Preliminary Copy
OPPENHEIMER INTERGRITY FUNDS
OPPENHEIMER INVESTMENT GRADE BOND FUND
3410 South Galena Street, Denver, Colorado 80231
Notice Of Meeting Of Shareholders To Be Held
June 28, 1995
To The Class A & Class B Shareholders of
Oppenheimer Investment Grade Bond Fund
Notice is hereby given that a Meeting of the shareholders of the
shareholders of Oppenheimer Integrity Funds (the "Trust") and a meeting
of the Class A and Class B Shareholders of Oppenheimer Investment Grade
bond Fund (the "Fund") will be held at 3410 South Galena Street, Denver,
Colorado, 80231, at 10:00 A.M., Denver time, on June 28, 1995, or any
adjournments thereof, for the following purposes:
To be voted on by holders of:
Class A Shares Class B Shares
X X (a) To elect nine Trustees to hold
office until the next meeting of
shareholders called for the purpose of
electing Trustees and until their
successors are elected and shall
qualify;
X X (b) To ratify the selection of Deloitte
& Touche LLP as the independent
certified public accountants and
auditors of the Fund for the fiscal
year beginning January 1, 1995
(Proposal No. 1);
X X (c) To approve changes in the Fund's
fundamental investment policies
Proposal No. 2);
X X (d) To approve a new investment
advisory agreement with Oppenheimer
Management Corporation;
X (e) To approve the Fund's Class B 12b-1
Distribution and Service Plan (Proposal
No. 4); and
X X (f) To transact such other business as
may properly come before the meeting,
or any adjournments thereof.
Shareholders of record at the close of business on April 28, 1995, are
entitled to vote at the meeting. The election of Trustees and the
Proposals are more fully discussed in the Proxy Statement. Please read
it carefully before telling us, through your proxy or in person, how you
wish your shares to be voted. The Board of Trustees of the Fund
recommends a vote to elect each of the nominees as Trustee and in favor
of each Proposal. WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED
PROXY PROMPTLY.
By Order of the Board of Trustees,
George C. Bowen, Secretary
May 19, 1995
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Shareholders who do not expect to attend the Meeting are asked 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.
285
Preliminary Copy
OPPENHEIMER INTEGRITY FUNDS
OPPENHEIMER INVESTMENT GRADE BOND FUND
3410 South Galena Street, Denver, Colorado 80231
PROXY STATEMENT
Meeting of Shareholders
To Be Held June 28, 1995
This statement is furnished to the Class A and Class B shareholders of
Oppenheimer Investment Grade Bond Fund (the "Fund") in connection with the
solicitation by the Board of Trustees of Oppenheimer Integrity Funds (the
"Trust") of proxies to be used at a meeting (the "Meeting") of
shareholders to be held at 3410 South Galena Street, Denver, Colorado,
80231, at 10:00 A.M., Denver time, on June 28, 1995, or any adjournments
thereof. It is expected that the mailing of this Proxy Statement will be
made on or about May 19, 1995. For a free copy of the annual report
covering the operations of the Fund for the fiscal year ended December
31, 1994, call Oppenheimer Shareholder Services, the Fund's transfer
agent, at 1-800-525-7048. The Fund is one of two series of Oppenheimer
Integrity Funds. The other series is Oppenheimer Value Stock Fund (which,
like the Fund, has two classes, Class A and Class B), whose shareholders
will be meeting at the same time as the Fund's shareholders. Shareholders
of the Fund and of Oppenheimer Value Stock Fund will vote together on the
election of Trustees, as explained in detail below.
The enclosed 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 a quorum to conduct the meeting. The proxy will be voted in
favor of the nominees for Trustee named in this Proxy Statement unless a
choice is indicated to withhold authority to vote for all listed nominees
or any individual nominee. The proxy will be voted in favor of each
Proposal unless a choice is indicated to vote against or to abstain from
voting on that Proposal. Shares owned of record by broker-dealers for the
benefit of their customers ("street account shares") will be voted by the
broker-dealer based on instructions received from its customers. If no
instructions are received, the broker-dealer may (if permitted under
applicable stock exchange rules) as record holder vote such shares for the
election of Trustees and on the Proposals in the same proportion as that
broker-dealer votes street account shares for which voting instructions
were received in time to be voted.
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 election
of each of the nominees named herein for Trustee and in favor of each
Proposal.
The proxy may be revoked at any time prior to the voting by: (1) writing
to the Secretary of the Fund at 3410 South Galena Street, Denver, Colorado
80231; (2) attending the meeting and voting in person; or (3) signing and
returning a new proxy (if returned and received in time to be voted).
The cost of printing and distributing these proxy materials is an expense
of the Fund. In addition to the solicitation of proxies by mail, proxies
may be solicited by officers or employees of the Fund's transfer agent,
personally or by telephone; any expenses so incurred will also be borne
by the Fund. Brokers, banks and other fiduciaries may be required to
forward soliciting material to their principals and to obtain
authorization for the execution of proxies. For those services they will
be reimbursed by the Fund for their out-of-pocket expenses.
The Fund is one of two series of Oppenheimer Investment Grade Bond Fund.
The Meeting of this Fund's shareholders includes a meeting of the Class
A and Class C shareholders of the other series, Oppenheimer Value Stock
Fund. All shareholders of both series vote for the election of trustees
and the ratification of the selection of the independent auditors
(Proposal No. 1). Only the shareholders of a series vote on the Proposal
to change the fundamental investment policies of that series and only a
Class of a series votes on the Proposal to approve the Distribution Plan
for that Class.
Shares Outstanding and Entitled to Vote. As of April 28, 1995, the record
date, there were (1) _______________ shares of the Fund issued and
outstanding, consisting of ______________ Class A shares and _____________
Class B shares and (2) _____________ shares of Oppenheimer Value Stock
Fund issued and outstanding, consisting of _____________ Class A shares
and ___________ Class B shares. Each Class A and Class B share of the
Fund and of Oppenheimre Value Stock Fund has voting rights as stated in
this Proxy Statement and is entitled to one vote for each share (and a
fractional vote for a fractional share) held of record at the close of
business on the record date. As of the record date, no person owned of
record or was known by the management of the Fund or of Oppenheimer Value
Stock Fund to be the beneficial owner of 5% or more of the outstanding
shares of any class of shares of Oppenheimer Integiry Funds, other than
____________________.
ELECTION OF TRUSTEES
At the Meeting, nine Trustees are to be elected to hold office until the
next meeting of shareholders called for the purpose of electing Trustees
and until their successors shall be duly elected and shall have qualified.
The persons named as attorneys-in-fact in the enclosed proxy have advised
the Fund that unless a proxy instructs them to withhold authority to vote
for all listed nominees or any individual nominee, all validly executed
proxies will be voted by them for the election of the nominees named below
as Trustees of the Fund. As a Massachusetts business trust, the Fund does
not contemplate holding annual shareholder meetings for the purpose of
electing Trustees. Thus, the Trustees will be elected for indefinite
terms until a shareholders meeting is called for the purpose of voting for
Trustees and until their successors are elected and shall qualify.
Each of the nominees is presently a Trustee and has agreed to be nominated
and, if elected, to continue to serve as a Trustee of the Fund. [All
Trustees have been elected by shareholders of the Fund.] Each Trustee is
also a Trustee, Director or Managing General Partner of Daily Cash
Accumulation Fund, Inc., Centennial Money Market Trust, Centennial Tax
Exempt Trust, Centennial Government Trust, Centennial New York Tax Exempt
Trust, Centennial California Tax Exempt Trust, Centennial America Fund,
L.P., Oppenheimer Total Return Fund, Inc., Oppenheimer Equity Income Fund,
Oppenheimer Champion High Yield Fund, Oppenheimer High Yield Fund,
Oppenheimer Cash Reserves, Oppenheimer Variable Account Funds, Oppenheimer
Main Street Funds, Inc., Oppenheimer Tax-Exempt Bond Fund, Oppenheimer
Strategic Funds Trust, Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond Fund, Oppenheimer Strategic
Short-Term Income Fund, Oppenheimer Limited-Term Government Fund, and The
New York Tax-Exempt Income Fund, Inc. (collectively, the "Denver-based
OppenheimerFunds"). Mr. Fossel is President and Mr. Swain is Chairman of
each of the Denver-based OppenheimerFunds.
