Registration No. 33-31533
File No. 811-08297
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [ ]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 5 [ X ]
------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. __7 [ X ]
-
--------------------------------------------------------------------------------
OPPENHEIMER MIDCAP FUND
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
--------------------------------------------------------------------------------
6801 South Tucson Way, Englewood, CO 80112
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
--------------------------------------------------------------------------------
303-768-3200
--------------------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)
--------------------------------------------------------------------------------
Andrew J. Donohue, Esq.
--------------------------------------------------------------------------------
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On _________________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ X ] On February 12, 2001 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _______________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Oppenheimer
MidCap Fund
Prospectus dated February 12, 2001
Oppenheimer MidCap Fund is a mutual
fund that seeks capital appreciation
to make your investment grow. It
emphasizes investments in common
stocks of growth companies having a
market capitalization between $2
billion and $11.5 billion.
This Prospectus contains important
information about the Fund's
objective, its investment policies,
strategies and risks. It also contains
important information about how to buy
and sell shares of the Fund and other
account features. Please read this
Prospectus carefully before you
As with all mutual funds, the invest and keep it for future
Securities and Exchange Commission reference about your account.
has not approved or disapproved the
Fund's securities nor has it
determined that this Prospectus is
accurate or complete. It is a
criminal offense to represent
otherwise.
<PAGE>
Contents
About the Fund
The Fund's Investment Objective and Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
How the Fund is Managed
About Your Account
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class N Shares
Class Y Shares
Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Web Site
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights
<PAGE>
ABOUT THE FUND
The Fund's Investment Objective and Strategies WHAT IS THE FUND'S INVESTMENT
OBJECTIVE? The Fund seeks capital appreciation.
WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in equity
securities, such as common and preferred stocks, and securities convertible into
common stock. It invests primarily in equity securities of U.S. companies, but
can also buy foreign stocks. Under normal market conditions, the Fund invests at
least 65% of its total assets in equity securities of growth companies that have
a market capitalization of between $2 billion and $11.5 billion (referred to as
"mid-cap" stocks).
HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the Fund's portfolio manager looks for
high-growth companies using a "bottom-up" stock selection process. The
"bottom-up" approach focuses on fundamental analysis of individual issuers
before considering overall economic, market or industry trends. The stock
selection process includes analysis of other business and economic factors that
might contribute to the company's stock appreciation. The portfolio manager also
looks for companies with revenues growing at above-average rates that might
support and sustain above-average earnings, and companies whose revenue growth
is primarily driven by strength in unit volume sales. While this process and the
inter-relationship of the factors used may change over time, and its
implementation may vary in particular cases, the portfolio manager currently
searches primarily for stocks of companies having the following characteristics:
o Market capitalization between $2 billion and $11.5 billion; o What the
portfolio manager believes to be a high rate of sustainable earnings
growth; o Revenue growth the portfolio manager expects to be at a rate
greater than 10% annually; o An expectation of better-than-anticipated
earnings or positive earnings forecasts.
If the portfolio manager discerns a slowdown in the company's internal
revenue growth or earnings growth or a negative movement in the company's
fundamental economic condition, he will consider selling that stock if
there are other investment alternatives that offer what he believes to be
better appreciation possibilities.
WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors
seeking capital growth in their investment over the long term. Those
investors should be willing to assume the greater risks of short-term share
price fluctuations that are typical for an aggressive growth fund focusing
on mid-cap stock investments. The Fund does not seek current income and the
income from its investments will likely be small. It is not designed for
investors needing current income or preservation of capital. Because of its
focus on long-term growth, the Fund may be appropriate for some portion of
a retirement plan investment. The Fund is not a complete investment
program.
Main Risks of Investing in the Fund
All investments have risks to some degree. The Fund's investments in stocks
are subject to changes in their value from a number of factors described
below. There is also the risk that poor security selection by the Fund's
investment Manager, OppenheimerFunds, Inc., will cause the Fund to
underperform other funds having similar objectives.
RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their
short-term volatility at times may be great. Because the Fund invests
primarily in common stocks, the value of the Fund's portfolio will be
affected by changes in the stock markets and the special economic and other
factors that might primarily affect the prices of mid-cap stocks in the
market. Market risk will affect the Fund's net asset value per share, which
will fluctuate as the values of the Fund's portfolio securities change. A
variety of factors can affect the price of a particular stock and the
prices of individual stocks do not all move in the same direction uniformly
or at the same time. Different stock markets may behave differently from
each other.
Other factors can affect a particular stock's price, such as poor earnings
reports by the issuer, loss of major customers, major litigation against
the issuer, or changes in government regulations affecting the issuer or
its industry.
Industry and Sector Focus. At times the Fund may increase the relative
emphasis of its investments in a particular industry or sector. The prices
of stocks of issuers in a particular industry or sector may go up and down
in response to changes in economic conditions, government regulations,
availability of basic resources or supplies, or other events that affect
that industry or sector more than others. To the extent that the Fund
increases the relative emphasis of its investments in a particular industry
or sector, its share values may fluctuate in response to events affecting
that industry or sector.
Risks of Growth Stocks. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater long-term capital
appreciation but may be more volatile than stocks of larger, more
established companies. They have greater risks if the company's earnings
growth or stock price fails to increase as expected. SPECIAL RISKS OF
MID-CAP STOCKS. While stocks of mid-size companies may offer greater
capital appreciation potential than investments in larger capitalization
companies, they may also present greater risks. Mid-cap stocks tend to be
more sensitive to changes in an issuer's earnings expectations. They tend
to have lower trading volumes than large capitalization securities. As a
result, they may experience more abrupt and erratic price movements. Since
mid-size companies typically reinvest a high proportion of earnings in
their own businesses, they may lack the dividend yield that can help
cushion their total return in a declining market. Many mid-cap stocks are
traded in over-the-counter markets and therefore may be less liquid than
stocks of larger exchange-traded issuers. That means the Fund could have
greater difficulty selling a security at an acceptable price, especially in
periods of market volatility. That factor increases the potential for
losses to the Fund. HOW RISKY IS THE FUND OVERALL? The risks described
above collectively form the overall risk profile of the Fund, and can
affect the value of the Fund's investments, its investment performance and
its prices per share. Particular investments and investment strategies also
have risks. These risks mean that you can lose money by investing in the
Fund. When you redeem your shares, they may be worth more or less than what
you paid for them. There is no assurance that the Fund will achieve its
investment objective. The Fund focuses its investments on mid-cap equity
securities for long-term growth, and in the short term, they can be
volatile. The price of the Fund's shares can go up and down substantially.
The Fund generally does not use income-oriented investments to help cushion
the Fund's total return from changes in stock prices, except for defensive
purposes. In the OppenheimerFunds spectrum, the Fund is an aggressive
investment vehicle, designed for investors willing to assume greater risks
in the hope of achieving greater gains. In the short-term the Fund may be
less volatile than small-cap and emerging markets stock funds, but it may
be subject to greater fluctuations in its share prices than funds that
emphasize large capitalization stocks, or funds that focus on both stocks
and bonds. An investment in the Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of investing in
the Fund, by showing the Fund's performance (for its Class A shares) from
year to year for the full calendar years since the Fund's inception and by
showing how the average annual total return of the Fund's Class A shares
compare to those of a broad-based market index. The Fund's past investment
performance is not necessarily an indication of how the Fund will perform
in the future.
Annual Total Returns (Class A) (as of 12/31/00)
[See appendix to prospectus for data in bar chart showing annual total returns]
Sales charges are not included in the calculations of return in this bar
chart, and if those charges were included, the returns would be less than
those shown. During the period shown in the bar chart, the highest return
(not annualized) for a calendar quarter was (____ )% (_QRT_) and the lowest
return (not annualized) for a calendar quarter was (___)% (_QTR_).
-----------------------------------------------------------
Average Annual Total
-----------------------
Returns for the 1 Year Life of Class
periods
ended December 31, 2000
-----------------------------------------------------------
-----------------------------------------------------------
Class A Shares % %1
-----------------------
-----------------------------------------------------------
-----------------------------------------------------------
Class B Shares % %1
-----------------------
-----------------------------------------------------------
-----------------------------------------------------------
Class C Shares % %1
-----------------------------------------------------------
-----------------------------------------------------------
Class Y Shares % %1
-----------------------------------------------------------
-----------------------------------------------------------
S&P MidCap 400 % %2
-----------------------
----------------------------------------------------------- 1. From
12/1/97. 2. From 11/30/97. The Fund's average annual total returns in the
table include the applicable sales charge for Classes A, B and C shares:
for Class A, the current maximum initial sales charge of 5.75%; for Class
B, the contingent deferred sales charges of 5% (1-year) and 3% (life of
class); and for Class C, the 1% contingent deferred sales charge for the
1-year period. There is no sales charge on Class Y shares. Because Class N
shares were not offered for sale during the Fund's fiscal year ended
October 31, 2000, no performance information is included in the table above
for Class N shares.
The Fund's returns measure the performance of a hypothetical account and
assume that all dividends and capital gains distributions have been
reinvested in additional shares. The performance of the Fund's Class A
shares is compared to the S&P MidCap 400 Index, an unmanaged index of
equity securities that is a measure of mid-cap stock performance. However,
it must be remembered that the performance of the index reflects the
reinvestment of income but does not consider the effects of transaction
costs.
Fees and Expenses of the Fund
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services. Those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales charges
and account transaction charges. The following tables are provided to help
you understand the fees and expenses you may pay if you buy and hold shares
of the Fund. The numbers below are based on the Fund's expenses during its
fiscal year ended October 31, 2000, except that the numbers for Class N
shares, which is a new class of shares, are based on the Fund's anticipated
expenses for Class N shares during the coming year.
Shareholder Fees (charges paid directly from your investment):
<PAGE>
-------------------------------------------------------------------------------
Class A Class B Class C Class N Class Y Shares Shares Shares Shares Shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Maximum Sales Charge (Load) on 5.75% None None None None purchases (as % of
offering price)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as None1 5%2 1% 1%3 None % of the lower of
the original offering price or redemption proceeds)
-------------------------------------------------------------------------------
1. A contingent deferred sales charge may apply to redemptions of investments of
$1 million or more ($500,000 for retirement plan accounts) of Class A shares.
See "How to Buy Shares" for details. Applies to redemptions in first year after
purchase. The contingent deferred sales charge declines to 1% in the sixth year
and is eliminated after that. 2. Applies to shares redeemed within 12 months of
purchase. 3. Applies to shares redeemed within eighteen (18) months of first
purchase.
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
-------------------------------------------------------------------------------
Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Management Fees % % % % %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Distribution and/or Service
(12b-1) % % % % None
Fees
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Other Expenses % % % % %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Annual Operating Expenses % % % % %
-------------------------------------------------------------------------------
Expenses may vary in future years. "Other expenses" include transfer agent
fees, custodial expenses, and accounting and legal expenses the Fund pays.
Class N shares were not offered for sale during the Fund's fiscal year
ended October 31, 2000. The expenses above for Class N shares are based on
the expected expenses for that class of shares for the current fiscal year.
EXAMPLES. The following examples are intended to help you compare the cost
of investing in the Fund with the cost of investing in other mutual funds.
The examples assume that you invest $10,000 in a class of shares of the
Fund for the time periods indicated and reinvest your dividends and
distributions.
The first example assumes that you redeem all of your shares at the end of
those periods. The second example assumes that you keep your shares. Both
examples also assume that your investment has a 5% return each year and
that the class's operating expenses remain the same. Your actual costs may
be higher or lower because expenses will vary over time. Based on these
assumptions your expenses would be as follows:
------------------------------------------------------------------------------
If shares are redeemed: 1 Year 3 Years 5 Years 10 Years1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class A Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class B Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class C Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class N Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class Y Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
If shares are not 1 Year 3 Years 5 Years 10 Years1
redeemed:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class A Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class B Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class C Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class N Shares $ $ $ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class Y Shares $ $ $ $
------------------------------------------------------------------------------
In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C or Class N contingent deferred sales
charges. In the second example, the Class A expenses include the sales charge,
but Class B, Class C and Class N expenses do not include the contingent deferred
sales charges. There are no sales charges on Class Y shares. 1. Class B expenses
for years 7 through 10 are based on Class A expenses, since Class B shares
automatically convert to Class A after 6 years.
About the Fund's Investments
THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's portfolio
among different investments will vary over time based upon the Manager's
evaluation of economic and market trends. The Fund's portfolio might not always
include all of the different types of investments described below. The Statement
of Additional Information contains more detailed information about the Fund's
investment policies and risks.
The Manager tries to reduce risks by carefully researching securities before
they are purchased, and in some cases by using hedging techniques. The Fund
attempts to reduce its exposure to market risks by diversifying its investments,
that is, by not holding a substantial percentage of the stock of any one company
and by not investing too great a percentage of the Fund's assets in any one
company. Also, the Fund does not concentrate 25% or more of its investments in
companies in any one industry.
However, changes in the overall market prices of securities can occur at any
time. The share prices of the Fund will change daily based on changes in market
prices of securities and market conditions, and in response to other economic
events.
Mid-Cap Stock Investments. Mid-cap companies are those that have completed their
initial start-up cycle, and in many cases have established markets and developed
seasoned management teams. The portfolio manager searches for stocks of mid-cap
companies that have the financial stability of larger companies and the high
growth potential associated with smaller companies. The portfolio manager will
not normally invest in stocks of companies in "turnaround" situations until the
company's operating characteristics have improved.
In general, growth companies tend to retain a large part of their earnings for
research, development or investment in capital assets. Therefore, they do not
tend to emphasize paying dividends, and may not pay any dividends for some time.
They are selected for the Fund's portfolio because the Manager believes the
price of the stock will increase over the long term.
The Fund's investments are not limited only to mid-cap issuers, and under normal
market conditions the Fund can invest up to 35% of its assets in stocks of
companies in other market capitalizations, if the Manager believes they offer
opportunities for growth.
The Fund measures the market capitalization of an issuer at the time of
investment to determine if it fits within the Fund's mid cap definition. Because
the relative sizes of companies change over time as the stock market changes,
the Fund's definition of what is a "mid cap" company may change over time as
well. Also, as individual companies grow, they may no longer fit within the
Fund's definition of a "mid cap" issuer after the Fund buys their stock. While
the Fund is not required to sell stocks of companies whose market
capitalizations grow beyond the Fund's mid cap definition, the Manager might
sell some of those holdings to try to lower the median capitalization of its
portfolio (measured on a dollar weighted basis). This could cause the Fund to
realize capital gains on its investments, which could increase taxable
distributions to shareholders. Of course, there is no assurance that mid cap
stocks will grow in value.
Cyclical Opportunities. The Fund may also seek to take advantage of changes in
the business cycle by investing in companies that are sensitive to those changes
if the Manager believes they have growth potential. For example, when the
economy is expanding, companies in the consumer durables and technology sectors
may benefit and offer long-term growth opportunities. Other cyclical industries
include insurance and forest products, for example. The Fund focuses on seeking
growth over the long term, but may seek to take tactical advantage of short-term
market movements or events affecting particular issuers or industries.
CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of
Trustees can change non-fundamental investment policies without shareholder
approval, although significant changes will be described in amendments to this
Prospectus. Fundamental policies are those that cannot be changed without the
approval of a majority of the Fund's outstanding voting shares. The Fund's
objective is a fundamental policy. Other Investment restrictions that are
fundamental policies are listed in the Statement of Additional Information. An
investment policy or technique is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Fund can also use the
investment techniques and strategies described below. The Fund might not always
use all of the different types of techniques and investments described below.
These techniques have certain risks, although some are designed to help reduce
overall investment or market risks.
Other Equity Securities. While the Fund emphasizes investments in common stocks,
it can also buy preferred stocks, warrants and securities convertible into
common stock. The Manager considers some convertible securities to be "equity
equivalents" because of the conversion feature and in that case their rating has
less impact on the investment decision than in the case of other debt
securities.
The Fund will not invest more than 5% of its net assets in convertible
securities that are rated below investment grade by a nationally recognized
rating organization such as Moody's Investors Service or that are assigned a
comparable rating by the Manager. "Investment grade" securities are debt
securities in the four highest ratings categories of ratings organizations or
unrated securities assigned a comparable rating by the Manager. Lower- grade
securities may be subject to greater market fluctuations and risks of loss of
income and principal and have less liquidity than investments in
investment-grade securities. Debt securities are subject to credit risk (the
risk that the issuer will not make timely payments of interest and principal)
and interest rate risk (the risk that the value of the security will fall if
interest rates rise).
Investing in Small, Unseasoned Companies. The Fund can invest in small,
unseasoned companies. These are companies that have been in operation less than
three years, including the operations of any predecessors. These securities may
have limited liquidity, which means that the Fund might not be able to sell them
quickly at an acceptable price. Their prices may be very volatile, especially in
the short term.
Foreign Investing. The Fund can buy securities in any country, including
developed countries and emerging markets. The Fund has no limits on the amount
of its assets that can be invested in foreign securities, but has adopted an
operating policy limiting its investments in foreign securities to 10% of its
total assets. It does not expect to invest substantial amounts of its assets in
foreign stocks.
Special Risks of Foreign Investing. While foreign securities offer special
investment opportunities, there are also special risks. The change in value of a
foreign currency against the U.S. dollar will result in a change in the U.S.
dollar value of securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected by
exchange control regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or other
political and economic factors. Securities in underdeveloped countries may be
more difficult to sell and their prices may be more volatile.
Illiquid and Restricted Securities. Investments may be illiquid because of the
absence of an active trading market. That may make it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933. The Fund will
not invest more than 15% of its net assets in illiquid or restricted securities.
That percentage limitation is not a fundamental policy. Certain restricted
securities that are eligible for resale to qualified institutional purchasers
may not be subject to that limit. The Manager monitors holdings of illiquid
securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity.
Derivative Investments. The Fund can invest in a number of different kinds of
"derivative" investments. In general terms, a derivative investment is an
investment contract whose value depends on (or is derived from) the value of an
underlying asset, interest rate or index. In the broadest sense, options,
futures contracts, and other hedging instruments the Fund might use may be
considered "derivative" investments. In addition to using derivatives for
hedging, the Fund might use other derivative investments because they offer the
potential for increased value. The Fund currently does not use derivatives to a
significant degree and is not required to use them in seeking its objective.
Derivatives have risks. If the issuer of the derivative investment does not pay
the amount due, the Fund can lose money on the investment. The underlying
security or investment on which the derivative is based, and the derivative
itself, may not perform the way the Manager expected it to perform. As a result
of these risks the Fund could realize less principal or income from the
investment than expected or its hedge might be unsuccessful. If that happens,
the Fund's share prices could fall. Certain derivative investments held by the
Fund may be illiquid.
o Hedging. The Fund can buy and sell certain kinds of futures contracts, put and
call options and forward contracts. These are all referred to as "hedging
instruments." The Fund does not currently use hedging extensively and is not
required to do so to seek its objective. It does not use hedging instruments for
speculative purposes. It has limits on the extent of its use of hedging and the
types of hedging instruments that it can use.
Some of these strategies could be used to hedge the Fund's portfolio against
price fluctuations. Other hedging strategies, such as buying futures and call
options, could increase the Fund's exposure to the securities market. Forward
contracts can be used to try to manage foreign currency risks on the Fund's
foreign investments. Foreign currency options can be used to try to protect
against declines in the dollar value of foreign securities the Fund owns, or to
protect against an increase in the dollar cost of buying foreign securities.
There are also special risks in particular hedging strategies. Options trading
involves the payment of premiums and has special tax effects on the Fund. If the
Manager used a hedging instrument at the wrong time or judged market conditions
incorrectly, the hedge might fail and the strategy could reduce the Fund's
return. The Fund could also experience losses if the prices of its futures and
options positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market.
Portfolio Turnover. The Fund can engage in short-term trading to try to achieve
its objective. It might have a portfolio turnover rate in excess of 100%
annually. Portfolio turnover affects brokerage costs the Fund pays. If the Fund
realizes capital gains when it sells its portfolio investments, generally it
must pay out those gains to shareholders, increasing their taxable
distributions. The Financial Highlights table at the end of this prospectus
shows the Fund's portfolio turnover rates during its most recent fiscal period.
Temporary Defensive Investments. In times of unstable or adverse market or
economic conditions, the Fund can invest up to 100% of its assets in temporary
defensive investments. Generally they would be cash equivalents (such as
commercial paper), money market instruments, short-term debt securities, U.S.
government securities, or repurchase agreements. They could include other
investment grade debt securities. The Fund might also hold these types of
securities pending the investment of proceeds from the sale of Fund shares or
portfolio securities or to meet anticipated redemptions of Fund shares. To the
extent the Fund invests defensively in these securities, it might not achieve
its investment objective of capital appreciation.
How the Fund Is Managed THE MANAGER. The Manager chooses the Fund's investments
and handles its day-to-day business. The Manager carries out its duties, subject
to the policies established by the Fund's Board of Trustees, under an investment
advisory agreement that states the Manager's responsibilities. The agreement
sets the fees the Fund pays to the Manager and describes the expenses that the
Fund is responsible to pay to conduct its business.
The Manager has been an investment adviser since January 1960. The Manager
(including subsidiaries) managed more than $125 billion in assets as of December
31, 2000, including other Oppenheimer funds, with more than 5 million
shareholder accounts. The Manager is located at Two World Trade Center, 34th
Floor, New York, New York 10048-0203.
Portfolio Manager. The portfolio manager of the Fund is Bruce Bartlett who is
principally responsible for the day-to-day management of the Fund's portfolio.
Mr. Bartlett has been the Fund's portfolio manager since April 1, 1998, and is a
Vice President of the Fund and of the Manager. Prior to joining the Manager in
1995, Mr. Bartlett was a Vice President and Senior Portfolio Manager of First of
America Investment Corp.
Advisory Fees. Under the investment advisory agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines on additional assets as
the Fund grows: 0.75% of the first $200 million of average annual net assets of
the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million; 0.66%
of the next $200 million; and 0.60% of average annual net assets in excess of
$800 million. The Fund's management fee for the year ended October 31, 2000 was
__% of average annual net assets for each class of shares.
ABOUT YOUR ACCOUNT
How to Buy Shares
HOW ARE SHARES PURCHASED? You can buy shares several ways as
described below. The Fund's Distributor, OppenheimerFunds Distributor, Inc., may
appoint certain servicing agents to accept purchase (and redemption) orders. The
Distributor, in its sole discretion, may reject any purchase order for the
Fund's shares.
Buying Shares Through Your Dealer. You can buy shares through any dealer, broker
or financial institution that has a sales agreement with the Distributor. Your
dealer will place your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an OppenheimerFunds New Account
Application and return it with a check payable to "OppenheimerFunds Distributor,
Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you don't list a
dealer on the application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment with a financial
advisor before you make a purchase to be sure that the Fund is appropriate for
you.
o Paying by Federal Funds Wire. Shares purchased through the Distributor may be
paid for by Federal Funds wire. The minimum investment is $2,500. Before sending
a wire, call the Distributor's Wire Department at 1.800.525.7048 to notify the
Distributor of the wire, and to receive further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink, you pay
for shares by electronic funds transfer from your bank account. Shares are
purchased for your account by a transfer of money from your bank account through
the Automated Clearing House (ACH) system. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by telephone
instructions using OppenheimerFunds PhoneLink, also described below. Please
refer to "AccountLink," below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder Plan
with AccountLink. Details are in the Asset Builder Application and the Statement
of Additional Information.
HOW MUCH MUST YOU INVEST? You can buy Fund shares with a minimum initial
investment of $1,000. You can make additional investments at any time with as
little as $25. There are reduced minimum investments under special investment
plans.
o With Asset Builder Plans, 403(b) plans, Automatic Exchange Plans and military
allotment plans, you can make initial and subsequent investments for as little
as $25. You can make additional purchases of at least $25 through AccountLink. o
Under retirement plans, such as IRAs, pension and profit-sharing plans and
401(k) plans, you can start your account with as little as $250. If your IRA is
started under an Asset Builder Plan, the $25 minimum applies. Additional
purchases may be as little as $25. o The minimum investment requirement does not
apply to reinvesting dividends from the Fund or other Oppenheimer funds (a list
of them appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price, which is
the net asset value per share plus any initial sales charge that applies. The
offering price that applies to a purchase order is based on the next calculation
of the net asset value per share that is made after the Distributor receives the
purchase order at its offices in Colorado, or after any agent appointed by the
Distributor receives the order and sends it to the Distributor.
Net Asset Value. The Fund calculates the net asset value of each class of shares
as of the close of The New York Stock Exchange, on each day the Exchange is open
for trading (referred to in this Prospectus as a "regular business day"). The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier on
some days. All references to time in this Prospectus mean "New York time".
The net asset value per share is determined by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that class that
are outstanding. To determine net asset value, the Fund's Board of Trustees has
established procedures to value the Fund's securities, in general based on
market value. The Board has adopted special procedures for valuing illiquid and
restricted securities and obligations for which market values cannot be readily
obtained. Because some foreign securities trade in markets and exchanges that
operate on weekends and U.S. holidays, the values of some of the Fund's foreign
investments may change significantly on days when investors cannot buy or redeem
shares.
The Offering Price. To receive the offering price for a particular day, in most
cases the Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes that day. If your order is
received on a day when the Exchange is closed or after it has closed, the order
will receive the next offering price that is determined after your order is
received.
Buying Shares Through a Dealer. If you buy shares through a dealer, your dealer
must receive the order by the close of The New York Stock Exchange and transmit
it to the Distributor so that it is received before the Distributor's close of
business on a regular business day (normally 5:00 P.M.) to receive that day's
offering price. Otherwise, the order will receive the next offering price that
is determined.
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors five (5)
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject to
different expenses and will likely have different share prices. When you buy
shares, be sure to specify the class of shares. If you do not choose a class,
your investment will be made in Class A shares.
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on
investments up to $1 million for regular accounts or $500,000 for certain
retirement plans). The amount of that sales charge will vary depending on the
amount you invest. The sales charge rates are listed in "How Can You Buy Class A
Shares?" below.
Class B Shares. If you buy Class B shares, you pay no sales charge at the time
of purchase, but you will pay an annual asset-based sales charge. If you sell
your shares within six years of buying them, you will normally pay a contingent
deferred sales charge. That contingent deferred sales charge varies depending on
how long you own your shares, as described in "How Can You Buy Class B Shares?"
below. Class C Shares. If you buy Class C shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge. If you
sell your shares within 12 months of buying them, you will normally pay a
contingent deferred sales charge of 1%, as described in "How Can You Buy Class C
Shares?" below. Class N Shares. Class N shares are offered only through
retirement plans. If a retirement plan buys Class N shares, it will pay no sales
charge at the time of purchase, but it will pay an annual asset-based sales
charge. If the retirement plan is terminated or the Oppenheimer funds are
terminated as an investment option of the plan and Class N shares are redeemed
within eighteen (18) months after the plan's first purchase of Class N shares of
any Oppenheimer fund, it will normally pay a contingent deferred sales charge of
1%, as described in "How Can I Buy Class N Shares?" below. Class Y Shares. Class
Y shares are offered only to certain institutional investors that have special
agreements with the Distributor.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is best
suited to your needs depends on a number of factors that you should discuss with
your financial advisor. Some factors to consider are how much you plan to invest
and how long you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you should
re-evaluate those factors to see if you should consider another class of shares.
The Fund's operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your investment
results over time.
The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are different.
The discussion below assumes that you will purchase only one class of shares,
and not a combination of shares of different classes. Of course, these examples
are based on approximations of the effect of current sales charges and expenses
projected over time, and do not detail all of the considerations in selecting a
class of shares. You should analyze your options carefully with your financial
advisor before making that choice.
