Registration No. 2-75276
File No. 811-3346
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 30 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 31 /X/
OPPENHEIMER SERIES FUND, INC.
- -------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212) 323-0200
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(Registrant's Telephone Number)
Andrew J. Donohue
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ___________, 1996 pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/X / On October 17, pursuant to paragraph (a)(2)
of Rule 485.
- -------------------------------------------------------------------
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 October 31, 1996, will be filed no
later than December 28, 1996.
<PAGE>
OPPENHEIMER SERIES FUND, INC.
FORM N-1A
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Front Cover Page
2 Expenses; Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies;
Investment Restrictions; How the Fund is Managed--
Organization and History
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
7 How to Buy Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Class A Shares;
Distribution and Service Plan for Class B Shares;
Distribution and Service Plan for Class C Shares; How to
Sell Shares; Shareholder Account Rules and Policies
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
14 How the Fund is Managed - Trustees and Officers of the
Fund;
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information - About the Fund
19 Your Investment Account-How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 Financial Statements
- ---------------------
* Not applicable or negative answer.
prosp\opseries.n1a
<PAGE>
OPPENHEIMER
Disciplined Value Fund
Prospectus Dated December 16, 1996
Oppenheimer Disciplined Value Fund is a mutual fund that seeks long
term growth of capital by investing primarily in common stocks with
low price-earnings ratios and better-than-anticipated earnings.
Realization of current income is a secondary consideration. In
selecting investments for the Fund, the investment advisor uses a
quantitative investment discipline in combination with fundamental
securities analysis. The Fund may invest the remainder of its
assets in corporate and U.S. Government debt obligations and
short-term debt instruments. The Fund may also use "hedging"
instruments to seek to reduce the risks of market fluctuations that
affect the value of the securities the Fund holds. Please refer to
"Investment Policies and Strategies" for more information about the
types of securities the Fund invests in and refer to "Investment
Risks" for a discussion of the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the December 16, 1996 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 ("SEC") and is incorporated into this
Prospectus by reference (which means that it is legally part of
this Prospectus).
Opp enheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective 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
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 the share of a
Fund's business operating expenses that you will bear indirectly.
The numbers below are based on the Fund's expenses during its for
the fiscal period January 1, 1996 through October 31, 1996.
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>
Maximum Sales Charge
on Purchases (as a % of
offering price) 5.75% None None None
Maximum Deferred Sale Charge
(as a % of the lower of the
original offering price or
redemption proceeds) None(1) 5% in the 1% if shares None
first year, are redeemed
declining to within 12 months
1% in the of purchase(2)
sixth year
and 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(3)
</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 18 calendar months 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 "Buying
Class C Shares" below, for more information on the contingent
deferred sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by
Federal Funds wire, but not for redemptions paid by check or ACH
transfer through AccountLink.
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
advisor, 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
12b-1 Plan Fees
Other Expenses
Total Fund
Operating Expenses
</TABLE>
The numbers for Class A shares in the chart above are based on
the Fund's expenses in its last fiscal year. These amounts are
shown as a percentage of the average net assets of each class of
the Fund's shares for that year. Class C shares were not publicly
offered before May 1, 1996. Therefore, the Class C Annual Fund
Operating Expenses shown are based on expenses for the period from
May 1, 1996 until October 31, 1996. Class Y shares were not
publicly offered before December 16, 1996. Accordingly, the "Other
Expenses" for Class Y shares are estimates based upon amounts that
would have been payable if Class Y shares had been outstanding
during the fiscal year. 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 the actual
amount of the Fund's assets represented by each class of shares.
The "12b-1 Distribution Plan Fees" for Class A shares are the
service fees (which can be up to a maximum of 0.25% of average
annual net assets of that class). For Class B and Class C shares,
12b-1 Plan Fees include the service fees (which can be up to a
maximum of 0.25%) and an annual asset-based sales charges of 0.75%.
These plans are described in greater detail in "How to Buy Shares."
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 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 $
Class B Shares $
Class C Shares $
Class Y Shares $
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $
Class B Shares $
Class C Shares $
Class Y Shares $
*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 on Class B and Class C shares, long-term Class B and Class
C shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares into 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, which may be more or less than the
amounts shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What is the Fund's Investment Objective? The Fund seeks
long-term growth of capital by investing primarily in common stocks
with low price-earnings ratios and better-than-anticipated
earnings. Realization of current income is a secondary
consideration.
What Does the Fund Invest In? Under normal market
conditions, the Fund expects to invest primarily in common stocks.
The Fund may invest the remainder of its assets in U.S. Government
securities and corporate debt obligations, including corporate
bonds rated below investment grade (commonly called "junk bonds")
and may invest to a limited degree in foreign securities. The Fund
may write covered calls and use certain types of "hedging
instruments" and "derivative investments" to seek to reduce the
risks of market fluctuations that affect the value of the
securities the Fund holds or to seek total return. These
investments are more fully explained in "Investment Objective and
Policies" starting on page __.
Who Manages the Fund? The Fund's investment advisor is
OppenheimerFunds, Inc., which (including a subsidiary) advises
investment company portfolios having over $55 billion in assets at
October 31, 1996. The Manager is paid an advisory fee by the Fund,
based on its net assets. The Fund's Board of Directors, elected by
shareholders, oversees the investment advisor and the portfolio
managers. The Fund has a team of portfolio managers, who are
employed by the Manager. Peter C. Antos is the senior portfolio
manager and he is assisted by Michael C. Strathearn and Kenneth B.
White. 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's investments in stocks are subject to changes in
their value from a number of factors such as changes in general
stock market movements. A change in value of a particular stock may
result from an event affecting the issuer. These changes affect the
value of the Fund's investments and its share prices for each class
of its shares.
In the Oppenheimer funds' spectrum, the Fund is considered a
growth fund that is considerably more aggressive than equity income
or growth and income funds because it invests for long-term growth
of capital in common stocks that tend to be more volatile than
other investments. While the Manager tries to reduce risks by
diversifying investments, by researching securities before they are
purchased for the Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's objective and your shares may be worth more or less than
their original cost when you redeem them. Please refer to
"Investment Objective and Policies" starting on page __ for a more
complete discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your dealer
or financial institution, or you can purchase shares directly
through the Distributor by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
To Buy Shares" beginning on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Each class of shares has the same investment
portfolio, but different expenses. Class A shares are offered with
a front-end sales charge, starting at 5.75% and reduced for larger
purchases. Class B and Class C shares are offered without front-end
sales charges, but may be subject to a contingent deferred sales
charge if redeemed within 6 years or 12 months, respectively, of
purchase. There is also an annual asset-based sales charge on Class
B and Class C shares. Please review "How To Buy Shares" starting on
page __ for more details, including a discussion about factors you
and your financial advisor should consider in determining which
class may be appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day or
through your dealer. 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 average annual total returns and
cumulative total returns, which measure historical performance.
Those returns can be compared to the total returns (over similar
periods) of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. Please remember that
past performance does not guarantee future results.
Financial Highlights
The tables on the following pages present selected financial
information about the Fund, including per share data and expense
ratios and other data based on the Fund's average net assets. Class
B shares have been offered since October 1, 1995. Class C shares
have been offered since May 1, 1996. Class Y shares were not
publicly offered during the periods shown and consequently, no
information on Class Y shares is included in the letters on the
following pages or in the Fund's financial statements. The
information for the Fund has been audited by Arthur Andersen LLP,
the Fund's independent auditors, whose report for the fiscal year
ended October 31, 1996 is included in the Statement of Additional
Information. Additional information about the performance of the
Fund is contained in the 1996 Annual Report which may be obtained
without charge by calling the Fund at the telephone number or
writing to the Fund's address on the back cover.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks long term growth of capital by investing
primarily in common stocks with low price-earnings ratios and
better-than-anticipated earnings. Realization of current income is
a secondary consideration.
Investment Policies and Strategies. Under normal circumstances,
most of the Fund's assets will be invested in stocks. The Manager
chooses stock investments for the Fund using a quantitative value
investment discipline in combination with fundamental securities
analysis. A stock may have a low price-earnings ratio (for example,
below the price-earnings ratio of the S&P 500 Index) because it is
out-of-favor in the market. When an out-of-favor company
demonstrates better earnings than what most analysts were
expecting, this is referred to as a favorable earnings surprise.
This may cause market analysts and investors to reevaluate the
issuer's earnings expectations and the price-earnings multiple,
which in turn may cause the company's stock price to increase in
value.
As stocks with low price-earnings ratios and favorable
earnings surprises are identified, the Manager uses fundamental
securities analysis to select individual stocks for the Fund. When
the price-earnings ratio of a stock held by the Fund moves
significantly above the multiple of the overall stock market, or
the company reports a material earnings disappointment, the Fund
will normally sell the stock.
The Fund may invest the remainder of its assets (up to 10%
under normal circumstances) in U.S. Government securities and
corporate debt obligations, including convertible bonds, which may
be rated as low as B by Moody's Investors Service, Inc. ("Moody's")
or Standard and Poor's Corporation ("Standard & Poor's"). Fitch
Investors Service, Inc., Duff & Phelpes, Inc. or another nationally
recognized statistical rating organization. When market conditions
are unstable, the Fund may invest without limit in high-quality
short-term debt securities for temporary defensive purposes, as
described below.
Consistent with the foregoing policies, the Fund may invest to
a limited degree in securities of foreign issuers, including
issuers in developing countries. Please refer to "Foreign
Securities," below.
Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and
strategies in carrying out those investment policies. The Fund's
investment policies and practices are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a
particular policy is "fundamental." The Fund's investment objective
is not a fundamental policy. Shareholders of the Fund will be given
30 days' advance written notice of a change to the Fund's
investment objective.
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 Directors may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
Convertible Securities. Convertible securities are bonds,
preferred stocks and other securities that pay a fixed rate of
interest or dividend and are convertible into the issuer's common
stock at the option of the buyer. While the value of these
securities depends in part on interest rate changes, their value is
also sensitive to the credit quality of the issuer and will change
based on the price of the underlying stock. The Manager
consequently does not look primarily to the ratings of these
securities but considers them as "equity substitutes." While these
securities generally offer less potential for gains than common
stock and less income than non-convertible bonds, their income
helps to provide a cushion against the stock price's declines.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its objective. As a
result, the Fund's portfolio turnover currently is not expected to
be more than 100% a year. The "Financial Highlights," above, show
the Fund's portfolio turnover rates during past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and
other transaction costs, and results in the Fund's realization of
capital gains or losses for tax purposes. It may also affect the
ability of the Fund to qualify as a "regulated investment company"
under the Internal Revenue Code and avoid being taxed on amounts
distributed as dividends and capital gains to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
current and future years, although it reserves the right not to
qualify.
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 assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some case by using hedging techniques, changes in
overall market prices can occur at any time, and because the income
earned on securities is subject to change, there is no assurance
that the Fund will achieve its investment objective. When you
redeem your shares, they may be worth more or less than what you
paid for them.
Stock Investment Risks. Because the Fund invests a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the
same direction at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, and changes in government regulations affecting an
industry). Not all of these factors can be predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the
stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Also, the Fund
does not concentrate its investments in any one industry or group
of industries.
Foreign Securities Have Special Risks. While foreign
securities offer special investment opportunities, there are also
special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the value of the
securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure requirements
that U.S. companies are subject to. The value of foreign
investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or
other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
Special Risks of Lower-Grade Securities. The Fund can invest
in domestic and foreign corporate debt obligations, including
high-yield, below-investment grade debt securities (including both
rated and unrated securities). These "lower-grade" securities are
commonly known as "junk bonds." All corporate debt securities
(whether foreign or domestic) are subject to some degree of credit
risk. High yield, lower-grade securities, whether rated or unrated,
often have speculative characteristics and 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. For foreign lower-grade debt securities, these risks
are in addition to the risks of investing in foreign securities,
described above. 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.
There are Special Risks in Investing in Derivative
Investments. The Fund can invest in a number of different kinds of
"derivative" investments. In general, a "derivative investment" is
a specially designed investment whose performance is linked to the
performance of another investment or security, such as an option,
future, index, currency or commodity. The company issuing the
instrument may fail to pay the amount due on the maturity of the
instrument. Also, the underlying investment or security might not
perform the way the Manager expected it to perform. Markets,
underlying securities and indices may move in a direction not
anticipated by the Manager. Performance of derivative investments
may also be influenced by interest rate and stock market changes in
the U.S. and abroad. All of this can mean that the Fund will
realize less principal or income from the investment than expected.
Certain derivative investments held by the Fund may be illiquid.
Please refer to "Illiquid and Restricted Securities."
Interest Rate Risks. Debt securities are subject to changes
in their values due to changes in prevailing interest rates. When
prevailing interest rates fall, the values of already-issued debt
securities generally rise. When interest rates rise, the values of
already-issued debt securities generally decline. The magnitude of
these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. Changes in the value
of securities held by the Fund mean that the Fund's share prices
can go up or down when interest rates change because of the effect
of the change on the value of the Fund's portfolio of debt
securities.
Hedging Instruments Can Be Volatile Investments and Involve
Special Risks. The use of hedging instruments requires special
skills and knowledge of investment techniques that are different
from what is required for normal portfolio management. If the
Manager uses a hedging instrument at the wrong time or judges
market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices
of its futures and options positions were not correlated with its
other investments or if it could not close out a position because
of an illiquid market for the future or option.
Options trading involves the payment of premiums, and options,
futures and forward contracts are subject to special tax rules that
may affect the amount, timing and character of the Fund's income
and distributions. 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. These risks are described in greater detail in the
Statement of Additional Information.
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
the practices, including limitations on their use that may help to
reduce some of the risks.
Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are similar to warrants but normally have a short
duration and are distributed directly by the issuer to its
shareholders. The Fund may invest up to 5% of its total assets in
warrants or rights. That 5% limitation does not apply to warrants
the Fund has acquired as part of units with other securities or
that are attached to other securities. No more than 2% of the
Fund's total assets may be invested in warrants that are not listed
on either The New York Stock Exchange or The American Stock
Exchange.
Foreign Securities. The Fund may purchase equity and debt
securities issued by foreign companies or issued or guaranteed by
foreign governments. The Fund may purchase securities in any
country, developed or underdeveloped. Investments in securities of
issuers in underdeveloped countries or countries that have emerging
markets generally may offer greater potential for gain but involve
more risk and may be considered highly speculative. As a matter of
fundamental policy, the Fund may not invest more than 10% of its
total assets in foreign securities, except that the Fund may invest
up to 25% of its total assets in foreign equity and debt securities
that are (i) issued, assumed or guaranteed by foreign governments
or their political subdivisions or instrumentalities, (ii) assumed
or guaranteed by domestic issuers, including Eurodollar securities,
or (iii) issued, assumed or guaranteed by foreign issuers having a
class of securities listed for trading on The New York Stock
Exchange. The Fund will hold foreign currency only in connection
with the purchase or sale of foreign securities. There are special
risks of investing in foreign securities, described in "Investment
Risks," above.
ADRs, EDRs and GDRs. ADRs are receipts issued by a U.S. bank
or trust company which evidence ownership of underlying securities
of foreign companies. ADRs are traded on domestic exchanges or in
the U.S. over-the-counter market and generally are in registered
form. If ADRs are bought through banks that do not have a
contractual relationship with the foreign issuer of the security
underlying the ADR to issue and service the ADR, there is a risk
that the Fund will not learn of corporate actions affecting the
issuer in a timely manner. EDRs and GDRs are receipts evidencing an
arrangement with a non-U.S. bank similar to that for ADRs and are
designed for use in non-U.S. securities markets. EDRs and GDRs are
not necessarily quoted in the same currency as the underlying
security.
Debt Securities. Under normal circumstances, the Fund may
invest some of its assets (normally up to 10%) in debt securities.
However, when market conditions for stocks are volatile, the Fund
may increase its investments in debt securities for defensive
purposes. The types of debt securities the Fund invests in are
described below.
U.S. Government Securities. U.S. Government Securities
include debt securities issued or guaranteed by the U.S. Government
or its agencies and instrumentalities. Certain U.S. Government
Securities, including U.S. Treasury bills, notes and bonds, and
mortgage participation certificates guaranteed by the Government
National Mortgage Association ("Ginnie Mae") are supported by the
full faith and credit of the U.S. Government, which in general
terms means that the U.S. Treasury stands behind the obligation to
pay principal and interest.
Ginnie Mae certificates are one type of mortgage-related U.S.
Government Security the Fund may invest in. The Fund may invest in
other mortgage-related U.S. Government Securities that are issued
or guaranteed by federal agencies or government-sponsored entities
but which are not supported by the full faith and credit of the
U.S. Government. Those securities include obligations supported by
the right of the issuer to borrow from the U.S. Treasury, such as
obligations of the Federal Home Loan Mortgage Corporation ("Freddie
Mac"), obligations supported only by the credit of the
instrumentality, such as the Federal National Mortgage Association
("Fannie Mae") or the Student Loan Marketing Association, and
obligations supported by the discretionary authority of the U.S.
Government to repurchase certain obligations of U.S. Government
agencies or instrumentalities such as the Federal Land Banks and
the Federal Home Loan Banks.
The value of U.S. Government Securities will fluctuate until
they mature, depending on prevailing interest rates. Because the
yields on U.S. Government Securities are generally lower than on
corporate debt securities, when the Fund holds U.S. Government
Securities it may attempt to increase the income it can earn from
them by writing covered call options against them, when market
conditions are appropriate. Writing covered calls is explained
below, under "Hedging."
Lower-Grade Debt Securities. Lower-grade debt securities
generally offer higher income potential than investment grade
securities. "Lower-grade" securities have a rating below "BBB" by
Standard & Poor's or "Baa" by Moody's or similar ratings by other
nationally-recognized rating organizations, or they are not rated
by a nationally-recognized rating organization, but the Manager
judges them to be comparable to lower-rated securities. The Fund
will not purchase securities rated below B by Moody's or Standard
& Poor's. The Fund may retain securities whose ratings fall below
B after purchase unless and until the Manager determines that
disposing of such securities is in the best interests of the Fund.
Appendix A to this Prospectus describes the rating categories of
Moody's and Standard & Poor's. The special risks of investing in
lower-grade debt securities are described in "Investment Risks,"
above.
Loans of Portfolio Securities. Subject to its investment
policies and restrictions, the Fund may seek to increase its income
by lending portfolio securities to brokers, dealers and financial
institutions in transactions other than repurchase agreements. The
Fund must receive collateral for a loan. As a matter of fundamental
policy, these loans are limited to not more than 33-1/3% of the
Fund's total assets (taken at market value) and are subject to
other conditions described in the Statement of Additional
Information. The Fund presently does not intend to engage in loans
of securities, but if it does so it does not intend to lend
securities that will exceed 5% of the value of the Fund's total
assets in the coming year.
"When-Issued" and Delayed Delivery Transactions. The Fund
may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "delayed delivery" basis. These terms refer
to securities that have been created and for which a market exists,
but which are not available for immediate delivery. There may be a
risk of loss to the Fund if the value of the security declines
prior to the settlement date.
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 fails to pay the resale price on the delivery date,
the Fund may experience costs in disposing of the collateral and
may experience losses if there is any delay in doing so. As a
matter of fundamental policy, the Fund will not enter into a
repurchase agreement that causes more than 10% of its net assets to
be invested in illiquid and restricted securities (as described
below) which includes repurchase agreements having a maturity
beyond seven days.
Illiquid and Restricted Securities. Under the policies
established by the Fund's Board of Directors, 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. As a matter of fundamental policy, the Fund will not invest
more than 10% of its total assets in illiquid and restricted
securities (including repurchase agreements having a maturity
beyond 7 days, portfolio securities which do not have readily
available market quotations, and time deposits maturing in more
than 2 days). The Fund has undertaken (as a matter of
non-fundamental policy) to apply this restriction to 10% of its net
assets. The Fund's 10% percent limitation on illiquid securities
does not apply to certain restricted securities that are eligible
for resale to qualified institutional buyers.
