Registration No. 2-62076
File No. 811-2849
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 34 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 28 / X /
OPPENHEIMER HIGH YIELD FUND
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(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
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(Address of Principal Executive Offices)
1-303-671-3200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation - Suite 3400
Two World Trade Center, New York, New York 10048-0203
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(Names and Addresses of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On November 1, 1995, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / On ------------------, pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / On --------------, pursuant to paragraph (a)(ii) of Rule 485
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended June 30, 1995, was filed on August 28, 1995.
<PAGE>
FORM N-1A
OPPENHEIMER HIGH YIELD FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- ----------- -------------------
1 Front Cover Page
2 Expenses; Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed - Organization and History; The
Transfer Agent; Dividends, Capital Gains and Taxes;
Investment Objectives and Policies - Portfolio Turnover
7 Shareholder Account Rules and Policies; How to Buy Shares;
How to Exchange Shares; Special Investor Services; Service
Plan for Class A Shares; Distribution and Service Plan for
Class B Shares; Distribution and Service Plan for Class C
Shares; How to Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
- ---------- --------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment Restrictions
14 How the Fund is Managed - Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders;
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 *
- ----------------------
* Not applicable or negative answer.
<PAGE>
Oppenheimer High Yield Fund
Prospectus dated November 1, 1995
Oppenheimer High Yield Fund is a mutual fund with the investment
objective of seeking a high level of current income primarily through
investing in a diversified portfolio of high-yield, lower-rated, fixed-
income securities. As a secondary objective, the Fund seeks capital
growth when consistent with its primary objective. The Fund invests
principally in lower-rated, high yield debt securities of U.S. companies,
commonly known as "junk bonds."
The Fund may invest up to 100% of its assets in "junk bonds", which
are securities that are speculative and involve greater risks, including
risk of default, than higher-rated securities. An investment in the Fund
is not a complete investment program and is not appropriate for investors
unable or unwilling to assume the high degree of risk associated with
investing in lower-rated, high yield securities. Investors should
carefully consider these risks before investing. Please refer to "Special
Risks of Lower-Rated Securities" on page ____.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the November 1, 1995, Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
Because of the Fund's investment policies and practices, the Fund's shares
may be considered to be speculative.
(Logo) OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
By Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix: Description of Ratings
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are reflected in the Fund's net asset value per share. As
a shareholder, you pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's operating expenses that you might expect
to bear indirectly. The calculations are based on the Fund's expenses
during its last fiscal year ended June 30, 1995.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages _____ through _____ for an explanation of how and when these charges
apply.
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge on Purchases
(as a % of offering price) 4.75% None None
Sales Charge on Reinvested
Dividends None None None
Deferred Sales Charge
(as a % of the lower of the
original
purchase price or
redemption proceeds None(1) 5% in the 1% if
first year, shares are
declining to redeemed
1% in the within 12
sixth year months of
and eliminated purchase(2)
thereafter(2)
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may
have to pay a sales charge of up to 1% if you sell your shares
within 18 calendar months from the end of the calendar month in
which you purchased those shares. See "How to Buy Shares-Class A
Shares," below.
(2) See "How to Buy Shares - Class B" and "How to Buy Shares - Class C"
below.
(3) There is a $10 transaction fee for redemptions paid by Federal Funds
wire, but not for redemptions paid by check or by ACH wire through
AccountLink, or for which checkwriting privileges are used (see "How to
Sell Shares").
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed," below. The Fund has other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds the Fund's portfolio securities, audit fees and legal expenses.
Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
These amounts are shown as a percentage of the average net assets of each
class of the Fund's shares for that year. The 12b-1 Plan Fees for Class
A shares are Service Plan Fees (which are a maximum of 0.25% of average
annual net assets of that class), and for Class B and Class C shares are
Distribution and Service Plan Fees (which are a maximum service fee of
0.25% of average annual net assets of that class) and an asset-based sales
charge of 0.75%. These plans are described in greater detail in "How to
Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares. Class C shares were not publicly offered during the
Fund's fiscal year ended June 30, 1995. Therefore, the Annual Fund
Operating Expenses for Class C shares are estimates based on amounts that
would have been payable if Class C shares had been outstanding during that
fiscal year.
Class A Class B Class C
Shares Shares Shares
Management Fees 0.66% 0.66% 0.66%
12b-1 Distribution Plan Fees 0.20% 1.00% 1.00%
Other Expenses 0.17% 0.18% 0.18%
Total Fund Operating Expenses 1.03% 1.84% 1.84%
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the Annual Fund
Operating Expenses table above. If you were to redeem your shares at the
end of each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years(*)
Class A Shares $58 $79 $102 $167
Class B Shares $69 $88 $120 $175
Class C Shares $29 $58 $100 $216
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years(*)
Class A Shares $58 $79 $102 $167
Class B Shares $19 $58 $100 $175
Class C Shares $19 $58 $100 $216
(*) The Class B expenses in years 7 through 10 are based on the Class
A expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the
effect of the asset-based sales charge and the contingent deferred
sales charge, on Class B and Class C shares, long-term Class B and
Class C shareholders could pay the economic equivalent of more than
the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy Shares
-- Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns
of the Fund, all of which will vary.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What Are the Fund's Investment Objectives? The Fund's primary
investment objective is to seek a high level of current income primarily
by investing in a diversified portfolio of high- yield, lower-rated,
fixed-income securities. The Fund has a secondary objective to seek
capital growth when consistent with its primary objective.
- What Does the Fund Invest In? To seek high current income, the
Fund anticipates that under normal conditions at least 80% of its total
assets will be invested in high-yield, lower-rated fixed-income
securities, such as long-term debt and preferred stock issues (commonly
referred to as "junk bonds"). The Fund's remaining assets may be invested
in cash or cash equivalents, or in common stocks and other equity
securities when consistent with the Fund's investment objectives or if
acquired as part of a unit consisting of a combination of fixed-income
securities and equity investments. The Fund may also use hedging
instruments and some derivative investments to try to manage investment
risks or increase income. These investments are more fully explained in
"Investment Objectives and Policies," starting on page ___.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation. The Manager (including
a subsidiary) advises investment company portfolios having over $38
billion in assets at September 30, 1995. The Manager is paid an advisory
fee by the Fund, based on its assets. The Fund's portfolio manager who
is employed by the Manager is primarily responsible for the selection of
the Fund's securities, Ralph Stellmacher. The Fund's Board of Trustees,
elected by shareholders, oversees the investment adviser and the portfolio
manager. Please refer to "How the Fund is Managed," starting on page ___
for more information about the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some
degree. The Fund may invest all or any portion of its assets in high-
yield, lower-rated fixed-income securities. The primary advantage of
high-yield securities is their relatively higher potential investment
return. However, such securities are considered speculative and may be
subject to greater market fluctuations and risks of loss of income and
principal and have less liquidity than investments in higher-rated
securities. Fixed-income securities are also subject to interest rate
risks and credit risks which can negatively impact the value of the
security and the Fund's net asset value per share. There are certain
risks associated with investments in foreign securities, including those
related to changes in foreign currency rates, that are not present in
domestic securities. These changes affect the value of the Fund's
investments and its price per share. In the OppenheimerFunds spectrum,
the Fund is generally not as risky as aggressive growth funds, but is more
aggressive than money market or investment grade bond funds. While the
Manager tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio, and
in some cases by using hedging techniques, there is no guarantee of
success in achieving the Fund's objectives and your shares may be worth
more or less than their original cost when you redeem them. Please refer
to "Investment Objectives and Policies" starting on page ___ for a more
complete discussion.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page ___ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers the
individual investor three classes of shares. All classes have the same
investment portfolio, but different expenses. Class A shares are offered
with a front-end sales charge, starting at 4.75%, and reduced for larger
purchases. Class B shares and Class C shares are offered without a front-
end sales charge, but may be subject to a contingent deferred sales charge
if redeemed within 6 years or 12 months of purchase, respectively. There
is also an annual asset-based sales charge on Class B shares and Class C
shares. Please review "How to Buy Shares" starting on page ___ for more
details, including a discussion about factors you and your financial
advisor should consider in determining which class may be appropriate for
you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer or by writing a check against your current account (available for
Class A shares only). Please refer to "How to Sell Shares" on page ___.
The Fund also offers exchange privileges to other Oppenheimer funds,
described in "How To Exchange Shares" on page _____.
- How Has the Fund Performed? The Fund measures its performance
by quoting its yield and total returns, which measure historical
performance. Those yields and returns can be compared to the yields and
returns (over similar periods) of other funds. Of course, other funds may
have different objectives, investments, and levels of risk. The Fund's
performance can also be compared to broad-based market indices and
narrower market indices, which we have done on page ___. Please remember
that past performance does not guarantee future results.
Financial Highlights
The table on the following pages present selected financial information
about the Fund, including per share data and expense ratios and other data
based on the Fund's average net assets. This information has been audited
by Deloitte & Touche LLP, the Fund's independent auditors, whose report
on the Fund's financial statements for the fiscal year ended June 30, 1995
is included in the Statement of Additional Information. Class C shares
were not publicly offered during the periods shown. Accordingly, no
financial information on Class C shares is included in the table that
follows or in the Fund's other financial statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
YEAR ENDED JUNE 30,
1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.63 $14.16 $13.76 $13.08
- ----------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 1.30 1.42 1.60 1.79
Net realized and unrealized gain
(loss) on investments, options written and
foreign currency transactions (.40) (.54) .36 .68
---------- ---------- ---------- --------
Total income from investment
operations .90 .88 1.96 2.47
- ----------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (1.30) (1.41) (1.56) (1.79)
Tax return of capital distribution (.01) -- -- --
---------- ---------- ---------- --------
Total dividends and distributions
to shareholders (1.31) (1.41) (1.56) (1.79)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $13.22 $13.63 $14.16 $13.76
---------- ---------- ---------- --------
---------- ---------- ---------- --------
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 7.09% 6.27% 15.31% 20.06%
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,060,752 $1,049,446 $1,119,056 $902,562
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,005,746 $1,111,103 $978,671 $768,339
- ----------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 80,260 77,002 79,047 65,581
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.81% 10.10% 11.59% 13.15%
Expenses 1.03% .96% .97% .92%
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 93.7% 96.7% 87.2% 64.0%
<FN>
1. For the period from May 3, 1993 (inception of offering) to June 30, 1993.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.
</TABLE>
18 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------- --------------------------
Year Ended June 30,
1991 1990 1989 1988 1987 1986 1995 1994 1993(1)
-------- -------- -------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.60 $15.42 $16.00 $17.09 $17.54 $17.15 $13.57 $14.12 $13.87
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 1.91 1.89 2.02 2.06 2.18 2.28 1.20 1.35 .23
Net realized and unrealized gain
(loss) on investments, options written
and foreign currency transactions (.51) (1.79) (.68) (1.03) (.47) .47 (.42) (.60) .27
-------- -------- -------- -------- -------- -------- -------- ------- -------
Total income from investment
operations 1.40 .10 1.34 1.03 1.71 2.75 .78 .75 .50
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (1.92) (1.92) (1.92) (2.12) (2.16) (2.36) (1.19) (1.30) (.25)
Tax return of capital distribution -- -- -- -- -- -- (.01) -- --
-------- -------- -------- -------- -------- -------- -------- ------- -------
Total dividends and distributions
to shareholders (1.92) (1.92) (1.92) (2.12) (2.16) (2.36) (1.20) (1.30) (.25)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.08 $13.60 $15.42 $16.00 $17.09 $17.54 $13.15 $13.57 $14.12
-------- -------- -------- -------- -------- -------- -------- ------- -------
-------- -------- -------- -------- -------- -------- -------- ------- -------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 11.90% .85% 8.97% 6.75% 10.63% 17.26% 6.21%
5.31% 3.54%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $657,182 $650,989 $860,588 $857,767 $760,934 $627,256 $192,465 $87,509 $10,493
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $601,758 $734,703 $863,178 $791,471 $691,968 $527,731 $134,550 $51,816
$4,405
- -------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 50,258 47,870 55,810 53,617 44,531 35,767 14,639 6,449 743
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 14.94% 13.00% 12.88% 12.72% 12.79% 13.24% 8.95% 8.98%
10.84%(3)
Expenses .96% .93% .88% .89% .88% .89% 1.84% 1.88% 2.28%(3)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 90.4% 63.2% 57.0% 41.1% 46.2% 90.5% 93.7% 96.7% 87.2%
<FN>
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended June 30, 1995 were $1,111,748,812 and
$974,203,135, respectively.
</TABLE>
1. For the period from May 3, 1993 (inception of offering) to June 30,
1993.
2. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period.
Sales charges are not reflected in the total returns. Total returns are
not annualized for periods of less than one full year.
<PAGE>
Investment Objectives and Policies
Objectives. The Fund's primary objective is to seek a high level of
current income primarily by investing mainly in a diversified portfolio
of high-yield, lower-rated fixed-income securities. The Fund generally
invests in long-term debt and preferred stock issues, including
convertible securities. Accordingly, the Fund's investments should be
considered speculative. As a secondary objective, the Fund seeks capital
growth when consistent with its primary objective.
Investment Policies and Strategies. The high yield and high income sought
by the Fund is ordinarily associated with securities in the lower rating
categories of the established rating services. Consistent with its primary
investment objective, the Fund anticipates that under normal conditions
at least 80% of the value of its total assets will be invested in fixed-
income securities. The Fund's remaining assets may be held in cash or
cash equivalents, in rights or warrants, or invested in common stock and
other equity securities when such investments are consistent with its
investment objectives or are acquired as part of a unit consisting of a
combination of fixed-income securities and equity investments. Since
market risks are inherent in all securities to varying degrees, there can
be no assurance that the Fund's investment objectives will be met.
- Special Risks of Lower-Rated Securities. In seeking high current
income, the Fund may invest in higher-yielding, lower-rated debt
securities, commonly known as "junk bonds." There is no restriction on the
amount of the Fund's assets that could be invested in these types of
securities. "Lower-grade" debt securities are those rated below
"investment grade," which means that they have a rating lower than "Baa"
by Moody's Investors Service, Inc. ("Moody's") or lower than "BBB" by
Standard & Poor's Corporation ("S&P") or similar ratings by other rating
organizations. The Fund may invest in securities rated as low as "C" or
"D" or which may be in default at the time the Fund buys them. While
securities rated "Baa" by Moody's or "BBB" by S&P are investment grade and
are not regarded as "junk bonds," those securities may be subject to
greater market fluctuations and risks of loss of income and principal than
higher-grade securities and may be considered to have certain speculative
characteristics.
The Manager does not rely solely on ratings of securities by rating
agencies when selecting investments for the Fund, but evaluates other
economic and business factors as well. The Fund may invest in unrated
securities that the Manager believes offer yields and risks comparable to
rated securities. High-yield, lower-grade securities, whether rated or
unrated, often have speculative characteristics. Lower-grade securities
have special risks that make them riskier investments than investment
grade securities. They may be subject to greater market fluctuations and
risk of loss of income and principal than lower yielding, investment grade
securities. There may be less of a market for them and therefore they may
be harder to sell at an acceptable price. There is a relatively greater
possibility that the issuer's earnings may be insufficient to make the
payments of interest due on the bonds. The issuer's low creditworthiness
may increase the potential for its insolvency ("credit risk"). All
corporate debt securities (whether foreign or domestic) are subject to
some degree of credit risk.
These risks mean that the Fund may not achieve the expected income from
lower-grade securities, and that the Fund's net asset value per share may
be affected by declines in value of these securities. The Fund is not
obligated to dispose of securities when issuers are in default or if the
rating of the security is reduced. These risks are discussed in more
detail in the Statement of Additional Information.
- Portfolio Turnover
Generally, the Fund will not trade for short-term profits, but when
circumstances warrant, to take advantage of differences in securities
prices and yields or of fluctuations in interest rates, consistent with
its investment objectives, the Fund may sell securities without regard to
the length of time held. As most purchases made by the Fund are principal
transactions at net prices, the Fund incurs little or no brokerage costs.
Short-term trading may affect the Fund's tax status.
- How the Fund's Portfolio Securities Are Rated. As of June 30, 1995,
the Fund's portfolio included corporate bonds in the following S&P rating
categories or if unrated, determined by the Manager to be comparable to
the category indicated (the amounts shown are dollar-weighted average
values of the bonds in each category measured as a percentage of the
Fund's total assets): BBB, 4.22%; BB, 22.87%; B, 55.33%; CCC, 3.37%; CC,
0.16%; D, 0.29%. The Appendix to this Prospectus describes the rating
categories. The allocation of the Fund's assets in securities in the
different rating categories will vary over time.
- Interest Rate Risks. In addition to credit risks, described below,
debt securities are subject to changes in value due to changes in
prevailing interest rates. When prevailing interest rates fall, the
values of outstanding debt securities generally rise. Conversely, when
interest rates rise, the values of outstanding debt securities generally
decline. The magnitude of these fluctuations will be greater when the
average maturity of the portfolio securities is longer.
- Credit Risks. Debt securities are also subject to credit risks.
Credit risk relates to the ability of the issuer of a debt security to
make interest or principal payments on the security as they become due.
Generally, higher-yielding, lower-rated bonds (which are the type of bonds
the Fund seeks to invest in) are subject to greater credit risk than
higher-rated bonds. Securities issued or guaranteed by the U.S.
Government are subject to little, if any, credit risk if they are backed
by the "full faith and credit of the U.S. Government," which in general
terms means that the U.S. Treasury stands behind the obligation to pay
interest and principal. While the Manager may rely to some extent on
credit ratings by nationally recognized rating agencies, such as Standard
& Poor's or Moody's, in evaluating the credit risk of securities selected
for the Fund's portfolio, it may also use its own research and analysis.
However, many factors affect an issuer's ability to make timely payments,
and there can be no assurance that the credit risks of a particular
security will not change over time.
- Can the Fund's Investment Objective and Policies Change? The Fund
has investment objectives, described above, as well as investment policies
it follows to try to achieve its objectives. Additionally, the Fund uses
certain investment techniques and strategies in carrying out those
investment policies. The Fund's investment policies and techniques are not
"fundamental" unless this Prospectus or the Statement of Additional
Information says that a particular policy is "fundamental." The Fund's
investment objectives are fundamental policies.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's
investment objective is a fundamental policy. The Fund's Board of Trustees
may change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information
contains more information about these practices, including limitations
designed to reduce some of the risks.
- Foreign Securities. The Fund may purchase debt and equity securities
(which may be denominated in U.S. dollars or in non-U.S. currencies)
issued or guaranteed by foreign companies or foreign governments or their
agencies. The Fund may invest up to 100% of its assets in foreign
securities. However, the Fund presently does not intend that such
investments will exceed 25% of its net assets. Investments in securities
of issuers in underdeveloped countries generally involve more risk and may
be considered highly speculative. Foreign currency will be held by the
Fund only in connection with the purchase or sale of foreign securities.
- Foreign securities have special risks. For example, foreign issuers
are not subject to the same accounting and disclosure requirements that
U.S. companies are subject to. The value of foreign investments may be
affected by changes in foreign currency rates, exchange control
regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or other
political and economic factors. More information about the risks and
potential rewards of investing in foreign securities is contained in the
Statement of Additional Information.
- Hedging. As described below, the Fund may purchase and sell certain
kinds of futures contracts, put and call options, forward contracts, and
options on futures, securities indices and securities, or enter into
interest rate swap agreements. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for speculative
purposes, and has limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater detail in
"Other Investment Techniques and Strategies" in the Statement of
Additional Information.
The Fund may buy and sell options, futures and forward contracts for a
number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. It may do so to try to manage its
exposure to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options, tend
to increase the Fund's exposure to the securities market. Forward
contracts are used to try to manage foreign currency risks on the Fund's
foreign investments. Foreign currency options are used to try to protect
against declines in the dollar value of foreign securities the Fund owns,
or to protect against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income to the
Fund for liquidity purposes or to raise cash to distribute to
shareholders.
- Futures. The Fund may buy and sell futures contracts that relate to
interest rates (these are referred to as Interest Rate Futures) and broad-
based securities indices (these are referred to as Financial Futures).
These types of Futures are described in "Hedging With Options and Futures
Contracts" in the Statement of Additional Information.
- Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls).
The Fund may buy calls only on debt or equity securities, security
indices, foreign currencies, Interest Rate Futures and Financial Futures
or to terminate its obligation on a call the Fund previously wrote. The
Fund may write (that is, sell) covered call options. When the Fund writes
a call, it receives cash (called a premium). The call gives the buyer the
ability to buy the investment on which the call was written from the Fund
at the call price during the period in which the call may be exercised.
If the value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the Fund
keeps the cash premium (and the investment).
The Fund may purchase put options. Buying a put on an investment gives
the Fund the right to sell the investment at a set price to a seller of
a put on that investment. The Fund can buy only those puts that relate to
(1) debt or equity securities and (2) securities indices.
The Fund may buy and sell puts and calls only if certain conditions are
met: (1) calls the Fund buys or sells must be listed on a domestic
securities or commodities exchange, or quoted on the Automated Quotation
System of the National Association of Securities Dealers, Inc. (NASDAQ)
or traded in the over-the-counter market; (2) in the case of puts and
calls on foreign currency, they must be traded on a securities or
commodities exchange, or in the over-the-counter market, or quoted by
recognized dealers in those options; (3) each call the Fund writes must
be "covered" while it is outstanding: that means the Fund must own the
investment on which the call was written or it must own other securities
that are acceptable for the escrow arrangements required for calls; (4)
any put written must be covered by segregated liquid assets with not more
than 50% of the Fund's assets subject to puts; (5) the Fund may write
calls on Futures contracts it owns, but these calls must be covered by
securities or other liquid assets the Fund owns and segregates to enable
it to satisfy its obligations if the call is exercised; and (6) a call or
put option may not be purchased if the value of all of the Fund's put and
call options would exceed 5% of the Fund's total assets.
- Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to try to "lock in"
the U.S. dollar price of a security denominated in a foreign currency that
the Fund has bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and a foreign 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.
- Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive or their obligation to pay
interest on a security. For example, they may swap a right to receive
floating rate payments for fixed rate payments. The Fund enters into
swaps only on securities it owns. The Fund may not enter into swaps with
respect to more than 25% of its total assets. Also, the Fund will
segregate liquid assets (such as cash or U.S. Government securities) to
cover any amounts it could owe under swaps that exceed the amounts it is
entitled to receive, and it will adjust that amount daily, as needed.
- Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, if a covered call written by the Fund is
exercised on an investment that has increased in value, the Fund will be
required to sell the investment at the call price and will not be able to
realize any profit if the investment has increased in value above the call
price. The use of forward contracts may reduce the gain that would
otherwise result from a change in the relationship between the U.S. dollar
and a foreign currency. Interest rate swaps are subject to credit risks
(if the other party fails to meet its obligations) and also to interest
rate risks. The Fund could be obligated to pay more under its swap
agreements than it receives under them, as a result of interest rate
changes. These risks are described in greater detail in the Statement of
Additional Information.
The Fund may also invest in currency-indexed securities. Typically,
these are short-term or intermediate-term debt securities having a value
at maturity, and/or an interest rate, determined by reference to one or
more foreign currencies. The currency-indexed securities purchased by the
Fund may make payments based on a formula. The payment of principal or
periodic interest may be calculated as a multiple of the movement of one
currency against another currency, or against an index. These investments
may entail increased risk to principal and increased price volatility.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." In general, a "derivative
investment" is a specially designed investment whose performance is linked
to the performance of another investment or security, such as an option,
future, index, currency or commodity. In the broadest sense, derivative
investments include exchange-traded options and futures contracts (see
"Hedging"), as well as the investments discussed in this section. The
risks of investing in derivative investments include not only the ability
of the company issuing the instrument to pay the amount due on the
maturity of the instrument, but also the risk that the underlying
investment or security might not perform the way the Manager expected it
to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of this
can mean that the Fund will realize less principal and/or income than
expected. Certain derivative investments held by the Fund may trade in
the over-the-counter market and may be illiquid. See "Illiquid and
Restricted Securities."
The Fund may invest in different types of derivatives. "Index-linked"
or "commodity-linked" notes are debt securities of companies that call for
interest payments and/or payment on the maturity of the note in different
terms than the typical note where the borrower agrees to make fixed
interest payments and/or to pay a fixed sum on the maturity of the note.
