER
JP Investment Management Company
RICHARD W. McENALLY, CFA, DIRECTOR 100 North Greene Street
Greensboro, North Carolina 27401
WILLIAM E. MORAN, DIRECTOR
CUSTODIAN AND TRANSFER AGENT
W. HARDEE MILLS, CFA, Investors Fiduciary Trust Company
VICE PRESIDENT 127 West Tenth Street
Kansas City, Missouri 64105
J. GREGORY POOLE, SECRETARY
GREGORY D. WALKER, CFA,
PORTFOLIO MANAGER
JEFFERSON-PILOT CAPITAL
APPRECIATION FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
<PAGE>
INVESTMENT RESULTS
TOTAL RETURN -- 1996 -- DIVIDEND REINVESTMENT PLAN:
Net Asset Value June 30, 1996 $17.27
Investment Income Dividend Paid:
February 9, 1996 $ .021
Capital Gains Paid:
February 9, 1996 $ .395
June 30, 1996 Adjusted Value per Share Assuming
All Dividends Reinvested in Fund Shares $17.72
Net Asset Value December 31, 1995 $15.96
Percent Change During Six Months Ended
June 30, 1996:
Jefferson-Pilot Capital Appreciation Fund --
Assuming All Dividends Reinvested in Fund Shares 11.03%
Reinvestment Price Assuming Dividend was reinvested
in New Fund Shares on the Record Date:
$15.90 per share as of January 30, 1996
2
<PAGE>
TO SHAREHOLDERS
INVESTMENT ACTIVITY
On June 30, 1996, the net asset value of your Fund was $17.27. Dividends
totaling $.021 per share from net investment income and $.395 per share from net
capital gains have been paid year to date.
On a total return basis for the first half of the year, the Jefferson-Pilot
Capital Appreciation Fund increased 11.03% while the S&P 500 increased 10.10%.
Through June 30, 1996, Jefferson-Pilot Capital Appreciation Fund's historical
compound annual rate of total return is shown below for the following holding
periods:*
1 Years -- 27.22%
3 Years -- 14.50%
5 Years -- 13.66%
10 Years -- 11.06%
The second quarter saw the S&P 500 reach a new all-time high on May 24 after
inflation and interest rate fears began to moderate. The S&P 500 returned 4.5%
for the quarter marking the sixth consecutive quarter of positive performance.
Stocks of smaller companies and stocks of cyclical companies, having benefited
from the perception of a stronger than expected economy, began to lag toward the
end of the second quarter as concerns over corporate profits began to arise
again. This concern began anew after anecdotal signs of an economy which was
stronger than expected began to stimulate fears of a Federal Reserve interest
rate hike. Since the S&P 500's peak in May, investors have begun a flight to
quality. Defensive growth names have since outperformed the market due to their
tendency to provide superior relative earnings if the Federal Reserve indeed
places the brakes on economic growth with higher interest rates.
Your Fund has outperformed both the median Lipper Growth and Income manager as
well as the S&P 500 year to date. The Fund is in the top 20% of all Growth and
Income funds for the trailing twelve months according to Lipper Analytical
Services. This outperformance continues as of this writing with the market
exhibiting continued weakness.
The current market correction should be viewed as a positive event. Veteran
investors consider corrections as a healthy means of removing speculative
excesses from the marketplace. Witness the NASDAQ composite, comprised mainly of
smaller companies, often technology stocks, which has fallen 15% from its April
high. Fortunately, lower stock prices based on investor skittishness and fear,
present the seasoned long-term investor with buying opportunities.
We do not question that it is becoming late in this bull market. The liquidity
provided by the Federal Reserve, as well as that provided by other central
banks, has been the critical catalyst for this aging worldwide bull market. This
accommodative posture by the Federal Reserve may be coming to an end. In his
recent testimony before Congress, Federal Reserve Chairman Greenspan appeared to
hint that the war against inflation may be just beginning.
We do not base our management strategy on a forecast of the economy or interest
rates. We continue to believe that the stocks of companies with superior
earnings growth relative to their peers and which are trading at attractive
valuations are the companies we wish to own in the portfolio. Irrespective of
the overall market direction we believe that this strategy, over time, will
result in superior relative performance.
3
<PAGE>
PORTFOLIO DIVERSIFICATION
SECTOR % OF TOTAL NET ASSETS
CREDIT CYCLICALS 0.00
FINANCIAL 18.47
CONSUMER GROWTH STAPLES 3.30
CONSUMER STAPLES 15.52
CONSUMER CYCLICALS 4.80
CAPITAL GOODS -- TECHNOLOGY 11.84
CAPITAL GOODS 4.39
ENERGY 10.15
BASIC INDUSTRIES 3.67
TRANSPORTATION 1.43
UTILITIES 14.63
CONGLOMERATES 1.13
CASH 10.67
Your continued support and interest in the Jefferson-Pilot Capital Appreciation
Fund are appreciated, and we welcome any questions.
Jefferson-Pilot Capital Appreciation Fund, Inc.
/s/ E.J. YELTON
President
July 29, 1996
* These results do not include the sales charge. If the maximum sales charge
of 4.50% of the initial investment is included and with all subsequent
distributions of the Fund reinvested, the average annual total rate of
return of the Fund for the one, three, five, and ten-year periods ended
June 30, 1996, were +21.51%, +12.77%, +12.66% and +10.48%, respectively.
These results represent past performance and are not necessarily an
indication of future results.
4
<PAGE>
ABOUT YOUR FUND
As a shareowner of Jefferson-Pilot Investment Grade Bond Fund, you have several
valuable benefits and privileges:
- - You may be able to acquire additional shares at a reduced sales charge through
either the Combined Purchases, Accumulated Purchases, or Statement of Intention
provisions of the Fund. (See those sections of your prospectus that describe
these provisions.)
- - You may exchange shares owned at any time for an equal value of shares of
Jefferson-Pilot Investment Grade Bond Fund, subject to certain minimum amounts,
without charge.
- - You may reinvest all income and capital gains distributions in additional Fund
shares at the Fund's net asset value (without a sales charge).
- - Provided you own shares or currently purchase shares having a net asset of at
least $10,000, you may elect to have monthly or quarterly payments made to you
under a Systematic Withdrawal Plan.
Additionally, the Fund provides a printed confirmation of each transaction,
quarterly reports, and other account information, making ownership of Fund
shares easy and convenient.
The cost of purchasing and owning shares is reasonable. The services provided
plus professional management plus diversification of investments would otherwise
be prohibitively expensive for most investors.
We hope that this information will encourage you to increase the level of your
future invesments in Jefferson-Pilot Capital Appreciation Fund -- or you may
wish to add a Jefferson-Pilot Investment Grade Bond Fund account.
