OPPENHEIMER DISCIPLINED ALLOCATION FUND
Supplement dated February 25, 1997 to the
Prospectus dated February 25, 1997
The Prospectus is changed as follows:
1. In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares" on page 32, (2) sales of Class B shares described
in the fifth paragraph in "Distribution and Service Plans for Class
B and Class C Shares" on page 40, and (3) sales of Class C shares
described in the sixth paragraph in "Distribution and Service Plans
for Class B and Class C Shares" on page 40, the Distributor will
pay additional commission to each broker, dealer and financial
institution that has a sales agreement with the Distributor and
agrees to accept that additional commission (these are referred to
as "participating firms") for Class A, Class B and Class C shares
of the Fund sold in "qualifying transactions" (the "promotion").
The additional commission will be 1.00% of the offering price of
shares of the Fund sold by a registered representative or sales
representative of a participating firm during the promotion. If
the additional commission is paid on the sale of Class A shares of
$500,000 or more or the sale of Class A shares to a SEP IRA with
100 or more eligible participants and those shares are redeemed
within 13 months from the end of the month in which they were
purchased, the participating firm will be required to return the
additional commission.
"Qualifying transactions" are aggregate sales of $150,000 or
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
February 25, 1997 PS0205.005
OPPENHEIMER
Disciplined Allocation Fund
Prospectus Dated February 25, 1997
Oppenheimer Disciplined Allocation Fund is a mutual fund that seeks
to maximize total investment return (including both capital
appreciation and income) principally by allocating its assets among
stocks, corporate bonds, U.S. Government securities and money
market instruments according to changing market conditions. This
allocation process utilizes quantitative asset allocation tools,
which measure the relationship among these asset categories, in
combination with the judgment of the portfolio managers concerning
current market dynamics. The Fund's investments are not restricted
to any specific type of security and the Fund may 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 Techniques 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 February 25, 1997 Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated into this
Prospectus by reference (which means that it is legally part of
this Prospectus).
OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE 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.
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
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
A-1 Appendix A: Special Sales Charge Arrangements
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 the fiscal period of 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 28 for an explanation of how and when
these charges apply.
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge
on Purchases (as a % of
offering price) 5.75% None None
Maximum Deferred Sales Charge
(as a % of the lower of the
original offering price or
redemption proceeds) None(1) 5% in the first 1% if
year, shares are
declining redeemed within
to 1% in the 12 months of
sixth year and purchase(2)
eliminated
thereafter(2)
Maximum Sales Charge
on Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page 33) 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
Shares Shares Shares
<S> <C> <C> <C>
Management Fees 0.625% 0.625% 0.625%
12b-1 Plan Fees 0.250% 0.990% 0.960%
Other Expenses 0.235% 0.235% 0.285%
Total Fund Operating
Expenses 1.110% 1.850% 1.870%
</TABLE>
The numbers for Class A and Class B shares in the chart above
are based on the Fund's expenses during the fiscal period from
January 1, 1996 to October 31, 1996. 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. Accordingly, the "Other Expenses" for Class C
shares are estimates based upon amounts that would have been
payable if Class C shares had been outstanding during the fiscal
period. 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 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 charge 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 $68 $91 $115 $185
Class B Shares $69 $88 $120 $179
Class C Shares $29 $59 $101 $219
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $68 $91 $115 $185
Class B Shares $19 $58 $100 $179
Class C Shares $19 $59 $101 $219
*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's
investment objective is to seek to maximize total investment return
(including capital appreciation and income) principally by
allocating its assets among stocks, corporate bonds, U.S.
Government securities and money market instruments according to
changing market conditions.
What Does the Fund Invest In? The Fund allocates its assets
among stocks, corporate bonds, U.S. Government securities and money
market instruments. The Fund may invest in debt securities and
preferred stocks rated below investment grade (commonly called
"junk bonds") and may invest to a limited degree in securities of
foreign issuers. The Fund may write covered calls and use certain
types of "hedging instruments" and "derivative investments" to try
to manage investment risks and produce income. 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 $62 billion in assets at
December 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 Antos is the senior portfolio
manager primarily responsible for the selection of the Fund's
securities and is assisted by Steven F. Libera, Michael C.
Strathearn, Kenneth B. White and Arthur Zimmer. 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 and bonds are subject to
changes in their value from a number of factors such as changes in
general bond and stock market movements. The change in value of a
particular stock or bond may result from an event affecting the
issuer, or changes in interest rates that can affect bond prices.
These changes affect the value of the Fund's investments and its
share prices for each class of its shares. In addition, there are
certain risks associated with the lower quality debt securities and
foreign securities the Fund may purchase and the hedging strategies
the Manager may utilize.
In the Oppenheimer funds spectrum the Fund is more aggressive than
most growth and income funds but less so than most growth funds.
While the Manager tries to reduce risks by diversifying
investments, by researching securities before they are purchased
for the portfolio, and in some cases may use hedging techniques,
there is no guarantee of success in achieving the Fund's objective.
Your shares may be worth more or less than their original cost when
you redeem them. Please refer to "Investment Risks" starting on
page ___ for a more complete discussion of the Fund's investment
risks.
How Can I Buy Shares? You can buy shares through your 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 28 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 28 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
43. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page 45.
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. The Fund's
performance can also be compared to broad market indices, which we
have done on pages 26 and 27. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected audited
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. The Fund
recently changed its fiscal year from December 31 to October 31.
The information for the Fund's last fiscal period has been audited
by KPMG Peat Marwick LLP, the Fund's independent auditors, whose
report for the fiscal period 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. The information in the table for the fiscal periods prior
to 1996 was audited by the Fund's previous independent auditors.