Principal and/or interest payments on an index-linked note depends on the
performance of one or more market indices, such as the S & P 500 Index or
a weighted index of commodity futures, such as crude oil, gasoline and
natural gas. The Fund may invest in "debt exchangeable for common stock"
of an issuer or "equity-linked" debt securities of an issuer. At
maturity, the principal amount of the debt security is exchanged for
common stock of the issuer or is payable in an amount based on the
issuer's common stock price at the time of maturity. In either case there
is a risk that the amount payable at maturity will be less than the
expected principal amount of the debt.
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the
maturity of the instrument. Also, the underlying investment or security
might not perform the way the Manager expected it to perform. Markets,
underlying securities and indices may move in a direction not anticipated
by the Manager. Performance of derivative investments may also be
influenced by interest rate and stock market changes in the U.S. and
abroad. All of this can mean that the Fund will realize less principal
or income from the investment than expected. Certain derivative
investments held by the Fund may be illiquid. Please refer to "Illiquid
and Restricted Securities."
- -Asset-Backed Securities. The Fund may invest in securities that
represent undivided fractional interests in pools of consumer loans,
similar in structure to mortgaged-backed securities described below.
Payments of principal and interest on the underlying obligations are
passed through to holders of asset-backed securities and are typically
supported by some form of credit enhancement, such as a letter of credit,
surety bond, limited guarantee by another entity or having a priority to
certain of the borrower's other securities. The degree of credit
enhancement varies, and generally applies to only a fraction of the asset-
backed security's par value until exhausted. If the credit enhancement
of an asset-backed security held by the Fund has been exhausted, and if
any required payments of principal and interest are not made with respect
to the underlying loans, the Fund may then experience losses or delays in
receiving payment. Further details are set forth in the Additional
Statement under "Investment Objectives and Policies -- Asset-Backed
Securities."
- -Mortgage-Backed Securities and CMOs. The Fund's investments may include
securities which represent participation interests in pools of residential
mortgage loans, including collateralized mortgage-backed obligations
("CMOs"), which may be issued or guaranteed by agencies or
instrumentalities of the U.S. Government (e.g., GNMA, FNMA and FHLMC
certificates), including collateralized mortgage-backed obligations
(CMOs). Such securities differ from conventional debt securities which
provide for periodic payment of interest in fixed amounts (usually semi-
annually) with principal payments at maturity or specified call dates.
Mortgage-backed securities provide monthly payments which are, in effect,
a "pass-through" of the monthly interest and principal payments (including
any prepayments) made by the individual borrowers on the pooled mortgage
loans. The Fund's reinvestment of scheduled principal payments and
unscheduled prepayments it receives may occur at lower rates than the
original investment, thus reducing the yield of the Fund. CMOs in which
the Fund may invest are securities issued by a U.S. Government
instrumentality that are collateralized by a portfolio of mortgages or
mortgage-backed securities. The issuer's obligation to make interest and
principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. The Fund may also invest in CMOs that are
"stripped," that is, the security is divided into two parts, one of which
receives some or all of the principal payments and the other which
receives some or all of the interest. The yield to maturity on the class
that receives only interest is extremely sensitive to the rate of payment
of the principal on the underlying mortgages. Principal prepayments
increase that sensitivity. Stripped securities that pay interest only are
therefore subject to greater price volatility when interest rates change,
and have the additional risk that if the underlying mortgages are prepaid,
which is more likely to happen if interest rates fall, the Fund will lose
the anticipated cash flow from the interest on the mortgages that were
prepaid. Stripped securities that receive principal payments only are
also subject to increased volatility in price due to interest rate changes
and have the additional risk that the security will be less liquid during
demand or supply imbalances. Mortgage-backed securities may be less
effective than debt obligations of similar maturity at maintaining yields
during periods of declining interest rates. The Fund may also enter into
"forward roll" transactions with banks or other buyers that provide for
future delivery of the mortgage-backed securities in which it may invest.
The Fund would be required to identify cash, U.S. Government securities
or other high-grade debt securities to its custodian bank in an amount
equal to its purchase payment obligation under the roll. Further details
are set forth in the Statement of Additional Information under "Mortgage-
Backed Securities."
- Loans of Portfolio Securities. To raise cash for liquidity purposes,
the Fund may lend its portfolio securities to certain types of eligible
borrowers approved by the Board of Trustees. The Fund must receive
collateral for a loan. After any loan, the value of the securities loaned
must not exceed 10% of the value of the Fund's net assets. There are some
risks in connection with securities lending. The Fund might experience a
delay in receiving additional collateral to secure a loan, or a delay in
recovery of the loaned securities. The Fund presently does not intend to
engage in loans of securities that will exceed 5% of the value of the
Fund's net assets in the coming year.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on
its resale or which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund currently intends to invest no more
than 10% of its net assets in illiquid and restricted securities (that
limit may increase to 15% if certain state laws are changed or if the
Fund's shares are no longer sold in those states). The Fund's percentage
limitation on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. There is no limit on the amount of the Fund's net assets that
may be subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor of the
securities under a repurchase agreement fails to pay the resale price on
the delivery date, the Fund may incur costs in disposing of the collateral
and may experience losses if there is any delay in its ability to do so.
The Fund will not enter into a repurchase agreement which causes more than
10% of its net assets to be subject to repurchase agreements having a
maturity beyond seven days.
- Participation Interests. The Fund may acquire participation
interests in U.S. dollar-denominated loans that are made to U.S. or
foreign companies (the "borrower"). They may be interests in, or
assignments of, the loan, and are acquired from banks or brokers that have
made the loan or are members of the lending syndicate. The Manager has
set certain creditworthiness standards for issuers of loan participations,
and monitors their creditworthiness. Some borrowers may have senior
securities rated as low as "C" by Moody's or "D" by S&P, but may be deemed
acceptable credit risks. Participation interests are considered
investments in illiquid securities (see "Illiquid and Restricted
Securities," above). Their value primarily depends upon the
creditworthiness of the borrower, and its ability to pay interest and
principal. Borrowers may have difficulty making payments. If a borrower
fails to make scheduled interest or principal payments, the Fund could
experience a reduction in its income and a decline in the net asset value
of its shares. Further details are set forth in the Additional Statement
under "Investment Objective and Policies."
- Temporary Defensive Investments. When market prices are falling or
in other unusual economic or business circumstances, the Fund may invest
all or a portion of its assets in defensive securities. Securities
selected for defensive purposes may include cash or cash equivalents, such
as U.S. Treasury Bills and other short-term obligations of the U.S.
Government, its agencies or instrumentalities, or commercial paper rated
"A-1" or better by Standard & Poor's Corporation or "P-1" or better by
Moody's Investors Service, Inc.
Other Investment Restrictions. The Fund has other investment restrictions
which are fundamental policies. Under these fundamental policies, the
Fund cannot do any of the following:
- buy securities issued or guaranteed by any one issuer (except the
U.S. Government or its agencies or instrumentalities) if with respect to
75% of its total assets, more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or the Fund would then own more
than 10% of that issuer's voting securities;
- borrow money, except from banks as a temporary measure for
extraordinary or emergency purposes and not for the purpose of leveraging
its investments, and then only up to 10% of the market value of the Fund's
assets; no additional investments may be made whenever borrowings exceed
5% of the Fund's assets;
- buy a security if, as a result of such purchase, more than 25% of
its total assets would be invested in the securities of issuers
principally engaged in the same industry; for purposes of this limitation,
utilities will be divided according to their services; for example, gas,
gas transmission, electric and telephone utilities will each be considered
a separate industry;
- make loans, except by purchasing debt obligations in which the Fund
may invest consistent with its investment policies, or by entering into
repurchase agreements or as described in "Loans of Portfolio Securities";
- invest more than 5% of the value of its assets in rights and
warrants nor more than 2% of such value in rights and warrants which are
not listed on the New York or American Stock Exchanges; rights and
warrants attached to other securities or acquired in units are not subject
to this limitation; or
- buy securities of an issuer which, together with any predecessor,
has been in operation for less than three years, if as a result, the
aggregate of such investments would exceed 5% of the value of the Fund's
net assets.
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time the Fund purchases a security, and the
Fund need not dispose of a security merely because the size of the Fund's
assets has changed or the security has increased in value relative to the
size of the Fund. There are other fundamental policies discussed in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was originally incorporated in
Maryland in 1978 but was reorganized in 1986 as a Massachusetts business
trust. The Fund is an open-end, diversified management investment company,
with an unlimited number of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Fund. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class C. All classes invest in the same investment portfolio.
Each class has its own dividends and distributions and pays certain
expenses which may be different for the different classes. Each class may
have a different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Shares of each
class may have separate voting rights on matters in which interests of one
class are different from interests of another class, and only shares of
a particular class vote as a class on matters that affect that class
alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting the
Fund's investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board
of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities. The Agreement sets forth the fees paid by the
Fund to the Manager, and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer Funds, with assets of more than $38 billion
as of September 30, 1995, and with more than 2.8 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company.
- Portfolio Manager. The Portfolio Manager of the Fund is Ralph W.
Stellmacher. He has been the person principally responsible for the day-
to-day management of the Fund's portfolio, since January, 1988. Mr.
Stellmacher is a Senior Vice President of the Manager and Vice President
of the Fund, and also serves as an officer of other Oppenheimer funds.
During the past five years, Mr. Stellmacher has also served as an officer
and portfolio manager for other mutual funds managed by the Manager (with
the Fund, the "Oppenheimer funds").
- Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fees, which decline on additional
assets as the Fund grows: 0.75% of the first $200 million of aggregate net
assets, 0.72% of the next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, and 0.60% of the next $200 million and
0.50% of aggregate net assets over $1 billion. The Fund's management fee
for its last fiscal year was 0.66% of average annual net assets for both
its Class A and Class B shares, which may be higher than the rate paid by
some other mutual funds.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the Investment Advisory
Agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the Investment Advisory
Agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of the other "Oppenheimer funds"
and is sub-distributor for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund on an "at-cost" basis. It also
acts as the shareholder servicing agent for other Oppenheimer Funds.
Shareholders should direct inquiries about their account to the Transfer
Agent at the address and toll-free number shown below in this Prospectus
and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return", "average annual total return" and "yield" to illustrate its
performance. The performance of each class of shares is shown separately,
because the performance of each class of shares will usually be different,
as a result of the different kinds of expenses each class bears. These
returns measure the performance of a hypothetical account in the Fund over
various periods and do not show the performance of each shareholder's
account (which will vary if dividends are received in cash, or shares are
purchased or sold). The Fund's performance information may help you see
how well your investment has done and to compare it to other funds or
market indices.
It is important to understand that the fund's yields and total returns
represent past performance and should not be considered to be predictions
of future returns or performance. This performance data is described
below, but more detailed information about how total returns and yields
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary over
time, depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally they include
the payment of the current maximum initial sales charge. Total returns
may also be quoted "at net asset value," without the sales charge, and
those returns would be reduced if sales charges were deducted. When total
returns are shown for Class B shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown. When total returns are shown for a one year period
for Class C shares, they reflect the effect of the contingent deferred
sales charge. They may also be shown based on the change in net asset
value, without considering the effect of the contingent deferred sales
charge, and those returns would be reduced if sales charges were deducted.
- Yield. Each Class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a
30-day period by the maximum offering price on the last day of the period.
The yield of each Class will differ because of the different expenses of
each Class of shares. The yield data represents a hypothetical investment
return on the portfolio, and does not measure an investment return based
on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a Class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B and Class C
shares do not reflect the deduction of the contingent deferred sales
charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended June 30, 1995,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index and a narrower market index.
- - Management's Discussion of Performance. During the Fund's fiscal year
ended June 30, 1995, high yield bond markets were volatile. The Fund's
performance was affected by a slow growth rate for the U.S. economy during
the second half of that period. In selecting new investments, the Manager
looked to issuers with demonstrated financial strength. Investments were
emphasized in health care and supermarkets, which the Manager viewed as
defensive investments in view of a perceived slowdown in the U.S. economy.
The Fund also made new investments in the oil refining, energy and gaming
industries. The Fund decreased its investments in consumer retailers.
The Fund's practice of attempting to pay dividends on Class A shares at
a constant level did not have a material effect on these investment
strategies or the Fund's net asset values per share.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund held until June 30, 1995, in the case of Class A
shares, over a ten-year period, and in the case of Class B shares, from
the inception of the Class on May 3, 1993, with all dividends and capital
gains distributions reinvested in additional shares. Class C shares were
not publicly offered during the fiscal year ended June 30, 1995.
Accordingly, no performance information is presented on Class C shares in
the graphs below.
The Fund's performance is compared to the performance of the Lehman
Brothers Corporate Bond Index and the Salomon Brothers High Yield Market
Index. The Lehman Brothers Corporate Bond Index is an unmanaged index of
publicly-issued nonconvertible investment grade corporate debt of U.S.
issuers, widely recognized as a measure of the U.S. fixed-rate corporate
bond market. The Salomon Brothers High Yield Market Index is an unmanaged
index of below-investment grade (but rated at least BB+/Ba1 by S&P or
Moody's) U.S. corporate debt obligations, widely recognized as a measure
of the performance of the high-yield corporate bond market, the market in
which the Fund principally invests. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital
gains or transaction costs, and none of the data below shows the effect
of taxes. Also, the Fund's performance reflects the effect of Fund
business and operating expenses. While index comparisons may be useful
to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in any one index.
Moreover, the index data does not reflect any assessment of the risk of
the investments included in the index.
Class A Shares
Comparison of Change in Value
of $10,000 Hypothetical Investment in:
Oppenheimer High Yield Fund,
the Lehman Brothers Corporate Bond Index
and the Salomon Brothers High Yield Market Index
(Graph)
Past performance is not predictive of future performance.
Average Annual Total Returns of the Fund at 6/30/95
1-Year 5-Year 10-Year1
Class A: 2.00% 10.92% 9.84%
Class B Shares
Comparison of Change in Value
of $10,000 Hypothetical Investment in:
Oppenheimer High Yield Fund,
the Lehman Brothers Corporate Bond Index
and the Salomon Brothers High Yield Market Index
(Graph)
Average Annual Total Return of the Fund at 6/30/95
1-Year Life2
Class B: 1.36% 5.81%
_________________________________________
1 The inception date of the Fund (Class A shares) was 7/28/78. The
average annual total returns and ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are
shown net of the applicable 4.75% maximum initial sales charge.
2 Class B shares of the Fund were first publicly offered on 5/3/93.
The average annual total returns reflect reinvestment of all dividend and
capital gains distributions and are shown net of the applicable 5% and 3%
contingent deferred sales charges, respectively, for the 1-year period and
life-of-the-class. The ending account value in the graph is net of the
applicable 3% contingent deferred sales charge.
Past performance is not predictive of future performance. Graphs are
not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
Oppenheimer funds prototype 401(k) plans). If you purchase Class A shares
as part of an investment of at least $1 million ($500,000 for Oppenheimer
Funds prototype 401(k) plans) in shares of one or more Oppenheimer funds,
you will not pay an initial sales charge but if you sell any of those
shares within 18 months after your purchase, you may pay a contingent
deferred sales charge. The amount of that sales charge will vary
depending on the amount you invested. Sales charge rates are described in
"Buying Class A Shares" below.
- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years of
buying them, you will normally pay a contingent
deferred sales charge that varies depending on how long you own your
shares. It is described in "Buying Class B Shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of
buying them, you will normally pay a contingent deferred sales charge of
1%. It is described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares,
you should re-evaluate those factors to see if you should consider another
class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to Class A, Class B and Class C and
considered the effect of the annual asset-based sales charge on Class B
and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed that
there is a 10% rate of appreciation in the investment each year. Of
course, the actual performance of your investment cannot be predicted and
will vary, based on the Fund's actual investment returns and the operating
expenses borne by each class of shares, and which class of shares you
invest in. The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to
consider in purchasing a particular class of shares assumes that you will
purchase only one class of shares and not a combination of shares of
different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on shares of Class B or
C for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases
toward six years, Class C shares might not be as advantageous as Class A
shares. That is because the annual asset-based sales charge on Class C
shares will have a greater impact on your account over the longer term
than the reduced front-end sales charge available for larger purchases of
Class A shares. For example, Class A might be more advantageous than
Class C (as well as Class B) for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments over
$250,000 expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and B). If investing $500,000 or
more, Class A may be more advantageous as your investment horizon
approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or $1 million or more of Class
B or C shares respectively from a single investor.
- Investing for the Longer Term. If you are investing for the longer-
term, for example, for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or C shares, as discussed above,
because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in
Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the effect of
current sales charges and expenses on a hypothetical investment over time,
using the assumptions stated above. Therefore, these examples should not
be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class B or Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. For example, share certificates are not available for Class B or
Class C shares and if you are considering using your shares as collateral
for a loan, that may be a factor to consider. Also, checkwriting
privileges are not available for Class B or Class C shares. Additionally,
the dividends payable to Class B and Class C shareholders will be reduced
by the additional expenses borne by those classes, such as the asset-based
sales charges described below and in the Statement of Additional
Information.
- How Does It Affect Payments to My Broker? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class than for selling another class. It is important that investors
understand that the purpose of the Class B and Class C contingent deferred
sales charges and asset-based sales charges are the same as the purpose
of the front-end sales charge on sales of Class A shares: to compensate
the Distributor for commissions it pays to dealers and financial
institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments for as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways -- through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the Oppenheimer funds AccountLink service. When you buy shares, be sure
to specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your order
with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer
Funds Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217.
If you don't list a dealer on the application, the Distributor will act
as your agent in buying the shares. However, we recommend that you discuss
your investment first with a financial advisor, to be sure it is
appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to send redemption proceeds or to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? In most cases, to enable you to
receive that day's offering price, the Distributor must receive your order
by the time of day The New York Stock Exchange closes which is normally
4:00 P.M., New York time but may be earlier on some days (all references
to time in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day"). If you
buy shares through a dealer, the dealer must receive your order by the
close of The New York Stock Exchange, on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, purchases are not subject to an initial
sales charge, and the offering price will be the net asset value. In some
cases, reduced sales charges may be available, as described below. Out
of the amount you invest, the Fund receives the net asset value to invest
for your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge as Sales Charge as Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
<S> <C> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%
$50,000 or more
but less than $100,000 4.50% 4.71% 3.75%
$100,000 or more
but less than $250,000 3.50% 3.63% 2.75%
$250,000 or more
but less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but less
than $1 million 2.00% 2.04% 1.60%
$1 million or more None None None
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
-- purchases aggregating $1 million or more, or
-- purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that it
projects to have annual plan purchases of $200,000 or more.
Shares of any of the Oppenheimer funds that offers only one class of
shares that has no designation are considered "Class A shares" for this
purpose. The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of (1) the first $2.5
million, plus 0.50% of the next $2.5 million, plus 0.25% of purchases over
$5 million. That commission will be paid only on the amount of those
purchases in excess of $1 million ($500,000 for purchases by
OppenheimerFunds 401(k) prototype plans) that were not previously subject
to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
contingent deferred sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can cumulate shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also count Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales charge to
reduce the sales charge rate for current purchases of Class A shares,
provided that you still hold your investment in one of the Oppenheimer
funds. The value of those shares will be based on the greater of the
amount you paid for the shares or their current value (at offering price).
The Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Distributor. The reduced sales charge will apply only to current purchases
and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, you may purchase Class
A shares or Class A shares and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the sales
charge rate that applies to your purchases of Class A shares. The total
amount of your intended purchases of both Class A and Class B shares will
determine the reduced sales charge rate for the Class A shares purchased
during that period. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of
this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans for
their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use
of shares of the Fund in particular investment products made available to
their clients (those clients may be charged a transaction fee by their
dealer, broker or adviser on the purchase or sale of Fund shares); and
- dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares to defined
contribution employee retirement plans for which the dealer, broker or
investment adviser provides administrative services.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor; or
- shares purchased and paid for with the proceeds of shares redeemed
in the past 12 months 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 your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver. There is a further discussion of this policy in "Reduced
Sales Charges" in the Statement of Additional Information.
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:
-- for retirement distributions or loans to participants or beneficiaries
from qualified retirement plans, deferred compensation plans or other
employee benefit plans, including OppenheimerFunds prototype 401(k) plans
(these are all referred to as "Retirement Plans"); or
-- to return excess contributions made to Retirement Plans; or
-- to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value; or
-- involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and
Policies," below); or
-- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month
(and no further commission will be payable if the shares are redeemed
within 18 months of purchase); or
-- for distributions from OppenheimerFunds prototype 401(k) plans for any
of the following cases or purposes: (1) following the death or disability
(as defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
- Service Plan for Class A Shares. The Fund has adopted a Service Plan
for Class A shares to reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class B contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Purchase On Redemptions in That Year
Payment Was Made (As % of Amount Subject to Charge)
- --------------------------------------------------------------
0-1 5.0%
- --------------------------------------------------------------
1-2 4.0%
- --------------------------------------------------------------
2-3 3.0%
- --------------------------------------------------------------
3-4 3.0%
- --------------------------------------------------------------
4-5 2.0%
- --------------------------------------------------------------
5-6 1.0%
- --------------------------------------------------------------
6 and following None
- --------------------------------------------------------------
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and
Class C Shares" in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fee increase
Class B expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
Because the Distributor's actual expenses in selling Class B shares
may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class B shares, those expenses may be
carried over and paid in future years. At June 30, 1995, the end of the
Plan year, the Distributor had incurred unreimbursed expenses under the
Plan of $6,962,004 (equal to 3.62% of the Fund's net assets represented
by Class B shares on that date), which have been carried over into the
present Plan year. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for certain expenses it incurred before the Plan
was terminated.
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of dividends
or capital gains distributions. The charge will be assessed on the lesser
of the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to compensate
the Distributor for distributing Class C shares and servicing accounts.
Under the Plan, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class C shares. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. The asset-based sales charge allows
investors to buy Class C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class C expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class C shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares.
Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and
other costs of distributing and selling Class C shares, including
compensating personnel of the Distributor who support distribution of
Class C shares. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing Class C shares before the Plan
was terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C charges will not be applied to shares purchased in certain types
of transactions nor will it apply to Class B and Class C shares redeemed
in certain circumstances as described below. The reasons for this policy
are in "Reduced Sales Charges" in the Statement of Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares
in the following cases:
- distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments are
no more than 10% of the account value annually (measured from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following
the death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of disability by the Social Security
Administration);
- returns of excess contributions to Retirement Plans; and (4)
distributions from IRAs (including SEP-IRAs and SAR/SEP accounts) before
the participant is age 59-1/2, and distributions from 403(b)(7) custodial
plans or pension or pension or profit sharing plans before the participant
is age 59-1/2 but only after the participant has separated from service,
if the distributions are made in substantially equal periodic payments
over the life (or life expectancy) of the participant or the joint lives
(or joint life and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must comply
with the other requirements for such distributions under the Internal
Revenue Code and may not exceed 10% of the account value annually,
measured from the date the Transfer Agent receives the request).
- for distributions from OppenheimerFunds prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order,
as defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; and
- shares issued in plans of reorganization to which the Fund is a
party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions, including purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the Oppenheimer funds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number:
1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments
of at least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other OppenheimerFunds on a monthly, quarterly, semi-annual or
annual basis under an Automatic Exchange Plan. The minimum purchase for
each OppenheimerFunds account is $25. These exchanges are subject to the
terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A or Class B shares of the Fund or other
Oppenheimer funds without paying a sales charge. This privilege applies
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. It does not apply to Class C shares.
You must be sure to ask the Distributor for this privilege when you send
your payment. Please consult the Statement of Additional Information for
more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
small business owners
- 401(k) prototype retirement plans for businesses.
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, by using the Fund's
checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, or from a retirement plan, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive
a check
- The redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
account statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing as a fiduciary or on behalf of a corporation, partnership
or other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
Mail requests to:
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. You may not redeem
shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call
1-800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink or by Wire. There are
no dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH wire to your
bank is initiated on the business day after the redemption. You do not
receive dividends on the proceeds of the shares you redeemed while they
are waiting to be wired.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal Reserve
wire system. There is a $10 fee for each Federal Funds wire. To place a
wire redemption request, call the Transfer Agent at 1-800-852-8457. The
wire will normally be transmitted on the next bank business day after the
shares are redeemed. There is a possibility that the wire may be delayed
up to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of
shares that have been redeemed and are awaiting transmittal by wire. To
establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Checkwriting. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.
- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
- Checkwriting privileges are not available for accounts holding
Class B shares, Class C shares or Class A shares that are subject to a
contingent deferred sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value.
Remember: your shares fluctuate in value and you should not write a
check close to the total account value.
- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within
the prior 15 days.