5
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
TEN LARGEST HOLDINGS
June 30, 1996
COMPANY MARKET VALUE PERCENT OF FUND
General Electric Company $1,124,500 2.8
Countrywide Credit Industries, Inc. 1,039,500 2.6
Tellabs, Inc. 1,034,625 2.5
Atlantic Richfield Company 995,400 2.5
Frontier Corporation 980,000 2.4
Citicorp 966,713 2.4
Monsanto Company 958,750 2.4
Schering -- Plough Corporation 953,800 2.3
Royal Dutch Petroleum Company 876,375 2.2
Borders Group, Inc. 854,625 2.1
----------- -----
$9,784,288 24.2
6
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS
June 30, 1996 (Unaudited)
NUMBER OF SHARES MARKET
COMMON STOCKS -- 88.33% OR PRINCIPAL AMOUNT VALUE
Aerospace/Defense -- 1.19%
Lockheed-Martin Corporation 5,700 $ 478,800
Banks -- 6.54%
Bank of New York Company, Inc. 11,000 563,750
Chase Manhattan Corporation 5,928 418,665
Citicorp 11,700 966,713
Mellon Bank Corporation 12,000 684,000
Broadcasting -- .34%
US West Media Group, Inc. 7,600 138,700*
Chemicals -- Major -- 3.36%
Imperial Chemical Industries, Inc. 8,000 393,000
Monsanto Company 29,500 958,750
Computer Systems -- 3.18%
SunGard Data Systems, Inc. 12,000 480,000*
Xerox Corporation 15,000 802,500
Conglomerates -- 1.13%
AlliedSignal, Inc. 8,000 457,000
Drugs -- 5.59%
Lilly (Eli) & Company 5,708 371,020
Merck & Company, Inc. 5,400 348,975
Pharmacia & Upjohn, Inc. 13,000 576,875
Schering-Plough Corporation 15,200 953,800
Electric Equipment -- Major -- 2.79%
General Electric Company 13,000 1,124,500
Electronics -- Instrument -- 1.05%
Varian Associates, Inc. 8,200 424,350
Electronics -- Semi -- .37%
Atmel Corporation 5,000 150,625*
Foods -- 1.90%
Sara Lee Corporation 23,600 764,050
Hospital -- Management -- 2.98%
Columbia/HCA Healthcare Corporation 9,900 528,412
Vencor, Inc. 22,000 671,000*
7
<PAGE>
Hospital -- Supplies -- 4.08%
Baxter International, Inc. 5,700 269,325
Guidant Corporation 5,046 248,516
Johnson & Johnson 16,000 792,000
St. Jude Medical, Inc. 10,000 332,500*
Insurance -- Multi-Line -- 5.92%
AFLAC, Inc. 13,500 403,312
Aetna Life & Casualty Company 10,000 715,000
Allstate Corporation 12,300 561,188
CIGNA Corporation 6,000 707,250
Insurance -- Property & Casualty -- 1.19%
Everest Reinsurance Holdings, Inc. 15,500 401,062
IPC Holdings, Inc. 4,000 80,500
Merchandising -- Department -- 2.27%
Consolidated Stores Corporation 10,000 367,500*
Federated Department Stores, Inc. 16,000 546,000
Merchandising -- Drugs -- 1.32%
Eckerd Corporation 12,000 271,500*
Thrifty Payless Holdings, Inc. 15,000 258,750*
Merchandising -- Special -- 2.12%
Borders Group, Inc. 26,500 854,625*
Miscellaneous Consumer Cyclical -- .44%
Kelly Services, Inc. 6,000 175,500
Miscellaneous Financial -- 4.92%
Countrywide Credit Industries, Inc. 42,000 1,039,500
Federal Home Loan Mortgage Corporation 4,600 393,300
First USA, Inc. 10,000 550,000
Natural Gas -- Diversified -- .70%
Questar Corporation 8,300 282,200
Oils -- Integrated Domestic -- 5.41%
Amerada Hess Corporation 9,500 509,438
Amoco Corporation 9,300 673,087
Atlantic Richfield Company 8,400 995,400
Oils -- Integrated International -- 4.09%
Mobil Corporation 6,900 773,663
Royal Dutch Petroleum Company 5,700 876,375
Paper & Forest Products -- .34%
Sonoco Products Company 4,830 137,051
8
<PAGE>
Pollution Control -- 1.63%
WMX Technologies, Inc. 20,000 655,000
Railroads -- .91%
CSX Corporation 7,600 366,700
Telecommunications -- 5.88%
DSC Communications Corporation 15,000 450,000*
Loral Space & Communications, Ltd. 9,200 125,350*
Lucent Technologies, Inc. 17,000 643,875*
Tellabs, Inc. 15,500 1,034,625*
360 Communications Company 4,866 116,784*
Tobacco -- 1.45%
Philip Morris Companies, Inc. 5,600 582,400
Transportation -- Miscellaneous -- .53%
Federal Express Corporation 2,600 213,200*
Utilities -- Communications -- 7.02%
Bell Atlantic Corporation 3,700 235,875
BellSouth Corporation 7,400 313,575
Century Telephone Enterprises, Inc. 8,400 267,750
Frontier Corporation 32,000 980,000
SBC Communications, Inc. 3,600 177,300
Sprint Corporation 14,600 613,200
US West Communications Group, Inc. 7,600 242,250
Utilities -- Electric -- 7.39%
American Electric Power Company, Inc. 6,600 281,325
CMS Energy Corporation 9,800 302,575
Carolina Power & Light Company 4,100 155,800
CINergy Corporation 13,700 438,400
Consolidated Edison Company of NY, Inc. 5,900 172,575
Dominion Resources, Inc. 4,600 184,000
Entergy Corporation 12,000 340,500
FPL Group, Inc. 8,200 377,200
Illinova Corporation 9,600 276,000
Northeast Utilities 8,650 115,694
PECO Energy Company 4,900 127,400
Public Service Enterprise Group, Inc. 7,500 205,312
Utilities -- Water -- .30%
American Water Works Company, Inc. 3,000 120,750
-----------
Total Common Stocks (Cost -- $26,768,816+) 35,585,442
-----------
9
<PAGE>
<TABLE>
<S> <C> <C>
PREFERRED STOCKS -- 1.51%
Telecommunications -- .22%
TCI Communications, Inc., $2.125 Cum Pfd. Ser. A 2,000 88,250
Tobacco -- 1.29%
RJR Nabisco Holdings, Inc. Pfd C 80,000 520,000
------------
Total Preferred Stocks (Cost -- $594,800+) 608,250
------------
SHORT-TERM SECURITIES -- 10.16%
American Express Credit Corporation, 7/10/96 $1,000,000 998,517
Cargill, Inc., 7/03/96 400,000 399,823
Chevron Oil Finance Company, 7/02/96 1,000,000 999,710
Ford Motor Credit Company, 7/08/96 700,000 699,165
General Electric Capital Corporation, 7/16/96 1,000,000 997,613
------------
Total Short-Term Securities (Cost -- $4,094,828+) 4,094,828
------------
Total Investments (Cost -- $31,458,444+) $40,288,520
------------
------------
</TABLE>
* Non-income producing.
+ Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
10
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
ASSETS
Investment in securities at value (cost $31,458,444) $ 40,288,520
Cash 373,991
Receivables:
Capital shares sold 5,000
Dividends 35,094
------------
Total Assets 40,702,605
------------
LIABILITIES
Payables:
Capital shares sold 17,136
Securities purchased 113,798
Accrued expenses 54,041
------------
Total Liabilities 184,975
------------
NET ASSETS
Net Assets, equivalent to $17.27 per share on
2,346,524 shares of capital stock outstanding (Note 2) $ 40,517,630
------------
------------
Computation of public offering price:
Net asset value per share $ 17.27
----------
----------
Offering price per share (100/95.5 x $17.27)
(reduced on sales of $25,000 or more) $ 18.08
----------
----------
See Notes to Financial Statements.
11
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996 (Unaudited)
Investment Income:
Interest $ 75,007
Dividends 422,863
-----------
Total income 497,870
-----------
Expenses:
Investment Adviser's fee (Note 3) 96,826
Custodian and Transfer Agent fees 34,397
Directors' fees 2,490
Professional fees 12,900
Shareholder accounting services (Note 3) 10,740
Printing and mailing 6,510
Other 2,662
-----------
Total expenses 166,525
Less expenses offset (Note 5) ( 7,731)
-----------
Net expenses 158,794
-----------
Investment income -- net 339,076
-----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments 3,246,231
Unrealized appreciation of investments for the period 469,653
-----------
Net gain on investments 3,715,884
-----------
Net increase in net assets from operations $ 4,054,960
-----------
-----------
See Notes to Financial Statements.
12
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1996 (Unaudited) and Year Ended December 31, 1995
SIX MONTHS Year Ended
ENDED JUNE 30, December 31,
1996 1995
Increase (Decrease) in Net Assets from: -------------- -------------
Operations:
Investment income -- net $ 339,076 $ 589,619
Net realized gain on investments 3,246,231 2,251,129
Unrealized appreciation
for the period 469,653 7,655,872
----------- -----------
Net increase in net assets
from operations 4,054,960 10,496,620
Dividends paid to shareholders from:
Investment income -- net ( 49,141) ( 568,392)
Net realized gain on investments ( 924,527) ( 1,486,668)
Capital share transactions (Note 2) ( 394,742) ( 2,993,629)
----------- -----------
Total increase 2,686,550 5,447,931
Net Assets
Beginning of period 37,831,080 32,383,149
----------- -----------
End of period (including undistributed net
investment income of $338,642 and
$48,707, respectively) $40,517,630 $37,831,080
----------- -----------
----------- -----------
See Notes to Financial Statements.
13
<PAGE>
JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Jefferson-Pilot Capital Appreciation Fund, Inc. is an open-end management
investment company registered under the Investment Company Act of 1940. The
Fund's primary investment objective is long-term capital appreciation. The Fund
seeks to achieve this objective by investing substantially all of its assets in
common stocks of companies recognized as leaders in their respective industries,
however, other types of securities may be purchased depending upon the judgment
of management. The following is a summary of significant accounting policies
followed in the preparation of its financial statements:
VALUATION OF SECURITIES -- Investments are stated at value based on the closing
prices reported on national securities exchanges on the last business day of the
period, or for over-the-counter securities, at the last bid price, except that
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
GENERAL -- Securities transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Interest income is accrued as earned.
NOTE 2. CAPITAL STOCK:
At June 30, 1996, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $28,104,300. Transactions in capital
stock were as follows:
SIX MONTHS ENDED Year Ended
JUNE 30, 1996 December 31, 1995
---------------- -----------------
SHARES AMOUNT Shares Amount
-------- ----------- -------- -----------
Sold 63,398 $1,043,722 153,009 $2,164,646
Issued on reinvestment
of dividends 49,540 787,686 109,424 1,662,936
Redeemed (136,467) ( 2,226,150) (469,652) ( 6,821,211)
-------- ----------- -------- -----------
Net decrease ( 23,529) ($ 394,742) (207,219) ($2,993,629)
-------- ----------- -------- -----------
-------- ----------- -------- -----------
14
<PAGE>
NOTE 3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $96,826
during the six months ended June 30, 1996. This fee is computed at the annual
rate of 0.5% of the Fund's average daily net asset value. If the Fund's
expenses, excluding interest and taxes, exceed 1% of the average daily net asset
value, the Investment Adviser will pay the excess. No such reimbursement was
required during the period.
