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. 39 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
Amendment No. 31 / X /
OPPENHEIMER HIGH YIELD FUND
- -------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
6803 South Tucson Way, Englewood, Colorado 80112
- -------------------------------------------------------------------
(Address of Principal Executive Offices)
1-303-671-3200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc. - 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 October 15, 1997, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ________________, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On __________________, pursuant to paragraph (a)(2) 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, 1997 was filed on August
27, 1997.
<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; A 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 Objective and Policies - Portfolio Turnover
7 Shareholder Account Rules and Policies; How to Buy
Shares; How to Exchange Shares; Service Plan for Class A
Shares; Distribution and Service Plans for Class B and
Class C Shares; Special Investor Services; 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 Policies and Strategies; Other
Investment Techniques and Strategies; Other
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 - The Manager and Its
Affiliates; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 How To Buy Shares; Dividends, Capital Gains and
Taxes
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 Financial Statements
- ----------------------
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER HIGH YIELD FUND
Prospectus dated October 15, 1997
Oppenheimer High Yield Fund is a mutual fund with the
investment objective of seeking a high level of current income by
investing mainly 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 high-yield, lower-rated, fixed-income 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 October 15, 1997 Statement of
Additional Information. For a free copy, call OppenheimerFunds
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, 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 NOR HAS THE SECURITIES AND
EXCHANGE 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 Objectives and Policies
Investment Risks
Investment Techniques and Strategies
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
Class Y 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 A: Description of Securities Ratings
Appendix B: Special Sales Charge Arrangements
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's operating expenses that you will bear
indirectly.
Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your
Account," starting on page __ for an explanation of how and when
these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
------- ------- -------- --------
<S> <C> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 4.75% None None None
- -------------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(as a % of the lower of the
original offering price or
redemption proceeds) None(1) 5% in the 1% if None
first year, shares are
declining redeemed
to 1% in within 12
the sixth months of
year and purchase(2)
eliminated
thereafter(2)
- -------------------------------------------------------------------------------------
Maximum Sales Charge on
Reinvested Dividends None None None None
- ------------------------------------------------------------------------------------
Exchange Fee None None None None
- -------------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3) None
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans", as defined in "Class A Contingent
Deferred Sales Charge" on page __) in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 12
calendar months (18 months for shares purchased prior to May 1,
1997) from the end of the calendar month during which you purchased
those shares. See "How to Buy Shares - Buying Class A Shares"
below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to
Buy Shares - Buying Class C Shares" below for more information on
the contingent deferred sales charges.
(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, OppenheimerFunds, Inc. (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.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.62% 0.62% 0.62% 0.62%
- -----------------------------------------------------------------------------
12b-1 Distribution Plan Fees 0.21% 1.00% 1.00% 0.00%
- -----------------------------------------------------------------------------
Other Expenses 0.17% 0.18% 0.20% 0.18%
- -----------------------------------------------------------------------------
Total Fund Operating Expenses 1.00% 1.80% 1.82% 0.80%
</TABLE>
The numbers in the chart above are based upon the Fund's
expenses in its last fiscal year ended June 30, 1997. These
amounts are shown as a percentage of the average net assets of each
class of the Fund's shares for that year. The 12b-1 Distribution
Plan Fees for Class A shares are Service Plan Fees (the maximum fee
is 0.25% of average annual net assets of that class). For Class B
and Class C shares, the 12b-1 Distribution Plan Fees are the
service fees (the maximum fee is 0.25% of average annual net assets
of that class) and the asset-based sales charge of 0.75% of the
average annual net assets of the class. 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 chart, depending on a
number of factors, including changes in the actual amount of assets
represented by each class of shares. Class Y shares were not
available during the fiscal year ended June 30, 1997. Therefore,
the Annual Fund Operating Expenses shown for Class Y shares are
based on the amount that would have been payable in that period
assuming that Class Y shares were outstanding during such fiscal
year.
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 $57 $78 $100 $164
Class B Shares $68 $87 $117 $171
Class C Shares $28 $57 $ 99 $214
Class Y Shares $ 8 $26 $ 44 $ 99
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
------ ------- ------- --------
Class A Shares $57 $78 $100 $164
Class B Shares $18 $57 $ 97 $171
Class C Shares $18 $57 $ 99 $214
Class Y Shares $ 8 $26 $ 44 $ 99
- ---------------
* In the first example, expenses include the Class A initial
sales charge and the applicable Class B or Class C contingent
deferred sales charge. In the second example, Class A expenses
include the initial sales charge but Class B and Class C expenses
do not include contingent deferred sales charges. The Class B
expenses in years 7 through 10 are based on the Class A expenses
shown above, because the Fund automatically converts your Class B
shares into Class A shares after 6 years. Because of the effect of
the asset-based sales charge and the contingent deferred sales
charge imposed on Class B and Class C shares, long-term holders of
Class B and Class C shares could pay the economic equivalent of
more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic
conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How
to Buy Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
<PAGE>
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 by investing mainly 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 fixed-income securities, and
at least 65% of its total assets will be invested in high-yield,
lower-rated fixed-income securities (commonly referred to as "junk
bonds"). Fixed-income securities include debt securities, such as
bond, notes and debentures, preferred stock, asset-backed
securities and mortgage-backed securities (including collateralized
mortgage-backed obligations). 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 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 is
OppenheimerFunds, Inc., which (including subsidiaries) manages
investment company portfolios having over $75 billion in assets at
September 30, 1997. The Manager is paid an advisory fee by the
Fund, based on its assets. The Fund's portfolio manager, Ralph W.
Stellmacher, is employed by the Manager and is primarily
responsible for the selection of the Fund's securities. 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. All fixed-income securities are
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. However, the securities in which the Fund
invests 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.
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 Oppenheimer funds 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 Risks" starting on page
___ for a more complete discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
broker, 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" starting on page ___ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
an investor four 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. The Fund also offers Class Y shares to certain institutional
investors; such shares are not available for sale to individual
investors.
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 that are not subject to
a contingent deferred sales charge). 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, which we have done on pages ___.
Please remember that past performance does not guarantee future
results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense
ratios and other data based on the Fund's average net assets. This
information has been audited by Deloitte & Touche LLP, the Fund's
independent auditors, whose report on the Fund's financial
statements for the fiscal year ended June 30, 1997 is included in
the Statement of Additional Information. Class Y shares were not
publicly offered during any of the periods shown; therefore,
information on this class of shares is not included in the tables
below or in the Fund's other financial statements.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
--------------------------------------------------------------
Year Ended June 30,
1997 1996 1995 1994
===========================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $13.51 $13.22 $13.63 $14.16
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.27 1.29 1.30 1.42
Net realized and unrealized gain (loss) .43 .27 (.40) (.54)
------ ------ ------ ------
Total income from investment operations 1.70 1.56 .90 .88
- -----------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.23) (1.27) (1.30) (1.41)
Tax return of capital distribution -- -- (.01) --
------ ------ ------ ------
Total dividends and distributions to
shareholders (1.23) (1.27) (1.31) (1.41)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.98 $13.51 $13.22 $13.63
====== ====== ====== ======
===========================================================================================================
Total Return, at Net Asset Value(3) 13.10% 12.25% 7.09% 6.27%
===========================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $1,167,055 $1,083,913 $1,060,752
$1,049,446
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,127,509 $1,092,002 $1,005,746
$1,111,103
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.22% 9.59% 9.81% 10.10%
Expenses 1.00% 1.03% 1.03% 0.96%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 125.8% 104.9% 93.7% 96.7%
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Class B
- ----------------------------------------------------------------------------- ----------------------
Year Ended June 30,
1993 1992 1991 1990 1989 1988 1997 1996
======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$13.76 $13.08 $13.60 $15.42 $16.00 $17.09 $13.43 $13.15
- ----------------------------------------------------------------------------------------------------
1.60 1.79 1.91 1.89 2.02 2.06 1.15 1.18
.36 .68 (.51) (1.79) (.68) (1.03) .43 .27
------ ------ ------ ------ ------ ------ ------ ------
1.96 2.47 1.40 .10 1.34 1.03 1.58 1.45
- ----------------------------------------------------------------------------------------------------
(1.56) (1.79) (1.92) (1.92) (1.92) (2.12) (1.13) (1.17)
-- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
(1.56) (1.79) (1.92) (1.92) (1.92) (2.12) (1.13) (1.17)
- ----------------------------------------------------------------------------------------------------
$14.16 $13.76 $13.08 $13.60 $15.42 $16.00 $13.88 $13.43
====== ====== ====== ====== ====== ====== ======
======
====================================================================================================
15.31% 20.06% 11.90% 0.85% 8.97% 6.75% 12.18% 11.40%
====================================================================================================
$1,119,056 $902,562 $657,182 $650,989 $860,588 $857,767 $396,678
$279,789
- ----------------------------------------------------------------------------------------------------
$978,671 $768,339 $601,758 $734,703 $863,178 $791,471 $335,220
$236,362
- ----------------------------------------------------------------------------------------------------
11.59% 13.15% 14.94% 13.00% 12.88% 12.72% 8.41% 8.75%
0.97% 0.92% 0.96% 0.93% 0.88% 0.89% 1.80% 1.84%
- ----------------------------------------------------------------------------------------------------
87.2% 64.0% 90.4% 63.2% 57.0% 41.1% 125.8% 104.9%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights (continued) Class B Class C
---------------------------------------------- --------------------------
Year Ended June 30, Year Ended June 30,
1995 1994 1993(2) 1997 1996(1)
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $13.57 $14.12 $13.87 $13.50
$13.30
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 1.20 1.35 .23 1.14 .77
Net realized and unrealized gain (loss) (.42) (.60) .27 .45 .19
------ ------ ------ ------ ------
Total income from investment operations .78 .75 .50 1.59
.96
- ------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.19) (1.30) (.25) (1.12)
(.76)
Tax return of capital distribution (.01) -- -- -- --
------ ------ ------ ------ ------
Total dividends and distributions to
shareholders (1.20) (1.30) (.25) (1.12) (.76)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.15 $13.57 $14.12 $13.97
$13.50
====== ====== ====== ======
======
========================================================================================================================
Total Return, at Net Asset Value(3) 6.21% 5.31% 3.54% 12.23%
7.36%
========================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $192,465 $87,509 $10,493 $30,463
$7,648
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $134,550 $51,816 $4,405 $17,654
$3,378
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.95% 8.98% 10.84%(4) 8.40%
8.41%(4)
Expenses 1.84% 1.88% 2.28%(4) 1.82%
1.90%(4)
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 93.7% 96.7% 87.2% 125.8%
104.9%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. For the period from May 3, 1993 (inception of offering) to June 30, 1993.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended June 30, 1997 were $1,882,628,909 and $1,742,733,767,
respectively.
Oppenheimer High Yield Fund
Investment Objectives and Policies
Objectives. The Fund's primary objective is to seek a high level
of current income by investing mainly 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.
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 nationally recognized
securities rating services ("rating services") such as the Standard
& Poor's Corporation ("S&P") and Moody's Investors Service, Inc.
("Moody's"). 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, and at least 65% of its total assets will be invested
in high-yield, lower-rated fixed-income securities commonly known
as "junk bonds". Fixed-income securities include debt securities,
such as bonds, notes and debentures, preferred stock, asset-backed
securities and mortgage-backed securities (including collateralized
mortgage obligations). 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.
The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies and derivative
investments described below. The Fund's portfolio manager may
employ special investment techniques in selecting securities for
the Fund. These are all described below. More detailed
information may be found about them under the same headings in the
Statement of Additional Information.
Since the Fund may invest in lower-rated securities without
limit, the Fund's investments should be considered speculative.
Further, 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. See "Investment Risks" below.
Can the Fund's Investment Objectives and Policies Change?
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 Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
Foreign Securities. The Fund may purchase debt and equity
securities issued or guaranteed by foreign companies or foreign
governments including foreign government 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. The Fund may purchase securities of
companies in any country, developed or underdeveloped. Foreign
currency will be held by the Fund only in connection with the
purchase or sale of foreign securities.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." Generally, the Fund will
not trade for short-term profits, but when circumstances warrant,
it may take advantage of differences in securities prices and
yields or of fluctuations in interest rates. 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. As to the
current fiscal year, any short-term trading could affect the Fund's
tax status.
How the Fund's Portfolio Securities Are Rated. As of June
30, 1997, the percentages of the Fund's total assets represented by
fixed-income securities that were rated by a rating service in each
of the S&P rating categories were as follows (securities rated by
any rating service are included in the equivalent S&P rating
category): AAA,0.00%; AA,0.00%; A,0.25%; BBB, 3.28%; BB,16.80%;
B,50.60%; CCC,3.35%; CC, 0.00%; C,0.10%; and D, 0.00%. Appendix A
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. As of June 30, 1997, 13.77% of the
Fund's total assets were represented by unrated fixed-income
securities.
Investment Risks
All investments carry risks to some degree, whether they are risks
that market prices of the investment will fluctuate (this is known
as "market risk") or that the underlying issuer will experience
financial difficulties and may default on its obligation under a
fixed-income investment to pay interest and repay principal (this
is referred to as "credit risk"). These general investment risks
and the special risks of certain types of investments that the Fund
may hold are described below. They affect the value of the Fund's
investments, its investment performance and the prices of its
shares. These risks collectively form the risk profile of the
Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking preservation of capital. While the Manager
tries to reduce risks by diversifying investments and by carefully
researching securities before they are purchased, the Fund's share
price may decline because of the risk factors described and there
is no assurance that the Fund will achieve its investment
objectives. When you redeem your shares, they may be worth more or
less than what you paid for them.
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 the Fund holds) 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 because 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 a rating service, such
as S&P 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.
Special Risks of Lower-Rated Securities. Under normal
market conditions, the Fund will invest at least 65% of its total
assets in high-yield, lower-rated fixed-income securities, commonly
known as "junk bonds". These types of securities are those rated
below "investment grade," which means that they have a rating lower
than "Baa" by Moody's or lower than "BBB" by S&P or similar ratings
by other rating services. 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. See "How the Fund's Portfolio Securities are
Rated" above for information on the ratings of the Fund's fixed-income
investments. 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 a rating service 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 and 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. Additionally, during an economic downturn, high-yield
bonds might decline in value more than lower yielding,
investment grade bonds. Also, an increase in interest rates could
have a significant negative impact on the value of high-yield
bonds.
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.
Special Risks of Hedging Instruments. The Fund may use
certain hedging instruments, as described below. 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 are not correlated with its other investments or
if it cannot 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.
Special Risks of Derivative Investments. The Fund can
invest in different kinds of derivative investments, as described
below, which entail special risks. The company issuing the
instrument may fail to pay the amount due on the maturity of the
instrument. Also, the underlying investment or security on which
the derivative is based, and the derivative itself, might not
perform the way the Manager expected it to perform because the
financial markets, underlying securities, currencies 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 trade in the over-the-counter
market and may be illiquid. Please refer to "Illiquid and
Restricted Securities."
Foreign Securities Risks. Investing in foreign securities
generally involves special risks. For example, foreign issuers are
not subject to the same accounting and disclosure requirements as
U.S. companies. 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. Consequently, foreign
investments may be less liquid and more volatile than investments
in U.S. securities. More information about the risks and potential
rewards of investing in foreign securities is contained in the
Statement of Additional Information.
Special Risks of Emerging Market Countries. Investments in
emerging market countries may involve further risks in addition to
those identified above for investments in foreign securities.
Securities issued by emerging market countries and companies
located in those countries may be subject to extended settlement
periods, whereby the Fund might not receive principal and/or income
on a timely basis and its net asset value could be affected. There
may be a lack of liquidity for emerging market securities; interest
rates and foreign currency exchange rates may be more volatile;
sovereign limitations on foreign investment may be more likely to
be imposed; there may be significant balance of payment deficits;
and their economies and markets may respond in a more volatile
manner to economic changes than those of developed countries.
Stock Investment Risks. The Fund may also invest a limited
portion of its assets in common stock and other equity securities.
At times, the stock markets can be volatile and stock prices can
change substantially. This market risk could affect the Fund's net
asset value per share, which will fluctuate as the values of the
Fund's equity portfolio securities change. Not all stock prices
change uniformly or at the same time, and other factors, not all of
which can be predicted, can affect a particular stock's price.
Investment Techniques and Strategies
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more information about
these practices, including limitations on their use that are
designed to reduce some of the risks.
Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, put and call options and
forward contracts, 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. 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 currency 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), broad-based securities indices (these are referred to as
Financial Futures) and commodities (these are referred to as
commodity futures). These types of Futures are described in
"Hedging" in the Statement of Additional Information.
Put and Call Options. The Fund may buy and sell exchange-traded
and over-the-counter put and call options, including index
options, securities options, currency options, commodities options,
and options on the other types of futures described in "Futures,"
above. A call or put may be purchased only if, after the purchase,
the value of all call and put options held by the Fund will not
exceed 5% of the Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be
"covered." That means the Fund must own the security subject to
the call while the call is outstanding, or, for other types of
written calls, the Fund must segregate liquid assets to enable it
to satisfy its obligations if the call is exercised.
The Fund may buy puts whether or not it holds the underlying
investment in the portfolio. If the Fund writes a put, the put
must be covered by segregated liquid assets. The Fund will not
write puts if more than 50% of the Fund's net assets would have to
be segregated to cover put options.
Forward Currency Contracts. Forward currency 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 purchased 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 interest rate payments for fixed
interest 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.
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. Derivative
instruments may be used by the Fund in some cases for hedging
purposes and in other cases for "non-hedging" purposes to seek
income or total return. 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 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 depend on the performance of one
or more market indices, such as the S & P 500 Index or a weighted
index of commodity futures, such as crude oil, gasoline and natural
gas. The Fund 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.
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.
Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers and other financial institutions. The Fund must receive
collateral for 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;
should the Fund do so, the amount loaned would not 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 (the Board may
increase that limit to 15%). The Fund's percentage limitation on
these investments does not apply to certain restricted securities
that are eligible for resale to qualified institutional purchasers.
Illiquid securities include repurchase agreements maturing in more
than seven days, or certain participation interests other than
those with puts exercisable within seven days. The Manager
monitors holdings of illiquid securities on an ongoing basis and at
times the Fund may be required to sell some holdings to maintain
adequate liquidity.
Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. 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.
Repurchase agreements having a maturity beyond seven days are
considered illiquid; accordingly, no more than 10% of the Fund's
net assets may be subject to such 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.
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 Statement of
Additional Information under "Investment Objectives and Policies."
Temporary Defensive Investments. When bond and stock market
prices are falling or in other volatile economic or unusual
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 S&P or "P-1" or better by Moody's or
similar ratings by other rating services. The yield on securities
selected for defensive purposes generally will be lower than the
yield on lower-rated, fixed-income securities.
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, 25% or
more 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 utilities, electric utilities, 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" in the Statement of Additional Information;
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.
Unless the Prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed 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 officers of the Fund, and provides more information about them.
Although the Fund will not normally hold annual meetings, it may
hold shareholder meetings from time to time on important matters,
and shareholders have the right to call a meeting to remove a
Trustee or to take other action described in the Fund's Declaration
of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has four
classes of shares, Class A, Class B, Class C and Class Y. All
classes invest in the same investment portfolio. Each class has its
own dividends and distributions and pays certain expenses which may
be different from the other classes. Therefore, each class may
have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally.
Only shares of a particular class vote as a class on matters that
affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the
Manager, OppenheimerFunds, Inc., 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
with the Fund which states the Manager's responsibilities. The
Investment Advisory 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 subsidiaries) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $75 billion as of September 30, 1997, and with more than 3
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 portfolio manager of other
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 average annual net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200
million, 0.60% of the next $200 million and 0.50% of average annual
net assets over $1 billion. The Fund's management fee for its last
fiscal year was 0.62% of average annual net assets for its Class A,
Class B and Class C 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, certain Trustees' fees, transfer agency fees,
legal fees and auditing costs. Those expenses are paid out of the
Fund's assets and are not paid directly by shareholders. However,
those expenses reduce the net asset value of shares, and therefore
are indirectly borne by shareholders through their investment. 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, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes 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
OppenheimerFunds 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 accounts 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 Fund has done over time and to
compare it to other funds or market indices as we have done on
pages __ and __.
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 the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. 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.
However, total returns 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 less 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 paid for a stated period by the
maximum offering price on the last day of the period and
annualizing the result. Yields for Class A shares normally reflect
the deduction of the maximum initial sales charge, but may also be
shown without deducting the sales charge. 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, 1997, followed by a graphical comparison of the Fund's
performance to appropriate broad-based market indices.
Management's Discussion of Performance. The Fund's fiscal
year ended June 30, 1997 proved to be a volatile year for
fixed-income investors. Amid economic uncertainty, inflation fears and
prospects of interest rate increases during the year, the fixed-income market,
including high-yield bonds, experienced highs and
lows. Overall returns, however, were positive, although the
various sectors of the fixed-income market exhibited a disparity in
performance, with the average high yield fund significantly
outperforming the average U.S. government fund.
Contributing factors to the overall favorable performance of the
high yield market during the past year were a favorable economic
climate and resulting healthy corporate cash flows and low default
rates. In addition, the high yield market benefited from strong
investor flows and a series of merger and acquisition transactions
which resulted in deleveraging for many high yield issuers. The
Fund generated strong relative performance by being invested in
noncyclical industries and economic sectors, and by investing in
growth areas in various industries in the U.S. and abroad. The
Fund's portfolio holdings, allocations and strategies are subject
to change.
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, 1997.
Performance is measured in the case of Class A shares, over a ten-year period,
in the case of Class B shares, from the inception of
the Class on May 3, 1993, and in the case of Class C shares, from
the inception of the Class on November 1, 1995, with all dividends
and capital gains distributions reinvested in additional shares.
Since Class Y shares are new as of the date of this Prospectus,
there are no comparisons shown for that class.
The Fund's performance is compared to the performance of the
Merrill Lynch High Yield Bond Master Index and the Lehman Brothers
Corporate Bond Index. The Merrill Lynch High Yield Bond Master
Index is an index of below investment grade (ratings are generally
comparable to below BBB of S&P) U.S. corporate issuers. It is
widely recognized as a measure of the U.S. corporate high yield
bond market. 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. 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
individual investments included in the index.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer High Yield Fund (Class A), the Merrill Lynch High
Yield Bond Master Index and the Lehman Brothers Corporate Bond
Index
[Graph]
Average Annual Total Return of Class A Shares of the Fund at
6/30/971
1 Year 5 Year 10 Year
- ------ ------ --------
7.73% 9.67% 9.60%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer High Yield Fund (Class B), the Merrill Lynch High Yield
Bond Master Index and the Lehman Brothers Corporate Bond Index
[Graph]
Average Annual Total Return of Class B Shares of the Fund at
6/30/972
1 Year Life
- ------ ------
7.18% 8.93%
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer High Yield Fund (Class C), the Merrill Lynch High Yield
Bond Master Index and the Lehman Brothers Corporate Bond Index
[Graph]
Average Annual Total Return of Class C Shares of the Fund at
6/30/973
1 Year Life
- ------ ----
11.23% 11.85%
- --------------
The total returns and the ending account values in the graphs
reflect reinvestment of all dividends and capital gains
distributions.