- Don't use your checks if you changed your Fund account number.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of
shares, which are considered to be Class A shares for this purpose. In
some cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request that is in
proper form by the close of The New York Stock Exchange that day, which
is normally 4:00 P.M. but may be earlier on some days. However, either
fund may delay the purchase of shares of the fund you are exchanging into
up to 7 days if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy
might require the disposition of securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a
result, those exchanges may be subject to notice requirements, delays and
other limitations that do not apply to shareholders who exchange their
shares directly by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange that day, which is normally
4:00 P.M. but may be earlier on some days, on each day the Exchange is
open by dividing the value of the Fund's net assets attributable to a
class by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities and obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable
procedures it may be liable for losses due to unauthorized transactions,
but otherwise neither the Transfer Agent nor the Fund will be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to complete
a telephone transaction and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. For accounts registered
in the name of a broker-dealer, payment will be forwarded within 3
business days. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or employer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income on each regular business day and
pays those dividends to shareholders monthly. Normally dividends are paid
on or about the last business day of the month, but the Board of Trustees
can change that date. Also, dividends paid on Class A shares generally are
expected to be higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher.
During the Fund's fiscal year ended June 30, 1995, the Fund
maintained the practice, to the extent consistent with the amount of the
Fund's net investment income and other distributable income, of attempting
to pay dividends on Class A shares at a constant level, although the
amount of such dividends were subject to change 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 that Class. The
practice of attempting to pay dividends on Class A shares at a constant
level required the Manager, consistent with the Fund's investment
objectives and investment restrictions, to monitor the Fund's portfolio
and select higher yielding securities when deemed appropriate to maintain
necessary net investment income levels. The Fund was able to pay
dividends at the targeted dividend level from net investment income and
other distributable income without any impact on the Fund's net asset
value per share. The Board of Trustees may change the Fund's targeted
dividend level at any time, without prior notice to shareholders; the Fund
does not otherwise have a fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the
year. Short-term capital gains are treated as dividends for tax purposes.
There can be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you received when you sold them.
- Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
Appendix: Description of Ratings
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, the changes that can be expected are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what are
generally known as "high-grade" bonds. They are rated lower than the best
bonds because margins of protection may not be as large as with "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
The investments in which the Fund will principally invest will be in the
lower-rated categories described below.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often the
protection of interest and principal payments may be very moderate and not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other marked
shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever retaining any real investment standing.
Description of Standard & Poor's Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse effects
of change in circumstances and economic conditions.
The investments in which the Fund will principally invest will be in
the lower-rated categories, described below.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this capacity than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of speculation and
"CC" the highest degree. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER HIGH YIELD FUND
Graphic material included in Prospectus of Oppenheimer High Yield
Fund: "Comparison of Total Return of Oppenheimer High Yield Fund with the
Lehman Brothers Corporate Bond Index and
the Salomon Brothers High Yield Market Index- Change in Value of a $10,000
Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer High
Yield Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in the Fund. In the
case of the Fund's Class A shares, that graph will cover each of the
Fund's last ten fiscal years from 6/30/85 through 6/30/95 and in the case
of the Fund's Class B shares, will cover the period from inception of the
class (5/3/93) through 6/30/95. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the Lehman
Brothers Corporate Bond Index and the Salomon Brothers High Yield Market
Index. Set forth below are the relevant data points that will appear on
the linear graph. Additional information with respect to the foregoing,
including a description of the Lehman Brothers Corporate Bond Index and
the Salomon Brothers High Yield Market Index, is set forth in the
Prospectus under "Fund Information - Management's Discussion of
Performance."
<TABLE>
<CAPTION>
Fiscal Oppenheimer Lehman Brothers Salomon Brothers
Year Ended High Yield Fund A Corporate Bond Index High Yield Market Index
<S> <C> <C> <C>
06/30/85 $ 9,525 $10,000 $10,000
06/30/86 $11,169 $12,129 $12,297
06/30/87 $12,356 $12,904 $13,386
06/30/88 $13,189 $13,975 $14,706
06/30/89 $14,372 $15,786 $16,304
06/30/90 $14,494 $16,984 $15,104
06/30/91 $16,220 $18,771 $17,796
06/30/92 $19,473 $21,671 $22,295
06/30/93 $22,455 $24,684 $27,272
06/30/94 $23,863 $23,857 $27,423
06/30/95 $25,554 $27,464 $31,235
</TABLE>
<TABLE>
<CAPTION>
Fiscal Oppenheimer Lehman Brothers Salomon Brothers
Period Ended High Yield Fund B Corporate Bond Index High Yield Market Index
<S> <C> <C> <C>
05/03/93 $10,000 $10,000 $10,000
06/30/93 $10,355 $10,243 $10,300
06/30/94 $10,905 $ 9,900 $10,357
06/30/95 $11,297 $11,397 $11,797
</TABLE>
<PAGE>
Oppenheimer High Yield Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given or
made, such information and representations must not be relied upon as
having been authorized by the Fund, Oppenheimer Management Corporation,
Oppenheimer Funds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
PR0280.001.1095N * Printed on recycled paper
<PAGE>
Oppenheimer High Yield Fund
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated November 1, 1995
This Statement of Additional Information of Oppenheimer High Yield Fund
is not a Prospectus. This document contains additional information about
the Fund and supplements information in the Prospectus dated November 1,
1995. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, Oppenheimer Shareholder
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the
Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objectives and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 7
Other Investment Restrictions 17
How the Fund is Managed 17
Organization and History 17
Trustees and Officers of the Fund 18
The Manager and Its Affiliates 22
Brokerage Policies of the Fund 23
Performance of the Fund 25
Distribution and Service Plans 29
About Your Account
How To Buy Shares 32
How To Sell Shares 38
How To Exchange Shares 42
Dividends, Capital Gains and Taxes 44
Additional Information About the Fund 45
Financial Information About the Fund
Independent Auditors' Report 46
Financial Statements 47
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as the strategies the Fund may use to
try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meaning as those terms have in the
Prospectus.
The Fund's investment adviser, Oppenheimer Management Corporation (the
"Manager"), evaluates the investment merits of fixed-income securities
primarily through the exercise of its own investment analysis. This may
include consideration of the financial strength of the issuer, including
its historic and current financial condition, the trading activity in its
securities, present and anticipated cash flow, estimated current value of
assets in relation to historical cost, the issuer's experience and
managerial expertise, responsiveness to changes in interest rates and
business conditions, debt maturity schedules, current and future borrowing
requirements, and any change in the financial condition of the issuer and
its continuing ability to meet its future obligations. The Manager also
may consider anticipated changes in business conditions, levels of
interest rates of bonds as contrasted with levels of cash dividends,
industry and regional prospects, the availability of new investment
opportunities and the general economic, legislative and monetary outlook
for specific industries, the nation and the world.
- Investment Risks of Fixed-Income Securities. All fixed-income
securities are subject to two types of risks: credit risk and interest
rate risk. Credit risk relates to the ability of the issuer to meet
interest or principal payments on a security as they become due.
Generally, higher yielding lower-grade bonds are subject to credit risk
to a greater extent than lower-yielding, investment grade bonds. Interest
rate risk refers to the fluctuations in value of fixed-income securities
resulting solely from the inverse relationship between price and yield of
outstanding fixed-income securities. An increase in prevailing interest
rates will generally reduce the market value of already-issued fixed-
income investments, and a decline in interest rates will tend to increase
their value. In addition, debt securities with longer maturities, which
tend to produce higher yields, are subject to potentially greater changes
in their prices from changes in interest rates than obligations with
shorter maturities. Fluctuations in the market value of fixed-income
securities after the Fund buys them will not affect the interest payable
on those securities, nor the cash income from such securities. However,
those price fluctuations will be reflected in the valuations of the
securities and therefore the Fund's net asset values.
- - Special Risks - High Yield Securities. As stated in the Prospectus,
the corporate debt securities in which the Fund will principally invest
are lower-rated debt securities, commonly known as "junk bonds." The Fund
may invest in securities rated as low as "C" by Moody's or "D" by Standard
& Poor's. The Manager will not rely solely on the ratings assigned by
rating services and may invest, without limitation, in unrated securities
which offer, in the opinion of the Manager, comparable yields and risks
as those rated securities in which the Fund may invest.
Risks of high yield securities may include: (i) limited liquidity and
secondary market support, (ii) substantial market price volatility
resulting from changes in prevailing interest rates, (iii) subordination
to the prior claims of banks and other senior lenders, (iv) the operation
of mandatory sinking fund or call/redemption provisions during periods of
declining interest rates that could cause the Fund to reinvest premature
redemption proceeds only in lower yielding portfolio securities, (v) the
possibility that earnings of the issuer may be insufficient to meet its
debt service, and (vi) the issuer's low creditworthiness and potential for
insolvency during periods of rising interest rates and economic downturn.
As a result of the limited liquidity of high yield securities, their
prices have at times experienced significant and rapid decline when a
substantial number of holders decided to sell. A decline is also likely
in the high yield bond market during an economic downturn. An economic
downturn or an increase in interest rates could severely disrupt the
market for high yield bonds and adversely affect the value of outstanding
bonds and the ability of the issuers to repay principal and interest. In
addition, there have been several Congressional attempts to limit the use
of tax and other advantages of high yield bonds which, if enacted, could
adversely affect the value of these securities and the Fund's net asset
value.
- - Warrants and Rights. The Fund may, to the limited extent described in
the Prospectus, invest in warrants and rights. 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 by the
issuer to its shareholders. Warrants and rights have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of such foreign currency against the
U.S. dollar will result in a change in the amount of income the Fund has
available for distribution. Because a portion of the Fund's investment
income may be received in foreign currencies, the Fund will be required
to compute its income in U.S. dollars for distribution to shareholders,
and therefore the Fund will absorb the cost of currency fluctuations.
After the Fund has distributed income, subsequent foreign currency losses
may result in the Fund's having distributed more income in a particular
fiscal period than was available from investment income, which could
result in a return of capital to shareholders.
Investing in foreign securities offers the Fund potential benefits not
available from investing solely in securities of domestic issuers,
including the opportunity to invest in foreign issuers that appear to
offer growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. If the
Fund's portfolio securities are held abroad, the countries in which they
may be held and the sub-custodians holding them must be approved by the
Fund's Board of Trustees where required under applicable rules of the
Securities and Exchange Commission.
- Brady Bonds. The Fund may invest in U.S. dollar-denominated,
collateralized Brady Bonds. These debt obligations of foreign entities
may be fixed-rate par bonds or floating rate discount bonds and are
generally collateralized in full as to principal due at maturity by U.S.
Treasury zero coupon obligations which have the same maturity as the Brady
Bonds. Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repayment of principal at final
maturity; (ii) the collateralized interest payments; (iii) the
uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts
constitute the "residual risk"). In the event of default with respect to
collateralized Brady Bonds as a result of which the payment obligations
of the issuer are accelerated, the zero coupon Treasury securities held
as collateral for the payment of principal will not be distributed to
investors nor will such obligations be sold and the proceeds distributed.
The collateral will be held by the collateral agent to the scheduled
maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will equal
the principal payments which would have then been due on the Brady Bonds
in the normal course. In addition, in light of the residual risk of Brady
Bonds and, among other factors, the history of defaults with respect to
commercial bank loans to public and private entities of countries issuing
Brady Bonds, investments in Brady Bonds are to be viewed as speculative.
- Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the U.S.
These include: reduction of income by foreign taxes; fluctuation in value
of foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges for
currency exchange; lack of public information about foreign issuers; lack
of uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less liquidity
on foreign markets than in the U.S.; less regulation of foreign issuers,
stock exchanges and brokers than in the U.S.; greater difficulties in
commencing lawsuits; higher brokerage commission rates than in the U.S.;
increased risks of delays in settlement of portfolio transactions or loss
of certificates for portfolio securities; possibilities in some countries
of expropriation, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the past,
U.S. Government policies have discouraged certain investments abroad by
U.S. investors, through taxation or other restrictions, and it is
possible that such restrictions could be re-imposed.
- - Asset-Backed Securities. The value of asset-backed securities is
affected by changes in the market's perception of the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also
affected if a credit enhancement is exhausted. The risks of investing in
asset-backed securities derive from depending upon payment of the
underlying consumer loans by the individual borrowers, and the Fund would
generally have no recourse to the entity that originated the loans in the
event of default by a borrower. The underlying loans are subject to
prepayments which shorten the weighted average life of asset-backed
securities and may lower their return, in the same manner as described
below for prepayments of a pool of mortgage loans underlying mortgage-
backed securities.
- - Mortgage-Backed Securities. These securities represent participation
interests in pools of residential mortgage loans which may or may not be
guaranteed by agencies or instrumentalities of the U.S. Government. Such
securities differ from conventional debt securities which provide for
periodic payment of interest in fixed amounts (usually semi-annually) with
principal payments at maturity or specified call dates. The mortgage-
backed securities in which the Fund may invest may be backed by the full
faith and credit of the U.S. Treasury (e.g. direct pass-through
certificates of the Government National Mortgage Association); some are
supported by the right of the issuer to borrow from the U.S. Government
(e.g. obligations of the Federal Home Loan Bank); and some are backed by
only the credit of the issuer itself. Any such guarantees do not extend
to the value of or yield of the mortgage-backed securities themselves or
to the net asset value of the Fund's shares.
The yield of a mortgage-backed security is based on the average expected
life of the underlying pool of mortgage loans. The actual life of any
particular pool will be shortened by any unscheduled or early payments of
principal and interest. Principal prepayments generally result from the
sale of the underlying property or the refinancing or foreclosure of
underlying mortgages. The occurrence of prepayments is influenced by a
wide range of economic, demographic and social factors and, accordingly,
it is not possible to predict accurately the average life of a particular
pool. Yield on such pools is usually computed by using the historical
record of prepayments for that pool, or, in the case of newly-issued
mortgages, the prepayment history of similar pools. The actual prepayment
experience of a pool of mortgage loans may cause the yield realized by the
Fund on the security backed by the pool to differ from the yield
calculated on the basis of the expected average life of the pool.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates, prepayments will most
likely decline. When prevailing interest rates rise, the value of a pass-
through security may decrease as do the values of other debt securities,
but, when prevailing interest rates decline, the value of a pass-through
security is not likely to rise to the extent that the values of other debt
securities rise, because of the prepayment feature of pass-through
securities. The Fund's reinvestment of scheduled principal payments and
unscheduled prepayments it receives may occur at a time of higher or lower
prevailing rates than the original investment, thus affecting the yield
of the Fund. Monthly interest payments received by the Fund have a
compounding effect which may increase the yield to shareholders more than
debt obligations that pay interest semi-annually. Because of those
factors, mortgage-backed securities may be less effective than Treasury
bonds of similar maturity at maintaining yields during periods of
declining interest rates. The Fund may purchase mortgage-backed
securities at a premium or at a discount. Accelerated prepayments
adversely affect yields for pass-through securities purchased at a premium
(i.e. at a price in excess of principal amount) and may involve additional
risk of loss of principal because the premium may not have been fully
amortized at the time the obligation is repaid. The opposite is true for
pass-through securities purchased at a discount.
-GNMA Certificates. Certificates of the Government National Mortgage
Association ("GNMA Certificates") are mortgage-backed securities which
evidence an undivided interest in a pool or pools of mortgages. The GNMA
Certificates that the Fund may purchase are of the "modified pass-through"
type, which entitle the holder to receive timely payment of all interest
and principal payments due on the mortgage pool, net of fees paid to the
"issuer" and GNMA, regardless of whether the mortgagor actually makes the
payments.
The National Housing Act authorizes GNMA to guarantee the timely payment
of principal and interest on securities backed by a pool of mortgages
insured by the Federal Housing Administration ("FHA") or guaranteed by the
Veterans Administration ("VA"). The GNMA guarantee is backed by the full
faith and credit of the U.S. Government. GNMA is also empowered to borrow
without limitation from the U.S. Treasury if necessary to make any
payments required under its guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of
principal investment long before the maturity of the mortgages in the
pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee, except to the extent that the Fund has purchased the
certificates at a premium in the secondary market.
-FNMA Securities. The Federal National Mortgage Association ("FNMA")
was established to create a secondary market in mortgages insured by the
FHA. FNMA issues guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in that each
FNMA Certificate represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. FNMA guarantees timely
payment of interest and principal on FNMA Certificates. The FNMA
guarantee is not backed by the full faith and credit of the U.S.
Government.
-FHLMC Securities. The Federal Home Loan Mortgage Corporation (FHLMC")
was created to promote development of a nationwide secondary market for
conventional residential mortgages. FHLMC issues two types of mortgage
pass-through securities ("FHLMC Certificates"), which are not guaranteed
or backed by the full faith and credit of the U.S. Government: mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro
rata share of all interest and principal payments made and owed on the
underlying pool. FHLMC guarantees timely monthly payment of interest on
PCs and the ultimate payment of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semi-annually and return principal once a year in guaranteed minimum
payments. The expected average life of these securities is approximately
ten years. The FHLMC guarantee is not backed by the full faith and credit
of the U.S. Government.
- Participation Interests. The Fund may invest in participation
interests, subject to the limitation on its net assets that may be
invested in illiquid investments. These participation interests provide
the Fund an undivided interest in a loan made by the issuing bank in the
proportion that the Fund's participation interest bears to the total
principal amount of the loan. No more than 5% of the Fund's net assets
can be invested in participation interests of the same borrower. The Fund
must look to the creditworthiness of the borrowing corporation, which is
obligated to make payments of principal and interest on the loan. In the
event the borrower fails to pay scheduled interest or principal payments,
the Fund would experience a reduction in its income and might experience
a decline in the net asset value of its shares. In the event of a failure
by the bank to perform its obligations in connection with the
participation agreement, the Fund might incur certain costs and delays in
realizing payment or may suffer a loss of principal and/or interest.
Other Investment Techniques and Strategies
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the value of the
loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities).
To be acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
-When-Issued and Delayed Delivery Transactions. The Fund may purchase
securities on a "when-issued" basis, and may purchase or sell such
securities on a "delayed delivery" basis. Although the Fund will enter
into such transactions for the purpose of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has entered
into, the Fund may dispose of a commitment prior to settlement. "When-
issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery. When such transactions are negotiated
the price (which is generally expressed in yield terms) is fixed at the
time the commitment is made, but delivery and payment for the securities
take place at a later date. During the period between commitment by the
Fund and settlement (generally within two months but not to exceed 120
days), no payment is made for the securities purchased by the purchaser,
and no interest accrues to the purchaser from the transaction. Such
securities are subject to market fluctuation; the value at delivery may
be less than the purchase price. The Fund will maintain a segregated
account with its Custodian, consisting of cash, U.S. Government Securities
or other high grade debt obligations at least equal to the value of
purchase commitments until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure to do so may result
in the Fund losing the opportunity to obtain a price and yield considered
to be advantageous. If the Fund chooses to (i) dispose of the right to
acquire a when-issued security prior to its acquisition or (ii) dispose
of its right to deliver or receive against a forward commitment, it may
incur a gain or loss. (At the time the Fund makes a commitment to
purchase or sell a security on a when-issued or forward commitment basis,
it records the transaction and reflects the value of the security
purchased, or if a sale, the proceeds to be received in determining its
net asset value).
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and not
for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or delivering
the securities, although (as noted above), when-issued securities and
forward commitments may be sold prior to settlement date. In addition,
changes in interest rates in a direction other than that expected by the
Manager before settlement will affect the value of such securities and may
cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor (a U.S. commercial bank
or the U.S. branch of a foreign bank having total domestic assets of at
least $1 billion or a broker-dealer with a net worth of at least $50
million and which has been designated a primary dealer in government
securities for delivery on an agreed-on future date. The resale price
exceeds the purchase price by an amount that reflects an agreed-upon
interest rate effective for the period during which the repurchase
agreement is in effect. The majority of these transactions run from day
to day, and delivery pursuant to the resale typically will occur within
one to five days of the purchase. Repurchase agreements are considered
"loans" under the Investment Company Act, collateralized by the underlying
security. The Fund's repurchase agreements require that at all times
while the repurchase agreement is in effect, the collateral's value must
equal or exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Trustees of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- -Hedging. The Fund may use hedging instruments for the purposes described
in the Prospectus. When hedging to attempt to protect against declines
in the market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons,
the Fund may: (i) sell Interest Rate Futures or Financial Futures
(together with Interest Rate Futures "Futures"), (ii) buy puts on
securities indices or on securities, or (iii) write covered calls on
securities indices or on Futures. When hedging to permit the Fund to
establish a position in the debt securities market as a temporary
substitute for purchasing particular debt securities (which the Fund will
normally purchase, and then terminate that hedging position), the Fund
may: (i) buy Futures, or (ii) buy calls on Futures, securities indices or
on securities. When hedging to protect against declines in the dollar
value of a foreign currency-denominated security, the Fund may: (a)
purchase puts on that foreign currency, (b) write calls on that currency
or (c) enter into Forward Contracts at a lower rate than the spot ("cash")
rate.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer,
which would establish a formula price at which the Fund would have the
absolute right to repurchase that OTC option. This formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is "in-the-money," that is,
exercisable below (for a put) or above (for a call) the market price of
the underlying security. For any OTC option the Fund writes, it will
treat as illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities) the amount of assets used to cover OTC
options it has written, equal to the formula price for the repurchase of
the OTC option less the amount by which the OTC option is "in-the-money."
The Fund will also treat as illiquid any OTC options held by it. The
Securities and Exchange Commission is evaluating whether OTC options
should be considered liquid securities, and the procedure described above
could be affected by the outcome of that evaluation.
The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's investment activities in the underlying cash
market. In the future, the Fund may employ hedging instruments and
strategies that are not presently contemplated but which may be developed,
to the extent such investment methods are consistent with the Fund's
investment objective, and are legally permissible and disclosed in the
Prospectus. Additional Information about the Hedging Instruments the Fund
may use is provided below.
-- Futures. The Fund may buy and sell Interest Rate Futures and
Financial Futures. Interest Rate Futures obligate one party to deliver
and the other to take a specific debt security at a specified price on a
specified date. The contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction or to enter into
an offsetting contract. No physical delivery of the securities underlying
the index is made on settling the futures obligation. No monetary amount
is paid or received by the Fund on the purchase or sale of an Interest
Rate Future. Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment in cash or U.S. Treasury
bills with the futures commission merchant (the "futures broker"). The
initial margin will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures broker can
gain access to that account only under specified conditions. As the
Future is marked to market to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid to or
by the futures broker on a daily basis. Prior to expiration of the
Future, if the Fund elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional
cash is required to be paid by or released to the Fund, and any loss or
gain is realized. Although Interest Rate Futures, by their terms, call
for settlement by delivery or acquisition of debt securities, in most
cases the obligation is fulfilled by entering into an offsetting position.
All futures transactions are effected through a clearinghouse associated
with the exchange on which the contracts are traded.
Financial Futures are similar to Interest Rate Futures except that
settlement is made in cash, and net gain or loss on options on Financial
Futures depends on price movements of the securities included in the
index. The strategies which the Fund employs regarding Financial Futures
are similar to those described above with regard to Interest Rate Futures.
- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. A Forward Contract involves
bilateral obligations of one party to purchase, and another party to sell,
a specific currency at a future date (which may be any fixed number of
days from the date of the contract agreed upon by the parties), at a price
set at the time the contract is entered into. These contracts are traded
in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The Fund may enter
into a Forward Contract in order to "lock in" the U.S. dollar price of a
security denominated in a foreign currency which it has purchased or sold
but which has not yet settled, or to protect against a possible loss
resulting from an adverse change in the relationship between the U.S.
dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the gain that
would otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. Forward contracts include standardized
foreign currency futures contracts which are traded on exchanges and are
subject to procedures and regulations applicable to other Futures. The
Fund may also enter into a forward contract to sell a foreign currency
denominated in a currency other than that in which the underlying security
is denominated. This is done in the expectation that there is a greater
correlation between the foreign currency of the forward contract and the
foreign currency of the underlying investment than between the U.S. dollar
and the foreign currency of the underlying investment. This technique is
referred to as "cross hedging." The success of cross hedging is dependent
on many factors, including the ability of the Manager to correctly
identify and monitor the correlation between foreign currencies and the
U.S. dollar. To the extent that the correlation is not identical, the
Fund may experience losses or gains on both the underlying security and
the cross currency hedge.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's assets that
may be committed to foreign currency exchange contracts. The Fund does
not enter into such forward contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency, or enter into a "cross hedge," unless it is
denominated in a currency or currencies that the Manager believes will
have price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated. See "Tax Aspects of
Covered Calls and Hedging Instruments" below for a discussion of the tax
treatment of foreign currency exchange contracts.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross-hedge").