Temporary Defensive Investments. When the Manager believes
it is appropriate (for example, because of unstable market
conditions), the Fund can hold cash or invest without limit in
money market instruments for temporary defensive purposes. The Fund
will invest in high quality, short-term money market instruments
such as U.S. Treasury and agency obligations; commercial paper
(short-term, unsecured, negotiable promissory notes of a domestic
or foreign company); short-term debt obligations of corporate
issuers; and certificates of deposit and bankers' acceptances (time
drafts drawn on commercial banks usually in connection with
international transactions) of domestic or foreign banks and
savings loan associations. The Fund will purchase money market
instruments denominated in a foreign currency only within the
limitations described under "Foreign Securities." The issuers of
foreign money market instruments purchased by the Fund must have at
least $1 billion dollars (U.S.) of assets.
The Fund may also invest in obligations of foreign branches of
U.S. banks (referred to as Eurodollar obligations) and U.S.
branches of foreign banks (Yankee dollars) as well as foreign
branches of foreign banks. These investments involve risks that are
different from investment in securities of U.S. banks.
Hedging. The Fund may write covered call options on
securities, stock indices and foreign currency. It may purchase and
sell certain kinds of futures contracts, forward contracts, and
options on futures, broadly based stock indices and foreign
currencies. These are all referred to as "hedging instruments."
While the Fund does not engage extensively in hedging, the Fund may
use these instruments for hedging purposes and, in the case of
covered calls, non-hedging purposes as well, as described below.
The Fund may write covered call options and buy and sell
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 and writing covered calls, hedge the Fund's portfolio
against price fluctuations.
Other hedging strategies, such as buying futures, tend to
increase the Fund's exposure to the securities market. Forward
Contracts may be used to try to manage foreign currency risks on
the Fund's foreign investments. Foreign currency options may be
used to try to protect against declines in the dollar value of
foreign securities the Fund owns, or to protect against an increase
in the dollar cost of buying foreign securities. Writing covered
call options may also provide income to the Fund for liquidity
purposes, defensive reasons, or to raise cash to distribute to
shareholders. There are special risks of using hedging instruments,
described in "Investment Risks," above.
The Fund may not purchase or sell physical commodities;
however, the Fund may purchase and sell foreign currency in hedging
transactions. This restriction also does not prevent the Fund from
selling covered call options or buying or selling futures contracts
or from investing in securities or other instruments backed by
physical commodities.
Futures. The Fund may buy and sell futures contracts that
relate to foreign currencies (these are referred to as "Forward
Contracts" and are discussed below), and stock indices (these are
referred to as "Stock Index Futures"). These types of Futures are
described in "Hedging" in the Statement of Additional Information.
Covered Call Options and Options on Futures. The Fund may
write (that is, sell) call options on securities, indices and
foreign currencies for hedging or liquidity purposes and write call
options on Futures for hedging and non-hedging purposes, but only
if all such calls are "covered." That means the Fund owns the
investment on which the call was written or the Fund owns and
segregates liquid assets to satisfy its obligations if the call is
exercised. When the Fund writes a call, it receives cash (called
a premium). The call gives the buyer the ability to buy the
investment on which the call was written from the Fund at the call
price during the period in which the call may be exercised. If the
value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the
Fund keeps the cash premium (and the investment). After the Fund
writes a call, not more than 20% of the value of its total assets
may be subject to calls.
The Fund may write covered call options that are traded on
U.S. or foreign securities or commodity exchanges or which are used
by the Options Clearing Corporation. In the case of foreign
currency options, they may be quoted by major recognized dealers in
those options.
Forward Contracts. Forward Contracts are foreign currency
exchange contracts. They may be used to buy or sell foreign
currency for future delivery at a fixed price. The Fund may use
them for hedging purposes 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 value of the U.S. dollar and a foreign
currency. Normally, the Fund will not use "cross hedging," where
the Fund hedges against changes in currencies other than the
currency in which a security it holds is denominated. The Fund will
not speculate in foreign exchange.
Derivative Investments. Derivative investments may be used
by the Fund in some cases for hedging purposes and in other cases
to seek income. In the broadest sense, exchange-traded options and
futures contracts (discussed in "Hedging," above) may be considered
"derivative investments." There are special risks in investing in
derivatives, discussed in "Investment Risks," above.
Other Investment Restrictions. The Fund has other investment
restrictions which are "fundamental" policies. Among these
fundamental policies, the Fund cannot do any of the following:
The Fund cannot borrow amounts in excess of 10% of the
Fund's total assets, taken at market value at the time of the
borrowing, and then only from banks as a temporary measure for
extraordinary or emergency purposes, or make investments in
portfolio securities while such outstanding borrowings exceed 5% of
the Fund's total assets.
The Fund cannot invest more than 25% of its assets in
securities of issuers in any single industry, provided that this
limitation shall not apply to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. For the
purpose of this restriction, each utility that provides a separate
service (e.g., gas, gas transmission, electric or telephone) shall
be considered a separate industry. This test shall be applied on a
pro forma basis using the market value of all assets immediately
prior to making any investment. The Fund has undertaken as a matter
of non-fundamental policy to apply this restriction to 25% or more
of its assets.
The Fund cannot invest more than 5 percent of the Fund's
total assets (taken at market value at the time of each investment)
in the securities (other than United States Government or
Government agency securities) of any one issuer (including
repurchase agreements with any one bank or dealer) or more than 15
percent of the Fund's total assets in the obligations of any one
bank.
The Fund cannot purchase more than either (i) 10 percent
in principal amount of the outstanding debt securities of an
issuer, or (ii) 10 percent of the outstanding voting securities of
an issuer, except that such restrictions shall not apply to
securities issued or guaranteed by the United States Government or
its agencies, bank money instruments or bank repurchase agreements.
All of the percentage restrictions described above and
elsewhere in this Prospectus apply only at the time the Fund
purchases a security (except for the 300% asset coverage
requirement on borrowing), and the Fund need not dispose of a
security merely because the Fund's assets have changed or the
security has increased in value relative to the size of the Fund.
There are other fundamental policies discussed in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund is a diversified series of
Oppenheimer Series Fund, Inc. (the "Company"). The Company was
organized in 1981 as a Maryland corporation and is an open-end
management investment company. Organized as a series fund, the
Company presently has eight series, including the Fund. Until March
18, 1996, the Fund was called Connecticut Mutual Growth Account.
The Company (and each series, including the Fund) is governed
by a Board of Directors, which is responsible for protecting the
interests of shareholders under Maryland law. The Directors meet
periodically throughout the year to oversee the Fund's activities,
review its performance, and review the actions of the Manager.
"Directors and Officers of the Funds" in the Statement of
Additional Information names the Directors and officers of the Fund
and provides more information about them. Although the Fund
normally will not hold annual meetings of its shareholders, it may
hold shareholder meetings from time to time on important matters,
and shareholders have the right to call a meeting to remove a
Director or to take other action described in the Fund's Articles
of Incorporation.
The Board of Directors 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 for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Shares of each class may
have separate voting rights on matters in which interests of one
class are different from interests of another class, and shares of
a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable. Please refer to "How
the Funds are Managed" in the Statement of Additional Information
for further information on voting of shares.
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 Directors, under an Investment Advisory Agreement which
states the Manager's responsibilities. The Agreement sets forth the
rate of the management fees paid by the Fund to the Manager and
describes the expenses that the Fund is responsible to pay to
conduct its business.
operated as an investment adviser since 1959. The Manager
and its affiliates currently manage investment companies, including
other Oppenheimer funds, with assets of more than $55 billion as of
October 31, 1996, and with nearly three 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 Management. The Fund has a portfolio management
team consisting of three portfolio managers. The principal
Portfolio Manager of the Fund is Peter M. Antos. He is a Vice
President of the Fund and a Senior Vice President of the Manager
and has been the senior portfolio manager of the Fund's portfolio
since 1989. He is also a Chartered Financial Analyst and serves as
a portfolio manager of other Oppenheimer funds. Mr. Antos was
employed since 1989 by the Fund's prior investment adviser, G.R.
Phelps & Co., Inc., as a Vice President and Senior Portfolio
Manager, Equities, before joining Oppenheimer Funds. Mr. Michael C.
Strathearn and Mr. Kenneth B. White are also Vice Presidents and
portfolio managers of the Fund and Vice Presidents of the Manager.
Each is also a Chartered Financial Analyst, and each was also
employed since 1988 and 1987, respectively, by Connecticut Mutual
Life Insurance Company, the parent of G.R. Phelps, as a Portfolio
Manager prior to joining Oppenheimer Funds, Inc. on March 1, 1996.
Mr. Strathearn and Mr. White have provided portfolio management
services to the Fund since 1988 and 1992, respectively.
Fees and Expenses. Under the Investment Advisory Agreement,
the Fund pays the Manager a monthly fee at the following annual
rates, which decline on additional assets as the Fund grows: 0.625%
of the first $300 million of aggregate net assets; 0.500% of the
next $100 million; and 0.450% of net assets in excess of $400
million. The Fund's management fee for its last fiscal year was
0.625% of the average annual net assets for Class A and Class B
shares (on an annualized basis). There were no Class C shares
outstanding during that fiscal year.
The Fund pays expenses related to its daily operations, such
as custodian fees, Directors' fees, transfer agency fees, legal and
auditing costs. Those expenses are paid out of the Fund's assets
and are not paid directly by shareholders. However, those expenses
reduce the net asset value of shares, and therefore are indirectly
borne by shareholders through their investment. More information
about the Investment Advisory Agreement and the other expenses paid
by the Fund is contained in the Statement of Additional
Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Funds" 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, banks 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 the 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 or on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the term
"total return" to illustrate its performance. The performance of
each class of shares is shown separately, because the performance
of each class of shares will usually be different as a result of
the different kinds of expenses each class bears. These returns
measure the performance of a hypothetical account in the Fund over
various periods, and do not show the performance of each
shareholder's account (which will vary if dividends are received in
cash, or shares are sold or purchased). The Fund's performance data
may help you see how well your investment has done over time and to
compare it to market indices.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. More detailed
information about how total returns are calculated is contained in
the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
Total Returns. There are different types of "total returns"
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B and Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted at "net asset value," without including
the effect of either the front-end or the appropriate contingent
deferred sales charge, as applicable, and those returns would be
less if sales charges were deducted.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors four different classes
of shares. Only certain institutional investors may purchase a
fourth Class of shares, Class Y shares. The different classes of
shares represent investments in the same portfolio of securities
but are subject to different expenses and will likely have
different share prices.
Class A Shares. If you buy Class A shares, you may 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 purchases by "Retirement Plans," as defined in "Class
A Contingent Deferred Sales Charge" on page __ ) in shares of one
or more Oppenheimer funds, you will not pay an initial sales
charge, but if you sell any of those shares within 18 months of
buying them, you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you
invested. Sales 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 owned
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 discussed in "Buying Class C
Shares," below.
Class Y Shares. Class Y Shares are sold at net asset value
per share without the imposition of a sales charge at the time of
purchase to separate accounts of insurance companies and other
institutional investors ( Class Y Sponsors ) having an agreement
( Class Y Agreements ) with the Manager or the Distributor. The
intent of Class Y Agreements is to allow tax qualified
institutional investors to invest indirectly (through separate
accounts of the Class Y Sponsor) in Class Y Shares of the Fund and
to allow institutional investors to invest directly in Class Y
shares of the Fund. Individual investors are not permitted to
invest directly in Class Y Shares. As of the date of this
Prospectus, Massachusetts Mutual Life Insurance Company (an
affiliate of the Manager and the Distributor) acts as Class Y
Sponsor for all outstanding Class Y Shares of the Fund. While
Class Y shares are not subject to a contingent deferred sales
charge, asset-based sales charge or service fee, a Class Y sponsor
may impose charges on separate accounts investing in Class Y
shares.
None of the instructions described elsewhere in this
Prospectus or the Statement of Additional Information for the
purchase, redemption, reinvestment, exchange or transfer of shares
of the Fund, the selection of classes of shares or the reinvestment
of dividends apply to its Class Y shares. Clients of Class Y
Sponsors must request their Sponsor to effect all transactions in
Class Y shares on their behalf.
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 used the sales charge rates that apply to each class, and
considered the effect of the asset-based sales charge on Class B
and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed
that there is a 10% rate of appreciation in your 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 the 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
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 the shares of Class B or Class C for which no initial
sales charge is paid.
Investing for the Short Term. If you have a short term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than seven 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
economic impact on your account over the longer term than the
reduced front-end sales charge available for larger purchases of
Class A shares. For example, Class A might be more advantageous
than Class C (as well as Class B) for investments of more than
$100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or
more), Class A shares may become more advantageous than Class C
(and B). If investing $500,000 or more, Class A may be more
advantageous as your investment horizon approaches 3 years or more.
And for 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 charge available for larger investments in Class A
shares under the Fund's Right of Accumulation. Unlike Class B
shares, Class C shares do not convert to Class A shares and remain
subject to the asset-based sales charge.
Of course all of 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 you should analyze your options carefully.
Are There Differences In Account Features That Matter To
You? Because some features may not be available to Class B or C
shareholders, or other features (such as Automatic Withdrawal
Plans) may not be advisable (because of the effect of the
contingent deferred sales charge in non-retirement accounts) for
Class B or Class C shareholders, you should carefully review how
you plan to use your investment account before deciding which class
of shares to buy. 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, this may be a factor to consider.
Additionally, dividends payable to Class B and Class C shareholders
will be reduced by the additional expenses borne by those classes
that are not borne by Class A, such as the Class B and Class C
asset-based sales charges described below and in the Statement of
Additional Information.
How Does It Affect Payments To My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares, may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purpose of the
Class B and Class C contingent deferred sales charges and
asset-based sales charges is the same as the purpose of the
front-end sales charge on sales of Class A shares: to reimburse the
Distributor for commissions it pays to dealers and financial
institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments for as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension and profit-sharing plans, 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 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 the
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.
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 on the Application
and in the Statement of Additional Information.
At What Prices Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor 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 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, in its sole discretion, may
reject any purchase order for the Fund's shares.
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 and Former Connecticut Mutual 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. Different sales charge
rates and commissions applied to sales of Class A shares prior to
March 18, 1996. The current sales charge rates and commissions paid
to dealers and brokers are as follows:
Front-End Sales
Front-End Sales Charge as
Charge as Percentage of Commission as
Percentage of Amount Percentage of
Amount of Purchase Offering Price Invested Offering Price
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$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%
The Distributor reserves the right to reallow the entire
commission to dealers. If that occurs, the dealer may be considered
an "underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more, or
Purchases by 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 (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), 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 $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more.
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.
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. That commission will be paid only on
those purchases that were not previously subject to a 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 within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. That sales
charge will be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gains 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 18 months of the end of the calendar month of the purchase
of the exchanged shares, the sales charge will apply.
Special Arrangements with Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients. Until January 1, 1997, dealers
whose sales of Class A shares of Oppenheimer funds (other than
money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per
quarter), will receive monthly one-half of the Distributor's
retained commissions on those sales, and if those sales exceed $10
million per year, those dealers will receive the Distributor's
entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and
your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate for current purchases of Class A
shares. You can also include Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine your reduced sales charge rate for
the Class A shares purchased during that period. More information
is contained in the Application and in "Reduced Sales Charges" in
the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their
spouses) of dealers or brokers described above or financial
institutions that have entered into sales arrangements with such
dealers or brokers (and are identified to the Distributor) or with
the Distributor; the purchaser must certify to the Distributor at
the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, banks or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products or employee benefit plans made available to
their clients (those clients may be charged a transaction fee by
their dealer, broker or advisor for the purchase or sale of shares
of the Fund);
(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 the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that fund due
to the termination of the Class B and C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by 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 one of
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; and
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 redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month ( and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
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.
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 Directors authorizes such reimbursements, which it
has not done as yet) 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
provider or its customers. The payments under the Plan increase the
annual expenses of Class A shares. For more details, please refer
to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset
value per share without an initial sales charge. However, if Class
B shares are redeemed within six years of their purchase, a
contingent deferred sales charge will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The 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 an
increase in net asset value over the initial purchase price. The
Class B contingent deferred sales charge is paid to the Distributor
to compensate it for providing distribution-related services to the
Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over six years, and (3)
shares held the longest during the six-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. Different contingent
deferred sales charges applied to redemptions of Class B shares
prior to March 18, 1996.
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.
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The 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 compensate 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 Distribution and Service Plans for Class B and
Class C shares to compensate the Distributor for its costs in
distributing Class B and 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 six years or less and on Class C shares. The Distributor also
receives a 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
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 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. 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 sales of Class B shares is therefore 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales 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 therefore 1.00% of the purchase
price. The Distributor plans to pay the asset-based sales charge as
an ongoing commission to the dealer on Class C shares that have
been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and 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 C
shares. If the Fund terminates either Plan, the Board of Directors
may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the Plan
was terminated.
Waivers of Class B and Class C Sales Charges. The Class B and Class
C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to
Class B and Class C shares redeemed in certain circumstances as
described below. The reasons for this policy are in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers for Redemptions 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 to the 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
disability must have occurred after the account was established,
and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from Retirement Plans to make "substantially
equal periodic payments" as permitted in Section 72(t) of the
Internal Revenue Code that 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," below; or
distributions from OppenheimerFunds prototype 401(k) plans
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies
or separate accounts of insurance companies having an agreement
with the Manager or the Distributor for that purpose; and
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. 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 refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account. Please
refer to "How to Sell Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another 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 Application and Statement of
Additional Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer 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 Class B shares, 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 SARSEP-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 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 or plan
trustee, you must arrange for the distribution request to be signed
and 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 Express Mail
for requests by 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 seven-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 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 if the bank is 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.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. To find out more information about this
service contact your dealer or broker. 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 the 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 the 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 names 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 seven days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and
harm shareholders, the Fund reserves the right to refuse any
exchange request that will disadvantage it, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
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 taxable gain or a 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.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange which is
normally 4:00 P.M., but may be earlier on some days, on each day
the Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Directors 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 Directors 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
the Transfer Agent or the Fund may be liable for losses due to
unauthorized transactions, but otherwise neither the Transfer Agent
nor the Fund will be liable for losses or expenses arising out of
telephone instructions reasonably believed to be genuine. If you
are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
The redemption price for shares will vary from day to day
because the 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 and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account has fewer than 100 shares, 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 your correct, certified Social Security or Employer
Identification Number and any other certifications required by the
Internal Revenue Service ("IRS") when you sign your application, or
if you violate IRS 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 intends to declare and pay dividends separately
for Class A, Class B, Class C and Class Y shares from net
investment income, if any, annually. Normally, dividends are paid
on the last business day of December, but the Board of Directors
can change that date. 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 than for Class A and Class Y shares. There
is no fixed dividend rate and there can be no assurance that the
Fund will pay any dividends.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains. Long-term
capital gains will be separately identified in the tax information
your Fund sends you after the end of the year. 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 Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by
check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
funds 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. The Fund's distributions from long-term capital gains
are taxable to shareholders as long-term capital gains, no matter
how long you held your shares. Dividends paid by the Fund from
short-term capital gains and net investment income, including
certain net realized foreign exchange gains, are taxable as
ordinary income. These dividends and distributions are subject to
Federal income tax and may be subject to state or local taxes. Your
distributions are taxable as described above, whether you reinvest
them in additional shares or take them in cash. Corporate
shareholders may be entitled to the corporate dividends received
deduction for some portion of the Fund's distributions treated as
ordinary income, subject to applicable limitations under the
Internal Revenue Code. Every year the Fund will send you and the
IRS a statement showing the aggregate amount and character of the
dividends and other distributions you received for the previous
year.
"Buying a Dividend". When the 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 and repurchases,
including redemptions for exchanges, may produce a taxable gain or
a loss, which generally will be a capital gain or loss for
shareholders who hold shares of the Fund as capital assets.