Oppenheimer Disciplined Allocation Fund
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A
- ----------------------------------------------------------------------------------
TEN MONTHS
ENDED
OCT. 31, YEAR ENDED DECEMBER 31,
1996(3) 1995 1994 1993 1992
1991
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $15.46 $13.44 $14.54 $13.81
$14.02 $11.94
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Income (loss) from investment operations:
Net investment income .46 .60 .55 .48
.50 .54
Net realized and unrealized gain (loss) .49 2.59 (.86) 1.70
.86 2.79
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Total income (loss) from investment
operations .95 3.19 (.31) 2.18
1.36 3.33
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.36) (.60) (.55) (.48)
(.50) (.54)
Distributions from net realized gain (.05) (.57) (.24) (.97)
(1.07) (.71)
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Total dividends and distributions
to shareholders (.41) (1.17) (.79) (1.45)
(1.57) (1.25)
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Net asset value, end of period $16.00 $15.46 $13.44 $14.54
$13.81 $14.02
==============================================================================
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 6.27% 23.95% (2.11)% 15.89%
9.90% 28.21%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $233,289 $218,099 $177,904 $171,205
$109,701 $86,455
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Average net assets (in thousands) $228,203 $200,172 $187,655 $138,629
$96,016 $74,749
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Ratios to average net assets:
Net investment income 3.52% (6) 4.00% 3.80% 3.40%
3.61% 4.02%
Expenses 1.11% (6) 1.17% 0.96% 1.02%
1.11% 1.20%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Portfolio turnover rate(7) 85.4% 55.2% 115.0% 155.2%
177.9% 122.4%
Average brokerage commission rate(8) $0.0636 -- -- --
- -- --
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
1990 1989 1988 1987
1986
- ----------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.69 $11.51 $10.91 $11.87
$10.91
- ----------------------------------------------------------------------------------------------------------------
- ------------
Income (loss) from investment operations:
Net investment income .66 .76 .53 .38
.31
Net realized and unrealized gain (loss) (.68) 1.81 .60 .13
.99
- ----------------------------------------------------------------------------------------------------------------
- ------------
Total income (loss) from investment
operations (.02) 2.57 1.13 .51
1.30
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dividends and distributions to shareholders:
Dividends from net investment income (.66) (.76) (.53) (.38)
(.30)
Distributions from net realized gain (.07) (.63) -- (1.09)
(.04)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Total dividends and distributions
to shareholders (.73) (1.39) (.53) (1.47)
(.34)
- ------------------------------------------------------==========================================================
============
Net asset value, end of period $11.94 $12.69 $11.51 $10.91
$11.87
======================================================================
- ----------------------------------------------------------------------------------------------------------------
- ------------
TOTAL RETURN, AT NET ASSET VALUE(4) (0.21)% 22.61% 10.40% 3.92%
11.88%
- ----------------------------------------------------------------------------------------------------------------
- ------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $66,382 $65,071 $54,253 $44,770
$35,382
- ----------------------------------------------------------------------------------------------------------------
- ------------
Average net assets (in thousands) N/A(5) N/A(5) N/A(5) N/A(5)
N/A(5)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Ratios to average net assets:
Net investment income 5.31% 5.90% 4.61% 3.15%
3.22%
Expenses 1.24% 1.20% 1.11% 1.08%
1.26%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Portfolio turnover rate(7) 115.5% 149.2% 223.6% 197.8%
143.3%
Average brokerage commission rate(8) -- -- -- --
--
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------
TEN MONTHS
ENDED PERIOD ENDED PERIOD ENDED
OCT. 31, DEC. 31, OCT. 31,
1996(3) 1995(2) 1996(1)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $15.66 $15.48 $15.71
- ----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 .07 .30
Net realized and unrealized gain (loss) .54 .70 .32
- ----------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .85 .77 .62
- ----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.30) (.07) (.35)
Distributions from net realized gain (.05) (.52) (.05)
- ----------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.35) (.59) (.40)
==============================================
Net asset value, end of period $16.16 $15.66 $15.93
=============================================
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 5.51% 4.93% 4.08%
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,919 $650 $188
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,324 $375 $57
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.86%(6) 0.73%(6) 2.90%(6)
Expenses 1.85%(6) 1.92%(6) 1.87%(6)
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 85.4% 55.2% 85.4%
Average brokerage commission rate(8) 0.0636 -- $0.0636
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
3. The Fund changed its fiscal year end from December 31 to October 31. On March
18, 1996, OppenheimerFunds, Inc. became the investment adviser to the Fund.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
5. Not available.
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1996 were $166,027,550 and $159,855,450, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
<PG$PCN>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks to maximize total investment return
(including capital appreciation and income) principally by
allocating its assets among stocks, corporate bonds, U.S.
Government securities and money market instruments according to
changing market conditions.
Investment Policies and Strategies. In deciding whether the Fund
should invest in stocks, bonds or money market instruments, the
Manager utilizes quantitative asset allocation tools, which measure
the relationship among these asset categories, in combination with
the judgment of the Manager concerning current market dynamics.
Allocating assets among different types of investments allows the
Fund to take advantage of opportunities in different segments of
the securities markets, but also subjects the Fund to the risks of
those market segments.
In selecting stocks for the Fund's portfolio, the Manager
searches for stocks with low price-earnings ratios (for example,
below the price-earnings ratio of the S&P 500 Index) which in many
cases may indicate a stock is out-of-favor. When a company then
demonstrates better earnings than what most analysts were
expecting, this is referred to as a favorable earnings surprise.
This may cause investors and analysts to re-evaluate the company's
earnings expectations and price-earnings multiple, which in turn
may cause the company's stock to increase in value. The Fund may
invest in a variety of equity securities including foreign and
domestic common stocks, preferred securities, convertible
securities and warrants, which are further described below.
The Fund may invest in a variety of bonds and other debt
securities including corporate debt obligations, U.S. Government
securities, foreign government securities, municipal obligations,
mortgage-backed and asset-backed securities, adjustable rate
securities, stripped securities, custodial receipts for Treasury
certificates, zero coupon bonds, equipment trust certificates, loan
participation notes, structured notes and money market instruments.
The Fund's debt securities are expected to have weighted average
from current date to maturity of 6 to 12 years. At least 25% of
the Fund's total assets will be invested in fixed income senior
securities. Otherwise, the Fund is not required to invest a fixed
amount in any asset class, and the amounts invested in each class
will vary over time.
The Fund may invest up to 20% of its total assets in the
aggregate in debt securities and preferred stocks rated below
investment grade (commonly called "junk bonds") and unrated
securities determined by the Manager to be of comparable credit
quality. However, the Manager does not intend to invest more than
10% of the Fund's assets in below investment grade securities in
the current year. These securities are subject to special risks,
described below. The Fund will not invest in securities rated below
B at the time of purchase. Unrated debt securities will not exceed
10% of the Fund's total assets.
The Fund may invest up to 10% of its total assets in mortgage
dollar rolls. The Fund may also invest up to 5% of its total assets
in inverse floating rate instruments, which are a type of
derivative security. Consistent with the foregoing policies, the
Fund may invest to a limited degree in securities of foreign
issuers. All of these types of securities are described below.
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.
Under normal market conditions, the Fund may invest up to 40%
of its total assets in short-term debt securities, such as money
market instruments and U.S. Government securities. When market
conditions are unstable, the Fund may invest substantial amounts of
its assets in short-term debt securities for temporary defensive
purposes. The Fund's portfolio managers may employ special
investment techniques in selecting investments for the Fund. These
are also described below. Additional Information about them may be
found under the same headings in the Statement of Additional
Information.
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.
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 is not currently
expected to be more than 150% 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 cases, may use 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 may offer special investment opportunities, there are
also special risks. The change in value of a foreign currency
against the U.S. dollar will result in a change in the U.S. dollar
value of securities denominated in that foreign currency. Foreign
issuers are not subject to the same accounting and disclosure
requirements that U.S. companies are subject to. The value of
foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions,
changes in governmental, economic or monetary policy in the U.S. or
abroad, or other political and economic factors. More information
about the risks and potential rewards of investing in foreign
securities is contained in the Statement of Additional Information.