(1) Class A returns and the ending account value in the
graph are shown net of the applicable 4.75% maximum initial sales
charge.
(2) Class B shares were first publicly offered on May 5,
1993. Returns are shown net of the applicable 5% and 2% 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 2% contingent deferred sales charge.
(3) Class C Shares of the Fund were first publicly offered on
November 1, 1995. Returns and the ending account value in the
graph are shown net of the 1% contingent deferred sales charge for
the period.
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 four different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but may be 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 "Retirement Plans" as defined in "Class
A Contingent Deferred Sales Charge" on page ___). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement 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 12 months of buying them (18
months if the shares were purchased prior to May 1, 1997), 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 as 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% as described in "Buying Class C Shares"
below.
Class Y Shares. Class Y shares are offered only to certain
institutional investors that have special agreements with the
Distributor.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is 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 to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We assumed you are an individual investor, and therefore
ineligible to purchase Class Y shares. We used the sales charge
rates that apply to Class A, Class B and Class C shares and
considered the effect of the annual asset-based sales charge on
Class B and Class C share 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 Class B or Class C shares
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 within 6 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 Class 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 more of Class B shares or $1 million or more of Class
C shares 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 Class 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 assumed annual performance return
stated above, and therefore you should analyze your options
carefully.
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 solely by those classes, such as the asset-based
sales charges described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class of shares than for selling
another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales
charges and asset-based sales charges is 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. The Distributor may pay
additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value
of shares of the Fund owned by the dealer or financial institution
for its own account or for its customers.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans.
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing and 401(k) 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 or distributions from the
Fund or other Oppenheimer funds (a list of them appears in the
Statement of Additional Information, or you can ask your dealer or
call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, or directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as
Distributor's agent to accept purchase (and redemption) orders.
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 "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Shares may be purchased by Federal Funds wire. The minimum
investment is $2,500. You must first call the Distributor's Wire
Department at 1-800-525-7041 to notify the Distributor of the wire
and receive further instructions.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds or to transmit dividends and distributions to your bank
account.
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 in the Statement
of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (plus any
initial sales charge that applies). That price is determined after
the Distributor receives the purchase order in Denver, Colorado.
In most cases, to enable you to receive that day's offering price,
the Distributor or its designated agent 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
referred to in this Prospectus as 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.
Special Sales Charge Arrangements for Certain Persons. Appendix B
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases
by exchange) by a person who was a shareholder of one of the Former
Quest for Value Funds (as defined in that Appendix).
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>
Commission
Front-End Front-End as
Sales Charge as Sales Charge as Percentage
Percentage of Percentage of of Offering
Amount of Purchase Offering Price Amount Invested 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.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan, an employee's
403(b)(7) custodial plan account, SEP IRA, SARSEP, or SIMPLE plan
(all of these plans are collectively referred to as "Retirement
Plans"); that: (1) buys shares costing $500,00 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.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million calculated on a calendar year basis.
That commission will be paid only on those purchases that were not
previously subject to front-end sales charge and dealer commission.
No sales commission will be paid to the dealer, broker or financial
institution on sales of Class A shares purchased with the
redemption proceeds of shares of a mutual fund offered as an
investment option in a Retirement Plan in which Oppenheimer funds
are also offered as investment options under a special arrangement
with the Distributor if the purchase occurs more than 30 days after
the addition of the Oppenheimer funds as an investment option to
the Retirement Plan.
If you redeem any of those shares purchased prior to May 1,
1997, within 18 months of the end of the calendar month of their
purchase, a contingent deferred sales charge (called the "Class A
contingent deferred sales charge") may be deducted from the
redemption proceeds. A Class A contingent deferred sales charge may
be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12
months of the end of the calendar month of their purchase. That
sales charge may be equal to 1.0% of the lesser of (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 offering price (which is the
original net asset value) of the redeemed shares. However, the
Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your
dealer on all 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 12 calendar months (18 months for shares purchased prior to
May 1, 1997) 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.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The
Distributor will add the current offering price of the shares you
previously purchased and currently own to the value of current
purchases to determine the sales charge rate that applies. The
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, if you
purchase Class A shares or Class A shares and Class B shares of the
Fund and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of your intended purchases of both
Class A and Class B shares will determine the reduced sales charge
rate for the Class A shares purchased during that period. This can
include purchases made up to 90 days before the date of the Letter.
More information is contained in the Application and in "Reduced
Sales Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below. There
is an explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, banks or registered investment advisers
(1) that have entered into an agreement with the Distributor
providing specifically for the use of shares of the Fund in
particular investment products or employee benefit plans 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) or (2) that have entered into an agreement
with the Distributor to sell shares to defined contribution
employee retirement plans for which the dealer, broker or
investment adviser provides administration services;
(1) investment advisors and financial planners who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on books
and records of the broker, agent or financial intermediary with
which the Distributor has made such special arrangements (each of
these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares);
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements were consummated and
share purchases commenced by December 31, 1996.
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;
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; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemption of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time of purchase of shares (prior to May 1,
1997) the dealer agreed in writing to accept the dealer's portion
of the sales commission 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);
if, at the time of purchase of shares (on or after May 1,
1997) the dealer agrees in writing to accept the dealer's portion
of the sales commission in installments of 1/12th of the commission
per month (and no further commission will be payable if the shares
are redeemed within 12 months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program;
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA;
for distributions from Retirement Plans having 500 or more
eligible participants, except distributions due to termination of
all of the Oppenheimer funds as an investment option under the
Plan; and
for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor
allowing this waiver.
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 shareholder 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 service
providers or their 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
contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or
the original offering price (which is the original net asset
value). 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. 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:
Years Since Beginning of Contingent Deferred Sales Charge
Month in which Purchase On Redemptions in That Year
Order was Accepted (As % of Amount Subject to Charge)
- -----------------------------------------------------------------
0-1 5.0%
- -----------------------------------------------------------------
1-2 4.0%
- -----------------------------------------------------------------
2-3 3.0%
- -----------------------------------------------------------------
3-4 3.0%
- -----------------------------------------------------------------
4-5 2.0%
- -----------------------------------------------------------------
5-6 1.0%
- -----------------------------------------------------------------
6 and following None
- -----------------------------------------------------------------
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
reimburse the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C shares."
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchases in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Waivers of Class
B and Class C Sales Charges."
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 1.00% 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 contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). 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. The
Class C contingent deferred sales charge is paid to the Distributor
for 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 Plans for Class B and Class C
Shares. The Fund has adopted a Distribution and Service Plan for
Class B shares to reimburse, and has adopted a Distribution and
Service Plan for Class C shares to compensate, the Distributor for
its services and costs in distributing Class B and Class C shares
and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year
on Class B shares that are outstanding for 6 years or less and on
Class C shares. The Distributor also receives an annual service
fee of 0.25% per year under each Plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares. As
to Class B shares, those asset-based sales charge payments
reimburse the Distributor for its services rendered in distributing
Class B shares. As to Class C shares, those payments are at a
fixed rate that 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 B and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge. If a dealer has a special arrangement with the
Distributor, the Distributor will pay the Class B service fee and
the asset-based sales charge to the dealer quarterly in lieu of
paying the sales commission and service fee advance at the time of
purchase.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is 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. If a dealer has a special
arrangement with the Distributor, the Distributor shall pay the
Class C service fee and asset-based sales charge to the dealer
quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
The Distributor's actual expenses in selling Class B and Class
C 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 Plans for Class B and Class
C shares. If either Plan is terminated by the Fund the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge and/or service fee to the Distributor for certain
expenses it incurred before the Plan was terminated. At June 30,
1997, the end of the Class B and Class C Plan year, the Distributor
had incurred unreimbursed expenses under the Plans of $12,071,339
and $397,196, respectively (equal to 1.34% and 0.10% of the Fund's
net assets represented by Class B and Class C shares, respectively,
on that date), which, as to Class B shares, have been carried over
into the present Plan year.
Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B and Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply at redemption:
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, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or the disability must have occurred after the account
was established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
to make distributions from retirement plans that qualify as
"substantially equal periodic payments" under Section 72(t) of the
Internal Revenue Code, provided the distributions do not exceed 10%
of the account value annually, measured from the date the Transfer
Agent receives the request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies";
distributions from OppenheimerFunds prototype 401(k) plans
and from certain Massachusetts Mutual Life Insurance Company
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; (5) for separation from service; or (6) for
loans to participants or beneficiaries; or
distributions from 401(k) plans sponsored by broker-dealers
that have entered into a special agreement with the Distributor
allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Buying Class Y Shares. Class Y shares are sold at net asset
value per share without sales charge directly to certain
institutional investors, such as insurance companies, registered
investment companies and employee benefit plans, that have special
agreements with the Distributor for this purpose. These include
Massachusetts Mutual Life Insurance Company, an affiliate of the
Manager, which may purchase Class Y shares of the Fund and other
Oppenheimer funds for asset allocation programs, investment
companies or separate investment accounts it sponsors and offers to
its customers. Individual investors are not able to invest in
Class Y shares directly.
While Class Y shares are not subject to initial or contingent
deferred sales charges or asset-based sales charges, an
institutional investor buying the shares for its customers'
accounts may impose charges on those accounts. The procedures for
purchasing, redeeming, exchanging, or transferring the Fund's other
classes of shares, and the special account features that apply to
those shares described elsewhere in this Prospectus (other than
provisions as to the timing of the Fund's receipt of purchase,
redemption and exchange orders) in general do not apply to Class Y
shares.
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. These include
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 call the Transfer Agent for more
information.
AccountLink privileges should be requested on your dealer's
settlement instructions if you buy your shares through your dealer.
After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as
to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your
account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer 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.
Shareholder Transactions by Fax. Requests for certain account
transactions may be sent to the Transfer Agent by fax (telecopier).
Please call 1-800-525-7048 for information about which transactions
are included. Transaction requests submitted by fax are subject to
the same rules and restrictions as written and telephone requests
described in this Prospectus.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even
set up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds 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 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.
This privilege 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 other employers
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 by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received 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 account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address Send courier or
for requests by mail: Express Mail requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue
Denver, Colorado 80217 Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
To redeem shares through a service representative, call
1-800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink 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 transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
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.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
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 of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. 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 obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
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 sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and
harm shareholders, the Fund reserves the right to refuse any
exchange request that will disadvantage it, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about taxes affecting exchanges, please refer to
"How to Exchange Shares" in the Statement of Additional
Information.
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 or improperly.
The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuate, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B, Class
C and Class Y shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange 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 taxable dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or employer identification
number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How To Buy Shares," you may be subject to a contingent deferred
sales charge when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B, Class C and Class Y shares from net investment income on
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 and Class Y shares generally are
expected to be higher than for Class B and Class C shares because
expenses allocable to Class B and Class C shares will generally be
higher.
During the Fund's fiscal year ended June 30, 1997, 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 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 its fiscal year which ended June 30. Long-term capital
gains will be separately identified in the tax information the Fund
sends you after the end of the calendar 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 have them 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 Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund 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 have 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.
Generally speaking a capital gain or loss is the difference between
the price you paid for the shares and the price you receive when
you sell 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 A
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.
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.
The investments in which the Fund will principally invest will be
in the lower-rated categories described below.
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.
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.
The investments in which the Fund will principally invest will
be in the lower-rated categories, described below.
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 B
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and
waivers for Class A, Class B and Class C shares of the Fund
described elsewhere in this Prospectus are modified as described
below for those shareholders of (i) Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value
Fund and Oppenheimer Quest Global Value Fund, Inc. on November 24,
1995, when OppenheimerFunds, Inc. became the investment adviser to
those funds, and (ii) Quest for Value U.S. Government Income Fund,
Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest
for Value National Tax-Exempt Fund and Quest for Value California
Tax-Exempt Fund when those funds merged into various Oppenheimer
funds on November 24, 1995. The funds listed above are referred to
in this Prospectus as the "Former Quest for Value Funds." The
waivers of initial and contingent deferred sales charges described
in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds
or (ii) purchased by such shareholder by exchange of shares of
other Oppenheimer funds that were acquired pursuant to the merger
of any of the Former Quest for Value Funds into an Oppenheimer fund
on November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
<PAGE>
Front-End Front-End Commission
Sales Charge Sales Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
- -------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -----------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages ___ and ___ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, Class B or Class C shares of
the Fund acquired by merger of a Former Quest for Value Fund into
the Fund or by exchange from an Oppenheimer fund that was a Former
Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
Class C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, Class B or Class C shares of
the Fund acquired by merger of a Former Quest for Value Fund into
the Fund or by exchange from an Oppenheimer fund that was a Former
Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to
November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those
distributions are made either (a) to an individual participant as
a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or
beneficiary; (2) returns of excess contributions to such retirement
plans; (3) redemptions other than from retirement plans following
the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan
(but only for Class B or Class C shares) where the annual
withdrawals do not exceed 10% of the initial value of the account;
and (5) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited
with the amount of any contingent deferred sales charge paid on the
redemption of any Class A, Class B or Class C shares of the Fund
described in this section if within 90 days after that redemption,
the proceeds are invested in the same Class of shares in this Fund
or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
Oppenheimer High Yield Fund
6803 South Tucson Way
Englewood, Colorado 80112
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder Servicing Agent
OppenheimerFunds 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 Statement of
Additional Statement, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds 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.________ * Printed on recycled paper
<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 Merrill Lynch High Yield Bond Master Index and Lehman
Brothers Corporate Bond 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 6/30/87 through 6/30/97, in the case of the Fund's Class
B shares, will cover the period from inception of the class
(5/3/93) through 6/30/97 and in the case of the Fund's Class C
shares, will cover the period from inception of the class (11/1/95)
through 6/30/97. Class Y shares were not available during the last
fiscal year and, accordingly, are not set forth below. The graph
will compare such values with hypothetical $10,000 investments over
the same time periods in the Merrill Lynch High Yield Bond Master
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 Merrill Lynch High
Yield Bond Master Index and Lehman Brothers Corporate Bond Index is
set forth in the Prospectus under "Fund Information - Management's
Discussion of Performance."
Fiscal Oppenheimer Merrill Lynch Lehman Brothers
Year High Yield High Yield Bond Corporate Bond
Ended Fund A Master Index Index
6/30/87 9,525 10,000 10,000
6/30/88 10,167 10,858 10,830
6/30/89 11,079 12,038 12,233
6/30/90 11,174 12,115 13,162
6/30/91 12,504 13,680 14,546
6/30/92 15,012 17,019 16,794
6/30/93 17,310 19,933 19,128
6/30/94 18,397 20,892 18,768
6/30/95 19,700 23,569 21,607
6/30/96 22,113 25,777 22,712
6/30/97 25,010 29,464 24,709
Fiscal Oppenheimer Merrill Lynch Lehman Brothers
Year High Yield High Yield Bond Corporate Bond
Ended Fund B Master Index Index
5/03/93 10,000 10,000 10,000
6/30/93 10,354 10,325 10,255
6/30/94 10,904 10,822 10,062
6/30/95 11,581 12,208 11,584
6/30/96 12,901 13,352 12,176
6/30/97 14,272 15,262 13,247
Fiscal Oppenheimer Merrill Lynch Lehman Brothers
Year High Yield High Yield Bond Corporate Bond
Ended Fund C Master Index Index
11/01/95 10,000 10,000 10,000
06/30/96 10,736 10,547 10,137
06/30/97 12,048 12,055 11,028
<PAGE>
Oppenheimer High Yield Fund
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048
Statement of Additional Information dated October 15, 1997
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 October 15, 1997. It should be read
together with the Prospectus, which may be obtained by writing to
the Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box
5270, Denver, Colorado 80217 or by calling the Transfer Agent at
the toll-free number shown above.
Contents
Page
About the Fund
Investment Objectives and Policies . . . . . . . . . . . . . . .
Investment Policies and Strategies. . . . . . . . . . . . .
Other Investment Techniques and Strategies. . . . . . . . .
Other Investment Restrictions . . . . . . . . . . . . . . .
How the Fund is Managed . . . . . . . . . . . . . . . . . . . .
Organization and History. . . . . . . . . . . . . . . . . .
Trustees and Officers of the Fund . . . . . . . . . . . . .
The Manager and Its Affiliates. . . . . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . . . . .
Distribution and Service Plans . . . . . . . . . . . . . . . . .
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . . . .
How To Sell Shares . . . . . . . . . . . . . . . . . . . . . . .
How To Exchange Shares . . . . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . . .
Additional Information About the Fund. . . . . . . . . . . . . .
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
ABOUT THE FUND
Investment Objectives and Policies
Investment Policies and Strategies. The investment objectives and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its objective.
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, OppenheimerFunds, Inc. (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 historical 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 S&P. 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. For example, federally
insured savings and loan associations have been required to divest
their investments in high yield bonds.
Warrants and Rights. Warrants and rights basically are
options to purchase equity securities at set prices valid for a
specified period of time. The price of warrants does not
necessarily move in a manner parallel to the prices of the
underlying securities. Rights are similar to warrants but normally
have a short duration and are distributed directly by the issuer to
its shareholders. 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 on mortgage-backed securities 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 affected 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 on a basis comparable with other debt securities, 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.
Due to 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 authorized the GNMA to guarantee the
timely payment of principal and interest on securities backed by a
pool of mortgages insured by the Federal Housing Administration
(the "FHA") or guaranteed by the Veterans Administration (the
"VA"). The GNMA guarantee is backed by the full faith and credit
of the U.S. Government. The 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"), 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 securities are
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 usually not exceeding 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 segregate or
identify with its Custodian, liquid assets of any type, including
equity and debt securities of any grade, 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. However,
the Fund may sell when-issued securities and forward commitments
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.
Mortgage-Backed Security Rolls. The Fund may enter into
"forward roll" transactions with respect to mortgage-backed
securities in which it can invest. In a forward roll transaction,
which is considered to be a borrowing by the Fund, the Fund will
sell a mortgage security to selected banks or other entities and
simultaneously agree to repurchase a similar security (same type,
coupon and maturity) from the institution at a specified later date
at an agreed upon price. The mortgage securities that are
repurchased will bear the same interest rate as those sold, but
generally will be collateralized by different pools of mortgages
with different prepayment histories than those sold. Risks of
mortgage-backed security rolls include: (i) the risk of prepayment
prior to maturity, (ii) the risk that the Fund may not be entitled
to receive interest and principal payments on the securities sold
and that the proceeds of the sale may have to be invested in money
market instruments (typically repurchase agreements) maturing not
later than the expiration of the roll, and (iii) the risk that the
market value of the securities sold by the Fund may decline below
the price at which the Fund is obligated to purchase the
securities. The Fund will enter into only "covered" rolls. Upon
entering into a mortgage-backed security roll, the Fund will be
required to identify or segregate liquid assets of any type
including equity and debt securities with its Custodian in an
amount equal to its obligation under the roll.
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 purchases 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) which must meet credit
requirements set by the Fund's Board of Trustees from time to time
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. 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 ("Futures"), (ii) buy puts on
securities indices or on securities, or (iii) write covered calls
on securities 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 currency contracts. Additionally, the Fund may write
covered call options and put options to attempt to increase the
Fund's income.
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" unless subject to a buy-back agreement
with the executing broker. 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. No monetary amount is paid or
received by the Fund on the purchase or sale of an Interest Rate
Future. The obligation underlying the Interest Rate Futures may be
satisfied by actual delivery of the security or by entering into an
offsetting contract.
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.
At any time prior to expiration of the Future, the Fund may
elect to close out its position by taking an opposite position, at
which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
At that time the Fund will realize a gain or a loss. 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 futures contracts, on a financial index
composed of several underlying securities. Financial Futures are
similar to Interest Rate Futures except that settlement is made in
cash instead of actual delivery, 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.
The Fund may also enter into a forward contract to sell a
foreign currency other than that in which the underlying security
is denominated. This may be 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 or, as a tactical allocation to take advantage of
differences in foreign interest rates. This technique is referred
to as "cross hedging." Cross hedges may be established with the
U.S. dollar as the base currency or with another currency
correlated with the U.S. dollar as the base.
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, the U.S. dollar
and other base currencies correlated with the U.S. dollar. To the
extent that these correlations are 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 cross hedges to effect a transaction hedge.
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 a foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a Forward Contract to sell an amount of that
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency
for a fixed U.S. dollar amount. Conversely, if the Fund believes
that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a Forward Contract to buy that
foreign currency for a fixed U.S. dollar amount. Additionally, the
Fund may use a cross hedge to effect a position 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 or accept delivery
of 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 differed on 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 Call Options. The Fund may write (i.e. sell) call
options ("calls") on equity and debt securities that are traded on
U.S. and foreign securities exchanges and over-the-counter markets,
to enhance income through the receipt of premiums from expired
calls and any net profits from closing purchase transactions.
After any such sale up to 100% of the Fund's total assets may be
subject to calls. All such calls written by the Fund must be
"covered" while the call is outstanding (i.e. the Fund must own the
securities subject to the call or other securities acceptable for
applicable escrow requirements). Calls on Futures (discussed
below) must be covered by the underlying Futures Contract,
deliverable securities or by liquid assets segregated to satisfy
the Futures contract. When the Fund writes a call on a security it
receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call on the same security during the
call period at a fixed exercise price (which may differ from the
market price of the underlying security), regardless of market
price changes during the call period. The Fund has retained the
risk of loss should the price of the underlying security decline
during the call period, which may be offset to some extent by the
premium.
To terminate its obligation on a call it has written, the Fund
may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of the option transaction costs and
the premium received on the call written was more or less than the
price of the call subsequently purchased. A profit may also be
realized if the call lapses unexercised, because the Fund retains
the underlying investment and the premium received. Any such
profits are considered short-term capital gains for Federal income
tax purposes, and when distributed by the Fund are taxable as
ordinary income. If the Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the
callable investments until the call lapsed or was exercised.
The Fund may also write calls on Futures contracts it owns,
provided that at the time the call is written, the Fund covers the
call by securities or other liquid assets the Fund owns and
segregates to enable it to satisfy its obligations if the call is
exercised. The Fund will segregate additional liquid assets if the
value of the escrowed assets drops below 100% of the current value
of the Future. In no circumstances would an exercise notice
require the Fund to deliver a futures contract; it would simply put
the Fund in a short futures position, which is permitted by the
Fund's hedging policies.