Generally speaking, a capital gain or loss is the difference
between your tax basis, which is usually the price you paid for the
shares, and the proceeds you received when you sold them. Special
tax rules may apply to certain redemptions preceded or followed by
investments in the Fund or another Oppenheimer fund.
Returns of Capital. In certain cases distributions made by
the Fund may be considered a return of capital to shareholders. If
that occurs, it will be identified in notices to shareholders. A
return of capital will reduce your tax basis in shares of the Fund
but will not be taxable except to the extent it exceeds your tax
basis.
Foreign Taxes. The Fund may be subject to foreign
withholding taxes or other foreign taxes on income (possibly
including capital gains) on certain of its foreign investments.
These taxes may be reduced or eliminated pursuant to an income tax
treaty in some cases. The Fund does not expect to qualify to pass
such foreign taxes (and any related tax deductions or credits)
through to its shareholders.
This information is only a summary of certain federal tax
information about your investment. Tax-exempt or tax-deferred
investors, foreign investors, and investors subject to special tax
rules (such as certain banks and securities dealers) may have
different tax consequences not described above. More tax
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 Securities Ratings
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds 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 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 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 rated "Baa" are considered medium grade obligations,
that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds 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 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 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 rated "Ca" represent obligations which are speculative in
a high degree and are often in default or have other marked
shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor
prospects of ever attaining 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 category than for bonds in
the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. "BB" indicates the lowest degree
of speculation and "CC" the highest degree. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment
of principal is in arrears.
Fitch Investors Service, Inc.
Investment Grade Bond Ratings
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-
term debt of these issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher
ratings.
Speculative Grade Bond Ratings
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflect the obligor's limited margin of safety and the need for
reasonable business and economic activity through out the life of
the issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation
or reorganization of the obligor. "DDD" represents the highest
potential for recovery on these bonds, and "D" represents the
lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the "AAA," "DDD," "DD," or "D" categories.
Duff & Phelps' Ratings
Long-Term Debt and Preferred Stock
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free US Treasury debt.
AA+, AA & AA- High credit quality protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.
A+, A & A- Protection factors are average but adequate. However,
risk factors are more variable and greater in periods of economic
stress.
BBB+, BBB & BBB- Below average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.
BB+, BB & BB- Below investment grade but deemed to meet
obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within
the category.
B+, B & B- Below investment grade and possessing risk that
obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry
conditions and/or company fortunes. Potential exists for frequent
changes in the rating within this category or into a higher of
lower rating grade.
CCC Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal interest or
preferred dividends. Protection factors are narrow and risk can be
substantial with unfavorable economic industry conditions, and/or
with unfavorable company developments.
DD Defaulted debt obligations issuer failed to meet scheduled
principal and/or interest payments.
DP Preferred stock with dividend arreages.
APPENDIX B: Special Sales Charge Arrangements
I. Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class , Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those
shareholders of (i) Quest for Value Fund, Inc., Quest for Value
Growth and Income Fund, Quest for Value Opportunity Fund, Quest for
Value Small Capitalization Fund and Quest for Value Global Equity
Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment adviser to those funds, and (ii) Quest for Value
U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for 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 acquired by such shareholder pursuant to an
exchange of shares of one of the Oppenheimer funds (i) that was one
of the Former Quest for Value Funds or (ii) that were acquired by
exchange from one of those funds or from a fund into which one of
the Former Quest for Value Funds merged.
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 Sales Front-End
Number of Charge as a Charge as a Commission as
Eligible Percentage Percentage Percentage
Employees of Offering of Amount of 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 to 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 Former Quest for Value Funds or 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."
<PAGE>
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March
6, 1995. In the following cases, the contingent deferred sales
charge will be waived for redemptions of Class A, B or C shares of
the Fund acquired by exchange from an Oppenheimer fund that was a
Former Quest for Value Fund or into which such fund merged, if
those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased On or After
March 6, 1995 but Prior to November 24, 1995. In the following
cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by
exchange from an Oppenheimer fund that was a Former Quest For Value
Fund or into which such fund merged, if those shares were purchased
on or after March 6, 1995, but prior to November 24, 1995: (1)
distributions to participants or beneficiaries from Individual
Retirement Accounts under Section 408(a) of the Internal Revenue
Code or retirement plans under Section 401(a), 401(k), 403(b) and
457 of the Code, if those distributions are made either (a) to an
individual participant as a result of separation from service or
(b) following the death or disability (as defined in the Code) of
the participant or beneficiary; (2) returns of excess contributions
to such retirement plans; (3) redemptions other than from
retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in the 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.
II. Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Connecticut Mutual Funds
Certain of the sales charge rates and waivers for Class A and
Class B shares of the Fund described elsewhere in this Prospectus
are modified as described below for those shareholders of
Connecticut Mutual Liquid Account, Connecticut Mutual Government
Securities Account, Connecticut Mutual Income Account, Connecticut
Mutual Growth Account, Connecticut Mutual Total Return Account,
CMIA LifeSpan Diversified Income Account, CMIA LifeSpan Capital
Appreciation Account and CMIA LifeSpan Balanced Account (the
"Former Connecticut Mutual Funds") on March 1, 1996, when
OppenheimerFunds, Inc. became the investment adviser to the Former
Connecticut Mutual Funds.
Prior Class A CDSC and Class A Sales Charge Waivers
Class A Contingent Deferred Sales Charge. Certain
shareholders of the Fund and the other Former Connecticut Mutual
Funds are entitled to continue to make additional purchases of
Class A shares at net asset value without a Class A initial sales
charge, but subject to the Class A contingent deferred sales charge
that was in effect prior to March 18, 1996 (the "prior Class A
CDSC"). Under the prior Class A CDSC, if any of those shares are
redeemed within one year of purchase, they will be assessed a 1%
contingent deferred sales charge on an amount equal to the current
market value or the original purchase price of the shares sold,
whichever is smaller (in such redemptions, any shares not subject
to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC
are: (1) persons whose purchases of Class A shares of the Fund and
other Former Connecticut Mutual Funds were $500,000 prior to March
18, 1996, as a result of direct purchases or purchases pursuant to
the Funds' policies on Combined Purchases or Rights of
Accumulation, who still hold those shares in the Fund or other
Former Connecticut Mutual Funds, and (2) persons whose intended
purchases under a Statement of Intention entered into prior to
March 18, 1996, with the Funds' former general distributor to
purchase shares valued at $500,000 or more over a 13-month period
entitled those persons to purchase shares at net asset value
without being subject to the Class A initial sales charge.
Any of the Class A shares of the Fund and the other Former
Connecticut Mutual Funds that were purchased at net asset value
prior to March 18, 1996, remain subject to the prior Class A CDSC,
or if any additional shares are purchased by those shareholders at
net asset value pursuant to this arrangement they will be subject
to the prior Class A CDSC.
Class A Sales Charge Waivers. Additional Class A shares of
the Fund may be purchased without a sales charge, by a person who
was in one (or more) of the categories below and acquired Class A
shares prior to March 18, 1996, and still holds Class A shares:
(1) any purchaser, provided the total initial amount invested in
the Fund or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more, including investments made pursuant to
the Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial purchase
and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged; (2)
any participant in a qualified plan, provided that the total
initial amount invested by the plan in the Fund or any one or more
of the Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former
Connecticut Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual
Financial Services, L.L.C. ("CMFS"), the Fund's prior distributor,
and its affiliated companies; (5) one or more members of a group of
at least 1,000 persons (and persons who are retirees from such
group) engaged in a common business, profession, civic or
charitable endeavor or other activity, and the spouses and minor
dependent children of such persons, pursuant to a marketing program
between CMFS and such group; and (6) an institution acting as a
fiduciary on behalf of an individual or individuals, if such
institution was directly compensated by the individual(s) for
recommending the purchase of the shares of the Fund or any one or
more of the Former Connecticut Mutual Funds, provided the
institution had an agreement with CMFS. Purchases of Class A shares
made pursuant to (1) and (2) above may be subject to the Class A
CDSC of the Former Connecticut Mutual Funds described above.
Additionally, Class A shares of the Fund may be purchased
without a sales charge by any holder of a variable annuity contract
issued in New York State by Connecticut Mutual Life Insurance
Company through the Panorama Separate Account which is beyond the
applicable surrender charge period and which was used to fund a
qualified plan, if that holder exchanges the variable annuity
contract proceeds to buy Class A shares of the Fund.
Class A and Class B Contingent Deferred Sales Charge Waivers
In addition to the waivers set forth in "How To Buy Shares," above,
the contingent deferred sales charge will be waived for redemptions
of Class A and Class B shares of the Fund and exchanges of Class A
or Class B shares of the Fund into Class A or Class B shares of a
Former Connecticut Mutual Fund provided that the Class A or Class
B shares of the Fund to be redeemed or exchanged were (i) acquired
prior to March 18, 1996 or (ii) were acquired by exchange from an
Oppenheimer Fund that was a Former Connecticut Mutual Fund and the
shares of such Former Connecticut Mutual Fund were purchased prior
to March 18, 1996: (1)by the estate of a deceased shareholder; (2)
upon the disability of a shareholder, as defined in Section
72(m)(7) of the Internal Revenue Code; (3) for retirement
distributions (or loans) to participants or beneficiaries from
retirement plans qualified under Sections 401(a) or 403(b)(7)of the
Code, or from IRAs, deferred compensation plans created under
Section 457 of the Code, or other employee benefit plans; (4) as
tax-free returns of excess contributions to such retirement or
employee benefit plans; (5) in whole or in part, in connection with
shares sold to any state, county, or city, or any instrumentality,
department, authority, or agency thereof, that is prohibited by
applicable investment laws from paying a sales charge or commission
in connection with the purchase of shares of any registered
investment management company; (6) in connection with the
redemption of shares of the Fund due to a combination with another
investment company by virtue of a merger, acquisition or similar
reorganization transaction; (7) in connection with the Fund's right
to involuntarily redeem or liquidate the Fund; (8) in connection
with automatic redemptions of Class A shares and Class B shares in
certain retirement plan accounts pursuant to an Automatic
Withdrawal Plan but limited to no more than 12% of the original
value annually; and (9) as involuntary redemptions of shares by
operation of law, or under procedures set forth in the Fund's
Articles of Incorporation, or as adopted by the Board of Directors
of the Fund.
<PAGE>
Oppenheimer Disciplined Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
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 and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Independent Auditors
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, 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.
PR0205.001.0596 Printed on recycled paper
375PSP.#1
<PAGE>
Oppenheimer Series Fund, Inc.
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated December 16, 1996
OPPENHEIMER SERIES FUND, INC. (the "Company") is an investment
company consisting of five separate series (the "Funds"):
Oppenheimer Disciplined Allocation Fund ("Allocation Fund")
Oppenheimer Disciplined Value Fund ("Value Fund")
and
Oppenheimer LifeSpan Balanced Fund ("LifeSpan Balanced Fund")
Oppenheimer LifeSpan Growth Fund ("LifeSpan Growth Fund")
Oppenheimer LifeSpan Income Fund ("LifeSpan Income Fund")
(collectively, the "LifeSpan Funds")
This Statement of Additional Information is not a Prospectus.
This document contains additional information about the Funds and
supplements information in each Fund's Prospectus dated December
16, 1996 (individually, a "Prospectus" and collectively, the
"Prospectuses"). It should be read together with the Prospectuses
which may be obtained by writing to the Funds' 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.
The Funds' investment adviser is OppenheimerFunds, Inc. (the
"Manager"). In the case of the LifeSpan Funds, the Manager has
engaged Babson-Stewart Ivory International ("Babson-Stewart"), BEA
Associates and Pilgrim, Baxter & Assoc. Ltd. ("Pilgrim") as
subadvisers to assist in the management of the LifeSpan Funds.
Babson-Stewart, BEA Associates and Pilgrim are sometimes referred
to herein individually as a "Subadviser" and collectively as the
"Subadvisers."
<PAGE>
Contents
Page
About the Funds
Investment Objective and Policies. . . . . . . . . . . . .
Other Investment Restrictions. . . . . . . . . . . . . .
How the Funds are Managed. . . . . . . . . . . . . . . . .
Organization and History . . . . . . . . . . . . . . . .
Directors and Officers of the Funds. . . . . . . . . . .
The Manager and Its Affiliates . . . . . . . . . . . . .
Brokerage Policies of the Funds. . . . . . . . . . . . . .
Performance of the Funds . . . . . . . . . . . . . . . . .
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 Funds . . . . . . . . . .
Financial Information About the Funds
Independent Auditors' Report . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . .
Independent Auditors' Report - LifeSpan Funds. . . . . . .
Financial Statements - LifeSpan Funds. . . . . . . . . . .
Appendix: Industry Classification. . . . . . . . . . . . .
A-1
<PAGE>
ABOUT THE FUNDS
Investment Objectives And Policies
Investment Policies and Strategies. The investment objectives and
policies of each Fund are described in its Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Funds may invest, as well as the
strategies the Funds may use to try to achieve their objective.
Certain capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the
Prospectuses.
Foreign Securities (All Funds). Consistent with the
limitations on foreign investing set forth in the relevant Fund's
Prospectus, each Fund (other than Liquid Fund and Government
Securities Fund) may invest in foreign securities. Each Fund
(other than Liquid Fund and Government Securities Fund) may also
invest in debt and equity securities of corporate and governmental
issuers of countries with emerging economies or securities markets.
Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers,
such as 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 or bond markets that do not move in a manner parallel
to U.S. markets. If a Fund's portfolio securities are held abroad,
the countries in which such securities may be held and the sub-
custodians holding them must be approved by the Fund's Board of
Directors under applicable rules of the Securities and Exchange
Commission ("SEC"). In buying foreign securities, a Fund may
convert U.S. dollars into foreign currency, but only to effect
securities transactions on foreign securities exchanges and not to
hold such currency as an investment.
"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 are traded in the U.S. over-the-
counter market are not considered "foreign securities" for purposes
of a Fund's investment allocations, because they are not subject to
many of the special considerations and risks (discussed below) that
apply to foreign securities traded and held abroad.
Investing in foreign securities, and in particular in
securities in emerging countries, 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 in foreign markets than in
the U.S.; less regulation of foreign issuers, stock exchanges and
brokers than in the U.S.; greater difficulties in commencing
lawsuits against foreign issuers; higher brokerage commission rates
than in the U.S.; increased risks of delays in settlement of
portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries, and in particular
emerging countries, of expropriation or nationalization of assets,
confiscatory taxation, political, financial or social instability
or adverse diplomatic developments; and unfavorable differences
between the U.S. economy and foreign economies. In the past, U.S.
Government policies have discouraged certain investments abroad by
U.S. investors, through taxation or other restrictions, and it is
possible that such restrictions could be re-imposed.
A Fund's investment income or, in some cases, capital gains
from foreign issuers may be subject to foreign withholding or other
foreign taxes, thereby reducing a Fund's net investment income
and/or net realized capital gains. See "Dividends, Capital Gains
and Taxes."
Debt Securities (All Funds). All debt securities are subject
to two types of risks: credit risk and interest rate risk (these
are in addition to other investment risks that may affect a
particular security).
Credit Risk. Credit risk relates to the ability of the issuer
to meet interest or principal payments or both as they become due.
Generally, higher yielding bonds are subject to credit risk to a
greater extent than higher quality bonds.
Interest Rate Risk. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely
from the inverse relationship between the market value of
outstanding fixed-income securities and changes in interest rates.
An increase in interest rates will generally reduce the market
value of 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 capital appreciation and
depreciation than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities
subsequent to their acquisition will not affect the interest
payable on those securities, and thus the cash income from such
securities, but will be reflected in the valuations of those
securities used to compute a Fund's net asset values.
High Yield Securities. Each Fund (other than Liquid Fund and
Government Securities Fund) may invest in high-yield/high risk
securities (commonly called junk bonds).
The Manager does not rely on credit ratings assigned by rating
agencies in assessing investment opportunities in debt securities.
Ratings by credit agencies assess safety of principal and interest
payments and do not reflect market risks. In addition, ratings by
credit agencies may not be changed by the agencies in a timely
manner to reflect subsequent economic events. By carefully
selecting individual issues and diversifying portfolio holdings by
industry sector and issuer, the Manager believes that the risk of
the Fund holding defaulted lower grade securities can be reduced.
Emphasis on credit risk management involves the Manager's own
internal analysis to determine the debt service capability,
financial flexibility and liquidity of an issuer, as well as the
fundamental trends and outlook for the issuer and its industry.
The Manager's rating helps it determine the attractiveness of
specific issues relative to the valuation by the market place of
similarly rated credits.
Risks of high yield securities 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 which may cause the Fund to invest premature redemption
proceeds 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 net asset value of a Fund. For example,
federally-insured savings and loan associations have been required
to divest their investments in high yield bonds.
U.S. Government Securities (All Funds). U.S. Government
Securities are debt obligations issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities, and include
"zero coupon" Treasury securities.
U.S. Treasury Obligations. These include Treasury Bills
(which have maturities of one year or less when issued), Treasury
Notes (which have maturities of one to ten years when issued) and
Treasury Bonds (which have maturities generally greater than ten
years when issued). U.S. Treasury obligations are backed by the
full faith and credit of the United States.
U.S. Government and Agency. U.S. Government Securities are
debt obligations issued by or guaranteed by the United States
government or any of its agencies or instrumentalities. Some of
these obligations, including U.S. Treasury notes and bonds, and
mortgage-backed securities (referred to as "Ginnie Maes")
guaranteed by the Government National Mortgage Association, are
supported by the full faith and credit of the United States, which
means that the government pledges to use its taxing power to repay
the debt. Other U.S. Government Securities issued or guaranteed by
Federal agencies or government-sponsored enterprises are not
supported by the full faith and credit of the United States. They
may include obligations supported by the ability of the issuer to
borrow from the U.S. Treasury. However, the Treasury is not under
a legal obligation to make a loan. Examples of these are
obligations of Federal Home Loan Mortgage Corporation (those
securities are often called "Freddie Macs"). Other obligations are
supported by the credit of the instrumentality, such as Federal
National Mortgage Association bonds (these securities are often
called "Fannie Maes").
GNMA Certificates. Certificates of Government National
Mortgage Association ("GNMA") are mortgaged-backed securities of
GNMA that evidence an undivided interest in a pool or pools of
mortgages ("GNMA Certificates"). The GNMA Certificates that a Fund
may purchase may be of the "modified pass-through" type, which
entitle the holder to receive timely payment of all interest and
principal payments due on the mortgage pool, net of fees paid to
the "issuer" and GNMA, regardless of whether the mortgagor actually
makes the payments.
The National Housing Act authorizes GNMA to guarantee the
timely payment of principal and interest on securities backed by a
pool of mortgages insured by the Federal Housing Administration
("FHA") or guaranteed by the Veterans Administration ("VA"). The
GNMA guarantee is backed by the full faith and credit of the U.S.
Government. GNMA is also empowered to borrow without limitation
from the U.S. Treasury if necessary to make any payments required
under its guarantee.
The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors
and mortgage foreclosures will usually result in the return of the
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 a 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 certificates ("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. The FHLMC guarantee is not
backed by the full faith and credit of the U.S. Government.
GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semi-annually
and return principal once a year in guaranteed minimum payments.
The expected average life of these securities is approximately ten
years. The FHLMC guarantee is not backed by the full faith and
credit of the U.S. Government.
Mortgage-Backed Security Rolls. Allocation Fund may enter
into "forward roll" transactions with respect to mortgage-backed
securities issued by GNMA, FNMA or FHLMC. In a forward roll
transaction, which is considered to be a borrowing by a Fund, a
Fund will sell a mortgage security to a bank or other permitted
entity and simultaneously agree to repurchase a similar security
from the institution at a 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 possibility
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 possibility
that the market value of the securities sold by a Fund may decline
below the price at which the Fund is obligated to purchase the
securities. Upon entering into a mortgage-backed security roll, a
Fund will be required to place cash, U.S. Government Securities or
other high-grade debt securities in a segregated account with its
Custodian in an amount equal to its obligation under the roll.