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 value 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.
Special Risks of Investing in Lower-Grade Securities. The
Fund can invest in 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.
Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different 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. The use of Forward
Contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign
currency. Interest rate swaps are subject to the risk that the
other party will fail to meet its obligations (or that the
underlying issuer will fail to pay on time), as well as interest
rate risks. The Fund could be obligated to pay more under its swap
agreements than it received under them, as a result of interest
rate changes. These risks are described in greater detail in the
Statement of Additional Information.
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 on which
the derivative is based, and the derivative itself, may 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."
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 detailed
information about these 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.
Convertible Securities. Convertible securities are bonds,
preferred stocks and other securities that normally pay a fixed
rate of interest or dividend and give the owner the option to
convert the security into common stock. While the value of
convertible securities depends in part on interest rate changes and
the credit quality of the issuer, the price will also change based
on the price of the underlying stock. While convertible securities
generally have less potential for gain than common stock, their
income provides a cushion against the stock price's declines. They
generally pay less income than non-convertible bonds. The Manager
generally analyzes these investments from the perspective of the
growth potential of the underlying stock and treats them as "equity
substitutes."
Foreign Securities. Consistent with its investment objective
and policies, the Fund may purchase equity securities issued by
foreign companies and debt securities issued or guaranteed by
foreign governments or their agencies. 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. The special risks of
investing in foreign securities are described in "Investment Risks"
above.
Lower-Grade Debt Securities. "Lower-grade" securities
generally offer higher income potential than investment grade
securities. "Lower-grade" securities have a rating below "BBB" by
Standard & Poor's Ratings Group ("Standard & Poor's") or "Baa" by
Moody's Investors Services, Inc. ("Moody's") or similar ratings by
other domestic or foreign 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. These percentages are historical and do not necessarily
indicate the current or predict future debt holdings of the Fund.
Lower-grade debt securities are subject to special risks described
in "Investment Risks," above.
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 also
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. Other U.S. Government Securities the Fund may
invest in are collateralized mortgage obligations ("CMOs").
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."
Mortgage-Backed Securities and CMOs. Certain mortgage-backed
securities, whether issued by the U.S. Government or by private
issuers, "pass-through" to investors the interest and principal
payments generated by a pool of mortgages assembled for sale by
government agencies. Pass-through mortgage-backed securities
entail the risk that principal may be repaid at any time because of
prepayments on the underlying mortgages. As a result, these
securities may be subject to greater price and yield volatility
than traditional fixed-income securities that have a fixed maturity
and interest rate.
The Fund may also invest in CMOs, which generally are
obligations fully collateralized by a portfolio of mortgages or
mortgage-related securities. Payments of the interest and principal
generated by the pool of mortgages relating to the CMOs are passed
through to the holders as the payments are received. CMOs are
issued with a variety of classes or series which have different
maturities. Certain CMOs may be more volatile and less liquid than
other types of mortgage-related securities, because of the
possibility of the early repayment of principal due to prepayments
on the underlying mortgage loans.
"Stripped" Securities. The Fund may also invest in CMOs that
are "stripped." That means that the security is divided into two
parts, one of which receives some or all of the principal payments
(and is known as a "principal-only" security, or "P/O") and the
other which receives some or all of the interest (and is known as
an "interest-only" security, or "I/O"). P/Os and I/Os are
generally referred to as "derivative investments," discussed
further below.
The yield to maturity on the class that receives only interest
is extremely sensitive to the rate of payment of the principal on
the underlying mortgages. Principal prepayments increase that
sensitivity. Stripped securities that pay "interest only" are
therefore subject to greater price volatility when interest rates
change, and they have the additional risk that if the underlying
mortgages are prepaid, the Fund will lose the anticipated cash flow
from the interest on the prepaid mortgages. That risk is increased
when general interest rates fall, and in times of rapidly falling
interest rates, the Fund might receive back less than its
investment.
The value of "principal only" securities generally increases
as interest rates decline and prepayment rates rise. The price of
these securities is typically more volatile than that of
coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and
sold by institutional investors through investment banking firms.
At present, established trading markets have not yet developed for
these securities. Therefore, most private-issuer stripped
securities may be deemed "illiquid." If the Fund holds illiquid
stripped securities, the amount it can hold will be subject to the
Fund's investment policy limiting investments in illiquid
securities to 10% of the Fund's net assets, described in "Illiquid
and Restricted Securities," below.
Asset-Backed Securities. The Fund may invest in
"asset-backed" securities. These represent interests in pools of
consumer loans and other trade receivables, similar to
mortgage-backed securities. They are issued by trusts and "special
purpose corporations." They are backed by a pool of assets, such
as credit card or auto loan receivables, which are the obligations
of a number of different parties. The income from the underlying
pool is passed through to holders, such as the Fund. These
securities may be supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the
extent of the credit enhancement may be different for different
securities and generally applies to only a fraction of the
security's value. These securities present special risks. For
example, in the case of credit card receivables, the issuer of the
security may have no security interest in the related collateral.
Inverse Floating Rate Instruments. The Fund may invest in
inverse floating rate debt instruments ("inverse floaters"),
including leveraged inverse floaters and inverse floating rate
mortgage-backed securities, such as inverse floating rate "interest
only" stripped mortgage-backed securities. The interest rate on
inverse floaters resets in the opposite direction from the market
rate of interest to which the inverse floater is indexed. An
inverse floater may be considered to be leveraged to the extent
that its interest rate varies by a magnitude that exceeds the
magnitude of the change in the index rate of interest. The higher
degree of leverage inherent in inverse floaters is associated with
greater volatility in their market values.
Mortgage Dollar Rolls. The Fund may invest up to 10% of its
total assets in mortgage dollar rolls. In a mortgage dollar roll
the Fund sells mortgage-backed securities for delivery in the
current month and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities
on a specified future date. During the roll period, the Fund
foregoes principal and interest paid on the mortgage-backed
securities. The Fund is compensated by the difference between the
current sales price and the lower forward price for the future
purchase (often referred to as the "drop") as well as by the
interest earned on the cash proceeds of the initial sale.
Structured Notes. A structured note is a debt security
having an interest rate or principal repayment requirement based on
the performance of a benchmark asset or market, such as stock
prices, currency exchange rates or commodity prices. They provide
exposure to the benchmark market while fixing the maximum loss if
that market does not perform as expected. Depending on the terms of
the note, the Fund could forego all or part of the interest and
principal that would be payable on a comparable conventional note,
and the Fund's loss could not exceed that amount.
Short-Term Debt Securities. Under normal market conditions,
the Fund may invest in short-term debt securities, such as money
market instruments and U.S. Government securities. When the
Manager believes it is appropriate (for example, for temporary
defensive purposes during unstable market conditions), the Fund can
hold cash or invest without limit in money market instruments. 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 and 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 (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 investments in securities of U.S. banks as
described in "Foreign Securities" above.