How Long Do You Expect to Hold Your Investment? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. Because
of the effect of class-based expenses, your choice will also depend on how much
you plan to invest. For example, the reduced sales charges available for larger
purchases of Class A shares may, over time, offset the effect of paying an
initial sales charge on your investment, compared to the effect over time of
higher class-based expenses on shares of Class B, Class C or Class N.
o Investing for the Shorter Term. While the Fund is meant to be a long term
investment, you have a relatively short-term investment horizon (that is, you
plan to hold your shares for not more than six years), you should probably
consider purchasing Class A or Class C shares rather than Class B shares. That
is because of the effect of the Class B contingent deferred sales charge if you
redeem within six years, as well as the effect of the Class B asset-based sales
charge on the investment return for that class in the short-term. Class C shares
might be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and the
contingent deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter term, then as
your investment horizon increases toward six years, Class C shares might not be
as advantageous as Class A shares. That is because the annual asset-based sales
charge on Class C shares will have a greater impact on your account over the
longer term than the reduced front-end sales charge available for larger
purchases of Class A shares.
And for investors who invest $1 million or more, in most cases Class A shares
will be the most advantageous choice, no matter how long you intend to hold your
shares. For that reason, the Distributor normally will not accept purchase
orders of $500,000 or more of Class B shares or $1 million or more of Class C
shares from a single investor.
o Investing for the Longer Term. If you are investing less than $100,000 for the
longer- term, for example for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be appropriate.
Are There Differences in Account Features That Matter to You? Some account
features may not be available to Class B, Class C or Class N shareholders. Other
features may not be advisable (because of the effect of the contingent deferred
sales charge) for Class B, Class C or Class N shareholders. Therefore, you
should carefully review how you plan to use your investment account before
deciding which class of shares to buy.
Additionally, the dividends payable to Class B, Class C and Class N shareholders
will be reduced by the additional expenses borne by those classes that are not
borne by Class A shares, such as the Class B, Class C and Class N asset-based
sales charge described below and in the Statement of Additional Information.
Share certificates are not available for Class B, Class C and Class N shares,
and if you are considering using your shares as collateral for a loan, that may
be a factor to consider.
How Do Share Classes Affect Payments to My Broker? A financial advisor may
receive different compensation for selling one class of shares than for selling
another class. It is important to remember that Class B, Class C and Class N
contingent deferred sales charges and asset-based sales charges have the same
purpose as the front-end sales charge on sales of Class A shares: to compensate
the Distributor for commissions and expenses it pays to dealers and financial
institutions for selling shares. The Distributor may pay additional compensation
from its own resources to securities dealers or financial institutions based
upon the value of shares of the Fund owned by the dealer or financial
institution for its own account or for its customers.
SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS. Appendix B to the Statement of
Additional Information details the conditions for the waiver of sales charges
that apply in certain cases, and the special sales charge rates that apply to
purchases of shares of the Fund by certain groups or under specified retirement
plan arrangements or in other special types of transactions. To receive a waiver
or special sales charge rate, you must advise the Distributor when purchasing
shares or the Transfer Agent when redeeming shares that the special conditions
apply.
HOW CAN YOU BUY CLASS A SHARES? Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However, in some
cases, described below, purchases are not subject to an initial sales charge,
and the offering price will be the net asset value. In other cases, reduced
sales charges may be available, as described below or in the Statement of
Additional Information. Out of the amount you invest, the Fund receives the net
asset value to invest for your account.
The sales charge varies depending on the amount of your purchase. A portion of
the sales charge may be retained by the Distributor or allocated to your dealer
as commission. The Distributor reserves the right to reallow the entire
commission to dealers. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
--------------------------------------------------------------------------------
-------------------- Front-End Sales Front-End Sales Commission As
Charge As a Charge As a Percentage of
Amount of Purchase Percentage of Percentage of Net Offering Price
Offering Price Amount Invested
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-------------------- 5.75% 6.10% 4.75%
Less than $25,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$100,000 or more
but less than 3.75% 3.90% 3.00%
$250,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$250,000 or more
but less than 2.50% 2.56% 2.00%
$500,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$500,000 or more
but less than $1 2.00% 2.04% 1.60%
million
--------------------------------------------------------------------------------
Class A Contingent Deferred Sales Charge. There is no initial sales charge on
purchases of Class A shares of any one or more of the Oppenheimer funds
aggregating $1 million or more or for certain purchases by particular types of
retirement plans described in Appendix B to the Statement of Additional
Information. The Distributor pays dealers of record commissions in an amount
equal to 1.0% of purchases of $1 million or more other than by those retirement
accounts. For those retirement plan accounts, the commission is 1.0% of the
first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of purchases
over $5 million, based on the cumulative purchases during the prior 12 months
ending with the current purchase. In either case, the commission will be paid
only on purchases that were not previously subject to a front-end sales charge
and dealer commission.1 That commission will not be paid on purchases of shares
in amounts of $1 million or more (including any right of accumulation) by a
retirement plan that pays for the purchase with the redemption proceeds of Class
C shares of one or more Oppenheimer funds held by the Plan for more than one
year.
If you redeem any of those shares within an 18 month "holding period" measured
from the end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. That sales charge will be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares at the
time of redemption (excluding shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original net asset value of the redeemed
shares. However, the Class A contingent deferred sales charge will not exceed
the aggregate amount of the commissions the Distributor paid to your dealer on
all purchases of Class A shares of all Oppenheimer funds you made that were
subject to the Class A contingent deferred sales charge.
Can You Reduce Class A Share Charges? You may be eligible to buy Class A shares
at reduced sales charge rates under the Fund's "Right of Accumulation" or a
Letter of Intent, as described in "Reduced Sales Charges" in the Statement of
Additional Information.
HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are redeemed
within 6 years of the end of the calendar month of their purchase, a contingent
deferred sales charge will be deducted from the redemption proceeds. The Class B
contingent deferred sales charge is paid to compensate the Distributor for its
expenses of providing distribution-related services to the Fund in connection
with the sale of Class B shares.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule for the Class B contingent deferred sales charge holding
period:
--------------------------------------------------------------------------------
Contingent Deferred Sales Charge on
Years Since Beginning of Month in Which Redemptions in That Year
Purchase Order was Accepted (As % of Amount Subject to Charge)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
0 - 1 5.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 - 2 4.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2 - 3 3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3 - 4 3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4 - 5 2.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5 - 6 1.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6 and following None
--------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the sales charge, all
purchases are considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. Class B shares automatically convert to
Class A shares 72 months after you purchase them. This conversion feature
relieves Class B shareholders of the asset-based sales charge that applies to
Class B shares under the Class B Distribution and Service Plan, described below.
The conversion is based on the relative net asset value of the two classes, and
no sales load or other charge is imposed. When any Class B shares you hold
convert, any other Class B shares that were acquired by reinvesting dividends
and distributions on the converted shares will also convert to Class A shares.
For further information on the conversion feature and its tax implications, see
"Class B Conversion" in the Statement of Additional Information.
HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are redeemed
within a holding period of 12 months from the end of the calendar month of their
purchase, a contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. The Class C contingent deferred sales charge is paid to
compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
WHO CAN BUY CLASS N SHARES? As discussed above, Class N shares are offered only
through retirement plans that purchase Class N shares of one or more Oppenheimer
funds totaling $500,000 or more, or that have assets of $500,000 or more, or 100
or more eligible plan participants. Non-retirement plan investors cannot buy
Class N shares directly. Class N shares are sold at net asset value per share
without an initial sales charge. However, a contingent deferred sales charge of
1.00% will be imposed if the retirement plan is terminated or Class N shares of
all Oppenheimer funds are terminated as an investment option of the plan and
Class N shares are redeemed within eighteen (18) months after the plan's first
purchase of Class N shares of any Oppenheimer fund. See the Statement of
Additional Information for when the contingent deferred sales charge is waived.
The Class N contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to the
Fund in connection with the sale of Class N shares.
WHO CAN BUY CLASS Y SHARES? Class Y shares are sold at net asset value per share
without sales charge directly to certain institutional investors that have
special agreements with the Distributor for this purpose. They may include
insurance companies, registered investment companies and employee benefit plans.
For example, Massachusetts Mutual Life Insurance Company, an affiliate of the
Manager, may purchase Class Y shares of the Fund and other Oppenheimer funds (as
well as Class Y shares of funds advised by MassMutual) for asset allocation
programs, investment companies or separate investment accounts it sponsors and
offers to its customers. Individual investors cannot buy Class Y shares
directly.
An institutional investor that buys Class Y shares for its customers' accounts
may impose charges on those accounts. The procedures for buying, selling,
exchanging and transferring the Fund's other classes of shares (other than the
time those orders must be received by the Distributor or Transfer Agent in
Colorado) and the special account features available to purchases of those other
classes of shares described elsewhere in this Prospectus do not apply to Class Y
shares. Instructions for purchasing, redeeming, exchanging or transferring Class
Y shares must be submitted by the institutional investor, not by its customers
for whose benefit the shares are held.
DISTRIBUTION AND SERVICE (12b-1) PLANS Service Plan for Class A Shares. The Fund
has adopted a Service Plan for Class A shares. It reimburses the Distributor for
a portion of its costs incurred for services provided to accounts that hold
Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25%
of the average annual net assets of Class A shares of the Fund. The Distributor
currently uses all of those fees to compensate dealers, brokers, banks and other
financial institutions quarterly for providing personal service and maintenance
of accounts of their customers that hold Class A shares.
Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to pay the Distributor for its services and costs in distributing Class
B, Class C and Class N shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B shares and on Class C shares and 0.25% per year on Class N shares. The
Distributor also receives a service fee of 0.25% per year under each of the
plans.
The asset-based sales charge and service fees increase Class B and Class C
expenses by 1.00% and Class N expenses by up to 0.50% of the net assets per year
of the respective class. Because these fees are paid out of the Fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than other types of sales charges.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or Class C shares. The
Distributor pays the 0.25% service fees to dealers in advance for the first year
after the shares are sold by the dealer. After the shares have been held for a
year, the Distributor pays the service fees to dealers on a quarterly basis.
The Distributor currently pays sales concessions of 3.75% of the purchase price
of Class B shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class B shares is therefore
4.00% of the purchase price. The Distributor retains the Class B asset-based
sales charge.
The Distributor currently pays sales concessions of 0.75% of the purchase price
of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. The Distributor pays the asset-based sales charge
as an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor currently pays sales concessions of 0.75% of the purchase price
of Class N shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class N shares is therefore
1.00% of the purchase price. The Distributor pays the asset-based sales charge
as an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
Special Investor Services ACCOUNTLINK. You can use our AccountLink feature to
link your Fund account with an account at a U.S. bank or other financial
institution. It must be an Automated Clearing House (ACH) member. AccountLink
lets you:
o transmit funds electronically to purchase shares by telephone (through a
service representative or by PhoneLink) or automatically under Asset Builder
Plans, or o have the Transfer Agent send redemption proceeds or transmit
dividends and distributions directly to your bank account. Please call the
Transfer Agent for more information.
You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1.800.852.8457. The purchase payment
will be debited from your bank account.
AccountLink privileges should be requested on your Application or your dealer's
settlement instructions if you buy your shares through a dealer. After your
account is established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent. AccountLink privileges
will apply to each shareholder listed in the registration on your account as
well as to your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions automatically
using a touch-tone phone. PhoneLink may be used on already-established Fund
accounts after you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number, 1.800.533.3310.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by phone,
by calling 1.800.533.3310. You must have established AccountLink privileges to
link your bank account with the Fund to pay for these purchases. Exchanging
Shares. With the OppenheimerFunds Exchange Privilege, described below, you can
exchange shares automatically by phone from your Fund account to another
OppenheimerFunds account you have already established by calling the special
PhoneLink number. Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will send the
proceeds directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details. CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may
send requests for certain types of account transactions to the Transfer Agent by
fax (telecopier). Please call 1.800.525.7048 for information about which
transactions may be handled this way. Transaction requests submitted by fax are
subject to the same rules and restrictions as written and telephone requests
described in this Prospectus.
OPPENHEIMERFUNDS INTERNET WEB SITE. You can obtain information about the Fund,
as well as your account balance, on the OppenheimerFunds Internet web site, at
www.oppenheimerfunds.com. Additionally, shareholders listed in the account
registration (and the dealer of record) may request certain account transactions
through a special section of that web site. To perform account transactions, you
must first obtain a personal identification number (PIN) by calling the Transfer
Agent at 1.800.533.3310. If you do not want to have Internet account transaction
capability for your account, please call the Transfer Agent at 1.800.525.7048.
At times, the web site may be inaccessible or its transaction features may be
unavailable.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer fund
account on a regular basis. Please call the Transfer Agent or consult the
Statement of Additional Information for details.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares
that you purchased subject to an initial sales charge and to Class A or Class B
shares on which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C, Class N or Class Y shares. You
must be sure to ask the Distributor for this privilege when you send your
payment.
RETIREMENT PLANS. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that can be used
by individuals and employers: Individual Retirement Accounts (IRAs). These
include regular IRAs, Roth IRAs, SIMPLE IRAs, rollover IRAs and Education IRAs.
SEP-IRAs. These are Simplified Employee Pensions Plan IRAs for small business
owners or self-employed individuals. 403(b)(7) Custodial Plans. These are tax
deferred plans for employees of eligible tax-exempt organizations, such as
schools, hospitals and charitable organizations. 401(k) Plans. These are special
retirement plans for businesses. Pension and Profit-Sharing Plans. These plans
are designed for businesses and self-employed individuals.
Please call the Distributor for OppenheimerFunds retirement plan documents,
which include applications and important plan information.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated after your order
is received in proper form (which means that it must comply with the procedures
described below) and is accepted by the Transfer Agent. The Fund lets you sell
your shares by writing a letter or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner or from a retirement
plan account, please call the Transfer Agent first, at 1.800.525.7048, for
assistance.
Certain Requests Require a Signature Guarantee. To protect you and the Fund
from fraud, the following redemption requests must be in writing and must
include a signature guarantee (although there may be other situations that
also require a signature guarantee):
o You wish to redeem $100,000 or more and receive a check o The
redemption check is not payable to all shareholders listed on the account
statement o The redemption check is not sent to the address of record on
your account statement o Shares are being transferred to a Fund account
with a different owner or name o Shares are being redeemed by someone (such
as an Executor) other than the owners
Where Can You Have Your Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including:
o a U.S. bank, trust company, credit union or savings association, o a
foreign bank that has a U.S. correspondent bank, o a U.S. registered dealer
or broker in securities, municipal securities or government securities, o a
U.S. national securities exchange, a registered securities association or a
clearing agency. If you are signing on behalf of a corporation, partnership
or other business or as a fiduciary, you must also include your title in
the signature.
Retirement Plan Accounts. There are special procedures to sell shares in an
OppenheimerFunds retirement plan account. Call the Transfer Agent for a
distribution request form. Special income tax withholding requirements apply to
distributions from retirement plans. You must submit a withholding form with
your redemption request to avoid delay in getting your money and if you do not
want tax withheld. If your employer holds your retirement plan account for you
in the name of the plan, you must ask the plan trustee or administrator to
request the sale of the Fund shares in your plan account.
HOW DO YOU SELL SHARES BY MAIL? Write a letter of instructions that includes: o
Your name o The Fund's name o Your Fund account number (from your account
statement) o The dollar amount or number of shares to be redeemed o Any special
payment instructions o Any share certificates for the shares you are selling o
The signatures of all registered owners exactly as the account is
registered, and
o Any special documents requested by the Transfer Agent to assure proper
authorization of the person asking to sell the shares.
Use the following address Send courier or express mail
for requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217-5270 Denver, Colorado 80231
HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption price
calculated on a particular business day, your call must be received by the
Transfer Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. You may not redeem shares
held in an OppenheimerFunds retirement plan account or under a share certificate
by telephone. o To redeem shares through a service representative, call
1.800.852.8457 o To redeem shares automatically on PhoneLink, call
1.800.533.3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds sent to that bank account.
Are There Limits On Amounts Redeemed By Telephone? Telephone Redemptions Paid by
Check. Up to $100,000 may be redeemed by telephone in any 7-day period. The
check must be payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not available within 30
days of changing the address on an account. Telephone Redemptions Through
AccountLink. There are no dollar limits on telephone redemption proceeds sent to
a bank account designated when you establish AccountLink. Normally the ACH or
Federal Funds transfer to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the shares you
redeemed while they are waiting to be transferred.
CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. If your shares are held in the
name of your dealer, you must redeem them through your dealer.
HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase shares
subject to a Class A, Class B, Class C or Class N contingent deferred sales
charge and redeem any Class A. Class B or Class C shares or all Class N shares
during the applicable holding period for the class of shares, the contingent
deferred sales charge will be deducted from the redemption proceeds (unless you
are eligible for a waiver of that sales charge based on the categories listed in
Appendix C to the Statement of Additional Information and you advise the
Transfer Agent of your eligibility for the waiver when you place your redemption
request).
A contingent deferred sales charge will be based on the lesser of the net asset
value of the redeemed shares at the time of redemption or the original net asset
value. A contingent deferred sales charge is not imposed on:
o the amount of your account value represented by an increase in net asset
value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains
distributions, or
o shares redeemed in the special circumstances described in Appendix B to the
Statement of Additional Information.
To determine whether a contingent deferred sales charge applies to a redemption,
the Fund redeems shares in the following order: 1. shares acquired by
reinvestment of dividends and capital gains distributions, 2. shares held for
the holding period that applies to the class, and 3. shares held the longest
during the holding period.
Contingent deferred sales charges are not charged when you exchange shares of
the Fund for shares of other Oppenheimer funds. However, if you exchange them
within the applicable contingent deferred sales charge holding period, the
holding period will carry over to the fund whose shares you acquire. Similarly,
if you acquire shares of this Fund by exchanging shares of another Oppenheimer
fund that are still subject to a contingent deferred sales charge holding
period, that holding period will carry over to this Fund.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge. Shares
of the Fund can be purchased by exchange of shares of other Oppenheimer funds on
the same basis. To exchange shares, you must meet several conditions: o Shares
of the fund selected for exchange must be available for sale in your state of
residence. o The prospectuses of both funds must offer the exchange privilege. o
You must hold the shares you buy when you establish your account for at least 7
days before you can exchange them. After the account is open 7 days, you can
exchange shares every regular business day. o You must meet the minimum purchase
requirements for the fund whose shares you purchase by exchange. o Before
exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of the Fund may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange Class A
shares of this Fund only for Class A shares of another fund. In some cases,
sales charges may be imposed on exchange transactions. For tax purposes,
exchanges of shares involve a sale of the shares of the fund you own and a
purchase of the shares of the other fund, which may result in a capital gain or
loss. Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
You can find a list of Oppenheimer funds currently available for exchanges in
the Statement of Additional Information or obtain one by calling a service
representative at 1.800.525.7048. That list can change from time to time.
HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing or by
telephone:
Written Exchange Requests. Submit an OppenheimerFunds Exchange Request form,
signed by all owners of the account. Send it to the Transfer Agent at the
address on the Back Cover. Exchanges of shares held under share certificates
cannot be processed unless the Transfer Agent receives the certificates with the
request. Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1.800.852.8457, or by using
PhoneLink for automated exchanges by calling 1.800.533.3310. Telephone exchanges
may be made only between accounts that are registered with the same name(s) and
address. Shares held under certificates may not be exchanged by telephone.
ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on
which the Transfer Agent receives an exchange request that conforms to the
policies described above. It must be received by the close of The New York
Stock Exchange that day, which is normally 4:00 P.M. but may be earlier on
some days. However, either fund may delay the purchase of shares of the
fund you are exchanging into up to seven days if it determines it would be
disadvantaged by a same-day exchange. For example, the receipt of multiple
exchange requests from a "market timer" might require the Fund to sell
securities at a disadvantageous time and/or price. o Because excessive
trading can hurt fund performance and harm shareholders, the Fund reserves
the right to refuse any exchange request that it believes will disadvantage
it, or to refuse multiple exchange requests submitted by a shareholder or
dealer. o The Fund may amend, suspend or terminate the exchange privilege
at any time. The Fund will provide you notice whenever it is required to do
so by applicable law, but it may impose these charges at any time. o If the
Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
More information about the Fund's policies and procedures for buying, selling,
and exchanging shares is contained in the Statement of Additional Information.
The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Trustees at any time the Board believes it is in the Fund's best
interest to do so. Telephone transaction privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund at any time.
If an account has more than one owner, the Fund and the Transfer Agent may rely
on the instructions of any one owner. Telephone privileges apply to each owner
of the account and the dealer representative of record for the account unless
the Transfer Agent receives cancellation instructions from an owner of the
account. The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the Fund will
not be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. Redemption or transfer requests will not be
honored until the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus. Dealers that can perform
account transactions for their clients by participating in NETWORKING through
the National Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions, and are responsible to their
clients who are shareholders of the Fund if the dealer performs any transaction
erroneously or improperly. The redemption price for shares will vary from day to
day because the value of the securities in the Fund's portfolio fluctuates. The
redemption price, which is the net asset value per share, will normally differ
for each class of shares. The redemption value of your shares may be more or
less than their original cost. Payment for redeemed shares ordinarily is made in
cash. It is forwarded by check or through AccountLink (as elected by the
shareholder) within seven days after the Transfer Agent receives redemption
instructions in proper form. However, under unusual circumstances determined by
the Securities and Exchange Commission, payment may be delayed or suspended. For
accounts registered in the name of a broker-dealer, payment will normally be
forwarded within three business days after redemption. The Transfer Agent may
delay forwarding a check or processing a payment via AccountLink for recently
purchased shares, but only until the purchase payment has cleared. That delay
may be as much as 10 days from the date the shares were purchased. That delay
may be avoided if you purchase shares by Federal Funds wire or certified check,
or arrange with your bank to provide telephone or written assurance to the
Transfer Agent that your purchase payment has cleared. Shares may be "redeemed
in kind" under unusual circumstances (such as a lack of liquidity in the Fund's
portfolio to meet redemptions). This means that the redemption proceeds will be
paid with liquid securities from the Fund's portfolio. Involuntary redemptions
of small accounts may be made by the Fund if the account value has fallen below
$200 for reasons other than the fact that the market value of the shares has
dropped, and in some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase orders. "Backup
Withholding" of Federal income tax may be applied against taxable dividends,
distributions and redemption proceeds (including exchanges) if you fail to
furnish the Fund your correct, certified Social Security or Employer
Identification Number when you sign your application, or if you under-report
your income to the Internal Revenue Service. To avoid sending duplicate copies
of materials to households, the Fund will mail only one copy of each prospectus,
annual and semi-annual report to shareholders having the same last name and
address on the Fund's records. The consolidation of these mailings, called
householding, benefits the Fund through reduced mailing expense.
If you want to receive multiple copies of these materials, you may call the
Transfer Agent at 1.800.525.7048. You may also notify the Transfer Agent in
writing. Individual copies of prospectuses and reports will be sent to you
within 30 days after the Transfer Agent receives your request to stop
householding. Dividends, Capital Gains and Taxes DIVIDENDS. The Fund intends to
declare dividends separately for each class of shares from net investment income
annually and to pay dividends to shareholders in December on a date selected by
the Board of Trustees. Dividends and distributions paid on Class A and Class Y
shares will generally be higher than dividends for Class B, Class C and Class N
shares, which normally have higher expenses than Class A and Class Y. The Fund
has no fixed dividend rate and cannot guarantee that it will pay any dividends
or distributions. CAPITAL GAINS. The Fund may realize capital gains on the sale
of portfolio securities. If it does, it may make distributions out of any net
short-term or long-term capital gains in December of each year. The Fund may
make supplemental distributions of dividends and capital gains following the end
of its fiscal year. There can be no assurance that the Fund will pay any capital
gains distributions in a particular year.
WHAT ARE YOUR CHOICES FOR RECEIVING DISTRIBUTIONS? When you open your account,
specify on your application how you want to receive your dividends and
distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all dividends
and capital gains distributions in additional shares of the Fund. Reinvest
Dividends or Capital Gains. You can elect to reinvest some distributions
(dividends, short-term capital gains or long-term capital gains distributions)
in the Fund while receiving other types of distributions by check or having them
sent to your bank account through AccountLink. Receive All Distributions in
Cash. You can elect to receive a check for all dividends and capital gains
distributions or have them sent to your bank through AccountLink. Reinvest Your
Distributions in Another OppenheimerFunds Account. You can reinvest all
distributions in the same class of shares of another OppenheimerFunds account
you have established.
TAXES. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state or
local taxes. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Long-term capital gains are taxable as
long-term capital gains when distributed to shareholders. It does not matter how
long you have held your shares. Whether you reinvest your distributions in
additional shares or take them in cash, the tax treatment is the same.
Every year the Fund will send you and the IRS a statement showing the amount of
any taxable distribution you received in the previous year. Any long-term
capital gains will be separately identified in the tax information the Fund
sends you after the end of the calendar year.
Avoid "Buying a Distribution". If you buy shares on or just before the
ex-dividend date or just before the Fund declares a capital gain distribution,
you will pay the full price for the shares and then receive a portion of the
price back as a taxable dividend or capital gain.
Remember, There May Be Taxes on Transactions. Because the Fund's share prices
fluctuate, you may have a capital gain or loss when you sell or exchange your
shares. A capital gain or loss is the difference between the price you paid for
the shares and the price you received when you sold them. Any capital gain is
subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders.
This information is only a summary of certain federal tax information about your
investment. You should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
Financial Highlights
The Financial Highlights Table is presented to help you understand the Fund's
financial performance since the Fund's inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). The
information for the fiscal year ended October 31, 2000, was audited by KPMG LLP,
the Fund's Independent Auditors, whose report, along with the Fund's financial
statements, is included in the Statement of Additional Information, which is
available on request. For previous years, the information was audited by
PricewaterhouseCoopers LLP.
<PAGE>
INFORMATION AND SERVICES
For More Information On Oppenheimer MidCap Fund The following additional
information about the Fund is available without charge upon request:
STATEMENT OF ADDITIONAL INFORMATION This document includes additional
information about the Fund's investment policies, risks, and operations. It is
incorporated by reference into this Prospectus (which means it is legally part
of this Prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS Additional information about the Fund's
investments and performance is available in the Fund's Annual and Semi-Annual
Reports to shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.
--------------------------------------------------------------------------------
How to Get More Information:
--------------------------------------------------------------------------------
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Fund or your account:
--------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services toll-free:
--------------------------------------------------------------------------------
1.800.525.7048
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
By Mail: Write to:
--------------------------------------------------------------------------------
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
On the Internet:
--------------------------------------------------------------------------------
You can send us a request by e-mail or read or down-load documents on the
OppenheimerFunds web site:
--------------------------------------------------------------------------------
http://www.oppenheimerfunds.com
--------------------------------------------------------------------------------
You can also obtain copies of the Statement of Additional Information and other
Fund documents and reports by visiting the SEC's Public Reference Room in
Washington, D.C. (Phone 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained upon payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected] or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to make
any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any state
or other jurisdiction where it is unlawful to make such an offer.
The Fund's shares are distributed by:
[logo] OppenheimerFunds Distributor, Inc.
SEC File No. 811-08297 The Fund's shares are distributed by:
PR0745.001.0201 (logo)OppenheimerFunds(R)
Printed on recycled paper. Distributor, Inc.
<PAGE>
Appendix to Prospectus of
Oppenheimer MidCap Fund
Graphic Material included in the Prospectus of Oppenheimer MidCap Fund:
"Annual Total Returns (Class A) (% as of 12/31 each year)":
A bar chart will be included in the Prospectus of Oppenheimer MidCap
Fund (the "Fund") depicting the annual total returns of a hypothetical
investment in Class A shares of the Fund for its most recent calendar year,
without deducting sales charges. Set forth below are the relevant data
points that will appear on the bar chart.