Zero Coupon Securities and Deferred Interest Bonds. The Funds
may invest in zero coupon securities and deferred interest bonds
issued by the U.S. Treasury or by private issuers such as domestic
or foreign corporations. Zero coupon U.S. Treasury securities
include: (1) U.S. Treasury bills without interest coupons, (2)
U.S. Treasury notes and bonds that have been stripped of their
unmatured interest coupons and (3) receipts or certificates
representing interests in such stripped debt obligations or
coupons. Zero coupon securities and deferred interest bonds
usually trade at a deep discount from their face or par value and
will be subject to greater fluctuations in market value in response
to changing interest rates than debt obligations of comparable
maturities that make current payments of interest. An additional
risk of private-issuer zero coupon securities and deferred interest
bonds is the credit risk that the issuer will be unable to make
payment at maturity of the obligation.
While zero coupon bonds do not require the periodic payment of
interest, deferred interest bonds generally provide for a period of
delay before the regular payment of interest begins. Although this
period of delay is different for each deferred interest bond, a
typical period is approximately one-third of the bond's term to
maturity. Such investments benefit the issuer by mitigating its
initial need for cash to meet debt service, but some also provide
a higher rate of return to attract investors who are willing to
defer receipt of such cash. With zero coupon securities, however,
the lack of periodic interest payments means that the interest rate
is "locked in" and the investor avoids the risk of having to
reinvest periodic interest payments in securities having lower
rates.
Because a Fund accrues taxable income from zero coupon and
deferred interest securities without receiving cash, a Fund may be
required to sell portfolio securities in order to pay dividends or
redemption proceeds for its shares, which require the payment of
cash. This will depend on several factors: the proportion of
shareholders who elect to receive dividends in cash rather than
reinvesting dividends in additional shares of a Fund, and the
amount of cash income a Fund receives from other investments and
the sale of shares. In either case, cash distributed or held by a
Fund that is not reinvested by investors in additional Fund shares
will hinder a Fund from seeking current income.
Mortgage-Backed Securities (All Funds). These securities
represent participation interests in pools of residential mortgage
loans which are guaranteed by agencies or instrumentalities of the
U.S. Government. Such securities differ from conventional debt
securities which generally provide for periodic payment of interest
in fixed or determinable amounts (usually semi-annually) with
principal payments at maturity or specified call dates. Some
mortgage-backed securities in which the Funds may invest may be
backed by the full faith and credit of the U.S. Treasury (e.g.,
direct pass-through certificates of Government National Mortgage
Association); some are supported by the right of the issuer to
borrower from the U.S. Government (e.g., obligations of Federal
Home Loan Mortgage Corporation); and some are backed by only the
credit of the issuer itself. Those guarantees do not extend to the
value of or yield of the mortgage-backed securities themselves or
to the net asset value of a Fund's shares.
Mortgage-backed securities may also be issued by trusts or
other entities formed or sponsored by private originators of and
institutional investors in mortgage loans and other foreign or
domestic non-governmental entities (or represent custodial
arrangements administered by such institutions). These private
originators and institutions include domestic and foreign savings
and loan associations, mortgage bankers, commercial banks,
insurance companies, investment banks and special purpose
subsidiaries of the foregoing. Privately issued mortgage-backed
securities are generally backed by pools of conventional (i.e.,
non-government guaranteed or insured) mortgage loans. Since such
mortgage-backed securities are not guaranteed by an entity having
the credit standing of Ginnie Mae, Fannie Mae or Freddie Mac, in
order to receive a high quality rating, they normally are
structured with one or more types of "credit enhancement." Such
credit enhancements fall generally into two categories; (1)
liquidity protection and (2) protection against losses resulting
after default by a borrower and liquidation of the collateral.
Liquidity protection refers to the providing of cash advances to
holders of mortgage-backed securities when a borrower on an
underlying mortgage fails to make its monthly payment on time.
Protection against losses resulting after default and liquidation
is designed to cover losses resulting when, for example, the
proceeds of a foreclosure sale are insufficient to cover the
outstanding amount on the mortgage. Such protection may be
provided through guarantees, insurance policies or letters of
credit, though various means of structuring the transaction or
through a combination of such approaches.
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 a Fund to differ from the yield
calculated on the basis of the expected average life of the pool.
Prepayments tend to increase during periods of falling
interest rates, while during periods of rising interest rates
prepayments will most likely decline. When prevailing interest
rates rise, the value of a pass-through security may decrease as do
the values of other debt securities, but, when prevailing interest
rates decline, the value of a pass-through security is not likely
to rise to the extent that the value of other debt securities rise,
because of the prepayment feature of pass-through securities. A
Fund's reinvestment of scheduled principal payments and unscheduled
prepayments it receives may occur at times when available
investments offer higher or lower rates than the original
investment, thus affecting the yield of such Fund. Monthly
interest payments received by a Fund have a compounding effect
which may increase the yield to the Fund more than debt obligations
that pay interest semi-annually. Because of those factors,
mortgage-backed securities may be less effective than Treasury
bonds of similar maturity at maintaining yields during periods of
declining interest rates. A Fund may purchase mortgage-backed
securities at par, 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 their
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.
Mortgage-backed securities may be less effective than debt
obligations of similar maturity at maintaining yields during
periods of declining interest rates. As new types of mortgage-
related securities are developed and offered to investors, the
Manager will, subject to the direction of the Board of Directors
and consistent with a Fund's investment objective and policies,
consider making investments in such new types of mortgage-related
securities.
"Stripped" Mortgage-Backed Securities. Allocation Fund and
each LifeSpan Fund may invest in "stripped" mortgage-backed
securities, in which the principal and interest portions of the
security are separated and sold. Stripped mortgage-backed
securities usually have at least two classes each of which receives
different proportions of interest and principal distributions on
the underlying pool of mortgage assets. One common variety of
stripped mortgage-backed security has one class that receives some
of the interest and most of the principal, while the other class
receives most of the interest and remainder of the principal. In
some cases, one class will receive all of the interest (the
"interest-only" or "IO" class), while the other class will receive
all of the principal (the "principal-only" or "PO" class).
Interest only securities are extremely sensitive to interest rate
changes, and prepayments of principal on the underlying mortgage
assets. An increase in principal payments or prepayments will
reduce the income available to the IO security. In accordance with
a requirement imposed by the staff of the SEC, the Manager or the
relevant Subadviser will consider privately-issued fixed rate IOs
and POs to be illiquid securities for purposes of a Fund's
limitation on investments in illiquid securities. Unless the
Manager or the relevant Subadviser, acting pursuant to guidelines
and standards established by the Board of Directors, determines
that a particular government-issued fixed rate IO or PO is liquid,
management will also consider these IOs and POs to be illiquid. In
other types of CMOs, the underlying principal payments may apply to
various classes in a particular order, and therefore the value of
certain classes or "tranches" of such securities may be more
volatile than the value of the pool as a whole, and losses may be
more severe than on other classes.
Custodial Receipts. Each of the Funds may acquire U.S.
Government Securities and their unmatured interest coupons that
have been separated (stripped) by their holder, typically a
custodian bank or investment brokerage firm. Having separated the
interest coupons from the underlying principal of the U.S.
Government Securities, the holder will resell the stripped
securities in custodial receipt programs with a number of different
names, including Treasury Income Growth Receipts (TIGRs) and
Certificate of Accrual on Treasury Securities (CATS). The stripped
coupons are sold separately from the underlying principal, which is
usually sold at a deep discount because the buyer receives only the
right to receive a future fixed payment on the security and does
not receive any rights to periodic interest (cash) payments. The
underlying U.S. Treasury bonds and notes themselves are generally
held in book-entry form at a Federal Reserve Bank. Counsel to the
underwriters of these certificates or other evidences of ownership
of U.S. Treasury securities have stated that, in their opinion,
purchasers of the stripped securities most likely will be deemed
the beneficial holders of the underlying U.S. Government Securities
for federal tax and securities purposes. In the case of CATS and
TIGRs, the IRS has reached this conclusion for the purpose of
applying the tax diversification requirements applicable to
regulated investment companies such as the Funds. CATS and TIGRs
are not considered U.S. Government Securities by the Staff of the
SEC, however. Further, the IRS' conclusion is contained only in a
general counsel memorandum, which is an internal document of no
precedential value or binding effect, and a private letter ruling,
which also may not be relied upon by the Funds. The Company is not
aware of any binding legislative, judicial or administrative
authority on this issue.
Collateralized Mortgage-Backed Obligations ("CMOs")
Allocation Fund and each of the LifeSpan Funds may invest in
collateralized mortgage obligations ("CMOs"). CMOs are fully-
collateralized bonds that are the general obligations of the issuer
thereof, either the U.S. Government, a U.S. Government
instrumentality, or a private issuer, which may be a domestic or
foreign corporation. Such bonds generally are secured by an
assignment to a trustee (under the indenture pursuant to which the
bonds are issued) of collateral consisting of a pool of mortgages.
Payments with respect to the underlying mortgages generally are
made to the trustee under the indenture. Payments of principal and
interest on the underlying mortgages are not passed through to the
holders of the CMOs as such (i.e., the character of payments of
principal and interest is not passed through, and therefore
payments to holders of CMOs attributable to interest paid and
principal repaid on the underlying mortgages do not necessarily
constitute income and return of capital, respectively, to such
holders), but such payments are dedicated to payment of interest on
and repayment of principal of the CMOs. CMOs often are issued in
two or more classes with different characteristics such as varying
maturities and stated rates of interest. Because interest and
principal payments on the underlying mortgages are not passed
through to holders of CMOs, CMOs of varying maturities may be
secured by the same pool of mortgages, the payments on which are
used to pay interest on each class and to retire successive
maturities in sequence. Unlike other mortgage-backed securities
(discussed above), CMOs are designed to be retired as the
underlying mortgages are repaid. In the event of prepayment on
such mortgages, the class of CMO first to mature generally will be
paid down. Therefore, although in most cases the issuer of CMOs
will not supply additional collateral in the event of such
prepayment, there will be sufficient collateral to secure CMOs that
remain outstanding.
Asset-Backed Securities. Allocation Fund and each Life Span
Fund may purchase asset-back securities. The value of an asset-
backed security is affected by changes in the market's perception
of the asset backing the security, 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 any credit enhancement has been exhausted. The
risks of investing in asset-backed securities are ultimately
dependent upon payment of consumer loans by the individual
borrowers. As a purchaser of an asset-backed security, a 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 above for the prepayments of a pool of mortgage
loans underlying mortgage-backed securities.
Commercial Paper (All Funds). Each Fund may purchase
commercial paper for temporary defensive purposes as described in
its Prospectus. In addition, a Fund may invest in variable amount
master demand notes and floating rate notes as follows:
Variable Amount Master Demand Notes. Master demand notes are
corporate obligations which permit the investment of fluctuating
amounts by a Fund at varying rates of interest pursuant to direct
arrangements between a Fund, as lender, and the borrower. They
permit daily changes in the amounts borrowed. A Fund has the right
to increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the amount,
and the borrower may prepay up to the full amount of the note
without penalty. These notes may or may not be backed by bank
letters of credit. Because these notes are direct lending
arrangements between the lender and borrower, it is not generally
contemplated that they will be traded. There is no secondary
market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at principal amount, plus
accrued interest, at any time. Accordingly, a Fund's right to
redeem such notes is dependent upon the ability of the borrower to
pay principal and interest on demand. A Fund has no limitations on
the type of issuer from whom these notes will be purchased;
however, in connection with such purchases and on an ongoing basis,
the Manager will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal
and interest on demand, including a situation in which all holders
of such notes made demand simultaneously. Investments in master
demand notes are subject to the limitation on investments by a Fund
in illiquid securities, described in the Fund's Prospectus. The
Manager and relevant Subadviser will consider the earning power,
cash flow and other liquidity ratios of issuers of demand notes and
continually will monitor their financial ability to meet payment on
demand.
Floating Rate/Variable Rate Notes. Some of the notes a Fund
may purchase may have variable or floating interest rates.
Variable rates are adjustable at stated periodic intervals;
floating rates are automatically adjusted according to a specified
market rate for such investments, such as the percentage of the
prime rate of a bank, or the 91-day U.S. Treasury Bill rate. Such
obligations may be secured by bank letters of credit or other
support arrangements. Any bank providing such a bank letter, line
of credit, guarantee or loan commitment will meet a Fund's
investment quality standards relating to investments in bank
obligations. A Fund will invest in variable and floating rate
instruments only when the Manager or relevant Subadviser deems the
investment to meet the investment guidelines applicable to a Fund.
The Manager or relevant Subadviser will also continuously monitor
the creditworthiness of issuers of such instruments to determine
whether a Fund should continue to hold the investments.
The absence of an active secondary market for certain variable
and floating rate notes could make it difficult to dispose of the
instruments, and a Fund could suffer a loss if the issuer defaults
or during periods in which the Fund is not entitled to exercise its
demand rights.
Variable and floating rate instruments held by a Fund will be
subject to the Fund's limitation on investments in illiquid
securities when a reliable trading market for the instruments does
not exist and the Fund may not demand payment of the principal
amount of such instruments within seven days.
Bank Obligations and Instruments Secured Thereby (All Funds).
The bank obligations a Fund may invest in include time deposits,
certificates of deposit, and bankers' acceptances if they are: (i)
obligations of a domestic bank with total assets of at least $1
billion or (ii) obligations of a foreign bank with total assets of
at least U.S. $1 billion. A Fund may also invest in instruments
secured by such obligations (e.g., debt which is guaranteed by the
bank). For purposes of this section, the term "bank" includes
commercial banks, savings banks, and savings and loan associations
which may or may not be members of the Federal Deposit Insurance
Corporation.
Time deposits are non-negotiable deposits in a bank for a
specified period of time at a stated interest rate, whether or not
subject to withdrawal penalties. However, time deposits that are
subject to withdrawal penalties, other than those maturing in seven
days or less, are subject to the limitation on investments by a
Fund in illiquid investments, set forth in the Fund's Prospectus
under "Illiquid and Restricted Securities."
Banker's acceptances are marketable short-term credit
instruments used to finance the import, export, transfer or storage
of goods. They are deemed "accepted" when a bank guarantees their
payment at maturity.
Equity Securities (All Funds). Additional information about
some of the types of equity securities a Fund may invest in is
provided below.
Convertible Securities. Each Fund may invest in convertible
securities. While convertible securities are a form of debt
security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more
as "equity equivalents." As a result, any rating assigned to the
security has less impact on the Manager's or relevant Subadviser's
investment decision with respect to convertible securities than in
the case of non-convertible debt securities. To determine whether
convertible securities should be regarded as "equity equivalents,"
the Manager or relevant Subadviser examines the following factors:
(1) whether, at the option of the investor, the convertible
security can be exchanged for a fixed number of shares of common
stock of the issuer, (2) whether the issuer of the convertible
securities has restated its earnings per share of common stock on
a fully diluted basis (considering the effect of converting the
convertible securities), and (3) the extent to which the
convertible security may be a defensive "equity substitute,"
providing the ability to participate in any appreciation in the
price of the issuer's common stock.
Warrants and Rights. Each Fund may purchase warrants.
Warrants are options to purchase equity securities at set prices
valid for a specified period of time. The prices of warrants do
not necessarily move in a manner parallel to the prices of the
underlying securities. The price a Fund pays for a warrant will be
lost unless the warrant is exercised prior to its expiration.
Rights are similar to warrants, but normally have a short duration
and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
Preferred Stock (All Funds). Each of the Funds subject to its
investment objective, may purchase preferred stock. Preferred
stocks are equity securities, but possess certain attributes of
debt securities and are generally considered fixed income
securities. Holders of preferred stocks normally have the right to
receive dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other
amounts available for distribution by the issuing corporation.
Dividends on the preferred stock may be cumulative, and all
cumulative dividends usually must be paid prior to dividend
payments to common stockholders. Because of this preference,
preferred stocks generally entail less risk than common stocks.
Upon liquidation, preferred stocks are entitled to a specified
liquidation preference, which is generally the same as the par or
stated value, and are senior in right of payment to common stocks.
However, preferred stocks are equity securities in that they do not
represent a liability of the issuer and therefore do not offer as
great a degree of protection of capital or assurance of continued
income as investments in corporate debt securities. In addition,
preferred stocks are subordinated in right of payment to all debt
obligations and creditors of the issuer, and convertible preferred
stocks may be subordinated to other preferred stock of the same
issuer.
Hedging (All Funds). Consistent with the limitations set
forth in its Prospectus and below, each Fund may employ one or more
of the types of hedging instruments described below. Additional
information about the hedging instruments a Fund may use is
provided below. In the future, a Fund may employ hedging
instruments and strategies that are not presently contemplated but
which may be developed, to the extent such investment methods are
consistent with the Fund's investment objective, legally
permissible and adequately disclosed.
Covered Call Options on Securities, Securities Indices and
Foreign Currencies (All Funds). Each Fund may write covered call
options. Each LifeSpan Fund may purchase and write covered call
options. Such options may relate to particular U.S. or non-U.S.
securities, to various U.S. or non-U.S. stock indices or to U.S. or
non-U.S. currencies. The Funds may purchase and write, as the case
may be, call options which are issued by the Options Clearing
Corporation (OCC) or which are traded on U.S. and non-U.S.
exchanges. LifeSpan Growth Fund and LifeSpan Balanced Fund (with
respect to the international Component) may purchase options on
currency in the over-the-counter (OTC) markets.
Writing Covered Calls. When a 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 (usually not more than 9 months) 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. A Fund retains 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, a 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 expires unexercised, because a 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 a 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.
No Fund shall write a covered call option if as a result
thereof the assets underlying calls outstanding (including the
proposed call option) would exceed 20% of the value of the assets
of the Fund.
Purchasing Covered Calls. When a 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 a Fund purchases a call on a securities 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, a
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 exercise price, 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.
Calls on broadly-based indices or futures are similar to 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 a Fund buys a call on an index or
future, it pays a premium. During the call period, upon exercise
of a call by a 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. 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. A Fund's option activities may affect its
turnover rate and brokerage commissions. A Fund may pay a
brokerage commission each time it buys a call, sells a call, or
buys or sells an underlying investment in connection with the
exercise of a 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, call
options offer large amounts of leverage. The leverage offered by
trading in options could result in a Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
Futures Contracts and Related Options. To hedge against
changes in interest rates, securities prices or currency exchange
rates or for certain non-hedging purposes, each Fund may, subject
to its investment objectives and policies, purchase and sell
various kinds of futures contracts, and purchase and write call and
put options on any of such futures contracts. A Fund may also
enter into closing purchase and sale transactions with respect to
any of such contracts and options. The futures contracts may be
based on various securities (such as U.S. Government securities),
securities indices, currencies and other financial instruments and
indices. The Value Fund and Allocation Fund may purchase and sell
futures contracts on stock indices and sell options on such
futures. The Income Fund and Allocation Fund may purchase and sell
interest rate futures and sell options on such futures. In
addition, each Fund that may invest in securities that are
denominated in a foreign currency may purchase and sell futures on
currencies and sell options on such futures. A Fund will engage in
futures and related options transactions only for bona fide hedging
or other non-hedging purposes as defined in regulations promulgated
by the CFTC. All futures contracts entered into by the Funds are
traded on U.S. exchanges or boards of trade that are licensed and
regulated by the CFTC or on foreign exchanges approved by the CFTC.
A Fund may buy and sell futures contracts on interest rates
("Interest Rate Futures"). No price is paid or received upon the
purchase or sale of an Interest Rate Future. An Interest Rate
Future obligates the seller to deliver and the purchaser to take a
specific type of debt security at a specific future date for a
fixed price. That obligation may be satisfied by actual delivery
of the debt security or by entering into an offsetting contract.