Expenses include $10,740 of fees paid to JP Investment Management Company for
shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of $25,487 in
its capacity as Principal Distributor for the Fund.
NOTE 4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $8,904,709 and $13,414,650, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized gain at June 30, 1996 was $3,244,612.
At June 30, 1996, the aggregate gross unrealized appreciation and depreciation
of portfolio securities was as follows:
Unrealized appreciation $9,209,014
Unrealized depreciation ( 378,938)
----------
Net unrealized appreciation $8,830,076
----------
----------
NOTE 5. EXPENSE OFFSET ARRANGEMENT:
The Fund has an arrangement with its custodian and transfer agent whereby
credits earned on cash balances maintained at the custodian are used to offset
custody and transfer agent charges. These credits amounted to $7,731 for the
period ended June 30, 1996.
15
<PAGE>
NOTE 6. SELECTED FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------ ------- ------- ------- ------- -------
1996 1995 1994 1993 1992 1991
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $15.96 $12.56 $17.05 $17.44 $18.02 $14.09
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .15 .25 .29 23 23 .32
Net realized and unrealized gain (loss)
on investments 1.58 4.03 ( 1.12) 1.04 .75 4.13
------ ------ ------ ------ ------ ------
Total from investment operations 1.73 4.28 ( .83) 1.27 .98 4.45
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ( .02) ( .24) ( .28) ( .22) ( .27) ( .33)
Distributions from net realized gains ( .40) ( .64) ( 3.38) ( 1.44) ( 1.29) ( .19)
------ ------ ------ ------ ------ ------
Total distributions ( .42) ( .88) ( 3.66) ( 1.66) ( 1.56) ( .52)
------ ------ ------ ------ ------ ------
Net asset value, end of period $17.27 $15.96 $12.56 $17.05 $17.44 $18.02
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (WITHOUT DEDUCTION
OF SALES LOAD) 11.03% 34.47% ( 4.63%) 7.68% 5.60% 32.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $40,518 $37,831 $32,383 $38,045 $34,898 $33,836
Ratios to average net assets:
Expenses .86%+^ .87%^ .83% .84% .87% .87%
Net investment income 1.75+ 1.66 1.74 1.30 1.34 1.98
Portfolio turnover rate 24.99 65.27 143.81 26.89 53.38 36.70
</TABLE>
+ Annualized.
^ Pursuant to new regulations, ratio includes expenses paid by expense offset
arrangements.
16
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
A MUTUAL FUND SEEKING MAXIMUM INCOME
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
FUND DIRECTORS AND OFFICERS DISTRIBUTOR
E. J. YELTON, Ph.D., DIRECTOR Jefferson-Pilot Investor Services,Inc.
PRESIDENT,AND TREASURER 100 North Greene Street
Greensboro, North Carolina 27401
JOHN C. INGRAM, CFA, DIRECTOR
INVESTMENT ADVISER
J. LEE LLOYD, DIRECTOR JP Investment Management Company
100 North Greene Street
RICHARD W. McENALLY, CFA, DIRECTOR Greensboro, North Carolina 27401
WILLIAM E. MORAN, DIRECTOR CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
W. HARDEE MILLS, CFA, VICE 127 West Tenth Street
PRESIDENT Kansas City, Missouri 64105
J. GREGORY POOLE, SECRETARY
H. LUSBY BROWN, CFA,
PORTFOLIO MANAGER
JEFFERSON-PILOT INVESTMENT
GRADE BOND FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina, 27420
17
<PAGE>
INVESTMENT RESULTS
TOTAL RETURN -- 1996 -- DIVIDEND REINVESTMENT PLAN:
Net Asset Value June 30, 1996 $ 9.26
Investment Income Dividend Paid:
February 9, 1996 $ .018
May 10, 1996 $ .150
June 30, 1996 Adjusted Value per Share Assuming
All Dividends Reinvested in Fund Shares $ 9.43
Net Asset Value December 31, 1995 $ 9.66
Percent Change During Six Months Ended
June 30, 1996:
Jefferson-Pilot Investment Grade Bond Fund, Inc.
Assuming All Dividends Reinvested in Fund Shares ( 2.38)%
Reinvestment Prices Assuming Dividends were reinvested
in New Fund Shares on the Record Date:
$9.67 per share as of January 30, 1996
$9.24 per share as of April 26, 1996
18
<PAGE>
TO SHAREHOLDERS
INVESTMENT ACTIVITY
On June 30, 1996, the net asset value of your Fund was $9.26. The Fund paid
dividends of $.168 per share from interest income during the first half of 1996.
The Fund's year-to-date returns and annual returns for one, three, five, and
ten-year periods ending June 30, 1996 are as follows:*
Year-to-Date (2.38%)
1 Year -- 3.46%
3 Years -- 3.70%
5 Years -- 6.87%
10 Years -- 7.29%
The bond market experienced these negative returns due to fears that the economy
was growing too rapidly causing the Federal Reserve to resort to a tightening of
monetary policy to prevent inflation. Since the beginning of the year, yields
have increased approximately 100 basis points in intermediate and long maturity
bonds, thus reducing bond prices.
The actions of the bond market in 1996 stem from expectations derived from
strong growth in payroll employment. This eliminated any expectations that the
Fed would cut short-term rates, causing the yield curve to steepen for longer
maturities. Corporate bonds outperformed Treasuries during the past six months
due to narrowing credit spreads caused by improved credit quality in most
sectors. Mortgage-backed securities also outperformed Treasuries as prepayment
assumptions declined with the rise in interest rates.
So far, the damage to the bond market has been inflicted solely on expectations.
Our view that inflation is unlikely to be a serious threat to bond yields has
proven to be accurate so far, as the CPI is still less than 3% on a year-over-
year basis. We believe that real yields on bonds are attractive at current
levels. If the Fed acts to raise short-term rates to choke off the prospects for
any future inflation, then bonds could become even more attractive. Despite the
attractiveness of real long-term rates, the bond market remains at risk until
the economy exhibits signs of a slowdown. We will continue to maintain a
somewhat neutral interest rate risk profile based on our short-term expectations
of bond market volatility; however, we maintain that in the long run bonds
should provide good relative returns.
19
<PAGE>
PORTFOLIO DIVERSIFICATION:
SECTOR % OF TOTAL NET ASSETS
U. S. Government 43.00
Mortgage-Backed Securities 13.45
Industrials 14.74
Financials 10.81
Electric Utilities 2.73
Telephone Utilities 3.70
Gas Utilities 7.74
Cash Equivalents 3.83
Your continued support and interest in the Jefferson-Pilot Investment Grade Bond
Fund are appreciated, and we welcome any questions.
Jefferson-Pilot Investment Grade Bond Fund, Inc.
/s/ E.J. Yelton
President
July 29, 1996
* These results do not include the sales charge. If the maximum sales charge of
4.50% of the initial investment is included, the rates of return of the Fund
for the one, three, five, and ten-year periods ended June 30, 1996, were
-1.16%, +2.14%, +5.90%, and +6.79%, respectively. These results represent past
performance and are not necessarily an indication of future results.
20
<PAGE>
ABOUT YOUR FUND
As a shareowner of Jefferson-Pilot Capital Appreciation Fund, you have several
valuable benefits and privileges:
- - You may be able to acquire additional shares at a reduced sales charge through
either the Combined Purchases, Accumulated Purchases, or Statement of Intention
provisions of the Fund. (See those sections of your prospectus that describe
these provisions.)
- - You may exchange shares owned at any time for an equal value of shares of
Jefferson-Pilot Capital Appreciation, subject to certain minimum amounts,
without charge.
- - You may reinvest all income and capital gains distributions in additional Fund
shares at the Fund's net asset value (without a sales charge).
- - Provided you own shares or currently purchase shares having a net asset of at
least $10,000, you may elect to have monthly or quarterly payments made to you
under a Systematic Withdrawal Plan.
Additionally, the Fund provides a printed confirmation of each transaction,
quarterly reports, and other account information, making ownership of Fund
shares easy and convenient.
The cost of purchasing and owning shares is reasonable. The services provided
plus professional management plus diversification of investments would otherwise
be prohibitively expensive for most investors.
We hope that this information will encourage you to increase the level of your
future investments in Jefferson-Pilot Investment Grade Bond Fund -- or you may
wish to add a Jefferson-Pilot Capital Appreciation Fund account.