The Fund's Custodian will place cash not available for investment or
U.S. Government securities or other liquid high-quality debt securities
in a separate account of the Fund having a value equal to the aggregate
amount of the Fund's commitments under forward contracts to cover its
short positions. If the value of the securities placed in a separate
account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the
amount of the Fund's commitments with respect to such contracts. As an
alternative to maintaining all or part of the separate account, the Fund
may purchase a call option permitting the Fund to purchase the amount of
foreign currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Fund may purchase a put
option permitting the Fund to sell the amount of foreign currency subject
to a forward purchase contract at a price as high or higher than the
forward contract price. Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had not
entered into such contracts.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs. The Fund may enter into Forward Contracts or maintain a net
exposure on such contracts only if: (1) the consummation of the contracts
would not 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 (2) the Fund maintains cash, U.S.
Government securities or liquid high-grade debt securities in a segregated
account in an amount not less than the value of the Fund's total assets
committed to the consummation of the contract.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
- Writing and Purchasing Puts. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying
investment at the exercise price during the option period. As noted above
under "Writing and Purchasing Calls," an additional reason for writing
options on a securities portfolio is to attempt to realize, through the
receipt of premiums, a greater return than would be realized on the
securities alone. Writing a put, covered by segregated liquid assets
equal to the exercise price of the put, has the same economic effect to
the Fund as writing a covered call.
The premium the Fund receives from writing a put option represents a
profit, as long as the price of the underlying investment remains above
the exercise price. However, the Fund has also assumed the obligation
during the option period to buy the underlying investment from the buyer
of the put option at the exercise price, even though the value of the
investment may fall below the exercise price. If the put expires
unexercised, the Fund (as the writer of the put) realizes a gain in the
amount of the premium. If the put option is exercised, the Fund must
fulfill its obligation to purchase the underlying investment at the
exercise price, which will usually exceed the then market value of the
underlying investment at that time. In that case, the Fund may incur a
loss, equal to the sum of the sale price of the underlying investment and
the premium received minus the sum of the exercise price and any
transaction costs incurred.
When writing put options on securities, to secure its obligation to pay
for the underlying security, the Fund will deposit in escrow with its
Custodian liquid assets with a value equal to or greater than the exercise
price of the underlying securities. The Fund therefore forgoes the
opportunity of investing the segregated assets or writing calls against
those assets. As long as the obligation of the Fund as the put writer
continues, it may be assigned an exercise notice by the exchange or
broker-dealer through whom such option was sold, requiring the Fund to
take delivery of the underlying security against payment of the exercise
price. The Fund has no control over when it may be required to purchase
the underlying security since it may be assigned an exercise notice at any
time prior to the termination of its obligation as the writer of the put.
This obligation terminates upon expiration of the put, or such earlier
time at which the Fund effects a closing purchase transaction by
purchasing a put of the same series as that previously sold. Once the
Fund has been assigned an exercise notice, it is thereafter not allowed
to effect a closing purchase transaction. The Fund may effect a closing
purchase transaction to realize a profit on an outstanding put option it
has written or to prevent an underlying security from being put.
Furthermore, effecting such a closing purchase transaction will permit the
Fund to write another put option to the extent that the exercise price
thereof is secured by the deposited assets, or to utilize the proceeds
from the sale of such assets for other investments by the Fund. The Fund
will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more than the premium received from
writing the option. As with writing covered calls, any and all such
profits described herein from writing puts are considered short-term gains
for Federal tax purposes, and when distributed to shareholders by the
Fund, are taxable as ordinary income.
When the Fund buys a put, it pays a premium and 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 a debt security or Future 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. Thus, in the
event of a decline in the market, the Fund could exercise or sell the put
at a profit that would offset some or all of its loss on the underlying
investment. If a put held by the Fund is exercised, the amount the Fund
receives on its sale of the underlying investment is reduced by the amount
of the premium paid by the Fund. If the market price of the underlying
investment is above the exercise price and, as a result, the put is not
exercised or resold, the put will become worthless as its expiration date
and the Fund will lose its premium payment and the right to sell the
underlying investment; the put may, however, be sold prior to expiration
(whether or not a profit).
- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions,
the net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."
- Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to its
use of futures and options thereon as established by the Commodities
Futures Trading Commission ("CFTC"). In particular, the Fund is excluded
from registration as a "commodity pool operator" if it 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 option premiums for a bona fide hedging position. However, under
the Rule the Fund must limit its aggregate initial futures margin and
related option premiums to no more than 5% of the Fund's net assets for
hedging strategies that are not considered bona fide hedging strategies
under the Rule.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more different exchanges or futures
brokers. Thus, the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same advisor as the Fund or having an
affiliated investment adviser. Position limits also apply to Futures.
An exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions. Due to
requirements under the Investment Company Act, when the Fund purchases a
Future, the Fund will maintain, in a segregated account or accounts with
its Custodian, cash or readily-marketable, short-term (maturing in one
year or less) debt instruments in an amount equal to the market value of
the securities underlying such Future, less the margin deposit applicable
to it.
- Tax Aspects of Hedging Instruments and Covered Calls. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. One of the tests for such qualification is that less than
30% of its gross income must be derived from gains realized on the sale
of securities held for less than three months. Due to this limitation,
the Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including Futures, held for less than three months, whether or not they
were purchased on the exercise of a call held by the Fund; (ii) purchasing
calls or puts which expire in less than three months; (iii) effecting
closing transactions with respect to calls or puts purchased less than
three months previously; (iv) exercising puts or calls held by the Fund
for less than three months; and (v) writing calls on investments held for
less than three months.
Certain foreign currency exchange contracts ("Forward Contracts") in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this mark-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a
position(s) making up a straddle is allowed only to the extent such loss
exceeds any unrecognized gain in the offsetting positions making up the
straddle. Disallowed loss is generally allowed at the point where there
is no unrecognized gain in the offsetting positions making up the
straddle, or the offsetting position is disposed.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
- Risks of Hedging With Options and Futures. An option position may
be closed out only on a market that provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option. In addition to the risks
associated with hedging that are discussed in the Prospectus and above,
there is a risk in using short hedging by selling Futures to attempt to
protect against declines in the value of the Fund's portfolio (due to an
increase in interest rates) that the prices of such Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's securities. The ordinary spreads between prices in the cash
and futures markets are subject to distortions due to differences in the
natures of those markets. First, all participants in the futures markets
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the
liquidity of the futures markets depend on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
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 debt securities being hedged and movements in the price of
the Hedging Instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of debt securities being hedged if
the historical volatility of the prices of the debt securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of the debt securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses Hedging Instruments to establish a position in the
debt securities markets as a temporary substitute for the purchase of
individual debt securities (long hedging) by buying Futures and/or calls
on such Futures or on debt securities, it is possible that the market may
decline; if the Fund then concludes not to invest in such securities at
that time because of concerns as to possible further market decline or for
other reasons, the Fund will realize a loss on the Hedging Instruments
that is not offset by a reduction in the price of the debt securities
purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of (1) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (2) more than 50% of the
outstanding shares.
Under these additional restrictions, the Fund cannot:
- invest in real estate, or commodities or commodity contracts;
however, the Fund may invest in debt securities secured by real estate or
interests therein or issued by companies, including real estate investment
trusts, which invest in real estate or interests therein, and the Fund may
buy and sell any of the Hedging Instruments which it may use, whether or
not such Hedging Instrument is considered to be a commodity or a commodity
contract;
- buy securities on margin or engage in short sales, except that
the Fund may make margin deposits in connection with any of the Hedging
Instruments which it may use;
- pledge, hypothecate, mortgage or otherwise encumber its assets;
however, escrow or other collateral arrangements in connection with
Hedging Instruments are not prohibited hereby;
- underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under Federal
securities laws;
- buy and retain securities of any issuer if those officers,
Trustees or Directors of the Fund or the Manager who beneficially own more
than .5% of the securities of such issuer together own more than 5% of the
securities of such issuer;
- invest in mineral-related programs or leases;
- buy the securities of any company for the purpose of exercising
management control; or
- buy securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
In connection with the qualification of its shares in certain states,
the Fund has undertaken that in addition to the above, as a non-
fundamental policy, it will not (1) invest in oil, gas or other mineral
leases, or (2) invest in real property, including real estate limited
partnership interests; however, this does not prevent the Fund from
investing in real estate investment trusts or readily marketable
securities of companies that invest in real estate.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations and occupations
during the past five years are listed below. All of the Trustees are also
trustees, directors or managing general partners of Oppenheimer Total
Return Fund, Inc., Oppenheimer Equity Income Fund, Oppenheimer Cash
Reserves, Oppenheimer Strategic Income Fund, Centennial America Fund,
L.P., The New York Tax-Exempt Income Fund, Inc., Oppenheimer Variable
Account Funds, Oppenheimer Champion Income Fund, Oppenheimer Main Street
Funds, Inc., Oppenheimer Strategic Income & Growth Fund, Oppenheimer
Integrity Funds, Oppenheimer Limited-Term Government Fund, Oppenheimer
Tax-Exempt Bond Fund, Centennial Money Market Trust, Centennial Government
Trust, Centennial New York Tax Exempt Trust, Centennial California Tax
Exempt Trust, Daily Cash Accumulation Fund, Inc. and Centennial Tax Exempt
Trust (all of the foregoing funds are collectively referred to as the
"Denver-based OppenheimerFunds") except for Mr. Fossel, who is a Trustee,
Director or Managing General Partner of all the Denver-based Oppenheimer
funds except Oppenheimer Bond Fund and Oppenheimer Strategic Income Fund.
Mr. Fossel is President and Mr. Swain is Chairman of the Denver-based
Oppenheimer funds. As of October 6, 1995, the Trustees and officers of
the Fund as a group owned less than 1% of its outstanding shares, not
including shares held of record by an employee benefit plan of the Manager
for which two officers of the Fund (Jon S. Fossel and Andrew J. Donohue)
are trustees.
Robert G. Avis, Trustee*; Age 64
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
William A. Baker, Trustee; Age 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age 65
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems Co.; formerly
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, President and Trustee*; Age 53
Two World Trade Center, New York, New York 10048-0203
Chairman and a Director of the Manager; President and a Director of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding
company; President and a Director of HarbourView Asset Management
Corporation, a subsidiary of the Manager ("HarbourView"); a Director
of Shareholder Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager;
formerly President of the Manager.
Raymond J. Kalinowski, Trustee; Age 66
44 Portland Drive, St. Louis, Missouri 63131
Director of International Inc.; formerly Vice Chairman and a Director
of A.G. Edwards, Inc., parent holding company of A.G. Edwards & Sons,
Inc. (a broker-dealer), of which he was a Senior Vice President.
C. Howard Kast, Trustee; Age 73
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
Robert M. Kirchner, Trustee; Age 74
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Ned M. Steel, Trustee; Age 80
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a Director of
Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman and Trustee*; Age 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a Director of the Manager; President and Director of
Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"); formerly Chairman of the
Board of SSI.
_____________________
* A Trustee who is an "interested person" as defined in the
Investment Company Act.
Ralph W. Stellmacher, Vice President and Portfolio Manager; Age 36
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.
Andrew J. Donohue, Vice President; Age 45
Two World Trade Center, New York, New York 10048
Executive Vice President and General Counsel of Oppenheimer Management
Corporation (the "Manager") and Oppenheimer Funds Distributor, Inc. (the
"Distributor"); an officer of other OppenheimerFunds; formerly Senior Vice
President and Associate General Counsel of the Manager and the
Distributor; Partner in Kraft & McManimon (a law firm); an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser); director
and an officer of First Investors Family of Funds and First Investors Life
Insurance Company.
George C. Bowen, Vice President, Secretary and Treasurer; Age 59
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert J. Bishop, Assistant Treasurer; Age 37
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions Supervisor
for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co., a bank, and previously a Senior Fund Accountant
for State Street Bank & Trust Company.
Robert G. Zack, Assistant Secretary; Age 47
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other OppenheimerFunds.
_____________________
* A Trustee who is an "interested person" as defined in the
Investment Company Act.
- Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager; they and the Trustees of the Fund who are
affiliated with the Manager (Messrs. Fossel and Swain, who are both
officers and Trustees) receive no salary or fee from the Fund. The
Trustees of the Fund (excluding Messrs. Fossel and Swain) received the
total amounts shown below (i) from the Fund, during its fiscal year ended
June 30, 1995, and (ii) from all 21 of the Denver-based OppenheimerFunds
(including the Fund) listed in the first paragraph of this section, for
services in the positions shown:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
<S> <C> <C>
Robert G. Avis $6,873 $53,000.00
Trustee
William A. Baker $9,502 $73,257.01
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $8,856 $68,293.67
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $6,873 $53,000.00
Trustee
C. Howard Kast $6,873 $53,000.00
Trustee
Robert M. Kirchner $8,856 $68,293.67
Audit and Review
Committee Member
and Trustee
Ned M. Steel $6,873 $53,000.00
Trustee
</TABLE>
______________________
1 For the 1994 calendar year.
- Major Shareholders. As of October 6, 1995 no person owned
of record or was known by the Fund to own beneficially 5% or more of any
class of the Fund's outstanding shares.
The Manager and Its Affiliates. The Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts
Mutual Life Insurance Company. OAC is also owned in part by certain of
the Manager's directors and officers, some of whom may also serve as
officers of the Fund, and two of whom (Messrs. Fossel and Swain) serve as
Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed
to detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributors Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs and non-recurring expenses, including
litigation costs. For the Fund's fiscal years ended June 30, 1993, 1994
and 1995, the management fees paid by the Fund to the Manager were
$6,696,256, $7,655,008 and $7,542,307, respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of ave
rage annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting from
a good faith error or omission on its part with respect to any of its
duties thereunder. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
- The Distributor. Under its General Distributor's Agreement with the
Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class C
shares but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales (other than those paid under the
Distribution and Service Plans, but including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders) are borne by the Distributor. During the Fund's fiscal
years ended June 30, 1993, 1994 and 1995, the aggregate amount of sales
charge on sales of the Fund's Class A shares were $6,556,648, $4,185,629
and $2,629,870, respectively, of which the Distributor and an affiliated
broker-dealer retained in the aggregate $1,562,280, $1,023,367 and
$624,955 in those respective years. The contingent deferred sales charges
collected by the Distributor on the redemption of Class B shares for the
fiscal year ended June 30, 1995 totalled $333,734. Class C shares were
not publicly offered during those periods and no contingent deferred sales
charges were collected. For additional information about distribution of
the Fund's shares and the expenses connected with such activities, please
refer to "Distribution and Service Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement and the procedures and rules
described above, allocations of brokerage generally are made by the
Manager's portfolio traders upon recommendations from the Manager's
portfolio managers. In certain instances, portfolio managers may directly
place trades and allocate brokerage, also subject to the provisions of the
advisory agreement and the procedures and rules described above. In
either case, brokerage is allocated under the supervision of the Manager's
executive officers. As most purchases made by the Fund are principal
transactions at net prices, the Fund does not incur substantial brokerage
costs. The Fund usually deals directly with the selling or purchasing
principal or market maker without incurring charges for the services of
a broker on its behalf unless it is determined that a better price or
execution may be obtained by utilizing the services of a broker.
Purchases of portfolio securities from underwriters include a commission
or concession paid by the issuer to the underwriter, and purchases from
dealers include a spread between the bid and asked price. The Fund seeks
to obtain prompt execution of orders at the most favorable net prices.
When the Fund engages in an option transaction, ordinarily the same broker
will be used for the purchase or sale of the option and any transaction
in the securities to which the option relates. When possible, concurrent
orders to purchase or sell the same security by more than one of the
accounts managed by the Manager or its affiliates are combined. The
transactions effected pursuant to such combined orders are averaged as to
price and allocated in accordance with the purchase or sale orders
actually placed for each account.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed-price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
agency trades to obtain research where the broker has represented to the
Manager that: (i) the trade is not from 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 research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
During the Fund's fiscal years ended June 30, 1993, 1994 and 1995,
total brokerage commissions paid by the Fund (not including any spreads
or concessions on principal transactions on a net trade basis) amounted
to $7,850, $70,384 and $73,086, respectively. During the fiscal year
ended June 30, 1995, $13,031 was paid to brokers as commissions in return
for research services; the aggregate dollar amount of these transactions
was $1,434,799. The transactions giving rise to those commissions were
allocated in accordance with the Manager's internal allocation procedures.
Performance of the Fund
Yield and Total Return Information. As described in the Prospectus, from
time to time the "standardized yield," "dividend yield," "average annual
total return," "cumulative total return," "average annual total return at
net asset value" and "total return at net asset value" of an investment
in a class of shares of the Fund may be advertised. An explanation of how
these total returns are calculated for each class and the components of
those calculations is set forth below. No performance information is
presented below for Class C shares because no shares of that class were
publicly offered during the fiscal year ended June 30, 1995.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) ending as
of the most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of each class
of shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to the
particular class.
- Standardized Yields
- Yield. The Fund's "yield" (referred to as "standardized yield") for
a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Securities and
Exchange Commission that apply to all funds that quote yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ. For
the 30-day period ended June 30, 1995, the standardized yields for the
Fund's Class A and Class B shares were 9.17% and 8.80%, respectively.
- Dividend Yield and Distribution Return. From time to time the Fund
may quote a "dividend yield" or a "distribution return" for each class.
Dividend yield is based on the dividends paid on shares of a class from
dividends derived from net investment income during a stated period.
Distribution return includes dividends derived from net investment income
and from realized capital gains declared during a stated period. Under
those calculations, the dividends and/or distributions for that class
declared during a stated period of one year or less (for example, 30 days)
are added together, and the sum is divided by the maximum offering price
per share of that class on the last day of the period. When the result
is annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the maximum front-
end sales charge. For Class B or Class C shares, the maximum offering
price is the net asset value per share, without considering the effect of
contingent deferred sales charges.
From time to time similar yield or distribution return calculations
may also be made using the Class A net asset value (instead of its
respective maximum offering price) at the end of the period. The dividend
yields on Class A shares for the 30-day period ended June 30, 1995, were
9.16% and 9.62% when calculated at maximum offering price and at net asset
value, respectively. The dividend yield on Class B shares for the 30-day
period ended June 30, 1995, was 8.86% when calculated at net asset value.
- - Total Return Information
- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return, but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class B shares, payment of contingent
deferred sales charge of 5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth year, 2.0% in the fifth year, 1.0% in
the sixth year and none thereafter is applied, as described in the
Prospectus. For Class C shares, the payment of the 1% contingent deferred
sales charge for the first 12 months is applied, as described in the
prospectus. Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares
at net asset value per share, and that the investment is redeemed at the
end of the period. The "average annual total returns" on an investment
in Class A shares of the Fund for the one, five and ten year periods ended
June 30, 1995 were 2.00%, 10.92% and 9.84%, respectively. The "average
annual total returns" on an investment in Class B shares of the Fund for
the fiscal year ended June 30, 1994 and for the period from May 3, 1993
(inception of the Class) through June 30, 1995 were 1.36% and 5.81%,
respectively. The cumulative "total return" on Class A shares for the ten
year period ended June 30, 1995 was 155.55%. During a portion of the
periods for which total returns are shown for Class A shares, the Fund's
maximum initial sales charge rate was higher; as a result, performance
returns on actual investments during those periods may be lower than the
results shown. The cumulative total return on Class B shares for the
fiscal year ended June 30, 1994 and for the period from May 3, 1993
through June 30, 1995 were 1.36% and 12.97%, respectively.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or Class
C shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions. The cumulative total return
at net asset value of the Fund's Class A shares for the ten-year period
ended June 30, 1995 was 168.28%. The average annual total returns at net
asset value for the one, five and ten-year periods ended June 30, 1995,
for Class A shares were 8.17%, 12.01% and 10.37%, respectively. The
average annual total return at net asset value for Class B shares for the
fiscal year ended June 30, 1995 and for the period from May 3, 1993
through June 30, 1995 was 7.71% and 7.04%, respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class C shares. However,
when comparing total return of an investment in Class A or Class B shares
of the Fund with that of other alternatives, investors should understand
that as the Fund invests in high yield securities, its shares are subject
to greater market risks and volatility than shares of funds having other
investment objectives and that the Fund is designed for investors who are
willing to accept greater risk of loss in the hopes of realizing greater
gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B or Class C shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent service. Lipper
monitors the performance of regulated investment companies, including the
Fund, and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund's classes
are ranked against (i) all other funds (excluding money market funds),
(ii) all other high current yield or fixed income funds and (iii) all
other such funds in a specific size category. The Lipper performance
rankings are based on total returns that include the reinvestment of
capital gain distributions and income dividends but do not take sales
charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when available) in excess of 90-day U.S.
Treasury bill returns after considering sales charges and expenses. Risk
reflects fund performance below 90-day U.S. Treasury bill monthly returns.
Risk and return are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars
is the "highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below average"
(next 22.5%) and one star is "lowest" (bottom 10%). Morningstar ranks the
Class A, Class B and Class C shares of the Fund in relation to other rated
high yield funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with performance for the same period of the
Lehman Brothers Corporate Bond Index and the Salomon Brothers High Yield
Market Index. The Lehman Brothers Corporate Bond Index is an unmanaged
index of publicly-issued nonconvertible investment grade corporate debt
of U.S. issuers, widely recognized as a measure of the U.S. fixed-rate
corporate bond market. The Salomon Brothers High Yield Market Index is
an unmanaged index of below-investment grade (but rated at least BB+/Ba1
by Standard & Poor's or Moody's) U.S. corporate debt obligations, widely
recognized as a measure of the performance of the high-yield corporate
bond market, the market in which the Fund principally invests. Each Index
includes a factor for the reinvestment of interest but does not reflect
expenses or taxes.
The performance of the Fund's Class A, Class B or Class C shares may
also be compared in publications to (i) the performance of various market
indices or to other investments for which reliable performance data is
available, and (ii) to averages, performance rankings or other benchmarks
prepared by recognized mutual fund statistical services.
Investors may also wish to compare the Fund's Class A, Class B or
Class C return to the returns on fixed income investments available from
banks and thrift institutions, such as certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed
or variable time deposits, and various other instruments such as Treasury
bills. However, the Fund's returns and share price are not guaranteed by
the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide fixed
rates of return, and Treasury bills are guaranteed as to principal and
interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance
rankings of the Oppenheimer funds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
OppenheimerFunds' services to those of other mutual fund families selected
by the rating or ranking services and may be based upon the opinions of
the rating or ranking service itself, based on its research or judgment,
or based upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares under Rule
12b-1 of the Investment Company Act pursuant to which the Fund will make
payment to the Distributor in connection with the distribution and/or
servicing of the shares of that class, as described in the Prospectus.
Each Plan has been approved by a vote of (i) the Board of Trustees of the
Fund, including a majority of the Independent Trustees, cast in person at
a meeting called for the purpose of voting on that Plan, and (ii) the
holders of a "majority" (as defined in the Investment Company Act) of the
shares of each class. For the Distribution and Service Plan for Class C
shares, the vote was cast by the Manager as the sole initial holder of
Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from
time to time may use their own resources (which, in the case of the
Manager, may include profits from the advisory fee it receives from the
Fund) to make payments to brokers, dealers or other financial
institutions (each is referred to as a "Recipient" under the Plans) for
distribution and administrative services they perform at no cost to the
Fund. The Distributor and the Manager may, in their sole discretion,
increase or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any
time by the vote of a majority of the Independent Trustees or by the vote
of the holders of a "majority" (as defined in the Investment Company Act)
of the outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A after six years, the Fund is required to obtain the
approval of Class B as well as Class A shareholders for a proposed
amendment to the Class A Plan that would materially increase the amount
to be paid by Class A shareholders under that Class A Plan. Such approval
must be by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act), voting separately by Class. All material
amendments must be approved by the Board and the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly for its review, detailing the amount of all payments made
pursuant to identity of each Recipient that received any such payment and
the purpose of the payment. The report for the Class B Plan shall also
include the Distributor's distribution costs for that quarter, and such
costs for previous fiscal periods that have been carried forward, as
explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and
approval of the Independent Trustees in the exercise of their fiduciary
duty. Each Plan further provides that while it is in effect, the
selection or replacement and nomination of those Trustees of the Fund who
are not "interested persons" of the Fund is committed to the discretion
of the Independent Trustees. This does not prevent the involvement of
others in such selection and nomination if the final decision as to any
such selection or nomination is approved by a majority of the Independent
Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares, held by the
Recipient for itself and its customers, did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fee at the maximum rate (except for assets representing Class A shares
acquired prior to April 1, 1991, for which the rate is 0.15% for the
current fiscal year) and set no minimum amount. For the fiscal year ended
June 30, 1995, payments under the Class A Plan totalled $1,981,782, all
of which was paid by the Distributor to Recipients, including $26,763 paid
to MML Investor Services, Inc. ("MMLISI"), an affiliate of the
Distributor. Payments made under the Class B Plan during that fiscal
period totalled $1,343,774, of which $1,215,382 was retained by the
Distributor and $1,112 was paid to MMLISI. Since no Class C shares were
outstanding during the Fund's fiscal year ended June 30, 1995, no payments
were made under the Class C Plan.