The Fund may buy and sell futures contracts related to
financial indices (a "Financial Future"). A financial index
assigns relative values to the securities included in the index and
fluctuates with the changes in the market value of those
securities. Financial indices cannot be purchased or sold
directly. The contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction or to
enter into an offsetting contract. No physical delivery of the
securities underlying the index is made on settling the futures
obligation. No monetary amount is paid or received by a Fund on
the purchase or sale of a Financial Future.
Upon entering into a futures transaction, a 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 a 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 made to or by the futures broker
on a daily basis. Prior to expiration of the Future, if a Fund
elects to close out its position by taking an opposite position, a
final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or
gain is realized for tax purposes. Although Financial Futures and
Interest Rate Futures by their terms call for settlement by
delivery cash or securities, respectively, 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.
Options on Futures Contracts. The acquisition of put and call
options on futures contracts will give the Funds the right (but not
the obligation) for a specified price to sell or to purchase,
respectively, the underlying futures contract at any time during
the option period. As the purchaser of an option on a futures
contract, a Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in
the event of an unfavorable price movement to the loss of the
premium and transaction costs.
The writing of a call option on a futures contract generates
a premium which may partially offset a decline in the value of a
Fund's assets. By writing a call option, a Fund becomes obligated,
in exchange for the premium, to sell a futures contract (if the
option is exercised), which may have a value higher than the
exercise price. Conversely, the writing of a put option on a
futures contract generates a premium which may partially offset an
increase in the price of securities that a Fund intends to
purchase. However, a Fund becomes obligated to purchase a futures
contract (if the option is exercised) which may have a value lower
than the exercise price. Thus, the loss incurred by a Fund in
writing options on futures is potentially unlimited and may exceed
the amount of the premium received. The Funds will incur
transaction costs in connection with the writing of options on
futures.
The holder or writer of an option on a futures contract may
terminate its position by selling or purchasing an offsetting
option on the same series. There is no guarantee that such closing
transactions can be effected. The Funds' ability to establish and
close out positions on such options will be subject to the
development and maintenance of a liquid market.
The Funds may use options on futures contracts solely for bona
fide hedging or other non-hedging purposes as described below.
Forward Contracts. Each Fund may enter into foreign currency
exchange contracts ("Forward Contracts") for hedging and non-
hedging purposes. A forward currency exchange contract generally
has no deposit requirement, and no commissions are generally
charged at any stage for trades. 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. A Fund generally will not enter into a forward currency
exchange contract with a term of greater than one year. These
contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers.
A 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 a 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.
A Fund may enter into Forward Contracts with respect to
specific transactions. For example, when a Fund enters into a
contract for the purchase or sale of a security denominated in a
foreign currency, or when it anticipates receipt of dividend
payments in a foreign currency, a 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"). A 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.
A 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 a Fund believes that foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of a Fund's
portfolio securities denominated in such foreign currency, or when
it believes that the U.S. dollar may suffer a substantial decline
against a foreign currency, it may enter into a forward purchase
contract to buy that foreign currency for a fixed dollar amount.
In this situation a Fund may, in the alternative, enter into a
Forward Contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar
value of the currency to be sold pursuant to the Forward Contract
will fall whenever there is a decline in the U.S. dollar value of
the currency in which portfolio securities of the Fund is
denominated ("cross hedge").
A Fund will not enter into such Forward Contracts or maintain
a net exposure to such contracts where the consummation of the
contracts would obligate a fund to deliver an amount of foreign
currency in excess of the value of the Fund's portfolio securities
or other assets denominated in that currency or another currency
that is also the subject of the hedge. A Fund, however, in order
to avoid excess transactions and transaction costs, may maintain a
net exposure to Forward Contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in these
currencies provided the excess amount is "covered" by liquid, high-
grade debt securities, denominated in any currency, at least equal
at all times to the amount of such excess. As an alternative, a
LifeSpan 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 a LifeSpan 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 a 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
a 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
a 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
a 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 a Fund
to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring a
Fund to sell a currency, a 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 a Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
a 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. A The Income Fund would realize a gain or
loss as a result of entering into such an offsetting Forward
Contract under either circumstance to the extent the exchange rate
or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.
The cost to a 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, a Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although a 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. A 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 a Fund at one rate, while offering a lesser
rate of exchange should a Fund desire to resell that currency to
the dealer.
Interest Rate Swap Transactions. All Funds may enter into
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 a Fund under a
swap agreement will have been greater than those received by them.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, a
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager or
relevant Subadviser will monitor the creditworthiness of
counterparties to the Fund's interest rate swap transactions on an
ongoing basis.
A Fund will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master
netting agreement provides that all swaps done between a Fund and
that counterparty under that 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 swap market has grown
substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid in comparison with the markets
for other similar instruments which are traded in the interbank
market. However, the staff of the SEC takes the position that
swaps, caps and floors are illiquid investments that are subject to
a limitation on such investments.
Additional Information About Hedging Instruments and Their
Use. A Fund's Custodian, or a securities depository acting for the
Custodian, will act as a Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which a Fund has written options traded on exchanges
or as to other acceptable escrow securities, so that no margin will
be required for such transactions. OCC will release the securities
covering a call on the expiration of the option or upon a Fund
entering into a closing purchase transaction. An option position
may be closed out only on a market which provides secondary trading
for options of the same series, and there is no assurance that a
liquid secondary market will exist for any particular option.
When LifeSpan Growth Fund or LifeSpan Balanced Fund writes an
over-the-counter ("OTC") option, it will enter into an arrangement
with a primary U.S. Government securities dealer, which would
establish a formula price at which the Fund would have the absolute
right to repurchase that OTC option. That formula price would
generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below
the market price of the underlying security (that is, the extent to
which the option "is in-the-money"). When LifeSpan Growth Fund or
LifeSpan Balanced Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in its Prospectus) the
mark-to-market value of any OTC option held by them. The SEC is
evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by
the outcome of that evaluation.
Regulatory Aspects of Hedging Instruments. The Funds are
required to operate within certain guidelines and restrictions with
respect to their use of futures and options thereon as established
by the Commodities Futures Trading Commission ("CFTC"). In
particular, the Funds are excluded from registration as a
"commodity pool operator" if they comply with the requirements of
Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Funds' assets that may be used for Futures margin
and related options premiums for a bona fide hedging position.
However, under the Rule a Fund must limit its aggregate initial
futures margin and related option premiums to no more than 5% of
the Funds' net assets for hedging strategies that are not
considered bona fide hedging strategies under the Rule. Under the
Rule, the Fund also must use short futures and options on futures
positions solely for bona fide hedging purposes within the meaning
and intent of the applicable provisions of the Commodity Exchange
Act.
Transactions in options by the Funds 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 through one or more or brokers.
Thus, the number of options which the Funds may write or hold may
be affected by options written or held by other entities, including
other investment companies having the same or 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 of 1940 (the
"Investment Company Act"), when the Funds purchase a Future, the
Funds will maintain, in a segregated account or accounts with their
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 Covered Calls and Hedging Instruments. Each
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code. That qualification enables a Fund to
"pass through" its income and realized capital gains to
shareholders without the Fund having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since
shareholders will be taxed on the dividends and capital gains they
receive from the Fund. One of the tests for a Fund's qualification
is that less than 30% of its gross income (irrespective of losses)
must be derived from gains realized on the sale of securities held
for less than three months. To comply with that 30% cap, a Fund
will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling
investments, including Futures, held for less than three months,
whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing calls or puts which expire in less
than three months; (iii) effecting closing transactions with
respect to calls or puts written or purchased less than three
months previously; (iv) exercising puts or calls held by a Fund for
less than three months; or (v) writing calls on investments held
for less than three months.
Risks Of Hedging With Options and Futures. In addition to the
risks with respect to hedging discussed in each Fund's Prospectus
and above, there is a risk in using short hedging by selling
Futures to attempt to protect against a decline in value of a
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 a Fund's
securities. The ordinary spreads between prices in the cash and
futures markets are subject to distortions due to differences in
the natures of those markets. First, all participants in the
futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the
futures 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.
Portfolio Turnover. Each Fund's particular portfolio
securities may be changed without regard to the holding period of
these securities (subject to certain tax restrictions), when the
Manager or respective Subadviser deems that this action will help
achieve the Fund's objective given a change in an issuer's
operations or changes in general market conditions. Short-term
trading means the purchase and subsequent sale of a security after
it has been held for a relatively brief period of time. The Funds
do not generally intend to invest for the purpose of seeking short-
term profits. Variations in portfolio turnover rate from year to
year reflect the investment discipline applied to the particular
Fund and do not generally reflect trading for short-term profits.
Other Investment Restrictions
A. Fundamental Investment Restrictions
Each Fund has adopted the following fundamental investment
restrictions. Each Fund's most significant investment restrictions
are also set forth in its Prospectus. Fundamental policies cannot
be changed without the vote of a "majority" of a 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 (i) 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 (ii) more than 50% of the
outstanding shares.
The Value and Allocation Funds may not:
1. Issue senior securities, except as permitted by
paragraphs 7, 8, 9 and 11 below. For purposes of this restriction,
the issuance of shares of common stock in multiple classes or
series, the purchase or sale of options, futures contracts and
options on futures contracts, forward commitments, and repurchase
agreements entered into in accordance with the Fund's investment
policies, and the pledge, mortgage or hypothecation of the Fund's
assets are not deemed to be senior securities.
2. (a) Invest more than 5 percent of its total assets (taken
at market value at the time of each investment) in the securities
(other than United States Government or Government agency
securities) of any one issuer (including repurchase agreements with
any one bank or dealer) or more than 15 percent of its total assets
in the obligations of any one bank; and (b) purchase more than
either (i) 10 percent in principal amount of the outstanding debt
securities of an issuer, or (ii) 10 percent of the outstanding
voting securities of an issuer, except that such restrictions shall
not apply to securities issued or guaranteed by the United States
Government or its agencies, bank money instruments or bank
repurchase agreements.
3. Invest more than 25 percent of the value of its total
assets in the securities of issuers in any single industry,
provided that this limitation shall not apply to the purchase of
obligations issued or guaranteed by the United States Government,
its agencies or instrumentalities. For the purpose of this
restriction, each utility that provides a separate service (e.g.,
gas, gas transmission, electric or telephone) shall be considered
to be a separate industry. This test shall be applied on a
proforma basis using the market value of all assets immediately
prior to making any investment.
4. Alone, or together with any other portfolio or
portfolios, make investments for the purpose of exercising control
over, or management of, any issuer.
5. Purchase securities of other investment companies, except
in connection with a merger, consolidation, acquisition or
reorganization, or by purchase in the open market of securities of
closed-end investment companies where no underwriter or dealer's
commission or profit, other than the customary broker's commission
is involved and only if immediately thereafter not more than 10
percent of such portfolio's total assets, taken at market value,
would be invested in such securities.
6. Purchase or sell interests in oil, gas or other mineral
exploration or development programs, commodities, commodity
contracts or real estate, except that such portfolio may: (1)
purchase securities of issuers which invest or deal an any of the
above and (2) invest for hedging purposes in futures contracts on
securities, financial instruments and indices, and foreign
currency, as are approved for trading on a registered exchange.
7. Purchase any securities on margin (except that the
Company may obtain such short- term credits as may be necessary for
the clearance of purchases and sales of portfolio securities) or
make short sales of securities or maintain a short position. The
deposit or payment by the Fund of initial or maintenance margin in
connection with futures contracts or related options transactions
is not considered the purchase of a security on margin.
8. Make loans, except that the Fund (1) may lend portfolio
securities in accordance with the Fund's investment policies up to
33 1/3% of the Fund's total assets taken at market value, (2) enter
into repurchase agreements, and (3) purchase all or a portion of an
issue of publicly distributed debt securities, bank loan
participation interests, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities.
9. Borrow amounts in excess of 10 percent of its total
assets, taken at market value at the time of the borrowing, and
then only from banks as a temporary measure for extraordinary or
emergency purposes, or make investments in portfolio securities
while such outstanding borrowings exceed 5 percent of its total
assets.
10. Allow its current obligations under reverse repurchase
agreements, together with borrowings, to exceed 1/3 of the value of
its total assets (less all its liabilities other than the
obligations under borrowings and such agreements).
11. Mortgage, pledge, hypothecate or in any manner transfer,
as security for indebtedness, any securities owned or held by such
Fund except as may be necessary in connection with borrowings as
mentioned in investment restriction (9) above, and then such
mortgaging, pledging or hypothecating may not exceed 10 percent of
such Fund's total assets, taken at market value at the time
thereof. In order to comply with certain state statutes, such Fund
will not, as a matter of operating policy, mortgage, pledge or
hypothecate its portfolio securities to the extent that at any time
the percentage of the value of pledged securities plus the maximum
sales charge will exceed 10 percent of the value of such Fund's
shares at the maximum offering price. The deposit of cash, cash
equivalents and liquid debt securities in a segregated account with
the custodian and/or with a broker in connection with futures
contracts or related options transactions and the purchase of
securities on a "when-issued" basis is not deemed to be a pledge.
12. Underwrite securities of other issuers except insofar as
the Company may be deemed an underwriter under the 1933 Act in
selling portfolio securities.
13. Write, purchase or sell puts, calls or combinations
thereof, except that covered call options may be written.
14. Invest in securities of foreign issuers if at the time of
acquisition more than 10 percent of its total assets, taken at
market value at the time of the investment, would be invested in
such securities. However, up to 25 percent of the total assets of
such portfolio may be invested in the aggregate in such securities
(i) issued, assumed or guaranteed by foreign governments, or
political subdivisions or instrumentalities thereof, (ii) assumed
or guaranteed by domestic issuers, including Eurodollar securities,
or (iii) issued, assumed or guaranteed by foreign issuers having a
class of securities listed for trading on the New York Stock
Exchange.
15. Invest more than 10 percent in the aggregate of the value
of its total assets in repurchase agreements maturing in more than
seven days, time deposits maturing in more than 2 days, portfolio
securities which do not have readily available market quotations
and all other illiquid assets.
Each of the LifeSpan Funds may not:
1. Issue senior securities, except as permitted by
paragraphs 2, 3, 6 and 7 below. For purposes of this restriction,
the issuance of shares of common stock in multiple classes or
series, the purchase or sale of options, futures contracts and
options on futures contracts, forward commitments and repurchase
agreements entered into in accordance with the Fund's investment
policies, are not deemed to be senior securities.
2. Purchase any securities on margin (except that the
Company may obtain such short-term credits as may be necessary for
the clearance of purchases and sales of portfolio securities) or
make short sales of securities or maintain a short position. The
deposit or payment by the Fund of initial or maintenance margin in
connection with futures contracts or related options transactions
is not considered the purchase of a security on margin.
3. Borrow money, except for emergency or extraordinary
purposes including (i) from banks for temporary or short-term
purposes or for the clearance of transactions in amounts not to
exceed 33 1/3% of the value of the Fund's total assets (including
the amount borrowed) taken at market value, (ii) in connection with
the redemption of Fund shares or to finance failed settlements of
portfolio trades without immediately liquidating portfolio
securities or other assets; and (iii) in order to fulfill
commitments or plans to purchase additional securities pending the
anticipated sale of other portfolio securities or assets, but only
if after each such borrowing there is asset coverage of at least
300% as defined in the Investment Company Act. For purposes of
this investment restriction, reverse repurchase agreements,
mortgage dollar rolls, short sales, futures contracts, options on
futures contracts, securities or indices and forward commitment
transactions shall not constitute borrowing.
4. Act as an underwriter, except to the extent that in
connection with the disposition of portfolio securities, the Fund
may be deemed to be an underwriter for purposes of the 1933 Act.
5. Purchase or sell real estate except that the Fund may (i)
acquire or lease office space for its own use, (ii) invest in
securities of issuers that invest in real estate or interests
therein, (iii) invest in securities that are secured by real estate
or interests therein, (iv) purchase and sell mortgage-related
securities and (v) hold and sell real estate acquired by the Fund
as a result of the ownership of securities.
6. Invest in commodities, except the Fund may purchase and
sell options on securities, securities indices and currency,
futures contracts on securities, securities indices and currency
and options on such futures, forward foreign currency exchange
contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with
the Fund's investment policies.
7. Make loans, except that the Fund (1) may lend portfolio
securities in accordance with the Fund's investment policies up to
33 1/3% of the Fund's total assets taken at market value, (2) enter
into repurchase agreements, and (3) purchase all or a portion of an
issue of publicly distributed bonds, debentures or other similar
obligations.
8. Purchase the securities of issuers conducting their
principal activity in the same industry if, immediately after such
purchase, the value of its investments in such industry would
exceed 25% of its total assets taken at market value at the time of
such investment. This limitation does not apply to investments in
obligations of the U.S. Government or any of its agencies,
instrumentalities or authorities.
9. With respect to 75% of total assets, purchase securities
of an issuer (other than the U.S. Government, its agencies,
instrumentalities or authorities), if:
(a) such purchase would cause more than 5% of the Fund's
total assets taken at market value to be invested in the
securities of such issuer; or
(b) such purchase would at the time result in more than 10%
of the outstanding voting securities of such issuer being held by
the Fund.
For purposes of the fundamental investment restrictions, the
term "borrow" does not include mortgage dollar rolls, reverse
repurchase agreements or lending portfolio securities and the terms
"illiquid securities" and "portfolio securities which do not have
readily available market quotations" shall include restricted
securities. However, as non-fundamental policies, the Company will
treat reverse repurchase agreements as borrowings, master demand
notes as illiquid securities and mortgage dollar rolls as sales
transactions and not as a financing.
For purposes of the restriction on investing more than 25% of
the Funds' assets in the securities of issuers in any single
industry, the category Financial Services as used in the Financial
Statements may include several different industries such as
mortgage-backed securities, brokerage firms and other financial
institutions. Each of the Income Fund and Liquid Fund of the
Company may not, as a non-fundamental investment restriction,
invest more than 5% of its total assets in securities of any issuer
which, together with its predecessors, has been in operation for
less than three years.
For purposes of a Funds' policy not to concentrate their
assets, described in the above restrictions, the Funds have adopted
the industry classifications set forth in the Appendix to this
Statement of Additional Information. This is not a fundamental
policy.
The percentage restrictions described above and in each Fund's
Prospectus are applicable only at the time of investment and
require no action by a Fund as a result of subsequent changes in
value of the investments or the size of a Fund.
B. Non-fundamental Investment Restrictions
The following restrictions are designated as non-fundamental
and may be changed by the Board of Directors without the approval
of shareholders.
The LifeSpan Funds each may not:
(1) Pledge, mortgage or hypothecate its assets, except to
secure permitted borrowings and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Fund's
total assets taken at market value. Collateral arrangements with
respect to margin, option and other risk management and when-issued
and forward commitment transactions are not deemed to be pledges or
other encumbrances for purposes of this restriction.
(2) Participate on a joint or joint-and-several basis in any
securities trading account. The "bunching" of orders for the sale
or purchase of marketable portfolio securities with other accounts
under the management of the Manager or the Subadvisers to save
commissions or to average prices among them is not deemed to result
in a joint securities trading account.
(3) Purchase or retain securities of an issuer if one or more
of the Directors or officers of the Company or directors or
officers of the Manager or any Subadviser or any investment
management subsidiary of the Manager or any Subadviser individually
owns beneficially more than 0.5% and together own beneficially more
than 5% of the securities of such issuer.
(4) Purchase a security if, as a result, (i) more than 10% of
the Fund's assets would be invested in securities of other
investment companies, (ii) such purchase would result in more than
3% of the total outstanding voting securities of any one such
investment company being held by the Fund or (iii) more than 5% of
the Fund's assets would be invested in any one such investment
company. The Fund will not purchase the securities of any open-end
investment company except when such purchase is part of a plan of
merger, consolidation, reorganization or purchase of substantially
all of the assets of any other investment company, or purchase the
securities of any closed-end investment company except in the open
market where no commission or profit to a sponsor or dealer results
from the purchase, other than customary brokerage fees. The Fund
has no current intention of investing in other investment
companies.