21
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF INVESTMENTS
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
FACE
RATINGS* AMOUNT ISSUE VALUE
BONDS -- 98.74%
U.S. GOVERNMENT -- 44.14%
<S> <C> <S> <C>
$ 750,000 U.S. Treasury Notes
5 1/8% due 11/30/98 $ 731,835
750,000 U.S. Treasury Notes
5 7/8% due 4/30/98 747,068
750,000 U.S. Treasury Notes
6 3/8% due 8/15/02 744,022
1,000,000 U.S. Treasury Notes
6 1/2% due 4/30/99 1,005,310
1,000,000 U.S. Treasury Notes
6 7/8% due 3/31/00 1,014,530
500,000 U.S. Treasury Bonds
7 1/8% due 2/15/23 505,390
750,000 U.S. Treasury Notes
8% due 10/15/96 755,393
500,000 U.S. Treasury Bonds
8 7/8% due 8/15/17 600,310
1,000,000 U.S. Treasury Bonds
10 3/8% due 11/15/09 1,222,970
1,000,000 U.S. Treasury Bonds
12 3/4% due 11/15/10 1,404,220
MORTGAGE-BACKED SECURITIES -- 13.82%
1,000,000 Federal Home Loan Mortgage Corporation
6% due 3/15/09 897,500
2,000,000 Federal Home Loan Mortgage Corporation
7% due 9/15/23 1,835,000
22
<PAGE>
INDUSTRIALS -- 26.23%
FINANCE -- 11.10%
A1 1,000,000 Ford Motor Credit Company
6 3/4% Notes due 8/15/08 938,000
A1 750,000 Merrill Lynch & Company, Inc.
6 7/8% Notes due 3/01/03 739,185
A1 500,000 SunTrust Banks, Inc.
8 7/8% Notes due 2/01/98 518,155
FOODS -- 3.68%
Aa2 750,000 Archer-Daniels-Midland Company
7 1/8% Debs. due 3/01/13 727,822
MACHINERY -- INDUSTRIAL/SPECIALTY -- 2.64%
A2 500,000 Johnson Controls, Inc.
7.70% Debs. due 3/01/15 523,435
POLLUTION CONTROL -- 2.57%
Baa2 500,000 Laidlaw, Inc.
7.70% Debs. due 8/15/02 508,850
RAILROADS -- 3.57%
Baa2 750,000 Kansas City Southern Industries, Inc.
6 5/8% Senior Notes due 3/01/05 705,660
TOBACCO -- 2.67%
A2 500,000 Philip Morris Companies, Inc.
8 1/4% Senior Notes due 10/15/03 527,680
UTILITIES -- 14.55%
UTILITIES -- ELECTRIC -- 2.80%
A1 500,000 South Carolina Electric & Gas Company
9% 1st & Ref. due 7/15/06 553,475
UTILITIES -- GAS -- 7.95%
Aa3 500,000 Laclede Gas Company
8 1/2% 1st Mtge. due 11/15/04 529,945
A2 500,000 National Fuel Gas Company
7 3/4% Debs. due 2/01/04 506,500
Baa1 500,000 Texas Gas Transmission
8 5/8% Notes due 4/01/04 535,160
23
<PAGE>
UTILITIES -- TELEPHONE -- 3.80%
A3 750,000 United Telephone Company of Pennsylvania
7 3/8% 1st Mtge. Ser. Y due 12/01/02 752,168
----------
Total Bonds (Cost -- $18,533,958+) 19,529,583
----------
SHORT-TERM SECURITIES -- 1.26%
A1 250,000 General Electric Capital Corporation, 7/02/96 249,925
----------
Total Short-Term Securities
(Cost -- $249,925+) 249,925
----------
Total Investments
(Cost -- $18,783,883+) $19,779,508
----------
----------
</TABLE>
* Bonds are rated by Moody's Investors Service, Inc. and Commercial Paper is
rated by Standard & Poor's Corporation.
+ Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
24
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
ASSETS
Investment in securities at value (cost $18,783,883) $ 19,779,508
Cash 228,262
Receivables:
Interest 333,464
Capital shares sold 239
------------
Total Assets 20,341,473
------------
LIABILITIES
Payables:
Accrued expenses 34,607
------------
Total Liabilities 34,607
------------
NET ASSETS
Net Assets, equivalent to $9.26 per share on
2,191,978 shares of capital stock outstanding (Note 2) $ 20,306,866
------------
------------
Computation of public offering price:
Net asset value per share $ 9.26
---------
---------
Offering price per share (100/95.5 x $9.26)
(reduced on sales of $25,000 or more) $ 9.70
---------
---------
See Notes to Financial Statements.
25
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996 (Unaudited)
Investment Income:
Interest $ 756,559
-----------
Expenses:
Investment Adviser's fee (Note 3) 52,920
Custodian and Transfer Agent fees 23,278
Directors' fees 2,640
Professional fees 10,650
Shareholder accounting services (Note 3) 5,280
Other 4,318
-----------
Total expenses 99,086
Less expenses offset (Note 5) ( 5,947)
-----------
Net expenses 93,139
-----------
Investment income -- net 663,420
-----------
Realized and Unrealized Loss on Investments:
Net realized loss on investments ( 945)
Unrealized depreciation of investments for the period ( 1,183,717)
-----------
Net loss on investments ( 1,184,662)
-----------
Net decrease in net assets from operations ($ 521,242)
-----------
-----------
See Notes to Financial Statements.
26
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1996 (Unaudited) and Year Ended December 31, 1995
SIX MONTHS Year Ended
ENDED JUNE 30, December 31,
1996 1995
-------------- ------------
Increase (Decrease) in Net Assets from:
Operations:
Investment income -- net $ 663,420 $ 1,407,084
Net realized loss on investments ( 945) ( 45,405)
Unrealized appreciation (depreciation)
for the period ( 1,183,717) 2,333,056
----------- ----------
Net increase (decrease) in net
assets from operations ( 521,242) 3,694,735
Dividends paid to shareholders from
investment income -- net ( 380,911) ( 1,403,096)
Capital share transactions (Note 2) ( 1,080,910) ( 1,033,355)
----------- ----------
Total increase (decrease) ( 1,983,063) 1,258,284
Net Assets
Beginning of period 22,289,929 21,031,645
----------- -----------
End of period (including undistributed net
investment income of $321,995 and
$39,486, respectively) $20,306,866 $22,289,929
----------- -----------
----------- -----------
See Notes to Financial Statements.
27
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Jefferson-Pilot Investment Grade Bond Fund, Inc. is an open-end management
investment company registered under the Investment Company Act of 1940. The
Fund's primary investment objective is to seek the maximum level of current
income as is consistent with prudent risk. The Fund attempts to achieve this
objective by investing primarily in high-rated fixed income securities and
dividend paying common stocks, however other types of securities may be
purchased depending upon the judgment of management. The following is a summary
of significant accounting policies followed in the preparation of its financial
statements:
VALUATION OF SECURITIES -- Fixed income securities are valued by using market
quotations or independent pricing services which utilize prices provided by
market makers or estimates based on yield data related to similar securities;
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
GENERAL -- Securities transactions are accounted for on the trade date.
Distributions to shareholders are recorded on the ex-dividend date. Interest
income is accrued as earned.
NOTE 2. CAPITAL STOCK:
At June 30, 1996, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $19,879,958. Transactions in capital
stock were as follows:
SIX MONTHS ENDED Year Ended
JUNE 30, 1996 December 31, 1995
--------------------- ------------------
SHARES AMOUNT Shares Amount
------- --------- -------- ----------
Sold 25,134 $ 236,712 36,972 $ 344,257
Issued on reinvestment
of dividends 25,530 237,039 94,251 879,674
Redeemed (166,310) ( 1,554,661) (241,492) ( 2,257,286)
-------- ---------- -------- ----------
Net decrease (115,646) ($1,080,910) (110,269) ($1,033,355)
-------- ---------- -------- ----------
-------- ---------- -------- ----------
28
<PAGE>
NOTE 3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $52,920
during the six months ended June 30, 1996. This fee is computed at the annual
rate of 0.5% of the Fund's average daily net asset value. If the Fund's
expenses, excluding interest and taxes, exceed 1% of the average daily net asset
value, the Investment Adviser will pay the excess. No such reimbursement was
required during the period.
Expenses include $5,280 of fees paid to JP Investment Management Company for
shareholder accounting services.
Jefferson-Pilot Investor Services, Inc. received sales commissions of $6,893 in
its capacity as Principal Distributor for the Fund.
NOTE 4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $1,251,797 and $2,067,286, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized loss at June 30, 1996 was $890,712. This loss may be
carried forward to offset future realized gains.
At June 30, 1996, the aggregate gross unrealized appreciation and depreciation
of portfolio securities was as follows:
Unrealized appreciation $1,109,800
Unrealized depreciation ( 114,175)
---------
Net unrealized appreciation $ 995,625
---------
---------
NOTE 5. EXPENSE OFFSET ARRANGEMENT:
The Fund has an arrangement with its custodian and transfer agent whereby
credits earned on cash balances maintained at the custodian are used to offset
custody and transfer agent charges. These credits amounted to $5,947 for the
period ended June 30, 1996.