Any unreimbursed expenses incurred by the Distributor with respect
to Class A shares for any fiscal year may not be recovered in subsequent
years. Payments received by the Distributor under the Plan for Class A
shares will not be used to pay any interest expense, carrying charge, or
other financial costs, or allocation of overhead by the Distributor.
The Class B and Class C Plans allow the service fee payment to be
paid by the Distributor to Recipients in advance for the first year such
shares are outstanding, and thereafter on a quarterly basis, as described
in the Prospectus. The advance payment is based on the net asset value
of the shares sold. An exchange of shares does not entitle the Recipient
to an advance service fee payment. In the event Class B or Class C shares
are redeemed during the first year such shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of such advance
payment to the Distributor.
Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fees on Class
B and Class C shares, or to pay Recipients the service fee on a quarterly
basis, without payment in advance, the Distributor intends to pay the
service fee to Recipients in the manner described above. A minimum
holding period may be established from time to time under the Class B and
Class C Plans by the Board. Initially, the Board has set no minimum
holding period. All payments under the Class B and Class C Plans are
subject to the limitations imposed by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. on payments of asset-
based sales charges and service fees. The Distributor anticipates that it
will take a number of years for it to recoup (from the Fund's payments to
the Distributor under the Class B Plan and recoveries of the contingent
deferred sales charge) the sales commissions paid to authorized brokers
or dealers.
Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B shares of the Fund. The
Distributor's actual distribution expenses for any given year may exceed
the aggregate of payments received pursuant to the Class B Plan and from
contingent deferred sales charges, and such expenses will be carried
forward and paid in future years. The Fund will be charged only for
interest expenses, carrying charges or other financial costs that are
directly related to the carry-forward of actual distribution expenses.
For example, if the Distributor incurred distribution expenses of
$4,000,000 in a given fiscal year, of which $2,000,000 was recovered in
the form of contingent deferred sales charges paid by investors and
$1,600,000 were reimbursed in the form of payments made by the Fund to the
Distributor under the Class B Plan, the balance of $400,000 (plus
interest) would be subject to recovery in future fiscal years from such
sources.
The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class B Plan is
intended to allow the Distributor to recoup the cost of sales commissions
paid to authorized brokers and dealers at the time of sale, plus financing
costs, as described in the Prospectus. Such payments may also be used to
pay for the following expenses in connection with the distribution of
Class B shares: (i) financing the advance of the service fee payment to
Recipients under the Class B Plan, (ii) compensation and expenses of
personnel employed by the Distributor to support distribution of Class B
shares, and (iii) costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue sky"
registration fees.
The Class C Plan provides for the Distributor to be compensated at
a flat rate, whether the Distributor's distribution expenses are more or
less than the amount paid by the Fund during that period. Such payments
are made in recognition that the Distributor (i) pays sales commissions
to authorized brokers and dealers at the time of sale and pays service
fees as described in the Prospectus, (ii) may finance such commissions
and/or the advance of the service fee payment to Recipients under those
Plans, (iii) employs personnel to support distribution of shares, and (iv)
may bear the costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue sky"
registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B shares are the same as
those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling
Fund shares may receive different compensation with respect to one class
of shares than the other. The Distributor will not accept (i) any order
for $500,000 or more of Class B or (ii) any order for $1 million or more
of Class C shares on behalf of a single investor (not including dealer
"street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund
instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on Class B and Class C
shares will be reduced by incremental expenses borne by those classes,
including the asset-based sales charge to which Class B and Class C shares
are subject.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of Class B shares does not constitute a
taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Class
B shares would occur while such 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.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to any class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total assets,
and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and
audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to unaffiliated Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution and/or
Service Plan fees, (ii) incremental transfer and shareholder servicing
agent fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C 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, by dividing the value of the Fund's net assets
attributable to that Class by the number of shares of that class
outstanding. The Exchange normally closes at 4:00 P.M., New York time,
but may close earlier on some days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states that
it will close on New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It
may also close on other days. Because the Fund's net asset value will not
be calculated on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not purchase or
redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
actively traded on a foreign securities exchange are valued at the last
sales price available to the pricing service approved by the Fund's Board
of Trustees or to the Manager as reported by the principal exchange on
which the security is traded; (iii) unlisted foreign securities or listed
foreign securities not actively traded are valued as in (i) above, if
available, or at the mean between "bid" and "asked" prices obtained from
active market makers in the security on the basis of reasonable inquiry;
(iv) long-term debt securities having a remaining maturity in excess of
60 days are valued at the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the
basis of reasonable inquiry; (v) debt instruments having a maturity of
more than one year when issued, and non-money market type instruments
having a maturity of one year or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained from active market makers in the security
on the basis of reasonable inquiry; (vi) money market-type debt securities
having a maturity of less than one year when issued that having a
remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vii) securities
(including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the Exchange.
Events affecting the values of foreign securities traded in such markets
that occur between the time their prices are determined and the close of
the Exchange will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made. Foreign currency including forward contracts,
will be valued at the closing price in the London foreign exchange market
that day as provided by a reliable bank, dealer or pricing service. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at closing price in the London foreign exchange market that
day as provided by a reliable bank, dealer or pricing service.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ,
as applicable as determined by a pricing service approved by the Board of
Trustees or by the Manager, or, if there are no sales that day, in
accordance with (i), above. Forward currency contracts are valued at the
closing price on the London foreign exchange market as provided by a
reliable bank, dealer or pricing service. When the Fund writes an option,
an amount equal to the premium received by the Fund is included in the
Fund's Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is adjusted "marked-to-market" to reflect the current market value of the
option. In determining the Fund's gain on investments, if a call written
by the Fund is exercised, the proceeds are increased by the premium
received. If a call or put written by the Fund expires, the Fund has a
gain in the amount of the premium; if the Fund enters into a closing
purchase transaction, it will have a gain or loss depending on whether the
premium was more or less than the cost of the closing transaction. If
the Fund exercises a put it holds, the amount the Fund receives on its
sale of the underlying investment is reduced by the amount of premium paid
by the Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy shares. Dividends will begin to accrue on shares
purchased by 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. 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 the Prospectus because the Distributor or
dealer or broker incurs little or no selling expenses. The term
"immediate family" refers to one's spouse, children, grandchildren,
grandparents, parents, parents-in-law, brothers and sisters, sons- and
daughters-in-law, a sibling's spouse and a spouse's siblings.
- The OppenheimerFunds. The Oppenheimer funds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor
and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
<PAGE>
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent ("Letter") 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"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases of shares,
which when added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made by
reinvestment of dividends or distributions of capital gains and purchases
made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to
count the Class A and Class B shares purchased under the Letter to obtain
the reduced sales charge rate on purchases of Class A shares of the Fund
(and other Oppenheimer funds) that applies under the Right of Accumulation
to current purchases of Class A shares. Each purchase of Class A shares
under the Letter will be made at the public 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, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
up to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter) include (a)
Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge, (b) Class B shares of other
Oppenheimer funds acquired subject to a contingent deferred sales charge,
and (c) Class A or Class B shares acquired in exchange for either (i)
Class A shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge or (ii)
Class B shares of one of the other Oppenheimer funds that were acquired
subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "How to Exchange Shares," and
the escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a
contingent deferred sales charge may apply to shares purchased by Asset
Builder payments. An application should be obtained from the Distributor,
completed and returned, and a prospectus of the selected fund(s) should
be obtained from the Distributor or your financial advisor before
initiating Asset Builder payments. The amount of the Asset Builder
investment may be changed or the automatic investments may be terminated
at any time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's receipt of
such instructions to implement them. The Fund reserves the right to
amend, suspend, or discontinue offering such plans at any time without
prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Checkwriting. When a check is presented to the Bank for
clearance, the Bank will ask the Fund to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the
amount of the check. This enables the shareholder to continue receiving
dividends on those shares until the check is presented to the Fund.
Checks may not be presented for payment at the offices of the Bank or the
Fund's Custodian. This limitation does not affect the use of checks for
the payment of bills or to obtain cash at other banks. The Fund reserves
the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However, the
Board of Trustees of the Fund may determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case the
Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
- Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than $200
or such lesser amount as the Board may fix. The Board of Trustees will
not cause the involuntary redemption of shares in an account if the
aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board elect
to exercise this right, it may also fix, in accordance with the Investment
Company Act, the requirements for any notice to be given to the
shareholders in question (not less than 30 days), or the Board may set
requirements for granting permission to the Shareholder to increase the
investment, and set other terms and conditions so that the shares would
not be involuntarily redeemed.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other
Oppenheimer funds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares
of the Fund or another of the Oppenheimer funds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans,
or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons maintaining a plan account
in their own name) in OppenheimerFunds-sponsored prototype pension,
profit-sharing or 401(k) plans may not directly redeem or exchange shares
held for their account under those plans. The employer, plan
administrator must sign the request. Distributions from pension and
profit sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P (available
from the Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless the
shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives the order
placed by the dealer or broker, except that if the Distributor receives
a repurchase order from a dealer or broker after the close of The New York
Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker
from its customers prior to the time the Exchange closes (normally, that
is 4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Ordinarily, for accounts redeemed
by a broker-dealer under this procedure, payment will be made within three
business days after the shares have been redeemed upon the Distributor's
receipt of the required redemption documents, in proper form with the
signature(s) of the registered owners guaranteed on the redemption
document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans, 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 the Prospectus under "Class B
Contingent Deferred Sales Charge" or in "Class C Contingent Deferred Sales
Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares of
the Fund for shares (of the same class) of other Oppenheimer funds
automatically on a monthly, quarterly, semi-annual or annual basis under
an Automatic Exchange Plan. The minimum amount that may be exchanged to
each other fund account is $25. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How
to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent and the Fund shall incur no liability
to the Planholder for any action taken or omitted by the Transfer Agent
in good faith to administer the Plan. Certificates will not be issued for
shares of the Fund purchased for and held under the Plan, but the Transfer
Agent will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the
Plan. In that case, the Transfer Agent will redeem the number of shares
requested at the net asset value per share in effect in accordance with
the Fund's usual redemption procedures and will mail a check for the
proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
the OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. Shares of Oppenheimer funds
that have a single class without a class designation are deemed "Class A"
shares for this purpose. All of the Oppenheimer funds offer Class A, B
and C shares except Oppenheimer Money Market Fund, Inc., Centennial Money
Market Trust, Centennial Tax-Exempt Trust, Centennial Government Trust,
Centennial New York Tax-Exempt Trust, Centennial California Tax-Exempt
Trust, Centennial America Fund, L.P., and Daily Cash Accumulation Fund,
Inc., which only offer Class A shares and Oppenheimer Main Street
California Tax-Exempt Fund which only offers Class A and Class B shares,
(Class B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds through OppenheimerFunds sponsored 401(k) plans).
Class A shares of Oppenheimer funds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc. purchased with the redemption proceeds
of shares of other mutual funds (other than funds managed by the Manager
or its subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or
the investor's dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased, and, if requested, must supply proof of entitlement to this
privilege. 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 (see "Class A Contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed on
Class B shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are deemed within 12 months of the initial purchase of
the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B or the Class C contingent deferred sales charge
will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value.
However, daily dividends on newly purchased shares will not be declared
or paid until such time as Federal Funds (funds credited to a member
bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. If all
shares in an account are redeemed, all dividends accrued on shares of the
same class in the account will be paid together with the redemption
proceeds. Dividends will be declared on shares repurchased by a dealer
or broker for three business days following the trade date (i.e., to and
including the day prior to settlement repurchase).
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and distributions is explained in the
Prospectus under the caption "Dividends, Capital Gains and Taxes."
Special provisions of the Internal Revenue Code govern the dividends-
received deduction for corporate shareholders. Long-term capital gains
distributions are not eligible for the deduction. In addition, the amount
of dividends paid by the Fund which may qualify for the deduction is
limited to the aggregate amount of qualifying dividends (generally
dividends from domestic corporations) which the Fund derives from its
portfolio investments that the Fund has held for a minimum period, usually
46 days. A corporate shareholder will not be eligible for the deduction
on dividends paid on shares held by the shareholder for 45 days or less.
To the extent that the Fund derives a substantial portion of its gross
income from option premiums, interest income or short-term gains from the
sale of securities or dividends from foreign corporations, its dividends
will not qualify for the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other Oppenheimer funds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. To elect
this option, the shareholder must notify the Transfer Agent in writing
and either must have an existing account in the fund selected for
reinvestment or must obtain a prospectus for that fund and an application
from the Transfer Agent to establish an account. The investment will be
made at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends and/or
distributions from certain of the OppenheimerFunds may be invested in
shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
Independent Auditors. The independent auditors of the Fund audit the
Manager's and the Fund's financial statements and perform other related
audit services. They also act as auditors for certain other funds advised
by the Manager and its affiliates.
INDEPENDENT AUDITORS' REPORT
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER HIGH YIELD FUND:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer High Yield Fund as
of June 30, 1995, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended June
30, 1995 and 1994, and the financial highlights for the period July 1,
1985 to June 30, 1995. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at June 30, 1995 by correspondence with
the custodian and brokers; where replies were not received from brokers,
we performed other auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer
High Yield Fund at June 30, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 24, 1995
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS June 30, 1995
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--2.7%
- ---------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--2.3%
- ---------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--2.3% Federal National Mortgage Assn.:
Interest-Only Stripped Mtg.-Backed Security,
Trust 218, Cl. 2, 7.50%, 4/25/23(2) $19,876,052 $5,832,379
Interest-Only Stripped Mtg.-Backed Security,
Trust 240, Cl. 2, 7%, 9/25/23(2) 51,472,859 16,278,292
Interest-Only Stripped Mtg.-Backed Security,
Trust 252, Cl. 2, 7.50%, 11/25/23(2) 19,918,813 5,950,746
-----------
28,061,417
- ---------------------------------------------------------------------------------------------------------------------------------
PRIVATE--0.4%
- ---------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY--0.4% Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates,
Series 1994-C2, Cl. E, 8%, 4/25/25 2,901,471 2,608,151
-----------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates,
Series 1995-C1, Cl. F, 6.90%, 2/25/27 3,250,000 2,831,563
-----------
5,439,714
-----------
Total Mortgage-Backed Obligations (Cost $34,468,879) 33,501,131
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--4.4%
- ---------------------------------------------------------------------------------------------------------------------------------
TREASURY--4.4% U.S. Treasury Nts., 10.50%, 8/15/95 (Cost $55,880,879)(3) 55,250,000
55,560,781
- ---------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--2.5% Argentina (Republic of) Bonds, Bonos de Consolidacion
de Deudas, Series I, 4.513%, 4/1/01(4)(5) ARA 1,503,472 710,235
-----------------------------------------------------------------------------------------
Brazil (Federal Republic of) Debs., 7.25%, 4/15/06(4) 4,500,000 2,685,938
-----------------------------------------------------------------------------------------
Brazil (Federal Republic of) Par Bonds, 4.25%, 4/15/24(6) 10,000,000 4,462,500
-----------------------------------------------------------------------------------------
Bulgaria (Republic of) Disc. Bonds, Tranche A,
7.562%, 7/28/24(4) 13,500,000 6,690,938
-----------------------------------------------------------------------------------------
Ecuador (Republic of) Par Bonds, 3%, 2/28/25(4) 6,000,000 1,938,750
-----------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 7.375%, 1/1/09(4) 13,000,000 7,572,500
-----------------------------------------------------------------------------------------
Poland (Republic of) Par Bonds, 2.75%, 10/27/24(6) 10,000,000 4,325,000
-----------------------------------------------------------------------------------------
Poland (Republic of) Past Due Interest Bonds,
3.25%, 10/27/14(6) 5,000,000 3,006,250
-----------
Total Foreign Government Obligations (Cost $30,134,018) 31,392,111
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--0.8% San Joaquin Hills, California Transportation Corridor
Agency Toll Road Capital Appreciation Revenue Bonds,
Jr. Lien, Zero Coupon, 1/1/12 15,000,000 4,149,838
-----------------------------------------------------------------------------------------
San Joaquin Hills, California Transportation Corridor
Agency Toll Road Capital Appreciation Revenue Bonds,
Jr. Lien, Zero Coupon, 1/1/28 74,000,000 5,363,076
-----------------------------------------------------------------------------------------
Total Municipal Bonds and Notes (Cost $7,885,852) 9,512,914
- ---------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--84.7%
- ---------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY--16.6%
- ---------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--3.2% Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 8,050,000
8,452,500
-----------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13%
Sr. Sec. Disc. Nts., 10/15/05(7) 10,490,000 7,447,900
-----------------------------------------------------------------------------------------
NL Industries, Inc., 11.75%
Sr. Sec. Nts., 10/15/03 3,200,000 3,344,000
-----------------------------------------------------------------------------------------
OSI Specialties Holding Co., 0%/11.50%
Sr. Sec. Disc. Debs., Series B, 4/15/04(7) 6,469,000 4,560,645
-----------------------------------------------------------------------------------------
OSI Specialties, Inc., 9.25%
Sr. Sub. Nts., 10/1/03 4,195,000 4,236,950
-----------------------------------------------------------------------------------------
Rexene Corp. (New), 11.75% Sr. Nts., 12/1/04 7,400,000 7,899,500
-----------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc., 12% Sr. Sub. Nts., 1/15/05 3,400,000 3,655,000
-----------
39,596,495
</TABLE>
6 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CONTAINERS--3.5% Owens-Illinois, Inc., 10% Sr. Sub. Nts., 8/1/02 $2,450,000 $2,535,750
-----------------------------------------------------------------------------------------
Owens-Illinois, Inc., 11% Sr. Debs., 12/1/03 11,955,000 13,240,163
-----------------------------------------------------------------------------------------
U.S. Can Co., 13.50% Sr. Sub. Nts., 1/15/02 25,450,000 28,122,250
-----------
43,898,163
- ---------------------------------------------------------------------------------------------------------------------------------
METALS/MINING--0.7% Kaiser Aluminum & Chemical Corp., 9.875%
Sr. Nts., 2/15/02 8,560,000 8,388,800
- ---------------------------------------------------------------------------------------------------------------------------------
PAPER--6.9% Domtar, Inc.:
11.25% Debs., 9/15/17 1,060,000 1,134,200
11.75% Sr. Nts., 3/15/99 600,000 663,000
12% Nts., 4/15/01 1,060,000 1,224,300
-----------------------------------------------------------------------------------------
Gaylord Container Corp., 0%/12.75%
Sr. Sub. Disc. Debs., 5/15/05(7) 3,150,000 3,087,000
-----------------------------------------------------------------------------------------
Gaylord Container Corp., 11.50%
Sr. Nts., 5/15/01 8,200,000 8,702,250
-----------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05 8,200,000 8,200,000
-----------------------------------------------------------------------------------------
Repap New Brunswick, Inc.:
9.50% First Priority Sr. Sec. Nts., 7/15/00(4) 1,300,000 1,322,750
9.875% First Priority Sr. Sec. Nts., 7/15/00 6,600,000 6,699,000
-----------------------------------------------------------------------------------------
Repap Wisconsin, Inc., 9.25% First Priority
Sr. Sec. Nts., 2/1/02 12,020,000 11,674,425
-----------------------------------------------------------------------------------------
Riverwood International Corp.:
10.375% Sr. Sub. Nts., 6/30/04 3,300,000 3,630,000
10.75% Sr. Nts., 6/15/00 2,000,000 2,160,000
11.25% Sr. Sub. Nts., 6/15/02 10,450,000 11,416,625
-----------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., 12/15/04 8,350,000 9,018,000
-----------------------------------------------------------------------------------------
Stone Consolidated Corp.:
10.25% Sr. Sec. Nts., 12/15/00 9,385,000 9,783,863
-----------------------------------------------------------------------------------------
Stone Container Corp.:
10.75% First Mtg. Nts., 10/1/02 3,600,000 3,798,000
10.75% Sr. Sub. Nts., 6/15/97 1,000,000 1,046,250
9.875% Sr. Nts., 2/1/01 3,000,000 3,000,000
-----------
86,559,663
- ---------------------------------------------------------------------------------------------------------------------------------
STEEL--2.3% AK Steel Corp., 10.75% Gtd. Sr. Nts., 4/1/04 3,200,000 3,368,000
-----------------------------------------------------------------------------------------
Armco, Inc., 8.50% Sinking Fund Debs., 9/1/01 26,985,000 25,770,675
-----------
29,138,675
- ---------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED--22.5%
- ---------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--2.9% Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 5/27/98 17,500,000 13,037,500
-----------------------------------------------------------------------------------------
Harman International Industries, Inc.,
12% Sr. Sub. Nts., 8/1/02 12,000,000 13,140,000
-----------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc.,
0%/11.50% Sr. Sec. Disc. Nts., 8/15/03(7) 19,410,000 9,802,050
-----------------------------------------------------------------------------------------
Revlon Consumer Products Corp.,
10.50% Sr. Sub. Nts., Series B, 2/15/03 460,000 453,100
-----------
36,432,650
- ---------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--2.3% Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 2,000,000
1,970,000
-----------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 5,650,000 5,720,625
-----------------------------------------------------------------------------------------
Curtice-Burns Foods, Inc., 12.25% Sr. Sub. Nts., 2/1/05 4,500,000 4,803,750
-----------------------------------------------------------------------------------------
Di Giorgio Corp., 12% Sr. Nts., 2/15/03 5,400,000 4,023,000
-----------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc., 0%/11.625%
Sr. Disc. Nts., 2/15/03(7) 1,000,000 745,000
-----------------------------------------------------------------------------------------
Heileman Acquisition Corp., 9.625% Sr. Sub. Nts., 1/31/04 7,150,000 4,969,250
-----------------------------------------------------------------------------------------
Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00 6,625,000 6,393,125
-----------
28,624,750
</TABLE>
7 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--5.4% Abbey Healthcare Group, Inc., 9.50%
Sr. Sub. Nts., 11/1/02 $1,500,000 $1,552,500
-----------------------------------------------------------------------------------------
AmeriSource Corp., 11.25% Sr. Debs., 7/15/05(5) 3,538,328 3,620,152
-----------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04 11,430,000 12,201,525
-----------------------------------------------------------------------------------------
Columbia/HCA Healthcare Corp., 6.91% Nts., 6/15/05 11,575,000 10,996,250
-----------------------------------------------------------------------------------------
Healthsouth Rehabilitation Corp., 9.50%
Sr. Sub. Nts., 4/1/01 2,640,000 2,725,800
-----------------------------------------------------------------------------------------
Multicare Cos., Inc. (The), 12.50% Sr. Sub. Nts., 7/1/02 7,977,000 8,974,125
-----------------------------------------------------------------------------------------
National Medical Enterprises, Inc., 10.125%
Sr. Sub. Nts., 3/1/05 11,550,000 12,271,875
-----------------------------------------------------------------------------------------
Ornda Healthcorp, 12.25% Sr. Sub. Nts., 5/15/02 4,500,000 4,972,500
-----------------------------------------------------------------------------------------
Quorum Health Group, Inc., 11.875%
Sr. Sub. Nts., 12/15/02 4,745,000 5,213,569
-----------------------------------------------------------------------------------------
Surgical Health Corp., 11.50% Sr. Sub. Nts., 7/15/04 2,550,000 2,945,250
-----------------------------------------------------------------------------------------
Total Renal Care, Inc., Units (each Unit consists of $1,000
principal amount of 0%/12% Sr. Sub. Disc. Nts., 8/15/04 and
nine shares of non-voting Class B Common Stock)(7)(8) 3,000,000 2,745,000
-----------
68,218,546
- ---------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING--7.0% Arizona Charlie's, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(9) 2,750,000 2,172,500
-----------------------------------------------------------------------------------------
Aztar Corp., 11% Sr. Sub. Nts., 10/1/02 2,000,000 2,000,000
-----------------------------------------------------------------------------------------
Aztar Corp., 13.75% Sr. Sub. Nts., 10/1/04 4,630,000 5,243,475
P -----------------------------------------------------------------------------------------
Bally's Park Place Funding, Inc., 9.25%
Gtd. First Mtg. Nts., 3/15/04 6,800,000 6,460,000
-----------------------------------------------------------------------------------------
Boyd Gaming Corp., 10.75% Sr. Sub. Nts., 9/1/03 3,035,000 3,141,225
-----------------------------------------------------------------------------------------
Capital Gaming International, Inc. Promissory Nts. 22,500 --
-----------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(9) 1,000,000 890,000
-----------------------------------------------------------------------------------------
Casino America, Inc.,
Zero Coupon First Mtg. Nts., 11/15/01 4,350,000 4,437,000
-----------------------------------------------------------------------------------------
Empress River Casino Finance Corp.,
10.75% Gtd. Sr. Nts., 4/1/02 5,820,000 5,892,750
-----------------------------------------------------------------------------------------
GB Property Funding Corp.,
10.875% First Mtg. Nts., 1/15/04 3,100,000 2,697,000
-----------------------------------------------------------------------------------------
GNF Corp., 10.625% Gtd. First Mtg. Nts.,
Series B, 4/1/03 2,000,000 1,695,000
-----------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., 5/15/05(10) 4,850,000 4,728,750
-----------------------------------------------------------------------------------------
Hollywood Casino Corp., 14% Sr. Sec. Nts., 4/1/98 800,000 884,000
-----------------------------------------------------------------------------------------
Maritime Group Ltd., Units (consisting of $1,000
principal amount of 14.25% First Mtg. Nts.,
Series 2/15/97 and one Warrant to purchase one share of
Palace Casinos, Inc., Series A Common Stock)(8)(10)(11) 2,212,618 1,239,066
-----------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp., 11.75% First Mtg. Nts.,
Series A, 5/1/99 2,500,000 2,706,250
-----------------------------------------------------------------------------------------
MGM Grand Hotel Finance Corp.,
12% First Mtg. Nts., 5/1/02 9,930,000 11,084,363
-----------------------------------------------------------------------------------------
Players International, Inc.,
10.875% Sr. Nts., 4/15/05(10) 7,260,000 7,169,250
-----------------------------------------------------------------------------------------
Resorts International, Inc., Zero Coupon Sec.