(5) Invest more than 15% of total assets in restricted
securities, including securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933.
(6) Invest more than 5% of total assets in securities of any
issuer which, together with its predecessors, has been in operation
for less than three years.
(7) Invest in securities which are illiquid if, as a result,
more than 15% of its net assets would consist of such securities,
including repurchase agreements maturing in more than seven days,
securities that are not readily marketable, certain restricted
securities, purchased OTC options, certain assets used to cover
written OTC options, and privately issued stripped mortgage-backed
securities.
(8) Purchase securities while outstanding borrowings exceed
5% of the Fund's total assets.
(9) Invest in real estate limited partnership interests.
(10) Purchase warrants of any issuer, if, as a result of such
purchase, more than 2% of the value of the Fund's total assets
would be invested in warrants which are not listed on an exchange
or more than 5% of the value of the total assets of the Fund would
be invested in warrants generally, whether or not so listed. For
these purposes, warrants are to be valued at the lesser of cost or
market, but warrants acquired by the Fund in units with or attached
to debt securities shall be deemed to be without value.
(11) Purchase interests in oil, gas, or other mineral
exploration programs or mineral leases; however, this policy will
not prohibit the acquisition of securities of companies engaged in
the production or transmission of oil, gas, or other minerals.
(12) Write covered call or put options with respect to more
than 25% of the value of its total assets, invest more than 25% of
its total assets in protective put options or invest more than 5%
of its total assets in puts, calls, spreads or straddles, or any
combination thereof, other than protective put options. The
aggregate value of premiums paid on all options, other than
protective put options, held by the Fund at any time will not
exceed 20% of the Fund's total assets.
(13) Invest for the purpose of exercising control over or
management of any company.
In order to permit the sale of shares of the Funds in certain
states, the Board of Directors may, in its sole discretion, adopt
restrictions on investment policy more restrictive than those
described above. Should the Board of Directors determine that any
such more restrictive policy is no longer in the best interest of
a Fund and its shareholders, the Fund may cease offering shares in
the state involved and the Board of Directors may revoke such
restrictive policy. Moreover, if the states involved shall no
longer require any such restrictive policy, the Board of Directors
may, in its sole discretion, revoke such policy.
How the Funds are Managed
Organization and History. The Company was incorporated in Maryland
on December 9, 1981. Prior to March 18, 1996, the Company was
named Connecticut Mutual Investment Accounts, Inc. On March 18,
1996 the Funds listed below changed their names as follows:
Fund Name Prior to
Fund March 18, 1996
Allocation Fund Connecticut Mutual Balanced Account
Value Fund Connecticut Mutual Growth Account
LifeSpan Balanced Fund CMIA LifeSpan Balanced Account
LifeSpan Growth Fund CMIA LifeSpan Capital Appreciation
Account
LifeSpan Income Fund CMIA LifeSpan Income Account
As a Maryland corporation, the Funds are not required to hold,
and do not plan to hold, regular annual meetings of shareholders.
The Funds 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 Directors or upon proper
request of the shareholders. The Directors will call a meeting of
shareholders to vote on the removal of a Director upon the written
request of the record holders of 10% of its outstanding shares. In
addition, if the Directors receive a request from at least 10
shareholders (who have been shareholders for at least six months)
holding shares of the Company valued at $25,000 or more or holding
at least 1% of the Company's outstanding shares, whichever is less,
stating that they wish to communicate with other shareholders to
request a meeting to remove a Director, the Directors will then
either make each Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at
the applicants' expense, or the Directors may take such other
action as set forth under Section 16(c) of the Investment Company
Act.
Directors and Officers of the Company. The Company's Directors
and officers and their principal occupations and business
affiliations during the past five years are listed below. The
address of each Director and officer is Two World Trade Center, New
York, New York 10048-0203, unless another address is listed below.
All of the Directors are directors of Oppenheimer Target Fund,
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer
International Growth Fund, Oppenheimer Growth Fund, Oppenheimer
Discovery Fund, Oppenheimer Enterprise Fund, Oppenheimer Global
Growth & Income Fund, Oppenheimer Global Emerging Growth Fund,
Oppenheimer Gold & Special Minerals Fund, Oppenheimer Bond Fund,
Oppenheimer New York Municipal Fund, Oppenheimer California
Municipal Fund, Oppenheimer Multi-State Municipal Trust,
Oppenheimer Asset Allocation Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Multi-Sector Income Trust and Oppenheimer World
Bond Fund (the "New York-based OppenheimerFunds"). Ms. Macaskill
and Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and Zack, who are
officers of the Company, hold the same offices with the other New
York-based OppenheimerFunds as with the Company. As of October 31,
1996, the Directors and Officers of the Fund as a group owned less
than 1% of the outstanding shares of the Fund. That statement does
not include ownership of shares held of record by an employee
benefit plan for employees of the Manager (two of the officers of
the Fund listed below, Ms. Macaskill and Mr. Donohue, are Directors
of that plan) other than the shares beneficially owned under that
plan by the officers of the Fund list below.
Leon Levy, Chairman of the Board of Directors; Age: 71
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Director*; Age: 63
Vice Chairman of the Manager; formerly he held the following
positions: Vice President and Counsel of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; a director of
the Manager and OppenheimerFunds Distributor, Inc. (the
"Distributor"), Vice President and a director of HarbourView Asset
Management Corporation ("HarbourView") and Centennial Asset
Management Corporation ("Centennial"), investment advisory
subsidiaries of the Manager, a director of Shareholder Financial
Services, Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"),
transfer agent subsidiaries of the Manager, an officer of other
Oppenheimer funds and Executive Vice President and General Counsel
of the Manager and the Distributor.
Benjamin Lipstein, Director; Age: 73
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc. (Publishers of Psychology Today on Mother Earth
News) and a director of Spy Magazine, L.P.
Bridget A. Macaskill, President and Director; Age: 47
President, Chief Executive Officer and a Director of the Manager;
Chairman and a Director of SSI and SFSI, President and a director
of OAC, HarbourView and of Oppenheimer Partnership Holdings, Inc.,
a holding company subsidiary of the Manager; a director of
Oppenheimer Real Asset Management, Inc.; formerly an Executive Vice
President of the Manager.
Elizabeth B. Moynihan, Director; Age: 67
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the
Trustees Council, Preservation League of New York State; a member
of the Indo-U.S. Sub-Commission on Education and Culture.
________________________
* A Director who is an "interested person" of the Company as
defined in the Investment Company Act.
Kenneth A. Randall, Director; Age: 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company),
Kemper Corporation (insurance and financial services company),
Fidelity Life Association (mutual life insurance company); formerly
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research), and a director of
Lumbemens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Director; Age: 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New
York; Senior Fellow of Jerome Levy Economics Institute; Bard
College; a member of the U.S. Competitiveness Policy Council; a
director of GranCare, Inc. (healthcare provider); formerly New York
State Comptroller and a trustee of the New York State and Local
Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 64
200 Park Avenue, New York, New York 10166
Founder and Chairman of Russell Reynolds Associates, Inc.
(executive recruiting); Chairman of Directorship Publication, Inc.
(consulting and publishing); a director of XYAN, Inc. (printing),
Professional Staff Limited and American Scientific Resources, Inc.;
a trustee of Mystic Seaport Museum, International House, Greenwich
Historical Society and Greenwich Hospital.
Sidney M. Robins, Director; Age: 84
50 Overlook Road, Assigning, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting
Professor of Finance, University of Hawaii; Emeritus Founding and
a director of The Korea Fund, Inc. (closed-end investment company);
a member of the Board of Advisors, Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
Donald W. Spiro, Vice Chairman and Director*; Age: 70
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Director; Age: 83
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
_________________________
* A Director who is an "interested person" of the Company as
defined in the Investment Company Act.
<PAGE>
Clayton K. Yeutter, Director; Age: 65
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
Farmers Insurance Company (Insurance); FMC Corp. (chemicals and
machinery), IMC Global Inc. (Chemicals and animal feed) andTexas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Counsellor to the President (Bush) for
Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director of Centennial; Executive Vice
President General Counsel and a director of HarbourView, SSI, SFSI
and Oppenheimer Partnership Holdings, Inc.; President and director
of Real Asset Management, Inc.; General Counsel of OAC; Executive
Vice President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer) an officer of other Oppenheimer
funds; formerly Senior Vice President and Associate General Counsel
of the Manager and the Distributor, prior to which he was a partner
in Kraft & McManimon (a law firm), an officer of First Investors
Corporation (a broker-dealer) and First Investors Management
Company, Inc. (broker-dealer and investment adviser), and a
director and an officer of First Investors Family of Funds and
First Investors Life Insurance Company.
Robert Doll, Jr., Vice President; Age: 42
Executive Vice President and a director of the Manager; Executive
Vice President of HarbourView; Vice President and a director of
OAC: an officer of other Oppenheimer funds.
George C. Bowen, Treasurer; Age: 60
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Senior Vice President, Treasurer and Secretary of SSI;
Vice President, Treasurer and Secretary of SFSI; Treasurer of OAC:
Vice President and Treasurer of Oppenheimer Real Asset Management
Inc.; Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc. (a broker-Dealer); an officer of other
Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; and officer of other
Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age: 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the
Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company.
Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager. They and the Trustees of the Fund who
are affiliated with the Manager (Ms. Macaskill and Messrs. Galli
and Spiro receive no salary or fee from the Fund. The remaining
Trustees of the Fund received the compensation shown below from the
Fund, during its fiscal period from January 1, 1996 through October
31, 1996, and from all of the New York-based Oppenheimer fund
(including the Fund) for which they served as a Trustee or
Director. Compensation is paid for services in the positions below
their names.
<TABLE>
<CAPTION>
Compensation
Received from
each Fund
LifeSpan LifeSpan LifeSpan
Allocation Value Income Balanced Growth
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Leon Levy $ $ $ $ $
Benjamin Lipstein $ $ $ $ $
Elizabeth Moynihan $ $ $ $ $
Kenneth A. Randall $ $ $ $ $
Edward V. Regan $ $ $ $ $
Russell S. Reynolds, Jr.$ $ $ $ $
Sidney M. Robbins $ $ $ $ $
Pauline Trigere $ $ $ $ $
Clayton K. Yeutter $ $ $ $ $
<PAGE>
Pension or Retirement
Benefits Accrued as
a Fund Expense
Total LifeSpan LifeSpan LifeSpan
Return Value Income Balanced Growth
Fund Fund Fund Fund Fund
Leon Levy $ $ $ $ $
Benjamin Lipstein $ $ $ $ $
Elizabeth Moynihan $ $ $ $ $
Kenneth A. Randall $ $ $ $ $
Edward V. Regan $ $ $ $ $
Russell S. Reynolds, Jr.$ $ $ $ $
Sidney M. Robbins $ $ $ $ $
Pauline Trigere $ $ $ $ $
Clayton K. Yeutter $ $ $ $ $
Total Compensation
from Company and
Complex Paid to the
Directors
Leon Levy $ $ $ $
Benjamin Lipstein $ $ $ $
Elizabeth Moynihan $ $ $ $
Kenneth A. Randall $ $ $ $
Edward V. Regan $ $ $ $
Russell S. Reynolds, Jr.$ $ $ $
Sidney M. Robbins $ $ $ $
Pauline Trigere $ $ $ $
Clayton K. Yeutter $ $ $ $
For the 1995 calendar year (prior to the inception of the Proxy
Committee) during which the New York-based Oppenheimer funds,
listed in the first paragraph of this section, included Oppenheimer
Mortgage Income and Oppenheimer Time Fund (which ceased operation
following the acquisition of their assets by certain other
Oppenheimer funds) but excluded Oppenheimer International Growth
Fund, which had not yet commenced operations.
The Fund has adopted a retirement plan that provides for payment
to a retired Trustee of up to 80% of the average compensation paid
during the Trustee's five years of service in which the highest
compensation was received. A Trustee must serve in that capacity
for any of the New York-based Oppenheimer funds for at least 15
years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the
Trustee's future compensation and length of service, the amount of
those benefits cannot be determined at this time, nor can the Fund
estimate the number of years of credited service that will be used
to determine those benefits.
Major Shareholders. As of __________, 1996, Connecticut Mutual
Life Insurance Company ("CML") and its affiliates owned shares of
the Funds as follows: Value Fund (__________ shares) (___% of
shares outstanding); Liquid Fund (__________ shares) (___% of
shares outstanding); LifeSpan Growth Fund (_________ shares) (__%
of shares outstanding); LifeSpan Balanced Fund (_________ shares)
(__% of shares outstanding); LifeSpan Income Fund (_________
shares) (___ of shares outstanding). CML is incorporated under the
laws of the State of Connecticut. CML and its affiliates are
deemed to be controlling persons of any Fund of the Company of
which they own more than 25% of the shares outstanding. As such,
the exercise by CML and its affiliates of their voting rights may
diminish the voting power of other shareholders. Effective March
1, 1996, Massachusetts Mutual Life Insurance Company, a
Massachusetts corporation, acquired CML's interests in the Funds.
As of __________, 1996, no person owned of record or was known by
the Company to own beneficially 5% or more of the outstanding
shares of any Fund.
The Manager, the Subadvisers and Their Affiliates. The Manager is
wholly-owned by Oppenheimer Acquisition Corporation ("OAC"), a
holding company controlled by Massachusetts Mutual Life Insurance
Company. OAC is also owned in part by certain of the Manager's
directors and officers, some of whom also serve as officers of the
Funds, and two of whom (Mr. Jon S. Fossel and Mr. James C. Swain)
serve as Directors of the Funds.
The Manager and the Funds 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 a Fund's portfolio transactions. Compliance with
the Code of Ethics is carefully monitored and strictly enforced by
the Manager.
The Investment Advisory Agreements. Each Fund has entered
into an Investment Advisory Agreement with the Manager. The
investment advisory agreement between the Manager and each Fund
requires the Manager, at its expense, to provide each 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 each 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 the continuous public sale of shares of
each Fund.
Expenses not expressly assumed by the Manager under an
advisory agreement or by the Distributor under a Distribution
Agreement (defined below) are paid by the relevant Fund. The
advisory agreement lists examples of expenses to be paid by a Fund,
the major categories of which relate to interest, taxes, brokerage
commissions, fees to certain Directors, legal, and audit expenses,
custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses,
including litigation.
The advisory fees paid by the Funds to G.R. Phelps & Co., the
Funds' prior investment advisor, for the last three fiscal years
were:
</TABLE>
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Allocation Fund $ $ $
Value Fund $ $ $
LifeSpan Balanced Fund $ $ $
LifeSpan Growth Fund $ $ $
LifeSpan Income Fund $ $ $
Total All Funds $ $ $
Under each advisory agreement, the Manager has undertaken that
if the total expenses of a Fund in any fiscal year should exceed
the most stringent state regulatory requirements on expense
limitations applicable to a Fund, the Manager's compensation under
the advisory agreement will be reduced by the amount of such
excess. For the purpose of such calculation, there shall be
excluded any expense borne directly or indirectly by a Fund which
is permitted to be excluded from the computation of such limitation
by such statute or state regulatory authority. At present, that
limitation is imposed by California, and limits expenses (with
specific exclusions) to 2.5% of the first $30 million of average
net assets, 2% of the next $70 million of average net assets and
1.5% of average net assets in excess of $100 million. Any
assumption of a Fund's expenses under this limitation would lower
a Fund's overall expense ratio and increase its total return during
any period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under
the advisory agreement, the Manager is not liable for any loss
resulting from any good faith errors or omissions in connection
with any matters to which the Agreement relates. Each 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 its other investment activities. If the Manager
shall no longer act as investment adviser to the Funds, the right
of the Funds to use the name "Oppenheimer" as part of their
corporate names may be withdrawn.
Babson-Stewart, One Memorial Drive, Cambridge, Massachusetts
02142, is a Massachusetts general partnership and a registered
investment adviser and was originally established in 1987. The
general partners of Babson-Stewart are David L. Babson & Co., which
is an indirect subsidiary of Massachusetts Life Insurance Company,
and Stewart Ivory & Co. (International), Ltd. As of ____________,
1996, Babson-Stewart had approximately $___ million in assets under
management. BEA Associates, Citicorp Center, 153 E. 53rd Street,
57th Floor, New York, NY 10022, is a partnership between Credit
Suisse Capital Corporation and BEA Associate's employee
shareholders. BEA Associates has been providing domestic and
global fixed income and equity investment management services for
institutional clients and mutual funds since 1984 and, together
with its global affiliate, had $____ billion in assets under
management as of _______, 1996. Pilgrim, 1255 Drummers Lane,
Wayne, Pennsylvania 19087, was established in 1982 to provide
specialized equity management for institutional investors. Pilgrim
is a Delaware corporation and a wholly owned subsidiary of United
Asset Management Corporation. As of ___________1996, Pilgrim had
over $_ billion in assets under management.
The Investment Subadvisory Agreements. With respect to the
international Component for LifeSpan Growth Fund and LifeSpan
Balanced Fund, the Manager has entered into investment subadvisory
agreements with Babson-Stewart. With respect to the small cap
Component of each LifeSpan Fund, the Manager has entered into
investment subadvisory agreements with Pilgrim. With respect to
the high yield/high risk bond Component for each LifeSpan Fund, the
Manager has entered into investment subadvisory agreements with BEA
Associates. Under the respective investment subadvisory agreement,
the corresponding Subadviser, subject to the review of the Board of
Directors and the overall supervision of the Manager, is
responsible for managing the investment operations of the
corresponding LifeSpan Fund Component and the composition of the
Component's portfolio and furnishing the LifeSpan Fund with advice
and recommendations with respect to investments and the purchase
and sale of securities for the respective Component.
The investment subadvisory agreements with Babson-Stewart
provide that in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard with respect to its
obligations and duties under the agreements, Babson-Stewart will
not be subject to liability for any loss sustained by reason of its
good faith errors of omissions in connection with any matters to
which the agreements relate.
The investment subadvisory agreements with Pilgrim provide
that in the absence of willful misfeasance, bad faith, negligence,
or reckless disregard of the performance of its duties under the
agreements, Pilgrim is not subject to liability for any error of
judgment or mistake of law or for any other action or omission in
the course of, or connected with, rendering services or for any
losses that may be sustained in the purchase, holding or sale of
any security, or otherwise.
The investment subadvisory agreement with BEA Associates
provides that in the absence of willful misfeasance, bad faith,
negligence, or reckless disregard of the performance of its duties
under the agreement, BEA Associates is not subject to liability for
losses as a result of its activities in connection with the
adoption of any investment policy or the purchase, sale or
retention of securities on behalf of the LifeSpan Funds subadvised
by BEA Associates if such activities were made with due care and in
good faith.
The Distributor. Under its Distribution Agreements with each
Fund, the Distributor acts as each Fund's principal underwriter in
the continuous public offering of the Fund's shares, but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales (other than those paid under the Distribution
and Service Plans, but including advertising and the cost of
printing and mailing prospectuses other than those furnished to
existing shareholders), are borne by the Distributor.
The compensation paid by the Funds to G.R. Phelps & Co., the
prior distributor of the Funds' shares, for distribution fees for
the last three fiscal years was:
1994 1995 1996
Allocation Fund $ $ $
Value Fund $ $ $
LifeSpan Income Fund $ $ $
LifeSpan Balanced Fund $ $ $
LifeSpan Growth Fund $ $ $
For additional information about distribution of the Funds' shares
and the expenses connected with such activities, please refer to
"Distribution and Service Plans," below.
The Transfer Agent. OppenheimerFunds Services, each Fund's
transfer agent, is responsible for maintaining each Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies Of The Funds
Brokerage Provisions of the Investment Advisory Agreements. One of
the duties of the Manager under each advisory agreement is to
arrange the portfolio transactions for each Fund. Each advisory
agreement contains provisions relating to the employment of broker-
dealers ("brokers") to effect a 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 a
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 a
Fund as established by its Board of Directors.