Calendar
Year Oppenheimer MidCap Fund
Ended Class A Shares
12/31/98 29.76%
12/31/99 94.87%
12/31/00 %
<PAGE>
--------------------------------------------------------------------------------
Oppenheimer MidCap Fund
--------------------------------------------------------------------------------
6801 South Tucson Way, Englewood, Colorado 80112
1.800.525.7048
Statement of Additional Information dated February 12, 2001
This Statement of Additional Information is not a Prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated February 12, 2001. It should be read together with the
Prospectus. You can obtain the Prospectus by writing to the Fund's Transfer
Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above, or by
downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.
Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks.. 2
The Fund's Investment Policies..................................... 2
Other Investment Techniques and Strategies......................... 6
Investment Restrictions............................................ 20
How the Fund is Managed ............................................... 21
Organization and History........................................... 21
Trustees and Officers of the Fund.................................. 23
The Manager........................................................ 28
Brokerage Policies of the Fund......................................... 29
Distribution and Service Plans......................................... 31
Performance of the Fund................................................ 34
About Your Account
How To Buy Shares...................................................... 38
How To Sell Shares..................................................... 47
How To Exchange Shares................................................. 51
Dividends, Capital Gains and Taxes..................................... 54
Additional Information About the Fund.................................. 55
Financial Information About the Fund
Independent Auditor's Report........................................... 57
Financial Statements................................................... 58
Appendix A: Industry Classifications................................... A-1
Appendix B: Special Sales Charge Arrangements and Waivers.............. B-1
<PAGE>
ABOUT THE FUND
Additional Information About the Fund's Investment Policies and Risks
The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those
policies and risks and the types of securities that the Fund's investment
Manager, OppenheimerFunds, Inc., can select for the Fund. Additional
information is also provided about the strategies that the Fund may use to
try to achieve its objective.
The Fund's Investment Policies.
Policies. The composition of the Fund's portfolio and the techniques and
strategies that the Manager may use in selecting portfolio securities will vary
over time. The Fund is not required to use all of the investment techniques and
strategies described below at all times in seeking its goal. It may use some of
the special investment techniques and strategies at some times or not at all.
|X| Cyclical Opportunities. The Fund might also seek to take advantage
of changes in the business cycle by investing in companies that are
sensitive to those changes if the Manager believes they have growth
potential. For example, when the economy is expanding, companies in the
consumer durables and technology sectors might benefit and offer long-term
growth opportunities. Other cyclical industries include insurance, for
example. The fund focuses on seeking growth over the long term, but could
seek to take tactical advantage of short-term market movements or events
affecting particular issuers or industries.
|X| Investments in Equity Securities. The Fund focuses its investments
in equity securities of mid-cap growth companies. Equity securities include
common stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. The Fund's investments will primarily
include stocks of companies having a market capitalization between $2
billion and $11.5 billion, generally measured at the time of the Fund's
investment. However, the Fund is not required to sell securities of an
issuer it holds if the issuer's capitalization exceeds $11.5 billion.
The Fund can also invest a portion of its assets in securities of
issuers having a market capitalization greater than $5 billion. At times,
in the Manager's view, the market may favor or disfavor securities of
issuers of a particular capitalization range. Therefore although the Fund
normally invests at least 65% of its assets in equity securities of mid-cap
issuers, the Fund may change the proportion of its equity investments in
securities of different capitalization ranges, based upon the Manager's
judgment of where the best market opportunities are to seek the Fund's
objective.
Growth companies might be providing new products or services that
could enable them to capture a dominant or important market position. They
may have a special area of expertise or the capability to take advantage of
changes in demographic factors in a more profitable way than larger, more
established companies.
Growth companies tend to retain a large part of their earnings for
research, development or investment in capital assets. Therefore, they do
not tend to emphasize paying dividends, and may not pay any dividends for
some time. They are selected for the Fund's portfolio because the Manager
believes the price of the stock will increase over the long term.
Current income is not a criterion used to select portfolio securities.
However, certain debt securities may be selected for the Fund's portfolio
for defensive purposes (including debt securities that the Manager believes
may offer some opportunities for capital appreciation when stocks are
disfavored).
In general, securities of mid-cap issuers may be subject to greater price
volatility in general than securities of large-cap companies. Therefore, to the
degree that the Fund has investments in medium capitalization companies at times
of market volatility, the Fund's share price may fluctuate more than funds
holding large cap securities.
|_| Over-the-Counter Securities. Mid-cap growth companies that are
growth companies may offer greater opportunities for capital appreciation
than securities of large, more established companies. However, securities
of mid-cap companies also involve greater risks than securities of larger
companies. Securities of medium capitalization issuers may trade on
securities exchanges or in the over-the-counter market. The
over-the-counter markets, both in the U.S. and abroad, may have less
liquidity than securities exchanges. That lack of liquidity can affect the
price the Fund is able to obtain when it wants to sell a security, because
if there are fewer buyers and less demand for a particular security, the
Fund might not be able to sell it at an acceptable price or might have to
reduce the price in order to dispose of the security.
In the U.S., the principal over-the-counter market is the NASDAQ Stock Market,
Inc., which is regulated by the National Association of Securities Dealers, Inc.
It consists of an electronic quotation system for certain securities, and a
security must have at least two market makers to be included in NASDAQ. Other
over-the-counter markets exist in the U.S., as well as those abroad, wherever a
dealer is willing to make a market in a particular security.
|_| Convertible Securities. Convertible securities are debt securities
that are convertible into an issuer's common stock. Convertible securities
rank senior to common stock in a corporation's capital structure and
therefore are subject to less risk than common stock in case of the
issuer's bankruptcy or liquidation.
The value of a convertible security is a function of its "investment
value" and its "conversion value." If the investment value exceeds the
conversion value, the security will behave more like a debt security, and
the security's price will likely increase when interest rates fall and
decrease when interest rates rise. If the conversion value exceeds the
investment value, the security will behave more like an equity security: it
will likely sell at a premium over its conversion value, and its price will
tend to fluctuate directly with the price of the underlying security.
While convertible securities are a form of debt security, in many
cases their conversion feature (allowing conversion into equity securities)
causes them to be regarded more as "equity equivalents." As a result, the
rating assigned to the security has less impact on the Manager's investment
decision with respect to convertible securities than in the case of
non-convertible fixed income securities. To determine whether convertible
securities should be regarded as "equity equivalents," the Manager examines
the following factors:
(1) whether, at the option of the investor, the convertible security can be
exchanged for a fixed number of shares of common stock of the issuer, (2)
whether the issuer of the convertible securities has restated its earnings per
share of common stock on a fully diluted basis (considering the effect of
conversion of the convertible securities), and (3) the extent to which the
convertible security may be a defensive "equity substitute," providing the
ability to participate in any appreciation in the price of the issuer's common
stock.
|_| Preferred Stock. Preferred stock, unlike common stock, has a
stated dividend rate payable from the corporation's earnings. Preferred
stock dividends may be cumulative or non-cumulative. "Cumulative" dividend
provisions require all or a portion of prior unpaid dividends to be paid
before dividends can be paid on the issuer's common stock. Preferred stock
may be "participating" stock, which means that it may be entitled to a
dividend exceeding the stated dividend in certain cases.
If interest rates rise, the fixed dividend on preferred stocks may be
less attractive, causing the price of preferred stocks to decline.
Preferred stock may have mandatory sinking fund provisions, as well as
provisions allowing calls or redemptions prior to maturity, which can also
have a negative impact on prices when interest rates decline. Preferred
stock generally has a preference over common stock on the distribution of a
corporation's assets in the event of liquidation of the corporation. The
rights of preferred stock on distribution of a corporation's assets in the
event of a liquidation are generally subordinate to the rights associated
with a corporation's debt securities.
|_| Credit Risk. Convertible securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a debt to make interest
or principal payments on the security as they become due. If the issuer
fails to pay interest, the Fund's income may be reduced and if the issuer
fails to repay principal, the value of that bond and of the Fund's shares
may be reduced. The Manager may rely to some extent on credit ratings by
nationally recognized ratings agencies in evaluating the credit risk of
securities selected for the Fund's portfolio. It may also use its own
research and analysis. Many factors affect an issuer's ability to make
timely payments, and the credit risks of a particular security may change
over time. The Fund may invest in higher-yielding lower-grade debt
securities (that is, securities below investment grade), which have special
risks. Those are securities rated below the four highest rating categories
of Standard & Poor's Rating Service or Moody's Investors Service, Inc., or
equivalent ratings of other rating agencies or ratings assigned to a
security by the Manager.
|_| Special Risks of Lower-Grade Securities. "Lower-grade" debt
securities are those rated below "investment grade" which means they have a
rating lower than "Baa" by Moody's or lower than "BBB" by Standard &
Poor's, or similar ratings by other rating organizations. If they are
unrated, and are determined by the Manager to be of comparable quality to
debt securities rated below investment grade, they are included in
limitation on the percentage of the Fund's assets that can be invested in
lower-grade securities.
Among the special credit risks of lower-grade securities is the
greater risk that the issuer may default on its obligation to pay interest
or to repay principal than in the case of investment grade securities. The
issuer's low creditworthiness may increase the potential for insolvency. An
overall decline in values in the high yield bond market is also more likely
during a period of general economic downturn. An economic downturn or an
increase in interest rates could severely disrupt the market for high yield
bonds, adversely affecting the values of outstanding bonds as well as the
ability of issuers to pay interest or repay principal. In the case of
foreign high yield bonds, these risks are in addition to the special risk
of foreign investing discussed in the Prospectus and in this Statement of
Additional Information. To the extent they can be converted into stock,
convertible securities may be less subject to some of these risks than
non-convertible high yield bonds, since stock may be more liquid and less
affected by some of these risk factors.
While securities rated "Baa" by Moody's or "BBB" by Standard and
Poor's are investment grade and are not regarded as junk bonds, those
securities may be subject to special risks, and have some speculative
characteristics.
|_| Interest Rate Risks. In addition to credit risks, convertible debt
securities are subject to changes in value when prevailing interest rates
change. When interest rates fall, the values of outstanding debt securities
generally rise, and the bonds may sell for more than their face amount.
When interest rates rise, the values of outstanding debt securities
generally decline, and the bonds may sell at a discount from their face
amount. The magnitude of these price changes is generally greater for bonds
with longer maturities. Therefore, when the average maturity of the Fund's
debt securities is longer, its share price may fluctuate more when interest
rates change.
|_| Rights and Warrants. The Fund can invest up to 5% of its net
assets in warrants or rights. That 5% limitation does not apply to warrants
and rights the Fund has acquired as part of units of securities or that are
attached to other securities that the Fund buys. Warrants basically are
options to purchase equity securities at specific prices valid for a
specific period of time. Their prices do not necessarily move parallel to
the prices of the underlying securities. Rights are similar to warrants,
but normally have a short duration and are distributed directly by the
issuer to its shareholders. Rights and warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
|X| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its last fiscal
period. For example, if a fund sold all of its securities during the year,
its portfolio turnover rate would have been 100%. The Fund's portfolio
turnover rate will fluctuate from year to year. The Fund may have a
portfolio turnover rate of more than 100% annually.
Increased portfolio turnover creates higher brokerage and transaction
costs for the Fund, which can reduce its overall performance. Additionally,
the realization of capital gains from selling portfolio securities may
result in distributions of taxable long-term capital gains to shareholders,
since the Fund will normally distribute all of its capital gains realized
each year, to avoid excise taxes under the Internal Revenue Code.
Other Investment Techniques and Strategies. In seeking its objective, the Fund
from time to time can use the types of investment strategies and investments
described below. It is not required to use all of these strategies at all times,
and at times may not use them.
|X| Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in foreign over-the-counter
markets. The Fund can purchase equity and debt securities (which may be
denominated in U.S. dollars or non-U.S. currencies) issued by foreign
corporations, or that are issued or guaranteed by certain supranational
entities (described below), or foreign governments or their agencies or
instrumentalities. These include securities issued by U.S. corporations
denominated in non-U.S. currencies. In normal market conditions the Fund
does not expect to hold significant amounts of foreign debt securities.
Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations. That is
because they are not subject to some of the special considerations and
risks, discussed below, that apply to foreign securities traded and held
abroad.
Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers. They
include the opportunity to invest in foreign issuers that appear to offer
growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce fluctuations
in portfolio value by taking advantage of foreign stock markets that do not
move in a manner parallel to U.S. markets. The Fund will hold foreign
currency only in connection with the purchase or sale of foreign
securities.
|_| Risks of Foreign Investing. Investments in foreign securities may
offer special opportunities for investing but also present special
additional risks and considerations not typically associated with
investments in domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes; o fluctuation in value of foreign
investments due to changes in currency rates or currency control regulations
(for example, currency blockage); o transaction charges for currency exchange; o
lack of public information about foreign issuers; o lack of uniform accounting,
auditing and financial reporting standards in foreign countries comparable to
those applicable to domestic issuers; o less volume on foreign exchanges than on
U.S. exchanges; o greater volatility and less liquidity on foreign markets than
in the U.S.; o less governmental regulation of foreign issuers, stock exchanges
and brokers than in the U.S.; o greater difficulties in commencing lawsuits; o
higher brokerage commission rates than in the U.S.; o increased risks of delays
in settlement of portfolio transactions or loss of certificates for portfolio
securities; o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse diplomatic
developments; and o unfavorable differences between the U.S. economy and foreign
economies.
In the past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.
|_| Special Risks of Emerging Markets. Emerging and developing markets
abroad may also offer special opportunities for growth investing but have
greater risks than more developed foreign markets, such as those in Europe,
Canada, Australia, New Zealand and Japan. There may be even less liquidity
in their securities markets, and settlements of purchases and sales of
securities may be subject to additional delays. They are subject to greater
risks of limitations on the repatriation of income and profits because of
currency restrictions imposed by local governments. Those countries may
also be subject to the risk of greater political and economic instability,
which can greatly affect the volatility of prices of securities in those
countries.
|X| Investing in Small, Unseasoned Companies. The Fund can invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, including the operations of
any predecessors. Securities of these companies may be subject to
volatility in their prices. They may have a limited trading market, which
may adversely affect the Fund's ability to dispose of them and can reduce
the price the Fund might be able to obtain for them. Other investors that
own a security issued by a small, unseasoned issuer for which there is
limited liquidity might trade the security when the Fund is attempting to
dispose of its holdings of that security. In that case the Fund might
receive a lower price for its holdings than might otherwise be obtained.
These are more speculative securities and can increase the Fund's overall
portfolio risks.
|X| Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It might do so for liquidity purposes to meet
anticipated redemptions of Fund shares, or pending the investment of the
proceeds from sales of Fund shares, or pending the settlement of portfolio
securities transactions, or for temporary defensive purposes, as described
below.
In a repurchase transaction, the Fund buys a security from, and
simultaneously resells it to, an approved vendor for delivery on an
agreed-upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. Approved vendors
include U.S. commercial banks, U.S. branches of foreign banks, or
broker-dealers that have been designated as primary dealers in government
securities. They must meet credit requirements set by the Fund's Board of
Trustees from time to time.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. The Fund will
not enter into a repurchase agreement that causes more than 15% of its net
assets to be subject to repurchase agreements having a maturity beyond
seven days. There is no limit on the amount of the Fund's net assets that
may be subject to repurchase agreements having maturities of seven days or
less.
Repurchase agreements, considered "loans" under the Investment Company
Act, are collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase
price to fully collateralize the repayment obligation. However, if the
vendor fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience losses if
there is any delay in its ability to do so. The Manager will monitor the
vendor's creditworthiness to confirm that the vendor is financially sound
and will continuously monitor the collateral's value.
|X| Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. To enable
the Fund to sell its holdings of a restricted security not registered under
the Securities Act of 1933, the Fund may have to cause those securities to
be registered. The expenses of registering restricted securities may be
negotiated by the Fund with the issuer at the time the Fund buys the
securities. When the Fund must arrange registration because the Fund wishes
to sell the security, a considerable period may elapse between the time the
decision is made to sell the security and the time the security is
registered so that the Fund could sell it. The Fund would bear the risks of
any downward price fluctuation during that period.
The Fund can also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions might limit the Fund's ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.
The Fund has limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions are
not fundamental policies and do not limit purchases of restricted
securities that are eligible for sale to qualified institutional purchasers
under Rule 144A of the Securities Act of 1933, if those securities have
been determined to be liquid by the Manager under Board-approved
guidelines. Those guidelines take into account the trading activity for
such securities and the availability of reliable pricing information, among
other factors. If there is a lack of trading interest in a particular Rule
144A security, the Fund's holdings of that security may be considered to be
illiquid. Illiquid securities include repurchase agreements maturing in
more than seven days.
|X| Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund can lend its portfolio securities to brokers, dealers
and other types of financial institutions approved by the Fund's Board of
Trustees. These loans are limited to not more than 25% of the value of the
Fund's total assets. The Fund currently does not intend to engage in loans
of securities, but if it does so, such loans will not likely exceed 5% of
the Fund's total assets.
There are some risks in connection with securities lending. The Fund
might experience a delay in receiving additional collateral to secure a
loan, or a delay in recovery of the loaned securities if the borrower
defaults. The Fund must receive collateral for a loan. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the value of the
loaned securities. It must consist of cash, bank letters of credit,
securities of the U.S. Government or its agencies or instrumentalities, or
other cash equivalents in which the Fund is permitted to invest. To be
acceptable as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Fund if the demand meets the terms of the letter.
The terms of the letter of credit and the issuing bank both must be
satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the
dividends or interest on loaned securities. It also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on any short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees in
connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund
to reacquire loaned securities on five days' notice or in time to vote on
any important matter.
|X| Borrowing for Leverage. The Fund has the ability to borrow up to
10% of the value of its net assets from banks on an unsecured basis to
invest the borrowed funds in portfolio securities. This speculative
technique is known as "leverage." The Fund may borrow only from banks.
Under current regulatory requirements, borrowings can be made only to the
extent that the value of the Fund's assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings (including the
proposed borrowing). If the value of the Fund's assets fails to meet this
300% asset coverage requirement, the Fund will reduce its bank debt within
three days to meet the requirement. To do so, the Fund might have to sell a
portion of its investments at a disadvantageous time.
The Fund will pay interest on these loans, and that interest expense
will raise the overall expenses of the Fund and reduce its returns. If it
does borrow, its expenses will be greater than comparable funds that do not
borrow for leverage. Additionally, the Fund's net asset value per share
might fluctuate more than that of funds that do not borrow. Currently, the
Fund does not contemplate using this technique, but if it does so, it will
not likely do so to a substantial degree.
|X| Derivatives. The Fund can invest in a variety of derivative
investments to seek income for liquidity needs or for hedging purposes.
Some derivative investments the Fund can use are the hedging instruments
described below in this Statement of Additional Information. However, the
Fund does not use, and does not currently contemplate using, derivatives or
hedging instruments to a significant degree and is not obligated to use
them in seeking its objective.
Some of the derivative investments the Fund can use include "debt
exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the debt security is exchanged for
common stock of the issuer or it is payable in an amount based on the price
of the issuer's common stock at the time of maturity. Both alternatives
present a risk that the amount payable at maturity will be less than the
principal amount of the debt because the price of the issuer's common stock
might not be as high as the Manager expected.
|X| Investment in Other Investment Companies. The Fund can invest up
to 10% of its total assets in shares of other investment companies. It can
invest up to 5% of its total assets in any one investment company, but
cannot own more than 3% of the outstanding voting securities of that
investment company. These limitations do not apply to shares acquired in a
merger, consolidation, reorganization or acquisition.
Investment in another investment company may involve the payment of
substantial premiums above the value of such investment company's portfolio
securities and is subject to limitations under the Investment Company Act.
The Fund does not intend to invest in other investment companies unless the
Manager believes that the potential benefits of the investment justify the
payment of any premiums or sales charges. As a shareholder in an investment
company, the Fund would be subject to its ratable share of that investment
company's expenses, including its advisory and administration fees. At the
same time, the Fund would bear its own management fees and other expenses.
|X| Hedging. Although the Fund does not anticipate the extensive use
of hedging instruments, the Fund can use hedging instruments. It is not
required to do so in seeking its goal. To attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons,
the Fund could:
|_| sell futures contracts,
|_| buy puts on such futures or on securities, or
|_| write covered calls on securities or futures. Covered calls can also
be used to seek income, but the Manager does not expect to engage
extensively in that practice.
The Fund can use hedging to establish a position in the securities
market as a temporary substitute for purchasing particular securities. In
that case the Fund would normally seek to purchase the securities and then
terminate that hedging position. The Fund might also use this type of hedge
to attempt to protect against the possibility that its portfolio securities
would not be fully included in a rise in value of the market. To do so the
Fund could:
|_| buy futures, or
|_| buy calls on such futures or on securities.
The Fund's strategy of hedging with futures and options on futures
will be incidental to the Fund's activities in the underlying cash market.
The particular hedging instruments the Fund can use are described below.
The Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective and are permissible under applicable regulations
governing the Fund.
|_| Futures. The Fund can buy and sell futures contracts that relate
to (1) stock indices (these are referred to as "stock index futures"), (2)
foreign currencies (these are referred to as "forward contracts"), and (3)
commodities (these are referred to as "commodity futures").
A broadly-based stock index is used as the basis for trading stock
index futures. In some cases stock indices may be based on stocks of
issuers in a particular industry or group of industries. A stock index
assigns relative values to the common stocks included in the index and its
value fluctuates in response to the changes in value of the underlying
stocks. A stock index cannot be purchased or sold directly. These contracts
obligate the seller to deliver, and the purchaser to take cash to settle
the futures obligation. There is no delivery of the underlying securities
to settle the obligation.
The Fund can invest a portion of its assets in commodity future
contracts. Commodity futures may be based upon commodities within five main
commodity groups: (1) energy, which includes crude oil, natural gas,
gasoline and heating oil; (2) livestock, which includes cattle and hogs;
(3) agriculture, which includes wheat, corn, soybeans, cotton, coffee,
sugar and cocoa; (4) industrial metals, which includes aluminum, copper,
lead, nickel, tin and zinc; and (5) precious metals, which includes gold,
platinum and silver. The Fund may purchase and sell commodity futures
contracts, options on futures contracts and options and futures on
commodity indices with respect to these five main commodity groups and the
individual commodities within each group, as well as other types of
commodities.
No money is paid or received by the Fund on the purchase or sale of a
future. Upon entering into a futures transaction, the Fund will be required
to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with the
Fund's Custodian bank in an account registered in the futures broker's
name. However, the futures broker can gain access to that account only
under specified conditions. As the future is marked to market (that is, its
value on the Fund's books is changed) to reflect changes in its market
value, subsequent margin payments, called variation margin, will be paid to
or by the futures broker daily.
At any time prior to expiration of the future, the Fund may elect to
close out its position by taking an opposite position, at which time a
final determination of variation margin is made and any additional cash
must be paid by or released to the Fund. Any loss or gain on the future is
then realized by the Fund for tax purposes. All futures transactions
(except forward contracts) are effected through a clearinghouse associated
with the exchange on which the contracts are traded.
|_| Put and Call Options. The Fund can buy and sell certain kinds of
put options ("puts") and call options ("calls"). The fund can buy and sell
exchange-traded and over-the-counter put and call options, including
options on indices, securities, currencies, commodities and futures.
|_| Writing Covered Call Options. The Fund can write (that is, sell)
covered calls. If the Fund sells a call option, it must be covered. That
means the Fund must own the security subject to the call while the call is
outstanding, or, for certain types of calls, the call may be covered by
segregating liquid assets to enable the Fund to satisfy its obligations if
the call is exercised. Not more than 25% of the Fund's total assets may be
subject to calls the Fund writes.
When the Fund writes a call, it receives cash (a premium). In the case
of a call on a security, the Fund agrees to sell the underlying security to
a purchaser of a corresponding call on the same security during the call
period at a fixed exercise price regardless of market price changes during
the call period. The call period is usually not more than nine months. The
exercise price may differ from the market price of the underlying security.
The Fund has the risk of loss that the price of the underlying security may
decline during the call period. That risk may be offset to some extent by
the premium the Fund receives. If the value of the investment does not rise
above the call price, it is likely that the call will lapse without being
exercised. In that case the Fund would keep the cash premium and the
investment.
When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash
equal to the difference between the closing price of the call and the
exercise price, multiplied by a specified multiple that determines the
total value of the call for each point of difference. If the value of the
underlying investment does not rise above the call price it is likely that
the call will lapse without being exercised. In that case, the Fund would
keep the cash premium.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the investments on which
the Fund has written calls traded on exchanges or as to other acceptable
escrow securities. In that way, no margin will be required for such
transactions. OCC will release the securities on the expiration of the
option or when the Fund enters into a closing transaction.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." The Fund
will then realize a profit or loss, depending upon whether the net of the
amount of the option transaction costs and the premium received on the call
the Fund wrote is more or less than the price of the call the Fund
purchases to close out the transaction. The Fund may realize a profit if
the call expires unexercised, because the Fund will retain the underlying
security and the premium it received when it wrote the call. Any such
profits are considered short-term capital gains for Federal income tax
purposes, as are the premiums on lapsed calls. When distributed by the Fund
they are taxable as ordinary income. If the Fund cannot effect a closing
purchase transaction due to the lack of a market, it will have to hold the
callable securities until the call expires or is exercised.
The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by segregating
an equivalent dollar amount of liquid assets. The Fund will segregate
additional liquid assets if the value of the segregated assets drops below
100% of the current value of the future. Because of this segregation
requirement, in no circumstances would the Fund's receipt of an exercise
notice as to that future require the Fund to deliver a futures contract. It
would simply put the Fund in a short futures position, which is permitted
by the Fund's hedging policies.
|_| Writing Put Options. The Fund can sell put options. A put option
on a security gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying security at the exercise price during the
option period. The Fund will not write puts if, as a result, more than 50%
of the Fund's net assets would have to be segregated to cover put options.
If the Fund sells a put option, it must be covered by segregated
liquid assets. The premium the Fund receives from writing a put option
represents a profit, as long as the price of the underlying investment
remains above the exercise price of the put. However, the Fund also assumes
the obligation during the option period to buy the underlying investment
from the buyer of the put at the exercise price, even if the value of the
investment falls below the exercise price. If the Fund writes a put that
expires unexercised, the Fund realizes a gain in the amount of the premium
less transaction costs. If the put is exercised, the Fund must fulfill its
obligation to purchase the underlying investment at the exercise price.
That price will usually exceed the market value of the investment at that
time. In that case, the Fund may incur a loss if it sells the underlying
investment. That loss will be equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the
underlying security. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those assets.
As long as the Fund's obligation as the put writer continues, it may
be assigned an exercise notice by the exchange or broker-dealer through
which the put was sold. That notice will require the Fund to exchange
currency (for a put written on a currency) at the specified rate of
exchange or to take delivery of the underlying security and pay the
exercise price. The Fund has no control over when it may be required to
purchase the underlying security, since it may be assigned an exercise
notice at any time prior to the termination of its obligation as the writer
of the put. That obligation terminates upon expiration of the put. It may
also terminate if, before the Fund receives an exercise notice, the Fund
effects a closing purchase transaction by purchasing a put of the same
series as it sold. Once the Fund has been assigned an exercise notice, it
cannot effect a closing purchase transaction.