Writing Put Options. The Fund may write put options on
equity and debt securities or Futures but only if such puts are
covered by segregated liquid assets. The Fund will not write puts
if, as a result, more than 50% of the Fund's net assets would be
required to be segregated to cover such put obligations. In
writing puts, there is the risk that the Fund may be required to
buy the underlying security at a disadvantageous price. A put
option on securities gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying investment at the
exercise price during the option period. Writing a put covered by
segregated liquid assets equal to the exercise price of the put has
the same economic effect to the Fund as writing a covered call.
The premium the Fund receives from writing a put option represents
a profit, as long as the price of the underlying investment remains
above the exercise price. However, the Fund has also assumed the
obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even
though the value of the investment may fall below the exercise
price. If the put lapses unexercised, the Fund (as the writer of
the put) realizes a gain in the amount of the premium. If the put
is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price, which will usually
exceed the market value of the investment at that time. In that
case, the Fund may incur a loss, equal to the sum of the current
market value of the underlying investments any transaction costs
incurred minus the sum of the exercise price and the premium
received.
When writing put options on securities, to secure its
obligation to pay for the underlying security, the Fund will
deposit in escrow liquid assets with a value equal to or greater
than the exercise price of the put option. 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 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 above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax
purposes, and when distributed by the Fund, are taxable as ordinary
income.
Purchasing Calls and Puts. The Fund may purchase calls on
equity or debt securities, indices, foreign currencies and Futures
that are traded on U.S. and foreign securities exchanges and the
U.S. over-the-counter markets, in order to protect against the
possibility that the Fund's portfolio will not fully participate in
an anticipated rise in value of the long-term debt securities
market. The value of equity or debt securities underlying calls
purchased by the Fund will not exceed the value of the portion of
the Fund's portfolio invested in cash or cash equivalents (i.e.
securities with maturities of less than one year). When the Fund
purchases a call (other than in a closing purchase transaction), it
pays a premium and, except as to calls on indices or Futures, has
the right to buy the underlying investment from a seller of a
corresponding call on the same investment during the call period at
a fixed exercise price. When the Fund purchases a call on an index
or Future, it pays a premium, but settlement is in cash rather than
by delivery of the underlying investment to the Fund. In
purchasing a call, the Fund benefits only if the call is sold at a
profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the
transaction costs and the premium paid and the call is exercised.
If the call is not exercised or sold (whether or not at a profit),
it will become worthless at its expiration date and the Fund will
lose its premium payment and the right to purchase the underlying
investment.
The Fund may purchase put options ("puts") which relate to
equity or debt securities (whether or not it holds such securities
in its portfolio), indices, foreign currencies or Futures. When
the Fund purchases a put, it pays a premium and, except as to puts
on indices, has the right to sell the underlying investment to a
seller of a corresponding put on the same investment during the put
period at a fixed exercise price. Buying a put on an investment
the Fund owns enables the Fund to protect itself during the put
period against a decline in the value of the underlying investment
below the exercise price by selling such underlying investment at
the exercise price to a seller of a corresponding put. If the
market price of the underlying investment is equal to or above the
exercise price and as a result the put is not exercised or resold,
the put will become worthless at its expiration date, and the Fund
will lose its premium payment and the right to sell the underlying
investment. The put may, however, be sold prior to expiration
(whether or not at a profit.)
Buying a put on an investment it does not own, either a put on
an index or a put on a Future not held by the Fund, permits the
Fund either to resell the put or buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price and as a result the put is not exercised, the put will become
worthless on its expiration date. In the event of a decline in the
stock market, the Fund could exercise or sell the put at a profit
to attempt to offset some or all of its loss on its portfolio
securities. When the Fund purchases a put on an index, or on a
Future not held by it, the put protects the Fund to the extent that
the index or Future moves in a similar pattern to the securities
held. In the case of a put on an index or Future, settlement is in
cash rather than by delivery by the Fund of the underlying
investment.
Puts and calls on broadly-based indices or Futures are similar
to puts and calls on securities or futures contracts except that
all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock
market generally) rather than on price movements in individual
securities or futures contracts. When the Fund buys a call on an
index or Future, it pays a premium. During the call period, upon
exercise of a call by the Fund, a seller of a corresponding call on
the same investment will pay the Fund an amount of cash to settle
the call if the closing level of the index or Future upon which the
call is based is greater than the exercise price of the call. That
cash payment is equal to the difference between the closing price
of the index and the exercise price of the call times a specified
multiple (the "multiplier") which determines the total dollar value
for each point of difference. When the Fund buys a put on an index
or Future, it pays a premium and has the right during the put
period to require a seller of a corresponding put, upon the Fund's
exercise of its put, to deliver to the Fund an amount of cash to
settle the put if the closing level of the index or Future upon
which the put is based is less than the exercise price of the put.
That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
An option position may be closed out only on a market which
provides secondary trading for options of the same series and there
is no assurance that a liquid secondary market will exist for any
particular option. The Fund's option activities may affect its
turnover rate and brokerage commissions. The exercise by the Fund
of puts on securities will cause the sale of related investments,
increasing portfolio turnover. Although such exercise is within
the Fund's control, holding a put might cause the Fund to sell the
related investments for reasons which would not exist in the
absence of the put. The Fund will pay a brokerage commission each
time it buys a put or call, sells a call, or buys or sells an
underlying investment in connection with the exercise of a put or
call. Such commissions may be higher than those which would apply
to direct purchases or sales of such underlying investments.
Premiums paid for options are small in relation to the market value
of the related investments, and consequently, put and call options
offer large amounts of leverage. The leverage offered by trading
in options could result in the Fund's net asset value being more
sensitive to changes in the value of the underlying investments.
Options on Foreign Currencies. The Fund intends to write
and purchase calls on foreign currencies. The Fund may purchase
and write puts and calls on foreign currencies that are traded on
a securities or commodities exchange or quoted by major recognized
dealers in such options, for the purpose of protecting against
declines in the dollar value of foreign securities and against
increases in the dollar cost of foreign securities to be acquired.
If a rise is anticipated in the dollar value of a foreign currency
in which securities to be acquired are denominated, the increased
cost of such securities may be partially offset by purchasing calls
or writing puts on that foreign currency. If a decline in the
dollar value of a foreign currency is anticipated, the decline in
value of portfolio securities denominated in that currency may be
partially offset by writing calls or purchasing puts on that
foreign currency. However, in the event of currency rate
fluctuations adverse to the Fund's position, it would lose the
premium it paid and transactions costs. A call written on a
foreign currency by the Fund is covered if the Fund owns the
underlying foreign currency covered by the call or has an absolute
and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration
held in a segregated account by its custodian) upon conversion or
exchange of other foreign currency held in its portfolio. A call
may be written by the Fund on a foreign currency to provide a hedge
against a decline due to an expected adverse change in the exchange
rate in the U.S. dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in a currency
other than that underlying the option. This is a crosshedging
strategy. In such circumstances, the Fund collateralizes the
option by maintaining in a segregated account with the Fund's
custodian, cash or U.S. Government Securities in an amount not less
than the value of the underlying foreign currency in U.S. dollars
marked-to-market daily.
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." The value
of securities subject to interest rate swaps will not exceed 25% of
the Fund's total assets.
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 exempted from registration with the CFTC as
a "commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not
limit the percentage of the Fund's assets that may be used for
Futures margin and related 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 through one or more brokers. Thus, the
number of options which the Fund may write or hold may be affected
by options written or held by other entities, including other
investment companies having the same 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. That qualification enables the Fund to
"pass through" its income and realized capital gains to
shareholders without the Fund having to pay taxes on them. This
avoids a "double tax" on that income and capital gains, since
shareholders will be taxed on the dividends and capital gains they
receive than the Fund.
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
market-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 and timing of gains (or losses) recognized
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 securities (due to an
increase in interest rates) that the prices of such Futures will
correlate imperfectly with the behavior of the cash (i.e., market
value) prices of the Fund's portfolio securities. The ordinary
spreads between prices in the cash and futures markets are subject
to distortions due to differences in the natures of those markets.
First, all participants in the futures markets are subject to
margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close out
futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depend on
participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view
of speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
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 objectives 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 0.5% 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.
issue "senior securities", but this does not prohibit it
from borrowing money or entering into margin, collateral or escrow
arrangements, in each case as permitted by its other investment
policies.
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 Real Asset Fund, Oppenheimer Total Return
Fund, Inc., Oppenheimer Equity Income Fund, Oppenheimer Cash
Reserves, Oppenheimer Strategic Income Fund, Centennial America
Fund, L.P., The New York TaxExempt Income Fund, Inc., Oppenheimer
Variable Account Funds, Oppenheimer Champion Income Fund,
Oppenheimer International Bond Fund, Oppenheimer Main Street Funds,
Inc., Oppenheimer Integrity Funds, Oppenheimer Limited-Term
Government Fund, Oppenheimer Municipal Fund, Panorama Series Fund,
Inc., 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 Oppenheimer funds") except for (i) Mr.
Fossel who is a Trustee, Director, or Managing General Partner of
all the Denver-based Oppenheimer funds except Centennial New York
Tax Exempt Trust and Centennial America Fund, L.P. and (ii) Ms.
Macaskill who is a Trustee, Director or Managing General Partner of
all the Denver-based Oppenheimer funds except Oppenheimer Integrity
Funds, Panorama Series Fund, Inc., Oppenheimer Strategic Income
Fund and Oppenheimer Variable Account Funds. Messrs. Bishop,
Bowen, Donohue, Farrar and Zack hold similar positions as officers
of all such funds. Ms. Macaskill is President and Mr. Swain is
Chairman and Chief Executive Officer of the Denver-based
Oppenheimer funds. As of September 26, 1997, 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 of the officers
listed below, Ms. Macaskill and Mr. Donohue, are trustees) other
than shares beneficially owned under that plan by the officers of
the Fund listed above.
Robert G. Avis, Trustee*; Age 66
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 82
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age 67
1501 Quail Street, Newport Beach, California 92660
Chairman and Chief Executive Officer of Universal Space Lines, Inc.
(a space services management company); formerly Vice President of
McDonnell Douglas Space Systems Co. and associated with the
National Aeronautics and Space Administration.
Jon S. Fossel, Trustee; Age 55
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Member of the Board of Governors of the Investment Company
Institute (a natural trade association of investment companies),
Chairman of the Investment Company Institute Education Foundation;
Formerly Chairman and a director of the Manager, President and a
Director of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company, Shareholder Services, Inc. ("SSI"), and
Shareholder Financial Services, Inc. ("SFSI") transfer agent
subsidiaries of the Manager.
Sam Freedman, Trustee; Age: 56
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds
Services, Chairman, Chief Executive Officer and a director of SSI,
Chairman, Chief Executive Officer and director of SFSI, Vice
President and director of OAC and a director of the Manager.
Raymond J. Kalinowski, Trustee; Age 68
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International Inc. (a computer
products training company); 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 75
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
Robert M. Kirchner, Trustee; Age 75
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill, President and Trustee*; Age: 49
President, Chief Executive Officer and a Director of the Manager
and HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; Chairman and a director of SSI and SFSI;
President and a director of OAC and Oppenheimer Partnership
Holdings, Inc., a holding company subsidiary of the Manager; a
director of Oppenheimer Real Asset Management, Inc.; a director
of the NASDAQ Stock Market, Inc. and Hillsdown Holdings plc (a U.K.
food company); formerly an Executive Vice President of the Manager.
</R.
<PAGE>
Ned M. Steel, Trustee; Age 81
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, Chief Executive Officer and Trustee*; Age
62
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager; formerly President and Director of
Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"); formerly Chairman of the
Board of SSI.
Ralph W. Stellmacher, Vice President and Portfolio Manager; Age 38
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager; an officer of other
Oppenheimer funds.
Andrew J. Donohue, Vice President and Secretary; Age 46
Two World Trade Center, New York, New York 10048
Executive Vice President, General Counsel and a Director of the
Manager, OppenheimerFunds Distributor, Inc. (the "Distributor"),
HarbourView, SSI, SFSI, Oppenheimer Partnership Holdings, Inc. and
MultiSource Services Inc. (a broker-dealer); President and a
director of Centennial; President and a director of Oppenheimer
Real Asset Management, Inc.; Secretary and General Counsel of OAC;
an officer of other Oppenheimer funds.
George C. Bowen, Vice President, Assistant Secretary and Treasurer;
Age 61
6803 South Tucson Way, Englewood, Colorado 80112
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; President, Treasurer and a Director of Centennial
Capital Corporation; Senior Vice President, Treasurer and Secretary
of SSI and Vice President, Treasurer and Secretary of SFSI;
Treasurer of OAC; Treasurer of Oppenheimer Partnership Holdings,
Inc; Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc., Chief Executive Officer, Treasurer and a director
of MultiSource Services, Inc.; an officer of other Oppenheimer
funds.
Robert J. Bishop, Assistant Treasurer; Age 38
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Scott Farrar, Assistant Treasurer; Age 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Robert G. Zack, Assistant Secretary; Age 49
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
_____________________
* A Trustee who is an "interested person" as defined in the
Investment Company Act.
Remuneration of Trustees. The officers of the Fund and
two Trustees of the Fund (Ms. Macaskill and Mr. Swain) who are
affiliated with the Manager receive no salary or fee from the Fund.
Mr. Fossel did not receive any salary or fees from the Fund prior
to January 1, 1997. The remaining Trustees of the Fund received
the compensation shown below. The compensation from the Fund was
paid during its fiscal year ended June 30, 1997. The compensation
from all of the Denver-based Oppenheimer funds includes the Fund
and is compensation received as a director, trustee, managing
general partner or member of a committee of the Board during
calendar year 1996.
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund Oppenheimer funds1
Robert G. Avis $6,906 $58,003
Trustee
William A. Baker $9,489 $79,715
Audit and Review Committee
Ex-officio member2 and Trustee
Charles Conrad, Jr. $8,894 $74,717
Trustee3
Jon S. Fossel $3,205 None
Trustee
Sam Freedman $5,087 $29,502
Audit and Review Committee
Member2 and Trustee
Raymond J. Kalinowski $8,486 $74,173
Audit and Review Committee
Member2 and Trustee
C. Howard Kast $8,860 $74,173
Audit and Review Committee
Chairman2 and Trustee
Robert M. Kirchner $8,894 $74,717
Trustee3
Ned M. Steel $6,906 $58,003
Trustee
______________________
(1) For the 1996 calendar year.
(2) Committee positions effective July 1, 1997.
(3) Prior to July 1, 1997, Messrs. Conrad and Kirchner were also
members of the Audit and Review Committee.
Major Shareholders. As of September 26, 1997 no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund as a whole or the Fund's outstanding Class A,
Class B, Class C or Class Y shares, except: Merrill Lynch Pierce
Fenner & Smith, 4800 Deer Lake Drive, East, Jacksonville, Florida
32246 who owned 4,724,569.758 Class B shares and 535,108.607 Class
C shares (7.78% and 19.06%, respectively, of then 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 (Ms.
Macaskill and Mr. 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 (the "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, 1995, 1996 and 1997, the management fees paid by the Fund to
the Manager were $7,542,307, $8,502,884 and $9,226,623
respectively.
The Advisory Agreement contains no expense limitation.
However, because of state regulations limiting fund expenses that
previously applied, the Manager had voluntarily undertaken that the
Fund's total expenses in any fiscal year (including the investment
advisory fee but excluding taxes, interest, brokerage commissions,
distribution plan payments and any extraordinary nonrecurring
expenses, including litigation costs) would not exceed the most
stringent state regulatory limitation applicable to the Fund. Due
to changes in federal securities laws, such state regulations no
longer apply and the Manager's undertaking is therefore
inapplicable and has been withdrawn. During the Fund's last fiscal
year, the Fund's expenses did not exceed the most stringent state
regulatory limit and the voluntary undertaking was not
invoked.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard for its obligations and duties
under the advisory agreement, the Manager is not liable for any
loss resulting from a good faith error or omission on its part with
respect to any of its duties thereunder. The Advisory Agreement
permits the Manager to act as investment adviser for any other
person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as
investment adviser or general distributor. If the Manager shall no
longer act as investment adviser to the Fund, the right of the Fund
to use the name "Oppenheimer" as part of its name may be withdrawn.
The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class
A, Class B, Class C and Class Y shares but is not obligated to sell
a specific number of shares. Expenses normally attributable to
sales (other than those paid under the Distribution and Service
Plans, 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, 1995, 1996 and 1997, the aggregate amount of sales charges
on sales of the Fund's Class A shares were $2,629,870, $2,823,797
and $2,724,041, respectively, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $624,955,
$688,648 and $719,342 in those respective years. The contingent
deferred sales charges collected by the Distributor on the
redemption of Class B shares for the fiscal years ended June 30,
1995, 1996 and 1997 totaled $333,734, $765,717 and $975,794,
respectively. The contingent deferred sales charges collected on
the Fund's Class C shares for the fiscal period November 1, 1995
through June 30, 1996 and the fiscal year ended June 30, 1997
totaled $733 and $18,172, respectively, all of which the
Distributor retained. 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. OppenheimerFunds 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 such 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 Manager provides information as to
the commissions paid to brokers furnishing such services, together
with the Manager's representation that the amount of such
commissions was reasonably related to the value or benefit of such
services.
During the Fund's fiscal years ended June 30, 1995, 1996 and
1997, total brokerage commissions paid by the Fund (not including
any spreads or concessions on principal transactions on a net trade
basis) amounted to $73,086, $37,308 and $141,722, respectively.
During the fiscal year ended June 30, 1997, $11,884 was paid to
brokers as commissions in return for research services; the
aggregate dollar amount of these transactions was $4,879,736. 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 Y shares because no Class Y shares were
publicly offered during the fiscal year ended June 30, 1997.
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 advertised class of
shares of the Fund for the 1, 5, and 10-year periods (or the life
of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a
basis for comparison with other investments. An investment in the
Fund is not insured; its returns and share prices are not
guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of Class A, Class B, Class C and Class Y shares of the Fund
are affected by portfolio quality, the type of investments the Fund
holds and its operating expenses allocated to the particular class.
Yields
Standardized Yield. The standardized yield (referred to as
"yield") is shown for a class of shares for a stated 30-day period.
It 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 for that period. It may therefore differ from the
"dividend yield" for the same class of shares, described below. It
is calculated using the following formula set forth in rules
adopted by the Securities and Exchange Commission designed to
assure uniformity in the way that all funds calculate their 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 for a 30-day period may differ from
the yield for other periods. 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.
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 any 30-day
period. For the 30-day period ended June 30, 1997, the
standardized yields for the Fund's classes of shares were as
follows:
Without Deducting Sales Charge With Sales Charge
Deducted
Class A: 8.47% 8.44%
Class B: 8.05% N/A
Class C: 8.03% N/A
Dividend Yield. The Fund may quote a "dividend yield" for
each class of its shares. Dividend yield is based on the dividends
paid on shares of a class during the actual dividend period. To
calculate dividend yield, the dividends of a class declared during
a stated period are added together and the sum is multiplied by 12
(to annualize the yield) and divided by the maximum offering price
on the last day of the dividend period. The formula is shown
below:
Dividend yield = dividends paid x 12/maximum offering price (payment date)
The maximum offering price for Class A shares includes the
current maximum initial sales charge. The maximum offering price
for Class B and Class C shares is the net asset value per share,
without considering the effect of contingent deferred sales
charges. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.
The dividend yields for the dividend period ended June 30,
1997 were as follows:
Without Deducting Sales Charge With Sales Charge Deducted
Class A: 8.67% 8.26%
Class B: 8.00% N/A
Class C: 7.94% N/A
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:
1/n
(ERV)
(---) -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. Class Y shares are not subject to a sales charge.
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, 1997 were 7.73%, 9.67% and 9.60%, respectively. During a
portion of the periods for which total returns are shown for Class
A shares, the Fund's maximum initial sales charge rate was higher;
as a result, performance returns on actual investments during those
periods may be lower than the results shown. The average annual
total returns on an investment in Class B shares of the Fund for
the one-year period ended June 30, 1997 and for the period from May
3, 1993 (inception of the Class) through June 30, 1997 were 7.18%
and 8.93%, respectively. The average annual total returns on an
investment in Class C shares of the Fund for the one-year period
ended June 30, 1997 and for the period from November 1, 1995 to
June 30, 1997 were 11.23% and 11.85%, respectively.
The cumulative total return on Class A shares for the ten year
period ended June 30, 1997 was 150.09%. The cumulative total
return on Class B shares for the period from May 3, 1993 through
June 30, 1997 was 42.72%. The cumulative total return on Class C
shares for the period from November 1, 1995 to June 30, 1997 was
20.48% .
Total Returns at Net Asset Value. From time to time the
Fund may also quote an average annual total return at net asset
value or a cumulative total return at net asset value for Class A,
Class B, Class C or Class Y shares. Each is based on the
difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of
shares (without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
The average annual total returns at net asset value for the
one, five and ten-year periods ended June 30, 1997 for Class A
shares were 13.10%, 10.75% and 10.13%, respectively. The
cumulative total return at net asset value of the Fund's Class A
shares for the ten-year period ended June 30, 1997 was 162.57%.
The average annual total returns at net asset value for Class B
shares for the fiscal year ended June 30, 1997 and for the period
from May 3, 1993 through June 30, 1997 were 12.18% and 9.30%,
respectively. For Class B shares, the cumulative total return at
net asset value for the period from May 3, 1993 through June 30,
1997 were 44.72%. The average annual total returns at net asset
value for Class C shares for the fiscal year ended June 30, 1997
and for the period from November 1, 1995 to June 30, 1997 were
12.23% and 11.85%, respectively. For Class C shares, the
cumulative total return at net asset value for the period from
November 1, 1995 through June 30, 1997 was 20.48% .
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B, Class C
or Class Y shares. However, when comparing total return of an
investment in each class of share 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, Class C or Class Y
shares by Lipper Analytical Services, Inc. ("Lipper"), a
widelyrecognized independent mutual fund monitoring service.
Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods
based on categories relating to investment objectives. The
performance of the Fund's classes are ranked against (i) all other
funds (excluding money market funds), (ii) all other high current
yield 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 star ranking of the
performance of its Class A, Class B, Class C or Class Y shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories:
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
return. The Fund is ranked among the taxable bond funds.
Investment return measures a fund's or class's one, three, five and
ten-year average annual total returns (depending on the inception
of the fund a class) in excess of 90-day U.S. Treasury bill returns
after considering the fund's sales charges and expenses. Risk
measures a fund's or class's performance below 90-day U.S. Treasury
bill returns. Risk and investment return are combined to produce
star rankings reflecting performance relative to the average fund
in a fund's category. Five stars is the "highest" ranking (top
10%), four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). The current star ranking is the
fund's or class's 3-year ranking or its combined 3- and 5-year
ranking (weighted 60%/40% respectively, or its combined 3-. 5- and
10-year ranking (weighted 40%, 30% and 30%, respectively),
depending on the inception of the fund or class. Rankings are
subject to change monthly.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
ranking, Morningstar also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's
investments objective. Morningstar's four broad categories are
each further subdivided into categories based on types of
investments and investment styles. Those comparisons by
Morningstar are based on the same risk and return measurements as
its star rankings but do not consider the effect of sales charges.