Under each advisory agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for
a 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 and
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 a Fund and other investment
companies managed by the Manager or its affiliates as a factor in
the selection of brokers for a Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Most
purchases made by the Funds are principal transactions at net
prices, and the Funds incur little or no brokerage costs. Subject
to the provisions of the advisory agreement, the procedures and
rules described above, allocations of brokerage are generally made
by the Manager's portfolio traders based upon recommendations from
the Manager's portfolio managers. In certain instances, portfolio
managers may directly place trades and allocate brokerage, also
subject to the provisions of the advisory agreements and the
procedures and rules described above. In either case, brokerage is
allocated under the supervision of the Manager's executive
officers. Transactions in securities other than those for which an
exchange is the primary market are generally done with principals
or market makers. Brokerage commissions are paid primarily for
effecting transactions in listed securities or for certain fixed
income agency transactions in the secondary market and otherwise
only if it appears likely that a better price or execution can be
obtained.
When the Funds engage 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
and 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 Funds
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 Directors 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 trades to obtain
research where the broker has represented to the Manager that (i)
the trade is not from the broker's own inventory, (ii) the trade
was executed by the broker on an agency basis at the stated
commission, and (iii) the trade is not a riskless principal
transaction.
The research services provided by brokers broadens the scope
and supplements the research activities of the Manager, by making
available additional views for consideration and comparisons, and
enabling the Manager to obtain market information for the valuation
of securities held in a Fund's portfolio or being considered for
purchase. The Board of Directors, including the "independent"
Directors of the Funds (those Directors of the Funds who are not
"interested persons" as defined in the Investment Company Act, and
who have no direct or indirect financial interest in the operation
of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to
the commissions paid to brokers furnishing such services so that
the Board may ascertain whether the amount of such commissions was
reasonably related to the value or benefit of such services.
Brokerage commissions for the most recent three year period
for the Fund's listed below were as follows:
</TABLE>
<TABLE>
<CAPTION>
1994 1995 1996
Brokerage Brokerage Brokerage
Fund Commissions Commissions Commissions
<S> <C> <C> <C>
Value Fund $
Allocation Fund $
LifeSpan Income Fund $
LifeSpan Balanced Fund $
LifeSpan Growth Fund $
</TABLE>
Performance of the Funds
Yield and Total Return Information (All Funds ). From time to
time, as set forth in a Fund's Prospectus, the "standardized
yield," "dividend yield," "average annual total return," "total
return," or "total return at net asset value", as the case may be,
of an investment in a class of a Fund may be advertised. An
explanation of how yields and total returns are calculated for each
class and the components of those calculations is set forth below.
A Fund's maximum sales charge rate on Class A shares was lower
prior to March 18, 1996, and actual investment performance would be
affected by that change.
A Fund's advertisement of its performance must, under
applicable rules of the SEC, include the average annual total
returns for each class of shares of a Fund for the 1, 5 and 10-year
periods (or the life of the class, if less) as of the most recently
ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare a 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 a Fund is not insured; its yields and total 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. Yields and total returns
for any given past period are not a prediction or representation by
a Fund of future yields or rates of return on its shares. The
yields and total returns of Class A, Class B, Class C and Class Y
shares of a Fund, as the case may be, are affected by portfolio
quality, the type of investments the Fund holds and its operating
expenses allocated to a particular class.
Standardized Yields
Yield. A Fund's "yields" (referred to as "standardized
yield") for a given 30-day period for a class of shares are
calculated using the following formula set forth in rules adopted
by the SEC that apply to all funds that quote yields:
2 [( a-b + 1)6 - 1]
Standardized Yield = ( 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 the class on the last
day of the period, using the current maximum sales charge rate
adjusted for undistributed net investment income.
The standardized yield of a class of shares for a 30-day
period may differ from its yield for any other period. The SEC
formula assumes that the standardized yield for a 30-day period
occurs at a constant rate for a six-month period and is annualized
at the end of the six-month period. This standardized yield is not
based on actual distributions paid by a Fund to shareholders in the
30-day period, but is a hypothetical yield based upon the net
investment income from a Fund's portfolio investments calculated
for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally,
because each class of shares is subject to different expenses, it
is likely that the standardized yields of a Fund's classes of
shares will differ.
Dividend Yield and Distribution Return. From time to time a
Fund may quote a "dividend yield" or a "distribution return" for
each class. Dividend yield is based on the dividends paid on
shares of a class from dividends derived from net investment income
during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains
declared during a stated period. Under those calculations, the
dividends and/or distributions for that class declared during a
stated period of one year or less (for example, 30 days) are added
together, and the sum is divided by the maximum offering price per
share of that class) on the last day of the period. When the
result is annualized for a period of less than one year, the
"dividend yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class divided by Number of days (accrual
Max. Offering Price of the Class period) x 365
(last day of period)
The maximum offering price for Class A shares includes the
current maximum front-end sales charge. For Class B or Class C
shares, as the case may be, the maximum offering price is the net
asset value per share, without considering the effect of contingent
deferred sales charges. From time to time similar yield or
distribution return calculations may also be made using the Class
A net asset value (instead of its respective maximum offering
price) at the end of the period.
Total Return Information
Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment according to the following formula:
(ERV)1/n - 1 = Average Annual Total Return
P
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV-P = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% for Allocation, Value, LifeSpan
Balanced, LifeSpan Growth and LifeSpan Income Fund (the "Equity
Funds") and 4.75% for Government Securities and Income Fund (the
"Bond Funds") (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at
net asset value, as discussed below). For Class B shares of an
Equity Fund, the payment of the current contingent deferred sales
charge (5.0% for the first year, 4.0% for the second year, 3.0% for
the third and fourth years, 2.0% in the fifth year, 1.0% in the
sixth year and none thereafter) is applied to the investment result
for the time period shown (unless the total return is shown at the
net asset value, as described below). For Class B shares of a Bond
Fund, the payment of the current contingent deferred sales charge
(4.0% for the first year, 3.0% for the second year, 2.0% for the
third and fourth years, 1.0% in the fifth year and none thereafter)
is applied to the investment result for the time period shown
(unless the total return is shown at net asset value, as described
below). For Class C shares, the 1.0% contingent deferred sales
charge is applied to the investment results for the one-year period
(or less). 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. 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.
Total Returns at Net Asset Value. From time to time a 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, as the case may be. 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.
Value of a $1,000 Investment in the Class A shares of the
Allocation Fund:
<TABLE>
<CAPTION>
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
<S> <C> <C> <C>
10 Years Ended 12/31/85 12.02% 11.45%
to 12/31/95
5 Years Ended 12/31/90 14.65% 13.48%
12/31/95
1 Year Ended 12/31/95 23.95% 17.75%
12/31/95
Value of a $1,000 Investment in the Class B Shares of the Allocation Fund:
Total Return Total Return
Investment Investment Annualized excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
Life of Fund 10/1/95* 4.93% -0.31%
to 12/31/95
Value of a $1,000 Investment in the Class C shares of the Allocation Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
* Date of Inception
Value of a $1,000 Investment in the Class A shares of the Value Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
10 Years Ended 12/31/85 14.84% 14.25%
to 12/31/95
5 Years Ended 12/31/90 20.23% 19.00%
12/31/95
1 Year Ended 12/31/94 36.40% 29.58%
12/31/95
Value of a $1,000 Investment in the Class B shares of the Value Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
Life of Fund 10/01/95* 8.04% 2.63%
to 12/31/95
Value of a $1,000 Investment in the Class C shares of Value Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
* Date of Inception
Value of a $1,000 Investment in the Class A shares of the LifeSpan Growth Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
Life of Fund 5/1/95* 18.02% 12.12%
to 12/31/95
Value of a $1,000 Investment in the Class B shares of the LifeSpan Growth Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
Life of Fund 10/01/95* 5.34% 0.07%
to 12/31/95
* Date of Inception
Value of a $1,000 Investment in the Class C shares of the LifeSpan Growth Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
Life of Fund 10/01/95* 5.34% 0.07%
to 12/31/95
Value of a $1,000 Investment in the Class A shares of the LifeSpan Balanced Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
Life of Fund 5/1/95* 15.33% 9.56%
to 12/31/95
* Date of Inception
Value of a $1,000 Investment in the Class B shares of the LifeSpan Balanced Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
Life of Fund 10/01/95* 4.49% -0.73%
to 12/31/95
* Date of inception
Value of a $1,000 Investment in the Class C shares of the LifeSpan Balanced Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
Life of Fund
to 12/31/95
* Date of Inception
Value of a $1,000 Investment in the Class A shares of the LifeSpan Income Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% sales charge) 5% sales charge)
Life of Fund 5/1/95* 11.22% 5.66%
to 12/31/95
* Date of Inception
Value of a $1,000 Investment in the Class B shares of the LifeSpan Income Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
Life of Fund 10/01/95* 4.30% -0.92%
to 12/31/95
* Date of Inception
Value of a $1,000 Investment in the Class C Shares of LifeSpan Income Fund:
Total Return Total Return
Investment Investment Annualized (excluding Annualized (including
Period Date 5% CDSC) 5% CDSC)
Life of Fund
to 12/31/95
* Date of Inception
</TABLE>
Other Performance Comparisons. From time to time a Fund may
also include in its advertisements and sales literature performance
information about a Fund or rankings of a Fund's performance cited
in newspapers or periodicals, such as The New York Times. These
articles may include quotations of performance from other sources,
such as Lipper Analytical Services, Inc. or Morningstar, Inc.
From time to time, a Fund's Manager may publish rankings or
ratings of the Manager (or the Transfer Agent), by independent
third-parties, on the investor services provided by them to
shareholders of the Oppenheimer funds, other than the performance
rankings of the Oppenheimer funds themselves. These ratings or
rankings of shareholder/investor services by third parties may
compare the Oppenheimer funds 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,
using its own research or judgment, or based upon surveys of
investors, brokers, shareholders or others.
When comparing yield, total return and investment risk of an
investment in Class A, Class B, Class C or Class Y shares, as the
case may be, of a Fund with other investments, investors should
understand that certain other investments have different risk
characteristics than an investment in shares of a Fund. For
example, certificates of deposit may have fixed rates of return and
may be insured as to principal and interest by the FDIC, while a
Fund's returns will fluctuate and its share values and returns are
not guaranteed. U.S. Treasury securities are guaranteed as to
principal and interest by the full faith and credit of the U.S.
government.
Distribution and Service Plans
Each Fund has adopted a Service Plan for Class A Shares and
a Distribution and Service Plan for Class B shares of the Fund
under Rule 12b-1 of the Investment Company Act. Each of Allocation
Fund, Value Fund and each LifeSpan Fund has adopted a Distribution
and Service Plan for Class C shares of such Fund under Rule 12b-1
of the Investment Company Act. Pursuant to such Plans, each Fund
will reimburse the Distributor for all or a portion of its costs
incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectuses. Each
Plan has been approved by a vote of (i) the Board of Directors of
the effected Funds, including a majority of the Independent
Directors, 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 Plans for the Class C shares, the
votes were cast by the Manager as the then-sole initial holder of
Class C shares of the effected Funds.
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 a Fund) to make payments to
brokers, dealers or other financial institutions (each is referred
to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to a Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make to Recipients from
their own resources.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the effected Fund's
Board of Directors including its Independent Directors 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 Directors 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
each Fund automatically convert into Class A shares after six
years, a Fund is required to obtain the approval of Class B as well
as Class A shareholders for a proposed amendment to a Class A Plan
that would materially increase payments under the Class A Plan.
Such approval must be by a "majority" of the Class A and Class B
shares (as defined in the Investment Company Act), voting
separately by class. All material amendments must be approved by
the Board and the Independent Directors.
While the Plans are in effect, the Treasurer of the Funds
shall provide separate written reports to the Board of Directors at
least quarterly for its review, detailing the amount of all
payments made pursuant to each Plan, the purpose for which the
payments were made and the identity of each Recipient that received
any such payment 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 are carried forward, as explained in the Prospectuses and
below. Those reports, including the allocations on which they are
based, will be subject to the review and approval of the
Independent Directors in the exercise of their fiduciary duty.
Each Plan further provides that while it is in effect, the
selection and nomination of those Directors who are not "interested
persons" of the Funds are committed to the discretion of the
Independent Directors. This does not prevent the involvement of
others in such selection and nomination if the final decision on
any such selection or nomination is approved by a majority of the
Independent Directors.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all shares of a
Fund 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 Directors.
Initially, the Board of Directors has set the fee at the maximum
rate and set no minimum amount. Any unreimbursed expenses incurred
by the Distributor with respect to Class A shares for any fiscal
quarter by the Distributor may not be recovered under the Class A
Plan in subsequent fiscal quarters. Payments received by the
Distributor under the Plan for Class A shares will not be used to
pay any interest expense, carrying charges, or other financial
costs, or allocation of overhead by the Distributor.
The Class B and Class C Plans allow the service fee payments
to be paid by the Distributor to Recipients in advance for the
first year Class B and Class C shares are outstanding, and
thereafter on a quarterly basis, as described in the Prospectuses.
The advance payment is based on the net asset value of the Class B
and Class C shares sold. An exchange of shares does not entitle
the Recipient to an advance payment of the service fee. 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 the advance of the service fee payment
to the Distributor.
Although the Class B and the Class C Plans permit the
Distributor to retain both the asset-based sales charges and the
service fee, or to pay Recipients the service fee on a quarterly
basis, without payment in advance, the Distributor presently
intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from
time to time under the Class B Plan and the Class C Plan by the
Board. Initially, the Board has set no minimum holding period.
All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. The
Distributor anticipates that it will take a number of years for it
to recoup (from a Fund's payments to the Distributor under the
Class B or Class C Plan and from contingent deferred sales charges
collected on redeemed Class B or Class C shares) the sales
commissions paid to authorized brokers or dealers.
For the for the fiscal period from January 1, 1996 through
October 31, 1996, each Fund paid the Distributor the following
amounts under its respective Class A, Class B and Class C Plans:
Class A Class B Class C
Allocation Fund $ $ $
Value Fund $ $ $
LifeSpan Growth Fund $ $ $
LifeSpan Balanced $ $ $
LifeSpan Income Fund $ $ $
Asset-based sales charge payments are designed to permit an
investor to purchase shares of a 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 a Fund. The Class B and Class C Plans
provide for the Distributor to be compensated at a flat rate
whether the Distributor's distribution expenses are more than the
amounts paid by a Fund during that period. Such payments are made
in recognition that the Distributor (i) pays sales commissions to
authorized brokers and dealers at the time of sale, (ii) may
finance such commissions and/or the advance of the service fee
payment to Recipients under those Plans or provide such financing
from its own resources, or from an affiliate, (iii) employs
personnel to support distribution of shares, and (iv) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders) and state "blue sky"
registration fees and certain other distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. Value Fund, Allocation Fund and each LifeSpan Fund offer
three classes of shares, Class A, Class B and Class C shares. The
availability of multiple 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 any order for $500,000 or $1 million or more of Class B or
Class C shares, respectively, 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 a Fund instead. A fourth Class of Share
of Oppenheimer Disciplined Value Fund may be purchased only be
certain institutional investors at net asset value per shares
("Class Y Shares").
A Fund's classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, including the
asset-based sales charge to which Class B and Class C shares are
subject.
The 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 a 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 a 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
Directors, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution and/or Service Plan
fees, (ii) incremental transfer and shareholder servicing agent
fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a
specific class rather than to a Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B and, in some cases, Class C and Class
Y shares of a Fund are determined as of the close of business of
The New York Stock Exchange on each day the Exchange is open by
dividing the value of a Fund's net assets attributable to that
class by the number of shares of that class outstanding. The
Exchange normally closes at 4:00 P.M., New York time, but may close
earlier on some days (for example, in case of weather emergencies
or on days falling before a holiday). The Exchange's most recent
annual holiday schedule (which is subject to change) states that it
will close New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day; it may close on other days. Trading may occur at times when
the Exchange is closed (including weekends and holidays or after
4:00 P.M., on a regular business day). Because the net asset
values of a Fund will not be calculated at such times, if
securities held in a Fund's portfolio are traded at such time, the
net asset values per share of Class A, Class B, Class C and Class
Y shares of a Fund may be significantly affected on such days when
shareholders do not have the ability to purchase or redeem shares.
The Funds' Board of Directors has established procedures for
the valuation of a Fund's securities, generally as follows: (i)
equity securities traded on a securities exchange or on NASDAQ for
which last sale information is regularly reported are valued at the
last reported sale prices 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 and
asked prices that day); (ii) securities traded on a foreign
securities exchange are valued generally at the last sales price
available to the pricing service approved by a Fund's Board of
Directors or to the Manager as reported by the principal exchange
on which the security is traded at its last trading session on or
immediately preceding the valuation date; 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) long-term debt securities having a remaining
maturity in excess of 60 days are valued based on the mean between
the "bid" and "asked" prices determined by a portfolio pricing
service approved by a Fund's Board of Directors 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 one year or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between "bid" and "asked" prices determined by a pricing
service approved by a Fund's Board of Directors or obtained by the
Manager from two active market makers in the security on the basis
of reasonable inquiry; (v) money market debt securities that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (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.
In the case of U.S. Government Securities and mortgage-backed
securities, when 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
on pricing services approved by the Board of Directors 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 New York Stock Exchange. Events affecting the values of
foreign securities traded in securities markets that occur between
the time their prices are determined and the close of the New York
Stock Exchange will not be reflected in a Fund's calculation of net
asset value unless the Board of Directors or the Manager, under
procedures established by the Board of Directors, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market that day as provided by
a reliable bank, dealer or pricing service.
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 Directors 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 makes (which in certain cases may
bid price if not asked price is available).
AccountLink. When shares are purchased through AccountLink,
each purchase must be at least $25.00. Shares will be purchased on
the regular business day the Distributor is instructed to initiate
the Automated Clearing House transfer to buy the shares. Dividends
will begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day a Fund receives Federal Funds for
such 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 the 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 a Fund three days after the transfers are
initiated. The Distributor and the Funds are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. 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 each Fund's Prospectus because the
Distributor or broker-dealer incurs little or no selling expenses.
The term "immediate family" refers to one's spouse, children,
grandchildren, grandparents, parents, parents-in-law, siblings,
sons- and daughters-in-law, aunts, uncles, nieces and nephews, a
sibling's spouse and a spouse's siblings.
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:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer Quest 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 Global Value Fund, Inc.
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
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 CDSC).
Letters of Intent. A Letter of Intent (referred to as a
"Letter") is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares of a Fund (and Class A
and Class B shares of 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 a 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 his or her Fund's 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 a Fund, that those amendments will apply automatically
to existing Letters of Intent.
For purchases of shares of a 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 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 a Fund equal in
value 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 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 shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A
initial or contingent deferred sales charge or (ii) Class B shares
of one of the other Oppenheimer funds that were acquired subject to
a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectuses 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 Prospectuses. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of Class A
shares of certain OppenheimerFunds, or a contingent deferred sales
charge may apply to shares purchased by Asset Builder payments. An
application should be obtained from the Transfer Agent, 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.
Each 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 a Fund's shares (for example, when a purchase check is
returned to a 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 a
Fund for the loss, the Distributor will do so. A 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.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent differed sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Funds is stated in
the Prospectuses. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. A Fund's Board of Directors has the
right to cause the involuntary redemption of the shares held in any
account if the number of shares is less than 1,000. Should the
Board elect to exercise this right, it may also fix, in accordance
with the Investment Company Act, the requirements for any notice to
be given to the shareholders in question (not less than 30 days),
or the Board may set requirements for granting permission to the
shareholder to increase the investment, and set other terms and
conditions so that the shares would not be involuntarily redeemed.
Selling Shares by Wire. The wire of redemption proceeds may
be delayed if a Fund's Custodian bank is not open for business on
a day when the Fund would normally authorize the wire to be made,
which is usually the Fund's next regular business day following the
redemption. In those circumstances, the wire will not be
transmitted until the next bank business day on which the Fund is
open for business. No dividends will be paid on the proceeds of
redeemed shares awaiting transfer by wire.