The Fund may decide to effect a closing purchase transaction to
realize a profit on an outstanding put option it has written or to prevent
the underlying security from being put. Effecting a closing purchase
transaction will permit the Fund to write another put option on the
security or to sell the security and use the proceeds from the sale for
other investments. The Fund will realize a profit or loss from a closing
purchase transaction depending on whether the cost of the transaction is
less or more than the premium received from writing the put option. Any
profits from writing puts are considered short-term capital gains for
federal tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
|_| Purchasing Calls and Puts. The Fund can purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund buys a call
(other than in a closing purchase transaction), it pays a premium. The Fund
then has the right to buy the underlying investment from a seller of a
corresponding call on the same investment during the call period at a fixed
exercise price. The Fund benefits only if it sells the call at a profit or
if, during the call period, the market price of the underlying investment
is above the sum of the call price plus the transaction costs and the
premium paid for the call and the Fund exercises the call. If the Fund does
not exercise the call or sell it (whether or not at a profit), the call
will become worthless at its expiration date. In that case the Fund will
have paid the premium but lost the right to purchase the underlying
investment.
The Fund can buy puts whether or not it holds the underlying
investment in its portfolio. When the Fund purchases a put, it pays a
premium and, except as to puts on indices, has the right to sell the
underlying investment to a seller of a put on a corresponding investment
during the put period at a fixed exercise price.
Buying a put on securities or futures the Fund owns enables the Fund
to attempt to protect itself during the put period against a decline in the
value of the underlying investment below the exercise price by selling the
underlying investment at the exercise price to a seller of a corresponding
put. If the market price of the underlying investment is equal to or above
the exercise price and, as a result, the put is not exercised or resold,
the put will become worthless at its expiration date. In that case the Fund
will have paid the premium but lost the right to sell the underlying
investment. However, the Fund may sell the put prior to its expiration.
That sale may or may not be at a profit.
Buying a put on an investment the Fund does not own permits the Fund
either to resell the put or to buy the underlying investment and sell it at
the exercise price. The resale price will vary inversely to the price of
the underlying investment. If the market price of the underlying investment
is above the exercise price and, as a result, the put is not exercised, the
put will become worthless on its expiration date.
When the Fund purchases a call or put on an index or Future, it pays a
premium, but settlement is in cash rather than by delivery of the underlying
investment to the Fund. Gain or loss depends on changes in the index in question
(and thus on price movements in the securities market generally) rather than on
price movements in individual securities or futures contracts.
The Fund may buy a call or put only if, after the purchase, the value of
all call and put options held by the Fund will not exceed 5% of the Fund's total
assets.
|_| Buying and Selling Options on Foreign Currencies. The Fund can buy and
sell calls and puts on foreign currencies. They include puts and calls that
trade on a securities or commodities exchange or in the over-the-counter markets
or are quoted by major recognized dealers in such options. The Fund could use
these calls and puts to try to protect against declines in the dollar value of
foreign securities and increases in the dollar cost of foreign securities the
Fund wants to acquire.
If the Manager anticipates a rise in the dollar value of a foreign currency
in which securities to be acquired are denominated, the increased cost of those
securities may be partially offset by purchasing calls or writing puts on that
foreign currency. If the Manager anticipates a decline in the dollar value of a
foreign currency, the decline in the dollar value of portfolio securities
denominated in that currency might be partially offset by writing calls or
purchasing puts on that foreign currency. However, the currency rates could
fluctuate in a direction adverse to the Fund's position. The Fund will then have
incurred option premium payments and transaction costs without a corresponding
benefit.
A call the Fund writes on a foreign currency is "covered" if the Fund owns
the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or it can do so for additional cash consideration held in a
segregated account by its Custodian bank) upon conversion or exchange of other
foreign currency held in its portfolio.
The Fund could write a call on a foreign currency to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option. That decline might be one that occurs due to an expected adverse change
in the exchange rate. This is known as a "cross-hedging" strategy. In those
circumstances, the Fund covers the option by maintaining cash, U.S. government
securities or other liquid, high grade debt securities in an amount equal to the
exercise price of the option, in a segregated account with the Fund's Custodian
bank.
|_| Risks of Hedging with Options and Futures. The use of hedging
instruments requires special skills and knowledge of investment techniques that
are different than what is required for normal portfolio management. If the
Manager uses a hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund could
also experience losses if the prices of its futures and options positions were
not correlated with its other investments.
The Fund's option activities could affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund might cause the
Fund to sell related portfolio securities, thus increasing its turnover rate.
The exercise by the Fund of puts on securities will cause the sale of underlying
investments, increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put might cause
the Fund to sell the related investments for reasons that would not exist in the
absence of the put.
The Fund could pay a brokerage commission each time it buys a call or put,
sells a call, or buys or sells an underlying investment in connection with the
exercise of a call or put. Those commissions could be higher on a relative basis
than the commissions for direct purchases or sales of the underlying
investments. Premiums paid for options are small in relation to the market value
of the underlying investments. Consequently, put and call options offer large
amounts of leverage. The leverage offered by trading in options could result in
the Fund's net asset value being more sensitive to changes in the value of the
underlying investment.
If a covered call written by the Fund is exercised on an investment that
has increased in value, the Fund will be required to sell the investment at the
call price. It will not be able to realize any profit if the investment has
increased in value above the call price.
An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no assurance that
a liquid secondary market will exist for any particular option. The Fund might
experience losses if it could not close out a position because of an illiquid
market for the future or option.
There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against declines
in the value of the Fund's portfolio securities. The risk is that the prices of
the futures or the applicable index will correlate imperfectly with the behavior
of the cash prices of the Fund's securities. For example, it is possible that
while the Fund has used hedging instruments in a short hedge, the market may
advance and the value of the securities held in the Fund's portfolio might
decline. If that occurred, the Fund would lose money on the hedging instruments
and also experience a decline in the value of its portfolio securities. However,
while this could occur for a very brief period or to a very small degree, over
time the value of a diversified portfolio of securities will tend to move in the
same direction as the indices upon which the hedging instruments are based.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable index.
To compensate for the imperfect correlation of movements in the price of the
portfolio securities being hedged and movements in the price of the hedging
instruments, the Fund might use hedging instruments in a greater dollar amount
than the dollar amount of portfolio securities being hedged. It might do so if
the historical volatility of the prices of the portfolio securities being hedged
is more than the historical volatility of the applicable index.
The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature of those markets.
First, all participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities markets. Therefore,
increased participation by speculators in the futures market may cause temporary
price distortions.
The Fund can use hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of individual
securities (long hedging) by buying futures and/or calls on such futures,
broadly-based indices or on securities. It is possible that when the Fund does
so the market might decline. If the Fund then concludes not to invest in
securities because of concerns that the market might decline further or for
other reasons, the Fund will realize a loss on the hedging instruments that is
not offset by a reduction in the price of the securities purchased.
|_| Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery at
a fixed price. The Fund uses them to "lock in" the U.S. dollar price of a
security denominated in a foreign currency that the Fund has bought or sold, or
to protect against possible losses from changes in the relative values of the
U.S. dollar and a foreign currency. The Fund limits its exposure in foreign
currency exchange contracts in a particular foreign currency to the amount of
its assets denominated in that currency or a closely-correlated currency. The
Fund may also use "cross-hedging" where the Fund hedges against changes in
currencies other than the currency in which a security it holds is denominated.
Under a forward contract, one party agrees to purchase, and another party
agrees to sell, a specific currency at a future date. That date may be any fixed
number of days from the date of the contract agreed upon by the parties. The
transaction price is set at the time the contract is entered into. These
contracts are traded in the inter-bank market conducted directly among currency
traders (usually large commercial banks) and their customers.
The Fund may use forward contracts to protect against uncertainty in the
level of future exchange rates. The use of forward contracts does not eliminate
the risk of fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
Although forward contracts may reduce the risk of loss from a decline in the
value of the hedged currency, at the same time they limit any potential gain if
the value of the hedged currency increases.
When the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when it anticipates receiving dividend
payments in a foreign currency, the Fund might desire to "lock-in" the U.S.
dollar price of the security or the U.S. dollar equivalent of the dividend
payments. To do so, the Fund could enter into a forward contract for the
purchase or sale of the amount of foreign currency involved in the underlying
transaction, in a fixed amount of U.S. dollars per unit of the foreign currency.
This is called a "transaction hedge." The transaction hedge will protect the
Fund against a loss from an adverse change in the currency exchange rates during
the period between the date on which the security is purchased or sold or on
which the payment is declared, and the date on which the payments are made or
received.
The Fund could also use forward contracts to lock in the U.S. dollar value
of portfolio positions. This is called a "position hedge." When the Fund
believes that foreign currency might suffer a substantial decline against the
U.S. dollar, it could enter into a forward contract to sell an amount of that
foreign currency approximating the value of some or all of the Fund's portfolio
securities denominated in that foreign currency. When the Fund believes that the
U.S. dollar might suffer a substantial decline against a foreign currency, it
could enter into a forward contract to buy that foreign currency for a fixed
dollar amount. Alternatively, the Fund could enter into a forward contract to
sell a different foreign currency for a fixed U.S. dollar amount if the Fund
believes that the U.S. dollar value of the foreign currency to be sold pursuant
to its forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund are denominated.
That is referred to as a "cross hedge."
The Fund will cover its short positions in these cases by identifying to
its Custodian bank assets having a value equal to the aggregate amount of the
Fund's commitment under forward contracts. The Fund will not enter into forward
contracts or maintain a net exposure to such contracts if the consummation of
the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets
denominated in that currency or another currency that is the subject of the
hedge.
However, to avoid excess transactions and transaction costs, the Fund may
maintain a net exposure to forward contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in foreign currencies if
the excess amount is "covered" by liquid securities denominated in any currency.
The cover must be at least equal at all times to the amount of that excess. As
one alternative, the Fund may purchase a call option permitting the Fund to
purchase the amount of foreign currency being hedged by a forward sale contract
at a price no higher than the forward contract price. As another alternative,
the Fund may purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price as high or
higher than the forward contact price.
The precise matching of the amounts under forward contracts and the value
of the securities involved generally will not be possible because the future
value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is entered
into and the date it is sold. In some cases the Manager might decide to sell the
security and deliver foreign currency to settle the original purchase
obligation. If the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver, the Fund might have to
purchase additional foreign currency on the "spot" (that is, cash) market to
settle the security trade. If the market value of the security instead exceeds
the amount of foreign currency the Fund is obligated to deliver to settle the
trade, the Fund might have to sell on the spot market some of the foreign
currency received upon the sale of the security. There will be additional
transaction costs on the spot market in those cases.
The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and to pay additional transactions costs. The use of forward
contracts in this manner might reduce the Fund's performance if there are
unanticipated changes in currency prices to a greater degree than if the Fund
had not entered into such contracts.
At or before the maturity of a forward contract requiring the Fund to sell
a currency, the Fund might sell a portfolio security and use the sale proceeds
to make delivery of the currency. In the alternative the Fund might retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract. Under that contract the Fund will obtain, on the
same maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund might close out a forward contract requiring it to
purchase a specified currency by entering into a second contract entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund would realize a gain or loss as a result of entering into
such an offsetting forward contract under either circumstance. The gain or loss
will depend on the extent to which the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
offsetting contract.
The costs to the Fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually entered
into on a principal basis, no brokerage fees or commissions are involved.
Because these contracts are not traded on an exchange, the Fund must evaluate
the credit and performance risk of the counterparty under each forward contract.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. The Fund may convert foreign currency from time to time, and will
incur costs in doing so. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the difference between
the prices at which they buy and sell various currencies. Thus, a dealer might
offer to sell a foreign currency to the Fund at one rate, while offering a
lesser rate of exchange if the Fund desires to resell that currency to the
dealer.
|_| Regulatory Aspects of Hedging Instruments. When using futures and
options on futures, the Fund is required to operate within certain guidelines
and restrictions with respect to the use of futures as established by the
Commodities Futures Trading Commission (the "CFTC"). In particular, the Fund is
exempted from registration with the CFTC as a "commodity pool operator" if the
Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The Rule
does not limit the percentage of the Fund's assets that may be used for futures
margin and related options premiums for a bona fide hedging position. However,
under the Rule, the Fund must limit its aggregate initial futures margin and
related options premiums to not more than 5% of the Fund's net assets for
hedging strategies that are not considered bona fide hedging strategies under
the Rule. Under the Rule, the Fund must also use short futures and options on
futures solely for bona fide hedging purposes within the meaning and intent of
the applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations established
by the option exchanges. The exchanges limit the maximum number of options that
may be written or held by a single investor or group of investors acting in
concert. Those limits apply regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more accounts
or through one or more different exchanges or through one or more brokers. Thus,
the number of options that the Fund may write or hold may be affected by options
written or held by other entities, including other investment companies having
the same adviser as the Fund (or an adviser that is an affiliate of the Fund's
adviser). The exchanges also impose position limits on futures transactions. An
exchange may order the liquidation of positions found to be in violation of
those limits and may impose certain other sanctions.
Under the Investment Company Act, when the Fund purchases a future, it must
maintain cash or readily marketable short-term debt instruments in an amount
equal to the market value of the securities underlying the future, less the
margin deposit applicable to it.
|_| Tax Aspects of Certain Hedging Instruments. Certain foreign currency
exchange contracts in which the Fund may invest are treated as "Section 1256
contracts" under the Internal Revenue Code. In general, gains or losses relating
to Section 1256 contracts are characterized as 60% long-term and 40% short-term
capital gains or losses under the Code. However, foreign currency gains or
losses arising from Section 1256 contracts that are forward contracts generally
are treated as ordinary income or loss. In addition, Section 1256 contracts held
by the Fund at the end of each taxable year are "marked-to-market," and
unrealized gains or losses are treated as though they were realized. These
contracts also may be marked-to-market for purposes of determining the excise
tax applicable to investment company distributions and for other purposes under
rules prescribed pursuant to the Internal Revenue Code. An election can be made
by the Fund to exempt those transactions from this marked-to-market treatment.
Certain forward contracts the Fund enters into may result in "straddles"
for Federal income tax purposes. The straddle rules may affect the character and
timing of gains (or losses) recognized by the Fund on straddle positions.
Generally, a loss sustained on the disposition of a position making up a
straddle is allowed only to the extent that the loss exceeds any unrecognized
gain in the offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain in the
offsetting positions making up the straddle, or the offsetting position is
disposed of.
Under the Internal Revenue Code, the following gains or losses are treated
as ordinary income or loss: (1) gains or losses attributable to fluctuations in
exchange rates that occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities, and (2) gains or losses attributable to fluctuations in the value
of a foreign currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward contracts and the
date of disposition.
Currency gains and losses are offset against market gains and losses on
each trade before determining a net "Section 988" gain or loss under the
Internal Revenue Code for that trade, which may increase or decrease the amount
of the Fund's investment income available for distribution to its shareholders.
|X| Temporary Defensive Investments. When market conditions are unstable,
or the Manager believes it is otherwise appropriate to reduce holdings in
stocks, the Fund can invest in a variety of debt securities for defensive
purposes. The Fund can also purchase these securities for liquidity purposes to
meet cash needs due to the redemption of Fund shares, or to hold while waiting
to reinvest cash received from the sale of other portfolio securities. The Fund
can buy:
|_| high-quality, short-term money market instruments, including those
issued by the U. S. Treasury or other government agencies, |_| commercial paper
(short-term, unsecured, promissory notes of domestic or foreign companies), |_|
short-term debt obligations of corporate issuers, |_| certificates of deposit
and bankers' acceptances of domestic and foreign banks and savings and loan
associations, and |_| repurchase agreements.
Short-term debt securities would normally be selected for defensive or cash
management purposes because they can normally be disposed of quickly, are not
generally subject to significant fluctuations in principal value and their value
will be less subject to interest rate risk than longer-term debt securities.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be changed
only by the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, a "majority" vote is defined as the vote of
the holders of the lesser of:
|_| 7% or more of the shares present or represented by proxy at a shareholder
meeting, if the holders of more than 50% of the outstanding shares are
present or represented by proxy, or
|_| more than 50% of the outstanding shares.
The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Fund's most significant investment policies are described in
the Prospectus.
|X| Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.
|_| The Fund cannot buy securities issued or guaranteed by any one issuer
if more than 5% of its total assets would be invested in securities of that
issuer or if it would then own more than 10% of that issuer's voting securities.
That restriction applies to 75% of the Fund's total assets. The limit does not
apply to securities issued by the U.S. Government or any of its agencies or
instrumentalities. |_| The Fund cannot invest in physical commodities or
physical commodity contracts. However, the Fund can buy and sell hedging
instruments to the extent specified in its Prospectus and this Statement of
Additional Information from time to time. The Fund can also buy and sell
options, futures, securities or other instruments backed by, or the investment
return from which, is linked to changes in the price of, physical commodities.
|_| The Fund cannot lend money. However, it can invest in all or a portion of an
issue of bonds, debentures, commercial paper or other similar corporate
obligations. The Fund may also lend its portfolio securities subject to the
restrictions stated in the Prospectus and this Statement of Additional
Information and can enter into repurchase transactions. |_| The Fund cannot
concentrate investments. That means it cannot invest 25% or more of its total
assets in companies in any one industry. |_| The Fund cannot underwrite
securities of other companies. A permitted exception is in case it is deemed to
be an underwriter under the Securities Act of 1933 when reselling any securities
held in its own portfolio. |_| The Fund cannot invest in real estate or in
interests in real estate. However, the Fund can purchase readily-marketable
securities of companies holding real estate or interests in real estate. |_| The
Fund cannot issue "senior securities." However, that restriction does not
prohibit the Fund from borrowing money subject to the provisions set forth in
this Statement of Additional Information, or from entering into margin,
collateral or escrow arrangements permitted by its other investment policies.
|X| Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund
has a number of other investment restrictions that are not fundamental policies,
which means that they can be changed by vote of a majority of the Fund's Board
of Trustees without shareholder approval.
|_|The Fund cannot invest in companies for the purpose of acquiring control or
management of them. |_|The Fund cannot invest in or hold securities of any
issuer if officers and Trustees or directors of the Fund or the Manager
individually or beneficially own more than 1/2 of 1% of the securities of that
issuer and together own more than 5% of the securities of that issuer. |_|The
Fund cannot purchase securities on margin. However, the Fund can make margin
deposits in connection with any of the hedging instruments permitted by any of
its other investment policies. |_|The Fund cannot pledge, mortgage or
hypothecate any of its assets. However, this does not prohibit the escrow
arrangements contemplated by writing covered call options or other collateral or
margin arrangements in connection with any of the hedging instruments permitted
by any of its other investment policies.
Unless the Prospectus or this Statement of Additional Information states
that a percentage restriction applies on an ongoing basis, it applies only at
the time the Fund makes an investment. The Fund need not sell securities to meet
the percentage limits if the value of the investment increases in proportion to
the size of the Fund.
For purposes of the Fund's policy not to concentrate its investments as
described above, the Fund has adopted the industry classifications set forth in
Appendix A to this Statement of Additional Information. That is not a
fundamental policy.
How the Fund is Managed
Organization and History. The Fund is an open-end, diversified management
investment company with an unlimited number of authorized shares of beneficial
interest. The Fund was organized as a Massachusetts business trust in June 1997.
The Fund is governed by a Board of Trustees, which is responsible for protecting
the interests of shareholders under Massachusetts law. The Trustees meet
periodically throughout the year to oversee the Fund's activities, review its
performance, and review the actions of the Manager. Although the Fund will not
normally hold annual meetings of its shareholders, it may hold shareholder
meetings from time to time on important matters, and shareholders have the right
to call a meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
|X| Classes of Shares. The Board of Trustees has the power, without
shareholder approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has five classes of
shares: Class A, Class B, Class C, Class N and Class Y. All classes invest in
the same investment portfolio. Only retirement plans may purchase Class N
shares. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes, o may
have a different net asset value, o may have separate voting rights on matters
in which interests of one class
are different from interests of another class, and o votes as a class on
matters that affect that class alone.
Shares are freely transferable, and each share of each class has one vote
at shareholder meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Each share of the Fund represents an
interest in the Fund proportionately equal to the interest of each other share
of the same class.
The Trustees are authorized to create new series and classes of shares. The
Trustees may reclassify unissued shares of the Fund into additional series or
classes of shares. The Trustees also may divide or combine the shares of a class
into a greater or lesser number of shares without changing the proportionate
beneficial interest of a shareholder in the Fund. Shares do not have cumulative
voting rights or preemptive or subscription rights. Shares may be voted in
person or by proxy at shareholder meetings.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Fund
is not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Fund, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of its outstanding shares.
If the Trustees receive a request from at least 10 shareholders stating that
they wish to communicate with other shareholders to request a meeting to remove
a Trustee, the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all other
shareholders at the applicants' expense. The shareholders making the request
must have been shareholders for at least six months and must hold shares of the
Fund valued at $25,000 or more or constituting at least 1% of the Fund's
outstanding shares, whichever is less. The Trustees may also take other action
as permitted by the Investment Company Act.
|X| Shareholder and Trustee Liability. The Fund's Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Fund's obligations. It also provides for indemnification and reimbursement of
expenses out of the Fund's property for any shareholder held personally liable
for its obligations. The Declaration of Trust also states that upon request, the
Fund shall assume the defense of any claim made against a shareholder for any
act or obligation of the Fund and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Fund)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Fund shareholder will incur financial loss from being
held liable as a "partner" of the Fund is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations.
The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with
the Fund. Additionally, the Trustees shall have no personal liability to
any such person, to the extent permitted by law. Trustees and Officers of
the Fund. The Fund's Trustees and officers and their principal occupations
and business affiliations and occupations during the past five years are
listed below. Trustees denoted with an asterisk (*) below are deemed to be
"interested persons" of the Fund under the Investment Company Act. All of
the Trustees are Trustees or Directors of the following Oppenheimer funds:
Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest For Value Funds, a series Fund having the following series:
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Balanced Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Global Value Fund, Inc.,
Oppenheimer Quest Capital Value Fund, Inc.,
Rochester Portfolio Series, a series Fund having one series:
Limited-Term New York Municipal Fund
Bond Fund Series, a series fund having one series:
Oppenheimer Convertible Securities Fund
Rochester Fund Municipals and
Oppenheimer MidCap Fund
Ms. Macaskill and Messrs. Bishop, Bowen, Donohue, Farrar and Zack, who are
officers of the Fund, respectively hold the same offices of the other
Oppenheimer funds listed above. As of January __, 2001, the Trustees and the
officers of the Fund as a group owned less than 1% of the outstanding shares of
the Fund. The foregoing statement does not reflect shares held of record by an
employee benefit plan for employees of the Manager other than shares
beneficially owned under that plan by the officers of the Fund listed below. Ms.
Macaskill and Mr. Donohue, are trustees of that plan.
Bridget A. Macaskill*, President and Trustee; -Age: 52. Two World Trade Center,
New York, New York 10048-0203 Chairman (since August 2000), Chief Executive
Officer (since September 1995) and a director (since December 1994) of the
Manager; President (since September 1995) and a director (since October 1990) of
Oppenheimer Acquisition Corp., the Manager's parent holding company; President,
Chief Executive Officer and a director (since March 2000) of OFI Private
Investments, Inc., an investment adviser subsidiary of the Manager; Chairman and
a director of Shareholder Services, Inc. (since August 1994) and Shareholder
Financial Services, Inc. (since September 1995), transfer agent subsidiaries of
the Manager; President (since September 1995) and a director (since November
1989) of Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of
the Manager; President and a director (since October 1997) of OppenheimerFunds
International Ltd., an offshore fund management subsidiary of the Manager and of
Oppenheimer Millennium Funds plc; a director of HarbourView Asset Management
Corporation (since July 1991) and of Oppenheimer Real Asset Management, Inc.
(since July 1996), investment adviser subsidiaries of the Manager; a director
(since April 2000) of OppenheimerFunds Legacy Program, a charitable trust
program established by the Manager; a director of Prudential Corporation plc (a
U.K. financial service company); President and a trustee of other Oppenheimer
funds; formerly President of the Manager (June 1991 - August 2000).
Paul Y. Clinton, Trustee, Age: 69 39 Blossom Avenue, Osterville, Massachusetts
02655 Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust, a
money-market fund and Narragansett Tax-Free Fund, a tax-exempt bond fund;
Director of OCC Cash Reserves, Inc. and Trustee of OCC Accumulation Trust, both
of which are open-end investment companies. Formerly: Director, External
Affairs, Kravco Corporation, a national real estate owner and property
management corporation; President of Essex Management Corporation, a management
consulting company; a general partner of Capital Growth Fund, a venture capital
partnership; a general partner of Essex Limited Partnership, an investment
partnership; President of Geneve Corp., a venture capital fund; Chairman of
Woodland Capital Corp., a small business investment company; and Vice President
of W.R. Grace & Co.
Thomas W. Courtney, Trustee, Age: 67. 833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm); former General
Partner of Trivest Venture Fund (private venture capital fund); former President
of Investment Counseling Federated Investors, Inc.; Trustee of Cash Assets
Trust, a money market fund; Director of OCC Cash Reserves, Inc., and Trustee of
OCC Accumulation Trust, both of which are open-end investment companies; former
President of Boston Company Institutional Investors; Trustee of Hawaiian
Tax-Free Trust and Tax Free Trust of Arizona, tax-exempt bond funds; Director of
several privately owned corporations; former Director of Financial Analysts
Federation.
Robert G. Galli, Trustee, Age: 67. 19750 Beach Road, Jupiter, FL 33469 A Trustee
or Director of other Oppenheimer funds. Formerly he held the following
positions: Vice Chairman (October 1995 - December 1997) and Executive Vice
President (December 1977 - October 1995) of the Manager; Executive Vice
President and a director (April 1986 - October 1995) of HarbourView Asset
Management Corporation.
Lacy B. Herrmann, Trustee, Age: 71. 380 Madison Avenue, Suite 2300, New York,
New York 10017 Chairman and Chief Executive Officer of Aquila Management
Corporation, the sponsoring organization and manager, administrator and/or
sub-Adviser to the following open-end investment companies, and Chairman of the
Board of Trustees and President of each: Churchill Cash Reserves Trust, Aquila -
Cascadia Equity Fund, Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Treasuries Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime
Cash Fund, Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado, Tax-Free Trust
of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-Free Trust, and Aquila Rocky
Mountain Equity Fund; Vice President, Director, Secretary, and formerly
Treasurer of Aquila Distributors, Inc., distributor of the above funds;
President and Chairman of the Board of Trustees of Capital Cash Management Trust
("CCMT"), and an Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to CCMT;
Chairman, President and a Director of InCap Management Corporation, formerly
sub-adviser and administrator of Prime Cash Fund and Short Term Asset Reserves;
Director of OCC Cash Reserves, Inc., and Trustee of OCC Accumulation Trust, both
of which are open-end investment companies; Trustee Emeritus of Brown
University.
George Loft, Trustee, Age: 85. 51 Herrick Road, Sharon, Connecticut 06069
Private Investor; formerly Director of OCC Cash Reserves, Inc., and Trustee of
OCC Accumulation Trust, both of which are open-end investment companies.
Bruce Bartlett, Vice President and Portfolio Manager, Age: 50. Two World Trade
Center, New York, New York 10048-0203 Senior Vice President (since January 1999)
of the Manager; an officer and portfolio manager of other Oppenheimer funds,
prior to joining the Manager in April, 1995, he was a Vice President and Senior
Portfolio Manager at First of America Investment Corp. (September 1986 - April
1995).
Andrew J. Donohue, Secretary Age: 50. Two World Trade Center, New York, New York
10048-0203 Executive Vice President (since January 1993), General Counsel (since
October 1991) and a director (since September 1995) of the Manager; Executive
Vice President (since September 1993) and a director (since January 1992) of
OppenheimerFunds Distributor, Inc.; Executive Vice President, General Counsel
and a director (since September 1995) of HarbourView Asset Management
Corporation, Shareholder Services, Inc., Shareholder Financial Services, Inc.
and Oppenheimer Partnership Holdings, Inc., of OFI Private Investments, Inc.