Each nominee indicated below by an asterisk is an "interested person" (as
that term is defined in the Investment Company Act of 1940, hereinafter
referred to as the "Investment Company Act") of the Fund due to the
positions indicated with the Fund's investment adviser, Oppenheimer
Management Corporation (the "Manager") or its affiliates, or other
positions described. The year given below indicates when the nominee
first became a Trustee or Director of any of the Denver OppenheimerFunds
without a break in service. The beneficial ownership of [Class A] shares
listed below includes voting and investment control, unless otherwise
indicated below. If a nominee should be unable to accept election, the
Board of Trustees may, in its discretion, select another person to fill
the vacant position. [As of April 28, 1995 the Trustees and officers of
the Fund as a group owned Class A shares of the Fund
in the aggregate, which is less than 1% of the outstanding shares of that
class.]
Shares
Beneficially
Name and Business Experience Owned as of
Other Information During the Past Five Years April 21, 1995
William A. Baker Management Consultant.
first became a
Trustee in 1966.
Age: 80
Charles Conrad, Jr. Vice President of McDonnell
first became a Douglas, Ltd.; formerly associated
Trustees in 1970. with the National Aeronautics and
Age: 64 Space Administration.
Raymond J. Kalinowski Director of Wave Technologies
first became a International, Inc.; formerly Vice
Trustee in 1988. Chairman and a director of A.G.
Age: 65 Edwards, Inc., parent holding
company of A.G. Edwards & Sons,
Inc. (a broker-dealer), of which
he was a Senior Vice President.
C. Howard Kast Formerly Managing Partner of
first became a Haskins & Sells (an accounting
Trustee in 1988. firm).
Age: 73
Robert M. Kirchner President of The Kirchner Company
first became a (management consultants).
Trustee in 1963.
Age: 73
Ned M. Steel Chartered property and casualty
first became a underwriter; Director of Visiting
Trustee in 1963. Nurse Corporation of Colorado;
Age: 79 formerly Senior Vice President
and a director of Van Gilder
Insurance Corp. (insurance
brokers).
Robert G. Avis Vice Chairman of A.G. Edwards &
first became a Sons, Inc. (a broker-dealer) and
Trustee in 1993. A.G. Edwards, Inc. (its parent
Age: 63 holding company); Chairman of A.G.
Edwards Trust Company (its
affiliated investment adviser and
trust company, respectively).
Jon S. Fossel* Chairman, Chief Executive Officer
first became a and a director of the Adviser;
Trustee in 1990. President and a director of
Age: 53 Oppenheimer Acquisition Corporation
("OAC"), parent of the Adviser;
President and a director of
HarbourView Asset Management
Corporation ("HarbourView"),
an investment adviser subsidiary of
the Adviser; a director of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent
subsidiaries of the Adviser;
formerly President of the Adviser.
James C. Swain* Vice Chairman and a director of
first became a the Adviser, President and a
Trustee in 1969. director of Centennial Asset
Age: 61 Management Corporation
("Centennial"), an investment
adviser subsidiary of the
Adviser; formerly President and
a director of Oppenheimer Asset
Management Corporation ("OAMC"),
an investment adviser that was a
subsidiary of the Adviser, and
Chairman of the Board of SSI.
Vote Required. The vote of a plurality of the votes cast by shareholders
of the Fund and Oppenheimer Value Stock Fund without regard to series or
class is required for the election of a nominee as Trustee. The Board of
Trustees recommends a vote for the election of each nominee.
Functions of the Board of Trustees. The primary responsibility for the
management of the Fund rests with the Board of Trustees. The Trustees
meet regularly to review the activities of the Fund and the Adviser, which
is responsible for the Fund's day-to-day operations. ___ regular meetings
of the Board were held in the fiscal year ended December 31, 1994 and all
of the Trustees [except Mr. Fossel] were present for at least 75% of those
meetings. The Trustees of the Fund have appointed an Audit and Review
Committee (the "Audit Committee"), comprised of Messrs. Baker (Chairman),
Conrad and Kirchner, none of whom is an "interested person" (as that term
is defined in the Investment Company Act) of the Adviser or the Fund. The
functions of the Audit Committee include (i) making recommendations to the
Board concerning the selection of independent auditors for the Fund
(subject to shareholder ratification); (ii) reviewing the methods, scope
and results of audits and the fees charged; (iii) reviewing the adequacy
of the Fund's internal accounting procedures and controls; and (iv)
establishing a separate line of communication between the Fund's
independent auditors and its independent Trustees. The Audit Committee
met _____ times during the fiscal year ended December 31, 1994 and [all
members] attended at least 75% of the meetings held during this period.
The Board of Trustees does not have a standing nominating or compensation
committee.
Remuneration of Trustees. The officers of the Fund are affiliated with
the Manager; they and the Trustees of the Fund who are affiliated with the
Manager (Messrs. Fossel and Swain, who are both officers and Trustees)
receive no salary or fee from the Fund. The Trustees of the Fund
(excluding Messrs. Fossel and Swain) received the total amounts shown
below (i) from the Fund, during its fiscal year ended December 31, 1994,
and (ii) from all 22 of the Denver-based OppenheimerFunds (including the
Fund) listed in the third paragraph of this section for services in the
positions shown:
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
Robert G. Avis $ $53,000.00
Trustee
William A. Baker $ $73,257.01
Audit and Review Committee
Chairman and Trustee
Charles Conrad, Jr. $ $68,293.67
Audit and Review Committee
Member and Trustee
Raymond J. Kalinowski $ $53,000.00
Trustee
C. Howard Kast $ $53,000.00
Trustee
Robert M. Kirchner $ $68,293.67
Audit and Review Committee
Member and Trustee
Ned M. Steel $ $53,000.00
Trustee
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1For the 1994 calendar year.
Officers of the Fund. Each officer of the Fund is elected by the Trustees
to serve an indefinite term. Information is given below about the
executive officers who are not Trustees of the Fund, including their
business experience during the past five years.
Mary Wilson, Vice President and Portfolio Manager, Age .
Vice President and Managing Director of Massachusetts Mutual Life
Insurance Company; Senior Vice President of MML Series Investment
Fund; Vice President of MassMutual Participation Investors and
MassMutual Corporate Investors.
Andrew J. Donohue, Vice President; Age: 44.
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor, Partner in Kraft & McManimon (a law firm), an officer
of First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser);
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
George C. Bowen, Vice President, Secretary and Treasurer; Age 58.
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds.
Robert G. Zack, Assistant Secretary; Age 46.
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age 36.
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an accountant for Yale &
Seffinger, P.C., an accounting firm, and previously an accountant and
commissions supervisor for Stuart James Company, Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age 29.
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an international mutual fund
supervisor for Brown Brothers, Harriman & Co., a bank, and previously
a senior fund accountant for State Street Bank & Trust Company.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal No. 1)
The Investment Company Act requires that independent certified public
accountants and auditors ("auditors") be selected annually by the Board
of Trustees and that such selection be ratified by the shareholders at the
next-convened annual meeting of the Fund, if one is held. The Board of
Trustees of the Fund, including a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act) of the
Fund or the Manager, at a meeting held ____________________, selected
Deloitta and Touche LLP ("Deloitte") as auditors of the Fund for the
fiscal year beginning January 1, 1995. Deloitte also serves as auditors
for certain other funds for which the Manager acts as investment adviser.