Payments "In Kind". Each Fund's Prospectus states that
payment for shares tendered for redemption is ordinarily made in
cash. However, if the Board of Directors of a Fund determines that
it would be detrimental to the best interests of the remaining
shareholders of a Fund to make payment of a redemption order wholly
or partly in cash, 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 SEC. Each 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 a Fund uses to value its portfolio securities described
above under "Determination of Net Asset Values Per Share" and such
valuation will be made as of the time the redemption price is
determined.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares purchased
subject to an initial sales charge, or (ii)
Class A or Class B shares on which the shareholder paid a
contingent deferred sales charge when redeemed. This privilege
does not apply to Class C shares.
Transfers of Shares. Shares are not subject to the payment of
a contingent deferred sales charge of either class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in a Fund's
Prospectus under "How to Buy Shares" for the imposition of the
Class B and Class C contingent deferred sales charge will be
followed in determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans or pension or profit-sharing plans should be addressed
to "Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer
Agent at its address listed in "How To Sell Shares" in the relevant
Fund's Prospectus or on the back cover of this Statement of
Additional Information. The request must: (i) state the reason for
the distribution; (ii) state the owner's awareness of tax penalties
if the distribution is premature; and (iii) conform to the
requirements of the plan and a Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension or profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are
subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the
Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Funds, 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 Funds' agent to repurchase their
shares from authorized dealers or brokers. The repurchase price
per share will be the net asset value next computed after the
Distributor receives the order placed by the dealer or broker,
except that if the Distributor receives a repurchase order from a
dealer or broker after the close of The New York Stock Exchange on
a regular business day, it will be processed at that day's net
asset value if the order was received by the dealer or broker from
its customer prior to the time the Exchange 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
Prospectuses.
Automatic Withdrawal and Exchange Plans. Investors owning
shares of a Fund valued at $5,000 or more can authorize the
Transfer Agent to redeem shares (minimum $50) automatically on a
monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. A Fund cannot guarantee
receipt of the 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
Class B and Class C contingent deferred sales charges on such
withdrawals (except where the Class B and Class C contingent
deferred sales charge is waived as described in the Prospectuses
under "Class B Contingent Deferred Sales Charge" or in "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectuses. These provisions may be amended from time to time by
a 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 a 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 thereafter shares acquired
with reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the
effected Fund shall incur no liability to the Planholder for any
action taken or omitted by the Transfer Agent and the Fund in good
faith to administer the Plan. Certificates will not be issued for
shares of a 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 such 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 a
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 a 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 such 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 a 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 a Fund, shares that have not been redeemed from
the account will be held in uncertificated form in the name of the
Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for a
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 Prospectuses, shares
of a particular class of OppenheimerFunds having more than one
class of shares may be exchanged only for shares of the same class
of other OppenheimerFunds. Shares of the OppenheimerFunds that
have a single class without a class designation are deemed "Class
A" shares for this purpose. All of the Oppenheimer funds offer
Class A, B and C shares except Oppenheimer Money Market Fund, Inc.,
Centennial Tax Exempt Trust, Centennial Government Trust,
Centennial New York Tax Exempt Trust, Centennial California Tax
Exempt Trust, Centennial America Fund, L.P., Daily Cash
Accumulation Fund Inc. and Connecticut Mutual Liquid Account, which
only offer Class A shares and Oppenheimer Main Street California
Tax Exempt Fund, Connecticut Mutual Government Securities Account
and Connecticut Mutual Income Account which only offers Class A and
Class B shares (Class B and Class C shares of Oppenheimer Cash
reserves are generally available only by exchange from the same
class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans).
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge).
Shares of a Fund acquired by reinvestment of dividends or
distributions from any other of the 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 either class purchased 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. The
Class C contingent deferred sales charge is imposed on Class C
shares acquired by exchange if they are redeemed within 12 months
of the initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectuses for the imposition of the Class B and 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.
A Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of 10 or
more accounts. A 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 relevant Fund's
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, the shareholder must
either have an existing account in, or obtain 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. A 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 a Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the funds selected are 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 Funds, 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 on newly purchased shares will not be declared or
paid until such time as Federal Funds (funds credited to a member
bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks
received from investors are converted to Federal Funds on the next
business day. Dividends will be declared on shares repurchased by
a dealer or broker for three business days following the trade date
(i.e., to and including the day prior to settlement of the
repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will
be paid together with the redemption proceeds.
Dividends, 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.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of a Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C shares" above. Dividends are calculated in the
same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower than dividends on Class A shares as a result
of the asset-based sales charges on Class B and Class C shares, and
will also differ in amount as a consequence of any difference in
net asset value between the classes.
If prior distributions must be re-characterized at the end of
the fiscal year as a result of the effect of a Fund's investment
policies, shareholders may have a non-taxable return of capital,
which will be identified in notices to shareholders. There is no
fixed dividend rate and there can be no assurance as to the payment
of any dividends or the realization of any capital gains.
If a Fund qualifies as a "regulated investment company" under
the Internal Revenue Code, they will not be liable for Federal
income taxes on amounts paid by them as dividends and
distributions. Each 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 to determine whether a Fund
will qualify, and a Fund might not meet those tests in a particular
year. For example, if a Fund derives 30% or more of its gross
income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, a Fund will be
treated for tax purposes as an ordinary corporation and will
receive no tax deduction for payments of dividends and
distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year each
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 a Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that each Fund will meet those requirements,
a Fund's Board and the Manager might determine in a particular year
that it would be in the best interest of shareholders for a 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 a 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
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 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 a Fund on the same basis.
Additional Information About The Funds
The Custodian. State Street Bank and Trust Company is the
Custodian of the Funds' assets. The Custodian's responsibilities
include safeguarding and controlling the Funds' portfolio
securities, collecting income on the portfolio securities and
handling the delivery of such securities to and from the Funds.
Independent Auditors. The independent auditors of the Funds
audit the Funds' financial statements and perform other related
audit services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
Financial Information About the Funds
Independent Auditors' Report and Financial Statements
The Funds' financial statements for the year ended October 31,
1996 are attached to and incorporated by reference from the
Company's Annual Report into this Statement of Additional
Information. The financial statements are so attached and
incorporated in reliance upon the report of Arthur Andersen LLP,
independent public accountants, as experts in accounting and
auditing.
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies &
Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications -
Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Oppenheimer Series Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
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 and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Independent Auditors
Arthur Andersen LLP
One Financial Plaza
Hartford, Connecticut 06103
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov
& Wein
114 West 47th Street
New York, New York 10036
opsersai.#1
<PAGE>
OPPENHEIMER SERIES FUND, INC.
PART C -- OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements:
(1) Financial Highlights (See Parts A and B, Prospectus
and Statement of Additional Information): To be filed by
Amendment.
(2) Independent Auditors' Report (See Part B Statement
of Additional Information): To be filed by Amendment.
(3) Statements of Investment (See part B, Statement of
Additional Information): To be filed by Amendment.
(4) Statement of Net Assets and Liabilities (See Part B
of Additional Information): To be filed by Amendment.
(5) Statement of Operations (See Part B, Statement of
Additional Information): To be filed by Amendment.
(6) Statement of Changes in Net Assets (See Part B,
Statement of Additional Information): To be filed by Amendment.
(7) Notes to Financial Statements (See Part B, Statement
of Additional Information): To be filed by Amendment.
(b) Exhibits
1. Amended and Restated Articles of Incorporation dated
January 6, 1995: Filed with Registrant's Post-Effective Amendment
NO. 28, 3/1/96, and Incorporated herein by reference.
1.1 Articles Supplementary dated September, 1995: Filed
with Registrant's Post-Effective Amendment No. 28, 3/1/96, and
incorporated herein by reference.
1.2 Articles Supplementary dated May, 1995: Filed with
Registrant's Post-Effective Amendment No. 28, 3/1/96, and
incorporated herein by reference.
1.3 Articles Supplementary dated October 16, 1996: To
be filed by Amendment.
2. By-Laws: Filed with Registrant's Post-Effective
Amendment No. 28, 3/1/96, and incorporated herein by reference.
3. Not Applicable
4. Not Applicable
5. Investment Advisory Agreement between the
Registrant, on behalf of Connecticut Mutual Total Return Account
and OppenheimerFunds, Inc. and schedule of omitted substantially
similar documents: Filed with Registrant's Post-Effective
Amendment No. 29, 4/30/96, and incorporated herein by reference.
5.1 Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Pilgrim, Baxter & Associates, Ltd. (for
CMIA LifeSpan Balanced Account) and schedule of omitted
substantially similar documents: Filed with Registrant's Post-
Effective Amendment No. 29, 4/30/96, and incorporated herein by
reference.
5.2 Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and BEA Associates (for CMIA LifeSpan
Balanced Account) and schedule of omitted substantially similar
documents: Filed with Registrant's Post-Effective Amendment No.
29, 4/30/96, and incorporated herein by reference.
5.3 Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Babson-Stewart Ivory International (for
CMIA LifeSpan Balanced Account) and schedule of omitted
substantially similar documents: Filed with Registrant's Post-
Effective Amendment No. 29, 4/30/96, and incorporated herein by
reference.
6. General Distributor's Agreement between Registrant
on behalf of Oppenheimer Disciplined Allocation Fund
OppenheimerFunds Distributor, Inc. and schedule of omitted
substantially similar documents: Filed with Registrant's Post-
Effective Amendment No. 29, 4/30/96, and incorporated herein by
reference.
7. Not Applicable
8. Master Custodian Agreement between Registrant, on
behalf of each series of the Registrant (except the Municipal
Accounts), and State Street Bank and Trust Company: Filed with
Registrant's Post-Effective Amendment No. 28, 3/1/96, and
incorporated herein by reference.
8.1 Amendment (LifeSpan Funds) to Custodian Agreement
between Registrant and State Street Bank and Trust Company: Filed
with Registrant's Post-Effective Amendments No. 28, 3/1/96, and
incorporated herein by reference.
9. Service Contract between Registrant and
OppenheimerFunds Services: Filed with Registrant's Post-Effective
Amendments No.29, 4/30/96, and incorporated herein by reference.
10. Opinion and Consent of Counsel dated 2/28/96: Filed
as an exhibit to 24f-2.
11. Consent of Independent Public Accounts: To be filed
by Amendment.
12. Incorporated by reference to the filings on Form
30D-1 filed on February 29, 1996 and April 11, 1996; file numbers
2-75276.
13. Not Applicable
14. Not Applicable
15. Service Plan and Agreement between Oppenheimer
Disciplined Allocation Fund and OppenheimerFunds Distributor, Inc.
for Class A Shares and schedule of substantially similar omitted
documents: Filed with the Registrant's Post-Effective Amendment
No. 29, 4/30/96, and incorporated herein by reference.
15.1 Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class B Shares of
Oppenheimer Disciplined Allocation Fund and schedule of
substantially similar omitted documents: Filed with the
Registrant's Post-Effective Amendment No. 29, 4/30/96, and
incorporated herein by reference.
15.2 Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class C Shares of
Oppenheimer Disciplined Allocation Fund and schedule of
substantially similar omitted documents: Filed with the
Registrant's Post-Effective Amendment No. 29, 4/30/96, and
incorporated herein by reference.
17. Financial Data Schedule.
18.1 Rule 18f-3 Multiple Class Plan (Class A, B and C
shares) for Oppenheimer Disciplined Allocation Fund, Oppenheimer
Disciplined Value Fund, Oppenheimer LifeSpan Growth Fund,
Oppenheimer LifeSpan Balanced Fund and Oppenheimer LifeSpan Income
Fund: Filed with the Registrant's Post-Effective Amendment No. 28,
3/1/96, 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 ___, 1996
Oppenheimer Disciplined
Alllocation Fund
Class A
Class B
Class C
Oppenheimer Disciplined
Value Fund
Class A
Class B
Class C
Class Y
Oppenheimer LifeSpan
Growth Fund
Class A
Class B
Class C
OppenheimerLifeSpan
Balanced Fund
Class A
Class B
Class C
Oppenheimer LifeSpan
Income Fund
Class A
Class B
Class C
ITEM 27. Indemnification.
Reference is made to Article VI of Registrant's By-laws filed
with Post-Effective Amendment Number 28.
<PAGE>
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 & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During 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.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith
Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab &
Co., Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed
below); previously a Fund
Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-
based Oppenheimer Funds; Vice
President, Assistant
Secretary and Treasurer of
the Denver-based Oppenheimer
Funds. Vice President and
Treasurer of OppenheimerFunds
Distributor, Inc. (the
"Distributor") and
HarbourView Asset Management
Corporation ("HarbourView"),
an investment adviser
subsidiary of the Manager;
Senior Vice President,
Treasurer, Assistant
Secretary and a director of
Centennial Asset Management
Corporation ("Centennial"),
an investment adviser
subsidiary of the Manager;
Vice President, Treasurer and
Secretary of Shareholder
Services, Inc. ("SSI") and
Shareholder Financial
Services, Inc. ("SFSI"),
transfer agent subsidiaries
of the Manager; Director,
Treasurer and Chief Executive
Officer of MultiSource
Services, Inc.; Vice
President and Treasurer of
Oppenheimer Real Asset
Management, Inc.; President,
Treasurer and Director of
Centennial Capital
Corporation; Vice President
and Treasurer of Main Street
Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D.
Vest Investment Securities,
Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio
manager of certain
Oppenheimer funds; Vice
President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street
Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President and
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 New York-
based Oppenheimer Funds; Vice
President and Secretary of
the Denver-based Oppenheimer
Funds; Secretary of the
Oppenheimer Quest and
Oppenheimer Rochester 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
Services, Inc.; President and
a Director of Oppenheimer
Real Asset Management, Inc.;
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.
Scott Farrar,
Vice President Assistant Treasurer of the
New York-based and Denver-
based Oppenheimer funds.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary
of OppenheimerFunds
Distributor, Inc.; Secretary
of HarbourView Asset
Management Corporation,
MultiSource Services, Inc.
and Centennial Asset
Management Corporation;
Secretary, Vice President and
Director of Centennial
Capital Corporation; Vice
President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. 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.
John Fortuna,
Vice President None.
Jon S. Fossel,
Chairman of the Board Director of OAC, the
Manager's parent holding
company; President, CEO and
a director of HarbourView; a
director of SSI and SFSI;
President, Director, Trustee,
and Managing General Partner
of the Denver-based
Oppenheimer Funds; President
and Chairman of the Board of
Main Street Advisers, Inc.;
formerly Chief Executive
Officer of the Manager.
Patricia Foster,
Vice President An officer of certain
Oppenheimer funds; Secretary
and General Counsel of
Rochester Capital Advisors,
L.P. and Secretary of
Rochester Tax Managed Fund,
Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice
President and Counsel of OAC;
formerly he held the
following positions: Vice
President and a director of
HarbourView and Centennial,
a director of SFSI and SSI,
an officer of other
Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellerman,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President
/ Director of Graphic and
Print Communications for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private
Client Division of Merrill
Lynch.
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.
Barbara Hennigar,
Executive Vice President and
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,
Assistant Vice President None.
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,
Assistant Vice President Formerly a Senior Associate
with Robinson, Lake/Sawyer
Miller.
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.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing
Director of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President
with Bankers Trust.
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.
Stephen F. Libera,
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 he was the senior bond
portfolio manager for
Panorama Series Fund, Inc.,
other mutual funds and
pension accounts managed by
G.R. Phelps; was also
responsible for managing the
public fixed-income
securities department at
Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and
Trustee of the New York-based
and the Denver-based
Oppenheimer funds; President
and a Director of OAC,
HarbourView and Oppenheimer
Partnership Holdings, Inc.;
Director of ORAMI; Chairman
and Director of SSI; a
Director of Oppenheimer Real
Asset Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President,
Mortgage Trading, at S.N.
Phelps & Co., Salomon
Brothers, and Kidder Peabody.
Sally Marzouk,
Vice President None.
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 with
Phoenix Securities Group.
Denis R. Molleur,
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.
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 Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain
Oppenheimer funds. Formerly
Senior Investment Officer and
Portfolio Manager with
Chemical Bank.
Russell Read,
Vice President 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 Formerly a Product Manager
for Metropolitan Life
Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio
manager of certain
Oppenheimer funds. Formerly
Vice President of RFS,
President and Director of
RFD, Vice President and
Director of FMC, Vice
President and director of
RCAI, General Partner of RCA,
an officer and/or portfolio
manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio
manager of certain
Oppenheimer funds.
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 Formerly Vice President of
Dollar Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of
Citicorp Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio
manager of certain
Oppenheimer funds; formerly
a Vice President and Senior
Portfolio Manager for Dean
Witter InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President
None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of
the New York-based
Oppenheimer Funds; formerly
Chairman of the Manager and
the Distributor.
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 he was 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 Vice President of the
Manager; Vice President and
Portfolio Manager of
Oppenheimer Discovery Fund,
Oppenheimer Global Emerging
Growth Fund and Oppenheimer
Enterprise Fund. 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.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An officer and/or portfolio
manager of certain
Oppenheimer funds.
Jerry A. 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.
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 he was 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.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of
the Manager; Assistant
Secretary of the Oppenheimer
Funds; Assistant Secretary of
SSI, SFSI; an officer of
other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio
manager of certain
Oppenheimer funds; Vice
President of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds, and the Rochester-based
Oppenheimer Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Municipal Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth 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 Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Series Fund, Inc.
Oppenheimer Target Fund
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
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 Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Rochester-based Oppenheimer Funds
- ---------------------------------
Bond Fund Series - Oppenheimer Bond Fund For
Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer 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., Oppenheimer Real Asset Management, Inc.,
MultiSource Services, Inc. and Oppenheimer Real Asset Management,
Inc. is 3410 South Galena Street, Denver, Colorado 80231.
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
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:
Position
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ----------
<S> <C> <C>
Susan P. Bader ++ Assistant Vice President None
Christopher Blunt Vice President None
38954 Plumbrook Drive
Farmington Hills, MI 48331
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the
NY-based
Oppenheimer funds
/ Vice President,
Secretary and
Treasurer of the
Denver-based
Oppen-heimer 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* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425 1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
Paul Delli-Bovi Vice President None
750 W. Broadway
Apt. 5M
Long Beach, NY 11561
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-
Counsel and Director based Oppen-heimer
funds/Vice
President of the
Denver-based
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
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
111 Rexford Court
Summerville, SC 29485
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
8572 Saint Ives Place
Cincinnati, OH 45255
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
30. Management Services.
Applicable.
Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) The company will furnish each person to whom a prospectus
is delivered with a copy of the Company's latest annual
report to shareholders, upon request and without charge.
(d) The Registrant undertakes to comply with Section 16(c) of
the Investment Company Act of 1940, as amended, as it
relates to the assistance to be rendered to shareholders
with respect to the call of a meeting to replace a
director.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 16th day of October, 1996
OPPENHEIMER DISCIPLINED VALUE FUND
By: /s/ Bridget A. Macskill *
----------------------------------------
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy * Chairman of the October 16, 1996
- ---------------- Board of Trustees
Leon Levy
/s/ Bridget A. Macskill* President, Principal October 16, 1996
- -------------------- Executive Officer
Bridget A. Macaskill and Trustee
/s/ Donald W. Spiro * Trustee October 16, 1996
- --------------------
Donald W. Spiro
/s/ George Bowen* Chief Financial October 16, 1996
- ------------------- Accounting Officer
George Bowen and Treasurer
/s/ Robert G. Galli* Trustee October 16, 1996
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee October 16, 1996
- --------------------
Benjamin Lipstein
<PAGE>
/s/ Elizabeth B. Moynihan* Trustee October 16, 1996
- ---------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee October 16, 1996
- ---------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee October 16, 1996
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee October 16, 1996
- ---------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins* Trustee October 16, 1996
- --------------------
Sidney M. Robbins
/s/ Pauline Trigere* Trustee October 16, 1996
- ---------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee October 16, 1996
- ---------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
i:\legal\prosp\375ptc.#2
</TABLE>