29
<PAGE>
NOTE 6. SELECTED FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
--------- --------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $ 9.66 $ 8.70 $ 9.89 $ 9.57 $ 9.65 $ 9.23
--------- --------- --------- ---------- ---------- --------
Income from investment operations:
Net investment income .30 .60 .62 .64 .66 .76
Net realized and unrealized gain (loss)
on investments ( .53) .96 ( 1.21) .32 ( .06) .44
--------- --------- --------- ---------- ---------- --------
Total from investment operations ( .23) 1.56 ( .59) .96 .60 1.20
--------- --------- --------- ---------- ---------- --------
Less distributions:
Dividends from net investment income ( .17) ( .60) ( .60) ( .64) ( .68) ( .78)
Distributions from net realized gains -- -- -- -- -- --
--------- --------- --------- ---------- ---------- --------
Total distributions ( .17) ( .60) ( .60) ( .64) ( .68) ( .78)
--------- --------- --------- ---------- ---------- --------
Net asset value, end of period $ 9.26 $ 9.66 $ 8.70 $ 9.89 $ 9.57 $ 9.65
--------- --------- --------- ---------- ---------- --------
--------- --------- --------- ---------- ---------- --------
TOTAL RETURN (WITHOUT DEDUCTION
OF SALES LOAD) ( 2.38%) 18.39% ( 5.97%) 10.24% 6.53% 13.76%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000 omitted) $20,307 $22,290 $21,032 $23,632 $21,359 $19,313
Ratios to average net assets:
Expenses .94%+^ .96%^ .85% .86% .93% .93%
Net investment income 6.27+ 6.40 8.32 6.46 6.99 8.18
Portfolio turnover rate 6.27 33.91 41.01 21.34 25.53 23.65
</TABLE>
+Annualized.
^Pursuant to new regulations, ratio includes expenses paid by expense offset
arrangements.
30
<PAGE>
JEFFERSON-PILOT INVESTMENT GRADE BOND FUND, INC.
CHANGES IN INVESTMENT POSITIONS
For the Period April 1, 1996 to June 30, 1996
ADDITIONS ELIMINATIONS
U.S. Treasury Tennessee Gas Pipeline Company
5 7/8% Notes due 4/30/98 9 1/4% due 5/15/96
U.S. Treasury U.S. Treasury
7 1/8% Bonds due 2/15/23 9 3/8% Notes due 4/15/96
31
<PAGE>
JEFFERSON PILOT
FAMILY OF FUNDS
- --------------------------
JEFFERSON-PILOT
CAPITAL APPRECIATION FUND
INVESTMENT GRADE BOND FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
THIS REPORT AND ACCOMPANYING FINANCIAL STATEMENTS ARE SUBMITTED FOR INFORMATION
OF THE FUND SHAREHOLDERS AND ARE NOT TO BE CONSIDERED AS AN OFFER OR
SOLICITATION OF OFFERS TO BUY OR SELL ANY SHARES OF THE FUND. SUCH OFFERING IS
MADE ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
ITEM #JPI607041
<PAGE>
OPPENHEIMER GROWTH FUND
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Reference is made to Article IV of Registrant's Declaration of Trust
filed as Exhibit 24(b)(1) to Registrant's 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 16. Exhibits
(1) Amended and Restated Declaration of Trust dated as of October 1,
1995: Previously filed with Registrant's Post-Effective Amendment
No. 49, 10/27/95, and incorporated herein by reference.
(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 to Registrant's Registration Statement,
8/22/94 pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(3) Not applicable.
(4) Agreement and Plan of Reorganization: See Exhibit A to Part A of
this Registration Statement
(5) (i)Specimen Share Certificate for Registrant's Class A Shares:
Previously filed with Registrant's Post-Effective Amendment
No. 49, 10/27/95, and incorporated herein by reference.
(ii) Specimen Share Certificate for Registrant's Class B Shares:
Previously filed with Registrant's Post-Effective Amendment
No. 49, 10/27/95, and incorporated herein by reference.
(iii) Specimen Share Certificate for Registrant's Class C Shares:
Previously filed with Registrant's Post-Effective Amendment
No. 49, 10/27/95, and incorporated herein by reference.
(iv) Specimen Share Certificate for Registrant's Class Y Shares:
Previously filed with Registrant's Post-Effective Amendment No. 49,
10/27/95, and incorporated herein by reference.
(6) 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 to Registrant's
Registration Statement, 8/22/94, pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(7) (i) General Distributor's Agreement dated December 10, 1992:
Previously filed with Post-Effective Amendment No. 41 to
Registrant's Registration Statement, 7/30/93, and incorporated
herein by reference.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated
herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement: Filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(v) Broker Agreement between Oppenheimer Fund Management, Inc. and
Newbridge Securities dated 10/1/86: Filed with Post-Effective
Amendment No. 25 to Registrant's Registration Statement,
11/1/86, refiled with Post-Effective Amendment No. 45 to
Registrant's Registration Statement, 8/22/94, pursuant to Item
102 of Regulation S-T, and incorporated herein by reference.
(8) Not Applicable.
(9) Custodian Agreement with The Bank of New York dated August 5, 1992:
Previously filed with Post-Effective Amendment No. 44 to
Registrant's Registration Statement, 3/31/94, and incorporated
herein by reference.
(10) (i) Class A Service Plan and Agreement dated July 1, 1993:
Previously filed with Post-Effective Amendment No. 41 to
Registrant's Registration Statement, 7/30/93, and incorporated
herein by reference.
(ii) Class B Distribution and Service Plan and Agreement dated
February 10, 1994: Previously filed with Post-Effective
Amendment No. 45 to Registrant's Registration Statement,
8/22/94, and incorporated herein by reference.
(iii) Class C Distribution and Service Plan: Previously filed with
Registrant's Post-Effective Amendment No. 49, 10/27/95, and
incorporated herein by reference.
(11) Opinion and Consent of Counsel dated 10/4/85: Previously filed with
Post-Effective Amendment No. 30 to Registrant's Registration
Statement, 10/28/88, refiled with Post-Effective Amendment No. 45
of Registrant's Registration Statement, 8/22/94, pursuant to Item
102 of Regulation S-T, and incorporated herein by reference.
(12)Tax Opinion Relating to the Reorganization: Draft Opinion filed
herewith.
(13) Not applicable.
(14) (i)Consent of KPMG Peat Marwick LLP: Filed herewith.
(ii)Consent of McGladrey & Pullen LLP: Filed herewith.
(15) Not applicable.
(16) Powers of Attorney signed by Registrant's Trustees and Certified
Board Resolutions: Previously filed with Post-Effective Amendment No. 41
to Registrant's Registration Statement, 7/30/93, and incorporated herein
by reference.
(17)(i) Declaration of Registrant under Rule 24f-2: Filed herewith.
(ii) Financial Data Schedules: Filed herewith.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the registrant, in the City of New York and State
of New York on the 11th day of September, 1996.
OPPENHEIMER GROWTH FUND
BY: /s/ Bridget A. Macaskill*
Bridget A. Macaskill, President
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Leon Levy* Chairman of the September 11, 1996
- -------------- Board of Trustees
Leon Levy
/s/ George Bowen* Chief Financial September 11, 1996
- ----------------- and Accounting
George Bowen Officer and Treasurer
/s/ Bridget A. Macaskill Principal Executive September 11, 1996
- ------------------------ Officer, President
Bridget A. Macaskill and Trustee
/s/ Robert G. Galli* Trustee September 11, 1996
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee September 11, 1996
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee September 11, 1996
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee September 11, 1996
- -----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee September 11, 1996
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee September 11, 1996
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins* Trustee September 11, 1996
- ----------------------
Sidney M. Robbins
/s/ Donald W. Spiro* Trustee September 11, 1996
- --------------------
Donald W. Spiro
/s/ Pauline Trigere* Trustee September 11, 1996
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee September 11, 1996
- -----------------------
Clayton K. Yeutter
*By:/s/ Robert G. Zack
________________________________
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER GROWTH FUND
Index to Exhibits
- -----------------
Exhibit No. Description
- ----------- -----------
16(12) Tax Opinion Relating to the Reorganization
16(14)(i) Independent Auditors' Consent
16(14)(ii) Independent Auditors' Consent
16(17)(i) Declaration of Registrant under Rule 24f-2
16(17)(ii) Financial Data Schedules
[Letterhead of Sutherland Asbill & Brennan]
AS a condition to the closing of the Reorganization, Oppenheimer Fund
and JP Fund will receive the opinion of Sutherland, Asbill & Brennan to
the effect that, based on the Reorganization Agreement, information
given by Jefferson-Pilot Corporation, certain representations and
other representations as such firm shall reasonably request, existing
provisions of the Code, Treasury Regulations issued thereunder, current
Revenue Rulings, Revenue Procedures and court decisions, for Federal
income tax purposes:
(a) The reorganization contemplated by the Reorganization
Agreement will constitute a "reorganization" within the meaning of
Section 368(a)(1)(C) of the Code and JP Fund and Oppenheimer Fund
will each be a "party to the reorganization" within the meaning of
Section 368(b) of the Code.