(since March 2000), and of PIMCO Trust Company (since May 2000); President and a
director of Centennial Asset Management Corporation (since September 1995) and
of Oppenheimer Real Asset Management, Inc. (since July 1996); Vice President and
a director (since September 1997) of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc; a director (since April 2000) of
OppenheimerFunds Legacy Program; General Counsel (since May 1996) and Secretary
(since April 1997) of Oppenheimer Acquisition Corp.; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 42. 6803 South Tucson Way,
Englewood, Colorado 80112 Vice President of the Manager/Mutual Fund Accounting
(since May 1996); an officer of other Oppenheimer funds; formerly an Assistant
Vice President of the Manager/Mutual Fund Accounting (April 1994 - May 1996) and
a Fund Controller of the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 35. 6803 South Tucson Way, Englewood,
Colorado 80112 Vice President of the Manager/Mutual Fund Accounting (since May
1996); Assistant Treasurer of Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer Funds; formerly an Assistant Vice
President of the Manager/Mutual Fund Accounting (April 1994 - May 1996), and a
Fund Controller of the Manager.
Brian W. Wixted, Treasurer and Chief Financial and Accounting Officer, Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President and
Treasurer (since March 1999) of the Manager Treasurer (since March 1999) of
HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Oppenheimer Real Asset Management Corporation, Shareholder Financial Services,
Inc. and Oppenheimer Partnership Holdings, Inc., of OFI Private Investments,
Inc. (since March 2000) and of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since May 2000); Treasurer and Chief Financial
Officer (since May 2000) of PIMCO Trust Company; Assistant Treasurer (since
March 1999) of Oppenheimer Acquisition Corp. and of Centennial Asset Management
Corporation an officer of other Oppenheimer funds; formerly Principal and Chief
Operating Officer, Bankers Trust Company - Mutual Fund Services Division (March
1995 - March 1999); Vice President and Chief Financial Officer of CS First
Boston Investment Management Corp. (September 1991 - March 1995).
Robert G. Zack, Assistant Secretary, Age: 52. Two World Trade Center, New
York, New York 10048-0203 Senior Vice President (since May 1985) and Associate
General Counsel (since May 1981) of the Manager Assistant Secretary of
Shareholder Services, Inc. (since May 1985), Shareholder Financial Services,
Inc. (since November 1989); OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
|X| Remuneration of Trustees. The officers of the Fund and one Trustee, Ms.
Macaskill, are affiliated with the Manager and receive no salary or fee from the
Fund. The remaining Trustees received the compensation shown below. The
compensation from the Fund was paid during its fiscal period ended October 31,
2000. The table below also shows the total compensation from all of the
Oppenheimer funds listed above (referred to as the "Oppenheimer Quest/Rochester
Funds"), including the compensation from the Fund. That amount represents
compensation received as a director, trustee, managing general partner or member
of a committee of the Board during the calendar year 2000.
--------------------------------------------------------------------------------
Total Compensation
From all Oppenheimer
Aggregate Retirement Quest/Rochester
Compensation Benefits Accrued Funds
Trustee's Name From the Fund1 as Part of Fund (10 Funds)2
Expenses
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paul Y. Clinton $ $ $3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Thomas W. Courtney $ $ $3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Robert G. Galli $ None $4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Lacy B. Herrmann $ $ $3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
George Loft $ $ $3
--------------------------------------------------------------------------------
1 Aggregate compensation includes fees, deferred compensation, if any, and
retirement plan benefits accrued for a Trustee or Director.
2. For the 2000 calendar year.
3.Total compensation for the 2000 calendar year includes compensation from two
funds for which the sub-advisor acts as the investment advisor.
4.Total compensation for the 2000 calendar year includes compensation received
for serving as Trustee or Director of 24 other Oppenheimer funds.
|X| Retirement Plan for Trustees. The Fund has adopted a retirement plan
that provides for payments to retired Trustees. Payments are up to 80% of the
average compensation paid during a Trustee's five years of service in which the
highest compensation was received. A Trustee must serve as Trustee for any of
the Oppenheimer Quest/Rochester/MidCap funds listed above for at least 15 years
to be eligible for the maximum payment. Each Trustee's retirement benefits will
depend on the amount of the Trustee's future compensation and length of service.
Therefore the amount of those benefits cannot be determined at this time, nor
can we estimate the number of years of credited service that will be used to
determine those benefits.
|X| Deferred Compensation Plan. The Board of Trustees has adopted a
Deferred Compensation Plan for disinterested Trustees that enables them to elect
to defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Trustee is
periodically adjusted as though an equivalent amount had been invested in shares
of one or more Oppenheimer funds selected by the Trustee. The amount paid to the
Trustee under the plan will be determined based upon the performance of the
selected funds.
Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities and net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an Order issued by the Securities and
Exchange Commission, the Fund may invest in the funds selected by the Trustee
under the plan without shareholder approval for the limited purpose of
determining the value of the Trustee's deferred fee account.
Major Shareholders. As of January ___, 2000, the only person who owned of
record or was known by the Fund to own beneficially 5% or more of any class of
the Fund's outstanding Class A, Class B, Class C or Class Y shares was:
OppenheimerFunds, Inc., c/o V.P. Financial Analysis, 6803 S. Tucson Way,
Englewood, CO 80112-3924, which owned 100.00 shares (representing 100% of the
Fund's then outstanding Class Y shares).
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company.
|X| Code of Ethics. The Fund, the Manager and the Distributor have a Code
of Ethics. It is designed to detect and prevent improper personal trading by
certain employees, including portfolio managers, that would compete with or take
advantage of the Fund's portfolio transactions. Covered persons include persons
with knowledge of the investments and investment intentions of the Fund and
other funds advised by the Manager. The Code of Ethics does permit personnel
subject to the Code to invest in securities, including securities that may be
purchased or held by the Fund, subject to a number of restrictions and controls.
Compliance with the Code of Ethics is carefully monitored and enforced by the
Manager.
The Code of Ethics is an exhibit to the Fund's registration statement filed
with the Securities and Exchange Commission and can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. You can obtain information
about the hours of operation of the Public Reference Room by calling the SEC at
1-202-942-8090. The Code of Ethics can also be viewed as part of the Fund's
registration statement on the SEC's EDGAR database at the SEC's Internet web
site at http://www.sec.gov. Copies may be obtained, after paying a duplicating
fee, by electronic request at the following E-mail address: [email protected].,
or by writing to the SEC's Public Reference Section, Washington, D.C.
20549-0102.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities for
the Fund's portfolio and handles its day-to-day business. The portfolio manager
of the Fund is employed by the Manager and is the person who is principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the Manager's Equity Portfolio Team provide the portfolio manager with
counsel and support in managing the Fund's portfolio.
The agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Fund.
Those responsibilities include 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.
The Fund pays expenses not expressly assumed by the Manager under the advisory
agreement. The advisory agreement lists examples of expenses paid by the Fund.
The major categories relate to interest, taxes, brokerage commissions, fees to
certain Trustees, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs and
non-recurring expenses, including litigation costs. The management fees paid by
the Fund to the Manager are calculated at the rates described in the Prospectus,
which are applied to the assets of the Fund as a whole. The fees are allocated
to each class of shares based upon the relative proportion of the Fund's net
assets represented by that class.
---------------------------------------------------------
Management Fees Paid to
Fiscal Year Ended: OppenheimerFunds, Inc.
---------------------------------------------------------
---------------------------------------------------------
10/31/981 $ 81,953
---------------------------------------------------------
---------------------------------------------------------
10/31/99 $817,885
---------------------------------------------------------
---------------------------------------------------------
10/31/00 $
---------------------------------------------------------
1. For the period from 12/1/97 (commencement of operations) to October 31,
1998. During 1998, the Fund's fiscal year was changed from 8/31 to 10/31.
The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss the Fund sustains for any
investment, adoption of any investment policy, or the purchase, sale or
retention of any security.
The agreement permits the Manager to act as investment adviser for any other
person, firm or corporation and to use the name "Oppenheimer" in connection with
other investment companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment adviser to the
Fund, the Manager may withdraw the right of the Fund to use the name
"Oppenheimer" as part of its name.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the investment advisory agreement is to arrange the portfolio
transactions for the Fund. The advisory agreement contains provisions relating
to the employment of broker-dealers to effect the Fund's portfolio transactions.
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. The Manager may employ broker-dealers that the Manager thinks in
its best judgment based on all relevant factors, will implement the policy of
the Fund to obtain, at reasonable expense, the "best execution" of the Fund's
portfolio transactions. "Best execution" means prompt and reliable execution at
the most favorable price obtainable. The Manager need not seek competitive
commission bidding. However, it is expected to be aware of the current rates of
eligible brokers and to minimize the commissions paid to the extent consistent
with the interests and policies of the Fund as established by its Board of
Trustees.
Under the investment advisory agreement, the Manager may select brokers
(other than affiliates) 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 charge, if the Manager makes a good faith
determination that the commission is fair and reasonable in relation to the
services provided. Subject to those considerations, as a factor in selecting
brokers for the Fund's portfolio transactions, the Manager may also consider
sales of shares of the Fund and other investment companies for which the Manager
or an affiliate serves as investment adviser.
Brokerage Practices Followed by the Manager. The Manager allocates brokerage for
the Fund subject to the provisions of the investment advisory agreement and the
procedures and rules described above. Generally, the Manager's portfolio traders
allocate brokerage based upon recommendations from the Manager's portfolio
managers. In certain instances, portfolio managers may directly place trades and
allocate brokerage. In either case, the Manager's executive officers supervise
the allocation of brokerage.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers. In
transactions on foreign exchanges, the Fund may be required to pay fixed
brokerage commissions and therefore would not have the benefit of negotiated
commissions available in U.S. markets. Brokerage commissions are paid primarily
for transactions in listed securities or for certain fixed-income agency
transactions in the secondary market. Otherwise brokerage commissions are paid
only if it appears likely that a better price or execution can be obtained by
doing so. In an option transaction, the Fund ordinarily uses the same broker for
the purchase or sale of the option and any transaction in the securities to
which the option relates.
Other funds advised by the Manager have investment policies similar to
those of the Fund. Those other funds may purchase or sell the same securities as
the Fund at the same time as the Fund, which could affect the supply and price
of the securities. If two or more funds advised by the Manager purchase the same
security on the same day from the same dealer, the transactions under those
combined orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
Most purchases of debt obligations are principal transactions at net prices.
Instead of using a broker for those transactions, the Fund normally deals
directly with the selling or purchasing principal or market maker unless the
Manager determines that a better price or execution can be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter.
Purchases from dealers include a spread between the bid and asked prices. The
Fund seeks to obtain prompt execution of these orders at the most favorable net
price.
The investment advisory agreement permits the Manager to allocate brokerage for
research services. The investment research services provided by a particular
broker may be useful only to one or more of the advisory accounts of the Manager
and its affiliates. The investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of the
Manager's other accounts. Investment research may be supplied to the Manager by
a third party at the instance of a broker through which trades are placed.
Investment research services include information and analysis on particular
companies and industries as well as market or economic trends and portfolio
strategy, market quotations for portfolio evaluations, information systems,
computer hardware and similar products and services. If a research service also
assists the Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that provides
assistance to the Manager in the investment decision-making process may be paid
in commission dollars.
The Board of Trustees permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research if the broker represents
to the Manager that: (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
The Board of Trustees permits the Manager to use concessions on fixed-price
offerings to obtain research, in the same manner as is permitted for agency
transactions.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either held
in the Fund's portfolio or are being considered for purchase. The Manager
provides information to the Board about the commissions paid to brokers
furnishing such services, together with the Manager's representation that the
amount of such commissions was reasonably related to the value or benefit of
such services.
--------------------------------------------------------------------
Fiscal Year Ended Total Brokerage Commissions Paid by the
10/31: Fund2
--------------------------------------------------------------------
--------------------------------------------------------------------
19981 $ 37,298
--------------------------------------------------------------------
--------------------------------------------------------------------
1999 $178,1413
--------------------------------------------------------------------
--------------------------------------------------------------------
2000 $
--------------------------------------------------------------------
1.From inception of the Fund on 12/1/97 to October 31, 1998. During 1998, the
Fund's fiscal year was changed from 8/31 to 10/31.
2.Amounts do not include spreads or concessions on principal transactions on a
net trade basis.
3. During the fiscal year ended 10/31/99, the amount of transactions
directed to brokers for research services
was $40,619,542 and the amount of the commissions paid to
broker-dealers for those services
was $52,095.
Distribution and Service Plans
The Distributor. Under its General Distributor's Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous public
offering of the Fund's different classes of shares. The Distributor is not
obligated to sell a specific number of shares. Expenses normally attributable to
sales are borne by the Distributor.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares during the Fund's three most recent fiscal
years is shown in the table below.
------------------------------------------------------------------------------
Aggregate Front-End Class A Commissions Commissions Commissions Fiscal
Sales Front-End on Class A on Class B on Class C Year Charges Sales Shares
Shares Shares Ended on Class Charges Advanced by Advanced by Advanced by 10/31:
A Retained by Distributor1 Distributor1 Distributor1 Shares Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998 $ 176,556 $ 47,171 $20,117 $ 248,554 $ 23,256
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1999 $1,197,997 $346,132 $88,165 $2,031,676 $127,146
------------------------------------------------------------------------------
2000 $ $ $ $ $
------------------------------------------------------------------------------
1.The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
------------------------------------------------------------------------------
Class A Contingent Class B Contingent Class C Contingent
Fiscal Year Deferred Sales Deferred Sales Deferred Sales
Ended 10/31 Charges Charges Charges
Retained by Retained by Retained by
Distributor Distributor Distributor
------------------------------------------------------------------------------
2000 $ $ $
------------------------------------------------------------------------------
Distribution and Service Plans. The Fund has adopted a Service Plan for Class A
shares and Distribution and Service Plans for Class B, Class C and Class N
shares under Rule 12b-1 of the Investment Company Act. Under those plans the
Fund pays the Distributor for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of the
particular class.
Each plan has been approved by a vote of the Board of Trustees, including a
majority of the Independent Trustees2, cast in person at a meeting called for
the purpose of voting on that plan. The shareholder votes for the plans were
cast by the Manager as the sole initial holder of the shares of each class of
shares of the Fund.
Under the plans, the Manager and the Distributor, in their sole discretion,
from time to time, may use their own resources (at no direct cost to the Fund)
to make payments to brokers, dealers or other financial institutions for
distribution and administrative services they perform. The Manager may use its
profits from the advisory fee it receives from the Fund. In their sole
discretion, the Distributor and the Manager may increase or decrease the amount
of payments they make from their own resources to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Fund's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of that class.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. Because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund must obtain the approval
of both Class A and Class B shareholders for a proposed material amendment to
the Class A plan that would materially increase payments under the plan. That
approval must be by a "majority" (as defined in the Investment Company Act) of
the shares of each Class, voting separately by class.
While the plans are in effect, the Treasurer of the Fund shall provide separate
written reports on the plans to the Board of Trustees at least quarterly for its
review. The Reports shall detail the amount of all payments made under a plan
and the purpose for which the payments were made. Those reports are subject to
the review and approval of the Independent Trustees.
Each plan states 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 the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan for a class, no payment will be made to any recipient in any
quarter in which the aggregate net asset value of all Fund shares of that class
held by the recipient for itself and its customers does not exceed a minimum
amount, if any, that may be set from time to time by a majority of the
Independent Trustees. The Board of Trustees has set no minimum amount of assets
to qualify for payments under the plans.
|X| Class A Service Plan Fees. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (they are referred to as "recipients")
for personal services and account maintenance services they provide for their
customers who hold Class A shares. The services include, among others, answering
customer inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and providing
other services at the request of the Fund or the Distributor. While the plan
permits the Board to authorize payments to the Distributor to reimburse itself
for services under the plan, the Board has not yet done so. The Distributor
makes payments to plan recipients quarterly at an annual rate not to exceed
0.25% of the average annual net assets consisting of Class A shares held in the
accounts of the recipients or their customers.
For the fiscal year ended October 31, 2000, payments under the Class A Plan
totaled $_____, all of which was paid by the Distributor to recipients. That
included $____ paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years. The Distributor may not
use payments received under the Class A Plan to pay any of its interest
expenses, carrying charges, or other financial costs, or allocation of overhead.
|X| Class B, Class C and Class N Service and Distribution Plan Fees. Under
the Class B and Class C plans, service fees and distribution fees, and under the
Class N plan, the distribution fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. Each plan provides for the Distributor
to be compensated at a flat rate, whether the Distributor's distribution
expenses are more or less than the amounts paid by the Fund under the plan
during the period for which the fee is paid. The types of services that
recipients provide are similar to the services provided under the Class A
service plan, described above.
The Class B and the Class C Plans permit the Distributor to retain both the
asset-based sales charges and the service fees or to pay recipients the service
fee on a quarterly basis, without payment in advance. However, the Distributor
currently intends to pay the service fee to recipients in advance for the first
year after the shares are purchased. After the first year shares are
outstanding, the Distributor makes service fee payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the advance service fee payment.
If Class B or Class C shares are redeemed during the first year after their
purchase, the recipient of the service fees on those shares will be obligated to
repay the Distributor a pro rata portion of the advance payment of the service
fee made on those shares.
The Distributor retains the asset-based sales charge on Class B and Class N
shares. The Distributor retains the asset-based sales charge on Class C shares
during the first year the shares are outstanding. It pays the asset-based sales
charge as an ongoing commission to the recipient on Class C shares outstanding
for a year or more. If a dealer has a special agreement with the Distributor,
the Distributor will pay the Class B and/or Class C service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commissions and service fee in advance at the time of purchase.
The asset-based sales charges on Class B, Class C and Class N shares allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund pays the
asset-based sales charges to the Distributor for its services rendered in
distributing Class B, Class C and Class N shares. The payments are made to the
Distributor in recognition that the Distributor:
o pays sales commissions to authorized brokers and dealers at the time of sale
and pays service fees as described above,
o may finance payment of sales commissions and/or the advance of the service
fee payment to recipients under the plans, or may provide such financing
from its own resources or from the resources of an affiliate,
o employs personnel to support distribution of Class B, Class C and Class N
shares, and
o bears the costs of sales literature, advertising and prospectuses (other
than those furnished to current shareholders) and state "blue sky"
registration
fees and certain other distribution expenses.
--------------------------------------------------------------------------------
All payments under the Class B, Class C and Class N plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.
<PAGE>
-------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor in the Fiscal Year Ended 10/31/00*
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class: Total Payments Amount Retained Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Expenses Under of Net Assets
Under Plan by Distributor Plan of Class
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B $ $ $ %
Plan
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C $ $ $ %
Plan
-------------------------------------------------------------------------------
* Class N shares were not offered for sale during the Fund's fiscal year ended
October 31, 2000.
--------------------------------------------------------------------------------
Performance of the Fund
Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how total
returns are calculated is set forth below. The charts below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current
performance information by calling the Fund's Transfer Agent at 1.800.525.7048
or by visiting the OppenheimerFunds Internet web site at
http://www.oppenheimerfunds.com.
The Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its performance data
must include the average annual total returns for the advertised class of shares
of the Fund. Those returns must be shown for the 1-, 5- and 10-year periods (or
the life of the class, if less) ending as of the most recently ended calendar
quarter prior to the publication of the advertisement (or its submission for
publication).
Use of standardized performance calculations enables an investor to compare
the Fund's performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using the Fund's
performance information as a basis for comparison with other investments:
|_| Total returns measure the performance of a hypothetical account in the
Fund over various periods and do not show the performance of each shareholder's
account. Your account's performance will vary from the model performance data if
your dividends are received in cash, or you buy or sell shares during the
period, or you bought your shares at a different time and price than the shares
used in the model. |_| The Fund's performance returns do no reflect the effect
of taxes on dividends and capital gains distributions. |_| An investment in the
Fund is not insured by the FDIC or any other government agency. |_| The
principal value of the Fund's shares and total returns are not guaranteed and
normally will fluctuate on a daily basis. |_| When an investor's shares are
redeemed, they may be worth more or less than their original cost. |_| Total
returns for any given past period represent historical performance information
and are not, and should not be considered, a prediction of future returns.
The performance of each class of shares is shown separately, because the
performance of each class of shares will usually be different. That is because
of the different kinds of expenses each class bears. The total returns of each
class of shares of the Fund are affected by market conditions, the quality of
the Fund's investments, the maturity of debt investments, the types of
investments the Fund holds, and its operating expenses that are allocated to the
particular class.
|X| Total Return Information. There are different types of "total returns"
to measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. Because of
differences in expenses for each class of shares, the total returns for each
class are separately measured. The cumulative total return measures the change
in value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period that
would produce the cumulative total return over the entire period. However,
average annual total returns do not show actual year-by-year performance. The
Fund uses standardized calculations for its total returns as prescribed by the
SEC. The methodology is discussed below.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown without sales charge, as
described below). For Class B shares, payment of the applicable contingent
deferred sales charge is applied, depending on the period for which the return
is shown: 5.0% in the first year, 4.0% in the second year, 3.0% in the third and
fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter. For Class C shares, the 1% contingent deferred sales charge is
deducted for returns for the 1-year period. There is no sales charge on Class Y
shares.
|_| Average Annual Total Return. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n" in the formula) to achieve an Ending Redeemable Value
("ERV" in the formula) of that investment, according to the following formula:
--------------------------------------------------------------------------------
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
--------------------------------------------------------------------------------
|_| Cumulative Total Return. The "cumulative total return" calculation measures
the change in value of a hypothetical investment of $1,000 over an entire period
of years. Its calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual basis.
Cumulative total return is determined as follows:
--------------------------------------------------------------------------------
ERV - P
------- = Total Return
P
-------------------------------------------------------------------------------
|_| Total Returns at Net Asset Value. From time to time the Fund may also quote
a cumulative or an average annual total return "at net asset value" (without
deducting sales charges) for Class A, Class B, Class C or Class N shares. Each
is based on the difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.
-------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 10/31/00*
-
-------------------------------------------------------------------------------
Cumulative Average Annual Total Returns
Class of Total Returns
Shares (10 years or
Life of Class)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-Year 5-Year or Life 10-Year or Life
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
After Without After Without After Without After Without Sales Sales Sales Sales
Sales Sales Sales Sales Charge Charge Charge Charge Charge Charge Charge Charge
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
87.60%1 99.05%1 73.22% 83.79% 38.85%1 43.21%1 Class A N/A N/A
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B 92.44%2 96.44%2 77.40% 82.40% 40.71%1 42.23%2 N/A N/A
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C 96.24%3 96.24%3 81.38% 82.38% 42.16%1 42.16%3 N/A N/A
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class Y 100.95%4100.95%4 84.69% 84.69% 43.92%1 43.92%4 N/A N/A
-------------------------------------------------------------------------------
*Class N shares were not offered for sale during the Fund's fiscal year ended
October 31, 2000. 1. Inception of Class A, Class B, Class C and Class Y: 12/1/97
Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer Agent
at the addresses or telephone numbers shown on the cover of this Statement of
Additional Information. The Fund may also compare its performance to that of
other investments, including other mutual funds, or use rankings of its
performance by independent ranking entities. Examples of these performance
comparisons are set forth below.
|X| Lipper Rankings. From time to time the Fund may publish the ranking of
the performance of its classes of shares by Lipper Analytical Services, Inc.
Lipper is a widely-recognized independent mutual fund monitoring service. Lipper
monitors the performance of regulated investment companies, including the Fund,
and ranks their performance for various periods in categories based on
investment styles. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gain distributions and income dividends
but do not take sales charges or taxes into consideration. Lipper also publishes
"peer-group" indices of the performance of all mutual funds in a category that
it monitors and averages of the performance of the funds in particular
categories.
|X| Morningstar Rankings. From time to time the Fund may publish the star
ranking of the performance of its classes of shares by Morningstar, Inc., an
independent mutual fund monitoring service. Morningstar ranks mutual funds in
broad investment categories: domestic stock funds, international stock funds,
taxable bond funds and municipal bond funds. The Fund is ranked among domestic
stock funds.
Morningstar star rankings are based on risk-adjusted total investment
return. Investment return measures a fund's (or class's) one-, three-, five- and
ten-year average annual total returns (depending on the inception of the fund or
class) in excess of 90-day U.S. Treasury bill returns after considering the
fund's sales charges and expenses. Risk measures a fund's (or class's)
performance below 90-day U.S. Treasury bill returns. Risk and investment return
are combined to produce star rankings reflecting performance relative to the
average fund in a fund's category. Five stars is the "highest" ranking (top 10%
of funds in a category), four stars is "above average" (next 22.5%), three stars
is "average" (next 35%), two stars is "below average" (next 22.5%) and one star
is "lowest" (bottom 10%). The current star ranking is the fund's (or class's)
3-year ranking or its combined 3- and 5-year ranking (weighted 60%/40%
respectively), or its combined 3-, 5-, and 10-year ranking (weighted 40%, 30%
and 30%, respectively), depending on the inception date of the fund (or class).
Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements and
sales literature performance information about the Fund cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar publications. That information may include performance quotations
from other sources, including Lipper and Morningstar. The performance of the
Fund's classes of shares may be compared in publications to the performance of
various market indices or other investments, and averages, performance rankings
or other benchmarks prepared by recognized mutual fund statistical services.
From time to time, the Fund may publish rankings or ratings of the Manager
or Transfer Agent, and of the investor services provided by them to shareholders
of the Oppenheimer funds, other than performance rankings of the Oppenheimer
funds themselves. Those ratings or rankings of shareholder and investor services
by third parties may include comparisons of their services to those provided by
other mutual fund families selected by the rating or ranking services. They may
be based upon the opinions of the rating or ranking service itself, using its
research or judgment, or based upon surveys of investors, brokers, shareholders
or others.
--------------------------------------------------------------------------------
ABOUT YOUR ACCOUNT
--------------------------------------------------------------------------------
How to Buy Shares
Additional information is presented below about the methods that can be
used to buy shares of the Fund. Appendix C contains more information about the
special sales charge arrangements offered by the Fund, and the circumstances in
which sales charges may be reduced or waived for certain classes of investors.
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House ("ACH")
transfer to buy the shares. Dividends will begin to accrue on shares purchased
with the proceeds of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of The New York
Stock Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier
on certain days. If Federal Funds are received on a business day after the close
of the Exchange, the shares will be purchased and dividends will begin to accrue
on the next regular business day. The proceeds of ACH transfers are normally
received by the Fund 3 days after the transfers are initiated. If the proceeds
of the ACH transfer are not received on a timely basis, the Distributor reserves
the right to cancel the purchase order. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in Appendix C to this
Statement of Additional Information because the Distributor or dealer or broker
incurs little or no selling expenses.
|X| Right of Accumulation. To qualify for the lower sales charge rates that
apply to larger purchases of Class A shares, you and your spouse can add
together:
|_| Class A and Class B shares you purchase for your individual accounts,
or for your joint accounts, or for trust or custodial accounts on behalf of your
children who are minors, and |_| current purchases of Class A and Class B shares
of the Fund and other Oppenheimer funds to reduce the sales charge rate that
applies to current purchases of Class A shares, and |_| Class A and Class B
shares of Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate for current
purchases of Class A shares, provided that you still hold your investment in one
of the Oppenheimer funds.