At the Meeting, a resolution will be presented for the Class A and Class
B shareholders' vote of the Fund and Oppenheimer Value Stock Fund to
ratify the selection of Deloitte as auditors. Representatives of Deloitte
are not expected to be present at the Meeting but will have the
opportunity to make a statement if they desire to do so and will be
available should any matter arise requiring their presence. The
affirmative vote of a Majority of the votes cast by shareholders of the
fund and Oppenheimer Value Stock Fund without regard to class is required
for ratification of Deloitte as auditors of the Fund. The Board of
Trustees recommends approval of the selection of Deloitte as auditors of
the Fund.
APPROVAL OF CHANGES TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES WITH RESPECT TO INVESTMENT
IN NON-INVESTMENT GRADE SECURITIES
(Proposal No. 2)
At the present time, the Fund's investment objective is to "seek to
achieve a high level of current income consistent with prudent investment
risk and the stability of capital primarily through investment in a
diversified portfolio of investment garde fixed-income securities"
In addition, it is currently a policy of the Fund to purchase only the
following fixed-income securities:
(1) Investment grade bonds, that is, debt securities rated BBB or above
by Standard & Poor's Corporation or Baa or above by Moody's Investors
Service, Inc. or comparably rating by a nationally recognized rating
organization, or, if unrated, determined by the Manager to be of
comparable quality;
(2) Securities issued, or guaranteed as to principal and interest by the
U.S. Government, its agencies or instrumentalities or obligations
secured by such securities (U.S. Government securities).
U.S. Government securities include U.S. Treasury bills, notes and
bonds, and mortgage participation certificates guaranteed by
Government National Mortgage Association ("Ginnie Mae") are supported
by the full faith and credit of the U>S. government, which in general
terms means that the U.S. Treasury stands behind the obligation to
pay principal and interest. Ginnie Mae certificates are one type of
mortgage-related U.S. Government Security the Fund invests in. Other
mortgage-related U.S. Government Securities the Fund invests in that
are issued or guaranteed by federal agencies or government-sponsored
entities are not supported by the full faith and credit of the U.S.
government. Those securities include obligations supported by the
right of the issuer to borrow from the U.S. Treasury, such as
obligations of Federal Home Loan Mortgage Corporation ("Freddie
Mac"), obligations supported only by the credit of the
instrumentality, such as Federal National Mortgage Association
("Fannie Mae") and obligations supported by the discretionary
authority of the U.S. Government to repurchase certain obligations
of U.S. Government agencies or instrumentalities such as the Federal
Land Banks and the Federal Home Loan Banks. Other U.S. Government
Securities the Fund invests in are collateralized mortgage
obligations ("CMOs");
(3) High-quality, short-term money market instruments, including U.S.
Treasury and agency obligations; commercial paper (short-term,
unsecured, negotiable promissory notes of a domestic or foreign
company); short-term obligations of corporate users; bank
participation certificates; and certificates of deposit and bankers'
acceptances (time drafts drawn on commercial banks usually in
connection with international transactions) of banks and savings and
loan associations.
The Fund also has a fundamental restriction which prohibits it from
purchasing commodities or commodities contracts.
The Manager proposes that the following changes by made to the Fund:
(1) that its investment objective be changed to : "to seek a high level
of current income by investing mainly in debt instruments";
(2) that permissible investments be expanded to: (i) permit investments
in debt securities other than investment grade debt securities,
securities issued by the U.S. Government or its agencies or
instrumentalities or money market instruments, and (ii) permit the
Fund to invest up to 35% of its total assets in non-investment grade
debt instruments (that, those rated at least BBB/Baa by Standard &
Poor's or Moody's or a comparable rating by a nationally recognized
rating organization, or, if unrated, determined by the Manager to be
of comparable quality);
(4) that the fundamental limit on investing in commodities be made non-
fundamental and that certain instruments, such as commodity-linked
notes or certificates of deposits, be permissible investments of the
Fund.
This Proposal would permit the Fund to invest in non-investment grade debt
securities and other debt securities that currently are not permitted
investments, when consistent with the Fund's proposed investment objective
of seeking a high level of current income by investing mainly in debt
instruments. If this Proposal is approved, the Board of Trustees would
change the Fund's name to "Oppenheimer Bond Fund" or similar name. If
this Proposal is approved, the Manager anticipates that, although the Fund
would be premitted to invest up to 35% of its assets in lower-grade debt
securities, that the Fund would invest at least 75% of its assets in (i)
U.S. corporate bonds rated "A" or better and (ii) U.S. government and
agency bonds. The Fund further anticipates that it would invest an
additional 15% of its total assets in lower-grade corporate bonds and 10%
of total assets in non-U.S. bonds. The reason for the proposed change is
that a portfolio made up entirely of investment grade Securities is
generally very sensitive to changes in interest rates, and therefore the
Fund's net asset value is presently susceptible to declines in a rising
interest rate environment. Allowing the Fund's portfolio managers to vary
the creditworthiness standard of the Fund's portfolio will permit them to
attempt to decrease the sensitivity of that portfolio to interest rate
changes. In addition, the Fund's investment adviser believes that, from
time to time, investment opportunities exist in non-investment grade
securities in which the Fund should be able to participate.
Although the yield in non-investment grade debt securities tends to be
higher than that of higher grade debt securities, and the potential for
higher long-term returns increases if such investments are made, there is
an increased credit risk potential that issuers of non-investment grade
debt securities may not be able to make interest or principal payments as
they become due. The Fund's portfolio managers intend to continue to
consider issuer creditworthiness, among other factors, in selecting
individual debt securities and in determining from time to time whether
a portion (but under the proposed non-fundamental limit, not more than
35%) of the Fund's portfolio should be invested in non-investment grade
or unrated Municipal Securities.
At a meeting of the Fund's Board of Trustees held on February 28, 1995,
the Manager presented to the Fund's Board of Trustees the issue of
eliminating the fundamental restrictions outlined above, so that the Board
would have the flexibility to approve further revisions, and the
advantages and risks of allowing the Fund's investment adviser flexibility
to invest up to 35% of the Fund's portfolio in non-investment grade debt
securities, in response to market, economic and other conditions. The
Trustees approved and recommended, subject to shareholder approval, the
change in fundamental investment policies described in this Proposal. If
approved, the effective date of this Proposal can be delayed by the Fund
until the Fund's Prospectus is updated to reflect this change.
Vote Required. An affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act) of all outstanding Class A and
Class B voting securities of the Fund is required to change a fundamental
investment policy; the classes do not vote separately. Such "majority"
vote is defined in the Investment Company Act as the vote of the holders
of the lesser of: (i) 67% or more of the voting securities present or
represented by proxy at the shareholders meeting, if the holders of more
than 50% of the outstanding voting securities are present or represented
by proxy, or (ii) more than 50% of the outstanding voting securities. If
this Proposal is not approved, the above-described fundamental investment
policies will not change. The Board of Trustees recommends a vote in
favor of approving this Proposal.
APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT
(Proposal No. 3)
The Fund has an investment advisory agreement dated March 28, 1991, with
the Manager (the "Current Agreement") which was submitted to and approved
by the Fund's shareholders at a meeting held [March 22, 1991].