"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.
Eurodollar and Yankee Dollar Bank Obligations. The Fund may
invest in obligations of foreign branches of U.S. banks (referred
to as Eurodollar obligations) and U.S. branches of foreign banks
(referred to as Yankee Dollars) as well as foreign branches of
foreign banks. These investments entail risks that are different
from investment in securities of U.S. banks.
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.
Index-Linked Notes. "Index-linked" or "commodity-linked"
notes are debt securities that call for interest payments or
repayment of principal on the maturity of the note in different
terms than a typical note where the borrower agrees to pay a fixed
sum on the maturity of the note. Principal or interest payments on
an index-linked note depend on the performance of one or more
market indices, such as the S&P 500 Index, or on a weighted index
of commodity futures, such as crude oil, gasoline and natural gas.
The Fund may invest in "debt exchangeable for common stock" of an
issuer or "equity-linked" debt securities of an issuer. At
maturity, the principal amount of the debt security is exchanged
for common stock of the issuer or is payable in an amount based on
the issuer's common stock price at the time of maturity. In either
case there is a risk that the amount payable at maturity will be
less than the expected principal amount of the debt.
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 Board may increase that limit to 15%). The percentage
limitation applicable to illiquid securities does not apply to
certain restricted securities that are eligible for resale to
qualified institutional buyers. The Fund has undertaken to apply
this percentage limitation to 10% of its net assets, as a matter of
non-fundamental policy. The Manager monitors holding of illiquid
securities on an ongoing basis and at times the Fund may be
required to sell some holdings to maintain adequate liquidity.
Hedging. The Fund may write covered call options on
securities, stock or bond indices and foreign currency. It may
purchase and sell certain kinds of futures contracts, forward
contracts, and options on futures, broadly based stock or bond
indices and foreign currencies, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments."
While the Fund currently 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 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. It may do so to try to manage its exposure
to changing interest rates. 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. Hedging strategies entail special risks, 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 (1) foreign currencies (these are referred to as "Forward
Contracts" and are discussed below), (2) financial indices, such as
U.S. or foreign government securities indices, corporate debt
securities indices or equity securities indices (these are referred
to as Financial Futures) and (3) interest rates (those are referred
to as Interest Rate 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." This means the Fund must own the
investment on which the call was written or it must own other
securities that are acceptable for the escrow arrangements required
for calls while the call is outstanding or, in the case of calls on
futures, segregate appropriate liquid assets. 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 sell covered call options that are traded on U.S.
or foreign securities or commodity exchanges as well as over the
counter which are issued by 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 are 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.
Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive or their obligation
to pay interest on a security. For example, they may swap a right
to receive floating rate payments for fixed rate payments. The Fund
will enter into swaps only on securities it owns, and will not
enter into swaps with respect to more than 25% of its total assets.
Also, the Fund will segregate liquid assets (such as cash or U.S.
Government Securities) to cover any amounts it could owe under
swaps that exceed the amounts it is entitled to receive, and it
will adjust that amount daily as needed. Income from interest rate
swaps may be taxable.
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."
Other examples of derivatives include CMOs, "stripped"
securities, asset-backed securities, index-linked and
commodity-linked notes and debt exchangeable for common stock, all
described elsewhere in this section of the prospectus. Some of the
special risks of derivatives are described 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 5% 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% of the
Fund's total assets in the obligations of any one bank.
The Fund cannot purchase more than either (i) 10% in
principal amount of the outstanding debt securities of an issuer,
or (ii) 10% 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.
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
non-fundamental policy to apply this restriction to 25% or more of
its assets.
Unless the prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment, and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" 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 five series, including the Fund. Until March
18, 1996, the Fund was called Connecticut Mutual Total Return
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 Fund" 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 three
classes of shares, Class A, Class B and Class C. All classes
invest in the same investment portfolio. Each class has its own
dividends and distributions, and pays certain expenses which may be
different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally 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.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Portfolio Management. The Fund has a portfolio management
team consisting of five 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
1976 by the Fund's prior investment adviser, G.R. Phelps & Co.,
Inc., and served as a Vice President and Senior Portfolio Manager,
Equities since 1989, before joining OppenheimerFunds, Inc. on March
1, 1996. Mr. Michael C. Strathearn, Mr. Stephen F. Libera, Mr.
Kenneth B. White and Mr. Arthur J. Zimmer are also Vice Presidents
and portfolio managers of the Fund and the Manager. Messrs.
Strathearn, White and Libera are each a Chartered Financial Analyst
and were employed by Connecticut Mutual Life Insurance Company, the
parent of G. R. Phelps, as Portfolio Managers prior to joining
OppenheimerFunds, Inc. on March 1, 1996. Mr. Strathearn, Mr. White
and Mr. Libera have provided portfolio management services to the
Fund since 1988, 1992 and 1985, 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 average annual net assets;
0.500% of the next $100 million; and 0.450% of average annual net
assets in excess of $400 million. The Fund's management fee for
the fiscal period of January 1, 1996 to October 31, 1996 was 0.625%
of the average annual net assets for Class A, Class B and Class C
shares (on an annualized basis). Class C shares were only offered
from May 1, 1996 to October 31, 1996.
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.
How has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its fiscal period of January 1, 1996
to October 31, 1996, followed by a graphical comparison of the
Fund's performance to an appropriate broad-based market index.
Management's Discussion of Performance. During the fiscal period
from January 1, 1996 to October 31, 1996, the domestic stock market
performed strongly, reaching record highs. The Manager maintained
its strategy of allocating the Fund's assets between stocks with
low price-to-earnings ratios and recent positive earnings
surprises, high grade bonds, and money market instruments by
identifying which among the three is the more undervalued group
with the most potential for total return. In the growing but
volatile market during that period, the Manager determined that the
types of equity securities it targets were overvalued. As a
result, the Manager invested a smaller percentage of the Fund's
assets in equity securities which negatively affected its
performance. The Fund's portfolio and its portfolio manager's
strategies are subject to change.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A , Class B and Class C shares of the Fund held until October
31, 1996. In the case of Class A shares, performance is measured
over a ten-year period, and in the case of Class B shares,
performance is measured from the inception of the class on October
2, 1995. In the case of Class C shares, performance is measured
from the inception of the class on May 1, 1996.
The Fund's performance is compared to the performance of the
S&P 500 Index, a broad-based index of equity securities widely
regarded as a general measure of the performance of the U.S. equity
securities market, and the Merrill Lynch Corporate Government
Master Index, a broad-based index of U.S. Government treasury and
agency securities, corporate and Yankee bonds regarded as a general
measurement of the performance of the domestic debt securities
market. Index performance reflects the reinvestment of dividends
but does not consider the effect of capital gains or transaction
costs, and none of the data below shows the effect of taxes. Also,
the Fund's performance reflects the effect of Fund business and
operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the securities in
the S&P 500 Index and the Merrill Lynch Corporate Government Master
Index. Moreover, the indices performance data do not reflect any
assessment of the risk of the investments included in the indices.