First Mtg. Non-Recourse Pass-Through Nts., 6/30/00 6,785,000 6,038,650
-----------------------------------------------------------------------------------------
Showboat, Inc., 13% Sr. Sub. Nts., 8/1/09 750,000 775,313
-----------------------------------------------------------------------------------------
Showboat, Inc., 9.25% First Mtg. Bonds, 5/1/08 3,850,000 3,542,000
-----------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 9,960,000 9,312,600
-----------------------------------------------------------------------------------------
Trump Hotels & Casino Resorts Holdings LP/Trump
Hotels & Casino Resorts Funding, Inc., 15.50%
Sr. Sec. Nts., 6/15/05 1,400,000 1,368,500
-----------------------------------------------------------------------------------------
Trump Plaza Funding, Inc.,
10.875% Gtd. Mtg. Nts., 6/15/01 4,175,000 3,861,875
-----------------------------------------------------------------------------------------
Trump's Castle Funding, Inc.,
13.875% Sub. Nts., 11/15/05(5) 26 19
-----------
87,339,586
</TABLE>
8 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
LEISURE--1.0% Gillett Holdings, Inc.,
12.25% Sr. Sub. Nts., Series A, 6/30/02 $12,075,200 $12,769,524
- ---------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--0.7% Carrols Corp., 11.50% Sr. Nts., 8/15/03 7,000,000 6,615,000
-----------------------------------------------------------------------------------------
Foodmaker, Inc., 9.25% Sr. Nts., 3/1/99 1,820,000 1,660,750
-----------
8,275,750
- ---------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--3.2% Consoltex Group, Inc.,
11% Gtd. Sr. Sub. Nts., Series B, 10/1/03 5,600,000 5,124,000
-----------------------------------------------------------------------------------------
Fieldcrest Cannon, Inc.,
11.25% Sr. Sub. Debs., 6/15/04 1,300,000 1,368,250
-----------------------------------------------------------------------------------------
Pope, Evans & Robbins, Inc.,
7% Sr. Nts., 5/15/98(11)(12) 5,955,189 267,984
-----------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01 7,150,000 7,257,250
-----------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa,
Zero Coupon Promissory Nts., 10/23/96 IDR 9,000,000,000 2,894,589
-----------------------------------------------------------------------------------------
Synthetic Industries, Inc.,
12.75% Sr. Sub. Debs., 12/1/02 12,000,000 12,060,000
-----------------------------------------------------------------------------------------
WestPoint Stevens, Inc.,
9.375% Sr. Sub. Debs., 12/15/05 12,175,000 11,779,313
-----------
40,751,386
- ---------------------------------------------------------------------------------------------------------------------------------
ENERGY--9.4% AmeriGas Partners LP,
10.125% Sr. Nts., 4/15/07(10) 1,280,000 1,350,400
-----------------------------------------------------------------------------------------
Clark R&M Holdings, Inc., Zero Coupon
Sr. Sec. Nts., Series A, 2/15/00 6,650,000 4,189,500
-----------------------------------------------------------------------------------------
Crown Central Petroleum Corp.,
10.875% Sr. Nts., 2/1/05 5,680,000 5,964,000
-----------------------------------------------------------------------------------------
Ferrellgas LP/Ferrellgas Finance Corp.,
10% Sr. Nts., 8/1/01 12,100,000 12,584,000
-----------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.,
9.25% Sr. Sub. Debs., 1/15/04 2,960,000 2,955,915
-----------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.,
9.625% Sr. Sub. Nts., 7/1/05(14) 4,240,000 4,224,100
-----------------------------------------------------------------------------------------
HS Resources, Inc., 9.875% Sr. Sub. Nts., 12/1/03 3,250,000 3,168,750
-----------------------------------------------------------------------------------------
Kelley Oil & Gas Corp., 13.50% Sr. Nts., 6/15/99 5,200,000 5,174,000
-----------------------------------------------------------------------------------------
Maxus Energy Corp.:
11.50% Debs., 11/15/15 5,700,000 5,643,000
9.375% Nts., 11/1/03 425,000 401,625
9.875% Nts., 10/15/02 2,200,000 2,095,500
-----------------------------------------------------------------------------------------
Mesa Capital Corp.,
0%/12.75% Sec. Disc. Nts., 6/30/98(7) 1,645,000 1,480,500
-----------------------------------------------------------------------------------------
Nuevo Energy Co., 12.50% Sr. Sub. Nts., 6/15/02 5,000,000 5,375,000
-----------------------------------------------------------------------------------------
OPI International, Inc.,
12.875% Gtd. Sr. Nts., 7/15/02 11,765,000 13,294,450
-----------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
12.25% Sub. Debs., 2/1/05 7,190,000 7,729,250
-----------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sub. Debs., 2/1/06 2,030,000 1,877,750
-----------------------------------------------------------------------------------------
Plains Resources, Inc., 12% Sr. Sub. Nts., 10/1/99 1,600,000 1,660,000
-----------------------------------------------------------------------------------------
Santa Fe Energy Resources, Inc.,
11% Sr. Sub. Debs., 5/15/04 11,280,000 12,069,600
-----------------------------------------------------------------------------------------
Transco Energy Co., 9.375% Debs., 8/15/01 7,000,000 7,907,298
-----------------------------------------------------------------------------------------
Triton Energy Corp.,
Zero Coupon Sr. Sub. Disc. Nts., 11/1/97 7,000,000 5,705,000
-----------------------------------------------------------------------------------------
Wainoco Oil Corp., 12% Sr. Nts., 8/1/02 11,925,000 12,402,000
-----------------------------------------------------------------------------------------
Wilrig AS, 11.25% Sr. Sec. Nts., 3/15/04 800,000 844,000
-----------
118,095,638
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--3.6%
- ---------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.0% Acme Holdings, Inc., 11.75% Sr. Nts., 6/1/00(11) 1,100,000
445,500
-----------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(9) 2,230,477 2,453,525
-----------------------------------------------------------------------------------------
GPA Holland BV, 8.94% Medium-Term Nts.,
Series C, 2/16/99 7,300,000 5,621,000
-----------------------------------------------------------------------------------------
GPA Investment BV, 6.40% Nts., 11/19/98 2,000,000 1,525,000
-----------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03 8,802,000 1,287,293
-----------------------------------------------------------------------------------------
Olympic Financial Ltd., 13% Sr. Nts., 5/1/00 1,890,000 1,946,700
-----------
13,279,018
</TABLE>
9 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.6% American Life Holding Co.,
11.25% Sr. Sub. Nts., 9/15/04 $11,730,000 $12,257,850
-----------------------------------------------------------------------------------------
Life Partners Group, Inc.,
12.75% Sr. Sub. Nts., 7/15/02 12,170,000 13,447,850
-----------------------------------------------------------------------------------------
Terra Nova Holdings, 10.75% Sr. Nts., 7/1/05 6,400,000 6,496,000
-----------
32,201,700
- ---------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED--4.0%
- ---------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--3.1% American Standard, Inc.,
0%/10.50% Sr. Sub. Disc. Debs., 6/1/05(7) 10,625,000 8,075,000
-----------------------------------------------------------------------------------------
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 1,750,000 1,898,750
-----------------------------------------------------------------------------------------
Diamond Cable Communications PLC,
0%/13.25% Sr. Disc. Nts., 9/30/04(7) 1,280,000 848,000
-----------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 9,300,000 8,811,750
-----------------------------------------------------------------------------------------
Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03 3,750,000 3,825,000
-----------------------------------------------------------------------------------------
USG Corp., 10.25% Sr. Sec. Nts., 12/15/02 12,900,000 13,093,500
-----------------------------------------------------------------------------------------
Walter Industries, Inc., 17% Sub. Nts., 1/1/96(11) 3,150,000 2,000,250
-----------
38,552,250
- ---------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE--0.9% NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 6,400,000
5,872,000
-----------------------------------------------------------------------------------------
Olympia & York First Canadian Place Ltd.,
11% Debs., Series 3, 11/4/49(13) CAD 4,875,000 2,182,238
-----------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts.,
Series 1993-A, 12/1/11(10) 6,000,000 3,870,000
-----------
11,924,238
- ---------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--3.9%
- ---------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/ELECTRONICS/COMPUTERS--1.6% Berg Electronics Holdings Corp.,
11.375% Sr. Sub. Debs., 5/1/03 5,890,000 6,125,600
-----------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07 3,850,000 808,500
-----------------------------------------------------------------------------------------
Tracor, Inc., 10.875% Sr. Sub. Nts., 8/15/01 6,930,000 7,155,225
-----------------------------------------------------------------------------------------
Unisys Corp., 13.50% Credit Sensitive Nts., 7/1/97(4) 5,631,000 6,286,059
-----------
20,375,384
- ---------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.4% Aftermarket Technology Corp.,
12% Sr. Sub. Nts., 8/1/04 4,730,000 5,061,100
-----------------------------------------------------------------------------------------
Aftermarket Technology Corp.,
12% Sr. Sub. Nts., 8/1/04(10) 1,870,000 1,996,225
-----------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.,
11.25% Sr. Nts., 10/1/02 6,600,000 6,534,000
-----------------------------------------------------------------------------------------
Foamex LP/Foamex Capital Corp.,
9.50% Sr. Sec. Nts., 6/1/00 800,000 782,000
-----------------------------------------------------------------------------------------
JPS Automotive Products Corp.,
11.125% Sr. Nts., 6/15/01 3,350,000 3,291,375
-----------
17,664,700
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--0.9% Atlantis Group, Inc., 11% Sr. Nts., 2/15/03 930,000 916,050
-----------------------------------------------------------------------------------------
Imo Industries, Inc., 12% Sr. Sub. Debs., 11/1/01 2,500,000 2,543,750
-----------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 7,368,000 7,403,190
-----------
10,862,990
- ---------------------------------------------------------------------------------------------------------------------------------
MEDIA--9.9%
- ---------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--6.2% American Telecasting, Inc.,
0%/12.50% Sr. Disc. Nts., 6/15/04(7) 7,200,000 4,230,000
-----------------------------------------------------------------------------------------
Bell Cablemedia PLC,
0%/11.95% Sr. Disc. Nts., 7/15/04(7) 1,500,000 1,005,000
-----------------------------------------------------------------------------------------
Cablevision Systems Corp.:
10.75% Sr. Sub. Debs., 4/1/04 7,800,000 8,180,250
9.875% Sr. Sub. Debs., 2/15/13 1,700,000 1,789,250
9.875% Sr. Sub. Debs., 4/1/23 1,000,000 1,045,000
-----------------------------------------------------------------------------------------
Century Communications Corp.,
11.875% Sr. Sub. Debs., 10/15/03 1,800,000 1,912,500
-----------------------------------------------------------------------------------------
Century Communications Corp., 9.50% Sr. Nts., 3/1/05 8,500,000 8,500,000
</TABLE>
10 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION (continued) Continental Cablevision, Inc.,
11% Sr. Sub. Debs., 6/1/07 $2,430,000 $2,697,300
-----------------------------------------------------------------------------------------
Continental Cablevision, Inc.,
9.50% Sr. Debs., 8/1/13 10,985,000 11,369,475
-----------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp.,
9% Sr. Sec. Nts., Series B, 11/1/03(4) 3,250,000 2,998,125
-----------------------------------------------------------------------------------------
International CableTel, Inc.,
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(7) 640,000 425,600
-----------------------------------------------------------------------------------------
International CableTel, Inc.,
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(7)(10) 11,080,000 6,592,600
-----------------------------------------------------------------------------------------
Rogers Cablesystems, Inc., 10% Sr. Nts., 3/15/05(10) 4,000,000 4,125,000
-----------------------------------------------------------------------------------------
Rogers Communications, Inc.,
10.875% Sr. Debs., 4/15/04 4,200,000 4,326,000
-----------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 9,950,000 10,431,510
-----------------------------------------------------------------------------------------
Time Warner, Inc., 9.15% Debs., 2/1/23 1,700,000 1,792,276
-----------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 5,000,000 5,782,375
-----------
77,202,261
- ---------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA--2.7% Ackerley Communications, Inc.,
10.75% Sr. Sec. Nts., Series A, 10/1/03 6,950,000 7,332,250
-----------------------------------------------------------------------------------------
Echostar Communications Corp.,
0%/12.875% Sr. Disc. Nts., 6/1/04(7) 4,310,000 2,101,125
-----------------------------------------------------------------------------------------
Lamar Advertising Co., 11% Sr. Sec. Nts., 5/15/03 7,550,000 7,568,875
-----------------------------------------------------------------------------------------
News America Holdings, Inc.,
10.125% Gtd. Sr. Debs., 10/15/12 2,000,000 2,414,234
-----------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(7) 14,600,000 10,384,250
-----------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp.,
9.75% Sr. Sec. Nts., 8/1/00 3,500,000 3,605,000
-----------
33,405,734
- ---------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.1% AMC Entertainment, Inc.,
11.875% Gtd. Sr. Nts., 8/1/00 1,800,000 1,953,000
- ---------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--0.9% Bell & Howell Holdings Co.,
0%/11.50% Sr. Disc. Debs., Series B, 3/1/05(7) 11,630,000 6,861,700
-----------------------------------------------------------------------------------------
Sullivan Graphics, Inc., 15% Sr. Sub. Nts., 2/1/00 4,500,000 4,770,000
-----------
11,631,700
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER--1.7%
- ---------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--0.2% Talley Manufacturing & Technology, Inc.,
10.75% Sr. Nts., 10/15/03 2,400,000 2,364,000
- ---------------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL--0.8% EnviroSource, Inc., 9.75% Sr. Nts., 6/15/03 8,800,000
7,854,000
-----------------------------------------------------------------------------------------
Envirotest Systems Corp., 9.625% Sr. Sub. Nts., 4/1/03 2,255,000 1,679,975
-----------------------------------------------------------------------------------------
Mid-American Waste Systems, Inc.,
12.25% Sr. Sub. Nts., 2/15/03 800,000 828,000
-----------
10,361,975
- ---------------------------------------------------------------------------------------------------------------------------------
SERVICES--0.7% Protection One Alarm Monitoring, Inc., Units (each
Unit consists of ten $1,000 principal amount 0%/13.625%
Sr. Sub. Disc. Nts., 6/30/05 and thirty-two Warrants,
each Warrant entitles holder to purchase one share of
Protection One, Inc. Common Stock(7)(8)(10) 13,100,000 8,842,500
- ---------------------------------------------------------------------------------------------------------------------------------
RETAIL--8.3%
- ---------------------------------------------------------------------------------------------------------------------------------
DRUG STORES--2.5% Duane Reade, 12% Sr. Nts., Series B, 9/15/02 5,000,000
4,025,000
-----------------------------------------------------------------------------------------
Revco D.S., Inc., 9.125% Sr. Nts., 1/15/00 13,800,000 14,421,000
-----------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 11,550,000 12,300,750
-----------
30,746,750
</TABLE>
11 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--3.3% Brylane LP/Brylane Capital Corp.,
10% Sr. Sub. Nts., Series B, 9/1/03 $11,100,000 $10,933,500
-----------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 8,300,000 7,947,250
-----------------------------------------------------------------------------------------
Eye Care Centers of America, Inc.,
12% Sr. Nts., 10/1/03 5,450,000 4,469,000
-----------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp.,
10.625% Sr. Nts., 5/1/03 8,850,000 8,540,250
-----------------------------------------------------------------------------------------
United Stationers Supply Co.,
12.75% Sr. Sub. Nts., 5/1/05(10) 6,000,000 6,075,000
-----------------------------------------------------------------------------------------
Zale Delaware, Inc., 11% Gtd.
Second Priority Sr. Sec. Nts., 7/30/00 3,500,000 3,491,250
-----------
41,456,250
- ---------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--2.5% Grand Union Co., 12% Sr. Nts., 9/1/04(14) 10,226,000
9,970,350
-----------------------------------------------------------------------------------------
Kash 'N Karry Food Stores, Inc.,
11.50% Sr. Nts., 2/1/03(5) 2,781,158 2,702,000
-----------------------------------------------------------------------------------------
Penn Traffic Co., 9.625% Sr. Sub. Nts., 4/15/05 7,890,000 7,475,775
-----------------------------------------------------------------------------------------
Purity Supreme, Inc.,
11.75% Sr. Sec. Nts., Series B, 8/1/99 7,375,000 7,946,563
-----------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04 3,300,000 3,316,500
-----------
31,411,188
- ---------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--2.9%
- ---------------------------------------------------------------------------------------------------------------------------------
RAILROADS--1.0% Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03(7) 21,515,000 13,016,575
- ---------------------------------------------------------------------------------------------------------------------------------
SHIPPING--1.9% Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 6,400,000 6,816,000
-----------------------------------------------------------------------------------------
Sea Containers Ltd.:
12.50% Sr. Sub. Debs., Series A, 12/1/04 1,250,000 1,375,000
12.50% Sr. Sub. Debs., Series B, 12/1/04 2,900,000 3,117,500
9.50% Sr. Sub. Debs., 7/1/03 4,000,000 3,900,000
-----------------------------------------------------------------------------------------
Trans Ocean Container Corp.,
12.25% Sr. Sub. Nts., 7/1/04 7,950,000 8,069,250
-----------
23,277,750
- ---------------------------------------------------------------------------------------------------------------------------------
UTILITIES--1.9%
- ---------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.4% California Energy Co.,
0%/10.25% Sr. Disc. Nts., 1/15/04(7) 2,680,000 2,331,602
-----------------------------------------------------------------------------------------
Subic Power Corp.,
9.50% Sinking Fund Debs., 12/28/08(10) 2,793,103 2,430,000
-----------
4,761,602
- ---------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.5% Horizon Cellular Telephone LP/Horizon Finance Corp.,
0%/11.375% Sr. Sub. Disc. Nts., 10/1/00(7) 10,456,000 8,207,960
-----------------------------------------------------------------------------------------
In Flight Phone Corp., Units (each Unit consists of
$1,000 principal amount of 0%/14% Sr. Disc. Nts.,
Series A, 5/15/02 and one Warrant to purchase one
share of Common Stock)(7)(8)(10) 6,400,000 3,776,000
-----------------------------------------------------------------------------------------
MFS Communications, Inc.,
0%/9.375% Sr. Disc. Nts., 1/15/04(7) 3,850,000 2,685,375
-----------------------------------------------------------------------------------------
PriCellular Wireless Corp.,
0%/14% Sr. Sub. Disc. Nts., 11/15/01(7) 2,133,000 1,717,065
-----------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II,
14% Sr. Nts., 11/1/04 2,000,000 2,160,000
-----------
18,546,400
- ---------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $1,063,469,788) 1,061,927,591
SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--0.6%
- ---------------------------------------------------------------------------------------------------------------------------------
Digicon, Inc. 4,930 28,964
-----------------------------------------------------------------------------------------
ECM Fund, L.P.I.(9) 1,350 1,350,000
-----------------------------------------------------------------------------------------
Equitable Bag, Inc.(15) 39,357 98,393
-----------------------------------------------------------------------------------------
Finlay Enterprises, Inc.(15) 4,266 60,257
-----------------------------------------------------------------------------------------
Grand Union Co.(15) 144,928 2,065,224
</TABLE>
12 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (continued) Great Bay Power Corp.(15) 39,565 $306,629
-----------------------------------------------------------------------------------------
Hollywood Casino Corp.(15) 90,836 806,170
-----------------------------------------------------------------------------------------
Jewel Recovery LP(15) 10,113 --
-----------------------------------------------------------------------------------------
LTV Corp.(15) 958 14,011
-----------------------------------------------------------------------------------------
New World Communications Group, Inc., Cl. A(15) 20,292 423,596
-----------------------------------------------------------------------------------------
Pope, Evans & Robbins, Inc.(12)(15) 1,688,400 52,763
-----------------------------------------------------------------------------------------
Resorts International, Inc.(15) 282,691 777,400
-----------------------------------------------------------------------------------------
Triangle Wire & Cable Inc.(9)(15) 370,500 741,000
-----------------------------------------------------------------------------------------
Walter Industries, Inc.(15) 7,097 97,584
-----------------------------------------------------------------------------------------
Zale Corp.(15) 10,113 136,526
-----------------------------------------------------------------------------------------
Total Common Stocks (Cost $9,687,771) 6,958,517
- ---------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--1.4%
- ---------------------------------------------------------------------------------------------------------------------------------
California Federal Bank, 10.625% Non-Cum., Series B 19,480 2,084,360
-----------------------------------------------------------------------------------------
First Nationwide Bank, 11.50% Non-Cum. 108,300 11,696,400
-----------------------------------------------------------------------------------------
K-III Communications Corp.,
$11.625 Exchangeable, Series B(5) 14,185 1,376,034
-----------------------------------------------------------------------------------------
SDW Holdings Corp. Units (each Unit consists of
ten shares of Sr. Exchangeable Preferred Stock
and one Cl. B Warrant to purchase one share of
Common Stock)(8)(10) 6,187 1,673,224
-----------------------------------------------------------------------------------------
Unisys Corp., $3.75 Cv., Series A 29,400 1,264,200
-----------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $17,097,876) 18,094,218
UNITS
- ---------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.5%
- ---------------------------------------------------------------------------------------------------------------------------------
ALC Communications Corp. Wts., Exp. 12/95 275,000 2,750
-----------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99 32,000 80,000
-----------------------------------------------------------------------------------------
Ames Department Stores, Inc., Excess Cash Flow Payment
Certificates, Series AG-7A 326,800 3,268
-----------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust 1,045,990 10,460
-----------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(9) 125,000 125,000
-----------------------------------------------------------------------------------------
Casino America, Inc. Wts., Exp. 11/96 13,052 13,052
-----------------------------------------------------------------------------------------
Digicon, Inc. Wts., Exp. 7/96 1,657 932
-----------------------------------------------------------------------------------------
Echostar Communications Corp. Wts., Exp. 6/04 25,860 290,925
-----------------------------------------------------------------------------------------
EUA Power Corp., Contingent Interest Certificates 2,000 --
-----------------------------------------------------------------------------------------
Eye Care Centers of America, Inc. Wts., Exp. 10/03 5,450 27,250
-----------------------------------------------------------------------------------------
Federated Department Stores, Inc. Wts., Cl. C, Exp. 12/99 69,654 478,871
-----------------------------------------------------------------------------------------
Federated Department Stores, Inc. Wts., Cl. D, Exp. 12/01 69,654 487,578
-----------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 7/96 291,367 3,022,933
-----------------------------------------------------------------------------------------
Interco, Inc. Wts., Series 1, Exp. 8/99 32,716 134,954
-----------------------------------------------------------------------------------------
OSI Specialties Corp. Wts., 4/99(10) 6,469 12,938
-----------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 11/03 182,000 1,092,000
-----------------------------------------------------------------------------------------
Purity Supreme, Inc. Wts., Exp. 8/97(9) 22,525 451
-----------------------------------------------------------------------------------------
Republic Health Corp. Wts., Exp. 4/00 3,763 --
-----------------------------------------------------------------------------------------
Southland Corp. Wts., Exp. 3/96 5,800 10,875
</TABLE>
13 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
UNITS SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES Terex Corp. Rts., Exp. 7/96(10) 534 $
67
(continued) -----------------------------------------------------------------------------------------
Trizec Corp. Wts., Exp. 7/99 16,277 24,880
-----------------------------------------------------------------------------------------
UGI Corp. Wts., Exp. 3/98 63,583 3,179
-----------------------------------------------------------------------------------------
Total Rights, Warrants and Certificates (Cost $3,323,484) 5,822,363
</TABLE>
<TABLE>
<CAPTION>
DATE/PRICE SHARES
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS PURCHASED--0.0% U.S. Treasury Nts. Call Opt.