A fiduciary can count all shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the same
employer) that has multiple accounts. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently own
to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You must
request it when you buy shares.
|X| The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and
currently include the following:
Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California
Oppenheimer California Municipal Fund Municipal Fund
Oppenheimer Main Street Growth & Income
Oppenheimer Capital Appreciation Fund Fund
Oppenheimer Capital Preservation Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Income Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Champion Income Fund Oppenheimer MidCap Fund Oppenheimer Convertible
Securities Fund Oppenheimer Multiple Strategies Fund Oppenheimer Developing
Markets Fund Oppenheimer Municipal Bond Fund Oppenheimer Disciplined Allocation
Fund Oppenheimer New York Municipal Fund Oppenheimer Disciplined Value Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Discovery Fund Oppenheimer
Pennsylvania Municipal Fund Oppenheimer Emerging Growth Fund Oppenheimer Quest
Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Emerging Technologies Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Europe Fund Oppenheimer Quest Opportunity Value Fund Oppenheimer
Florida Municipal Fund Oppenheimer Quest Small Cap Fund Oppenheimer Global Fund
Oppenheimer Quest Value Fund, Inc. Oppenheimer Global Growth & Income Fund
Oppenheimer Real Asset Fund Oppenheimer Gold & Special Minerals Fund Oppenheimer
Senior Floating Rate Fund Oppenheimer Growth Fund Oppenheimer Strategic Income
Fund Oppenheimer High Yield Fund Oppenheimer Total Return Fund, Inc. Oppenheimer
Insured Municipal Fund Oppenheimer Trinity Core Fund Oppenheimer Intermediate
Municipal Fund Oppenheimer Trinity Growth Fund Oppenheimer International Bond
Fund Oppenheimer Trinity Value Fund Oppenheimer International Growth Fund
Oppenheimer U.S. Government Trust Oppenheimer International Small Company Fund
Oppenheimer World Bond Fund Oppenheimer Large Cap Growth Fund Limited-Term New
York Municipal Fund
Rochester Fund Municipals
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except the money market funds. Under certain
circumstances described in this Statement of Additional Information, redemption
proceeds of certain money market fund shares may be subject to a contingent
deferred sales charge.
|X| Letters of Intent. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of the Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies to
your purchases of Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales charge rate for
the Class A shares purchased during that period. You can include purchases made
up to 90 days before the date of the Letter.
A Letter of Intent is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares or Class A and Class B shares of the
Fund (and other Oppenheimer funds) during a 13-month period (the "Letter of
Intent period"). At the investor's request, this may include purchases made up
to 90 days prior to the date of the Letter. The Letter states the investor's
intention to make the aggregate amount of purchases of shares which, when added
to the investor's holdings of shares of those funds, will equal or exceed the
amount specified in the Letter. Purchases made by reinvestment of dividends or
distributions of capital gains and purchases made at net asset value without
sales charge do not count toward satisfying the amount of the Letter.
A Letter enables an investor to count the Class A and Class B shares
purchased under the Letter to obtain the reduced sales charge rate on purchases
of Class A shares of the Fund (and other Oppenheimer funds) that applies under
the Right of Accumulation to current purchases of Class A shares. Each purchase
of Class A shares under the Letter will be made at the offering price (including
the sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares. However, if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the investor's
holdings of shares on the last day of that period, do not equal or exceed the
intended purchase amount, the investor agrees to pay the additional amount of
sales charge applicable to such purchases. That amount is described in "Terms of
Escrow," below (those terms may be amended by the Distributor from time to
time). The investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent subject to the
Terms of Escrow. Also, the investor agrees to be bound by the terms of the
Prospectus, this Statement of Additional Information and the Application used
for a Letter of Intent. If those terms are amended, as they may be from time to
time by the Fund, the investor agrees to be bound by the amended terms and that
those amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
total purchases. If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to qualify for
the next sales charge rate reduction set forth in the Prospectus, the sales
charges paid will be adjusted to the lower rate. That adjustment will be made
only if and when the dealer returns to the Distributor the excess of the amount
of commissions allowed or paid to the dealer over the amount of commissions that
apply to the actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such purchase,
promptly after the Distributor's receipt thereof.
The Transfer Agent will not hold shares in escrow for purchases of shares
of the Fund and other Oppenheimer funds by OppenheimerFunds prototype 401(k)
plans under a Letter of Intent. If the intended purchase amount under a Letter
of Intent entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
o Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value up to 5% of the intended
purchase amount specified in the Letter shall be held in escrow by the Transfer
Agent. For example, if the intended purchase amount is $50,000, the escrow shall
be shares valued in the amount of $2,500 (computed at the offering price
adjusted for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account
2. If the total minimum investment specified under the Letter is completed
within the thirteen-month Letter of Intent period, the escrowed shares will be
promptly released to the investor
3. If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended purchase amount
specified in the Letter, the investor must remit to the Distributor an amount
equal to the difference between the dollar amount of sales charges actually paid
and the amount of sales charges which would have been paid if the total amount
purchased had been made at a single time. That sales charge adjustment will
apply to any shares redeemed prior to the completion of the Letter. If the
difference in sales charges is not paid within twenty days after a request from
the Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales charge, the
sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and appoints
the Transfer Agent as attorney-in-fact to surrender for redemption any or all
escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include: (a) Class A shares
sold with a front-end sales charge or subject to a Class A contingent deferred
sales charge, (b) Class B shares of other Oppenheimer funds acquired subject to
a contingent deferred sales charge, and (c) Class A or Class B shares acquired
by exchange of either (1) Class A shares of one of the other Oppenheimer funds
that were acquired subject to a Class A initial or contingent deferred sales
charge or (2) Class B shares of one of the other Oppenheimer funds that were
acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares" and the escrow will
be transferred to that other fund. Asset Builder Plans. To establish an Asset
Builder Plan to buy shares directly from a bank account, you must enclose a
check (the minimum is $25) for the initial purchase with your application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in the Prospectus.
Asset Builder Plans are available only if your bank is an ACH member. Asset
Builder Plans may not be used to buy shares for OppenheimerFunds
employer-sponsored qualified retirement accounts. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use their fund account to
make monthly automatic purchases of shares of up to four other Oppenheimer
funds.
If you make payments from your bank account to purchase shares of the Fund,
your bank account will be debited automatically. Normally the debit will be made
two business days prior to the investment dates selected in the Application.
Neither the Distributor, the Transfer Agent nor the Fund shall be responsible
for any delays in purchasing shares resulting from delays in ACH transmissions.
Before you establish Asset Builder payments, you should obtain a prospectus
of the selected fund(s) from your financial advisor (or the Distributor) and
request an application from the Distributor. Complete and return it. You may
change the amount of your Asset Builder payment or you can terminate these
automatic investments at any time by writing to the Transfer Agent. The Transfer
Agent requires a reasonable period (approximately 10 days) after receipt of your
instructions to implement them. The Fund reserves the right to amend, suspend,
or discontinue offering Asset Builder plans at any time without prior notice.
Retirement Plans. Certain types of Retirement Plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in Appendix B to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily valuation basis by Merrill Lynch
Pierce Fenner & Smith, Inc. or an independent record keeper that has a contract
or special arrangement with Merrill Lynch. If on the date the plan sponsor
signed the Merrill Lynch record keeping service agreement the plan has less than
$3 million in assets (other than assets invested in money market funds) invested
in applicable investments, then the retirement plan may purchase only Class B
shares of the Oppenheimer funds. Any retirement plans in that category that
currently invest in Class B shares of the Fund will have their Class B shares
converted to Class A shares of the Fund when the plan's applicable investments
reach $5 million.
Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class B,
Class C or Class N shares and the dividends payable on Class B, Class C or Class
N shares will be reduced by incremental expenses borne solely by that class.
Those expenses include the asset-based sales charges to which Class B, Class C
and Class N are subject.
The availability of different classes of shares permits an investor to
choose the method of purchasing shares that is more appropriate for the
investor. That may depend on the amount of the purchase, the length of time the
investor expects to hold shares, and other relevant circumstances. Class A
shares normally are sold subject to an initial sales charge. While Class B,
Class C and Class N shares have no initial sales charge, the purpose of the
deferred sales charge and asset-based sales charge on Class B, Class C and Class
N shares is the same as that of the initial sales charge on Class A shares - to
compensate the Distributor and brokers, dealers and financial institutions that
sell shares of the Fund. A salesperson who is entitled to receive compensation
from his or her firm for selling Fund shares may receive different levels of
compensation for selling one class of shares than another. The Distributor will
not accept any order in the amount of $500,000 or more for Class B shares or $1
million or more for Class C shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts). That is because generally it will be
more advantageous for that investor to purchase Class A shares of the Fund.
|X| Class B Conversion. Under current interpretations of applicable federal
income tax law by the Internal Revenue Service, the conversion of Class B shares
to Class A shares after six years is not treated as a taxable event for the
shareholder. If those laws or the IRS interpretation of those laws should
change, the automatic conversion feature may be suspended. In that event, no
further conversions of Class B shares would occur while that suspension remained
in effect. Although Class B shares could then be exchanged for Class A shares on
the basis of relative net asset value of the two classes, without the imposition
of a sales charge or fee, such exchange could constitute a taxable event for the
holder, and absent such exchange, Class B shares might continue to be subject to
the asset-based sales charge for longer than six years.
|X| Allocation of Expenses. The Fund pays expenses related to its daily
operations, such as custodian fees, Trustees' fees, transfer agency fees, legal
fees and auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce the net
asset value of shares, and therefore are indirectly borne by shareholders
through their investment.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are allocated
pro rata to the shares of all classes. The allocation is based on the percentage
of the Fund's total assets that is represented by the assets of each class, and
then equally to each outstanding share within a given class. Such general
expenses include management fees, legal, bookkeeping and audit fees, printing
and mailing costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, fees to unaffiliated
Trustees, custodian expenses, share issuance costs, organization and start-up
costs, interest, taxes and brokerage commissions, and non-recurring expenses,
such as litigation costs.
Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of such
expenses include distribution and service plan (12b-1) fees, transfer and
shareholder servicing agent fees and expenses, and shareholder meeting expenses
(to the extent that such expenses pertain only to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share of
each class of shares of the Fund are determined as of the close of business of
The New York Stock Exchange on each day that the Exchange is open. The
calculation is done by dividing the value of the Fund's net assets attributable
to a class by the number of shares of that class that are outstanding. The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier on
some other days (for example, in case of weather emergencies or on days falling
before a holiday). The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Presidents' Day,
Martin Luther King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may also close on other days.
Dealers other than Exchange members may conduct trading in certain securities on
days on which the Exchange is closed (including weekends and U.S. holidays) or
after 4:00 P.M. on a regular business day. The Fund's net asset values will not
be calculated on those days, and the values of some of the Fund's portfolio
securities may significantly change on those days, when shareholders may not
purchase or redeem shares. Additionally, trading on European and Asian stock
exchanges and over-the-counter markets normally is completed before the close of
The New York Stock Exchange.
Changes in the values of securities traded on foreign exchanges or markets
as a result of events that occur after the prices of those securities are
determined, but before the close of The New York Stock Exchange, will not be
reflected in the Fund's calculation of its net asset values that day unless the
Board of Trustees determines that the event is likely to effect a material
change in the value of the security. The Manager may make that determination,
under procedures established by the Board.
|X| Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
|_| Equity securities traded on a U.S. securities exchange or on NASDAQ are
valued as follows:
(1) if last sale information is regularly reported, they are valued at the
last reported sale price on the principal exchange on which they are traded or
on NASDAQ, as applicable, on that day, or (2) if last sale information is not
available on a valuation date, they are valued at the last reported sale price
preceding the valuation date if it is within the spread of the closing "bid" and
"asked" prices on the valuation date or, if not, at the closing "bid" price on
the valuation date. |_| Equity securities traded on a foreign securities
exchange generally are valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the
Board of Trustees, or (2) at the last sale price obtained by the Manager from
the report of the principal exchange on which the security is traded at its last
trading session on or immediately before the valuation date, or (3) at the mean
between the "bid" and "asked" prices obtained from the principal exchange on
which the security is traded or, on the basis of reasonable inquiry, from two
market makers in the security. |_| Long-term debt securities having a remaining
maturity in excess of 60 days are valued based on the mean between the "bid" and
"asked" prices determined by a portfolio pricing service approved by the Fund's
Board of Trustees or obtained by the Manager from two active market makers in
the security on the basis of reasonable inquiry. |_| The following securities
are valued at the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis of reasonable
inquiry:
(1) debt instruments that have a maturity of more than 397 days when
issued, (2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and (3) non-money market
debt instruments that had a maturity of 397 days or less when issued and which
have a remaining maturity of 60 days or less. |_| The following securities are
valued at cost, adjusted for amortization of premiums and accretion of
discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a remaining maturity of 60
days or less, and (2) debt instruments held by a money market fund that have a
remaining maturity of 397 days or less. |_| Securities (including restricted
securities) not having readily-available market quotations are valued at fair
value determined under the Board's procedures. If the Manager is unable to
locate two market makers willing to give quotes, a security may be priced at the
mean between the "bid" and "asked" prices provided by a single active market
maker (which in certain cases may be the "bid" price if no "asked" price is
available).
In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale
information is not generally available, the Manager may use pricing services
approved by the Board of Trustees. The pricing service may use "matrix"
comparisons to the prices for comparable instruments on the basis of quality,
yield, and maturity. Other special factors may be involved (such as the
tax-exempt status of the interest paid by municipal securities). The Manager
will monitor the accuracy of the pricing services. That monitoring may include
comparing prices used for portfolio valuation to actual sales prices of selected
securities.
The closing prices in the London foreign exchange market on a particular
business day that are provided to the Manager by a bank, dealer or pricing
service that the Manager has determined to be reliable are used to value foreign
currency, including forward contracts, and to convert to U.S. dollars securities
that are denominated in foreign currency.
Puts, calls, and futures are valued at the last sale price on the principal
exchange on which they are traded or on NASDAQ, as applicable, as determined by
a pricing service approved by the Board of Trustees or by the Manager. If there
were no sales that day, they shall be valued at the last sale price on the
preceding trading day if it is within the spread of the closing "bid" and
"asked" prices on the principal exchange or on NASDAQ on the valuation date. If
not, the value shall be the closing bid price on the principal exchange or on
NASDAQ on the valuation date. If the put, call or future is not traded on an
exchange or on NASDAQ, it shall be valued by the mean between "bid" and "asked"
prices obtained by the Manager from two active market makers. In certain cases
that may be at the "bid" price if no "asked" price is available.
When the Fund writes an option, an amount equal to the premium received is
included in the Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section. The credit is adjusted
("marked-to-market") to reflect the current market value of the option. In
determining the Fund's gain on investments, if a call or put written by the Fund
is exercised, the proceeds are increased by the premium received. If a call or
put written by the Fund expires, the Fund has a gain in the amount of the
premium. If the Fund enters into a closing purchase transaction, it will have a
gain or loss, depending on whether the premium received was more or less than
the cost of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is reduced by
the amount of premium paid by the Fund.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the Prospectus.
The information below provides additional information about the procedures and
conditions for redeeming shares.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
|_|Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
|_|Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed.
The reinvestment may be made without sales charge only in Class A shares of
the Fund or any of the other Oppenheimer funds into which shares of the Fund are
exchangeable as described in "How to Exchange Shares" below. Reinvestment will
be at the net asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Transfer Agent for that
privilege at the time of reinvestment. This privilege does not apply to Class C,
Class N or Class Y shares. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on that
gain. If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds of
Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the Oppenheimer funds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the loss or
increase the gain recognized from the redemption. However, in that case the
sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds.
Payments "In Kind". The Prospectus states that payment for shares tendered for
redemption is ordinarily made in cash. However, the Board of Trustees of the
Fund may determine that it would be detrimental to the best interests of the
remaining shareholders of the Fund to make payment of a redemption order wholly
or partly in cash. In that case, the Fund may pay the redemption proceeds in
whole or in part by a distribution "in kind" of liquid securities from the
portfolio of the Fund, in lieu of cash.
The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net assets of the Fund during any
90-day period for any one shareholder. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage or other costs in selling the
securities for cash. The Fund will value securities used to pay redemptions in
kind using the same method the Fund uses to value its portfolio securities
described above under "Determination of Net Asset Values Per Share." That
valuation will be made as of the time the redemption price is determined.
Transfers of Shares. A transfer of shares to a different registration is not an
event that triggers the payment of sales charges. Therefore, shares are not
subject to the payment of a contingent deferred sales charge of any class at the
time of transfer to the name of another person or entity. It does not matter
whether the transfer occurs by absolute assignment, gift or bequest, as long as
it does not involve, directly or indirectly, a public sale of the shares. When
shares subject to a contingent deferred sales charge are transferred, the
transferred shares will remain subject to the contingent deferred sales charge.
It will be calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the transferring
shareholder.
If less than all shares held in an account are transferred, and some but
not all shares in the account would be subject to a contingent deferred sales
charge if redeemed at the time of transfer, the priorities described in the
Prospectus under "How to Buy Shares" for the imposition of the Class B, Class C
or Class N contingent deferred sales charge will be followed in determining the
order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must
(1) state the reason for the distribution; (2)state the owner's awareness
of tax penalties if the distribution is premature; and (3) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Fund, the Manager, the Distributor, and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the conditions of
applicable tax laws and will not be responsible for any tax penalties assessed
in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. Shareholders should contact their
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
an order placed by the dealer or broker. However, if the Distributor receives a
repurchase order from a dealer or broker after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net asset
value if the order was received by the dealer or broker from its customers prior
to the time the Exchange closes. Normally, the Exchange closes at 4:00 P.M., but
may do so earlier on some days. Additionally, the order must have been
transmitted to and received by the Distributor prior to its close of business
that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption documents in
proper form. The signature(s) of the registered owners on the redemption
documents must be guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the shareholder for
receipt of the payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable to all
shareholders of record. Payments must also be sent to the address of record for
the account and the address must not have been changed within the prior 30 days.
Required minimum distributions from OppenheimerFunds-sponsored retirement plans
may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the Account
Application or by signature-guaranteed instructions sent to the Transfer Agent.
Shares are normally redeemed pursuant to an Automatic Withdrawal Plan three
business days before the payment transmittal date you select in the Account
Application. If a contingent deferred sales charge applies to the redemption,
the amount of the check or payment will be reduced accordingly.
The Fund cannot guarantee receipt of a payment on the date requested. The
Fund reserves the right to amend, suspend or discontinue offering these
plans at any time without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan. Class B and
Class C shareholders should not establish withdrawal plans, because of the
imposition of the contingent deferred sales charge on such withdrawals (except
where the contingent deferred sales charge is waived as described in Appendix B,
below).
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated below.
These provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, any amendments will automatically apply to existing
Plans.
|X| Automatic Exchange Plans. Shareholders can authorize the Transfer Agent
to exchange a pre-determined amount of shares of the Fund for shares (of the
same class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Instructions should be
provided on the OppenheimerFunds Application or signature-guaranteed
instructions. Exchanges made under these plans are subject to the restrictions
that apply to exchanges as set forth in "How to Exchange Shares" in the
Prospectus and below in this Statement of Additional Information.
|X| Automatic Withdrawal Plans. Fund shares will be redeemed as necessary
to meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first. Shares acquired with reinvested dividends and capital gains
distributions will be redeemed next, followed by shares acquired with a sales
charge, to the extent necessary to make withdrawal payments. Depending upon the
amount withdrawn, the investor's principal may be depleted. Payments made under
these plans should not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal Plan
as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. Neither the Fund
nor the Transfer Agent shall incur any liability to the Planholder for any
action taken or not taken by the Transfer Agent in good faith to administer the
Plan. Share certificates will not be issued for shares of the Fund purchased for
and held under the Plan, but the Transfer Agent will credit all such shares to
the account of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may be
held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the account
may be paid in cash or reinvested.
Shares will be redeemed to make withdrawal payments at the net asset value
per share determined on the redemption date. Checks or AccountLink payments
representing the proceeds of Plan withdrawals will normally be transmitted three
business days prior to the date selected for receipt of the payment, according
to the choice specified in writing by the Planholder. Receipt of payment on the
date selected cannot be guaranteed.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time after mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice to redeem all, or any part of, the
shares held under the Plan. That notice must be in proper form in accordance
with the requirements of the then-current Prospectus of the Fund. In that case,
the Transfer Agent will redeem the number of shares requested at the net asset
value per share in effect and will mail a check for the proceeds to the
Planholder.
The Planholder may terminate a Plan at any time by writing to the Transfer
Agent. The Fund may also give directions to the Transfer Agent to terminate a
Plan. The Transfer Agent will also terminate a Plan upon its receipt of evidence
satisfactory to it that the Planholder has died or is legally incapacitated.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that have
not been redeemed will be held in uncertificated form in the name of the
Planholder. The account will continue as a dividend-reinvestment, uncertificated
account unless and until proper instructions are received from the Planholder,
his or her executor or guardian, or another authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of Oppenheimer
funds having more than one class of shares may be exchanged only for shares of
the same class of other Oppenheimer funds. Shares of Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. You can obtain a current list showing which funds offer which classes
by calling the Distributor at 1.800.525.7048.
|_| All of the Oppenheimer funds currently offer Class A, B and C shares
except Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust,
Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial California Tax Exempt Trust, and Centennial America
Fund, L.P., which only offer Class A shares.
|_| Oppenheimer Main Street California Municipal Fund currently offers only
Class A and Class B shares.
|_| Class B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other Oppenheimer
funds or through OppenheimerFunds sponsored 401 (k) plans.
|_| Only certain Oppenheimer funds currently offer Class Y shares. Class Y
shares of Oppenheimer Real Asset Fund may not be exchanged for shares of any
other Fund.
|_| Class M shares of Oppenheimer Convertible Securities Fund may be
exchanged only for Class A shares of other Oppenheimer funds. They may not be
acquired by exchange of shares of any other Oppenheimer funds except Class A
shares of Oppenheimer Money Market Fund or Oppenheimer Cash Reserves acquired by
exchange of Class M shares.
|_| Class A shares of Oppenheimer Senior Floating Rate Fund are not
available by exchange of shares of Oppenheimer Money Market Fund or Class A
shares of Oppenheimer Cash Reserves. If any Class A shares of another
Oppenheimer fund that are exchanged for Class A shares of Oppenheimer Senior
Floating Rate Fund are subject to the Class A contingent deferred sales charge
of the other Oppenheimer fund at the time of exchange, the holding period for
that Class A contingent deferred sales charge will carry over to Class A shares
of Oppenheimer Senior Floating Rate Fund acquired in the exchange. The Class A
shares of Oppenheimer Senior Floating Rate Fund acquired in that exchange will
be subject to the Class A Early Withdrawal Charge of Oppenheimer Senior Floating
Rate Fund if they are repurchased before the expiration of the holding period.
|_| Class X shares of Limited Term New York Municipal Fund can be exchanged
only for Class B shares of other Oppenheimer funds and no exchanges may be made
to Class X shares.
|_| Shares of Oppenheimer Capital Preservation Fund may not be exchanged
for shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash Reserves or
Oppenheimer Limited-Term Government Fund. Only participants in certain
retirement plans may purchase shares of Oppenheimer Capital Preservation Fund,
and only those participants may exchange shares of other Oppenheimer funds for
shares of Oppenheimer Capital Preservation Fund.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any money market fund offered by the Distributor. Shares of any money
market fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales charge.
They may also be used to purchase shares of Oppenheimer funds subject to a
contingent deferred sales charge. Shares of Oppenheimer Money Market Fund, Inc.
purchased with the redemption proceeds of shares of other mutual funds (other
than funds managed by the Manager or its subsidiaries) redeemed within the 30
days prior to that purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent deferred
sales charge. To qualify for that privilege, the investor or the investor's
dealer must notify the Distributor of eligibility for this privilege at the time
the shares of Oppenheimer Money Market Fund, Inc. are purchased. If requested,
they must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or distributions
from any of the other Oppenheimer funds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may be
exchanged at net asset value for shares of any of the Oppenheimer funds.
The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days notice prior to materially amending
or terminating the exchange privilege. That 60 day notice is not required in
extraordinary circumstances.
|X| How Exchanges Affect Contingent Deferred Sales Charges. No contingent
deferred sales charge is imposed on exchanges of shares of any class purchased
subject to a contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds purchased
subject to a Class A contingent deferred sales charge are redeemed within 18
months of the end of the calendar month of the initial purchase of the exchanged
Class A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares. The Class B contingent deferred sales charge is imposed on
Class B shares acquired by exchange if they are redeemed within 6 years of the
initial purchase of the exchanged Class B shares. The Class C contingent
deferred sales charge is imposed on Class C shares acquired by exchange if they
are redeemed within 12 months of the initial purchase of the exchanged Class C
shares. The Class N contingent deferred sales charge is imposed on Class N
shares acquired by exchange if they are redeemed within eighteen (18) months of
the initial purchase of the exchanged Class N shares.
When Class B, Class C or Class N shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B, Class C or Class N contingent deferred sales charge
will be followed in determining the order in which the shares are exchanged.
Before exchanging shares, shareholders should take into account how the exchange
may affect any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning shares of more
than one class must specify which class of shares they wish to exchange.
|X| Limits on Multiple Exchange Orders. The Fund reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Fund may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.
|X| Telephone Exchange Requests. When exchanging shares by telephone, a
shareholder must have an existing account in the fund to which the exchange is
to be made. Otherwise, the investors must obtain a Prospectus of that fund
before the exchange request may be submitted. If all telephone lines are busy
(which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
|X| Processing Exchange Requests. Shares to be exchanged are redeemed on
the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The Fund
reserves the right, in its discretion, to refuse any exchange request that may
disadvantage it. For example, if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price that might be disadvantageous to the Fund, the Fund may refuse the
request. When you exchange some or all of your shares from one fund to another,
any special account feature such as an Asset Builder Plan or Automatic
Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so. However, special redemption and exchange features
such as Automatic Exchange Plans and Withdrawal Plans cannot be switched to an
account in Oppenheimer Senior Floating Rate Fund.
In connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested would
include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Fund, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. The Fund has no fixed dividend rate and there can
be no assurance as to the payment of any dividends or the realization of any
capital gains. The dividends and distributions paid by a class of shares will
vary from time to time depending on market conditions, the composition of the
Fund's portfolio, and expenses borne by the Fund or borne separately by a class.
Dividends are calculated in the same manner, at the same time, and on the same
day for each class of shares. However, dividends on Class B, Class C and Class N
shares are expected to be lower than dividends on Class A and Class Y shares.
That is because of the effect of the asset-based sales charge on Class B, Class
C and Class N shares. Those dividends will also differ in amount as a
consequence of any difference in the net asset values of the different classes
of shares.
Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.
Reinvestment will be made as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders or
their representatives for compliance with those laws in good faith.
Tax Status of the Fund's Dividends and Distributions. The Federal tax treatment
of the Fund's dividends and capital gains distributions is briefly highlighted
in the Prospectus.
Special provisions of the Internal Revenue Code govern the eligibility of
the Fund's dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not eligible for the
deduction. The amount of dividends paid by the Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Fund shares held for 45 days or less. To the
extent the Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or dividends
from foreign corporations, those dividends will not qualify for the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund must
distribute 98% of its taxable investment income earned from January 1 through
December 31 of that year and 98% of its capital gains realized in the period
from November 1 of the prior year through October 31 of the current year. If it
does not, the Fund must pay an excise tax on the amounts not distributed. It is
presently anticipated that the Fund will meet those requirements. However, the
Board of Trustees and the Manager might determine in a particular year that it
would be in the best interests of shareholders for the Fund not to make such
distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized capital
gains to shareholders without having to pay tax on them. This avoids a double
tax on that income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund (unless the Fund's
shares are held in a retirement account or the shareholder is otherwise exempt
from tax). If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on amounts
paid by it as dividends and distributions. The Fund qualified as a regulated
investment company in its last fiscal year. The Internal Revenue Code contains a
number of complex tests relating to qualification which the Fund might not meet
in any particular year. If it did not so qualify, the Fund would be treated for
tax purposes as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
If prior distributions made by the Fund must be re-characterized as a
non-taxable return of capital at the end of the fiscal year as a result of the
effect of the Fund's investment policies, they will be identified as such in
notices sent to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed above. Reinvestment will be
made without sales charge at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution. To elect
this option, the shareholder must notify the Transfer Agent in writing and must
have an existing account in the fund selected for reinvestment. Otherwise the
shareholder first must obtain a prospectus for that fund and an application from
the Distributor to establish an account. Dividends and/or distributions from
shares of certain other Oppenheimer funds (other than Oppenheimer Cash Reserves)
may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Distributor. The Fund's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes shares of the other Oppenheimer
funds and is sub-distributor for funds managed by a subsidiary of the Manager.