Oppenheimer Disciplined Allocation Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer Disciplined Allocation Fund and
the S&P 500 Index
[Graph]
Past performance is not predictive of future performance.
Oppenheimer Disciplined Allocation Fund
Average Annual Total Returns of the Fund at 10/31/96
Class A Shares(1)
1-Year 5-Year 10-Years
5.07% 10.10% 10.76%
Class B Shares(2)
1-Year Life
5.58% 6.20%
Cumulative Total Return of Class C Shares (3)
Life
3.08%
___________________
1. The inception date of the Fund (Class A shares) was 09/16/85.
The average annual total returns and the ending account value in
the graph show change in share value and include reinvestment of
all dividends and capital gains distributions and are shown net of
the applicable 5.75% maximum sales charge. The Fund's fiscal year
end has changed from 12/31 to 10/31.
2. Class B shares of the Fund first publicly offered on 10/2/95.
The average annual total return reflect reinvestment of all
dividends and capital gains distributions and are shown net of the
applicable 5% and 4% contingent deferred sales charge the one year
period and the life of the class, respectively. The ending account
value in the graph is net of the applicable 4% contingent deferred
sales charge.
3. Class C shares of the Fund were first publicly offered on
5/1/96. The average annual total return in the graph for the six
month period is shown net of the applicable 1% contingent deferred
sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
Class A Shares. If you buy Class A shares, you 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 33). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 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 described in "Buying Class C
Shares," below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors 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 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 A
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:
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
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%
</TABLE>
The Distributor reserves the right to reallow the entire
commission to dealers. If that occurs, the dealer may be considered
an "underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more;
Purchases by a retirement plan qualified under Section
401(a) if the retirement plan has total plan assets of $500,000 or
more;
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (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; or
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 gain
distributions) or (2) the original offering price (which is the
original net asset value) of the redeemed shares. However, the
Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your
dealer on all Class A shares of all Oppenheimer funds you purchased
subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described
below). However, if the shares acquired by exchange are redeemed
within 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.
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 Fund shares, 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); or
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 sale of Class B shares is therefore 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales 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 call the Transfer Agent for more
information.
AccountLink privileges should be requested on your dealer's
settlement instructions if you buy your shares through your dealer.
After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as
to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your
account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly,
semi-annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each 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, or as
a fiduciary, 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 for requests Send courier or
by mail: Express Mail
requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue
Denver, Colorado 80217 Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
To redeem shares through a service representative, call
1-800-852-8457
To redeem shares automatically on PhoneLink, call
1-800-533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 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, please 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 and Class C shares from net investment income,
if any, quarterly. Normally, dividends are paid on the last
business day of March, June, September and December, but the Board
of Directors can change those dates. Dividends paid on Class A
shares generally are expected to be higher than for Class B and
Class C shares because expenses allocable to Class B and Class C
shares will generally be higher than for Class A 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
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. 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: 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
A, Class B and Class C shares of the Fund described elsewhere in
this Prospectus are modified as described below for those
shareholders of (i) 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.
<TABLE>
<CAPTION>
Front-End Front-End
Charge as a Charge as a Commission as
Number of Percentage Percentage Percentage
Eligible of Offering of Amount of Offering
Employees or Members Price Invested Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not more
than 49 2.00% 2.04% 1.60%
</TABLE>
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 33 to 34 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates.
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders.
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in
Certain Transactions. The Class A contingent deferred sales charge
will not apply to redemptions of Class A shares of the Fund
purchased by the following investors who were shareholders of any
Former Quest for Value Fund:
Investors who purchased Class A shares from a dealer that
is not 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.
A-2
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March
6, 1995. In the following cases, the contingent deferred sales
charge will be waived for redemptions of Class A, 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.
A-3
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>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER DISCIPLINED ALLOCATION FUND
Graphic material included in Prospectus of Oppenheimer
Disciplined Allocation Fund: "Comparison of Total Return of
Oppenheimer Disciplined Allocation Fund with the S&P 500 Index and
the Merrill Lynch Corporate Government Master Index - Change in
Value of $10,000 Hypothetical Investments in Class A, Class B and
Class C Shares of Oppenheimer Disciplined Allocation Fund and S&P
500 and the Merrill Lynch Corporate Government Master Index."
Linear graphs will be included in the Prospectus of
Oppenheimer Disciplined Allocation Fund (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. In the case of the
Fund's Class A shares, that graph will cover the period from
inception (9/16/85) through 10/31/96, in the case of the Fund's
Class B, that graph will cover the period from inception (10/2/95)
through 10/31/96, and in the case of Class C shares, that graph
will cover the period from the inception of the class (5/1/96)
through 10/31/96. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the
S&P 500 Index and the Merrill Lynch Corporate Government Master
Index. Set forth below are the relevant data points that will
appear on the linear graph. Additional information with respect to
the foregoing, including a description of the S&P 500 Index and the
Merrill Lynch Corporate Government Master Index, is set forth in
the Prospectus under "Performance of the Fund - Comparing the
Fund's Performance to the Market."
<TABLE>
<CAPTION>
Oppenheimer Merrill Lynch
Fiscal Disciplined S&P 500 Corporate
Period Allocation Index Government
Ended Fund A Master Index
- ------------ ----------------- ---------- --------------------
<S> <C> <C> <C>
12/31/85(1) $ 9,425 $10,000 $10,000
12/31/86 $10,544 $11,867 $11,563
12/31/87 $10,958 $12,490 $11,806
12/31/88 $12,097 $14,558 $12,717
12/31/89 $14,833 $19,163 $14,514
12/31/90 $14,801 $18,567 $15,747
12/31/91 $18,977 $24,212 $18,249
12/31/92 $20,854 $26,054 $19,651
12/31/93 $24,168 $28,674 $21,824
12/31/94 $23,659 $29,051 $21,073
12/31/95 $29,326 $39,955 $25,119
10/31/96 $31,164 $46,597 $25,670
</TABLE>
_______________
(1) Class A of the Fund were first publicly offered on 9/16/85.
<TABLE>
<CAPTION>
Oppenheimer Merrill Lynch
Fiscal Disciplined Allocation S&P 500 Corporate Government
Period Ended Fund B Index Master Index
- ------------ ----------------- ------- ---------------
<S> <C> <C> <C>
10/02/95(2) $10,000 $10,000 $10,000
12/31/95 $10,493 $10,602 $10,463
10/31/96 $10,671 $12,364 $10,693
Oppenheimer Merrill Lynch
Fiscal Disciplined Allocation S&P 500 Corporate Government
Period Ended Fund C Index Master Index
- ------------ ----------------- ------- ---------------
5/01/96(3) $10,000 $10,000 $10,000
10/31/96 $10,308 $10,908 $10,524
- ---------------------
(2) Class B shares of the Fund were first publicly offered on 10/02/95.