At a meeting of the Fund's Board of Trustees held April 18, 1995, the
Board, including a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or the
Manager, approved the terms of a new investment advisory agreement (the
"Proposed Agreement") between the Fund and the Manager. The management
fee under the Proposed Agreement is at an annual rate of: .75% of the
first $200 million of the Fund's average annual net assets, .72% of the
next $200 million, .69% of the next $200 million, .66% of the next $200
million, .60% of the next $200 million, and .50% of aggregate net assets
over $1 billion. All investment advisory services will be performed by
the Manager. The sub-advisory agreement between the Manager and
Massachusetts Mutual Life Insurance Company (the "Sub-Advisor"), under
which the Manager, not the Fund, pays a fee to the Sub-Advisor for
managing the Fund's portfolio securities and making investments decisions
with respect to the Fund's investments, will terminate. If the Proposed
Agreement is approved by the shareholders at this meeting, the Proposed
Agreement will be effective on such date and continue in effect until
December 31, 1995 and thereafter from year to year unless terminated, but
only so long as such continuance is approved in accordance with the
Investment Company Act.
Under the Current Agreement, the management fee payable monthly to the
Manager is computed on the aggregate net assets of the Fund as of the
close of business each day at the annual rate of .50% of the first $100
million of average annual net assets, .45% of the next $200 million, .40%
of the next $200 million, and .35% of aggregate net assets over $500
million. At March 31, 1995, the Fund's assets were $___________. The
Fund paid a management fee of $_________ to the Manager for the fiscal
year ended December 31, 1994.
The investment advisory fee rate included in the Proposed Agreement is
identical to the fee rate payable by Oppenheimer High Yield Fund (total
assets of $____ million at March 31, 1995), Oppenheimer Strategic
Diversified Income Fund ($____ million), Oppenheimer Strategic Income Fund
($____ million), Oppenheimer Strategic Income & Growth Fund ($____
million) and Oppenheimer Strategic Investment Grade Bond Fund ($___
million). Once the Fund is converted to a general bond fund (see Proposal
No. 2, above), the time and effort expended by the Manager's portfolio
management, fund accounting and legal departments on behalf of the Fund
will be essentially the same as the time and effort it expends on behalf
of the above-described bond funds.
The table below compares actual advisory fees and expenses paid by the
Fund under the Current Agreement with the fees that would have been
payable under the Proposed Agreement from January 1, 1994 through December
31, 1994 (unaudited):
Advisory
Fees
Advisory Other Payable
Fees Expenses Under
Actually Actually Proposed
Incurred(a) Incurred Agreement(b) $ Change % Change(c)
Class A Class B
$522,205 $607,566 $786,863 $264,658 23.6% 14.0%
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(a) Computed pursuant to the current fee schedule as described above.
(b) Computed pursuant to the proposed fee scheduled as described above.
(c) As a percent of Total Expenses for Class A and Class B shares,
respectively, for the year ended December 31, 1994.
The ratio of operating expenses to average net assets for Class A shares
for the period from January 1, 1994 through December 31, 1994 was 1.06%.
If the Proposed Agreement had been in effect such ratio would have been
1.31%. The ratio of operating expenses to average net assets for Class
B shares under the Current Agreement and under the Proposed Agreement for
that period would be 1.78% and 2.03%, respectively.
The Proposed Agreement and the Current Agreement (Hereinafter jointly
referred to as the "Agreements") are identical except for the change in
the management fee rates described above and the dates of the Agreements.
Under the Agreements, the Manager supervises the investment operations of
the Fund and the composition of its portfolio and furnishes the Fund
advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities. The Agreements require
the Manager, at its expense, to provide the Fund with adequate office
space, facilities and equipment as well as to provide, and supervise the
activities of, all administrative and clerical personnel required to
provide effective administration for the Fund, including the compilation
and maintenance of records with respect to its operations, the preparation
and filing of specified reports, and 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 Agreements or by
the distributor of the Fund's shares are paid by the Fund. the Agreements
list 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 certificate issuance costs, certain printing and registration costs,
and non-recurring expenses, including litigation.
The Agreements contain no expense limitation. However, independently of
the Agreements, the Manager has undertaken that the total expenses of the
Fund in any fiscal year (including the management fee but excluding taxes,
interest, brokerage fees and any extraordinary non-recurring expenses,
such as litigation) shall not exceed the most stringent applicable
regulatory limitation. At present, that limitation is imposed by
California and limits expenses (with specified exclusions) to 2.5% of the
first $30 million of average annual net assets, 2% of the next $70 million
and 1.5% of average annual net assets in excess of $100 million. the
payment of the management fee at the end of any month will be reduced or
eliminated so that there will not be any accrued but unpaid liability
under this expense limitation. The Manager reserves the right to change
or eliminate this expense limitation at any time.
The Agreements provide that in the absence of willful misfeasance, bad
faith or gross negligence in the performance of its duties or reckless
disregard of its obligations under the Agreements, the Manager shall not
be liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which the Agreements relate.
The Agreements permit 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. 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 by withdrawn.
Brokerage Provisions of the Investment Advisory Agreements. 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. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price.
Under the advisory agreement, the Manager is authorized to select brokers
that provide brokerage and/or research services for the Fund and/or the
other accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged if a good faith determination
is made by the Manager that the commission is fair and reasonable in
relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, and the procedures and rules
described above, allocations of brokerage are made by portfolio managers
of the Manager under the supervision of the Manager's executive officers.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers.
Brokerage commissions are paid primarily for effecting transactions in
listed securities and are otherwise paid only if it appears likely that
a better price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account.
The Manager. The Manager (including a subsidiary) currently manages
investment companies, including other OppenheimerFunds, with assets of
more than $29 billion as of December 31, 1994, and with more than 2.4
million shareholder accounts. The Manager is a wholly-owned subsidiary
of Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company ("MassMutual"). MassMutual
is located at 1295 State Street, Springfield, Massachusetts 01111. OAC
acquired the Manager on October 22, 1990. As indicated below, the common
stock of OAC is owned by (i) certain officers and/or directors of the
Manager, (ii) MassMutual and (iii) another investor. No institution or
person holds 5% or more of OAC's outstanding common stock except
MassMutual. MassMutual has engaged in the life insurance business since
1851. It is the nation's twelfth largest life insurance company by assets
and has an A.M. Best Co. rating of "A++".
The common stock of OAC is divided into three classes. At December 31,
1994, MassMutual held (i) all of the 2,160,000 shares of Class A voting
stock, (ii) 422,023 shares of Class B voting stock, and (iii) 937,403
shares of Class C non-voting stock. This collectively represented 80.2%
of the outstanding common stock and 86.5% of the voting power of OAC as
of that date. Certain officers and/or directors of the Manager held (i)
706,286 shares of the Class B voting stock, representing 16.1% of the
outstanding common stock and 10.9% of the voting power, and (ii) options
acquired without cash payment which, when they become exercisable, allow
the holders to purchase up to 744,282 shares of Class C non-voting stock.
That group includes persons who serve as officers of the Fund and two of
whom (Messrs. Donald W. Spiro and Robert G. Galli) serve as Trustees of
the Fund. Holders of OAC Class B and Class C common stock may put (sell)
their shares and vested options to OAC or MassMutual at a formula price
(based on earnings of the Manager). MassMutual may exercise call
(purchase) options on all outstanding shares of both such classes of
common stock and vested options at the same formula price, according to
a schedule that will commence on September 30, 1995. Since October 1,
1993, the only transactions by persons who serve as Trustees of the Fund
in excess of 1% of the outstanding shares of common stock or options of
OAC were by Mr. Galli, who surrendered to OAC 45,445 stock appreciation
rights issued in tandem with the Class C OAC options for $2,821,736, and
by Mr. Spiro, who sold 50,000 shares of Class B OAC common stock to
MassMutual for $3,740,000, for cash payments by OAC or MassMutual to be
made as follows: one-third of the amount due (i) within 30 days of the
transaction, (ii) by the first anniversary following the transaction (with
interest), and (iii) by the second anniversary following the transaction
(with interest).