(b) No gain or loss will be recognized by Oppenheimer Fund upon
the receipt of the assets transferred to it by JP Fund in exchange
for Class A shares of Oppenheimer Fund and the assumption by
Oppenheimer Fund of certain identified liabilities of JP Fund.
(Section 1032)
(c) No gain or loss will be recognized by JP Fund upon the
transfer of its assets to Oppenheimer Fund in exchange solely for
Class A shares of Oppenheimer Fund and the assumption by
Oppenheimer Fund of certain identified liabilities of JP Fund (if
any) and the subsequent distribution by JP Fund of such Class A
shares to the shareholders of JP Fund. (Section 361)
(d) No gain or loss will be recognized by JP Fund shareholders
upon the exchange of the JP Fund shares solely for the Class A
shares of Oppenheimer Fund. (Section 354)
(e) The basis of the Class A shares of Oppenheimer Fund received
by each JP Fund shareholder pursuant to the reorganization will be
the same as the adjusted basis of that shareholder's JP Fund
shares surrendered in exchange therefor. (Section 358)
(f) The holding period of Class A shares of Oppenheimer Fund to be
received by each JP Fund shareholder will include the
shareholder's holding period for the JP Fund shares surrendered in
exchange therefor, provided such JP Fund shares were held as
capital assets on the Closing Date. (Section 1223)
(g) Oppenheimer Fund's basis for the assets transferred to it by
JP Fund will be the same as JP Fund's tax basis for the assets
immediately prior to the reorganization. (Section 362(b))
(h) Oppenheimer Fund's holding period for the transferred assets
will include JP Fund's holding period therefor. (Section 1223)
(i) Oppenheimer Fund will succeed to and take into account the
items of JP Fund described in Section 381(c) of the Code,
including the earnings and profits, or deficit in earnings and
profits, of JP Fund as of the date of the transaction, subject to
the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code.
Letterhead of McGladrey & Pullen, LLP]
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated January 11, 1996
on financial statements of Jefferson-Pilot Capital Appreciation Fund,
Inc. referred to therein in this Registration Statement on Form N-14
We also consent to the reference to our firm in the Proxy
Statement under the caption "Ratification or Rejection of Selection of
Independent Auditors", in the Jefferson-Pilot Capital Appreciation
Fund, Inc. Prospectus and Statement of Additional Information under the
captions "Condensed Financial Information", and "General Information",
respectively.
/s/ McGladrey & Pullen LLP
New York, New York
September 6, 1996
MERGE/270CON.MP
Independent Auditors' Consent
The Board of Trustees
Oppenheimer Growth Fund:
We consent to the incorporation by reference in this Registration
Statement on Form N-14 of Oppenheimer Growth Fund of our report dated July
22, 1996, appearing in the Annual Report of Oppenheimer Growth Fund for
the year ended June 30, 1996, which is part of this Registration
Statement.
/s/ KPMG Peat Marwick LLP
- --------------------------------
KPMG PEAT MARWICK LLP
Denver, Colorado
September 10, 1996
MERGE/270JEFF.CON
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
1. Name and address of issuer:
Oppenheimer Growth Fund
Two World Trade Center
New York, NY 10048-0203
2. Name of each series or class of funds for which this notice is
filed:
Oppenheimer Growth Fund - Class A
3. Investment Company Act File Number: 811-2306
Securities Act File Number: 2-45272
4. Last day of fiscal year for which this notice is filed:
6/30/96
5. Check box if this notice is being filed more than 180 days
after the close of the issuer's fiscal year for purposes of
reporting securities sold after the close of the fiscal year
but before termination of the issuer's 24f-2 declaration:
/ /
6. Date of termination of issuer's declaration under rule
24f-2(a)(1), if applicable (see instruction a.6):
7. Number and amount of securities of the same class or series
which had been registered under the Securities Act of 1933
other than pursuant to rule 24f-2 in a prior fiscal year, but
which remained unsold at the beginning of the fiscal year:
34,485,670
8. Number and amount of securities registered during the fiscal
year other than pursuant to rule 24f-2:
-0-
9. Number and aggregate sale price of securities sold during the
fiscal year:
8,407,775 $279,261,881
10. Number and aggregate sale price of securities sold during the
fiscal year in reliance upon registration pursuant to rule
24f-2:
2,845,799 $99,438,159
11. Number and aggregate sale price of securities issued during
the fiscal year in connection with dividend reinvestment
plans, if applicable (see Instruction B.7):
3,323,811 $101,576,179
12. Calculation of registration fee:
(i) Aggregate sale price of securities sold
during the fiscal year in reliance on
rule 24f-2 (from Item 10): $99,438,159
------------
(ii) Aggregate price of shares issued in
connection with dividend reinvestment
plans (from Item 11, if applicable): +$101,576,179
------------
(iii) Aggregate price of shares redeemed or
repurchased during the fiscal year
(if applicable): -$201,014,338
------------
(iv) Aggregate price of shares redeemed or
repurchased and previously applied as
a reduction to filing fees pursuant to
rule 24e-2 (if applicable): + -0-
------------
(v) Net aggregate price of securities sold
and issued during the fiscal year in
reliance on rule 24f-2 (line (i), plus
line (ii), less line (iii), plus line
(iv)) (if applicable): $ -0-
------------
(vi) Multiplier prescribed by Section 6(b)
of the Securities Act of 1933 or other
applicable law or regulation (see
Instruction C.6): x 1/2900
------------
(vii) Fee due (line (i) or line (v) multiplied
by line (vi)): $ -0-
------------
Instruction: Issuers should complete line (ii), (iii), (iv), and
(v) only if the form is being filed within 60 days
after the close of the issuer's fiscal year. See
Instructions C.3.
13. Check box if fees are being remitted to the Commission's
lockbox depository as described in section 3a of the
Commission's Rule of Informal and Other Procedures (17 CFR
202.3a). / /
Date of mailing or wire transfer of filing fees to the
Commission's lockbox depository:
SIGNATURES
This report has been signed below by the following persons on
behalf of the issuer and in the capacities and on the dates
indicated.
Oppenheimer Growth Fund
By: /s/ Robert J. Bishop
------------------------------
Robert J. Bishop, Assistant Treasurer
Date: August 22, 1996
cc: Ronald Feiman, Esq.
Katherine Feld
Gloria LaFond
<PAGE>
GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN
114 West 47th Street New York, N.Y. 10036
Telephone: (212) 626-0800 Telecopier (212) 626-0799
August 21, 1996
Oppenheimer Growth Fund
Two World Trade Center
New York, New York 10048
Ladies and Gentlemen:
In connection with the public offering of Class A shares
of beneficial interest, no par value (the "Shares") of Oppenheimer
Growth Fund (the "Fund"), we have examined such records and
documents and have made such further investigation and examination
as we deemed necessary for the purpose of this opinion.
It is our opinion that the Shares, the registration of
which is made definite by the accompanying Rule 24f-2 Notice of the
Fund, were legally issued, fully paid and non-assessable by the
Fund to the extent set forth in its Prospectus forming part of its
Registration Statement under the Securities Act of 1933, as
amended.
We hereby consent to the filing of this opinion with said
Notice.