The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a
division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It acts on an "at-cost" basis. It also
acts as shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the Transfer Agent
at the address and toll-free numbers shown on the back cover.
The Custodian. The Bank of New York is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities and handling the delivery of such securities to and from
the Fund. It will be the practice of the Fund to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Fund's cash balances with the custodian in
excess of $100,000 are not protected by Federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Accountants. KPMG LLP are the independent accountants of the Fund.
They audit the Fund's financial statements and perform other related audit
services. They also act as accountants for certain other funds advised by the
Manager and its affiliates.
<PAGE>
Appendix A
--------------------------------------------------------------------------------
Industry Classifications
--------------------------------------------------------------------------------
Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads & Truckers
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
<PAGE>
Appendix B
--------------------------------------------------------------------------
OppenheimerFunds Special Sales Charge Arrangements and Waivers
--------------------------------------------------------------------------
In certain cases, the initial sales charge that applies to purchases of Class A
shares1 of the Oppenheimer funds or the contingent deferred sales charge that
may apply to Class A, Class B or Class C shares may be waived.2 That is because
of the economies of sales efforts realized by OppenheimerFunds Distributor,
Inc., (referred to in this document as the "Distributor"), or by dealers or
other financial institutions that offer those shares to certain classes of
investors.
Not all waivers apply to all funds. For example, waivers relating to Retirement
Plans do not apply to Oppenheimer municipal funds, because shares of those funds
are not available for purchase by or on behalf of retirement plans. Other
waivers apply only to shareholders of certain funds.
For the purposes of some of the waivers described below and in the Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds, the
term "Retirement Plan" refers to the following types of plans: (1)plans
qualified under Sections 401(a) or 401(k) of the Internal Revenue Code, (2)
non-qualified deferred compensation plans, (3) employee benefit plans3 (4) Group
Retirement Plans4 (5) 403(b)(7) custodial plan accounts (6) Individual
Retirement Accounts ("IRAs"), including traditional IRAs, Roth
IRAs, SEP-IRAs, SARSEPs or SIMPLE plans
The interpretation of these provisions as to the applicability of a special
arrangement or waiver in a particular case is in the sole discretion of the
Distributor or the transfer agent (referred to in this document as the "Transfer
Agent") of the particular Oppenheimer fund. These waivers and special
arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the
"Manager"). Waivers that apply at the time shares are redeemed must be requested
by the shareholder and/or dealer in the redemption request.
--------------
1. Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
2. In the case of Oppenheimer Senior Floating Rate Fund, a
continuously-offered closed-end fund, references to contingent deferred sales
charges mean the Fund's Early Withdrawal Charges and references to "redemptions"
mean "repurchases" of
shares.
3. An "employee benefit plan" means any plan or arrangement, whether or not
it is "qualified" under the Internal Revenue Code, under which Class A shares of
an Oppenheimer fund or funds are purchased by a fiduciary or other administrator
for the account of participants who are employees of a single employer or of
affiliated employers. These may include, for example, medical savings accounts,
payroll deduction plans or similar plans. The fund accounts must be registered
in the name of the fiduciary or administrator purchasing the shares for the
benefit of participants in the plan.
4. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship, members
and employees of a partnership or association or other organized group of
persons (the members of which may include other groups), if the group has made
special arrangements with the Distributor and all members of the group
participating in (or who are eligible to participate in) the plan purchase Class
A shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution designated by the group. Such plans
include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than
plans for public school employees. The term "Group Retirement Plan" also
includes qualified retirement plans and non-qualified deferred compensation
plans and IRAs that purchase Class A shares of an Oppenheimer fund or funds
through a single investment dealer, broker or other financial institution that
has made special arrangements with the Distributor enabling those plans to
purchase Class A shares at net asset value but subject to the Class A contingent
deferred sales charge.
I. Applicability of Class A Contingent Deferred Sales Charges in Certain
Cases
Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial
Sales Charge but May Be Subject to the Class A Contingent Deferred Sales Charge
(unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any of
the Oppenheimer funds in the cases listed below. However, these purchases may be
subject to the Class A contingent deferred sales charge if redeemed within 18
months of the end of the calendar month of their purchase, as described in the
Prospectus (unless a waiver described elsewhere in this Appendix applies to the
redemption). Additionally, on shares purchased under these waivers that are
subject to the Class A contingent deferred sales charge, the Distributor will
pay the applicable commission described in the Prospectus under "Class A
Contingent Deferred Sales Charge."3 This waiver provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more. |_| Purchases by
a Retirement Plan (other than an IRA or 403(b)(7) custodial
plan) that:
(1) buys shares costing $500,000 or more, or
(2) has, at the time of purchase, 100 or more eligible employees or total plan
assets of $500,000 or more, or
(3) certifies to the Distributor that it projects to have annual plan purchases
of $200,000 or more. |_| Purchases by an OppenheimerFunds-sponsored Rollover
IRA, if the purchases are made:
(1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for those purchases, or (2)
by a direct rollover of a distribution from a qualified Retirement Plan if
the administrator of that Plan has made special arrangements with the
Distributor for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith,
Inc. ("Merrill Lynch") on a daily valuation basis for the Retirement Plan. On
the date the plan sponsor signs the record-keeping service agreement with
Merrill Lynch, the Plan must have $3 million or more of its assets invested in
(a) mutual funds, other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM"), that are made available under a Service Agreement
between Merrill Lynch and the mutual fund's principal underwriter or
distributor, and (b) funds advised or managed by MLAM (the funds described in
(a) and (b) are referred to as "Applicable Investments").
(2) The record keeping for the Retirement Plan is performed on a daily
valuation basis by a record keeper whose services are provided under a contract
or arrangement between the Retirement Plan and Merrill Lynch. On the date the
plan sponsor signs the record keeping service agreement with Merrill Lynch, the
Plan must have $3 million or more of its assets (excluding assets invested in
money market funds) invested in Applicable Investments.
(3) he record keeping for a Retirement Plan is handled under a service
agreement with Merrill Lynch and on the date the plan sponsor signs that
agreement, the Plan has 500 or more eligible employees (as determined
by the Merrill Lynch plan conversion manager).
|_| Purchases by a Retirement Plan whose record keeper had a cost-allocation
agreement with the Transfer Agent on or before May 1, 1999.
II. Waivers of Class A Sales Charges of Oppenheimer Funds
A. Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers.
Class A shares purchased by the following investors are not subject to any Class
A sales charges (and no commissions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its affiliates, and
retirement plans established by them for their employees. The term "immediate
family" refers to one's spouse, children, grandchildren, grandparents, parents,
parents-in-law, brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews; relatives by
virtue of a remarriage (step-children, step-parents, etc.) are included.
|_| Registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose.
|_| Dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for their
employees.
|_| Employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered into
sales arrangements with such dealers or brokers (and which are identified as
such to the Distributor) or with the Distributor. The purchaser must certify to
the Distributor at the time of purchase that the purchase is for the purchaser's
own account (or for the benefit of such employee's spouse or minor children).
|_| Dealers, brokers, banks or registered investment advisors that have
entered into an agreement with the Distributor providing specifically for the
use of shares of the Fund in particular investment products made available to
their clients. Those clients may be charged a transaction fee by their dealer,
broker, bank or advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the purchases
are made through a broker or agent or other financial intermediary that has made
special arrangements with the Distributor for those purchases.
|_| Clients of investment advisors or financial planners (that have entered
into an agreement for this purpose with the Distributor) who buy shares for
their own accounts may also purchase shares without sales charge but only if
their accounts are linked to a master account of their investment advisor or
financial planner on the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special arrangements .
Each of these investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit sharing or
other benefit plan which beneficially owns shares for those persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which is the
beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate agreement
with the Distributor. |_| Dealers, brokers, banks, or registered investment
advisers that have entered into an agreement with the Distributor to sell shares
to defined contribution employee retirement plans for which the dealer, broker
or investment adviser provides administration services. |_| Retirement Plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 401(k), 403(b) or 457
of the Internal Revenue Code), in each case if those purchases are made through
a broker, agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases. |_| A TRAC-2000 401(k)
plan (sponsored by the former Quest for Value Advisors) whose Class B or Class C
shares of a Former Quest for Value Fund were exchanged for Class A shares of
that Fund due to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995. |_| A qualified Retirement Plan that had agreed with the
former Quest for Value Advisors to purchase shares of any of the Former Quest
for Value Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that arrangement
was consummated and share purchases commenced by December 31, 1996. B. Waivers
of Initial and Contingent Deferred Sales Charges in Certain Transactions.
Class A shares issued or purchased in the following transactions are not
subject to sales charges (and no commissions are paid by the Distributor on
such purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party. |_| Shares
purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other Oppenheimer funds (other than Oppenheimer
Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor. |_| Shares purchased
through a broker-dealer that has entered into a special agreement with the
Distributor to allow the broker's customers to purchase and pay for shares
of Oppenheimer funds using the proceeds of shares redeemed in the prior 30
days from a mutual fund (other than a fund managed by the Manager or any of
its subsidiaries) on which an initial sales charge or contingent deferred
sales charge was paid. This waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were
purchased and paid for in this manner. This waiver must be requested when
the purchase order is placed for shares of the Fund, and the Distributor
may require evidence of qualification for this waiver. |_| Shares purchased
with the proceeds of maturing principal units of any Qualified Unit
Investment Liquid Trust Series. |_| Shares purchased by the reinvestment of
loan repayments by a participant in a Retirement Plan for which the Manager
or an affiliate acts as sponsor.
C. Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.
The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the account value adjusted annually.
|_| Involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (please refer to "Shareholder Account Rules
and Policies," in the applicable fund Prospectus).
|_|For distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes:
(1) Following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary. The death or disability must occur
after the participant's account was established.
(2) To return excess contributions.
(3) To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.4
(5) Under a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code, or, in the case of an IRA, a divorce or separation
agreement described in Section 71(b) of the Internal Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue Code.
(7)To make "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.
(9) Separation from service.5
(10) Participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or a subsidiary of
the Manager) if the plan has made special arrangements with the
Distributor.
(11) Plan termination or "in-service distributions," if the redemption
proceeds are rolled over directly to an OppenheimerFunds-sponsored
IRA.
|_| For distributions from Retirement Plans having 500 or more eligible
employees, except distributions due to termination of all of the
Oppenheimer funds as an investment option under the Plan.
|_| For distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
III. Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
The Class B and Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions or redeemed in certain
circumstances described below.
A. Waivers for Redemptions in Certain Cases.
The Class B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
|_| Shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus. |_| Redemptions from
accounts other than Retirement Plans following the death or disability of
the last surviving shareholder, including a trustee of a grantor trust or
revocable living trust for which the trustee is also the sole beneficiary.
The death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration. |_|
Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch. |_|
Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into a
special arrangement with the Distributor for this purpose. |_| Redemptions
requested in writing by a Retirement Plan sponsor of Class C shares of an
Oppenheimer fund in amounts of $1 million or more held by the Retirement
Plan for more than one year, if the redemption proceeds are invested in
Class A shares of one or more Oppenheimer funds. |_| Distributions from
Retirement Plans or other employee benefit plans for any of the following
purposes:
(1) Following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary. The death or disability must occur
after the participant's account was established in an Oppenheimer fund. (2) To
return excess contributions made to a participant's account. (3) To return
contributions made due to a mistake of fact. (4) To make hardship withdrawals,
as defined in the plan.6 (5) To make distributions required under a Qualified
Domestic Relations Order or, in the case of an IRA, a divorce or separation
agreement described in Section 71(b) of the Internal Revenue Code. (6) To meet
the minimum distribution requirements of the Internal Revenue Code. (7) To make
"substantially equal periodic payments" as described in Section 72(t) of the
Internal Revenue Code. (8) For loans to participants or beneficiaries.7 (9) On
account of the participant's separation from service.8 (10) Participant-directed
redemptions to purchase shares of a mutual fund (other than a fund managed by
the Manager or a subsidiary of the Manager) offered as an investment option in a
Retirement Plan if the plan has made special arrangements with the Distributor.
(11) Distributions made on account of a plan termination or "in-service"
distributions, if the redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA. (12) Distributions from Retirement Plans having
500 or more eligible employees, but excluding distributions made because of the
Plan's elimination as investment options under the Plan of all of the
Oppenheimer funds that had been offered. (13) For distributions from a
participant's account under an Automatic Withdrawal Plan after the participant
reaches age 59 1/2 , as long as the aggregate value of the distributions does
not exceed 10% of the account's value, adjusted annually. (14) Redemptions of
Class B shares under an Automatic Withdrawal Plan for an account other than a
Retirement Plan, if the aggregate value of the redeemed shares does not exceed
10% of the account's value, adjusted annually.
|_|Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if the
aggregate value of the redeemed shares does not exceed 10% of the
account's value annually.
B. Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and Class C
shares
sold or issued in the following cases:
|_| Shares sold to the Manager or its affiliates.
|_| Shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose.
|_| Shares issued in plans of reorganization to which the Fund is a party.
|_|Shares sold to present or former officers, directors, trustees or employees
(and their "immediate families" as defined above in Section I.A.) of the
Fund, the Manager and its affiliates and retirement plans established by
them for their employees.
IV. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers for
Class A, Class B and Class C shares described in the Prospectus or
Statement of Additional Information of the Oppenheimer funds are modified
as described below for certain persons who were shareholders of the former
Quest for Value Funds. To be eligible, those persons must have been
shareholders on November 24, 1995, when OppenheimerFunds, Inc. became the
investment advisor to those former Quest for Value Funds. Those funds
include:
<PAGE>
Oppenheimer Quest Value Fund, Inc. Oppenheimer Quest Small Cap
Value Fund
Oppenheimer Quest Balanced Value Fund Oppenheimer Quest Global Value
Fund
Oppenheimer Quest Opportunity Value
Fund
These arrangements also apply to shareholders of the following funds when
they merged (were reorganized) into various Oppenheimer funds on November 24,
1995:
Quest for Value U.S. Government Quest for Value New York Tax-Exempt
Income Fund Fund
Quest for Value Investment Quality Quest for Value National Tax-Exempt
Income Fund Fund
Quest for Value Global Income Fund Quest for Value California Tax-Exempt
Fund
All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent
deferred sales charges described in this Appendix apply to shares of an
Oppenheimer fund that are either:
|_| acquired by such shareholder pursuant to an exchange of shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds, or
|_| purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of the
Former Quest
for Value Funds into that other Oppenheimer fund on November 24, 1995.
A. Reductions or Waivers of Class A Sales Charges.
|X| Reduced Class A Initial Sales Charge Rates for Certain Former
Quest for Value Funds Shareholders.
Purchases by Groups and Associations. The following table sets forth the initial
sales charge rates for Class A shares purchased by members of "Associations"
formed for any purpose other than the purchase of securities. The rates in the
table apply if that Association purchased shares of any of the Former Quest for
Value Funds or received a proposal to purchase such shares from OCC Distributors
prior to November 24, 1995.
--------------------------------------------------------------------------------
Initial Sales Initial Sales Number of Eligible Charge as a % of Charge as a % of
Commission as % Employees or Members Offering Price Net Amount Invested of
Offering Price
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60% more than 49
--------------------------------------------------------------------------------
For purchases by Associations having 50 or more eligible employees or members,
there is no initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge described in
the applicable fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either the
sales charge rate in the table based on the number of members of an Association,
or the sales charge rate that applies under the Right of Accumulation described
in the applicable fund's Prospectus and Statement of Additional Information.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations also may purchase shares for their individual or
custodial accounts at these reduced sales charge rates, upon request to the
Distributor.
|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any
Class A initial or contingent deferred sales charges:
|_| Shareholders who were shareholders of the AMA Family of Funds on
February 28, 1991 and who acquired shares of any of the Former Quest for Value
Funds by merger of a portfolio of the AMA Family of Funds.
|_| Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.
|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.
B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.
|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund
into the fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:
|_| withdrawals under an automatic withdrawal plan holding only either
Class B or Class C shares if the annual withdrawal does not exceed 10% of the
initial value of the account value, adjusted annually, and |_| liquidation of a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the required minimum value of such accounts.
|X| Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, Class B or Class C
shares of an Oppenheimer fund. The shares must have been acquired by the merger
of a Former Quest for Value Fund into the fund or by exchange from an
Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995:
|_| redemptions following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S. Social Security
Administration); |_| withdrawals under an automatic withdrawal plan (but only
for Class B or Class C shares) where the annual withdrawals do not exceed 10% of
the initial value of the account value; adjusted annually, and |_| liquidation
of a shareholder's account if the aggregate net asset value of shares held in
the account is less than the required minimum account value. A shareholder's
account will be credited with the amount of any contingent deferred sales charge
paid on the redemption of any Class A, Class B or Class C shares of the
Oppenheimer fund described in this section if the proceeds are invested in the
same Class of shares in that fund or another Oppenheimer fund within 90 days
after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Connecticut Mutual Investment Accounts, Inc.
The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix) of
the following Oppenheimer funds (each is referred to as a "Fund" in this
section):
o Oppenheimer U. S. Government Trust,
o Oppenheimer Bond Fund,
o Oppenheimer Disciplined Value Fund and
o Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return
Account
Connecticut Mutual Government Securities CMIA LifeSpan Capital Appreciation
Account Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account
A. Prior Class A CDSC and Class A Sales Charge Waivers.
|_| Class A Contingent Deferred Sales Charge. Certain shareholders of a
Fund and the other Former Connecticut Mutual Funds are entitled to continue to
make additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge on
an amount equal to the current market value or the original purchase price of
the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other Former
Connecticut Mutual Funds were $500,000 prior to March 18, 1996, as a result of
direct purchases or purchases pursuant to the Fund's policies on Combined
Purchases or Rights of Accumulation, who still hold those shares in that Fund or
other Former Connecticut Mutual Funds, and (2) persons whose intended purchases
under a Statement of Intention entered into prior to March 18, 1996, with the
former general distributor of the Former Connecticut Mutual Funds to purchase
shares valued at $500,000 or more over a 13-month period entitled those persons
to purchase shares at net asset value without being subject to the Class A
initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut Mutual
Funds that were purchased at net asset value prior to March 18, 1996, remain
subject to the prior Class A CDSC, or if any additional shares are purchased by
those shareholders at net asset value pursuant to this arrangement they will be
subject to the prior Class A CDSC.
|_| Class A Sales Charge Waivers. Additional Class A shares of a Fund may
be purchased without a sales charge, by a person who was in one (or more) of the
categories below and acquired Class A shares prior to March 18, 1996, and still
holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled $500,000 or
more, including investments made pursuant to the Combined Purchases, Statement
of Intention and Rights of Accumulation features available at the time of the
initial purchase and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged; (2) any
participant in a qualified plan, provided that the total initial amount invested
by the plan in the Fund or any one or more of the Former Connecticut Mutual
Funds totaled $500,000 or more; (3) Directors of the Fund or any one or more of
the Former Connecticut Mutual Funds and members of their immediate families; (4)
employee benefit plans sponsored by Connecticut Mutual Financial Services,
L.L.C. ("CMFS"), the prior distributor of the Former Connecticut Mutual Funds,
and its affiliated companies; (5) one or more members of a group of at least
1,000 persons (and persons who are retirees from such group) engaged in a common
business, profession, civic or charitable endeavor or other activity, and the
spouses and minor dependent children of such persons, pursuant to a marketing
program between CMFS and such group; and (6) an institution acting as a
fiduciary on behalf of an individual or individuals, if such institution was
directly compensated by the individual(s) for recommending the purchase of the
shares of the Fund or any one or more of the Former Connecticut Mutual Funds,
provided the institution had an agreement with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of the Fund.
B. Class A and Class B Contingent Deferred Sales Charge Waivers.
In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B shares
of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund
provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by
exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been
purchased prior to March 18, 1996:
(1) by the estate of a deceased shareholder; (2) upon the disability of a
shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code; (3)
for retirement distributions (or loans) to participants or beneficiaries from
retirement plans qualified under Sections 401(a) or 403(b)(7)of the Code, or
from IRAs, deferred compensation plans created under Section 457 of the Code, or
other employee benefit plans; (4) as tax-free returns of excess contributions to
such retirement or employee benefit plans; (5) in whole or in part, in
connection with shares sold to any state, county, or city, or any
instrumentality, department, authority, or agency thereof, that is prohibited by
applicable investment laws from paying a sales charge or commission in
connection with the purchase of shares of any registered investment management
company; (6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger, acquisition
or similar reorganization transaction; (7) in connection with the Fund's right
to involuntarily redeem or liquidate the Fund; (8) in connection with automatic
redemptions of Class A shares and Class B shares in certain retirement plan
accounts pursuant to an Automatic Withdrawal Plan but limited to no more than
12% of the original value annually; or (9) as involuntary redemptions of shares
by operation of law, or under procedures set forth in the Fund's Articles of
Incorporation, or as adopted by the Board of Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of
Advance America Funds, Inc.
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity Income Fund who
acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those Oppenheimer
funds on October 18, 1991, and who held shares of Advance America Funds, Inc. on
March 30, 1990, may purchase Class A shares of those four Oppenheimer funds at a
maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of
Oppenheimer Convertible Securities Fund
Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to purchase
those shares at net asset value without sales charge:
|_| the Manager and its affiliates, |_| present or former officers,
directors, trustees and employees (and their "immediate families" as defined in
the Fund's Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them or the prior investment
advisor of the Fund for their employees, |_| registered management investment
companies or separate accounts of insurance companies that had an agreement with
the Fund's prior investment advisor or distributor for that purpose, |_| dealers
or brokers that have a sales agreement with the Distributor, if they purchase
shares for their own accounts or for retirement plans for their employees, |_|
employees and registered representatives (and their spouses) of dealers or
brokers described in the preceding section or financial institutions that have
entered into sales arrangements with those dealers or brokers (and whose
identity is made known to the Distributor) or with the Distributor, but only if
the purchaser certifies to the Distributor at the time of purchase that the
purchaser meets these qualifications, |_| dealers, brokers, or registered
investment advisors that had entered into an agreement with the Distributor or
the prior distributor of the Fund specifically providing for the use of Class M
shares of the Fund in specific investment products made available to their
clients, and |_| dealers, brokers or registered investment advisors that had
entered into an agreement with the Distributor or prior distributor of the
Fund's shares to sell shares to defined contribution employee retirement plans
for which the dealer, broker, or investment advisor provides administrative
services.
<PAGE>
For More Information About Oppenheimer MidCap Fund
Internet Web Site:
www.oppenheimerfunds.com
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian Bank
The Bank of New York
One Wall Street
New York, New York 10015
Independent Accountants
KPMG LLP
707 Seventeenth Street
Suite 2300
Denver, Colorado 80202
Legal Counsel
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
890
PX745.0201
1 No commission will be paid on sales of Class A shares purchased with the
redemption proceeds of shares of another mutual fund offered as an investment
option in a retirement plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor, if the
purchase occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan.
2. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan.
3 However, that commission will not be paid on purchases of shares in
amounts of $1 million or more (including any right of accumulation) by a
Retirement Plan that pays for the purchase with the redemption proceeds of Class
C shares of one or more Oppenheimer funds held by the Plan for more than one
year.
4 This provision does not apply to IRAs.
5 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.
6 This provision does not apply to IRAs.
7 This provision does not apply to loans from 403(b)(7) custodial plans.
8 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.
<PAGE>
OPPENHEIMER MIDCAP FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits:
-------- --------
(a) Declaration of Trust dated 6/18/97: Filed with Registrant's Initial
Registration Statement (Reg. No. 333-31533), 7/18/97, and incorporated herein by
reference.
(b) By-Laws dated 6/18/97: Filed with Registrant's Initial Registration
Statement (Reg. No. 333-31533), 7/18/97, and incorporated herein by reference.
(c) (i) Specimen Class A Share Certificate: Filed with Registrant's
Initial Registration Statement, 7/18/97, and incorporated herein by
reference.
(ii) Specimen Class B Share Certificate: Filed with Registrant's
Initial Registration Statement, 7/18/97, and incorporated herein by
reference.
(iii) Specimen Class C Share Certificate: Filed with Registrant's
Initial Registration Statement, 7/18/97, and incorporated herein by
reference.
(iv) Specimen Class N Share Certificate: Filed herewith.
(v) Specimen Class Y Share Certificate: Filed with Registrant's
Initial Registration Statement, 7/18/97, and incorporated herein by
reference.
(d) Investment Advisory Agreement dated 11/17/97: Filed with
Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533), 11/3/97,
and incorporated herein by reference.
(e) (i) General Distributor's Agreement dated 11/17/97, filed with
Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533), 11/3/97,
and incorporated herein by reference.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer Agreement:
Filed with Pre-Effective Amendment No. 2 of Oppenheimer Trinity Value Fund
(Reg. No. 333-79707), 8/25/99, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker Agreement:
Filed with Pre-Effective Amendment No. 2 of Oppenheimer Trinity Value Fund
(Reg. No. 333-79707), 8/25/99, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency Agreement:
Filed with Pre-Effective Amendment No. 2 of Oppenheimer Trinity Value Fund
(Reg. No. 333-79707), 8/25/99, and incorporated herein by reference.
(f) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Previously filed with Post-Effective Amendment No. 43
to the Registration Statement of Oppenheimer Quest For Value Funds (Reg.
No. 333-31533), 12/21/98, and incorporated herein by reference.
Broker Agreement between Oppenheimer Fund Management, Inc. and
Newbridge Securities, Inc. dated October 1, 1986: Previously filed with
Post-Effective Amendment No. 25 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272), 11/1/86, refiled with
Post-Effective Amendment No. 45 of Oppenheimer Growth Fund (Reg. No.
2-45272), 8/22/94, pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(g) (i) Custody Agreement between Registrant and The Bank of New York:
Filed with Registrant's Pre-Effective Amendment No. 1, 9/22/97, and
incorporated herein by reference.
(ii) Foreign Custody Manager Agreement between Registrant and The Bank
of New York: Filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer World Bond Fund (Reg. No. 333-48973), 4/23/98, and
incorporated herein by reference.
(h) Not applicable.
<PAGE>
(i) Opinion and Consent of Counsel dated 11/3/97: Filed with
Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533), 11/3/97,
and incorporated herein by reference.
(j) Independent Auditors' Consent: Not Applicable.
(k) Not applicable.
(l) Investment Letter dated 10/1/97 from OppenheimerFunds, Inc. to
Registrant: Filed with Registrant's Pre-Effective Amendment No. 2 (Reg. No.
333-31533), 11/3/97, and incorporated herein by reference.
(m) (i) Service Plan and Agreement for Class A shares dated 11/17/97:
Filed with Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533),
11/3/97, and incorporated herein by reference.
<PAGE>
(ii) Amended and Restated Distribution and Service Plan and Agreement
for Class B shares dated 2/3/98: Filed with Registrant's Post-Effective
Amendment No. 1 (Reg. No. 333-31533), 5/11/98, and incorporated herein by
reference.
(iii) Amended and Restated Distribution and Service Plan and Agreement
for Class C shares dated 2/3/98: Filed with Registrant's Post-Effective
Amendment No. 1 (Reg. No. 333-31533), 5/11/98, and incorporated herein by
reference.
(iv) Form of Distribution and Service Plan and Agreement for Class N
shares: Filed herewith.