The names and principal occupations of the executive officers and
directors of the manager are as follows: Jon S. Fossel, Chief Executive
Officer and Chairman of the Board of Directors; Bridget A. Macaskill,
President, Chief Operating Officer and a director; Donald W. Spiro, a
director and Chairman Emeritus of the Board of Directors; James C. Swain,
Vice Chairman of the Board of Directors; Samuel Freedman, Jr. (Chairman
and a director of SSI), a director; Robert G. Galli, Executive Vice
President and a director; Tilghman G. Pitts, III, Executive Vice President
and a director of the Manager and President of the Distributor; Andrew J.
Donohue, Executive Vice President and General Counsel of the Manager and
the Distributor; Robert Doll, Jr., Executive Vice President; Kenneth C.
Eich, Executive Vice President and Chief Financial Officer; George C.
Bowen, Senior Vice President and Treasurer; Victor Babin, Loretta
McCarthy, Nancy Sperte and Robert G. Zack, Senior Vice Presidents. The
address of Messrs. Bowen, Eich, Freedman and Swain is 3410 South Galena
Street, Denver, Colorado 80231. the address of all other officers is Two
World Trade Center, New York, New York 10048-0203, which is also the
address of the Manager and OAC.
Vote Required. An affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act) of the outstanding voting
securities of the Fund is required for approval of the Proposed Agreement.
Such "majority" vote is defined in the Investment Company Act as the vote
of the holders of the lesser of: (i) 67% or more of the voting securities
present or represented by proxy at the shareholders meeting, if the
holders of more than 50% of the outstanding voting securities are present
or represented by proxy, or (ii) more than 50% of the outstanding voting
securities. The Board of Trustees recommends a vote in favor of approving
the Proposed Investment Advisory Agreement.
APPROVAL OF THE FUND'S CLASS B 12b-1 DISTRIBUTION
AND SERVICE PLAN AND AGREEMENT
(Proposal No. 4)
NOTE: This Proposal applies to Class B Shareholders only.
Class B shares were first offered to the public on May 1, 1993. At that
time, the Fund had adopted a Distribution Plan and Agreement for Class B
shares pursuant to Rule 12b-1 of the Investment Company Act. In June of
1993, the Fund's Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined in the Investment Company
Act) of the Fund and who have no direct or indirect financial interest in
the operation of the Fund's current 12b-1 plans or in any related
agreements ("Independent Trustees"), approved amendments to that plan to
recharacterize it as a distribution and service plan and agreement in
conformity with the National Association of Securities Dealers, Inc.
("NASD") Rule which permits the Fund to pay on an annual basis up to 0.25%
of its average annual net assets as a service fee and up to 0.75% of its
average annual assets as an asset-based sales charge. In February of
1994, that Distribution and Service Plan was further amended by the Fund's
Board of Trustees to eliminate a provision which had required the Fund to
continue to make payments to the Distributor after a termination of the
Distribution and Service Plan. At a meeting of the Fund's Board of
Trustees held February 28, 1995, the Manager proposed the adoption of a
new Distribution and Service Plan and Agreement (the "Distribution and
Service Plan") which is recharacterized as a "compensation type plan"
instead of a "reimbursement type plan." The Fund's Board of Trustees,
including a majority of the Independent Trustees, approved the new
Distribution and Service Plan, subject to shareholder approval, and
determined to recommend the Distribution and Service Plan and Agreement
for approval by the shareholders. A copy of the new Distribution and
Service Plan is attached as Exhibit A to this proxy statement.
Description of the Distribution and Service Plan. Under the Distribution
and Service Plan, the Fund compensates the Distributor for its services
in connection with the distribution of Class B Shares and the personal
service and maintenance of accounts that hold Class B shares. The Fund
pays the Distributor an asset-based sales charge of 0.75% per annum of
Class B shares outstanding for six years or less, and also pays the
Distributor a service fee of 0.25% per annum, each of which is computed
on the average annual net assets of Class B shares of the Fund.
The Distribution and Service Plan provides for payments for two different
distribution-related functions. The Distributor pays certain brokers
dealers, banks or other institutions ("Recipients") a service fee of 0.25%
for personal services to Class B shareholders and maintenance of
shareholder accounts by those Recipients. The services rendered by
Recipients in connection with personal services and the maintenance of
Class B shareholder accounts may include but shall not be limited to, the
following: answering routine inquiries from the Recipient's customers
concerning the Fund, providing such customers with information on their
investment in shares, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund, making the Fund's investment plans
and dividend payment options available, and providing such other
information and customer liaison services and the maintenance of accounts
as the Distributor or the Fund may reasonably request. The Distributor
is permitted under the Distribution and Service Plan to retain service fee
payments to compensate it for rendering such services.
Service fee payments by the Distributor to Recipients are made (i) in
advance for the first year Class B shares are outstanding, following the
purchase of shares, in an amount equal to 0.25% of the net asset value of
the shares purchased by the Recipient or its customers and (ii)
thereafter, on a quarterly basis, computed as of the close of business
each day at an annual rate of 0.25% of the net asset value of Class B
shares held in accounts of the Recipient or its customers. In the event
Class B shares are redeemed less than one year after the date such shares
were sold, the Recipient is obligated to repay to the Distributor on
demand a pro rata portion of such advance service fee payments, based on
the ratio of the remaining period to one year.
The Distribution and Service Plan also provides that the Fund will pay the
Distributor on a monthly basis an asset-based sales charge at an annual
rate of 0.75% of the net asset value of Class B shares outstanding to
compensate it for other services in connection with the distribution of
the Fund's Class B shares. The distribution assistance and administrative
support services rendered by the Distributor in connection with the sales
of Class B shares may include: (i) paying sales commissions to any broker,
dealer, bank or other institution that sells the Fund's Class B shares,
(ii) paying compensation to and expenses of personnel of the Distributor
who support distribution of Class B shares by Recipients, and (iii) paying
or reimbursing the Distributor for interest and other borrowing costs
incurred on any unreimbursed expenses carried forward to subsequent fiscal
quarters. The other distribution assistance in connection with the sale
of Class B shares rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales literature
and prospectuses other than those furnished to current Class B
shareholders, processing Class B share purchase and redemption
transactions and providing such other information in connection with the
distribution of Class B shares as the Distributor or the Fund may
reasonably request.
The Distributor currently pays sales commissions from its own resources
to Recipients at the time of sale equal to 3.75% of the purchase price of
Fund shares sold by such Recipient, and advances the first year service
fee of 0.25%. Asset-based sales charge payments are designed to permit
an investor to purchase shares of the Fund without the assessment of a
front-end sales load and at the same time permit the Distributor to
compensate Recipients in connection with the sale of shares of the Fund.
The Distributor and the Fund anticipate that it will take a number of
years for the Distributor to recoup the sales commissions paid to
Recipients and other distribution-related expenses, from the Fund's
payments to the Distributor under the Distribution and Service Plan, and
from the contingent deferred sales charge deducted from redemption
proceeds for Class B shares redeemed before the end of six years of their
purchase, as described in the Fund's prospectus.
The Distribution and Service Plan contains a provision which provides that
the Board may allow the Fund to continue payments to the Distributor for
Class B shares sold prior to termination of the Distribution and Service
Plan. Pursuant to this provision, payment of the asset-based sales charge
of up to 0.75% per annum could be continued by the Board after
termination.
The Distribution and Service Plan has the effect of increasing annual
expenses of Class B shares of the Fund by up to 1.00% of the class's
average annual net assets from what those expenses would otherwise be.
Payments by the Fund to the Distributor under the current Class B Plan for
the fiscal year ended December 31, 1994 were $ ( % of the
Fund's average net assets represented by Class B shares during that
period), of which the Distributor paid $ to an affiliate of the
Distributor and retained $ as reimbursement for Class B sales
commissions and service fee advances, as well as financing costs; the
balance was paid to Recipients not affiliated with the Distributor.