(Cost $125,938) Jul. 95/$102-05 13,000 $20,313
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,222,074,485) 97.6%
1,222,789,939
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.4 30,427,211
----- --------------
NET ASSETS 100.0% $1,253,217,150
----- --------------
----- --------------
</TABLE>
1. Face amount is reported in local currency. Foreign currency
abbreviations are as follows:
ARA--Argentine Austral
CAD--Canadian Dollar
IDR--Indonesian Rupiah
2. Interest-Only Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline. Most
other fixed-income securities increase in price when interest rates
decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated. The price of
these securities is typically more sensitive to changes in prepayment
rates than traditional mortgage-backed securities (for example, GNMA
pass-throughs).
3. Securities with an aggregate market value of $538,009 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts, as follows:
TYPE OF CONTRACT NUMBER OF CONTRACTS FACE AMOUNT
- -----------------------------------------------------------------------
- -------
U.S. Treasury Nts., 9/95 250 $25,000,000
The market value of the open contracts was $28,382,813 at June 30, 1995,
with a net unrealized loss of $210,937.
4. Represents the current interest rate for a variable rate security.
5. Interest or dividend is paid in kind.
6. Represents the current interest rate for an increasing rate security.
7. Represents a zero coupon bond that converts to a fixed rate of interest
at a designated future date.
8. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. In most
cases, units involve a high degree of risk.
9. Identifies issues considered to be illiquid--See Note 6 of Notes to
Financial Statements.
10. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $53,881,020 or 4.30% of the Fund's
net assets, at June 30, 1995.
11. Non-income producing--issuer is in default of interest payment.
12. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the year ended June 30, 1995.
The aggregate fair value of all securities of affiliated companies as of
June 30, 1995 amounted to $320,747. Transactions during the period in
which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE JUNE 30, 1994 GROSS ADDITIONS GROSS REDEMPTIONS BALANCE JUNE
30, 1995
---------------------- -------------------- --------------------- --------------------- DIVIDEND
STOCKS SHARES/FACE COST SHARES/FACE COST SHARES/FACE COST
SHARES/FACE COST INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
- ----------------------------------------------------------------------------------------------------------------------------------
Pope, Evans & Robbins, Inc. 1,688,400 $1,114,384 -- $ -- -- $ -- 1,688,400 $1,114,384 $ --
- ----------------------------------------------------------------------------------------------------------------------------------
Petrolane, Inc., Cl. B 457,515 4,575,150 -- -- 457,515 4,575,150 -- -- 34,176
BONDS AND NOTES
- ----------------------------------------------------------------------------------------------------------------------------------
Pope, Evans & Robbins, Inc.,
7% Sr. Nts., 5/15/98 6,163,620 4,449,094 -- 222,705 208,431 9,379 5,955,189 4,662,420
- --
----------- -------- ---------- ---------- -------
$10,138,628 $222,705 $4,584,529 $5,776,804 $34,176
----------- -------- ---------- ---------- -------
----------- -------- ---------- ---------- -------
</TABLE>
13. Partial interest payment received.
14. When-issued security to be delivered and settled after June 30, 1995.
15. Non-income producing security.
See accompanying Notes to Financial Statements.
14 Oppenheimer High Yield Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $1,222,074,485)--see accompanying statement $1,222,789,939
-----------------------------------------------------------------------------------------------------
Receivables:
Interest 29,037,265
Investments sold 18,081,263
Shares of beneficial interest sold 1,916,134
-----------------------------------------------------------------------------------------------------
Receivable for daily variation on futures contracts 117,187
-----------------------------------------------------------------------------------------------------
Other 2,153,904
-----------------------------------------------------------------------------------------------------
Total assets 1,274,095,692
--------------
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Bank overdraft 1,521,853
Payables and other liabilities:
Investments purchased 12,030,833
Dividends 3,394,658
Shares of beneficial interest redeemed 2,714,034
Distribution and service plan fees--Note 5 635,713
Transfer and shareholder servicing agent fees 40,739
Other 540,712
--------------
Total liabilities 20,878,542
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,253,217,150
--------------
--------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $1,477,292,236
NET ASSETS -----------------------------------------------------------------------------------------------------
Overdistributed net investment income (3,769,638)
-----------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment, written option and
foreign currency transactions (220,809,965)
-----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 504,517
--------------
Net assets $1,253,217,150
--------------
--------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of
$1,060,752,358 and 80,259,749 shares of beneficial interest outstanding) $13.22
Maximum offering price per share (net asset value plus sales charge of 4.75%
of offering price) $13.88
- ----------------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $192,464,792 and 14,639,438 shares of beneficial interest
outstanding) $13.15
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer High Yield Fund
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest (net of withholding taxes of $131,146) $122,002,614
-----------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of withholding taxes of $7,366) 1,511,846
Affiliated companies 34,176
------------
Total income 123,548,636
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 5 7,542,307
-----------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 5 1,981,782
Class B--Note 5 1,343,774
-----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 1,076,505
-----------------------------------------------------------------------------------------------------
Shareholder reports 484,540
-----------------------------------------------------------------------------------------------------
Custodian fees and expenses 100,052
-----------------------------------------------------------------------------------------------------
Legal and auditing fees 67,313
-----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 54,706
-----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 34,542
-----------------------------------------------------------------------------------------------------
Other 133,363
------------
Total expenses 12,818,884
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 110,729,752
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) on:
GAIN (LOSS) ON INVESTMENTS, Investments:
OPTIONS WRITTEN Unaffiliated companies (59,188,576)
AND FOREIGN CURRENCY Affiliated companies 2,744,845
TRANSACTIONS Closing of options written--Note 4 (578,488)
Foreign currency transactions (155,967)
------------
Net realized loss (57,178,186)
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 26,793,814
Translation of assets and liabilities denominated in foreign currencies (30,694)
------------
Net change 26,763,120
------------
Net realized and unrealized loss on investments, options written and foreign
currency transactions (30,415,066)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$80,314,686
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer High Yield Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $ 110,729,752 $ 116,850,546
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments, options written and foreign
currency transactions (57,178,186) 14,669,174
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
and translation of assets and liabilities denominated in foreign
currencies 26,763,120 (59,741,123)
-------------- --------------
Net increase in net assets resulting from operations 80,314,686 71,778,597
- ----------------------------------------------------------------------------------------------------------------------------------
EQUALIZATION Net change -- (96,177)
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS Class A ($1.295 and $1.407 per share, respectively) (98,284,579)
(109,900,662)
TO SHAREHOLDERS Class B ($1.192 and $1.295 per share, respectively) (11,983,690)
(4,671,944)
-----------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A ($.012 per share) (998,196) --
Class B ($.012 per share) (181,114) --
- ----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A beneficial
TRANSACTIONS interest transactions--Note 2 40,387,389 (30,446,407)
-----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial
interest transactions--Note 2 107,007,443 80,742,052
-------------- --------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 116,261,939 7,405,459
-----------------------------------------------------------------------------------------------------
Beginning of period 1,136,955,211 1,129,549,752
-------------- --------------
End of period (including overdistributed net investment income
of $3,769,638 and $3,538,462, respectively) $1,253,217,150 $1,136,955,211
-------------- --------------
-------------- --------------
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer High Yield Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
YEAR ENDED JUNE 30,
1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.63 $14.16 $13.76 $13.08
- ----------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 1.30 1.42 1.60 1.79
Net realized and unrealized gain
(loss) on investments, options written and
foreign currency transactions (.40) (.54) .36 .68
---------- ---------- ---------- --------
Total income from investment
operations .90 .88 1.96 2.47
- ----------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (1.30) (1.41) (1.56) (1.79)
Tax return of capital distribution (.01) -- -- --
---------- ---------- ---------- --------
Total dividends and distributions
to shareholders (1.31) (1.41) (1.56) (1.79)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $13.22 $13.63 $14.16 $13.76
---------- ---------- ---------- --------
---------- ---------- ---------- --------
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 7.09% 6.27% 15.31% 20.06%
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,060,752 $1,049,446 $1,119,056 $902,562
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,005,746 $1,111,103 $978,671 $768,339
- ----------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 80,260 77,002 79,047 65,581
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.81% 10.10% 11.59% 13.15%
Expenses 1.03% .96% .97% .92%
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 93.7% 96.7% 87.2% 64.0%
<FN>
1. For the period from May 3, 1993 (inception of offering) to June 30, 1993.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.
</TABLE>
18 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------- --------------------------
Year Ended June 30,
1991 1990 1989 1988 1987 1986 1995 1994 1993(1)
-------- -------- -------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.60 $15.42 $16.00 $17.09 $17.54 $17.15 $13.57 $14.12 $13.87
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 1.91 1.89 2.02 2.06 2.18 2.28 1.20 1.35 .23
Net realized and unrealized gain
(loss) on investments, options written
and foreign currency transactions (.51) (1.79) (.68) (1.03) (.47) .47 (.42) (.60) .27
-------- -------- -------- -------- -------- -------- -------- ------- -------
Total income from investment
operations 1.40 .10 1.34 1.03 1.71 2.75 .78 .75 .50
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (1.92) (1.92) (1.92) (2.12) (2.16) (2.36) (1.19) (1.30) (.25)
Tax return of capital distribution -- -- -- -- -- -- (.01) -- --
-------- -------- -------- -------- -------- -------- -------- ------- -------
Total dividends and distributions
to shareholders (1.92) (1.92) (1.92) (2.12) (2.16) (2.36) (1.20) (1.30) (.25)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.08 $13.60 $15.42 $16.00 $17.09 $17.54 $13.15 $13.57 $14.12
-------- -------- -------- -------- -------- -------- -------- ------- -------
-------- -------- -------- -------- -------- -------- -------- ------- -------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 11.90% .85% 8.97% 6.75% 10.63% 17.26% 6.21%
5.31% 3.54%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $657,182 $650,989 $860,588 $857,767 $760,934 $627,256 $192,465 $87,509 $10,493
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $601,758 $734,703 $863,178 $791,471 $691,968 $527,731 $134,550 $51,816
$4,405
- -------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 50,258 47,870 55,810 53,617 44,531 35,767 14,639 6,449 743
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 14.94% 13.00% 12.88% 12.72% 12.79% 13.24% 8.95% 8.98%
10.84%(3)
Expenses .96% .93% .88% .89% .88% .89% 1.84% 1.88% 2.28%(3)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 90.4% 63.2% 57.0% 41.1% 46.2% 90.5% 93.7% 96.7% 87.2%
<FN>
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended June 30, 1995 were $1,111,748,812 and
$974,203,135, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer High Yield Fund (the Fund) is registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company.
The Fund's investment advisor is Oppenheimer Management Corporation (the
Manager). The Fund offers both Class A and Class B shares.
Class A shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales charge.
Both classes of shares have identical rights to earnings, assets and
voting privileges, except that each class has its
own distribution and/or service plan, expenses
directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class.
Class B shares will automatically convert to Class
A shares six years after the date of purchase.
The following is a summary of significant accounting
policies consistently followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange on each trading day.
Listed and unlisted securities for which such information
is regularly reported are valued at the last sale price of the day or, in
the absence of sales, at values based on the closing bid or asked
price or the last sale price on the prior trading day. Long-term
and short-term "non-money market" debt securities
are valued by a portfolio pricing service approved by the Board of Trustees.
Such securities which cannot be valued by the approved
portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering
the quotes is reliable and that the quotes reflect current market value,
or under consistently applied procedures established by
the Board of Trustees to determine fair value in good faith. Short-term
""money market type'' debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined
market value) adjusted for amortization to maturity of
any premium or discount. Forward contracts are valued based on the
closing prices of the forward currency contract rates
in the London foreign exchange markets on a daily basis as provided by
a reliable bank or dealer. Options are valued based
upon the last sale price on the principal exchange on which the option is
traded or, in the absence of any transactions that day,
the value is based upon the last sale price on the prior trading date if it
is within the spread between the closing bid and asked prices.
If the last sale price is outside the spread, the closing bid or asked
price closest to the last reported sale price is used.
SECURITY CREDIT RISK. The Fund invests in high yield
securities, which may be subject to a greater degree of credit risk,
greater market fluctuations and risk of loss of income
and principal, and may be more sensitive to economic conditions than
lower yielding, higher rated fixed income securities.
The Fund may acquire securities in default, and is not obligated to dispose
of securities whose issuers subsequently default.
At June 30, 1995, securities with an aggregate market value of $6,135,038,
representing .49% of the Fund's net assets, were in default.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund
are maintained in U.S. dollars. Prices of
securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment
income are translated at the rates of exchange prevailing on the respective
dates of such transactions.
The effect of changes in foreign currency exchange
rate on investments is separately identified from the fluctuations arising from
changes in market values of securities held and reported with all
other foreign currency gains and losses in the Fund's results of operations.
REPURCHASE AGREEMENTS. The Fund requires the custodian to
take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the
custodian's vault, all securities held as collateral for repurchase
agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of
purchase. If the seller of the agreement defaults and the
value of the collateral declines, or if the seller enters an insolvency
proceeding, realization of the value of the collateral
by the Fund may be delayed or limited.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated daily
to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable
to a specific class are charged against the operations of that
class.
FEDERAL TAXES. The Fund intends to continue to comply
with provisions of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of
its taxable income, including any net realized gain on investments not
offset by loss carryovers, to shareholders.
Therefore, no federal income or excise tax provision
is required. At June 30, 1995,
the Fund had available for federal income tax purposes
an unused capital loss carryover of approximately $167,575,000,
$749,000 of which will expire in 1997, $14,942,000 in 1998,
$74,080,000 in 1999, $42,206,000 in 2000, $21,168,000 in 2001
and $14,430,000 in 2003.
EQUALIZATION. Prior to September 30, 1993, the Fund followed the accounting
practice of equalization, by which a portion
of the proceeds from sales and costs of redemptions of Fund shares equivalent
on a per share basis to the amount of undistributed
net investment income were credited or charged to undistributed income.
The cumulative effect of the change in accounting
practice resulted in a reclassification of $12,664,697 from undistributed
net investment income to paid-in capital.
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A and Class B shares from
net investment income each day the New York Stock Exchange is open for business
and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be
declared at least once each year.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss)
may differ for financial statement and tax purposes primarily because of
premium amortization, paydown gains and losses and
the recognition of certain foreign currency gains (losses) as ordinary income
(loss) for tax purposes. The character of the
distributions made during the year from net investment income or net realized
gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or realized gain (loss)
was recorded by the Fund. Effective July 1, 1993,
the Fund adopted Statement of Position 93-2: Determination, Disclosure, and
Financial Statement Presentation of Income, Capital
Gain, and Return of Capital Distributions by Investment Companies.
As a result, the Fund changed the classification of
distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
June 30, 1995, amounts have been reclassified
to reflect a decrease in paid-in capital of $1,179,310, a decrease
in overdistributed net investment income of $486,651, and a
decrease in accumulated net realized loss on investments of $692,659.
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold trade date) and dividend
income is recorded on the ex-dividend date. Discount on securities purchased
is amortized over the life of the respective
securities, in accordance with federal income tax requirements.
Dividends in kind are recognized as income on the ex-dividend
date, at the current market value of the underlying security. Interest on
payment-in-kind debt instruments is accrued as income
at the coupon rate and a market adjustment is made on the ex-date. Realized
gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax
purposes.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each Class. Transactions in shares
of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1995 YEAR ENDED JUNE 30, 1994
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 19,902,935 $270,466,315 23,301,265 $328,422,185
Dividends reinvested 4,217,534 45,347,591 4,259,599 60,060,363
Redeemed (20,862,882) (275,426,517) (29,606,189) (418,928,955)
---------- ----------- ---------- -----------
Net increase (decrease) 3,257,587 $40,387,389 (2,045,325) $(30,446,407)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
----------------------------------------------------------------------------------
Class B:
Sold 10,963,657 $143,405,028 7,150,795 $100,862,645
Dividends reinvested 431,770 5,641,548 146,613 2,058,843
Redeemed (3,205,114) (42,039,133) (1,591,185) (22,179,436)
---------- ----------- --------- -----------
Net increase 8,190,313 $107,007,443 5,706,223 $80,742,052
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------------------------------------
- ---------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At June 30, 1995, net unrealized appreciation on investments of $715,454
was composed of gross appreciation of $41,610,867, and gross depreciation
of $40,895,413.
4. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write covered call
options on portfolio securities in order to produce incremental earnings
or protect against changes in the value of portfolio securities. The Fund
generally purchases put options or writes covered call options to hedge
against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to
sell or purchase the underlying security at a fixed price, upon exercise
of the option. Options are valued daily based upon the last sale price on
the principal exchange on which the option is traded and unrealized
appreciation or depreciation is recorded. The Fund will realize a gain or
loss upon the expiration or closing of the option transaction. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option, or the cost of the security for
a purchased put or call option is adjusted by the amount of premium
received or paid.
In this report, securities designated to cover outstanding call options
are noted in the Statement of Investments. Shares subject to call,
expiration date, exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments. Options written
are reported as a liability in the Statement of Assets and Liabilities.
Gains and losses are reported in the Statement of Operations. The risk in
writing a call option is that the Fund gives up the opportunity for profit
if the market price of the security increases and the option is exercised.
The risk in writing a put option is that the Fund may incur a loss if the
market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not
the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary
market does not exist.
Written option activity for the year ended June 30, 1995 was as follows:
<TABLE>
<CAPTION>
Call Options
-----------------------------
Number of Amount of
Options Premiums
----------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at June 30, 1994 -- $ --
----------------------------------------------------------------------------
Options written 29,981,244 379,370
----------------------------------------------------------------------------
Options closed or expired (29,981,244) (379,370)
----------- --------
Options outstanding at June 30, 1995 -- $ --
----------- --------
----------- --------
</TABLE>
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .75% on the
first $200 million of average annual net assets with a reduction of .03%
on each $200 million thereafter to $800 million, .60% on the next $200
million and .50% on net assets in excess of $1 billion. The Manager has
agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent state regulatory limit on Fund
expenses.
For the year ended June 30, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $2,629,870, of which
$624,955 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales
of the Fund's Class B shares totaled $3,735,267, of which $35,245 was
paid to an affiliated broker/dealer. During the year ended June 30, 1995,
OFDI received contingent deferred sales charges of $333,734 upon
redemption of Class B shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such
services are allocated ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to reimburse OFDI for costs incurred in connection with
the personal service and maintenance of accounts that hold shares of the
Fund, including amounts paid to brokers, dealers, banks and other
institutions. In addition, Class B shares are subject to an asset-based
sales charge of .75% of net assets annually, to reimburse OFDI for sales
commissions paid from its own resources at the time of sale and associated
financing costs.
In the event of termination or discontinuance of the Class B plan, the
Board of Trustees may allow the Fund to continue payment of the
asset-based sales charge to OFDI for distribution expenses incurred on
Class B shares sold prior to termination or discontinuance of the plan.
During the year ended June 30, 1995, OFDI paid $26,763 and $1,112 to an
affiliated broker/dealer as reimbursement for Class A and Class B personal
service and maintenance expenses, respectively, and retained $1,215,382
as reimbursement for Class B sales commissions and service fee advances,
as well as financing costs.
6. ILLIQUID AND RESTRICTED SECURITIES
At June 30, 1995, investments in securities included issues that are
illiquid or restricted. The securities are often purchased in private
placement transactions, are not registered under the Securities Act of
1933, may have contractual restrictions on resale, and are valued under
methods approved by the Board of Trustees as reflecting fair value. The
Fund intends to invest no more than 10% of its net assets (determined at
the time of purchase) in illiquid and restricted securities. The aggregate
value of these securities subject to this limitation at June 30, 1995 was
$7,732,476 which represents .62% of the Fund's net assets. Information
concerning these securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS
OF JUNE 30,
SECURITY ACQUISITION DATE COST PER UNIT 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series A, 11/15/00 11/18/93 100.00 79.00
- ------------------------------------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93 $ 2.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts., Series A, 11/15/00 11/18/93 87.50 89.00
- ------------------------------------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02 4/14/92--3/3/93 100.00 110.00
- ------------------------------------------------------------------------------------------------------------------------
ECM Fund L.P.I. Common Stock 4/14/92 $1,000.00 $1,000.00
- ------------------------------------------------------------------------------------------------------------------------
Purity Supreme, Inc. Wts., Exp. 8/97 7/29/92 $ -- $ 0.02
- ------------------------------------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc., Common Stock 5/2/94 $ 9.50 $ 2.00
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain
unregistered securities are determined to be liquid and are not included
within the 10% limitation specified above.
7. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may
also buy or write put or call options on these futures contracts. The Fund
generally sells futures contracts to hedge against increases in interest
rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities. Upon entering into
a futures contract, the Fund is required to deposit either cash or
securities in an amount (initial margin) equal to a certain percentage of
the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to
the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund recognizes a realized gain or loss when the
contract is closed or expires. Securities held in collateralized accounts
to cover initial margin requirements on open futures contracts are noted
in the Statement of Investments. The Statement of Assets and Liabilities
reflects a receivable or payable for the daily mark to market for
variation margin. Risks of entering into futures contracts (and related
options) include the possibility that there may be an illiquid market and
that a change in the value of the contract or option may not correlate
with changes in the value of the underlying securities.
At June 30, 1995, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
Number of Valuation as of Unrealized
Expiration Date Futures Contracts June 30, 1995 Depreciation
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 9/95 250 $28,382,813 $(210,937)
</TABLE>
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, NY 10015
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
<PAGE>
OPPENHEIMER HIGH YIELD FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Highlights - See Parts A and B: Filed herewith
(2) Independent Auditors' Report - See Part B: Filed herewith
(3) Statement of Investments - See Part B: Filed herewith
(4) Statement of Assets and Liabilities - See Part B: Filed herewith
(5) Statement of Operations - See Part B: Filed herewith
(6) Statement of Changes in Net Assets - See Part B: Filed herewith
(7) Notes to Financial Statements - See Part B: Filed herewith
(8) Independent Auditors' Consent: Filed herewith
(b) Exhibits:
Exhibit
Number Description
(1) Amended and Restated Declaration of Trust dated 10/24/95: Filed
with Registrant's Post-Effective Amendment No. 33 (8/30/95), and
incorporated herein by reference.
(2) Amended By-Laws dated 6/26/90: Previously filed with
Registrant's Post-Effective Amendment No. 26 (10/23/91), refiled
with Registrant's Post-Effective Amendment No. 30 (8/25/94)
pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(3) Not applicable.
(4)(i) Specimen Class A Share Certificate: Filed with Registrant's Post-
Effective Amendment No. 32, 10/24/94, and incorporated herein by
reference.
(ii) Specimen Class B Share Certificate: Filed with Registrant's
Post-Effective Amendment No. 32, 10/24/94, and incorporated
herein by reference.
(iii) Specimen Class C Share Certificate: Filed with Registrant's
Post-Effective Amendment No. 33, (8/30/95), and incorporated herein
by reference.