The total return on an investment in the Fund's Class A, Class
B, Class C or Class Y shares may be compared with performance for
the same period of the Merrill Lynch High Yield Bond Master Index
as described in the Prospectus. The Index includes a factor for
the investment of interest but does not reflect expenses or taxes.
The performance of the Fund's Class A, Class B, Class C or
Class Y shares may also be compared in publications to (i) the
performance of various market indices or to other investments for
which reliable performance data is available, and (ii) to averages,
performance rankings or other benchmark prepared by recognized
mutual fund statistical services.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B, Class C
or Class Y shares. However, when comparing total return of an
investment in Class A, Class B, Class C and Class Y shares of the
Fund, a number of factors should be considered before using such
information as a basis for comparison with other investments. For
example, investors may also wish to compare the Fund's Class A,
Class B, Class C or Class Y shares 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 or
insured 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 of
the Fund under Rule 12b-1 of the Investment Company Act pursuant to
which the Fund makes payments to the Distributor in connection with
the distribution and/or servicing of the shares of that class, as
described in the Prospectus. No such Plan has been adopted for
Class Y shares. Each Plan has been approved by a vote of (i) the
Board of Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the Investment Company Act) of the shares
of each class. For the Distribution and Service Plan for Class B
and Class C shares, the vote was cast by the Manager as the sole
initial holder of Class B and 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) at no cost to the
Fund to make payments to brokers, dealers or other financial
institutions (each is referred to as a "Recipient" under the Plans)
for distribution and administrative services they perform . The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at
a meeting called for the purpose of voting on such continuance.
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 by a Securities and Exchange Commission rule 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, describing the amount of all
payments and the purpose of the payments. 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.
The Class A and Class B reports must also identify each Recipient
that received payments. Those reports 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. 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, 1997, payments
under the Class A Plan totaled $2,322,035, all of which was paid by
the Distributor to Recipients, including $37,465 paid to MML
Investor Services, Inc. ("MMLISI"), an affiliate of the
Distributor. Payments made under the Class B Plan during that
fiscal period totaled $3,345,679, of which $2,779,601 was retained
by the Distributor and $7,271 was paid to MMLISI. Payments made
under the Class C Plan during that period totaled $175,760, of
which $147,841 was retained by the Distributor.
Any unreimbursed expenses incurred by the Distributor with
respect to lass 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 assetbased 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 presently intends to pay the service fee to
Recipients in the manner described above. If a dealer has a
special arrangement with the Distributor, the Distributor will pay
the asset-based sales charge and service fee on Class B and C
shares to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase. A
minimum holding period may be established from time to time under
the Class B and Class C Plans by the Board. 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 Conduct Rules
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 for selling Class
B shares.
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 and Class C shares of the Fund. Such payments are made in
recognition that the Distributor (i) pays sales commissions to
authorized brokers and dealers at the time of sale 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.
The Class B and Class Plans allow for the carry-forward of
distribution expenses, to be recovered from asset-based sales
charges in subsequent fiscal periods, as above and described in the
Prospectus. 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.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares permits an
investor to choose the method of purchasing shares that is more
beneficial to the investor depending on the amount of the purchase,
the length of time the investor expects to hold shares and other
relevant circumstances. Investors should understand that the
purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B and Class C shares are the
same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other.
The Distributor will not accept (i) any order for $500,000 or more
of Class B shares or $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. A fourth
class of shares may be purchased only by certain institutional
investors at net asset value per share (the "Class Y shares").
The four 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 such Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, including the
asset-based sales charge to which Class B and Class C shares are
subject.
The 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, Class C and Class
Y 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 net 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 (a) Distribution and/or Service Plan
fees, (b) transfer and shareholder servicing agent fees and
expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B, Class C and Class Y shares of the
Fund are determined as of the close of business of The New York
Stock Exchange (the "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 other days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's
most recent annual announcement (which is subject to change) states
that it will close on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a portion of its assets in foreign securities primarily
listed on foreign exchanges which may trade on Saturdays or
customary U.S. business holidays on which the Exchange is closed.
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 U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. 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 sale prices of the preceding trading day, or
closing "bid" prices that day); (ii) securities traded on a foreign
securities exchange are generally valued at the last sale 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 or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) longterm debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "asked" prices determined by a portfolio pricing service
approved by the Fund's Board of Trustees or obtained by the Manager
from two active market makers in the security on the basis of
reasonable inquiry; (iv) debt instruments having a maturity of more
than 397 days when issued, and non-money market type instruments
having a maturity of 397 days or less when issued, which have a
remaining maturity of 60 days or less are valued as in (iii) above;
(v) money market-type debt securities held by a non-money market
fund that had a maturity of less than 397 days when issued that
have a remaining maturity of 60 days or less, and debt instruments
held by a money market fund that have a remaining maturity of 397
days or less, shall be valued at cost, adjusted for amortization of
premiums and accretion of discount; and (vi) securities (including
restricted securities) not having readily-available market
quotations are valued at fair value determined under the Board's
procedures. If the Manager is unable to locate two market makers
willing to give quotes (see (ii), (iii) and (iv) above), the
security may be priced at the mean between the "bid" and "asked"
prices provided by a single active market maker (which in certain
cases may be the "bid" price if no "asked" price is available).
In the case of U.S. Government Securities, asset-backed
securities and and mortgage-backed securities, where last sale
information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable
instruments on the basis of quality, yield, maturity and other
special factors involved. The Manager may use pricing services
approved by the Board of Trustees to price U.S. Government
Securities for which last sale information is not generally
available. The Manager will monitor the accuracy of such pricing
services, which may include comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
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 securities 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
cause a material change in 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 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. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
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 ("ACH") 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-inlaw, brothers and sisters, sons- and daughters-in-law,
aunts, uncles, nieces, nephews, a sibling's spouse and a spouse's
siblings. Relations by virtue of a remarriage (step-children,
step-parents, etc.) are included.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Limited Term New York Municipal Fund
Oppenheimer Bond Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Global Fund
Oppenheimer Global Securities Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Growth & Income Fund
Oppenheimer High Income Fund
Oppenheimer High Yield Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Money Fund
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Bond Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Panorama Series Fund Inc.
Rochester Fund Municipals
The New York Tax Exempt Income Fund, Inc.
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except 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 total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
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 total minimum investment specified under the
Letter is completed within the thirteen-month Letter of Intent
period, the escrowed shares will be promptly released to the
investor.
(3) If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. 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 sold with a front-end
sales charge or Class B shares of one of the other Oppenheimer
funds that were acquired subject to a 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. If you make payments from your bank account to
purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to
the investment dates selected in the Account Application. Neither
the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares resulting from
delays in ACH transmission.
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.
By choosing the Checkwriting privilege, whether you do so by
signing the Account Application or by completing a Checkwriting
card, the individuals signing (1) represent that they are either
the registered owner(s) of the shares of the Fund, or are an
officer, general partner, trustee or other fiduciary or agent, as
applicable, duly authorized to act on behalf of such registered
owner(s); (2) authorize the Fund, its Transfer Agent and any bank
through which the Fund's drafts ("checks") are payable (the
"Bank"), to pay all checks drawn on the Fund account of such
person(s) and to effect a redemption of sufficient shares in that
account to cover payment of such checks; (3) specifically
acknowledge(s) that if you choose to permit a single signature on
checks drawn against joint accounts, or accounts for corporations,
partnerships, trusts or other entities, the signature of any one
signatory on a check will be sufficient to authorize payment of
that check and redemption from an account even if that account is
registered in the names of more than one person or even if more
than one authorized signature appears on the Checkwriting card or
the Application, as applicable; and (4) understand(s) that the
Checkwriting privilege may be terminated or amended at any time by
the Fund and/or the Bank and neither shall incur any liability for
such amendment or termination or for effecting redemptions to pay
checks reasonably believed to be genuine, or for returning or not
paying checks which have not been accepted for any reason.
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 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 that you purchase subject to an initial sales
charge or Class A contingent deferred sales charge, which was paid
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed. This privilege does not apply
to Class C shares or Class Y shares. The reinvestment may be made
without sales charge only in Class A shares of the Fund or any of
the other Oppenheimer funds into which shares of the Fund are
exchangeable as described in "How to Exchange Shares" below, 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 or
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFundssponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profitsharing 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 the Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-sponsored
prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension plans or 401(k) 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 on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives 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 signatureguaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before
the date you select in the Account Application. If a contingent
deferred sales charge applies to the redemption, the amount of the
check or payment will be reduced accordingly. The Fund cannot
guarantee receipt of a payment on the date requested 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 "Waivers of Class B and Class C Sales
Charges".
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below 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 such 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. Neither the Fund nor the Transfer
Agent shall incur any 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
dividendreinvestment, uncertificated account unless and until
proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C
shares except Oppenheimer Money Market Fund, Inc., Centennial Money
Market Trust, Centennial Tax-Exempt Trust, Centennial Government
Trust, Centennial New York Tax-Exempt Trust, Centennial California
Tax-Exempt Trust, Centennial America Fund, L.P., and Daily Cash
Accumulation Fund, Inc., which only offer Class A shares and
Oppenheimer Main Street California Tax-Exempt Fund which only
offers Class A and Class B shares, (Class B and Class C shares of
Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A current list showing
which funds offer which class can be obtained by calling the
distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds. Exchanges to Class M shares of Oppenheimer Bond Fund for
Growth are permitted from Class A shares of Oppenheimer Money
Market Fund, Inc. or Oppenheimer Cash Reserves that were acquired
by exchange from Class M shares. Otherwise no exchanges of any
class of any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any
unit investment trust for which reinvestment arrangements have been
made with the Distributor may be exchanged at net asset value for
shares of any of the Oppenheimer funds. 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 12 months of the end of
the calendar month of the initial purchase of the exchanged Class
A shares, (18 months if the shares were initially purchased prior
to May 1, 1997), 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 more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. 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 or as otherwise described in "How to Buy Shares."
Daily dividends will not be declared or paid on newly purchased
shares 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. Shares purchased
through dealers or brokers normally are paid for by the third
business day following the placement of the purchase order. Shares
redeemed through the regular redemption procedures will be paid
dividends through and including the day on which the redemption
request is received by the Transfer Agent in proper form.
Dividends will be paid with respect to 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 capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends (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.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
The Fund qualified as a regulated investment company in its last
fiscal year, and intends to qualify in future years, but reserves
the right not to qualify. The Internal Revenue Code contains a
number of complex tests relating to qualification which the Fund
might not meet in any particular year. For example, if the Fund
derives 30% or more of its gross income from the sale of securities
held less than three months, it may fail to qualify. If it did not
so qualify, the Fund would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made
to shareholders.
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 Oppenheimer
funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on
the portfolio securities and handling the delivery of such
securities to and from the Fund. The Manager has represented to
the Fund that the banking relationships between the Manager and the
Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in
a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates. The Fund's cash balances
with the custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may
be substantial.
Independent 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,
1997, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1997 and 1996,
and the financial highlights for the period July 1, 1992 to June 30, 1997. 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, 1997 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, 1997, 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.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
July 22, 1997
10 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
==============================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--3.4%
- ----------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg.
Pass-Through Certificates, Series 1997-D4:
Cl. B1, 7.525%, 4/14/29(2) $ 2,250,000 $ 2,109,726
Cl. B2, 7.525%, 4/14/29(2) 3,750,000 3,428,906
Cl. B3, 7.525%, 4/14/29(2) 1,500,000 1,331,953
- ---------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg
Pass-Through Certificates, Series 1997-C1:
Cl. F, 7.50%, 6/20/29 1,400,000 1,299,157
Cl. G, 7.50%, 6/20/29 1,900,000 1,693,079
Cl. H, 7.50%, 6/20/29 1,400,000 1,030,750
- ---------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 177, Cl. B:
12.604%, 7/1/26(3) 28,113,635 10,028,661
11.945%, 7/1/26(3) 14,491,564 5,169,413
11.683%, 7/1/26(3) 5,361,878 1,912,683
- ---------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 240, Cl. 2, 11.244%-13.205%, 9/1/23(3) 22,765,536 7,807,868
- ---------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg
Pass-Through Certificates, Series 1997-CHL1, 8.13%, 2/25/11(2) 4,500,000 3,583,125
- ---------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg
Pass-Through Certificates:
Series 1996-C1, Cl. E, 7.51%, 2/15/28(2)(4) 5,362,000 4,912,932
Series 1997-HF1, Cl. F, 6.86%, 7/15/29 1,960,000 1,756,650
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(4) 1,400,000 1,295,875
- ---------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1994-C2, Cl. E, 8%, 4/25/25 2,574,548 2,584,396
Series 1995-C1, Cl. F, 6.90%, 2/25/27 2,174,308 2,009,537
- ---------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII,
Series 1996-C1, Cl. E, 9.18%, 1/20/06 2,496,000 2,524,080
-----------
Total Mortgage-Backed Obligations (Cost $51,278,645) 54,478,791
=============================================================================================
Foreign Government Obligations--5.8%
- ---------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion
de Deudas, Series I, 3.242%, 4/1/01(2)(5) ARP 7,500,296 6,857,721
- ---------------------------------------------------------------------------------------------
Argentina (Republic of) Bonos del Tesoro Bonds, 8.75%, 5/9/02 3,000,000 3,002,625
- ---------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
23.87%, 2/4/98(6) MXP 28,300,000 3,147,344
22.666%, 3/5/98(6) MXP 101,500,000 11,114,003
23.181%, 4/2/98(6) MXP 43,513,230 4,697,582
- ---------------------------------------------------------------------------------------------
City of Buenos Aires Bonds, 10.50%, 5/28/04(4) ARP 1,710,000 1,750,824
- ---------------------------------------------------------------------------------------------
City of St. Petersburg Sr. Unsub. Nts., 9.50%, 6/18/02(7) 3,130,000 3,131,956
- ---------------------------------------------------------------------------------------------
Ecuador (Republic of) Past Due Interest Bonds, 5.39%, 2/27/15(2) 6,091,914 3,925,493
- ---------------------------------------------------------------------------------------------
Hashemite (Kingdom of) Jordan Disc. Bonds, 6.75%, 12/23/23(2) 1,000,000 827,500
- ---------------------------------------------------------------------------------------------
Hashemite (Kingdom of) Jordan Par Bonds, 4%, 12/23/23(8) 5,250,000 3,465,000
- ---------------------------------------------------------------------------------------------
</TABLE>
11 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
=============================================================================================
Foreign Government Obligations (continued)
- ---------------------------------------------------------------------------------------------
Hellenic Republic Treasury Bills, Zero Coupon, 9.154%,
4/1/98(6) GRD 818,000,000 $ 2,771,669
- ---------------------------------------------------------------------------------------------
Hong Kong & Shanghai Bank Banker's Acceptance Bills,
Zero Coupon:
6.924%, 7/23/97(6) MYR 3,500,000 1,383,086
7.022%, 7/8/97(6) MYR 300,000 118,784
7.022%, 7/9/97(6) MYR 6,955,000 2,753,487
- ---------------------------------------------------------------------------------------------
Moldova (Republic of) Bonds, 9.875%, 6/13/02(7) 1,530,000 1,564,348
- ---------------------------------------------------------------------------------------------
Moldova (Republic of) Sr. Unsub. Nts., 8.465%, 12/10/99(2) 2,140,000 2,167,017
- ---------------------------------------------------------------------------------------------
Philippines (Republic of) Bonds, 8.60%, 6/15/27 1,500,000 1,485,000
- ---------------------------------------------------------------------------------------------
Poland (Republic of) Bonds:
12%, 6/12/01 PLZ 5,580,000 1,368,152
12%, 6/12/02 PLZ 12,000,000 2,905,747
16%, 10/12/98 PLZ 9,600,000 2,717,070
16%, 2/12/99 PLZ 16,700,000 4,695,571
- ---------------------------------------------------------------------------------------------
PT Hutama Karya Medium-Term Nts., Zero Coupon:
15.378%, 11/19/97(6) IDR 10,000,000,000 3,879,958
14.201%, 3/17/98(6) IDR 4,000,000,000 1,485,197
- ---------------------------------------------------------------------------------------------
Renel R.A. Nts., 8.562%, 2/21/02(2)(4) 2,500,000 2,504,687
- ---------------------------------------------------------------------------------------------
Romanian Commercial Bank SA Bonds, 9.125%, 3/10/00 4,690,000 4,648,962
- ---------------------------------------------------------------------------------------------
South Africa (Republic of) Bonds, Series 162, 12.50%, 1/15/02 ZAR 32,274,000 6,699,512
- ---------------------------------------------------------------------------------------------
Telkom SA Ltd. Bonds, Series TK05, 12%, 3/31/98 ZAR 20,350,000 4,383,373
- ---------------------------------------------------------------------------------------------
Venezuela (Republic of) Disc. Bonds, Series W-A, 6.812%, 3/31/20(2) 2,750,000 2,437,188
----------
Total Foreign Government Obligations (Cost $93,295,452) 91,888,856
=============================================================================================
Loan Participations--1.0%
- ---------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.977%, 9/4/06(2) 10,900,000 9,554,531
- ---------------------------------------------------------------------------------------------
AO Rostelecom Loan Facility Nts., 9.50%, 2/15/00(2) 4,000,000 4,000,000
- ---------------------------------------------------------------------------------------------
GPA Investment BV Nts., 6.40%, 11/19/98(4) 2,000,000 1,952,500
-----------
Total Loan Participations (Cost $14,518,877) 15,507,031
=============================================================================================
Municipal Bonds and Notes--1.0%
- ---------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor Agency Toll Road
Capital Appreciation Revenue Bonds, Jr. Lien, Zero Coupon:
9%, 1/1/28(6)(9) 74,000,000 10,060,300
8.75%, 1/1/12(6) 15,000,000 5,808,450
-----------
Total Municipal Bonds and Notes (Cost $9,383,037) 15,868,750
</TABLE>
12 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
=============================================================================================
Corporate Bonds and Notes--79.2%
- ---------------------------------------------------------------------------------------------
Basic Industry--9.9%
- ---------------------------------------------------------------------------------------------
Chemicals--2.2%
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc
Nts., 7/15/01 $ 790,000 $ 819,625
- ---------------------------------------------------------------------------------------------
ICO, Inc., 10.375% Sr. Nts., 6/1/07(7) 1,400,000 1,445,500
- ---------------------------------------------------------------------------------------------
ISP Holdings, Inc.:
9% Sr. Nts., 10/15/03 6,970,000 7,257,512
9.75% Sr. Nts., 2/15/02 1,400,000 1,491,000
- ---------------------------------------------------------------------------------------------
NL Industries, Inc.:
0%/13% Sr. Sec. Disc. Nts., 10/15/05(10) 6,870,000 6,535,087
11.75% Sr. Sec. Nts., 10/15/03 1,475,000 1,613,281
- ---------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(7) 3,245,000 3,212,550
- ---------------------------------------------------------------------------------------------
Polytama International, 11.25% Gtd. Sec. Nts., 6/15/07 1,250,000 1,296,875
- ---------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts.,
8/15/08(10) 3,325,000 2,211,125
- ---------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07(7) 310,000 330,150
11.75% Sr. Unsec. Sub. Nts., 8/15/06 4,560,000 4,947,600
- ---------------------------------------------------------------------------------------------
Terra Industries, Inc., 10.50% Sr. Nts., Series B, 6/15/05 3,345,000 3,637,687
-----------
34,797,992
- ---------------------------------------------------------------------------------------------
Containers--0.8%
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(7) 2,700,000 2,916,000
- ---------------------------------------------------------------------------------------------
IVEX Holdings Corp., 0%/13% Sr. Disc. Debs., Series B, 3/15/05(10) 5,820,000 4,714,200
- ---------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts., 10/15/06 4,750,000 5,094,375
-----------
12,724,575
- ---------------------------------------------------------------------------------------------
Metals/Mining--1.3%
Carbide/Graphite Group, Inc. (The), 11.50% Sr. Nts., 9/1/03 7,271,000 7,961,745