If the Class B shareholders approve this Proposal, the Distribution and
Service Plan shall, unless terminated as described below, continue in
effect until December 31, 1995 and from year to year thereafter only so
long as such continuance is specifically approved, at least annually, by
the Fund's Board of Trustees and its Independent Trustees by a vote cast
in person at a meeting called for the purpose of voting on such
continuance. The Distribution and Service Plan may be terminated at any
time by a vote of a majority of the Independent Trustees or by a vote of
the holders of a "majority" (as defined in the Investment Company Act) of
the Fund's outstanding Class B shares. The Distribution and Service Plan
may not be amended to increase materially the amount of payments to be
made without approval by Class B shareholders. All material amendments
must be approved by a majority of the Independent Trustees.
Additional Information. The Distribution and Service Plan provides that
while it is in effect, the selection and nomination of those Trustees of
the Fund who are not "interested persons" of the Fund is committed to the
discretion of the Independent Trustees. This does not prevent the
involvement of others in such selection and nomination if the final
decision on any such selection or nomination is approved by a majority of
the Independent Trustees.
Under the Distribution and Service Plan, no payment for service fees 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 Independent Trustees. Initially, the Board of
Trustees has set the fee at the maximum rate and set no minimum amount.
The Distribution and Service Plan permits the Distributor and the Manager
to make additional distribution payments to Recipients from their own
resources (including profits from management fees) at no cost to the Fund.
The Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of distribution assistance payments they make to
Recipients from their own assets.
Analysis of the Distribution and Service Plan by the Board of Trustees.
In considering whether to recommend the Distribution and Service Plan for
approval, the Board requested and evaluated information it deemed
necessary to make an informed determination. The Board found that there
is a reasonable likelihood that the Distribution and Service Plan benefits
the Fund and its Class B shareholders by providing financial incentives
to financial intermediaries to attract new Class B shareholders to the
Fund and by assisting the efforts of the Fund and the Distributor to
service and retain existing shareholders and attract new investors. The
Distribution and Service Plan enables the Fund to be competitive with
similar funds, including funds that impose sales charges, provide
financial incentives to institutions that direct investors to such funds,
and provide shareholder servicing and administrative services.
The Board also focused on the two principal differences in the
Distribution and Service Plan and its predecessor. First, the proposed
plan provides for compensating the Distributor for its distribution
efforts rather than reimbursing it for its costs. While it was possible
for the Fund's Class B 12b-1 payments to be reduced when limited by the
Distributor's expenses (including past expenses which were not previously
reimbursed, and which were, therefore, carried forward with interest)
under a reimbursement-type plan, under normal circumstances this is
unlikely. Therefore, adoption of this Proposal is not expected to
materially increase the Fund's expenses under normal circumstances.
Payments under the proposed Distribution and Service Plan still remain
subject to limits imposed on asset-based sales charges by the NASD. The
Board also noted that investors who purchase Class B shares of the Fund
reasonably expect that they will be paying an asset-based sales charge of
0.75% per annum regardless of the Distributor's actual distribution
expenses.
A second difference in the Distribution and Service Plan over its
predecessor is that the proposed Plan expressly provides that distribution
and administrative support services may be rendered in connection with
Class B shares acquired either in exchange for other OppenheimerFund
shares or by reorganization with another fund. The Board determined that
although these changes are less likely to have significance under a
compensation-type Plan, it should have the flexibility to approve
reorganizations among funds without concern that the transaction would
affect payments to the Distributor for its distribution efforts. The
Board also noted that investors who purchase Class B shares of the Fund
reasonably expect that they will be paying an asset-based sales charge of
0.75% per annum regardless of share exchanges or the occurrence of
reorganizations to which their Fund is a party.
The Board concluded that it is likely that because the Distribution and
Service Plan provides an alternative means for investors to acquire Fund
shares without paying an initial sales charge, it will benefit Class B
shareholders of the Fund by enabling the Fund to maintain or increase its
present asset base in the face of competition from a variety of financial
products. The Trustees recognized that payments made pursuant to the
Distribution and Service Plan would likely be offset in part by economies
of scale associated with the growth of the Fund's assets. With larger
assets, the Class B shareholders should benefit as the Distribution and
Service Plan should help maintain Fund assets at the lower investment
advisory fee rate that is currently in effect. Costs of shareholder
administration and transfer agency operations will be spread among a
larger number of shareholders as the Fund grows larger, thereby reducing
the Fund's expense ratio. The Manager has advised the Trustees that
investing larger amounts of money is made more readily, more efficiently,
and at lesser cost to the Fund. The Board found that a positive flow of
new investment money is desirable primarily to offset the potentially
adverse effects that might result from a pattern of net redemptions. Net
cash outflow increases the likelihood that the Fund will have to dispose
of portfolio securities for other than investment purposes. Net cash
inflow minimizes the need to sell securities to meet redemptions when
investment considerations would dictate otherwise, reduces daily liquidity
requirements, and may assist in a prompt restructuring of the portfolio
without the need to dispose of present holdings.
Stimulation of distribution of mutual fund shares and providing for
shareholder services and account maintenance services by payments to a
mutual fund's distributor and to brokers, dealers, banks and other
financial institutions has become common in the mutual fund industry.
Competition among brokers and dealers for these types of payments has
intensified. The Trustees concluded that promotion, sale and servicing
of mutual fund shares and shareholders through various brokers, dealers,
banks and other financial institutions is a successful way of distributing
shares of a mutual fund. The Trustees concluded that without an effective
means of selling and distributing Fund shares and servicing shareholders
and providing account maintenance, expenses may remain higher on a per
share basis than those of some competing funds. By providing an
alternative means of acquiring Fund shares, the Distribution and Service
Plan proposed for shareholder approval is designed to stimulate sales by
and services from many types of financial institutions.
The Trustees recognize that the Manager will benefit from the Distribution
and Service Plan through larger investment advisory fees resulting from
an increase in Fund assets, since its fees are based upon a percentage of
net assets of the Fund. The Board, including each of the Independent
Trustees, determined that the Distribution and Service Plan is in the best
interests of the Fund, and that its continuation has a reasonable
likelihood of benefiting the Fund and its Class B shareholders. In its
annual review of the Distribution and Service Plan, the Board will
consider the continued appropriateness of the Distribution and Service
Plan, including the level of payments provided for therein.
Vote Required. Pursuant to Rule 12b-1 under the Investment Company Act,
an affirmative vote of the holders of a "majority" (as defined in the
Investment Company Act) of the Fund's Class B voting securities is
required for approval of the Distribution and Service Plan. The
requirements for such "majority" vote under the Investment Company Act are
as described in Proposal No. 2. A vote in favor of this Proposal shall
be deemed a vote to approve the prior Plans and the Distribution and
Service Plan. The Board of Trustees recommends a vote in favor of
approving this Proposal.
ADDITIONAL INFORMATION
The Distributor. Oppenheimer Funds Distributor, Inc., a wholly-owned
subsidiary of the Manager, is the general distributor of the Fund's
shares. The address of the Manager and the Distributor is Two World Trade
Center, New York, New York 10048-0203.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required to hold shareholder meetings on a regular basis.
Special meetings of shareholders may be called from time to time by either
the Fund or the Shareholders (under special conditions described in the
Fund's Statement of Additional Information). Under the proxy rules of the
Securities and Exchange Commission, shareholder proposals which meet
certain conditions may be included in the Fund's proxy statement and proxy
for a particular meeting. Those rules require that for future meetings
the shareholder must be a record or beneficial owner of Fund shares with
a value of at least $1,000 at the time the proposal is submitted and for
one year prior thereto, and must continue to own such shares through the
date on which the meeting is held. Another requirement relates to the
timely receipt by the Fund of any such proposal. Under those rules, a
proposal submitted for inclusion in the Fund's proxy material for the next
meeting after the meeting to which this proxy statement relates must be
received by the Fund a reasonable time before the solicitation is made.