(5) Investment Advisory Agreement dated 10/22/90: Previously filed
with Post-Effective Amendment No. 23 (10/31/90), refiled with
Registrant's Post-Effective Amendment No. 30 (8/25/94) pursuant to
Item 102 of Regulation S-T and incorporated herein by reference.
(6)(a) General Distributor's Agreement dated 10/13/92: Filed with
Registrant's Post-Effective Amendment No. 29 (10/4/93), and
incorporated herein by reference.
(b) Form of Dealer Agreement of Oppenheimer Funds Distributor, Inc.:
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(c) Form of Oppenheimer Funds Distributor, Inc. Broker Agreement:
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(d) Form of Oppenheimer Funds Distributor, Inc. Agency Agreement:
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(e) Broker Agreement between Oppenheimer Funds Distributor, Inc. and
Newbridge Securities, Inc. dated 10/1/86: Filed with Post-Effective
Amendment No. 25 to the Registration Statement of Oppenheimer Special
Fund (Reg. No. 2-45272), 11/1/86, refiled with Post-Effective
Amendment No. 45 of Oppenheimer Special Fund (Reg. No. 2-45272),
8/30/94, pursuant to Item 102 of Regulation S-T and incorporated
herein by reference.
(7) Not applicable.
(8) Custody Agreement dated 10/6/92: Filed with Post-Effective
Amendment No. 27 (10/21/92), refiled with Registrant's Post-Effective
Amendment No. 30 (8/25/94) pursuant to Item 102 of Regulation S-T and
incorporated herein by reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 8/3/78: Previously filed
with Registrant's Post-Effective Amendment No. 1 to Registrant's
Registration Statement (9/27/78), refiled with Registrant's Post-
Effective Amendment No. 30, 8/25/94 pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(11) Independent Auditors Consent: Filed herewith.
(12) Not applicable.
(13) Not applicable.
(14)(i) Form of prototype Standardized and Non-Standardized Profit-
Sharing Plan and Money Purchase Pension Plan for self-employed
persons and corporations: Previously filed with Post-Effective
Amendment No. 15 of Oppenheimer Mortgage Income Fund (Reg. No. 33-
6614), January 19, 1995, and incorporated herein by reference.
(ii) Form of Individual Retirement Account Trust Agreement:
Previously filed with Post-Effective Amendment No. 21 of
Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93,
and incorporated herein by reference.
(iii) Form of Tax-Sheltered Retirement Plan and Custody Agreement for
employees of public schools and tax-exempt organizations: Previously
filed with Post-Effective Amendment No. 47 of Oppenheimer Growth Fund
(Reg. No. 2-45272), 10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Previously filed with
Post-Effective Amendment No. 15 of Oppenheimer Mortgage Income Fund
(Reg. No. 33-6614), 1/19/95, and incorporated herein by reference.
(v) Form SAR-SEP Simplified Employee Pension IRA: Filed with Post-
Effective Amendment No. 19 to the Registration Statement for
Oppenheimer Integrity Funds (File No. 2-76547), 3/1/94, and
incorporated herein by reference.
(vi) Form of prototype 401(k) plan: Previously filed with Post-
Effective Amendment No. 7 to the Registration Statement of
Oppenheimer Strategic Income & Growth Fund (Reg. No. 33-47378),
9/28/95, and incorporated herein by reference.
(15)(i) Service Plan and Agreement for Class A shares dated 7/1/94:
Filed with Registrant's Post-Effective Amendment No. 30, 8/25/94, and
incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for Class B shares
dated 6/21/94: Filed with Registrant's Post-Effective Amendment
No. 30, 8/25/94, and incorporated herein by reference.
(iii) Distribution and Service Plan and Agreement for Class C shares
dated 11/1/95, under Rule 12b-1 of the Investment Company Act of
1940: Filed with Registrant's Post-Effective Amendment No. 33,
(8/30/95) and incorporated herein by reference.
(16) Performance Data Computation Schedule: Filed herewith.
(17) (i) Financial Data Schedule for Class A Shares: Filed herewith.
(ii) Financial Data Schedule for Class B Shares: Filed
herewith.
-- Powers of Attorney (including Certified Board resolutions):
Filed with Registrant's Post-Effective Amendment No. 30,
8/25/94, and incorporated by reference.
(18) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 dated
10/24/95: Filed with Post-Effective Amendment No. 12 to the Registration
Statement of Oppenheimer California Tax-Exempt Fund (33-23566), 11/1/95,
and incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
Number of Record Holders
as of October 6, 1995
Title of Class
Shares of Beneficial Interest, 58,562
Class A
Shares of Beneficial Interest,
Class B 9,760
Shares of Beneficial Interest,
Class C 0
Item 27. Indemnification
Reference is made to the provisions of Article Seventh of
Registrant's Declaration of Trust filed as Exhibit 24(b)(1) 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 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) Oppenheimer Management Corporation is the investment adviser of
the Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts
A and B hereof and listed in Item 28(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 Oppenheimer Management Corporation 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.
<TABLE>
<CAPTION>
Name & Current Position
with Oppenheimer Other Business and Connections
Management Corporation During the Past Two Years
- ----------------------- ------------------------------
<S> <C>
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund
and Oppenheimer Global Emerging Growth
Fund.
Victor Babin, None.
Senior Vice President
Bruce Bartlett, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, Inc.,
Oppenheimer Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and Senior
Portfolio Manager at First of America
Investment Corp.
Robert J. Bishop Assistant Treasurer of the Oppenheimer Funds
Assistant Vice President (listed below); previously a Fund
Controller for Oppenheimer Management
Corporation (the "Manager").
George Bowen Treasurer of the New York-based
Senior Vice President Oppenheimer Funds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based
Oppenheimer Funds. Vice President and
Treasurer of Oppenheimer Funds Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of OMC; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
OMC; President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President/Director of
Internal Audit of the Manager.
O. Leonard Darling, Formerly Co-Director of Fixed Income for
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Senior Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund, Oppenheimer Target
Fund, Oppenheimer Main Street Funds, Inc.
and Oppenheimer Variable Account Funds;
Senior Vice President and Portfolio Manager
of Oppenheimer Strategic Income & Growth
Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President Oppenheimer Funds; Vice President of the
& General Counsel Denver-based Oppenheimer Funds; Executive
Vice President, Director and General
Counsel of the Distributor; formerly Senior
Vice President and Associate General
Counsel of the Manager and the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Variable Account Funds,
Oppenheimer Global Securities Fund.
Scott Farrar, Assistant Treasurer of the Oppenheimer
Assistant Vice President Funds; previously a Fund Controller for the
Manager.
Katherine P.Feld Vice President and Secretary of Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc. and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board, Acquisition Corp. ("OAC"), the Manager's
and Director parent holding company; President, CEO and
a director of HarbourView; a director of
SSI and SFSI; President, Director, Trustee,
and Managing General Partner of the Denver-
based Oppenheimer Funds. President and
Chairman of the Board of Main Street
Advisers, Inc.; formerly Chief Executive
Officer of the Manager.
Robert G. Galli, Trustee of the New York-based
Vice Chairman Oppenheimer Funds; Vice President and
Counsel of OAC; formerly he held the
following positions: a director of the
Distributor, Vice President and a director
of HarbourView and Centennial, a director
of SFSI and SSI, an officer of other
Oppenheimer Funds and Executive Vice
President & General Counsel of the Manager
and the Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman
Brothers.
Mildred Gottlieb Formerly served as a Strategy Consultant
Assistant Vice President for the Private Client Division of Merrill
Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Fund and
Oppenheimer Intermediate Tax Exempt Fund;
an officer of other Oppenheimer Funds;
formerly Vice President of Fixed Income
Portfolio Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
Bennett Inkeles, Formerly employed by Doremus & Company, an
Assistant Vice President advertising agency.
Frank Jennings Portfolio Manager of Oppenheimer Global
Vice President Growth & Income Fund. Formerly a Managing
Director of Global Equities at Paine
Webber's Mitchell Hutchins division.
Stephen Jobe, None.
Vice President
Heidi Kagan None.
Assistant Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund, Oppenheimer Variable
Account Funds; Associate Portfolio Manager
of Oppenheimer Discovery Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director and Trustee of the New York
President, Chief Executive based Oppenheimer funds; Vice President and
Officer and Director a director of OAC; Director of HarbourView;
Director of Main Street Advisers, Inc.; and
Chairman of Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Marilyn Miller, Formerly a director of marketing for
Vice President TransAmerica Fund Management Company.
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund,
Oppenheimer Multiple Strategies Fund,
Oppenheimer Oppenheimer Asset Allocation
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer High Income Fund, Oppenheimer
Variable Account Funds and Oppenheimer Bond
Fund; an officer of other Oppenheimer
Funds.
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Insured Tax-Exempt
Fund, Oppenheimer Intermediate Tax-Exempt
Fund, Oppenheimer Florida Tax-Exempt Fund,
Oppenheimer New Jersey Tax-Exempt Fund,
Oppenheimer Pennsylvania Tax-Exempt Fund,
Oppenheimer California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt Fund and
Oppenheimer Tax-Free Bond Fund; Vice
President of the New York Tax-Exempt Income
Fund, Inc.; Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund.
Vice President and Portfolio Manager for
Oppenheimer Variable Account Funds.
Formerly Senior Investment Officer and
Portfolio Manager with Chemical Bank.
Russell Read, Formerly an International Finance Consultant
Vice President for Dow Chemical.
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust; an officer of other
Oppenheimer Funds; formerly a Securities
Analyst for the Manager.
David Robertson, None.
Vice President
Adam Rochlin, Formerly a product manager for Metropolitan
Assistant Vice President Life Insurance Company.
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund
and Oppenheimer U.S. Government Trust.
Formerly Vice President and Senior
Portfolio Manager for Delaware Investment
Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer Multiple
Strategies Fund; an officer of other
Oppenheimer Funds; formerly Vice President
and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
James Ruff, None.
Executive Vice President
Ellen Schoenfeld, None.
Assistant Vice President
Diane Sobin, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, Inc.,
Oppenheimer Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and Senior
Portfolio Manager for Dean Witter
InterCapital, Inc.
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus Oppenheimer Funds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund;
an officer of other Oppenheimer Funds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion Income Fund and
Oppenheimer High Yield Fund; an officer of
other Oppenheimer Funds.
John Stoma, Vice President Formerly Vice President of Pension Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors Oppenheimer Funds; President and a Director
and Director of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund. Formerly
Managing Director of Buckingham Capital
Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Ashwin Vasan, Vice President and Portfolio Manager of
Vice President Oppenheimer Multi-Sector Income Trust,
Oppenheimer Multi-Government Trust and
Oppenheimer International Bond Fund; an
officer of other Oppenheimer Funds.
Jeffrey Van Giesen Formerly employed by Kidder Peabody Asset
Vice President Management.
Valerie Victorson, None.
Vice President
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial Government
Trust and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice President
of HarbourView; an officer of other
Oppenheimer Funds.
Susan Wilson-Perez, None.
Vice President
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P., Centennial
Government Trust, Centennial Money Market
Trust and Daily Cash Accumulation Fund,
Inc.; Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President of
Centennial.
Robert G. Zack, Associate General Counsel of the Manager;
Senior Vice President Assistant Secretary of the Oppenheimer
and Assistant Secretary Funds; Assistant Secretary of SSI, SFSI; an
officer of other Oppenheimer Funds.
Eva A. Zeff, An officer of certain Oppenheimer Funds;
Assistant Vice President formerly a Securities Analyst for the
Manager.
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily
Cash Accumulation Fund, Inc.; Vice
President of Oppenheimer Multi-Sector
Income Trust; Vice President of Centennial;
an officer of other Oppenheimer Funds.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer
Funds and the Denver-based Oppenheimer Funds set forth below:
New York-based Oppenheimer Funds
--------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Trust
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
------------------------------
Oppenheimer Cash Reserves
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
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New York-
based Oppenheimer Funds, Oppenheimer Funds Distributor, Inc., Harbourview
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New
York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., Oppenheimer
Shareholder Services, Centennial Asset Management Corporation, Centennial
Capital Corp., and Main Street Advisers, Inc. is 3410 South Galena Street,
Denver, Colorado 80231.
Item 29. Principal Underwriter
- -------- ---------------------
(a) Oppenheimer Funds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which Oppenheimer Management
Corporation is the investment adviser, as described in Part A and B of
this Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C>
George Clarence Bowen+ Vice President & Treasurer Vice
President,
Secretary and
Treasurer
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Mary Crooks+ Vice President None
Paul Delli Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Vice President
President & Director
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Wendy Fishler* Vice President- None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
664 Circuit Road
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
Dave Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80012
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
Bernard J. Wolocko Vice President None
33915 Grand River
Farmington, MI 48335
William Harvey Young+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder
are in the possession of Oppenheimer Management Corporation at
its offices at 3410 South Galena Street, Denver, Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver and State of Colorado on
the 24th day of October, 1995.
OPPENHEIMER HIGH YIELD FUND
By: /s/ James C. Swain*
----------------------------------
James C. Swain, Chairman
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:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ James C. Swain* Chairman of the
- ------------------ Board of Trustees October 24, 1995
James C. Swain
/s/ Jon S. Fossel* Chief Executive
- -------------------- Officer and October 24, 1995
Jon S. Fossel Trustee
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting October 24, 1995
George C. Bowen Officer
/s/ Robert G. Avis* Trustee October 24, 1995
- ------------------
Robert G. Avis
/s/ William A. Baker* Trustee October 24, 1995
- --------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee October 24, 1995
- -----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee October 24, 1995
- -------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee October 24, 1995
- ------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee October 24, 1995
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee October 24, 1995
- ----------------
Ned M. Steel
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER HIGH YIELD FUND
EXHIBIT INDEX
Exhibit No. Description
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Calculations
24(b)(17)(i) Financial Data Schedule for Class A Shares
24(b)(17)(ii) Financial Data Schedule for Class B Shares
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
Oppenheimer High Yield Fund:
We consent to the use in this Post-Effective Amendment No. 34 to
Registration Statement No. 2-62076 of our report dated July 24, 1995 on
the financial statements of Oppenheimer High Yield Fund appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the heading "Financial
Highlights" appearing in the Prospectus, which is also a part of such
Registration Statement.
/s/ Deloitte & Touche
- --------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
October 25, 1995
Oppenheimer High Yield Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are
calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
07/25/85 $0.2000 $0.0000 $17.010
08/22/85 0.2000 0.0000 16.950
09/19/85 0.2000 0.0000 16.980
10/24/85 0.2000 0.0000 16.910
11/21/85 0.2000 0.0000 17.000
12/19/85 0.2000 0.0000 17.190
01/23/86 0.2000 0.0000 17.080
02/20/86 0.2000 0.0000 16.990
03/26/86 0.2000 0.0000 17.420
04/24/86 0.2000 0.0000 17.520
05/22/86 0.1800 0.0000 17.560
06/19/86 0.1800 0.0000 17.460
07/24/86 0.1800 0.0000 16.830
08/21/86 0.1800 0.0000 16.670
09/18/86 0.1800 0.0000 16.650
10/23/86 0.1800 0.0000 16.690
11/20/86 0.1800 0.0000 16.900
12/18/86 0.1800 0.0000 16.770
01/22/87 0.1800 0.0000 17.010
02/19/87 0.1800 0.0000 17.200
03/19/87 0.1800 0.0000 17.320
04/23/87 0.1800 0.0000 17.210
05/21/87 0.1800 0.0000 16.850
06/18/87 0.1800 0.0000 16.970
07/22/87 0.1800 0.0000 16.960
08/19/87 0.1800 0.0000 17.000
09/17/87 0.1800 0.0000 16.800
10/21/87 0.1800 0.0000 15.880
11/18/87 0.1800 0.0000 15.870
12/22/87 0.1800 0.0000 15.600
01/20/88 0.1800 0.0000 15.890
02/16/88 0.1800 0.0000 15.960
03/16/88 0.1800 0.0000 15.710
04/20/88 0.1800 0.0000 15.770
05/18/88 0.1600 0.0000 15.720
06/15/88 0.1600 0.0000 15.830
07/20/88 0.1600 0.0000 15.810
08/17/88 0.1600 0.0000 15.730
09/21/88 0.1600 0.0000 15.780
10/19/88 0.1600 0.0000 15.750
11/16/88 0.1600 0.0000 15.620
12/21/88 0.1600 0.0000 15.530
01/18/89 0.1600 0.0000 15.470
02/15/89 0.1600 0.0000 15.500
03/15/89 0.1600 0.0000 15.430
04/19/89 0.1600 0.0000 15.310
05/17/89 0.1600 0.0000 15.340
06/21/89 0.1600 0.0000 15.350
07/19/89 0.1600 0.0000 15.310
08/16/89 0.1600 0.0000 15.290
09/20/89 0.1600 0.0000 15.090
10/18/89 0.1600 0.0000 14.810
11/15/89 0.1600 0.0000 14.530
12/20/89 0.1600 0.0000 14.360
01/24/90 0.1600 0.0000 14.070
02/21/90 0.1600 0.0000 13.610
03/21/90 0.1600 0.0000 13.560
04/18/90 0.1600 0.0000 13.600
05/23/90 0.1600 0.0000 13.510
06/20/90 0.1600 0.0000 13.550
07/18/90 0.1600 0.0000 13.540
08/22/90 0.1600 0.0000 13.080
09/19/90 0.1600 0.0000 12.810
10/24/90 0.1600 0.0000 12.200
11/21/90 0.1600 0.0000 12.010
12/19/90 0.1600 0.0000 11.900
01/23/91 0.1600 0.0000 11.900
02/20/91 0.1600 0.0000 12.220
03/20/91 0.1600 0.0000 12.800
04/24/91 0.1600 0.0000 13.080
05/22/91 0.1600 0.0000 12.900
06/26/91 0.1600 0.0000 13.020
07/24/91 0.1600 0.0000 13.260
08/21/91 0.1600 0.0000 13.150
09/18/91 0.1600 0.0000 13.250
10/16/91 0.1600 0.0000 13.260
11/20/91 0.1600 0.0000 13.310
12/18/91 0.1450 0.0000 13.120
01/15/92 0.1450 0.0000 13.410
02/19/92 0.1450 0.0000 13.700
03/18/92 0.1450 0.0000 13.770
04/15/92 0.1450 0.0000 13.690
05/20/92 0.1300 0.0000 13.730
06/17/92 0.1300 0.0000 13.740
07/15/92 0.1300 0.0000 13.680
08/19/92 0.1300 0.0000 13.790
09/16/92 0.1300 0.0000 13.700
10/21/92 0.1300 0.0000 13.410
11/18/92 0.1300 0.0000 13.370
12/16/92 0.1300 0.0000 13.350
01/20/93 0.1300 0.0000 13.430
02/17/93 0.1300 0.0000 13.610
03/17/93 0.1300 0.0000 13.750
04/21/93 0.1300 0.0000 13.820
05/19/93 0.1300 0.0000 13.840
06/16/93 0.1300 0.0000 14.010
07/21/93 0.1300 0.0000 14.210
08/18/93 0.1300 0.0000 14.130
09/30/93 0.1300 0.0000 14.060
10/29/93 0.1130 0.0000 14.300
11/30/93 0.1130 0.0000 14.330
12/31/93 0.1130 0.0000 14.500
01/31/94 0.1130 0.0000 14.760
02/28/94 0.1130 0.0000 14.590
03/31/94 0.1130 0.0000 13.980
04/29/94 0.1130 0.0000 13.720
05/31/94 0.1130 0.0000 13.770
06/30/94 0.1130 0.0000 13.630
07/29/94 0.1130 0.0000 13.530
08/31/94 0.1130 0.0000 13.400
09/30/94 0.1130 0.0000 13.400
10/31/94 0.1130 0.0000 13.260
11/30/94 0.1130 0.0000 13.030
12/30/94 0.1060 0.0000 12.830
01/31/95 0.1060 0.0000 12.800
02/28/95 0.1060 0.0000 13.000
03/31/95 0.1060 0.0000 12.920
04/28/95 0.1060 0.0000 13.090
05/31/95 0.1060 0.0000 13.270
06/30/95 0.1060 0.0000 13.220
Class B Shares
05/19/93 0.1250 0.0000 13.820
06/16/93 0.1220 0.0000 13.990
07/21/93 0.1200 0.0000 14.170
08/18/93 0.1210 0.0000 14.090
09/30/93 0.1170 0.0000 14.020
10/29/93 0.1029 0.0000 14.260
11/30/93 0.1034 0.0000 14.290
12/31/93 0.1055 0.0000 14.460
01/31/94 0.1047 0.0000 14.710
02/28/94 0.1045 0.0000 14.540
03/31/94 0.1023 0.0000 13.920
04/29/94 0.1052 0.0000 13.660
05/31/94 0.1045 0.0000 13.710
06/30/94 0.1042 0.0000 13.570
07/29/94 0.1038 0.0000 13.470
08/31/94 0.1037 0.0000 13.340
09/30/94 0.1040 0.0000 13.340
10/31/94 0.1049 0.0000 13.200
11/30/94 0.1047 0.0000 12.970
12/30/94 0.0975 0.0000 12.770
01/31/95 0.0976 0.0000 12.740
02/28/95 0.0982 0.0000 12.940
03/31/95 0.0969 0.0000 12.860
04/28/95 0.0982 0.0000 13.030
05/31/95 0.0974 0.0000 13.200
06/30/95 0.0971 0.0000 13.150
1. Average Annual Total Returns for the Periods Ended 06/30/95:
The formula for calculating average annual total return is as
follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$1,020.02 1 $1,679.26 .2
(---------) - 1 = 2.00% (---------) - 1 = 10.92%
$1,000 $1,000
Ten Year
$2,555.47 .1
(---------) - 1 = 9.84%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 3.00% for the inception year:
One Year Inception
$1,013.64 1 $1,129.68 .4633
(---------) - 1 = 1.36% (---------) - 1 = 5.81%
$1,000 $1,000
1. Average Annual Total Returns for the Periods Ended 06/30/95
(continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,070.86 1 $1,762.99 .2
(---------) - 1 = 7.09% (---------) - 1 = 12.01%
$1,000 $1,000
Ten Year
$2,682.80 .1
(---------) - 1 = 10.37%
$1,000
Class B Shares
One Year Inception
$1,062.09 1 $1,158.09 .4633
(---------) - 1 = 6.21% (---------) - 1 = 7.04%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 06/30/95:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$1,020.02 - $1,000 $1,679.26 - $1,000
------------------ = 2.00% ------------------ = 67.93%
$1,000 $1,000
Ten Year
$2,555.47 - $1,000
------------------ = 155.55%
$1,000
Oppenheimer High Yield Fund
Page 6
2. Cumulative Total Returns for the Periods Ended 06/30/95
(continued):
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 3.00% for the inception year:
One Year Inception
$1,013.64 - $1,000 $1,129.68 - $1,000
------------------ = 1.36% ------------------ = 12.97%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,070.86 - $1,000 $1,762.99 - $1,000
------------------ = 7.09% ------------------ = 76.30%
$1,000 $1,000
Ten Year
$2,682.80 - $1,000
------------------ = 168.28%
$1,000
Class B Shares
One Year Inception
$1,062.09 - $1,000 $1,158.09 - $1,000
------------------ = 6.21% ------------------ = 15.81%
$1,000 $1,000
3. Standardized Yield for the 30-Day Period Ended 06/30/95:
The Fund's standardized yields are calculated using the following
formula set
forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
The symbols above represent the following factors:
a = Dividends and interest earned during the 30-day period.
b = Expenses accrued for the period (net of any expense
reimbursements).
c = The average daily number of Fund shares outstanding during
the 30-day period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
e = The Fund's net asset value (excluding contingent deferred
sales charge) per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 4.75%:
$9,312,594.62 - $921,111.55 6
2{(--------------------------- + 1) - 1} = 9.17%
80,609,268 x $13.88
Class B Shares
Example at NAV:
$1,627,693.53 - $286,615.51 6
2{(--------------------------- + 1) - 1} = 8.80%
14,156,342 x $13.15
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 06/30/95:
The Fund's dividend yields are calculated using the following
formula:
Dividend Yield = ( a * 12 ) / b or c
The symbols above represent the following factors:
a = The dividend earned during the period.
b = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share
on the last day of the period.
Examples :
Class A Shares
Dividend Yield ( $0.1060000 * 12 ) / $13.88 =
9.16% at Maximum Offer:
Dividend Yield ( $0.1060000 * 12 ) / $13.22 = 9.62%
at Net Asset Value:
Class B Shares
Dividend Yield ( $0.0971290 * 12 ) / $13.15 =
8.86% at Net Asset Value:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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