- ---------------------------------------------------------------------------------------------
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 13,950,000 13,392,000
-----------
21,353,745
- ---------------------------------------------------------------------------------------------
Paper--3.0%
APP International Finance Co. BV, 11.75% Gtd. Sec. Nts., 10/1/05 1,500,000 1,655,625
- ---------------------------------------------------------------------------------------------
Buckeye Cellulose Corp., 9.25% Sr. Sub. Nts., 9/15/08 7,205,000 7,457,175
- ---------------------------------------------------------------------------------------------
Container Corp., 9.75% Gtd. Sr. Nts., 4/1/03 1,500,000 1,605,000
- ---------------------------------------------------------------------------------------------
Four M Corp., 12% Sr. Nts., Series B, 6/1/06 645,000 667,575
- ---------------------------------------------------------------------------------------------
Gaylord Container Corp., 9.75% Sr. Nts., 6/15/07(7) 560,000 561,400
- ---------------------------------------------------------------------------------------------
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03 8,880,000 9,190,800
- ---------------------------------------------------------------------------------------------
QUNO Corp., 9.125% Sr. Nts., 5/15/05(4) 5,300,000 5,724,000
- ---------------------------------------------------------------------------------------------
Riverwood International Corp., 10.25% Sr. Nts., 4/1/06 2,115,000 2,109,712
- ---------------------------------------------------------------------------------------------
Riverwood International Corp., 10.875% Sr. Sub. Nts., 4/1/08 6,215,000 5,640,112
- ---------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 6,450,000 7,207,875
</TABLE>
13 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Paper (continued)
Stone Container Corp.:
10.75% First Mtg. Nts., 10/1/02 $ 3,325,000 $ 3,474,625
9.875% Sr. Nts., 2/1/01 3,190,000 3,190,000
-----------
48,483,899
- ---------------------------------------------------------------------------------------------
Steel--2.6%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 5,675,000 5,859,437
- ---------------------------------------------------------------------------------------------
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 6,865,000 7,637,312
- ---------------------------------------------------------------------------------------------
Armco, Inc., 8.50% Sinking Fund Debs., 9/1/01 20,207,000 20,004,930
- ---------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 4,150,000 4,305,625
- ---------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 2,990,000 2,788,175
-----------
40,595,479
- ---------------------------------------------------------------------------------------------
Consumer Related--17.6%
- ---------------------------------------------------------------------------------------------
Consumer Products--5.3%
Coleman Escrow Corp., Zero Coupon Sr. First Priority Disc. Nts.,
11.125%, 5/15/01(6)(7) 14,000,000 8,925,000
- ---------------------------------------------------------------------------------------------
Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 3.838%, 5/27/98(4)(6) 16,995,000 15,841,753
- ---------------------------------------------------------------------------------------------
E & S Holdings Corp., 10.375% Sr. Sub. Nts., 10/1/06 13,470,000 14,109,825
Harman International Industries, Inc., 12% Sr. Sub. Nts., 8/1/02 12,000,000 12,840,000
- ---------------------------------------------------------------------------------------------
International Semi-Tech Microelectronics, Inc., 0%/11.50%
Sr. Sec. Disc. Nts., 8/15/03(10) 10,210,000 6,074,950
- ---------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
11.001%, 3/15/01(6)(7) 17,635,000 12,035,887
- ---------------------------------------------------------------------------------------------
Samsonite Corp., 11.125% Sr. Sub. Nts., 7/15/05(4) 10,085,000 11,446,475
- ---------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 2,695,000 3,099,250
-----------
84,373,140
- ---------------------------------------------------------------------------------------------
Food/Beverages/Tobacco--1.8%
CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., 1/15/04(7) 6,930,000 7,207,200
- ---------------------------------------------------------------------------------------------
Consolidated Cigar Corp., 10.50% Sr. Sub. Nts., 3/1/03 2,000,000 2,120,000
- ---------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 10,015,000 10,465,675
- ---------------------------------------------------------------------------------------------
International Home Foods, Inc., 10.375% Sr. Sub. Nts., 11/1/06 6,845,000 7,084,575
- ---------------------------------------------------------------------------------------------
Windy Hill Pet Food, Inc., 9.75% Sr. Sub. Nts., 5/15/07(7) 1,680,000 1,688,400
28,565,850
-----------
</TABLE>
14 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Healthcare--2.3%
Genesis Health Ventures, Inc., 9.25% Sr. Sub. Nts., 10/1/06 $ 10,575,000 $10,945,125
- ---------------------------------------------------------------------------------------------
Integrated Health Services, Inc.:
11% Sr. Sub. Nts., 4/30/06(2)(7) 5,330,000 5,703,100
9.50% Sr. Sub. Nts., 9/15/07(7) 8,000,000 8,220,000
- ---------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts.,
Series A, 4/15/04 9,480,000 10,617,600
- ---------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 1,000,000 1,016,250
-----------
36,502,075
- ---------------------------------------------------------------------------------------------
Hotel/Gaming--4.5%
Arizona Charlie's, Inc., 12% First Mtg. Nts., Series B, 11/15/00(4) 2,750,000 1,608,750
- ---------------------------------------------------------------------------------------------
Capital Gaming International, Inc., Promissory Nts., 8/1/95(11) 22,500 --
- ---------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc., 12% First Mtg. Nts.,
Series A, 11/15/00(4)(11) 1,000,000 187,500
- ---------------------------------------------------------------------------------------------
Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02(4) 8,070,000 8,594,550
- ---------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 10,205,000 10,689,737
- ---------------------------------------------------------------------------------------------
Griffin Gaming & Entertainment, Inc., 8.015% First Mtg
Non-Recourse Pass-Through Nts., 6/30/00(2) 6,785,000 6,895,256
- ---------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 6,390,000 6,549,750
- ---------------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05 4,880,000 5,099,600
- ---------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(7) 6,125,000 6,201,562
- ---------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B,
11/15/02 5,085,000 6,686,775
- ---------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc.:
10.625% Sr. Sub. Nts., 7/15/05 1,900,000 2,047,250
9.50% Gtd. Sr. Sub. Nts., 4/15/07 3,785,000 3,908,012
- ---------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 6,400,000 7,328,000
- ---------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City Funding, Inc.,
11.25% First Mtg. Nts., 5/1/06 6,530,000 6,399,400
- ---------------------------------------------------------------------------------------------
Trump's Castle Funding, Inc., 13.875% Sub. Nts., 11/15/05(5) 34 31
-----------
72,196,173
- ---------------------------------------------------------------------------------------------
Restaurants--1.3%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 7,140,000 7,479,150
- ---------------------------------------------------------------------------------------------
Carrols Corp., 11.50% Sr. Nts., 8/15/03 7,840,000 8,388,800
- ---------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 3,475,000 3,579,250
9.75% Sr. Sub. Nts., 6/1/02 710,000 737,512
-----------
20,184,712
</TABLE>
15 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Textile/Apparel--2.4%
CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03(4) $ 3,765,000 $ 3,812,062
- ---------------------------------------------------------------------------------------------
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03(4) 5,600,000 5,796,000
- ---------------------------------------------------------------------------------------------
GFSI, Inc., 9.625% Sr. Sub. Nts., 3/1/07(7) 3,460,000 3,511,900
- ---------------------------------------------------------------------------------------------
Polysindo International Finance Co. BV, 11.375% Gtd. Sec. Nts.,
6/15/06 3,250,000 3,583,125
- ---------------------------------------------------------------------------------------------
Pope, Evans & Robbins, Inc., 7% Sr. Nts., 5/15/98(4)(11)(12) 5,955,189 37,220
- ---------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa, 13% Gtd. Nts., 6/15/01 5,490,000 6,231,150
- ---------------------------------------------------------------------------------------------
Tultex Corp., 9.625% Sr. Nts., 4/15/07(7) 2,180,000 2,312,162
- ---------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 9,545,000 9,974,525
- ---------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., 12/1/06 3,375,000 3,552,187
-----------
38,810,331
- ---------------------------------------------------------------------------------------------
Energy--7.8%
- ---------------------------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07(7) 10,290,000 10,264,275
- ---------------------------------------------------------------------------------------------
Chesapeake Energy Corp.:
8.50% Sr. Nts., 3/15/12 1,060,000 969,900
9.125% Sr. Nts., 4/15/06 8,720,000 8,763,600
- ---------------------------------------------------------------------------------------------
Clark Oil Refining & Marketing Corp., 10.50% Sr. Nts., 12/1/01 4,000,000 4,150,000
- ---------------------------------------------------------------------------------------------
Clark R&M Holdings, Inc., Zero Coupon Sr. Sec. Nts., Series A,
10.528%, 2/15/00(6) 10,445,000 7,964,312
- ---------------------------------------------------------------------------------------------
Cross Timbers Oil Co., 9.25% Sr. Sub. Nts., 4/1/07 500,000 512,500
- ---------------------------------------------------------------------------------------------
DI Industries, Inc., 8.875% Sr. Nts., 7/1/07 4,025,000 3,984,750
- ---------------------------------------------------------------------------------------------
Energy Corp. of America, 9.50% Sr. Sub. Nts., 5/15/07(7) 6,100,000 6,069,500
- ---------------------------------------------------------------------------------------------
Flores & Rucks, Inc., 9.75% Sr. Sub. Nts., 10/1/06 225,000 238,500
- ---------------------------------------------------------------------------------------------
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., 2/15/07 6,445,000 6,332,213
9.50% Sr. Sub. Nts., 11/1/06 2,650,000 2,756,000
- ---------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 7,510,000 7,754,075
- ---------------------------------------------------------------------------------------------
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 7,560,000 7,900,200
- ---------------------------------------------------------------------------------------------
Maxus Energy Corp., 11.50% Debs., 11/15/15 5,700,000 6,006,375
- ---------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06(10) 24,250,000 18,793,750
- ---------------------------------------------------------------------------------------------
National Energy Group, Inc., 10.75% Sr. Nts., 11/1/06 4,890,000 5,061,150
- ---------------------------------------------------------------------------------------------
Parker Drilling Corp., 9.75% Gtd. Sr. Nts., 11/15/06 700,000 740,250
- ---------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 13,615,000 13,002,325
- ---------------------------------------------------------------------------------------------
Pogo Producing Co., 8.75% Sub. Nts., 5/15/07(7) 8,025,000 8,055,094
- ---------------------------------------------------------------------------------------------
Statia Terminals International/Statia Terminals (Canada), Inc.,
11.75% First Mtg., Series B, 11/15/03 925,000 980,500
- ---------------------------------------------------------------------------------------------
Vintage Petroleum, Inc., 9% Sr. Sub. Nts., 12/15/05 800,000 812,000
- ---------------------------------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07(7) 3,450,000 3,467,250
-----------
124,578,519
</TABLE>
16 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Financial Services--3.7%
- ---------------------------------------------------------------------------------------------
Banks & Thrifts--0.7%
Banco de Colombia, 5.20% Cv. Jr. Unsec. Sub. Nts., 2/1/99(4) $ 1,650,000 $ 1,575,750
- ---------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc.:
10.625% Sr. Sub. Nts., 10/1/03 6,450,000 7,159,500
9.125% Sr. Sub. Nts., 1/15/03 250,000 259,375
- ---------------------------------------------------------------------------------------------
Shoshone Partners Trust, 8% Sr. Nts., 5/31/02(2)(4) 2,796,000 2,799,871
-----------
11,794,496
- ---------------------------------------------------------------------------------------------
Diversified Financial--1.6%
Americredit Corp., 9.25% Sr. Nts., 2/1/04 5,300,000 5,220,500
- ---------------------------------------------------------------------------------------------
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 3,300,000 3,366,000
- ---------------------------------------------------------------------------------------------
Cityscape Financial Corp., 12.75% Sr. Nts., 6/1/04(7) 5,110,000 5,058,900
- ---------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts., 6/10/02(4) 922,935 1,018,690
- ---------------------------------------------------------------------------------------------
Lomas Financial Corp., 9% Cv. Sr. Nts., 10/31/03(4)(11) 8,802,000 1,716,390
- ---------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000
principal amount of 11.50% sr. nts., 3/15/07 and one warrant to
purchase 6.84 shares of common stock)(13) 2,600,000 2,684,500
- ---------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment Trust,
11.625% Sr. Sec. Nts., Series B, 4/1/02 1,700,000 1,810,500
- ---------------------------------------------------------------------------------------------
Wilshire Financial Services Group, Inc., 13% Nts., 1/1/04 3,200,000 3,248,000
-----------
24,123,480
- ---------------------------------------------------------------------------------------------
Insurance--1.4%
American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04 6,980,000 7,887,400
- ---------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 3,400,000 3,553,000
- ---------------------------------------------------------------------------------------------
Residential Reinsurance, 11.951% Nts., 12/15/98(2) 3,500,000 3,520,125
- ---------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03(7) 7,460,000 7,721,100
-----------
22,681,625
- ---------------------------------------------------------------------------------------------
Housing Related--2.2%
- ---------------------------------------------------------------------------------------------
Building Materials1.1%
Building Materials Corp. of America, 8.625% Sr. Nts., 12/15/06 6,550,000 6,681,000
- ---------------------------------------------------------------------------------------------
Falcon Building Products, Inc.:
0%/10.50% Sr. Disc. Nts., 6/15/07(7)(10) 3,360,000 1,999,200
9.50% Sr. Sub. Nts., 6/15/07(7) 3,820,000 3,820,000
- ---------------------------------------------------------------------------------------------
Nortek, Inc., 9.25% Sr. Nts., 3/15/07 5,275,000 5,406,875
-----------
17,907,075
</TABLE>
17 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Homebuilders/Real Estate--1.1%
Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds, 4/15/06 $ 590,000 $ 610,650
- ---------------------------------------------------------------------------------------------
First Place Tower, Inc.:
9.22% First Mtg. Bonds, 12/15/05 CAD 1,464,450 1,219,731
Units (each unit consists of one $10 principal amount of 8.50% cv
sub. debs., 12/15/15 and 40 common shares)(13) CAD 880,730 1,655,888
- ---------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr. Nts., 3/1/04 1,940,000 2,104,900
- ---------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts., 4/15/02 420,000 438,900
- ---------------------------------------------------------------------------------------------
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03 3,100,000 3,270,500
- ---------------------------------------------------------------------------------------------
Standard Pacific Corp., 8.50% Sr. Nts., 6/15/07 3,295,000 3,303,238
- ---------------------------------------------------------------------------------------------
U.S. Home Corp., 9.75% Sr. Nts., 6/15/03 3,980,000 4,159,100
-----------
16,762,907
- ---------------------------------------------------------------------------------------------
Manufacturing--7.0%
- ---------------------------------------------------------------------------------------------
Aerospace--2.8%
America West Airlines, Inc., 10.75% Sr. Nts., 9/1/05 13,275,000 13,789,406
- ---------------------------------------------------------------------------------------------
Atlas Air, Inc., 12.25% Pass-Through Certificates, 12/1/02(4) 6,425,000 7,131,750
- ---------------------------------------------------------------------------------------------
Continental Airlines, Inc., 9.50% Sr. Unsec. Nts., 12/15/01 1,800,000 1,890,000
- ---------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 7,540,000 7,709,650
- ---------------------------------------------------------------------------------------------
GPA Holland BV, 8.94% Medium-Term Nts., Series C, 2/16/99(4) 7,300,000 7,423,188
- ---------------------------------------------------------------------------------------------
Northwest Airlines Corp., 8.375% Gtd. Nts., 3/15/04 1,120,000 1,137,139
- ---------------------------------------------------------------------------------------------
Pegasus Aircraft Lease Securitization Trust, 11.76% Sr. Nts., Cl A,
6/15/04(4) 2,500,000 2,521,750
- ---------------------------------------------------------------------------------------------
UNC, Inc., 11% Sr. Sub. Nts., 6/1/06 2,000,000 2,320,000
-----------
43,922,883
- ---------------------------------------------------------------------------------------------
Automotive--2.4%
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 10,450,000 11,886,875
- ---------------------------------------------------------------------------------------------
Hayes Wheels International, Inc.:
11% Sr. Sub. Nts., 7/15/06 9,300,000 10,253,250
9.125% Sr. Sub. Nts., 7/15/07(4) 6,000,000 6,007,500
- ---------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., 3/15/07(7) 500,000 530,000
- ---------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 7,415,000 7,896,975
- ---------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Sub. Nts., 6/15/07(7) 2,400,000 2,403,000
-----------
38,977,600
</TABLE>
18 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Capital Goods--1.8%
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 $ 350,000 $ 381,500
- ---------------------------------------------------------------------------------------------
Consorcio Ecuatoriano, 14% Nts., 5/1/02(4) 2,575,000 2,735,938
- ---------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05(4) 2,000,000 2,170,000
- ---------------------------------------------------------------------------------------------
Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 10,385,000 10,956,175
- ---------------------------------------------------------------------------------------------
Roller Bearing Co. (America), 9.625% Sr. Sub. Nts., 6/15/07(7) 1,120,000 1,136,800
- ---------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 9.25% Sr. Sub. Nts., 2/15/07(7) 5,020,000 5,145,500
- ---------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 3,950,000 4,048,750
- ---------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr. Nts., 11/1/03(4) 2,800,000 2,898,000
-----------
29,472,663
- ---------------------------------------------------------------------------------------------
Media--8.0%
- ---------------------------------------------------------------------------------------------
Broadcasting--2.4%
American Radio Systems Corp., 9% Sr. Sub. Nts., 2/1/06 350,000 356,125
- ---------------------------------------------------------------------------------------------
Argyle Television, Inc., 9.75% Sr. Sub. Nts., 11/1/05 915,000 960,750
- ---------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07(7) 2,000,000 1,945,000
- ---------------------------------------------------------------------------------------------
Chancellor Radio Broadcasting Co., 8.75% Sr. Sub. Nts., 6/15/07(7) 7,000,000 6,965,000
- ---------------------------------------------------------------------------------------------
Granite Broadcasting Corp., 9.375% Sr. Sub. Nts., Series A, 12/1/05 3,700,000 3,598,250
- ---------------------------------------------------------------------------------------------
Jacor Communications Co., 8.75% Gtd. Sr. Sub. Nts., 6/15/07(7) 2,000,000 1,990,000
- ---------------------------------------------------------------------------------------------
Radio One, Inc., 7% Sr. Sub. Nts., 5/15/04(7)(8) 1,800,000 1,611,000
- ---------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06 1,965,000 2,122,200
- ---------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
10% Sr. Sub. Nts., 9/30/05 5,975,000 6,184,125
9% Sr. Sub. Nts., 7/15/07(7) 3,500,000 3,399,375
- ---------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc.:
11% Sr. Nts., 3/15/04(7) 1,520,000 1,603,600
12.50% Sr. Nts., 6/15/02 700,000 778,750
- ---------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07(7) 3,850,000 3,686,375
9% Sr. Sub. Nts., Series B, 1/15/06 3,500,000 3,447,500
-----------
38,648,050
- ---------------------------------------------------------------------------------------------
Cable Television--2.5%
Adelphia Communications Corp., 9.875% Sr. Nts., 3/1/07(7) 3,760,000 3,651,900
- ---------------------------------------------------------------------------------------------
Cablevision Industries Corp., 9.25% Sr. Debs., Series B, 4/1/08(9) 1,600,000 1,726,382
- ---------------------------------------------------------------------------------------------
Cablevision Systems Corp.:
9.875% Sr. Sub. Debs., 2/15/13 600,000 633,000
9.875% Sr. Sub. Nts., 5/15/06 3,400,000 3,646,500
- ---------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(10) 1,500,000
1,267,500
- ---------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02(7) 5,600,000 5,572,000
- ---------------------------------------------------------------------------------------------
EchoStar I, 8.25% Bonds, 2/26/01(4) 2,555,295 2,529,743
- ---------------------------------------------------------------------------------------------
EchoStar II, 8.25% Bonds, 11/9/01(4) 2,280,958 2,258,149
</TABLE>
19 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Cable Television (continued)
EchoStar Satellite Broadcasting Corp., 0%/13.125%
Sr. Sec. Disc. Nts., 3/15/04(10) $ 4,715,000 $ 3,383,013
- ---------------------------------------------------------------------------------------------
Optel, Inc., Units (each unit consists of $1,000 principal amount
of 13% sr. nts., 2/15/05 and one warrant to purchase one share
of non-vtg. common stock)(7)(13) 3,030,000 2,908,800
- ---------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.:
0%/10.875% Sr. Sub. Nts., 2/15/07(7)(10) 5,210,000 3,099,950
10.875% Sr. Sub. Nts., 2/15/07(7) 3,385,000 3,418,850
- ---------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 5,000,000 5,503,435
-----------
39,599,222
- ---------------------------------------------------------------------------------------------
Diversified Media--2.0%
Ackerley Communications, Inc., 10.75% Sr. Sec. Nts.,
Series A, 10/1/03 6,950,000 7,471,250
- ---------------------------------------------------------------------------------------------
Jacor Communications Co., 9.75% Gtd. Unsec. Sr. Sub. Nts., 12/15/06 250,000 262,500
- ---------------------------------------------------------------------------------------------
Katz Media Corp., 10.50% Sr. Sub. Nts., 1/15/07 2,450,000 2,413,250
- ---------------------------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 4,945,000 5,093,350
- ---------------------------------------------------------------------------------------------
News America Holdings, Inc., 10.125% Gtd. Sr. Debs., 10/15/12 2,000,000 2,253,712
- ---------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr. Sub. Nts., 6/15/07(7) 8,750,000 8,542,188
- ---------------------------------------------------------------------------------------------
Universal Outdoor, Inc.:
9.75% Sr. Sub. Nts., 10/15/06 4,185,000 4,352,400
9.75% Sr. Sub. Nts., Series B, 10/15/06 2,000,000 2,080,000
-----------
32,468,650
- ---------------------------------------------------------------------------------------------
Entertainment/Film--0.2%
Azteca Holdings SA, 11% Sr. Nts., 6/15/02(7) 2,965,000 3,009,475
- ---------------------------------------------------------------------------------------------
Publishing/Printing--0.9%
Hollinger International Publishing, Inc.:
9.25% Gtd. Sr. Sub. Nts., 2/1/06 3,200,000 3,272,000
9.25% Gtd. Sr. Sub. Nts., 3/15/07 4,875,000 4,996,875
- ---------------------------------------------------------------------------------------------
Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07(7) 6,200,000 6,293,000
-----------
14,561,875
- ---------------------------------------------------------------------------------------------
Other--3.2%
- ---------------------------------------------------------------------------------------------
Conglomerates--0.4%
Cia Latino Americana de Infraestructura & Servicios SA - CLISA,
11.625% Gtd. Sr. Nts., 6/1/04(7) 365,000 386,900
- ---------------------------------------------------------------------------------------------
Empresas ICA Sociedad Controladora SA de CV, 5% Cv. Sub. Debs.,
3/15/04 4,900,000 3,886,313
- ---------------------------------------------------------------------------------------------
Mechala Group Jamaica Ltd.:
12% Bonds, 2/15/02 700,000 721,726
12.75% Bonds, 12/30/99 775,000 812,551
-----------
5,807,490
</TABLE>
20 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Environmental--0.0%
Allied Waste North America, Inc., 10.25% Sr. Sub. Nts., 12/1/06(7) $ 400,000 $ 430,000
- ---------------------------------------------------------------------------------------------
Services--2.8%
Borg-Warner Security Corp.:
9.125% Sr. Sub. Nts., 5/1/03 1,550,000 1,581,000
9.625% Sr. Sub. Nts., 3/15/07(7) 10,425,000 10,555,313
- ---------------------------------------------------------------------------------------------
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(4)(10) 5,475,000 3,777,750
- ---------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 6,260,000 6,134,800
- ---------------------------------------------------------------------------------------------
Neodata Services, Inc., 12% Sr. Nts., Series B, 5/1/03 1,400,000 1,512,000
- ---------------------------------------------------------------------------------------------
Protection One Alarm Monitoring, Inc.:
0%/13.625% Sr. Disc. Nts., 6/30/05(10) 15,350,000 15,964,000
6.75% Cv. Gtd. Sr. Sub. Nts., 9/15/03 2,432,000 2,477,600
- ---------------------------------------------------------------------------------------------
Road King Infrastructure Finance (1997) Ltd., 9.50% Gtd. Unsec.