(3) Class C shares of the Fund were first publicly offered on 5/01/96.
</TABLE>
<PAGE>
Oppenheimer Disciplined Allocation 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 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
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, CO 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, NY 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.
PR0205.001.0296y
Printed on recycled paper
<PAGE>
Oppenheimer Disciplined Allocation Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 25, 1997
This Statement of Additional Information for Oppenheimer
Disciplined Allocation Fund is not a Prospectus. This document
contains additional information about the Fund and supplements
information in the Fund's Prospectus dated February 25, 1997. It
should be read together with the Prospectus which may be obtained
by writing to the Fund's Transfer Agent, OppenheimerFunds Services,
at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
The Fund's investment adviser is OppenheimerFunds,
Inc. (the "Manager").
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . 2
Investment Policies and Strategies . . . . . . . . . . . 2
Other Investment Restrictions. . . . . . . . . . . . .21
How the Fund are Managed . . . . . . . . . . . . . . . .23
Organization and History . . . . . . . . . . . . . . .23
Directors and Officers of the Fund . . . . . . . . . .24
The Manager and Its Affiliates . . . . . . . . . . . .29
Brokerage Policies of the Fund . . . . . . . . . . . . .31
Performance of the Fund. . . . . . . . . . . . . . . . .32
Distribution and Service Plan. . . . . . . . . . . . . .37
About Your Account
How to Buy Shares. . . . . . . . . . . . . . . . . . . .39
How to Sell Shares . . . . . . . . . . . . . . . . . . .47
How to Exchange Shares . . . . . . . . . . . . . . . . .52
Dividends, Capital Gains and Taxes . . . . . . . . . . .53
Additional Information About the Fund. . . . . . . . . .55
Independent Auditors' Report . . . . . . . . . . . . . .56
Financial Statement. . . . . . . . . . . . . . . . . . .57
Appendix A: Corporate Industry Classification. . . . . A-1
Appendix B: Description of Securities Ratings. . . . . B-1
<PAGE>
ABOUT THE FUNDS
Investment Objectives And Policies
Investment Policies and Strategies. The investment objectives and
policies of the Fund are described in its Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its objective.
Certain capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the
Prospectus.
Foreign Securities. Consistent with the limitations on
foreign investing set forth in the Fund's Prospectus, the Fund may
invest in foreign securities. The 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 the 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 Compny's Board of
Directors under applicable rules of the Securities and Exchange
Commission ("SEC"). In buying foreign securities, the 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 the Fund's investment allocations, because they are not subject
to many of the special considerations and risks (discussed below)
that apply to foreign securities traded and held abroad.
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.
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.
The 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 the Fund's net investment income
and/or net realized capital gains. See "Dividends, Capital Gains
and Taxes."
Debt Securities. The Fund may invest in debt securities.
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 the Fund's net asset values.
High Yield Securities. The 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 the Fund. For example,
federally-insured savings and loan associations have been required
to divest their investments in high yield bonds.
U.S. Government Securities. The Fund may invest in U.S.
Government Securities. 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 the
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 the Fund
has purchased the certificates at a premium in the secondary
market.
FNMA Securities. The Federal National Mortgage Association
("FNMA") was established to create a secondary market in mortgages
insured by the FHA. FNMA issues guaranteed mortgage pass-through
certificates ("FNMA Certificates"). FNMA Certificates resemble
GNMA Certificates in that each FNMA Certificate represents a pro
rata share of all interest and principal payments made and owed on
the underlying pool. FNMA guarantees timely payment of interest
and principal on FNMA Certificates. The FNMA guarantee is not
backed by the full faith and credit of the U.S. Government.
FHLMC Securities. The Federal Home Loan Mortgage
Corporation ("FHLMC") was created to promote development of a
nationwide secondary market for conventional residential mortgages.
FHLMC issues two types of mortgage pass-through 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. The Fund may enter into
"forward roll" transactions with respect to mortgage-backed
securities issued by GNMA, FNMA or FHLMC. In the forward roll
transaction, which is considered to be a borrowing by the Fund, the
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 the Fund may
decline below the price at which the Fund is obligated to purchase
the securities. Upon entering into a mortgage-backed security
roll, the 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
Fund 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 the Fund accrues taxable income from zero coupon and
deferred interest securities without receiving cash, the 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 the Fund, and the
amount of cash income the Fund receives from other investments and
the sale of shares. In either case, cash distributed or held by
the Fund that is not reinvested by investors in additional Fund
shares will hinder the Fund from seeking current income.
Mortgage-Backed Securities. The Fund may invest in
Mortgage-backed securities. 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 Fund 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 the 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 the 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. The
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 the 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. The 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 the Fund's investment objective and policies,
consider making investments in such new types of mortgage-related
securities.
"Stripped" Mortgage-Backed Securities. The 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 the 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. The Fund 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 Fund. 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 Fund. The Company is not
aware of any binding legislative, judicial or administrative
authority on this issue.
Collateralized Mortgage-Backed Obligations ("CMOs") The
Fund 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 director (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 director 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. The 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, the Fund would generally have no recourse to
the entity that originated the loans in the event of default by a
borrower. The underlying loans are subject to prepayments, which
shorten the weighted average life of asset-backed securities and
may lower their return, in the same manner as described above for
the prepayments of a pool of mortgage loans underlying mortgage-
backed securities.
Commercial Paper. The Fund may purchase commercial paper
for temporary defensive purposes as described in its Prospectus.
In addition, the 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 the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and
the borrower. They permit daily changes in the amounts borrowed.
The 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, the Fund's right
to redeem such notes is dependent upon the ability of the borrower
to pay principal and interest on demand. The 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 the 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 the
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 the Fund's
investment quality standards relating to investments in bank
obligations. The 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 the
Fund. The Manager or relevant Subadviser will also continuously
monitor the creditworthiness of issuers of such instruments to
determine whether the 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 the 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 the 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. The
bank obligations the 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. The 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 the
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. Additional information about some of
the types of equity securities the Fund may invest in is provided
below.
Convertible Securities. The Fund may invest in
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.
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 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 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. The 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 the 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. The Fund, 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. Consistent with the limitations set forth in
the Prospectus and below, the Fund may employ one or more of the
types of hedging instruments described below. Additional
information about the hedging instruments the Fund may use is
provided below. In the future, the Fund may employ hedging
instruments and strategies that are not presently contemplated but
which may be developed, to the extent such investment methods are
consistent with the Fund's investment objective, legally
permissible and adequately disclosed.
Covered Call Options on Securities, Securities Indices
and Foreign Currencies. The Fund may 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 Fund 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.