(n) OppenheimerFunds Multiple Class Plan under Rule 18f-3 dated
8/24/99: Previously filed with Pre-Effective Amendment No. 1 to the
Registration Statement of Oppenheimer Senior Floating Rate Fund (Reg. No.
333-82579), and incorporated herein by reference.
-- Powers of Attorney: Previously filed with Registrant's Initial
Registration Statement, 7/18/97, and incorporated herein by reference.
Power of Attorney for Brian W. Wixted: Previously filed with Post-Effective
Amendment No. 5 to the Registration Statement of Oppenheimer Quest Capital
Value Fund, Inc., (Reg. No. 333-16881), 2/22/00, and incorporated herein by
reference.
-- Certified Board Resolutions: Filed with Pre-Effective Amendment No.
1 of Registrant, 9/22/97, and incorporated herein by reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
-------- -------------------
Reference is made to the provisions of Article Seven of Registrant's Amended and
Restated Declaration of Trust filed as Exhibit 23(a) to this Registration
Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final adjudication
of such issue.
Item 26. Business and Other Connections of the Investment Adviser
--------------------------------------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and
certain subsidiaries and affiliates act in the same capacity to other investment
companies, including without limitation those described in Parts A and B hereof
and listed in Item 26(b) below.
(b) There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each officer and
director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal
years has been, engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
--------------------------------------------------------------------------------
Name and Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
Amy Adamshick,
Vice President Scudder Kemper Investments (July 1998 - May
2000)
Charles E. Albers, Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since April 1998); a Chartered Financial Analyst.
Edward Amberger,
Assistant Vice President None.
Janette Aprilante,
Assistant Vice President None.
Victor Babin,
Senior Vice President None.
Bruce L. Bartlett,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
George Batejan,
Executive Vice President/
Chief Information Officer Formerly Senior Vice President (until May 1998).
Kevin Baum,
Assistant Vice President None.
Connie Bechtolt,
Assistant Vice President None.
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President None.
Mark Binning
Assistant Vice President None.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting (since
May 1996); an officer of other Oppenheimer
funds.
John R. Blomfield,
Vice President None.
Chad Boll,
Assistant Vice President None
Scott Brooks,
Vice President None.
Jeffrey Burns,
Vice President, Assistant Counsel Stradley, Ronen
Stevens and Young, LLP (February
1998-September 1999).
Bruce Burroughs,
Vice President
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of Rochester
Fund Services, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial
Asset Management Corporation.
John Cardillo,
Assistant Vice President None.
Elisa Chrysanthis
Assistant Vice President None.
H.C. Digby Clements,
Vice President: Rochester Division None.
O. Leonard Darling,
Vice Chairman, Executive Vice
President and Chief Investment
Officer and Director Chairman of the Board and a director (since
June 1999) and Senior Managing Director (since
December 1998) of HarbourView Asset Management
Corporation; a director (since March 2000) of
OFI Private Investments, Inc.; Trustee (1993)
of Awhtolia College - Greece; formerly Chief
Executive Officer of HarbourView Asset
Management Corporation (December 1998 - June
1999).
John Davis
Assistant Vice President EAB Financial (April 1998-February 1999).
Robert A. Densen,
Senior Vice President None.
Ruggero de'Rossi
Vice President Formerly, Chief Strategist at ING Barings (July
1998 - March 2000).
Sheri Devereux,
Vice President None.
Max Dietshe
Vice President Deloitte & Touche LLP (1989-1999).
Craig P. Dinsell
Executive Vice President None.
Steven Dombrower
Vice President
John Doney,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since September 1993)
and a director (since January 1992) of the
Distributor; Executive Vice President, General
Counsel (since September 1995) and a director
(since August 1994) of HarbourView Asset
Management Corporation, Shareholder Services,
Inc., Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc., of OFI
Private Investments, Inc. (since March 2000),
and of PIMCO Trust Company (since May 2000);
President and a director of Centennial Asset
Management Corporation (since September 1995)
and of Oppenheimer Real Asset Management, Inc.
(since July 1996); Vice President and a
director (since September 1997) of
OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc; a director
(since April 2000) of OppenheimerFunds Legacy
Program, a charitable trust program established by
the Manager; General Counsel (since May 1996) and
Secretary (since April 1997) of Oppenheimer
Acquisition Corp.; an officer of other Oppenheimer
funds.
Bruce Dunbar,
Vice President None.
John Eiler
Vice President None.
Daniel Engstrom,
Assistant Vice President None.
Armond Erpf
Assistant Vice President None.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Edward N. Everett,
Assistant Vice President None.
George Fahey,
Vice President None.
Leslie A. Falconio,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds (since
6/99).
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer
Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Katherine P. Feld,
Vice President, Senior Counsel
and Secretary Vice President and Secretary of the
Distributor; Secretary and Director of
Centennial Asset Management Corporation; Vice
President and Secretary of Oppenheimer Real
Asset Management, Inc.; Secretary of
HarbourView Asset Management Corporation,
Oppenheimer Partnership Holdings, Inc.,
Shareholder Financial Services, Inc. and
Shareholder Services, Inc.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio manager
of certain Oppenheimer funds; presently he
holds the following other positions: Director
(since 1995) of ICI Mutual Insurance Company;
Governor (since 1994) of St. John's College;
Director (since 1994 - present) of
International Museum of Photography at George
Eastman House..
David Foxhoven,
Assistant Vice President Formerly Manager, Banking Operations Department
(July 1996 - November 1998).
Colleen Franca,
Assistant Vice President None.
Crystal French
Vice President None.
Dan Gangemi,
Vice President None.
Subrata Ghose
Assistant Vice President Formerly, Equity Analyst at Fidelity
Investments (1995 - March 2000).
Charles Gilbert,
Assistant Vice President None.
Alan Gilston,
Vice President None.
Jill Glazerman,
Vice President None.
Paul Goldenberg,
Vice President Formerly, President of Advantageware (September
1992 - September 1999).
Mikhail Goldverg
Assistant Vice President None.
Laura Granger,
Vice President Formerly, Portfolio Manager at Fortis Advisors
(July 1998-October 2000).
Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and
Director Chief Financial Officer, Treasurer and director
of Oppenheimer Acquisition Corp.; Executive
Vice President of HarbourView Asset Management
Corporation; President. Chief Executive Officer
and director of PIMCO Trust Company; director
of OppenheimerFunds, Legacy Program (charitable
trust program); Vice President of OFI Private
Investments, Inc. and a Member and Fellow of
the Institute of Chartered Accountants.
Robert Grill,
Senior Vice President None.
Robert Guy,
Senior Vice President None.
Robert Haley,
Assistant Vice President None.
Kelly Haney,
Assistant Vice President None.
Thomas B. Hayes,
Vice President None.
Dennis Hess,
Assistant Vice President None.
Dorothy Hirshman,
Assistant Vice President None
Merryl Hoffman,
Vice President and
Senior Counsel None
Merrell Hora,
Assistant Vice President None.
Scott T. Huebl,
Vice President None.
Margaret Hui
Assistant Vice President Formerly Vice President - Syndications
of Sanwa Bank California (January 1998 - September
1999).
James Hyland,
Assistant Vice President Formerly Manager of Customer Research
for Prudential Investments (February 1998 - July
1999).
David Hyun,
Vice President Formerly portfolio manager, technology
analyst and research associate at Fred Alger
Management, Inc. (August 1993 - June 2000).
Steve Ilnitzki,
Senior Vice President Formerly Vice President of Product Management
at Ameritrade (until March 2000).
Kathleen T. Ives,
Vice President None.
William Jaume,
Vice President Senior Vice President (since April 2000) of
HarbourView Asset Management Corporation.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew Jordan,
Assistant Vice President None.
Deborah Kaback,
Vice President and
Senior Counsel Senior Vice President and Deputy General
Counsel of Oppenheimer Capital (April
1989-November 1999).
Lewis Kamman
Vice President Senior Consultant for Bell Atlantic Network
Integration, Inc. (June 1997-December 1998).
Jennifer Kane
Assistant Vice President None.
Lynn Oberist Keeshan
Senior Vice President Formerly (until March 1999) Vice
President, Business Development and Treasury at
Liz Claiborne, Inc.
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President None.
Walter Konops,
Assistant Vice President None.
Avram Kornberg,
Senior Vice President None.
Jimmy Kourkoulakos,
Assistant Vice President. None.
John Kowalik,
Senior Vice President An officer and/or portfolio
manager for certain OppenheimerFunds.
Joseph Krist,
Assistant Vice President None.
Christopher Leavy
Senior Vice President Vice President and Portfolio
Manager at Morgan Stanley Investment Management
(1997-September 2000) and an Analyst and
Portfolio Manager at Crestar Asset Management
(1995-1997).
Michael Levine,
Vice President None.
Shanquan Li,
Vice President None.
Mitchell J. Lindauer,
Vice President and Assistant
General Counsel None.
Malissa Lischin
Assistant Vice President Formerly Associate Manager, Investment
Management Analyst at Prudential (1996 - March
2000).
David Mabry,
Vice President None.
Bridget Macaskill,
Chairman, Chief Executive Officer
and Director President, Chief Executive Officer and a
director (since March 2000) of OFI Private
Investments, Inc., an investment adviser
subsidiary of the Manager; Chairman and a
director of Shareholder Services, Inc. (since
August 1994) and Shareholder Financial
Services, Inc. (since September 1995), transfer
agent subsidiaries of the Manager; President
(since September 1995) and a director (since
October 1990) of Oppenheimer Acquisition Corp.,
the Manager's parent holding company; President
(since September 1995) and a director (since
November 1989) of Oppenheimer Partnership
Holdings, Inc., a holding company subsidiary of
the Manager; President and a director (since
October 1997) of OppenheimerFunds International
Ltd., an offshore fund management subsidiary of
the Manager and of Oppenheimer Millennium Funds
plc; a director of HarbourView Asset Management
Corporation (since July 1991) and of
Oppenheimer Real Asset Management, Inc. (since
July 1996), investment adviser subsidiaries of
the Manager; a director (since April 2000) of
OppenheimerFunds Legacy Program, a charitable
trust program established by the Manager; a
director of Prudential Corporation plc (a U.K.
financial service company); President and a
trustee of other Oppenheimer funds; formerly
President of the Manager (June 1991 - August
2000).
Steve Macchia,
Vice President None.
Marianne Manzolillo,
Assistant Vice President Formerly, Vice President for DLJ
High Yield Research Department (February 1993 -
July 2000).
Luann Mascia,
Vice President None.
Philip T. Masterson,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Lisa Migan,
Assistant Vice President None.
Andrew J. Mika
Senior Vice President Formerly a Second Vice
President for Guardian Investments (June
1990 - October 1999).
Joy Milan
Assistant Vice President None.
Denis R. Molleur,
Vice President and
Senior Counsel None.
Nikolaos Monoyios,
Vice President A Vice President and/or portfolio
manager of certain Oppenheimer funds.
John Murphy,
President, Chief Operating
Officer and Director President of MassMutual
Institutional Funds and the MML Series Funds
until September 2000.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Gina M. Palmieri,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since June 1999).
Frank Pavlak,
Vice President Formerly. Branch Chief of Investment Company
Examinations at U.S. Securities and Exchange
Commission (January 1981 - December 1998).
James Phillips
Assistant Vice President None.
David Pellegrino
Vice President None.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Michael Quinn,
Assistant Vice President None.
Heather Rabinowitz,
Assistant Vice President None.
Julie Radtke,
Vice President None.
Thomas Reedy,
Vice President Vice President (since April 1999) of
HarbourView Asset Management Corporation; an
officer and/or portfolio manager of certain
Oppenheimer funds.
John Reinhardt,
Vice President: Rochester Division None
David Robertson,
Senior Vice President Formerly, Director of Sales and
Marketing for Schroder Investment Management of
North America (March 1998 - March 2000).
Jeffrey Rosen,
Vice President None.
Marci Rossell,
Vice President and Corporate Economist Economist with Federal
Reserve Bank of Dallas (April 1996 - March
1999).
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President President and director of the
Distributor; Vice President (since March 2000)
of OFI Private Investments, Inc.
Andrew Ruotolo
Executive Vice President President and director of Shareholder Services,
Inc.; formerly Chief Operations Officer for
American International Group (August
1997-September 1999).
Rohit Sah,
Assistant Vice President None.
Valerie Sanders,
Vice President None.
Kenneth Schlupp
Assistant Vice President Assistant Vice President (since March 2000) of
OFI Private Investments, Inc.
Jeff Schneider,
Vice President Formerly (until May 1999) Director, Personal
Decisions International.
Ellen Schoenfeld,
Vice President None.
Brooke Schulte,
Assistant Vice President None.
Allan Sedmak
Assistant Vice President None.
Jennifer Sexton,
Vice President None.
Martha Shapiro,
Assistant Vice President None.
Connie Song,
Assistant Vice President None.
Richard Soper,
Vice President None.
Keith Spencer,
Vice President None.
Cathleen Stahl,
Vice President Assistant Vice President & Manager of Women &
Investing Program
Richard A. Stein,
Vice President:
Rochester Division Assistant Vice President (since 1995) of
Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Jayne Stevlingson,
Vice President None.
Gregg Stitt,
Assistant Vice President None.
John Stoma,
Senior Vice President None.
Deborah Sullivan,
Assistant Vice President,
Assistant Counsel Formerly, Associate General Counsel, Chief
Compliance Officer, Corporate Secretary and
Vice President of Winmill & Co. Inc. (formerly
Bull & Bear Group, Inc.), CEF Advisers, Inc.
(formerly Bull & Bear Advisers, Inc.), Investor
Service Center, Inc. and Midas Management
Corporation (November 1997 - March 2000).
Kevin Surrett,
Assistant Vice President Assistant Vice President of Product Development
At Evergreen Investor Services, Inc. (June 1995
-
May 1999).
Michael Sussman,
Assistant Vice President None.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee,
Director or Managing Partner of the Denver-based
Oppenheimer Funds; formerly, President and
Director of Centennial Asset Management
Corporation and Chairman of the Board of
Shareholder Services, Inc.
Susan Switzer,
Assistant Vice President None.
Anthony A. Tanner,
Vice President: Rochester Division None.
James Taylor,
Assistant Vice President None.
Paul Temple,
Vice President Formerly (until May 2000) Director of Product
Development at Prudential.
Angela Uttaro,
Assistant Vice President None.
Mark Vandehey,
Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Annette Von Brandis,
Assistant Vice President None.
Phillip Vottiero,
Vice President Chief Financial officer for the Sovlink Group
(April 1996 - June 1999).
Sloan Walker
Vice President
Teresa Ward,
Vice President None.
Jerry Webman,
Senior Vice President Senior Investment Officer, Director of Fixed
Income.
Barry Weiss,
Assistant Vice President Fitch IBCA (1996 - January 2000)
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Catherine White,
Assistant Vice President Formerly, Assistant Vice
President with Gruntal & Co. LLC (September 1998
- October 2000); member of the American Society
of Pension Actuaries (ASPA) since 1995.
William L. Wilby,
Senior Vice President Senior Investment Officer,
Director of International Equities; Senior Vice
President of HarbourView Asset Management
Corporation.
Donna Winn,
Senior Vice President Vice President (since March 2000) of OFI
Private Investments, Inc.
Philip Witkower,
Senior Vice President Formerly Vice President of Prudential Investments (1993
- November 2000)
Brian W. Wixted, Senior Vice President and Treasurer Treasurer (since March
1999) of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Oppenheimer Real Asset Management Corporation, Shareholder Financial Services,
Inc. and Oppenheimer Partnership Holdings, Inc., of OFI Private Investments,
Inc. (since March 2000) and of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since May 2000); Treasurer and Chief Financial
Officer (since May 2000) of PIMCO Trust Company; Assistant Treasurer (since
March 1999) of Oppenheimer Acquisition Corp. and of Centennial Asset Management
Corporation; an officer of other Oppenheimer funds; formerly Principal and Chief
Operating Officer, Bankers Trust Company - Mutual Fund Services Division (March
1995 - March 1999).
Carol Wolf, Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; serves on the Board of Chinese Children Adoption
International Parents Council, Supporters of Children, and the Advisory Board of
Denver Children's Hospital Oncology Department.
Kurt Wolfgruber
Senior Vice President Senior Investment Officer, Director of Domestic
Equities; member of the Investment Product
Review Committee and the Executive Committee of
HarbourView Asset Management Corporation;
formerly (until April 2000) a Managing Director
and Portfolio Manager at J.P. Morgan Investment
Management, Inc.
Caleb Wong,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds (since June 1999) .
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of Shareholder Services,
Inc. (since May 1985), Shareholder Financial
Services, Inc. (since November 1989),
OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Neal Zamore,
Vice President Director e-Commerce; formerly (until May 2000)
Vice President at GE Capital.
Mark Zavanelli,
Assistant Vice President None.
Arthur J. Zimmer,
Senior Vice President Senior Vice President (since
April 1999) of HarbourView Asset Management
Corporation; Vice President of Centennial Asset
Management Corporation; an officer and/or
portfolio manager of certain Oppenheimer funds.
Susan Zimmerman,
Vice President None.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer Quest /Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund Oppenheimer Capital
Appreciation Fund Oppenheimer Capital Preservation Fund Oppenheimer
Developing Markets Fund Oppenheimer Discovery Fund Oppenheimer
Emerging Growth Fund Oppenheimer Emerging Technologies Fund
Oppenheimer Enterprise Fund Oppenheimer Europe Fund Oppenheimer
Global Fund Oppenheimer Global Growth & Income Fund Oppenheimer Gold
& Special Minerals Fund Oppenheimer Growth Fund Oppenheimer
International Growth Fund Oppenheimer International Small Company
Fund Oppenheimer Large Cap Growth Fund Oppenheimer Money Market
Fund, Inc. Oppenheimer Multi-Sector Income Trust Oppenheimer
Multi-State Municipal Trust Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc. Oppenheimer Trinity Core Fund
Oppenheimer Trinity Growth Fund Oppenheimer Trinity Value Fund
Oppenheimer U.S. Government Trust Oppenheimer World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
Centennial America Fund, L.P. Centennial California Tax Exempt Trust
Centennial Government Trust Centennial Money Market Trust Centennial
New York Tax Exempt Trust Centennial Tax Exempt Trust Oppenheimer
Cash Reserves Oppenheimer Champion Income Fund Oppenheimer Capital
Income Fund Oppenheimer High Yield Fund Oppenheimer Integrity Funds
Oppenheimer International Bond Fund Oppenheimer Limited-Term
Government Fund Oppenheimer Main Street Opportunity Fund Oppenheimer
Main Street Small Cap Fund Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund Oppenheimer Real Asset Fund Oppenheimer
Senior Floating Rate Fund Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc. Oppenheimer Variable Account
Funds Panorama Series Fund, Inc.
The address of OppenheimerFunds, Inc., OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership Holdings, Inc.,
Oppenheimer Acquisition Corp. and OFI Private Investments, Inc. is Two World
Trade Center, New York, New York 10048-0203.
The address of the New York-based Oppenheimer Funds, the Quest Funds, the
Rochester-based funds, the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
Item 27. Principal Underwriter
-------------------------------------------------------------------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the Registrant's
shares. It is also the Distributor of each of the other registered open-end
investment companies for which OppenheimerFunds, Inc. is the investment adviser,
as described in Part A and B of this Registration Statement and listed in Item
26(b) above (except Oppenheimer Multi-Sector Income Trust and Panorama Series
Fund, Inc.) and for MassMutual Institutional Funds.
(b) The directors and officers of the Registrant's principal underwriter are:
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
Jason Bach Vice President None
31 Raquel Drive
Marietta, GA 30064
William Beardsley (2) Vice President None
Peter Beebe Vice President None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice President None
17011 Woodbank
Spring, TX 77379
Kevin Brosmith Senior Vice President None.
856 West Fullerton
Chicago, IL 60614
Susan Burton(2) Vice President None
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
William Coughlin Vice President None
1730 N. Clark Street
#3203
Chicago, IL 60614
Jeff Damia(2) Vice President None
Stephen Demetrovits(2) Vice President None
Christopher DeSimone Vice President None
5105 Aldrich Avenue South
Minneapolis, MN 55419
Michael Dickson Vice President None
21 Trinity Avenue
Glastonburg, CT 06033
Joseph DiMauro Vice President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Steven Dombrowser Vice President None
Andrew John Donohue(2) Executive Vice Secretary
President and Director
G. Patrick Dougherty (2) Vice President None
Cliff Dunteman Vice President None
940 Wedgewood Drive
Crystal Lake, IL 60014
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
35 Crown Terrace
Yardley, PA 19067
George Fahey Vice President None
9 Townview Ct.
Flemington, NJ 08822
Eric Fallon Vice President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice President and None
Corporate Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Brian Flahive Assistant Vice President None
John ("J") Fortuna(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Victoria Friece(1) Assistant Vice President None
Luiggino Galleto Vice President None
10302 Riesling Court
Charlotte, NC 28277
Michelle Gans Vice President None
18771 The Pines
Eden Prairie, MN 55347
L. Daniel Garrity Vice President None
27 Covington Road
Avondale Estates, GA 30002
Lucio Giliberti Vice President None
6 Cyndi Court
Flemington, NJ 08822
Ralph Grant(2) Senior Vice President/ None
National Sales Manager
Michael Guman Vice President None
3913 Pleasent Avenue
Allentown, PA 18103
Tonya Hammet Assistant Vice President None
Webb Heidinger Vice President None
90 Gates Street
Portsmouth, NH 03801
Phillip Hemery Vice President None
184 Park Avenue
Rochester, NY 14607
Edward Hrybenko (2) Vice President None
Brian Husch(2) Vice President None
Richard L. Hymes(2) Assistant Vice President None
Byron Ingram(1) Assistant Vice President None
Kathleen T. Ives(1) Vice President None
Eric K. Johnson Vice President None
28 Oxford Avenue
Mill Valley, CA 94941
Mark D. Johnson Vice President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Elyse Jurman Vice President None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL 33062
John Kavanaugh Vice President None
2 Cervantes Blvd., Apt. #301
San Francisco, CA 94123
Brian G. Kelly Vice President None
60 Larkspur Road
Fairfield, CT 06430
Michael Keogh(2) Vice President None
Lisa Klassen(1) Assistant Vice President None
Richard Klein Senior Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Brent Krantz Vice President None
2609 SW 149th Place
Seattle, WA 98166
Oren Lane Vice President None
5286 Timber Bend Drive
Brighton, MI 48116
Dawn Lind Vice President None
21 Meadow Lane
Rockville Centre, NY 11570
James Loehle Vice President None
30 Wesley Hill Lane
Warwick, NY 10990
John Lynch (2) Vice President None
Michael Magee(2) Vice President None
Steve Manns Vice President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice President None
3 St. Marks Place
Cold Spring Harbor, NY 11724
LuAnn Mascia(2) Assistant Vice President None
Theresa-Marie Maynier Vice President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice President None
704 Beaver Road
Leetsdale, PA 15056
John McDonough Vice President None
3812 Leland Street
Chevy Chase, MD 20815
Kent McGowan Vice President None
18424 12th Avenue West
Lynnwood, WA 98037
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marie Nakamura Vice President None
4111 Colony Plaza
Newport Beach, CA 92660
John Nesnay Vice President None
9511 S. Hackberry Street
Highlands Ranch, CO 80126
Kevin Neznek(2) Vice President None
Chad V. Noel Vice President None
2408 Eagleridge Drive
Henderson, NV 89014
Raymond Olson(1) Assistant Vice President None
& Treasurer
Alan Panzer Assistant Vice President None
925 Canterbury Road, Apt. #848
Atlanta, GA 30324
Kevin Parchinski Vice President None
8409 West 116th Terrace
Overland Park, KS 66210
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Brian Perkes Vice President None
8734 Shady Shore Drive
Frisco, TX 75034
Charles K. Pettit Vice President None
22 Fall Meadow Drive
Pittsford, NY 14534
Bill Presutti(2) Vice President None
Steve Puckett Vice President None
5297 Soledad Mountain Road
San Diego, CA 92109
Elaine Puleo(2) Senior Vice President None
Christopher Quinson Vice President None
Minnie Ra Vice President None
100 Dolores Street, #203
Carmel, CA 93923
Dustin Raring Vice President None
184 South Ulster
Denver, CO 80220
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
Douglas Rentschler Vice President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Michelle Simone Richter(2) Assistant Vice President None
Ruxandra Risko(2) Vice President None
David Robertson(2) Senior Vice President, None
Director of Variable
Accounts
Kenneth Rosenson Vice President None
26966 W. Malibu
Cove Colony Drive
Malibu, CA 90265
James Ruff(2) President & Director None
William Rylander (2) Vice President None
Alfredo Scalzo Vice President None
9616 Lale Chase Island Way
Tampa, FL 33626
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Eric Sharp Vice President None
862 McNeill Circle
Woodland, CA 95695
Kristen Sims (2) Vice President None
Douglas Smith Vice President None
808 South 194th Street
Seattle,WA 98148
David Sturgis Vice President None
81 Surrey Lane
Boxford, MA 01921
Brian Summe Vice President None
239 N. Colony Drive
Edgewood, KY 41017
Michael Sussman(2) Vice President None
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
George Sweeney Senior Vice President None
5 Smokehouse Lane
Hummelstown, PA 17036
Scott McGregor Tatum Vice President None
704 Inwood
Southlake, TX 76092
Martin Telles(2) Senior Vice President None
David G. Thomas Vice President None
2200 North Wilson Blvd.
Suite 102-176
Arlington, VA 22201
Tanya Valency (2) Assistant Vice President None
Mark Vandehey(1) Vice President None
Brian Villec (2) Vice President None
Andrea Walsh(1) Vice President None
Suzanne Walters(1) Assistant Vice President None
Michael Weigner Vice President None
5722 Harborside Drive
Tampa, FL 33615
Donn Weise Vice President None
3249 Earlmar Drive
Los Angeles, CA 90064
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
Philip Witkower Senior Vice President None
Cary Wozniak Vice President None
18808 Bravata Court
San Diego, CA 92128
Gregor Yuska(2) Vice President None
(1)6803 South Tucson Way, Englewood, CO 80112
(2)Two World Trade Center, New York, NY 10048
(3)350 Linden Oaks, Rochester, NY 14623
(c) Not applicable.
Item 28. Location of Accounts and Records
--------------------------------------------------------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
rules promulgated thereunder are in the possession of OppenheimerFunds, Inc. at
its offices at 6803 South Tucson Way, Englewood, Colorado 80112.
Item 29. Management Services
--------------------------------------------------------------------------------
Not applicable.
Item 30. Undertakings
--------------------------------------------------------------------------------
(a) Not applicable
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 6th day of December, 2000.
OPPENHEIMER MIDCAP FUND
By: /s/ Bridget A. Macaskill*
-------------------------------------------
Bridget A. Macaskill, President and
Chairman of the Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
/s/ Bridget A Macaskill* Chairman of the Board,
------------------------------ President (Chief
December 6, 2000
Bridget A. Macaskill Executive Officer)
and Trustee
/s/ Brian W. Wixted* Treasurer and Principal December 6, 2000
-------------------------- Financial and
Brian W. Wixted Accounting Officer
/s/ Paul Y. Clinton* Trustee December 6, 2000
-----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney* Trustee December 6, 2000
------------------------------
Thomas W. Courtney
/s/ Robert G. Galli*
------------------------ Trustee December 6, 2000
Robert G. Galli
/s/ Lacy B. Herrmann* Trustee December 6, 2000
---------------------------
Lacy B. Herrmann
/s/ George Loft* Trustee December 6, 2000
--------------------
George Loft
*By: /s/ Robert G. Zack
-----------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Registration Statement No. 333-31533
Exhibit No. Description
-------------- --------------
23(c)(iv) Specimen Class N Share Certificate
23(m)(iv) Form of Distribution and Service Plan and Agreement for Class N
Shares