Unsub. Bonds, 7/15/07(4)(14) 400,000 403,000
- ---------------------------------------------------------------------------------------------
United Stationers Supply Co., 12.75% Sr. Sub. Nts., 5/1/05 2,500,000 2,800,000
-----------
45,205,463
- ---------------------------------------------------------------------------------------------
Retail--3.0%
- ---------------------------------------------------------------------------------------------
Specialty Retailing--1.1%
Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B,
9/1/03 6,325,000 6,751,938
- ---------------------------------------------------------------------------------------------
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 2,100,000 2,320,500
- ---------------------------------------------------------------------------------------------
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(4) 4,970,000 5,293,050
- ---------------------------------------------------------------------------------------------
Profitt's, Inc., 8.125% Sr. Nts., 5/15/04(7) 1,400,000 1,410,500
- ---------------------------------------------------------------------------------------------
Specialty Retailers, Inc.:
8.50% Gtd. Sr. Nts., 7/15/05(7) 1,250,000 1,265,625
9% Gtd. Sr. Sub. Nts., 7/15/07(7) 550,000 555,500
-----------
17,597,113
- ---------------------------------------------------------------------------------------------
Supermarkets--1.9%
Dominick's Finer Foods, Inc., 10.875% Sr. Sub. Nts., 5/1/05 2,600,000 2,889,250
- ---------------------------------------------------------------------------------------------
Grand Union Co., 12% Sr. Nts., 9/1/04 1,893,000 1,410,285
- ---------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 5,925,000 6,628,594
- ---------------------------------------------------------------------------------------------
Ralph's Grocery Co.:
(New), 11% Sr. Sub. Nts., 6/15/05(7) 2,300,000 2,507,000
10.45% Sr. Nts., 6/15/04 8,570,000 9,244,888
- ---------------------------------------------------------------------------------------------
Randall's Food Markets, 9.375% Sr. Sub. Nts., 7/1/07(7) 5,050,000 5,024,750
- ---------------------------------------------------------------------------------------------
Smith's Food & Drug Centers, Inc., 11.25% Sr. Unsec. Sub. Nts.,
5/15/07 2,330,000 2,746,488
-----------
30,451,255
</TABLE>
21 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Technology--12.3%
- ---------------------------------------------------------------------------------------------
Information Technology--6.4%
Amphenol Corp., 9.875% Sr. Sub. Nts., 5/15/07 $ 1,400,000 $ 1,452,500
- ---------------------------------------------------------------------------------------------
Bell & Howell Co. (New), 0%/11.50% Sr. Disc. Debs.,
Series B, 3/1/05(10) 3,130,000 2,535,300
- ---------------------------------------------------------------------------------------------
Businessland, Inc., 5.50% Sub. Debs., 3/1/07(4) 3,850,000 2,310,000
- ---------------------------------------------------------------------------------------------
CellNet Data Systems, Inc., 0%/13% Sr. Disc. Nts., 6/15/05(4)(10) 3,100,000 2,201,000
- ---------------------------------------------------------------------------------------------
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 12.096%, 8/15/00(6) 18,765,000 14,402,138
- ---------------------------------------------------------------------------------------------
Comcast Cellular Communications, Inc., 9.50% Sr. Nts., 5/1/07(7) 4,585,000 4,619,388
- ---------------------------------------------------------------------------------------------
Comunicacion Celular SA, 0%/13.125% Sr. Deferred
Coupon Bonds, 11/15/03(10) 5,700,000 4,089,750
- ---------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts.,
2/15/07(7)(10) 700,000 406,000
- ---------------------------------------------------------------------------------------------
Dobson Communications Corp., 11.75% Sr. Nts., 4/15/07 1,850,000 1,803,750
- ---------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07(7) 2,805,000 2,840,063
- ---------------------------------------------------------------------------------------------
Geotek Communications, Inc., 0%/15% Sr. Sec. Disc. Nts., 7/15/05(10) 850,000 531,250
- ---------------------------------------------------------------------------------------------
Globalstar LP/Globalstar Capital Corp., 11.25% Sr. Nts., 6/15/04(7) 3,430,000 3,232,775
- ---------------------------------------------------------------------------------------------
McCaw International Ltd., Units (each unit consists of $1,000
principal amount of 0%/13% sr. disc. nts., 4/15/07 and one warrant
to purchase 0.10616 shares of common stock)(7)(10)(13) 4,300,000 2,085,500
- ---------------------------------------------------------------------------------------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 2,390,000 2,198,800
- ---------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 1,440,000 1,389,600
11.625% Sr. Nts., Series A, 8/15/06 3,530,000 3,406,450
- ---------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp.,
14% Sr. Nts., 8/15/04 1,890,000 1,918,350
- ---------------------------------------------------------------------------------------------
Pierce Leahy Corp., 11.125% Sr. Sub. Nts., 7/15/06 4,950,000 5,469,750
- ---------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(10) 10,290,000 9,724,050
0%/14% Sr. Sub. Disc. Nts., 11/15/01(10) 3,373,000 3,558,515
10.75% Sr. Nts., 11/1/04 2,740,000 2,890,700
- ---------------------------------------------------------------------------------------------
Rogers Cantel, Inc., 9.375% Sr. Sec. Debs., 6/1/08 3,250,000 3,440,938
- ---------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp.:
0%/12.50% Sr. Disc. Nts., 8/15/06(10) 5,730,000 4,168,575
11% Sr. Nts., 8/15/06 2,425,000 2,691,750
- ---------------------------------------------------------------------------------------------
Therma-Wave, Inc., 10.625% Sr. Nts., 5/15/04(7) 840,000 894,600
- ---------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 4,375,000 4,429,688
- ---------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 5,200,000 5,642,000
- ---------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 14% Sr. Nts., 11/1/04 3,400,000 3,774,000
- ---------------------------------------------------------------------------------------------
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07(7) 3,360,000 3,465,000
-----------
101,572,180
</TABLE>
22 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Telecommunications-Technology--5.9%
American Communications Services, Inc., 0%/12.75%
Sr. Disc. Nts., 4/1/06(10) $ 3,970,000 $ 2,183,500
- ---------------------------------------------------------------------------------------------
Bell Cablemedia plc:
0%/11.875% Sr. Disc. Nts., 9/15/05(10) 11,470,000 9,634,800
0%/11.95% Sr. Disc. Nts., 7/15/04(10) 3,400,000 3,094,000
- ---------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc.:
0%/10.875% Sr. Disc. Nts., 3/1/06(10) 1,425,000 977,906
0%/11.875% Sr. Disc. Nts., 11/1/06(10) 2,435,000 1,594,925
10% Sr. Nts., 6/1/07(7) 4,900,000 4,985,750
- ---------------------------------------------------------------------------------------------
Colt Telecom Group plc, Units (each unit consists of $1,000
principal amount of 0%/12% sr. disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary shares)(10)(13) 5,210,000 3,412,550
- ---------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07(10) 7,495,000 5,714,938
- ---------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(10) 12,265,000 8,340,200
- ---------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875% Cv. Sr. Sub. Disc. Nts.,
12/15/05(7)(10) 1,400,000 834,750
- ---------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Bonds, 12/15/05(10) 1,370,000 852,825
- ---------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc., 0%/13% Sr. Disc. Nts.,
Series B, 4/15/03(10) 1,090,000 553,175
- ---------------------------------------------------------------------------------------------
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(10) 1,900,000 1,254,000
0%/13.50% Sr. Disc. Nts., 9/15/05(10) 8,790,000 6,328,800
- ---------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Nts., Series B, 10/1/05 1,790,000 2,040,600
- ---------------------------------------------------------------------------------------------
McLeod, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07(7)(10) 4,950,000 3,180,375
- ---------------------------------------------------------------------------------------------
MFS Communications Co., Inc.:
0%/8.875% Sr. Disc. Nts., 1/15/06(10) 2,435,000 1,935,825
0%/9.375% Sr. Disc. Nts., 1/15/04(10) 5,170,000 4,833,950
- ---------------------------------------------------------------------------------------------
NTL, Inc.:
0%/10.875% Sr. Deferred Coupon Nts., 10/15/03(10) 640,000 558,400
0%/12.75% Sr. Deferred Coupon Nts., 4/15/05(10) 150,000 115,500
10% Sr. Nts., 2/15/07(7) 7,110,000 7,269,975
- ---------------------------------------------------------------------------------------------
Petersburg Long Distance, Inc.:
9% Cv. Sub. Nts., 6/1/06(7) 630,000 619,763
Units (each unit consists of $1,000 principal amount of 0%/14%
sr. disc. nts., 6/1/04 and one warrant to purchase
34 ordinary shares)(4)(10)(13) 4,350,000 3,675,750
- ---------------------------------------------------------------------------------------------
PTC International Finance BV, 0%/10.75% Gtd. Sr. Sub.
Unsec. Bonds, 7/1/07(4)(10) 1,420,000 866,200
</TABLE>
23 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Telecommunications-Technology (continued)
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07(10) $ 4,135,000 $ 2,992,706
9.875% Sr. Nts., 7/1/06 2,805,000 3,001,350
- ---------------------------------------------------------------------------------------------
Telewest Communications plc:
0%/11% Sr. Disc. Debs., 10/1/07(10) 6,015,000 4,360,875
9.625% Sr. Debs., 10/1/06 750,000 787,500
- ---------------------------------------------------------------------------------------------
UNIFI Communications, Inc., Units (each unit consists of $1,000
principal amount of 14% sr. nts., 3/1/04 and one warrant to
purchase 27.52 ordinary shares)(7)(13) 6,000,000 5,970,000
- ---------------------------------------------------------------------------------------------
Videotron Holdings plc, 0%/11% Sr. Disc. Nts., 8/15/05(10) 2,500,000 2,100,000
-------------
94,070,888
- ---------------------------------------------------------------------------------------------
Transportation--2.6%
- ---------------------------------------------------------------------------------------------
Railroads--1.4%
TFM SA de CV, 0%/11.75% Gtd. Sr. Disc. Bonds, 6/15/09(7)(10) 2,210,000 1,287,325
- ---------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(10) 24,415,000 20,630,675
-------------
21,918,000
- ---------------------------------------------------------------------------------------------
Shipping--0.7%
Gearbulk Holding Ltd., 11.25% Sr. Nts., 12/1/04 6,865,000 7,620,150
- ---------------------------------------------------------------------------------------------
Greyhound Lines, Inc., 11.50% Sr. Nts., 4/15/07(7) 1,800,000 1,935,000
- ---------------------------------------------------------------------------------------------
Transportacion Maritima Mexicana SA de CV, 9.25% Nts., 5/15/03 1,500,000 1,496,250
-------------
11,051,400
- ---------------------------------------------------------------------------------------------
Trucking--0.5%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., 7/1/07(7) 1,050,000 1,044,750
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(7) 8,900,000 7,372,137
-------------
8,416,887
- ---------------------------------------------------------------------------------------------
Utilities--1.9%
- ---------------------------------------------------------------------------------------------
Electric Utilities--1.9%
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 7,290,000 7,891,425
- ---------------------------------------------------------------------------------------------
Calpine Corp.:
10.50% Sr. Nts., 5/15/06 5,745,000 6,262,050
9.25% Sr. Nts., 2/1/04 2,410,000 2,458,200
- ---------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 5,550,000 6,063,375
- ---------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04(7) 4,500,000 4,410,000
- ---------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., 12/28/08(7) 2,482,758 2,582,243
-------------
29,667,293
-------------
Total Corporate Bonds and Notes (Cost $1,240,645,598) 1,263,284,460
</TABLE>
24 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
==============================================================================================
Common Stocks--0.9%
- ---------------------------------------------------------------------------------------------
BayCorp Holdings Ltd.(15) 16,133 $ 123,014
- ---------------------------------------------------------------------------------------------
Cellnet Data Systems, Inc.(15) 16,000 199,000
- ---------------------------------------------------------------------------------------------
EchoStar Communications Corp., Cl. A(15) 32,100 501,563
- ---------------------------------------------------------------------------------------------
ECM Fund, L.P.I.(4) 1,350 1,355,062
- ---------------------------------------------------------------------------------------------
El Paso Electric Co.(15) 60,400 426,575
- ---------------------------------------------------------------------------------------------
Equitable Bag, Inc.(4)(15) 39,357 196,785
- ---------------------------------------------------------------------------------------------
Grand Union Co.(15) 144,928 326,088
- ---------------------------------------------------------------------------------------------
Greate Bay Casino Corp.(15) 15,247 20,965
- ---------------------------------------------------------------------------------------------
Hollywood Casino Corp., Cl. A(15) 90,836 272,508
- ---------------------------------------------------------------------------------------------
News Corp. Ltd., Sponsored ADR, Preference 166,271 2,597,984
- ---------------------------------------------------------------------------------------------
Omnipoint Corp.(4)(15) 200,000 3,158,750
- ---------------------------------------------------------------------------------------------
Pope, Evans & Robbins, Inc.(4)(12)(15) 1,688,400 211,050
- ---------------------------------------------------------------------------------------------
Southwest Airlines Co. 123,700 3,200,738
- ---------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc.(4)(15) 370,500 370,500
- ---------------------------------------------------------------------------------------------
Walter Industries, Inc.(15) 544 9,112
- ---------------------------------------------------------------------------------------------
WorldCom, Inc. 59,300 1,897,600
-----------
Total Common Stocks (Cost $17,564,349) 14,867,294
=============================================================================================
Preferred Stocks--3.0%
- ---------------------------------------------------------------------------------------------
American Radio Systems Corp., 11.375% Cum. Exchangeable
Preferred(5)(7) 19,917 2,116,181
- ---------------------------------------------------------------------------------------------
Cablevision Systems Corp., 8.50% Cum. Cv., Series I 142,500 3,865,313
- ---------------------------------------------------------------------------------------------
California Federal Bank, 11.50% Non-Cum., Non-Vtg 97,300 10,800,300
- ---------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred(4)(12)(15) 130,000 3,250,000
- ---------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B 26,000 939,250
- ---------------------------------------------------------------------------------------------
Earthwatch, Inc., 12% Cv. Sr. Preferred Stock, Series C(4)(15) 390,000 4,056,000
- ---------------------------------------------------------------------------------------------
El Paso Electric Co., 11.40% Series A Preferred Stock(5) 20,229 2,280,820
- ---------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual
Preferred Stock, Series A(4) 3,150 88,200
- ---------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9% Preferred Securities 6,070,000 6,312,800
- ---------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 11,500 747,500
- ---------------------------------------------------------------------------------------------
K-III Communications Corp., $11.625 Exchangeable, Series B(4)(5) 17,335 1,876,549
- ---------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr. Exchangeable
Preferred(5)(15) 71,742 3,784,391
- ---------------------------------------------------------------------------------------------
Panamsat Corp., 12.75% Sr. Preferred Exchangeable(5) 1,968 2,413,260
- ---------------------------------------------------------------------------------------------
Prime Retail, Inc., $19.00 Cv., Series B 21,000 498,750
- ---------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Preferred Stock 194,900 5,067,400
-----------
Total Preferred Stocks (Cost $45,282,106) 48,096,714
</TABLE>
25 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
==============================================================================================
Other Securities--0.4%
- ---------------------------------------------------------------------------------------------
SD Warren Co., 14% Cum. Exchangeable, Series B(15) 72,000 $ 3,114,000
- ---------------------------------------------------------------------------------------------
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred(7)(15) 86,880 3,127,680
-----------
Total Other Securities (Cost $5,428,859) 6,241,680
Units
=============================================================================================
Rights, Warrants and Certificates--0.5%
- ---------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(4) 2,575 128,750
- ---------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99(4) 40,000 20,200
- ---------------------------------------------------------------------------------------------
Ames Department Stores, Inc., Litigation Trust(4) 1,045,990 10,460
- ---------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00(4) 825 6
- ---------------------------------------------------------------------------------------------
Becker Gaming, Inc. Wts., Exp. 11/00(4) 125,000 15,625
- ---------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(4) 12,305 184,575
- ---------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49(4)(12) 130,000 65,000
- ---------------------------------------------------------------------------------------------
Coinstar, Inc. Wts., Exp. 11/03(4) 5,475 383,250
- ---------------------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03(4) 5,700 313,500
- ---------------------------------------------------------------------------------------------
Federated Department Stores, Inc.:
Cl. C Wts., Exp. 12/99 69,654 931,622
Cl. D Wts., Exp. 12/01 69,654 966,449
- ---------------------------------------------------------------------------------------------
Furniture Brands International, Inc., Series 1 Wts., Exp. 8/99 32,716 351,697
- ---------------------------------------------------------------------------------------------
Gaylord Container Corp. Wts., Exp. 11/02 163,894 1,311,152
- ---------------------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01(4) 1,090 32,700
- ---------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(4) 50,820 406,560
- ---------------------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 6,000 --
- ---------------------------------------------------------------------------------------------
Jewel Recovery LP, Participation Units of Limited Partners' Interest 10,113 --
- ---------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts., Exp. 2/09(4) 69,290 693
- ---------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00(4) 32,000 505,400
- ---------------------------------------------------------------------------------------------
Protection One, Inc. Wts.:
Exp. 11/03(4) 182,000 1,342,250
Exp. 6/05(4) 49,120 362,260
- ---------------------------------------------------------------------------------------------
Republic Health Corp. Wts., Exp. 4/00 3,763 --
- ---------------------------------------------------------------------------------------------
SDW Holdings Corp., Cl. B Wts., Exp. 12/06(4) 6,188 80,444
- ---------------------------------------------------------------------------------------------
Trizec Corp. Wts., Exp. 7/99 16,277 69,023
- ---------------------------------------------------------------------------------------------
Venezuela Oil Linked Certificates Wts., Exp. 4/20 24,990 --
- ---------------------------------------------------------------------------------------------
Walden Residential Properties, Inc. Wts., Exp. 1/02(4) 114,400 157,300
-----------
Total Rights, Warrants and Certificates (Cost $2,150,564) 7,638,916
</TABLE>
26 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
=============================================================================================
Structured Instruments--3.7%
- ---------------------------------------------------------------------------------------------
Bayerische Landesbank (New York Branch) CD, 13.75%, 8/18/97
(indexed to the cross currency rates of Greek Drachma &
Swiss Franc) $ 7,000,000 $ 6,684,300
- ---------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch):
Deutsche Mark Currency Protected Yield Curve CD, 6.28%, 7/25/97 1,500,000 1,563,825
Lehman Brothers High Yield Bond Index Nts., 12.50%, 7/8/97 8,000,000 8,220,800
Lehman Brothers High Yield Bond Index Nts., 12.50%, 8/7/97 2,000,000 2,046,200
Nikkei 225 Equity-Linked Nts., 6.03%, 4/23/98 3,500,000 3,857,350
- ---------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce (New York Branch):
CD, 11.25%, 9/4/97 (indexed to the Russian Federation GKO,
Zero Coupon, 8/27/97)(4) 600,000 598,500
U.S. Dollar CD Linked to South African Rand, 17%, 1/21/98 1,750,000 1,804,775
- ---------------------------------------------------------------------------------------------
Credit Suisse First Boston (Cayman) Ltd., City of Moscow, Credit &
Convertibility Linked Nts., Series EM 215, Zero Coupon, 12.046%,
12/30/97(6)(14) 6,000,000 5,685,240
- ---------------------------------------------------------------------------------------------
German Bank (New York Branch) 2x High Yield Index Nts., 11.95%,
8/5/97(4) 9,500,000 9,523,750
- ---------------------------------------------------------------------------------------------
ING (U.S.) Financial Holdings Corp.:
Nts., Linked to the Greek Drachma/Swiss Franc Exchange Rate,
Zero Coupon, 14.437%, 12/10/97(6) 1,020,000 929,475
U.S. Dollar Hedged GKO Pass-Through Nts., Zero Coupon, 13.161%,
10/29/97(4)(6) 3,000,000 2,871,480
Zero Coupon Nts., Linked to the Greek Drachma/Swiss Franc
Exchange Rate, 14.235%, 10/8/97(6) 3,000,000 2,807,880
Zero Coupon Nts., Linked to the Greek Drachma/Swiss Franc
Exchange Rate, 14.462%, 3/31/98(6) 4,500,000 3,859,875
- ---------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, Nassau Branch,
Leveraged Nts. on Emerging Markets Bond Index Yield, 12%, 11/14/97 2,300,000
2,294,020
- ---------------------------------------------------------------------------------------------
Salomon, Inc. Russian S-Account Credit Linked Nts., Zero Coupon,
14.166%, 5/22/98(6) 3,375,000 2,962,136
Standard Chartered Bank, Korean Wong Principal & Interest
Linked Deposit:
8.04%, 12/17/97 1,500,000 1,491,750
8.63%, 6/30/98 1,500,000 1,486,650
-----------
Total Structured Instruments (Cost $58,612,497) 58,688,006
</TABLE>
27 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
===============================================================================================
<S> <C> <C> <C> <C>
Put Options Purchased--0.0%
- ------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds,
Buoni del Tesoro Poliennali, 9.50%,
2/1/06 Put Opt. (Cost $189,766) 7/97 99.96%(ITL) 5,532 $ --
Total Investments, at Value (Cost $1,538,349,750) 98.9% 1,576,560,498
Other Assets Net of Liabilities 1.1 17,635,050
Net Assets 100.0% $1,594,195,548
===== ==============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso MXP--Mexican Peso
CAD--Canadian Dollar MYR--Malaysian Ringgit
GRD--Greek Drachma PLZ--Polish Zloty
IDR--Indonesian Rupiah ZAR--South African Rand
ITL--Italian Lira
2. Represents the current interest rate for a variable rate security.
3. 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). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
4. Identifies issues considered to be illiquid or restricted--See Note 7
of Notes to Financial Statements.
5. Interest or dividend is paid in kind.
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established by the
Board of Trustees. These securities amount to $268,749,090 or 16.86% of the
Fund's net assets, at June 30, 1997.
8. Represents the current interest rate for an increasing rate security.
9. Securities with an aggregate market value of
$15,402,182 are held in collateralized accounts to cover initial margin
requirements on open futures sales contracts. See Note 5 of Notes to Financial
Statements.
10. Denotes a step bond: a zero coupon bond that converts to a fixed
or variable interest rate at a designated future date.
11. Non-income producing issuer is in default of interest payment.
28 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 period ended June 30, 1997. The
aggregate fair value of all securities of affiliated companies as of June 30,
1997 amounted to $3,563,270. Transactions during the period in which the issuer
was an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Balance
June 30, 1996 Gross Additions Gross Reductions June 30, 1997
- -------------------------------------------------------------------------------------------------
Stocks and Warrants Shares/Face Shares/Face Shares/Face Shares/Face
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CGA Group Ltd. Preferred -- 130,000 -- 130,000
CGA Group Ltd. Wts., Exp. 12/49 -- 130,000 -- 130,000
Pope, Evans & Robbins, Inc. 1,688,400 -- -- 1,688,400
Bonds and Notes
- -------------------------------------------------------------------------------------------------
Pope, Evans, & Robbins, Inc.,
7% Sr. Nts., 5/15/98 $5,955,189 -- -- $5,955,189
</TABLE>
13. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
14. When-issued security to be delivered and settled after June 30, 1997.
15. Non-income producing security.
See accompanying Notes to Financial Statements.