The fact that the Fund receives a proposal from a qualified shareholder
in a timely manner does not ensure its inclusion in the proxy material,
since there are other requirements under the proxy rules for such
inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above that 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, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote the proxy in accordance with their
judgment on such matters.
By Order of the Board of Trustees,
George C. Bowen, Secretary
May 1, 1995
PROXY\285PXY.695
Exhibit A
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER INSURED TAX-EXEMPT FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 15th
day of June, 1995, by and between Oppenheimer Tax-Exempt Fund (the
"Trust") for the account of OPPENHEIMER INSURED TAX-EXEMPT FUND (the
"Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for its
services in connection with the distribution of Shares, and the personal
service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it
is the issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative support
services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms
and provisions of this Plan shall be interpreted and defined in a manner
consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., or its
successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Trust's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other institution as a Recipient, whereupon such entity's rights as
a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that two entities would otherwise qualify as Recipients as to
the same Shares, the Recipient which is the dealer of record on the
Fund's books shall be deemed the Recipient as to such Shares for
purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) within ten (10) days of the end of each month, in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares
computed as of the close of each business day (the "Asset-Based Sales
Charge") outstanding for six years or less (the "Maximum Holding
Period"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing
administrative support services of the type approved by the Board
with respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and Recipients
for providing distribution assistance in connection with the sales
of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor still is not satisfied,
it may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such entity's rights as a third-party
beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than one
(1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by Article III, Section 26,
of the NASD Rules of Fair Practice. In the event Shares are redeemed
less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand
a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding Period
and Minimum Holding Period, if any, and the rate of payments
hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute
sufficient notice. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor
if such affiliated person qualifies as a Recipient.
(c) The Distributor is entitled to retain from the payments
described in Section 3(a) the aggregate amount of (i) the Service Fee
on Shares outstanding for less than the Minimum Holding Period plus
(ii) the Asset-Based Sales Charge on Shares outstanding for not more
than the Maximum Holding Period, in each case computed as of the
close of each business day during that period and subject to
reduction or elimination of such amounts under the limits to which
the Distributor is, or may become, subject under Article III, Section
26, of the NASD Rules of Fair Practice. The distribution assistance
and administrative support services to be rendered by the Distributor
in connection with the Shares may include, but shall not be limited
to, the following: (i) paying sales commissions to any broker,
dealer, bank or other institution that sells Shares, and\or paying
such persons Advance Service Fee Payments in advance of, and\or
greater than, the amount provided for in Section 3(a) of this
Agreement; (ii) paying compensation to and expenses of personnel of
the Distributor who support distribution of Shares by Recipients;
(iii) paying of or reimbursing the Distributor for interest and
other borrowing costs on its unreimbursed expenses at the rate paid
by the Distributor or, if such amounts are financed by the
Distributor from its own resources or by an affiliate, at the rate
of 1% per annum above the prime rate (which shall mean the most
preferential interest rate on corporate loans at large U.S. money
center commercial banks) then being reported in the Eastern edition
of the Wall Street Journal (or if such prime rate is no longer so
reported, such other rate as may be designated from time to time by
the Distributor with the approval of the Independent Trustees); (iv)
other direct distribution costs, including without limitation the
costs of sales literature, advertising and prospectuses (other than
those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this
Section 3. Such services include distribution and administrative
support services rendered in connection with Shares acquired by the
Fund (i) by purchase, (ii) in exchange for shares of another
investment company for which the Distributor serves as distributor
or sub-distributor, or (ii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board should have
reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support
services in connection with the sale of Shares, then the Distributor,
at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is
providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset-Based Sales Charge payments or
from its borrowings.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Trust
who are not "interested persons" of the Fund or the Trust ("Disinterested
Trustees") shall be committed to the discretion of such Disinterested
Trustees. Nothing herein shall prevent the Disinterested Trustees from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust
shall provide written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the
Shares. The reports shall be provided in the frequency requested by the
Board, and shall state whether all provisions of Section 3 of this Plan
have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees cast
in person at a meeting called on February 28, 1995, for the purpose of
voting on this Plan, and shall take effect after approved by Class B
shareholders of the Fund, at which time it shall replace the Fund's
Distribution and Service Plan and Agreement for the Shares dated February
23, 1994. Unless terminated as hereinafter provided, it shall continue
in effect until December 31, 1995 and from year to year thereafter or as
the Board may otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the Class
B Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall be
entitled to payment from the Fund of all or a portion of the Service Fee
and/or the Asset-Based Sales Charge in respect of Shares sold prior to the
effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and
the Fund's property. The Distributor represents that it has notice of the
provisions of the Declaration of Trust of the Trust disclaiming
shareholder and Trustee liability for acts or obligations of the Fund.
OPPENHEIMER TAX-EXEMPT FUND
for the account of
OPPENHEIMER INSURED TAX-EXEMPT FUND
By:____________________________________
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:___________________________________
Katherine P. Feld
Vice President & Secretary
PROXY/285PXY.695
Preliminary Copy
Oppenheimer Integrity Funds Proxy for Shareholders Meeting To
Oppenheimer Investment Grade Be Held June 28, 1995
Bond Fund - Class A Shares
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse
side, date and sign it, and return it
promptly in the accompanying envelope,
which requires no postage if mailed in
the United States.
Please detach at perforation before
mailing.
Oppenheimer Investment Grade Bond Fund - Class A Shares
Proxy For Shareholders Meeting To Be Held June 28, 1995
The undersigned shareholder of Oppenheimer Investment Grade Bond Fund
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen, Rendle
Myer and Scott Farrar, and each of them, as attorneys-in-fact and proxies
of the undersigned, with full power of substitution, to attend the Meeting
of Shareholders of Oppenheimer Integrity Funds and of the Fund to be held
June 28, 1995, at 3410 South Galena Street, Denver, Colorado 80231 at
10:00 A.M., Denver 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 for the election of Trustees and 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 Trustees, which recommends a
vote FOR the election of all nominees for Trustee and FOR each Proposal
on the reverse side. The shares represented hereby will be voted as
indicated on the reverse side or FOR if no choice is indicated.
(over)
285
Oppenheimer Integrity Funds Proxy for Shareholders Meeting To
Oppenheimer Investment Grade Be Held June 28, 1995
Bond Fund - Class A Shares
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and mail your proxy
ballot (this card) in the enclosed
postage-paid envelope today, no matter
how many shares you own. A majority
of the Fund's shares must be
represented in person or by proxy.
Please vote your proxy so your Fund
can avoid the expense of another
mailing.
Please detach at perforation before
mailing.
1. Election of Trustees
____ For all nominees listed _____ Withhold authority
except as marked to the vote for all nominees
contrary at left. listed at left.
R. Avis W. Baker C. Conrad J. Fossel
(A) (B) (C) (D)
R. Kalinowski C. Kast R. Kirchner N. Steel
(E) (F) (G) (H)
C. Swain
(I)
Instruction: To withhold authority to vote for any individual nominee,
line out that nominee's name at left.
2. Ratification of selection of Deloitte & Touche LLP as independent
auditors (Proposal No. 1)
For ____ Against ____ Abstain ____
3. Approval of the proposed changes in fundamental investment policies
(Proposal No. 2)
For ____ Against ____ Abstain ____
4. Approval of new advisory agreement with Oppenheimer Management
Corporation (Proposal No. 3)
For ____ Against ____ Abstain ____
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 title.
Dated: _______________________, 1995
(Month) (Day)
____________________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
285
PROXY/285BAL.695
Preliminary Copy
Oppenheimer Integrity Funds Proxy for Shareholders Meeting To
Oppenheimer Investment Grade Be Held June 28, 1995
Bond Fund - Class B Shares
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse
side, date and sign it, and return it
promptly in the accompanying envelope,
which requires no postage if mailed in
the United States.
Please detach at perforation before
mailing.