Very truly yours,
/s/ GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
1. Name and address of issuer:
Oppenheimer Growth Fund
Two World Trade Center
New York, NY 10048-0203
2. Name of each series or class of funds for which this notice is
filed:
Oppenheimer Growth Fund - Class B
3. Investment Company Act File Number: 811-2306
Securities Act File Number: 2-45272
4. Last day of fiscal year for which this notice is filed:
6/30/96
5. Check box if this notice is being filed more than 180 days
after the close of the issuer's fiscal year for purposes of
reporting securities sold after the close of the fiscal year
but before termination of the issuer's 24f-2 declaration:
/ /
6. Date of termination of issuer's declaration under rule
24f-2(a)(1), if applicable (see instruction a.6):
7. Number and amount of securities of the same class or series
which had been registered under the Securities Act of 1933
other than pursuant to rule 24f-2 in a prior fiscal year, but
which remained unsold at the beginning of the fiscal year: -0-
8. Number and amount of securities registered during the fiscal
year other than pursuant to rule 24f-2: -0-
9. Number and aggregate sale price of securities sold during the
fiscal year:
3,119,546 $100,609,679
10. Number and aggregate sale price of securities sold during the
fiscal year in reliance upon registration pursuant to rule
24f-2:
3,119,546 $100,609,679
11. Number and aggregate sale price of securities issued during
the fiscal year in connection with dividend reinvestment
plans, if applicable (see Instruction B.7):
288,253 $8,664,821
12. Calculation of registration fee:
(i) Aggregate sale price of securities sold
during the fiscal year in reliance on
rule 24f-2 (from Item 10): $100,609,679
------------
(ii) Aggregate price of shares issued in
connection with dividend reinvestment
plans (from Item 11, if applicable): +$8,664,821
------------
(iii) Aggregate price of shares redeemed or
repurchased during the fiscal year
(if applicable): -$28,091,205
------------
(iv) Aggregate price of shares redeemed or
repurchased and previously applied as
a reduction to filing fees pursuant to
rule 24e-2 (if applicable): + -0-
------------
(v) Net aggregate price of securities sold
and issued during the fiscal year in
reliance on rule 24f-2 (line (i), plus
line (ii), less line (iii), plus line
(iv)) (if applicable): $ 81,183,295
------------
(vi) Multiplier prescribed by Section 6(b)
of the Securities Act of 1933 or other
applicable law or regulation (see
Instruction C.6): x 1/2900
------------
(vii) Fee due (line (i) or line (v) multiplied
by line (vi)): $ 27,994
------------
Instruction: Issuers should complete line (ii), (iii), (iv), and
(v) only if the form is being filed within 60 days
after the close of the issuer's fiscal year. See
Instructions C.3.
13. Check box if fees are being remitted to the Commission's
lockbox depository as described in section 3a of the
Commission's Rule of Informal and Other Procedures (17 CFR
202.3a). /x/
Date of mailing or wire transfer of filing fees to the
Commission's lockbox depository: 8/21/96, Fed Wire #2864
SIGNATURES
This report has been signed below by the following persons on
behalf of the issuer and in the capacities and on the dates
indicated.
Oppenheimer Growth Fund
By: /s/ Robert J. Bishop
------------------------------
Robert J. Bishop, Assistant Treasurer
Date: August 22, 1996
cc: Ronald Feiman, Esq.
Katherine Feld
Gloria LaFond
<PAGE>
GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN
114 West 47th Street New York, N.Y. 10036
Telephone: (212) 626-0800 Telecopier (212) 626-0799
August 21, 1996
Oppenheimer Growth Fund
Two World Trade Center
New York, New York 10048
Ladies and Gentlemen:
In connection with the public offering of Class B shares
of beneficial interest, no par value (the "Shares") of Oppenheimer
Growth Fund (the "Fund"), we have examined such records and
documents and have made such further investigation and examination
as we deemed necessary for the purpose of this opinion.
It is our opinion that the Shares, the registration of
which is made definite by the accompanying Rule 24f-2 Notice of the
Fund, were legally issued, fully paid and non-assessable by the
Fund to the extent set forth in its Prospectus forming part of its
Registration Statement under the Securities Act of 1933, as
amended.
We hereby consent to the filing of this opinion with said
Notice.
Very truly yours,
/s/ GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
1. Name and address of issuer:
Oppenheimer Growth Fund
Two World Trade Center
New York, NY 10048-0203
2. Name of each series or class of funds for which this notice is
filed:
Oppenheimer Growth Fund - Class C
3. Investment Company Act File Number: 811-2306
Securities Act File Number: 2-45272
4. Last day of fiscal year for which this notice is filed:
6/30/96
5. Check box if this notice is being filed more than 180 days
after the close of the issuer's fiscal year for purposes of
reporting securities sold after the close of the fiscal year
but before termination of the issuer's 24f-2 declaration:
/ /
6. Date of termination of issuer's declaration under rule
24f-2(a)(1), if applicable (see instruction a.6):
7. Number and amount of securities of the same class or series
which had been registered under the Securities Act of 1933
other than pursuant to rule 24f-2 in a prior fiscal year, but
which remained unsold at the beginning of the fiscal year: -0-
8. Number and amount of securities registered during the fiscal
year other than pursuant to rule 24f-2: -0-
9. Number and aggregate sale price of securities sold during the
fiscal year:
111,265 $3,624,375
10. Number and aggregate sale price of securities sold during the
fiscal year in reliance upon registration pursuant to rule
24f-2:
111,265 $3,624,375
11. Number and aggregate sale price of securities issued during
the fiscal year in connection with dividend reinvestment
plans, if applicable (see Instruction B.7):
2,287 $69,761
12. Calculation of registration fee:
(i) Aggregate sale price of securities sold
during the fiscal year in reliance on
rule 24f-2 (from Item 10): $3,624,375
------------
(ii) Aggregate price of shares issued in
connection with dividend reinvestment
plans (from Item 11, if applicable): +$69,761
------------
(iii) Aggregate price of shares redeemed or
repurchased during the fiscal year
(if applicable): -$167,483
------------
(iv) Aggregate price of shares redeemed or
repurchased and previously applied as
a reduction to filing fees pursuant to
rule 24e-2 (if applicable): + -0-
------------
(v) Net aggregate price of securities sold
and issued during the fiscal year in
reliance on rule 24f-2 (line (i), plus
line (ii), less line (iii), plus line
(iv)) (if applicable): $ 3,526,653
------------
(vi) Multiplier prescribed by Section 6(b)
of the Securities Act of 1933 or other
applicable law or regulation (see
Instruction C.6): x 1/2900
------------
(vii) Fee due (line (i) or line (v) multiplied
by line (vi)): $ 1,216
------------
Instruction: Issuers should complete line (ii), (iii), (iv), and
(v) only if the form is being filed within 60 days
after the close of the issuer's fiscal year. See
Instructions C.3.
13. Check box if fees are being remitted to the Commission's
lockbox depository as described in section 3a of the
Commission's Rule of Informal and Other Procedures (17 CFR
202.3a). /x/
Date of mailing or wire transfer of filing fees to the
Commission's lockbox depository: 8/21/96, Fed Wire #2893
SIGNATURES
This report has been signed below by the following persons on
behalf of the issuer and in the capacities and on the dates
indicated.
Oppenheimer Growth Fund
By: /s/ Robert J. Bishop
------------------------------
Robert J. Bishop, Assistant Treasurer
Date: August 22, 1996
cc: Ronald Feiman, Esq.
Katherine Feld
Gloria LaFond
<PAGE>
GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN
114 West 47th Street New York, N.Y. 10036
Telephone: (212) 626-0800 Telecopier (212) 626-0799
August 21, 1996
Oppenheimer Growth Fund
Two World Trade Center
New York, New York 10048
Ladies and Gentlemen:
In connection with the public offering of Class C shares
of beneficial interest, no par value (the "Shares") of Oppenheimer
Growth Fund (the "Fund"), we have examined such records and
documents and have made such further investigation and examination
as we deemed necessary for the purpose of this opinion.
It is our opinion that the Shares, the registration of
which is made definite by the accompanying Rule 24f-2 Notice of the
Fund, were legally issued, fully paid and non-assessable by the
Fund to the extent set forth in its Prospectus forming part of its
Registration Statement under the Securities Act of 1933, as
amended.
We hereby consent to the filing of this opinion with said
Notice.