29 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities June 30, 1997
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $1,529,322,946) $ 1,572,997,228
Affiliated companies (cost $9,026,804) 3,563,270
Receivables:
Investments sold 65,260,611
Interest, dividends and principal paydowns 27,105,896
Shares of beneficial interest sold 3,492,788
Closed forward foreign currency exchange contracts 575,458
Other 25,639
Total assets 1,673,020,890
================================================================================
Liabilities
Bank overdraft 44,234,218
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $12,968,776
purchased on a when-issued
basis)--Note 1 23,604,432
Dividends 4,707,007
Shares of beneficial interest redeemed 4,544,062
Distribution and service plan fees 823,580
Daily variation on futures contracts Note--5 350,937
Transfer and shareholder servicing agent fees 80,881
Closed forward foreign currency exchange contracts 133,037
- --------------------------------------------------------------------------------
Trustees' fees 6,178
Other 341,010
---------------
Total liabilities 78,825,342
================================================================================
Net Assets $ 1,594,195,548
===============
Composition of Net Assets
Paid-in capital $ 1,739,334,661
- --------------------------------------------------------------------------------
Undistributed net investment income 276,928
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (183,149,812)
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and
translation of Assets and liabilities denominated
in foreign currencies 37,733,771
---------------
Net assets $ 1,594,195,548
===============
30 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $1,167,054,667
and 83,454,351 shares of beneficial interest outstanding) $13.98
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $14.68
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (less applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$396,677,987 and 28,573,358 shares of beneficial interest outstanding) $13.88
- --------------------------------------------------------------------------------
Class C Shares: Net asset value, redemption price (less applicable
contingent deferred sales charge) and offering price per share (based
on net assets of $30,462,894 and 2,181,030 shares of beneficial
interest outstanding) $13.97
See accompanying Notes to Financial Statements
31 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended June 30, 1997
- --------------------------------------------------------------------------------
Investment Income
Interest (net of foreign withholding taxes of $31,323) $ 148,247,572
- --------------------------------------------------------------------------------
Dividends 2,914,897
------------
Total income 151,162,469
================================================================================
Expenses
Management fees--Note 4 9,226,623
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 2,322,035
Class B 3,345,679
Class C 175,760
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,626,415
- --------------------------------------------------------------------------------
Shareholder reports 443,059
- --------------------------------------------------------------------------------
Custodian fees and expenses 162,192
- --------------------------------------------------------------------------------
Legal and auditing fees 86,039
- --------------------------------------------------------------------------------
Trustees' fees and expenses 66,727
- --------------------------------------------------------------------------------
Registration and filing fees:
Class A 167
Class B 33,936
Class C 6,840
- --------------------------------------------------------------------------------
Other 78,903
------------
Total expenses 17,574,375
================================================================================
Net Investment Income 133,588,094
================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 31,374,457
Closing of futures contracts--Note 5 (2,343,893)
Closing and expiration of option contracts written--Note 6 (1,675,609)
Foreign currency transactions (5,396,913)
------------
Net realized gain 21,958,042
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 25,365,278
Translation of assets and liabilities denominated
in foreign currencies (1,487,347)
------------
Net change 23,877,931
------------
Net realized and unrealized gain 45,835,973
================================================================================
Net Increase in Net Assets Resulting From Operations $179,424,067
============
See accompanying Notes to Financial Statements
32 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
1997 1996
=====================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $133,588,094 $125,626,377
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain 21,958,042 14,577,616
- ---------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 23,877,931
13,351,323
----------- -----------
Net increase in net assets resulting from operations 179,424,067
153,555,316
=====================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (100,736,506)
(103,496,917)
Class B (27,545,181)
(20,649,798)
Class C (1,429,353)
(185,655)
=====================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A 44,730,912
(1,432,524)
Class B 106,093,196 82,693,557
Class C 22,308,284 7,649,000
=====================================================================================================================
NET ASSETS
Total increase 222,845,419 118,132,979
- ---------------------------------------------------------------------------------------------------------------------
Beginning of period 1,371,350,129 1,253,217,150
-------------- --------------
End of period [including undistributed (overdistributed) net
investment income of $276,928 and $(2,519,975), respectively] $1,594,195,548
$1,371,350,129
============== ==============
</TABLE>
See accompanying Notes to Financial Statements
33 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------
Year Ended June 30,
1997 1996 1995 1994 1993
============================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $13.51 $13.22 $13.63 $14.16 $13.76
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 1.27 1.29 1.30 1.42 1.60
Net realized and unrealized
gain (loss) .43 .27 (.40) (.54) .36
------ ------ ------ ------ ------
Total income from investment
operations 1.70 1.56 .90 .88 1.96
- ------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (1.23) (1.27) (1.30) (1.41) (1.56)
Tax return of capital distribution -- -- (.01) -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.23) (1.27) (1.31) (1.41) (1.56)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.98 $13.51 $13.22 $13.63 $14.16
====== ====== ====== ====== ======
============================================================================================================
Total Return, at Net Asset Value(3) 13.10% 12.25% 7.09% 6.27%
15.31%
============================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $1,167,055 $1,083,913 $1,060,752 $1,049,446
$1,119,056
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,127,509 $1,092,002 $1,005,746 $1,111,103
$978,671
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.22% 9.59% 9.81% 10.10% 11.59%
Expenses 1.00% 1.03% 1.03% 0.96% 0.97%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 125.8% 104.9% 93.7% 96.7% 87.2%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. For the period from May 3, 1993 (inception of offering) to June 30, 1993.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. Annualized.
34 Oppenheimer High Yield Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
-------------------------------------------------------------
- -----------------------
Year Ended June 30, Year Ended
June 30,
1997 1996 1995 1994 1993(2) 1997
1996(1)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning
of period $13.43 $13.15 $13.57 $14.12 $13.87 $13.50
$13.30
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 1.15 1.18 1.20 1.35 .23 1.14
.77
Net realized and unrealized
gain (loss) .43 .27 (.42) (.60) .27 .45
.19
------ ------ ------ ------ ------ ------
------
Total income from investment
operations 1.58 1.45 .78 .75 .50 1.59
.96
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (1.13) (1.17) (1.19) (1.30) (.25)
(1.12)
(.76)
Tax return of capital distribution -- -- (.01) -- --
- -- --
------ ------ ------ ------ ------ ------
------
Total dividends and distributions
to shareholders (1.13) (1.17) (1.20) (1.30) (.25) (1.12)
(.76)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.88 $13.43 $13.15 $13.57 $14.12
$13.97
$13.50
====== ====== ====== ====== ======
======
======
================================================================================================================================
Total Return, at Net Asset Value(3) 12.18% 11.40% 6.21% 5.31% 3.54%
12.23%
7.36%
================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $396,678 $279,789 $192,465 $87,509 $10,493
$30,463
$7,648
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $335,220 $236,362 $134,550 $51,816 $4,405
$17,654
$3,378
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.41% 8.75% 8.95% 8.98% 10.84%(4)
8.40%
8.41%(4)
Expenses 1.80% 1.84% 1.84% 1.88% 2.28%(4)
1.82%
1.90%(4)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 125.8% 104.9% 93.7% 96.7% 87.2%
125.8%
104.9%
</TABLE>
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended June 30, 1997 were $1,882,628,909 and $1,742,733,767, respectively.
See accompanying Notes to Financial Statements.
35 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
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 objective is to seek a high level of
current income primarily through investing in a diversified portfolio of high
yield, lower-rated, fixed income securities. The Fund's investment adviser is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class
C shares. Class A shares are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent deferred sales charge. All classes
of shares have identical rights to earnings, assets and voting privileges,
except that each class has its own distribution and/or service plan, expenses
directly attributable to that class and exclusive voting rights with respect to
matters affecting that 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
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 an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Forward foreign currency exchange 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 is used.
36 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During the
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of June 30, 1997, the
Fund had entered into outstanding when-issued or forward commitments of
$12,968,776.
In connection with its ability to purchase securities on a
when-issued or forward commitment basis, the Fund may enter into mortgage
"dollar-rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund records each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
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, 1997, securities with an
aggregate market value of $1,941,110, representing 0.12% 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 foreign 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 rates 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 Statement 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.
37 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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, 1997, the Fund
had available for federal income tax purposes an unused capital loss carryover
of approximately $169,033,000, which expires between 1999 and 2004.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C 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 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 fiscal year in
which the income or realized gain was recorded by the Fund.
During the year ended June 30, 1997, the Fund adjusted the
classification of net investment income and net realized gain (loss) to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. Accordingly,
during the year ended June 30, 1997, amounts have been reclassified to reflect
an increase in overdistributed net investment income of $1,080,151. Accumulated
net realized loss on investments was decreased by the same amount.
38 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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.
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. 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 periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
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 30,1997 Year Ended June 30, 1996(1)
----------------------- ---------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 20,692,314 $285,257,249 19,901,989 $ 267,392,441
Dividends reinvested 4,327,859 59,845,032 4,497,586 60,481,931
Redeemed (21,776,775) (300,371,369) (24,448,371) (329,306,896)
----------- ------------ ----------- ------------
Net increase (decrease) 3,243,398 $ 44,730,912 (48,796) $ (1,432,524)
=========== ============ =========== =============
- -------------------------------------------------------------------------------------
Class B:
Sold 14,179,293 $194,365,424 11,155,284 $ 149,169,252
Dividends reinvested 951,852 13,080,795 730,103 9,766,261
Redeemed (7,393,386) (101,353,023) (5,689,226) (76,241,956)
----------- ------------ ----------- ------------
Net increase 7,737,759 $106,093,196 6,196,161 $ 82,693,557
=========== ============ =========== =============
- -------------------------------------------------------------------------------------
Class C:
Sold 2,112,964 $ 29,194,779 870,562 $ 11,774,656
Dividends reinvested 66,911 925,795 8,861 120,139
Redeemed (565,170) (7,812,290) (313,098) (4,245,795)
----------- ------------ ----------- ------------
Net increase 1,614,705 $ 22,308,284 566,325 $ 7,649,000
=========== ============ =========== =============
</TABLE>
1. For the year ended June 30, 1996 for Class A and Class B shares and for the
period from November 1, 1995 (inception of offering) to June 30, 1996 for Class
C shares.
39 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
3. Unrealized Gains and Losses on Investments
At June 30, 1997, net unrealized appreciation on investments of $38,210,748 was
composed of gross appreciation of $69,241,100, and gross depreciation of
$31,030,352.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% of the first
$200 million of average annual net assets, 0.72% of the next $200 million, 0.69%
of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200
million and 0.50% of average annual net assets over $1 billion.
For the year ended June 30, 1997, commissions (sales charges paid by
investors) on sales of Class A shares totaled $2,724,041, of which $719,342 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $4,834,653 and $223,999, respectively, of which $78,254
and $3,081 was paid to an affiliated broker/dealer for Class B and Class C
shares, respectively. During the year ended June 30, 1997, OFDI received
contingent deferred sales charges of $975,794 and $18,172, respectively, upon
redemption of Class B and Class C shares as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended June 30, 1997, OFDI paid $37,465 to
an affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
40 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The Fund has adopted a Distribution and Service Plan for Class B shares to
reimburse OFDI for its services and costs in distributing Class B shares and
servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based
sales charge of 0.75% per year on Class B shares. OFDI also receives a service
fee of 0.25% per year to reimburse dealers for providing personal services for
accounts that hold Class B shares. Both fees are computed on the average annual
net assets of Class B shares, determined as of the close of each regular
business day. During the year ended June 30, 1997, OFDI paid $7,271 to an
affiliated broker/dealer as reimbursement for Class B personal service and
maintenance expenses and retained $2,779,601, as reimbursement for Class B sales
commissions and service fee advances, as well as financing costs. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for distributing shares before
the Plan was terminated. As of June 30, 1997, OFDI had incurred unreimbursed
expenses of $12,071,339 for Class B.
The Fund has adopted a Distribution and Service Plan for Class C
shares to compensate OFDI for its services and costs in distributing Class C
shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class C shares. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close of each
regular business day. During the year ended June 30, 1997, OFDI retained
$147,841 as compensation for Class C sales commissions and service fee advances,
as well as financing costs. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales charge
to OFDI for distributing shares before the Plan was terminated. As of June 30,
1997, OFDI had incurred unreimbursed expenses of $397,196 for Class C.
================================================================================
5. 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.
41 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Futures Contracts (continued)
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, 1997, the Fund had outstanding futures contracts to purchase debt
securities as follows:
<TABLE>
<CAPTION>
Number of Valuation as of Unrealized
Contracts to Purchase Expiration Date Futures Contracts June 30, 1997
Depreciation
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 9/97 633 $70,302,563 $430,469
</TABLE>
================================================================================
6. Option Activity
The Fund may buy and sell put and call options, or write put and 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.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. 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.
42 Oppenheimer High Yield Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Written option activity for the year ended June 30, 1997 was as follows:
Call Options Put Options
--------------------------- ------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- -------------------------------------------------------------------------------
Options outstanding at
June 30, 1996 9,183,500 $ 185,550 -- $ --
Options written 486,233,714 3,206,197 2,886,513 222,393
Options closed or expired (486,634,164) (3,256,157) (2,885,853) (218,829)
Options exercised (8,783,050) (135,590) (660) (3,564)
------------ ----------- ---------- ---------
Options outstanding at
June 30, 1997 -- $ -- -- $ --
============ =========== ========== =========
================================================================================
7. Illiquid and Restricted Securities
At June 30, 1997, investments in securities included issues that are illiquid or
restricted. Restricted 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. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at June 30, 1997 was $158,344,196, which represents
9.93% of the Fund's net assets, of which $11,535,278 is considered restricted.
Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Dates Cost Per Unit June 30, 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
Arizona Charlie's, Inc.,
12% First Mtg. Nts.,
Series A, 11/15/00 11/18/93 100.00% 58.50%
- -------------------------------------------------------------------------------------------
Capitol Queen & Casino, Inc.,
12% First
Mtg. Nts., Series A, 11/15/00 11/18/93-12/15/95 87.50 18.75
- -------------------------------------------------------------------------------------------
ECM Fund, L.P.I., 14% Sub. Nts.,
6/10/02 4/14/92-3/3/93 100.00 110.37
Stocks and Warrants
Becker Gaming, Inc. Wts., Exp. 11/00 11/18/93 $ 2.00 $ .13
- -------------------------------------------------------------------------------------------
CGA Group Ltd., Preferred 6/17/97 25.00 25.00
- -------------------------------------------------------------------------------------------
CGA Group Ltd. Wts., Exp. 12/49 6/17/97 -- .50
- -------------------------------------------------------------------------------------------
ECM Fund, L.P.I. 4/14/92 1,000.00 1,003.75
- -------------------------------------------------------------------------------------------
Omnipoint Corp. 1/26/96 16.00 15.79
- -------------------------------------------------------------------------------------------
Omnipoint Corp. Wts., Exp. 11/00 11/29/95 -- 15.79
- -------------------------------------------------------------------------------------------
Triangle Wire & Cable, Inc. 5/2/94 9.50 1.00
</TABLE>
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
OppenheimerFunds 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.
(b) Exhibits:
(1) Amended and Restated Declaration of Trust dated
June 24, 1997: Previously filed with Registrant's
Post-Effective Amendment No. 38 (8/13/97) 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: Previously
filed with Registrant's Post-Effective
Amendment No. 38 (8/13/97) and incorporated
herein by reference.
(ii) Specimen Class B Share Certificate:Previously
filed with Registrant's Post-Effective
Amendment No. 38 (8/13/97) and incorporated
herein by reference.
(iii)Specimen Class C Share Certificate:Previously
filed with Registrant's Post-Effective
Amendment No. 38 (8/13/97) and incorporated
herein by reference.
(iv) Specimen Class Y Share Certificate:Previously
filed with Registrant's Post-Effective
Amendment No. 38 (8/13/97) 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 of 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 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.
(iii)Financial Data Schedule for Class C Shares:
Filed herewith.
(iv) Financial Data Schedule for Class Y Shares:
Not applicable.
(18) Oppenheimer Funds Multiple Class Plan under Rule
18f-3 dated 3/18/96: Previously filed with
Registrant's Post-Effective Amendment No. 38
(8/13/97) and incorporated herein by reference.
-- Powers of Attorney (including Certified Board
resolutions): for Bridget A. Macaskill and Sam Freedman,
filed with Registrant's Post-Effective Amendment No.
36,9/26/96, and all others filed with Registrant's Post-
Effective Amendment No. 30, 8/25/94, 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
Title of Class as of September 26, 1997
-------------- ----------------------
Shares of Beneficial Interest,
Class A 56,720
Shares of Beneficial Interest,
Class B 17,817
Shares of Beneficial Interest,
Class C 1,527
Shares of Beneficial Interest,
Class Y -0-
Item 27. Indemnification
--------------------------
Reference is made to the provisions of Article Seventh of
Registrant's Amended and Restated 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) OppenheimerFunds, Inc. 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 OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name and Current Position Other Business and Connections During
with OppenheimerFunds, Inc. the Past Two Years
- --------------------------- ------------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc. ("ORAMI"); formerly Vice
President of Equity Derivatives at Salomon
Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial Analyst;
Senior Vice President of HarbourView; prior to
March, 1996 he was the senior equity portfolio
manager for the Panorama Series Fund, Inc. (the
"Company") and other mutual funds and pension
funds managed by G.R. Phelps & Co. Inc. ("G.R.
Phelps"), the Company's former investment
adviser, which was a subsidiary of Connecticut
Mutual Life Insurance Company; was also
responsible for managing the common stock
department and common stock investments of
Connecticut Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly a Vice President and
Senior Portfolio Manager at First of America
Investment Corp.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President (January 1992 - February,
1996) of Asian Equities for Barclays de Zoete
Wedd, Inc.
Robert J. Bishop,
Vice President Assistant treasurer of the Oppenheimer funds.
George C. Bowen,
Senior Vice President & Treasurer Treasurer of the Oppenheimer funds,
OppenheimerFunds Distributor, Inc. (the
"Distributor") and HarbourView Asset Management
Corporation ("HarbourView"), an investment
adviser subsidiary of OppenheimerFunds, Inc. (the
"Manager"); Vice President and Assistant
Secretary of the Denver-based Oppenheimer funds;
Vice President of the Distributor and
HarbourView; Senior Vice President, Treasurer,
Assistant Secretary and a Director of Centennial
Asset Management Corporation ("Centennial"), Vice
President, Treasurer and Secretary of Shareholder
Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent
subsidiaries of the Manager; Director, Treasurer
and Chief Executive Officer of MultiSource
Services, Inc. (July, 1996 - present); Vice
President and Treasurer of ORAMI (July, 1996 -
present); President Treasurer and Director of
Centennial Capital Corporation; Vice President
and Treasurer of Main Street Advisers.
Scott Brooks,
Vice President None.
Susan Burton,
Assistant Vice President None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly Assistant Vice President of Rochester
Fund Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 - present) of Awhtolia College -
Greece.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President & Director An officer and/or portfolio manager of certain
Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the Oppenheimer Funds; Vice
President of the Denver-based Oppenheimer Funds;
Executive Vice President, Director and General
Counsel of the Distributor; President and a
Director of Centennial; Chief Legal Officer and a
Director of MultiSource; President and a Director
of ORAMI; Executive Vice President, General
Counsel and Director of SFSI and SSI; formerly
Senior Vice President and Associate General
Counsel of the Manager and the Distributor.
George Evans,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of the Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the Distributor;
Secretary of HarbourView, MultiSource and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corporation; Vice
President and Secretary of Oppenheimer Real Asset
Management, Inc.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio manager of
certain Oppenheimer funds; Presently he holds
the following other positions: Director (since
1995) of ICI Mutual Insurance Company; Governor
(since 1994) of St. John's College; Director
(since 1994 - present) of International Museum of
Photography at George Eastman House; Director
(since 1986) of GeVa Theatre. Formerly he held
the following positions: formerly, Chairman of
the Board and Director of Rochester Fund
Distributors, Inc. ("RFD"); President and
Director of Fielding Management Company, Inc.
("FMC"); President and Director of Rochester
Capital Advisors, Inc. ("RCAI"); Managing Partner
of Rochester Capital Advisors, L.P., President
and Director of Rochester Fund Services, Inc.
("RFS"); President and Director of Rochester Tax
Managed Fund, Inc.; Director (1993 - 1997) of
VehiCare Corp.; Director (1993 - 1996) of
VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following positions: An
officer of certain Oppenheimer funds (May, 1993 -
January, 1996); Secretary of Rochester Capital
Advisors, Inc. and General Counsel (June, 1993 -
January 1996) of Rochester Capital Advisors, L.P.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director (1990-1996) for Bankers Trust
Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based Oppenheimer Funds.
Formerly Vice President and General
Counsel of
Oppenheimer Acquisition Corp.
Linda Gardner,
Vice President None.
Jill Glazerman,
Assistant Vice President None.
Robert Grill,
Vice President Formerly Marketing Vice President for Bankers
Trust Company (1993-1996); Steering Committee
Member, Subcommittee Chairman for American
Savings Education Council (1995- 1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly Vice President of
Fixed Income Portfolio Management at Bankers
Trust.
Elaine T. Hamann,
Vice President Formerly Vice President
(September, 1989 -
January, 1997) of Bankers Trust Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President (1994-1997) of
Retirement Plans Services for
OppenheimerFunds Services.
Thomas B. Hayes,
Assistant Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and Director of SFSI; President and
Chief executive Officer of SSI.
Dorothy Hirshman, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice President None.
Byron Ingram,
Assistant Vice President None.
Ronald Jamison,
Vice President Formerly Vice President and Associate General
Counsel at Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly, a Managing Director
of Global Equities at Paine Webber's Mitchell
Hutchins division.
Thomas W. Keffer,
Senior Vice President Formerly Senior Managing Director (1994 - 1996)
of Van Eck Global.
Avram Kornberg,
Vice President None.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly, a Securities Analyst
for Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President Director of Board (since 2/96), Chinese
Finance Society; formerly, Chairman
(11/94- 2/96), Chinese Finance
Society; and Director
(6/94-6/95),Greater China Business
Networks,
Stephen F. Libera,
Vice President An officer and/or portfolio manager for
certain Oppenheimer funds;
a Chartered Financial Analyst;
a Vice President of HarbourView;
prior to March 1996, the senior
bond portfolio manager for
Panorama Series Fund Inc., other
mutual funds and pension accounts
managed by G.R. Phelps; also
responsible for managing the
public fixed- income
securities department at Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Assistant Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of the
Oppenheimer funds; President and a Director of
OAC, HarbourView and Oppenheimer Partnership
Holdings, Inc.; Director of Oppenheimer Real
Asset Management, Inc.; Chairman and Director of
SSI; Director (since 1993) of Hillsdown Holdings
plc, U.K.; Director (since 1996) of NASDAQ.
Wesley Mayer,
Vice President Formerly Vice President (January, 1995 - June,
1996) of Manufacturers Life Insurance Company.
Loretta McCarthy,
Executive Vice President None.
Kevin McNeil,
Vice President Treasurer (September, 1994 - present) for the
Martin Luther King Multi-Purpose Center (non-profit community
organization); Formerly Vice
President (January, 1995 - April, 1996) for
Lockheed Martin IMS.