Oppenheimer Investment Grade Bond Fund - Class B Shares
Proxy For Shareholders Meeting To Be Held June 28, 1995
The undersigned shareholder of Oppenheimer Investment Grade Bond Fund
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen, Rendle
Myer and Scott Farrar, and each of them, as attorneys-in-fact and proxies
of the undersigned, with full power of substitution, to attend the Meeting
of Shareholders of Oppenheimer Integrity Funds and the Fund to be held
June 14, 1995, at 3410 South Galena Street, Denver, Colorado 80231 at
10:00 A.M., Denver 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 for the election of Trustees and 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 Trustees, which recommends a
vote FOR the election of all nominees for Trustee and FOR each Proposal
on the reverse side. The shares represented hereby will be voted as
indicated on the reverse side or FOR if no choice is indicated.
(over)
286
Oppenheimer Integrity Funds Proxy for Shareholders Meeting To
Oppenheimer Investment Grade Be Held June 28, 1995
Bond Fund - Class B Shares
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and mail your proxy
ballot (this card) in the enclosed
postage-paid envelope today, no matter
how many shares you own. A majority
of the Fund's shares must be
represented in person or by proxy.
Please vote your proxy so your Fund
can avoid the expense of another
mailing.
Please detach at perforation before
mailing.
1. Election of Trustees
____ For all nominees listed _____ Withhold authority
except as marked to the vote for all nominees
contrary at left. listed at left.
R. Avis W. Baker C. Conrad J. Fossel
(A) (B) (C) (D)
R. Kalinowski C. Kast R. Kirchner N. Steel
(E) (F) (G) (H)
C. Swain
(I)
Instruction: To withhold authority to vote for any individual nominee,
line out that nominee's name at left.
2. Ratification of selection of Deloitte & Touche LLP as independent
auditors (Proposal No. 1)
For ____ Against ____ Abstain ____
3. Approval of the proposed changes in fundamental investment policies
(Proposal No. 2)
For ____ Against ____ Abstain ____
4. Approval of new advisory agreement with Oppenheimer Management
Corporation (Proposal No. 3)
For ____ Against ____ Abstain ____
5. Approval of the proposed Class B 12b-1 Distribution and Service Plan
(Proposal No. 4)
For ____ Against ____ Abstain ____
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 title.
Dated: _______________________, 1995
(Month) (Day)
____________________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
286
PROXY/285BAL.695
Preliminary Copy
May 1995
Dear Oppenheimer Investment Grade Bond Fund Class A shareholder:
We have scheduled a shareholder meeting on June 28, 1995 for you to
decide upon some important proposals for the Fund. Your ballot card and
a detailed statement of the issues are enclosed with this letter.
Your vote is very important because these decisions will affect your
investment, and it's your chance to help shape the policies of the Fund.
So we urge you to consider these issues carefully and to make your vote
count.
How do you vote?
To vote, simply complete the ballot by marking your choices and
return it in the postage-paid envelope provided. Remember, it can be
expensive for the Fund -- and ultimately for you as a shareholder -- to
remail ballots if not enough responses are received to conduct the
meeting.
What are the issues?
After consideration, the Board of Trustees, who represent your
interests in the day-to-day management of the Fund, recommend approval of
the following items:
- - Election of Trustees. There are nine Trustees up for reelection on
June 14. You will find detailed information on the members of the
Board in the enclosed proxy statement.
- - Ratification of Auditors. Each year, outside auditors are employed
to review the Fund's financial statements, as explained in the proxy
statement.
- - Change in Certain Fundamental Investment Policies. The fundamental
investment policies described in the prospectus determine the types
of securities that may be purchased by the Fund.
In the wake of last year's turbulent marketplace, the Fund's
investment adviser requests your approval to amend some of these
investment limitations to allow the portfolio manager more
flexibility to diversify the Fund's holdings. Specifically, the
investment adviser recommends that the Fund have the capacity to
invest at least 35% of its total assets in lower-grade debt
securities. Currently, the Fund may invest only in investment grade
debt securities, U.S. government and agency securities, and money
market instruments. A portfolio made up primarily of investment
grade securities generally more sensitive to changes in interest
rates than a portfolio of securities with varying credit quality.
The investment adviser firmly believes the ability to diversify the
Fund's assets in securities of various credit qualities may help
protect your investment against volatility, as well as potentially
add to your investment return over time.
New Investment Advisory Agreement with Oppenheimer Management
Corporation. Oppenheimer Management Corporation, your fund's
adviser, requests your approval of a new investment advisory
agreement. The new agreement would compensate your fund's adviser
at the same, higher rate paid by the other general bond funds within
the OppenheimerFunds family.
Please contact your financial advisor or call at 1-800-525-7048 if
you have any questions.
As always, we appreciate your confidence in OppenheimerFunds and
thank you for allowing us to manage a portion of your investment assets.
Sincerely,
Jon S. Fossel
Preliminary Copy
May 1995
Dear Oppenheimer Investment Grade Bond Fund Class B shareholder:
We have scheduled a shareholder meeting on June 28, 1995 for you to
decide upon some important proposals for the Fund. Your ballot card and
a detailed statement of the issues are enclosed with this letter.
Your vote is very important because these decisions will affect your
investment, and it's your chance to help shape the policies of the Fund.
So we urge you to consider these issues carefully and to make your vote
count.
How do you vote?
To vote, simply complete the ballot by marking your choices and
return it in the postage-paid envelope provided. Remember, it can be
expensive for the Fund -- and ultimately for you as a shareholder -- to
remail ballots if not enough responses are received to conduct the
meeting.
What are the issues?
After consideration, the Board of Trustees, who represent your
interests in the day-to-day management of the Fund, recommend approval of
the following items:
- - Election of Trustees. There are nine Trustees up for reelection on
June 14. You will find detailed information on the members of the
Board in the enclosed proxy statement.
- - Ratification of Auditors. Each year, outside auditors are employed
to review the Fund's financial statements, as explained in the proxy
statement.
- - Change in Certain Fundamental Investment Policies. The fundamental
investment policies described in the prospectus determine the types
of securities that may be purchased by the Fund.
In the wake of last year's turbulent marketplace, the Fund's
investment adviser requests your approval to amend some of these
investment limitations to allow the portfolio manager more
flexibility to diversify the Fund's holdings. Specifically, the
investment adviser recommends that the Fund have the capacity to
invest at least 35% of its total assets in lower-grade debt
securities. Currently, the Fund may invest only in investment grade
debt securities, U.S. government and agency securities, and money
market instruments. A portfolio made up primarily of investment
grade securities generally more sensitive to changes in interest
rates than a portfolio of securities with varying credit quality.
The investment adviser firmly believes the ability to diversify the
Fund's assets in securities of various credit qualities may help
protect your investment against volatility, as well as potentially
add to your investment return over time.
New Investment Advisory Agreement with Oppenheimer Management
Corporation. Oppenheimer Management Corporation, your fund's
adviser, requests your approval of a new investment advisory
agreement. The new agreement would compensate your fund's adviser
at the same, higher rate paid by the other general bond funds within
the OppenheimerFunds family.
- - Changes in Distribution Plan Contracts for Class B Shares.
Currently, the Fund's distributor is reimbursed for a portion of its
distribution expenses from the service fee and the asset-based sales
charge. Your approval is requested to change the way the distributor
is paid so that it is compensated for its distribution efforts at the
same rate. This is a common type of plan in the mutual fund industry
and is not expected to increase fund expenses materially under normal
circumstances. Any distribution costs in excess of that rate will
be the responsibility of the distributor.
Please contact your financial advisor or call at 1-800-525-7048 if
you have any questions.
As always, we appreciate your confidence in OppenheimerFunds and
thank you for allowing us to manage a portion of your investment assets.
Sincerely,
Jon S. Fossel