Writing Covered Calls. When the Fund writes a call on a
security, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call on the same
security during the call period (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. The 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, the Fund
may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of the option transaction costs and
the premium received on the call written was more or less than the
price of the call subsequently purchased. A profit may also be
realized if the call expires unexercised, because the Fund retains
the underlying investment and the premium received. Any such
profits are considered short-term capital gains for Federal income
tax purposes, and when distributed by the Fund are taxable as
ordinary income. If the Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the
callable investments until the call lapsed or was exercised.
The Fund shall not 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.
Futures Contracts and Related Options. To hedge against
changes in interest rates, securities prices or currency exchange
rates or for certain non-hedging purposes, the 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. The 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 Fund may purchase and sell futures contracts on stock indices
and sell options on such futures. In addition, the 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. The 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 Fund 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.
The 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 the Fund on
the purchase or sale of a Financial Future.
Upon entering into a futures transaction, the Fund will be
required to deposit an initial margin payment in cash or U.S.
Treasury bills with the futures commission merchant (the "futures
broker"). The initial margin will be deposited with the Fund's
Custodian in an account registered in the futures broker's name;
however the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to
reflect changes in its market value, subsequent margin payments,
called variation margin, will be made to or by the futures broker
on a daily basis. Prior to expiration of the Future, if the Fund
elects to close out its position by taking an opposite position, a
final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or
gain is realized 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 Fund 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, the 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 the
Fund's assets. By writing a call option, the 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 the Fund intends to
purchase. However, the 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
the Fund in writing options on futures is potentially unlimited and
may exceed the amount of the premium received. The Fund 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 Fund's ability to establish and
close out positions on such options will be subject to the
development and maintenance of a liquid market.
The Fund may use options on futures contracts solely for bona
fide hedging or other non-hedging purposes as described below.
Forward Contracts. The 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. The 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.
The Fund may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of
Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the
value of the hedged currencies, at the same time they limit any
potential gain that might result should the value of the currencies
increase.
The Fund may enter into Forward Contracts with respect to
specific transactions. For example, when the Fund enters into a
contract for the purchase or sale of a security denominated in a
foreign currency, or when it anticipates receipt of dividend
payments in a foreign currency, the Fund may desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment by entering into a Forward Contract, for a fixed
amount of U.S. dollars per unit of foreign currency, for the
purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will
thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared,
and the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a
position hedge, for example, when the Fund believes that foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency,
or when 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 the Fund may, in the alternative, enter
into a Forward Contract to sell a different foreign currency for a
fixed U.S. dollar amount where the Fund believes that the U.S.
dollar value of the currency to be sold pursuant to the Forward
Contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund is
denominated ("cross hedge").
The Fund will not enter into such Forward Contracts or
maintain a net exposure to such contracts where the consummation of
the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency or another
currency that is also the subject of the hedge. The 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. Unanticipated
changes in currency prices may result in poorer overall performance
for the Fund than if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
these securities between the date the Forward Contract is entered
into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e.,
cash) market (and bear the expense of such purchase), if the market
value of the security is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. The projection of short-term
currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the
Fund to sell a currency, the Fund, may either sell a portfolio
security and use the sale proceeds to make delivery of the currency
or retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
the Fund may close out a Forward Contract requiring it to purchase
a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity
date of the first contract.
The cost to the Fund of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no
fees or commissions are involved. Because such contracts are not
traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may
convert foreign currency from time to time, and investors should be
aware of the costs of currency conversion. Foreign exchange
dealers do not charge a fee for conversion, but they do seek to
realize a profit based on the difference between the prices at
which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
Interest Rate Swap Transactions. The Fund 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 the 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, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received.
The Manager will monitor the creditworthiness of counterparties to
the Fund's interest rate swap transactions on an ongoing basis.
The Fund will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master
netting agreement provides that all swaps done between the Fund and
that counterparty under 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. The Fund's Custodian, or a securities depository acting
for the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written 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 the 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.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of futures and options thereon as established by
the Commodities Futures Trading Commission ("CFTC"). In
particular, the Fund is excluded from registration as a "commodity
pool operator" if it complies with the requirements of Rule 4.5
adopted by the CFTC. The Rule does not limit the percentage of the
Fund's assets that may be used for Futures margin and related
options premiums for a bona fide hedging position. However, under
the Rule the Fund must limit its aggregate initial futures margin
and related option premiums to no more than 5% of the Fund's net
assets for hedging strategies that are not considered bona fide
hedging strategies under the Rule. 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 Fund are subject to limitations
established by each of the exchanges governing the maximum number
of options which may be written or held by a single investor or
group of investors acting in concert, regardless of whether the
options were written or purchased on the same or different
exchanges or are held in one or more accounts or through one or
more different exchanges through one or more or brokers. Thus, the
number of options which the Fund may write or hold may be affected
by options written or held by other entities, including other
investment companies having the same 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 Fund purchases a Future, the
Fund will maintain, in a segregated account or accounts with its
Custodian, cash or readily-marketable, short-term (maturing in one
year or less) debt instruments in an amount equal to the market
value of the securities underlying such Future, less the margin
deposit applicable to it.
Tax Aspects of Covered Calls and Hedging Instruments.
The Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code. That qualification enables the
Fund to "pass through" its income and realized capital gains to
shareholders without the Fund having to pay 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 the 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, the Fund will limit the extent to which it engages in
the following activities, but will not be precluded from them: (i)
selling investments, including Futures, held for less than three
months, whether or not they were purchased on the exercise of a
call held by the Fund; (ii) purchasing calls or puts which expire
in less than three months; (iii) effecting closing transactions
with respect to calls or puts written or purchased less than three
months previously; (iv) exercising puts or calls held by the 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 the 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
the Fund's portfolio securities (due to an increase in interest
rates) that the prices of such Futures will correlate imperfectly
with the behavior of the cash (i.e., market value) prices of the
Fund's 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.
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.
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" in the Fund's
prospectus.
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 set forth in "Other Investment Restrictions." 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.
Portfolio Turnover. The 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 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 Fund does 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
The Fund has adopted the following fundamental investment
restrictions. The Fund's most significant investment restrictions
are also set forth in the Prospectus. Fundamental policies cannot
be changed without the vote of a "majority" of the Fund's
outstanding voting securities. Under the Investment Company Act,
such a "majority" vote is defined as the vote of the holders of the
lesser of (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 Fund 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.
The Fund has undertaken as a matter of non-fundamental policy to
apply this restriction to 25% or more of its total assets.
4. Alone, or together with any other portfolio or
portfolios, make investments for the purpose of exercising control
over, or management of, any issuer. The Fund has undertaken as a
matter of non-fundamental policy to apply this restriction to 25%
or more of its total assets.
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 the Fund'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 the
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
the Fund's total assets, taken at market value at the time thereof.
In order to comply with certain state statutes, the 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 the 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.