Lisa Migan,
Assistant Vice President None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly a Portfolio Manager
(August, 1989 - August, 1995) with Phoenix
Securities Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly, Marketing Manager (July 1995- November
1996) for Chase Investment Services Corp.
Tanya Mrva,
Assistant Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly, a Vice President with Cohane
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Russell Read,
Senior Vice President Formerly a consultant for Prudential Insurance on
behalf of the General Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly, a Securities Analyst
for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President None.
Michael S. Rosen
Vice President; President,
Rochester Division An officer and/or portfolio manager of certain
Oppenheimer funds; Formerly, Vice President
(June, 1983 - January, 1996) of RFS, President
and Director of RFD; Vice President and Director
of FMC; Vice President and director of RCAI;
General Partner of RCA; Vice President and
Director of Rochester Tax Managed Fund Inc.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly Vice President and
Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment adviser.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly, Vice President of Citicorp
Investment Services
Richard Soper,
Assistant Vice President None.
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the New York-based
Oppenheimer Funds; formerly Chairman of the
Manager and the Distributor.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of
Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
John Stoma,
Senior Vice President, Director
Retirement Plans Formerly Vice President of U.S. Group Pension
Strategy and Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial Analyst;
a Vice President of HarbourView; prior to March
1996, an equity portfolio manager for Panorama
Series Fund, Inc. and other mutual funds and
pension accounts managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or Managing
Partner of the Denver-based Oppenheimer Funds;
President and a 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 An officer and/or portfolio manager of certain
Oppenheimer funds; formerly Managing Director of
Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt
fixed income Oppenheimer funds;
Formerly, Managing Director and Chief
Fixed Income Strategist at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B.White,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial Analyst;
Vice President of HarbourView; prior to March
1996, an equity portfolio manager for Panorama
Series Fund, Inc. and other mutual funds and
pension funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial;
Vice President, Finance and Accounting and member
of the Board of Directors of the Junior League of
Denver, Inc.; Point of Contact: Finance
Supporters of Children; Member of the Oncology
Advisory Board of the Childrens Hospital; Member
of the Board of Directors of the Colorado Museum
of Contemporary Art.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of the Oppenheimer funds;
Assistant Secretary of SSI and SFSI.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds and the Oppenheimer/Quest Rochester Funds,
as set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S.Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Quest/Rochester Funds
- ---------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited Term New York Municipal Fund
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 Income Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
Oppenheimer Real Asset Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, the Quest Funds, OppenheimerFunds
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., OppenheimerFunds Services, Centennial
Asset Management Corporation, Centennial Capital Corp.,
and Oppenheimer Real Asset Management, Inc. is 6803 South
Tucson Way, Englewood,Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of the Rochester-based funds is 350 Linden
Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc. is
the investment adviser, as described in Part A and B of this Registration
Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
<TABLE>
<CAPTION>
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
- ---------------- ------------------- -------------------
<S> <C> <C>
George C. Bowen(1) Vice President and Vice President and
Treasurer Treasurer of the Oppenheimer
funds.
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce(2) Senior Vice President; None
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
E. Drew Devereaux(3) Assistant Vice President None
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of
President & Director the Oppenheimer funds.
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Reed F. Finley Vice President None
1657 Graefield
Birmingham, MI 48009
Wendy Fishler(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/National None
Sales Manager
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
Byron Ingram(2) Assistant Vice President None
Mark D. Johnson Vice President None
129 Girard Place
Kirkwood, MO 63105
Michael Keogh(2) Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
13416 Larchmere Square
Shaker Heights, OH 44120
Ilene Kutno(2) Assistant Vice President None
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior Vice President None
23 Fox Trail
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
21 N. Passaic Avenue
Chatham,N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya Mrva(2) Assistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Chad V. Noel Vice President None
3238 W. Taro Lane
Phoenix, AZ 85027
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President None
3530 Providence Plantation Way
Charlotte, NC 28270
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
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III(2) Chairman & Director None
Elaine Puleo(2) Vice President None
Minnie Ra Vice President None
895 Thirty-First Ave.
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI
48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(3) Vice President None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President None
8116 Arlingon Blvd.
#123
Falls Church, VA 22042
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Sarah Turpin Vice President None
2735 Dover Road
Atlanta,GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen Vandehey(1) Vice President None
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
</TABLE>
(1) 6803 South Tucson Way, Englewood, Colorado 80112
(2) Two World Trade Center, New York, NY 10048-0203
(3) 350 Linden Oaks, Rochester, NY 14625-2807
(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 OppenheimerFunds, Inc. at its offices at 3410 South Galena
Street, Denver, Colorado 80231.
Item 31. Management Services
- ---------------------------
Not applicable
Item 32. Undertakings
- --------------------
(a) Not applicable
(b) Not applicable
(c) Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant certifies that
it meets all the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the County of Arapahoe and State of Colorado on the 10th day of
October, 1997.
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
James C. Swain and Chief Executive
Officer October 10, 1997
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting
George C. Bowen Officer and Treasurer October 10, 1997
/s/ Bridget A. Macaskill* President
- ------------------------ and Trustee October 10, 1997
Bridget A. Macaskill
/s/ Robert G. Avis* Trustee October 10, 1997
- ------------------
Robert G. Avis
/s/ William A. Baker* Trustee October 10, 1997
- --------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee October 10, 1997
- -----------------------
Charles Conrad, Jr.
/s/ Jon S. Fossel* Trustee October 10, 1997
- -----------------
Jon S. Fossel
/s/ Sam Freedman* Trustee October 10, 1997
- ----------------
Sam Freedman
/s/ Raymond J. Kalinowski* Trustee October 10, 1997
- -------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee October 10, 1997
- ------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee October 10, 1997
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee October 10, 1997
- ----------------
Ned M. Steel
</TABLE>
*By:
/s/ Robert G. Zack
-------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER HIGH YIELD FUND
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A shares
24(b)(17)(ii) Financial Data Schedule for Class B shares
24(b)(17)(iii) Financial Data Schedule for Class C shares
INDEPENDENT AUDITORS' CONSENT
Oppenheimer High Yield Fund:
We consent to the use in this Post-Effective Amendment No. 39 to
Registration Statement No. 2-62076 of our report dated July 22,
1997 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 LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
October 10, 1997
prosp\280con.#2
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
07/22/87 0.1800000 0.0000000 16.960
08/19/87 0.1800000 0.0000000 17.000
09/17/87 0.1800000 0.0000000 16.800
10/21/87 0.1800000 0.0000000 15.880
11/18/87 0.1800000 0.0000000 15.870
12/22/87 0.1800000 0.0000000 15.600
01/20/88 0.1800000 0.0000000 15.890
02/16/88 0.1800000 0.0000000 15.960
03/16/88 0.1800000 0.0000000 15.710
04/20/88 0.1800000 0.0000000 15.770
05/18/88 0.1600000 0.0000000 15.720
06/15/88 0.1600000 0.0000000 15.830
07/20/88 0.1600000 0.0000000 15.810
08/17/88 0.1600000 0.0000000 15.730
09/21/88 0.1600000 0.0000000 15.780
10/19/88 0.1600000 0.0000000 15.750
11/16/88 0.1600000 0.0000000 15.620
12/21/88 0.1600000 0.0000000 15.530
01/18/89 0.1600000 0.0000000 15.470
02/15/89 0.1600000 0.0000000 15.500
03/15/89 0.1600000 0.0000000 15.430
04/19/89 0.1600000 0.0000000 15.310
05/17/89 0.1600000 0.0000000 15.340
06/21/89 0.1600000 0.0000000 15.350
07/19/89 0.1600000 0.0000000 15.310
08/16/89 0.1600000 0.0000000 15.290
09/20/89 0.1600000 0.0000000 15.090
10/18/89 0.1600000 0.0000000 14.810
11/15/89 0.1600000 0.0000000 14.530
12/20/89 0.1600000 0.0000000 14.360
01/24/90 0.1600000 0.0000000 14.070
02/21/90 0.1600000 0.0000000 13.610
03/21/90 0.1600000 0.0000000 13.560
04/18/90 0.1600000 0.0000000 13.600
05/23/90 0.1600000 0.0000000 13.510
06/20/90 0.1600000 0.0000000 13.550
07/18/90 0.1600000 0.0000000 13.540
08/22/90 0.1600000 0.0000000 13.080
09/19/90 0.1600000 0.0000000 12.810
10/24/90 0.1600000 0.0000000 12.200
11/21/90 0.1600000 0.0000000 12.010
12/19/90 0.1600000 0.0000000 11.900
01/23/91 0.1600000 0.0000000 11.900
02/20/91 0.1600000 0.0000000 12.220
03/20/91 0.1600000 0.0000000 12.800
04/24/91 0.1600000 0.0000000 13.080
05/22/91 0.1600000 0.0000000 12.900
06/26/91 0.1600000 0.0000000 13.020
07/24/91 0.1600000 0.0000000 13.260
08/21/91 0.1600000 0.0000000 13.150
09/18/91 0.1600000 0.0000000 13.250
Oppenheimer High Yield Fund
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (continued)
10/16/91 0.1600000 0.0000000 13.260
11/20/91 0.1600000 0.0000000 13.310
12/18/91 0.1450000 0.0000000 13.120
01/15/92 0.1450000 0.0000000 13.410
02/19/92 0.1450000 0.0000000 13.700
03/18/92 0.1450000 0.0000000 13.770
04/15/92 0.1450000 0.0000000 13.690
05/20/92 0.1300000 0.0000000 13.730
06/17/92 0.1300000 0.0000000 13.740
07/15/92 0.1300000 0.0000000 13.680
08/19/92 0.1300000 0.0000000 13.790
09/16/92 0.1300000 0.0000000 13.700
10/21/92 0.1300000 0.0000000 13.410
11/18/92 0.1300000 0.0000000 13.370
12/16/92 0.1300000 0.0000000 13.350
01/20/93 0.1300000 0.0000000 13.430
02/17/93 0.1300000 0.0000000 13.610
03/17/93 0.1300000 0.0000000 13.750
04/21/93 0.1300000 0.0000000 13.820
05/19/93 0.1300000 0.0000000 13.840
06/16/93 0.1300000 0.0000000 14.010
07/21/93 0.1300000 0.0000000 14.210
08/18/93 0.1300000 0.0000000 14.130
09/30/93 0.1300000 0.0000000 14.060
10/29/93 0.1130000 0.0000000 14.300
11/30/93 0.1130000 0.0000000 14.330
12/31/93 0.1130000 0.0000000 14.500
01/31/94 0.1130000 0.0000000 14.760
02/28/94 0.1130000 0.0000000 14.590
03/31/94 0.1130000 0.0000000 13.980
04/29/94 0.1130000 0.0000000 13.720
05/31/94 0.1130000 0.0000000 13.770
06/30/94 0.1130000 0.0000000 13.630
07/29/94 0.1130000 0.0000000 13.530
08/31/94 0.1130000 0.0000000 13.400
09/30/94 0.1130000 0.0000000 13.400
10/31/94 0.1130000 0.0000000 13.260
11/30/94 0.1130000 0.0000000 13.030
12/30/94 0.1060000 0.0000000 12.830
01/31/95 0.1060000 0.0000000 12.800
02/28/95 0.1060000 0.0000000 13.000
03/31/95 0.1060000 0.0000000 12.920
04/28/95 0.1060000 0.0000000 13.090
05/31/95 0.1060000 0.0000000 13.270
06/30/95 0.1060000 0.0000000 13.220
07/31/95 0.1060000 0.0000000 13.320
08/31/95 0.1060000 0.0000000 13.230
09/29/95 0.1060000 0.0000000 13.290
10/31/95 0.1060000 0.0000000 13.300
11/30/95 0.1060000 0.0000000 13.320
12/29/95 0.1060000 0.0000000 13.410
01/31/96 0.1060000 0.0000000 13.600
02/29/96 0.1060000 0.0000000 13.680
03/29/96 0.1060000 0.0000000 13.570
04/30/96 0.1060000 0.0000000 13.570
05/31/96 0.1060000 0.0000000 13.600
06/28/96 0.1010000 0.0000000 13.510
Oppenheimer High Yield Fund
Page 3
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (continued):
07/31/96 0.1010000 0.0000000 13.480
08/30/96 0.1010000 0.0000000 13.590
09/30/96 0.1010000 0.0000000 13.800
10/31/96 0.1010000 0.0000000 13.820
11/29/96 0.1010000 0.0000000 13.970
12/31/96 0.1229185 0.0000000 13.980
01/31/97 0.1010000 0.0000000 13.980
02/28/97 0.1010000 0.0000000 14.070
03/31/97 0.1010000 0.0000000 13.670
04/30/97 0.1010000 0.0000000 13.660
05/30/97 0.1010000 0.0000000 13.890
06/30/97 0.1010000 0.0000000 13.980
Class B Shares
05/19/93 0.1250000 0.0000000 13.820
06/16/93 0.1220000 0.0000000 13.990
07/21/93 0.1200000 0.0000000 14.170
08/18/93 0.1210000 0.0000000 14.090
09/30/93 0.1170000 0.0000000 14.020
10/29/93 0.1029000 0.0000000 14.260
11/30/93 0.1034000 0.0000000 14.290
12/31/93 0.1055000 0.0000000 14.460
01/31/94 0.1047088 0.0000000 14.710
02/28/94 0.1045156 0.0000000 14.540
03/31/94 0.1023219 0.0000000 13.920
04/29/94 0.1052254 0.0000000 13.660
05/31/94 0.1045249 0.0000000 13.710
06/30/94 0.1042104 0.0000000 13.570
07/29/94 0.1038277 0.0000000 13.470
08/31/94 0.1037366 0.0000000 13.340
09/30/94 0.1040179 0.0000000 13.340
10/31/94 0.1049057 0.0000000 13.200
11/30/94 0.1046802 0.0000000 12.970
12/30/94 0.0974841 0.0000000 12.770
01/31/95 0.0976358 0.0000000 12.740
02/28/95 0.0981620 0.0000000 12.940
03/31/95 0.0969173 0.0000000 12.860
04/28/95 0.0982434 0.0000000 13.030
05/31/95 0.0973587 0.0000000 13.200
06/30/95 0.0971290 0.0000000 13.150
07/31/95 0.0979365 0.0000000 13.250
08/31/95 0.0974590 0.0000000 13.160
09/29/95 0.0972084 0.0000000 13.210
10/31/95 0.0975811 0.0000000 13.220
11/30/95 0.0977194 0.0000000 13.250
12/29/95 0.0974431 0.0000000 13.330
01/31/96 0.0973255 0.0000000 13.520
02/29/96 0.0978804 0.0000000 13.600
03/29/96 0.0973830 0.0000000 13.490
04/30/96 0.0976144 0.0000000 13.480
05/31/96 0.0965921 0.0000000 13.510
06/28/96 0.0932411 0.0000000 13.430
07/31/96 0.0923017 0.0000000 13.400
08/30/96 0.0916899 0.0000000 13.500
09/30/96 0.0930708 0.0000000 13.710
10/31/96 0.0922575 0.0000000 13.730
Oppenheimer High Yield Fund
Page 4
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class B Shares (continued)
11/29/96 0.0920393 0.0000000 13.880
12/31/96 0.1141807 0.0000000 13.890
01/31/97 0.0914272 0.0000000 13.880
02/28/97 0.0928306 0.0000000 13.970
03/31/97 0.0927941 0.0000000 13.580
04/30/97 0.0925591 0.0000000 13.560
05/30/97 0.0917924 0.0000000 13.790
06/30/97 0.0925784 0.0000000 13.880
Class C Shares
11/30/95 0.0961821 0.0000000 13.320
12/29/95 0.0927145 0.0000000 13.400
01/31/96 0.0951545 0.0000000 13.600
02/29/96 0.0966887 0.0000000 13.670
03/29/96 0.0965869 0.0000000 13.560
04/30/96 0.0959581 0.0000000 13.560
05/31/96 0.0951296 0.0000000 13.590
06/28/96 0.0928403 0.0000000 13.500
07/31/96 0.0916501 0.0000000 13.470
08/30/96 0.0911393 0.0000000 13.580
09/30/96 0.0926055 0.0000000 13.780
10/31/96 0.0916208 0.0000000 13.810
11/29/96 0.0916656 0.0000000 13.960
12/31/96 0.1138798 0.0000000 13.970
01/31/97 0.0906760 0.0000000 13.960
02/28/97 0.0924469 0.0000000 14.050
03/31/97 0.0922878 0.0000000 13.660
04/30/97 0.0921034 0.0000000 13.640
05/30/97 0.0916255 0.0000000 13.870
06/30/97 0.0923908 0.0000000 13.970
Oppenheimer High Yield Fund
Page 5
1. Average Annual Total Returns for the Periods Ended 06/30/97:
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
{($1,077.28/$1,000)^ 1} - 1 = 7.73%
Examples at NAV:
{($1,131.02/$1,000)^ 1} - 1 = 13.10%
Five Year
{($1,586.83/$1,000)^.2} - 1 = 9.67%
Five Year
{($1,665.98/$1,000)^.2} - 1 = 10.75%
Ten Year
{($2,500.94/$1,000)^.1} - 1 = 9.60%
Ten Year
{($2,625.68/$1,000)^.1} - 1 = 10.13%
Class B Shares
Examples, assuming a maximum
contingent deferred sales charge
of 5.00% for the first year, and
2.00% for the inception year:
One Year
{($1,071.79/$1,000)^ 1 } - 1 = 7.18%
Examples at NAV:
One Year
{$1,121.78/$1,000)^ 1 } - 1 = 12.18%
Inception Year
{($1,427.24/$1,000)^.2405} - 1 = 8.93%
Inception Year
{($1,447.24/$1,000)^.2405} - 1 = 9.30%
Class C Shares
Examples, assuming a maximum
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year.
One Year
{($1,112.26/$1,000)^ 1 } - 1 = 11.23%
Examples at NAV:
One Year
{($1,122.27/$1,000)^ 1 } - 1 = 12.23%
Inception Year
{($1,204.83/$1,000)^.6010} - 1 = 11.85%
Inception Year
{($1,204.83/$1,000)^.6010} - 1 = 11.85%
Oppenheimer High Yield Fund
Page 6
2. Cumulative Total Returns for he Periods Ended 06/30/97:
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
$1,077.28 - $1,000 /$1,000 = 7.73%
One Year
$1,131.02 - $1,000 /$1,000 = 13.10%
Five Year
$1,586.83 - $1,000 /$1,000 = 58.68%
Five Year
$1,665.98 - $1,000 /$1,000 = 66.60%
Ten Year
$2,500.94 - $1,000 /$1,000 = 150.09%
Ten Year
$2,625.68 - $1,000 /$1,000 = 162.57%
Class B Shares
Examples, assuming a maximum
contingent deferred sales charge
of 5.00% for the first year, and
2.00% for the inception year:
One Year
$1,071.79 - $1,000 /$1,000 = 7.18%
Examples at NAV:
One Year
$1,121.78 - $1,000 /$1,000 = 12.18%
Inception Year
$1,427.24 - $1,000 /$1,000 = 42.72%
Inception Year
$1,447.24 - $1,000 /$1,000 = 44.72%
Class C Shares
Examples, assuming a maximum
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year.
One Year
$1,112.26 - $1,000 /$1,000 = 11.23%
Examples at NAV:
One Year
$1,122.27 - $1,000 /$1,000 = 12.23%
Inception Year
$1,204.83 - $1,000 /$1,000 = 20.48%
Inception Year
$1,204.83 - $1,000 /$1,000 = 20.48%
Oppenheimer High Yield Fund
Page 7
3. Standardized Yield for the 30-Day Period Ended 06/30/97:
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%:
$9,379,558.17 - $959,775.29 6
2{(--------------------------- + 1) - 1} = 8.44%
82,950,296 x $14.68
Class B Shares
Example at NAV:
$3,155,450.46 - $582,100.35 6
2{(--------------------------- + 1) - 1} = 8.05%
28,104,989 x $13.88
Class C Shares
Example at NAV:
$ 239,395.55 - $ 44,444.81 6
2{(--------------------------- + 1) - 1} = 8.03%
2,119,040 x $13.97
Oppenheimer High Yield Fund
Page 8
4. DIVIDEND YIELDS FOR THE PERIOD ENDED 06/30/97:
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 last dividend earned during the period.
b = The Fund's maximum offering price (including sales charge)
per share on dividend payable date.
c = The Fund's net asset value (excluding sales charge) per share
on dividend payable date.
Examples :
Class A Shares
Dividend Yield ($0.1010000 * 12 ) / $14.68 = 8.26%
at Maximum Offer:
Dividend Yield ($0.1010000 * 12 ) / $13.98 = 8.67%
at Net Asset Value:
Class B Shares
Dividend Yield ($0.0925784 * 12 ) / $13.88 = 8.00%
at Net Asset Value:
Class C Shares
Dividend Yield ($0.0923908 * 12 ) / $13.97 = 7.94%
at Net Asset Value:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 276195
<NAME> Oppenheimer High Yield Fund - Class A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,538,349,750
<INVESTMENTS-AT-VALUE> 1,576,560,498
<RECEIVABLES> 96,434,753
<ASSETS-OTHER> 25,639
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,673,020,890
<PAYABLE-FOR-SECURITIES> 23,604,432
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,220,910
<TOTAL-LIABILITIES> 78,825,342
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,739,334,661
<SHARES-COMMON-STOCK> 83,454,351
<SHARES-COMMON-PRIOR> 80,210,953
<ACCUMULATED-NII-CURRENT> 276,928
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (183,149,812)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37,733,771
<NET-ASSETS> 1,167,054,667
<DIVIDEND-INCOME> 2,914,897
<INTEREST-INCOME> 148,247,572
<OTHER-INCOME> 0
<EXPENSES-NET> 17,574,375
<NET-INVESTMENT-INCOME> 133,588,094
<REALIZED-GAINS-CURRENT> 21,958,042
<APPREC-INCREASE-CURRENT> 23,877,931
<NET-CHANGE-FROM-OPS> 179,424,067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 100,736,506
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,692,314
<NUMBER-OF-SHARES-REDEEMED> 21,776,775
<SHARES-REINVESTED> 4,327,859
<NET-CHANGE-IN-ASSETS> 222,845,419
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (206,188,005)
<OVERDISTRIB-NII-PRIOR> (2,519,975)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,226,623
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17,574,375
<AVERAGE-NET-ASSETS> 1,127,509,000
<PER-SHARE-NAV-BEGIN> 13.51
<PER-SHARE-NII> 1.27
<PER-SHARE-GAIN-APPREC> 0.43
<PER-SHARE-DIVIDEND> 1.23
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.98
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 276195
<NAME> Oppenheimer High Yield Fund - Class B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 276195
<NAME> Oppenheimer High Yield Fund - Class C
<S> <C>
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