Very truly yours,
/s/ GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 74676
<NAME> Oppenheimer Growth Fund- A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 939,013,033
<INVESTMENTS-AT-VALUE> 1,272,706,620
<RECEIVABLES> 4,533,714
<ASSETS-OTHER> 151,004
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,277,391,338
<PAYABLE-FOR-SECURITIES> 5,015,348
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,457
<TOTAL-LIABILITIES> 8,157,805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 837,674,129
<SHARES-COMMON-STOCK> 33,508,383
<SHARES-COMMON-PRIOR> 27,946,407
<ACCUMULATED-NII-CURRENT> 8,210,351
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 89,655,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 333,693,587
<NET-ASSETS> 1,120,045,776
<DIVIDEND-INCOME> 10,705,764
<INTEREST-INCOME> 17,120,681
<OTHER-INCOME> 0
<EXPENSES-NET> 12,623,849
<NET-INVESTMENT-INCOME> 15,202,596
<REALIZED-GAINS-CURRENT> 123,112,424
<APPREC-INCREASE-CURRENT> 65,683,680
<NET-CHANGE-FROM-OPS> 203,998,700
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,145,385
<DISTRIBUTIONS-OF-GAINS> 92,881,153
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,407,775
<NUMBER-OF-SHARES-REDEEMED> 6,169,610
<SHARES-REINVESTED> 3,323,811
<NET-CHANGE-IN-ASSETS> 362,036,192
<ACCUMULATED-NII-PRIOR> 6,036,689
<ACCUMULATED-GAINS-PRIOR> 68,866,019
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,558,069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,623,849
<AVERAGE-NET-ASSETS> 1,018,022,000
<PER-SHARE-NAV-BEGIN> 30.80
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> 5.70
<PER-SHARE-DIVIDEND> 0.41
<PER-SHARE-DISTRIBUTIONS> 3.10
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 33.43
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 74676
<NAME> Oppenheimer Growth Fund- B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 939,013,033
<INVESTMENTS-AT-VALUE> 1,272,706,620
<RECEIVABLES> 4,533,714
<ASSETS-OTHER> 151,004
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,277,391,338
<PAYABLE-FOR-SECURITIES> 5,015,348
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,457
<TOTAL-LIABILITIES> 8,157,805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 837,674,129
<SHARES-COMMON-STOCK> 3,955,435
<SHARES-COMMON-PRIOR> 1,425,337
<ACCUMULATED-NII-CURRENT> 8,210,351
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 89,655,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 333,693,587
<NET-ASSETS> 129,484,414
<DIVIDEND-INCOME> 10,705,764
<INTEREST-INCOME> 17,120,681
<OTHER-INCOME> 0
<EXPENSES-NET> 12,623,849
<NET-INVESTMENT-INCOME> 15,202,596
<REALIZED-GAINS-CURRENT> 123,112,424
<APPREC-INCREASE-CURRENT> 65,683,680
<NET-CHANGE-FROM-OPS> 203,998,700
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 763,600
<DISTRIBUTIONS-OF-GAINS> 8,596,317
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,119,546
<NUMBER-OF-SHARES-REDEEMED> 877,701
<SHARES-REINVESTED> 288,253
<NET-CHANGE-IN-ASSETS> 362,036,192
<ACCUMULATED-NII-PRIOR> 6,036,689
<ACCUMULATED-GAINS-PRIOR> 68,866,019
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,558,069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,623,849
<AVERAGE-NET-ASSETS> 90,501,000
<PER-SHARE-NAV-BEGIN> 30.36
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 5.53
<PER-SHARE-DIVIDEND> 0.28
<PER-SHARE-DISTRIBUTIONS> 3.10
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 32.74
<EXPENSE-RATIO> 1.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 74676
<NAME> Oppenheimer Growth Fund- C
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 939,013,033
<INVESTMENTS-AT-VALUE> 1,272,706,620
<RECEIVABLES> 4,533,714
<ASSETS-OTHER> 151,004
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,277,391,338
<PAYABLE-FOR-SECURITIES> 5,015,348
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,457
<TOTAL-LIABILITIES> 8,157,805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 837,674,129
<SHARES-COMMON-STOCK> 108,160
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 8,210,351
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 89,655,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 333,693,587
<NET-ASSETS> 3,592,867
<DIVIDEND-INCOME> 10,705,764
<INTEREST-INCOME> 17,120,681
<OTHER-INCOME> 0
<EXPENSES-NET> 12,623,849
<NET-INVESTMENT-INCOME> 15,202,596
<REALIZED-GAINS-CURRENT> 123,112,424
<APPREC-INCREASE-CURRENT> 65,683,680
<NET-CHANGE-FROM-OPS> 203,998,700
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,006
<DISTRIBUTIONS-OF-GAINS> 61,792
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 111,265
<NUMBER-OF-SHARES-REDEEMED> 5,392
<SHARES-REINVESTED> 2,287
<NET-CHANGE-IN-ASSETS> 362,036,192
<ACCUMULATED-NII-PRIOR> 6,036,689
<ACCUMULATED-GAINS-PRIOR> 68,866,019
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,558,069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,623,849
<AVERAGE-NET-ASSETS> 1,804,000
<PER-SHARE-NAV-BEGIN> 33.44
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 2.88
<PER-SHARE-DIVIDEND> 0.40
<PER-SHARE-DISTRIBUTIONS> 3.10
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 33.22
<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 74676
<NAME> Oppenheimer Growth Fund- Y
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 939,013,033
<INVESTMENTS-AT-VALUE> 1,272,706,620
<RECEIVABLES> 4,533,714
<ASSETS-OTHER> 151,004
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,277,391,338
<PAYABLE-FOR-SECURITIES> 5,015,348
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,457
<TOTAL-LIABILITIES> 8,157,805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 837,674,129
<SHARES-COMMON-STOCK> 482,038
<SHARES-COMMON-PRIOR> 103,550
<ACCUMULATED-NII-CURRENT> 8,210,351
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 89,655,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 333,693,587
<NET-ASSETS> 16,110,476
<DIVIDEND-INCOME> 10,705,764
<INTEREST-INCOME> 17,120,681
<OTHER-INCOME> 0
<EXPENSES-NET> 12,623,849
<NET-INVESTMENT-INCOME> 15,202,596
<REALIZED-GAINS-CURRENT> 123,112,424
<APPREC-INCREASE-CURRENT> 65,683,680
<NET-CHANGE-FROM-OPS> 203,998,700
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 111,943
<DISTRIBUTIONS-OF-GAINS> 783,715
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 439,359
<NUMBER-OF-SHARES-REDEEMED> 90,199
<SHARES-REINVESTED> 29,328
<NET-CHANGE-IN-ASSETS> 362,036,192
<ACCUMULATED-NII-PRIOR> 6,036,689
<ACCUMULATED-GAINS-PRIOR> 68,866,019
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,558,069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,623,849
<AVERAGE-NET-ASSETS> 9,384,000
<PER-SHARE-NAV-BEGIN> 30.80
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 5.70
<PER-SHARE-DIVIDEND> 0.44
<PER-SHARE-DISTRIBUTIONS> 3.10
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 33.42
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE SEMI-ANNUAL REPORT OF THE JEFFERSON-PILOT CAPITAL APPRECIATION
FUND, INC., DATED AS OF JUNE 30, 1996, AND FROM FORM N-SAR FOR
THE PERIOD ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 31,458,444
<INVESTMENTS-AT-VALUE> 40,288,520
<RECEIVABLES> 40,094
<ASSETS-OTHER> 373,991
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,702,605
<PAYABLE-FOR-SECURITIES> 113,798
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71,177
<TOTAL-LIABILITIES> 184,975
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,104,300
<SHARES-COMMON-STOCK> 2,346,524
<SHARES-COMMON-PRIOR> 2,370,053
<ACCUMULATED-NII-CURRENT> 338,642
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,244,612
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,830,076
<NET-ASSETS> 40,517,630
<DIVIDEND-INCOME> 422,863
<INTEREST-INCOME> 75,007
<OTHER-INCOME> 0
<EXPENSES-NET> 158,794
<NET-INVESTMENT-INCOME> 339,076
<REALIZED-GAINS-CURRENT> 3,246,231
<APPREC-INCREASE-CURRENT> 469,653
<NET-CHANGE-FROM-OPS> 4,054,960
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 49,141
<DISTRIBUTIONS-OF-GAINS> 924,527
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 63,398
<NUMBER-OF-SHARES-REDEEMED> 136,467
<SHARES-REINVESTED> 49,540
<NET-CHANGE-IN-ASSETS> 2,686,550
<ACCUMULATED-NII-PRIOR> 48,707
<ACCUMULATED-GAINS-PRIOR> 922,908
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 96,826
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 39,077,220
<PER-SHARE-NAV-BEGIN> 15.96
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> 1.58
<PER-SHARE-DIVIDEND> .42
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.27
<EXPENSE-RATIO> .86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT OF THE JEFFERSON-PILOT CAPITAL APPRECIATION
FUND, INC., DATED AS OF DECEMBER 31, 1995, AND FROM FORM N-SAR FOR
THE PERIOD ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS
ETIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 29,447,919
<INVESTMENTS-AT-VALUE> 37,808,342
<RECEIVABLES> 58,025
<ASSETS-OTHER> 364,199
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,230,566
<PAYABLE-FOR-SECURITIES> 258,090
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 141,396
<TOTAL-LIABILITIES> 399,486
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,499,042
<SHARES-COMMON-STOCK> 2,370,053
<SHARES-COMMON-PRIOR> 2,577,272
<ACCUMULATED-NII-CURRENT> 48,707
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 922,908
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,360,423
<NET-ASSETS> 37,831,080
<DIVIDEND-INCOME> 828,748
<INTEREST-INCOME> 53,147
<OTHER-INCOME> 0
<EXPENSES-NET> 292,276
<NET-INVESTMENT-INCOME> 589,619
<REALIZED-GAINS-CURRENT> 2,251,129
<APPREC-INCREASE-CURRENT> 7,655,872
<NET-CHANGE-FROM-OPS> 10,496,620
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 568,392
<DISTRIBUTIONS-OF-GAINS> 1,486,668
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153,009
<NUMBER-OF-SHARES-REDEEMED> 469,652
<SHARES-REINVESTED> 109,424
<NET-CHANGE-IN-ASSETS> 5,447,931
<ACCUMULATED-NII-PRIOR> 27,480
<ACCUMULATED-GAINS-PRIOR> 158,446
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 177,665
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 35,493,686
<PER-SHARE-NAV-BEGIN> 12.56
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> 4.03
<PER-SHARE-DIVIDEND> .88
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.96
<EXPENSE-RATIO> .87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