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 Fund's 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.
For purposes of the Fund's policy not to concentrate their
assets, described in the above restrictions, the Fund has 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 the Fund's
Prospectus are applicable only at the time of investment and
require no action by the Fund as a result of subsequent changes in
value of the investments or the size of the Fund.
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 Fund changed its name from to Oppenheimer Series Fund,
Inc. and the Fund changed its name from Connecticut Mutual Total
Return Account to Oppenheimer Disciplined Allocation Fund.
As a Maryland corporation, the Company is not required to
hold, and does not plan to hold, regular annual meetings of
shareholders. The Fund will hold meetings when required to do so
by the Investment Company Act or other applicable law, or when a
shareholder meeting is called by the 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 the 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 except Ms. Macaskill are directors of Oppenheimer Money
Market Fund, Inc. All of the Directors are directors of Oppenheimer
Capital Appreciation Fund, Oppenheimer Fund, Oppenheimer Global
Fund, Oppenheimer International Growth Fund, Oppenheimer Growth
Fund, Oppenheimer Developing Markets 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
Municipal Bond Fund, Oppenheimer New York Municipal Fund,
Oppenheimer California Municipal Fund, Oppenheimer Multi-State
Municipal Trust, Oppenheimer Multiple Strategies Fund, Oppenheimer
U.S. Government Trust, Oppenheimer Multi-Sector Income Trust, and
Oppenheimer World Bond Fund (collectively the "New York-based
Oppenheimer funds"). 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 Oppenheimer
funds as with the Company. As of February 7, 1997, the Directors
and Officers as a group owned of record or beneficially 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 (three of the officers of the
Company listed below, Ms. Macaskill and Messrs. Doll and Donohue,
are Directors of that plan) other than the shares beneficially
owned under that plan by the officers of the Company listed below.
Leon Levy, Chairman of the Board of Directors; Age: 71
31 West 52nd Street, New York, New York, 10019
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 OppenheimerFunds, Inc. (the "Manager"); formerly he
held the following positions: Vice President and Counsel of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company;
Executive Vice President & General Counsel and 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 adviser subsidiaries of the Manager, a
director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of the
Manager and an officer of other Oppenheimer funds.
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 and Mother Earth News) and of Spy
Magazine, L.P.
Bridget A. Macaskill, President and Director*; Age: 48
President, Chief Executive Officer and a Director of the Manager and
HarbourView; Chairman and a director of SSI, and SFSI; President and a
director of OAC and Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc.; 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, and of the
Indo-U.S. Sub-Commission on Education and Culture.
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
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
______________________
* A Director who is an "interested person" of the Company as
defined in the Investment Company Act.
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.
(health care provider); formerly New York State Comptroller and trustee,
New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (corporate governance
consulting); a director of Professional Staff Limited (U.K.); a
trustee of Mystic Seaport Museum, International House, Greenwich
Historical Society.
Donald W. Spiro, Vice Chairman and Director*; Age: 71
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Director; Age: 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Director; Age: 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, 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) and Texas
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, General Counsel and a Director of the
Manager, the Distributor, HarbourView, SSI, SFSI, Oppenheimer
Partnership Holdings, Inc. and MultiSource Services, Inc. (a
broker-dealer); President and a director of Centennial;
President and a director of Oppenheimer Real Asset Management,
Inc.; General Counsel of OAC; an officer of other Oppenheimer
funds.
______________________
* A Director who is an "interested person" of the Company as
defined in the Investment Company Act.
Robert Doll, Jr., Vice President and Portfolio Manager; Age: 42
Executive Vice President and 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
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; President, Treasurer and a director of Centennial
Capital Corporation; Senior Vice President, Treasurer and
Secretary of SSI; Vice President, Treasurer and Secretary of SFSI;
Treasurer of OAC; Treasurer of Oppenheimer Partnership Holdings,
Inc.; Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a
director of MultiSource Services, Inc. (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; an officer of other
Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Scott Farrar, Assistant Treasurer; Age: 31
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Remuneration of Directors. The officers of the Fund and
certain Directors of the Fund (Ms. Macaskill and Messrs. Galli and
Spiro; Ms. Macaskill is also an officer) who are affiliated with
the Manager receive no salary or fee from the Fund. The remaining
Directors of the Fund received the compensation shown below from
the Fund. The compensation from the Fund was paid during its
fiscal period from January 1, 1996 through October 31, 1996, and
from all of the New York-based Oppenheimer funds includes the Fund
and is compensation received as a director, trustee or member of a
committee of the Board of those funds during the calendar year
1996.
<TABLE>
<CAPTION> Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From the Fund Fund Expenses Oppenheimer Funds1
<S> <C> <C> <C>
Leon Levy $1,339 $5,001 $141,000
Chairman and Director
Benjamin Lipstein
Study Committee
Chairman(2), Audit
Committee Member
and Director $818 $3,057 $88,200
Elizabeth Moynihan
Study Committee Member
and Director $818 $3,057 $86,200
Kenneth A. Randall
Audit Committee
Chairman & Director $744 $2,781 $78,400
Edward V. Regan
Proxy Committee Chairman(2),
Audit Committee Member and
Director $653 $2,440 $68,800
Russell S. Reynolds, Jr.
Proxy Committee Member(2)
and Director $495 $1,848 $52,100
Pauline Trigere
Director $495 $1,848 $52,100
Clayton K. Yeutter
Proxy Committee Member(2)
and Director $495 $1,848 $52,100
For the 1996 calendar year.
(2)Committee position held during a portion of the shown.
</TABLE>
The Company has adopted a retirement plan that provides for
payment to a retired Director of up to 80% of the average
compensation paid during the Director's five years of service in
which the highest compensation was received. A Director 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 Director's retirement benefits will depend on the
amount of the Director'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 February 7, 1997, no person owned of
record or was known by the Fund to own beneficially 5% or more of
the Fund's outstanding Class A, Class B or Class C shares except:
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 three of whom (Ms. Macaskill and Messrs. Galli and
Spiro) serve as Directors of the Funds.
The Manager and the Company have a Code of Ethics. It is
designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
The Investment Advisory Agreements. The Fund has entered
into an Investment Advisory Agreement with the Manager. The
investment advisory agreement between the Manager and the Fund
requires the Manager, at its expense, to provide the Fund with
adequate office space, facilities and equipment, and to provide and
supervise the activities of all administrative and clerical
personnel required to provide effective corporate administration
for the Fund, including the compilation and maintenance of records
with respect to its operations, the preparation and filing of
specified reports, and composition of proxy materials and
registration statements for the continuous public sale of shares of
the 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 Fund. The advisory
agreement lists examples of expenses to be paid by the 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.
For the fiscal years ended December 31, 1994 and 1995 the
Management's fees paid to G.R. Phelps & Co., the Fund's Investment
Advisor, was $1,173,401 and $1,251,666 respectively. For the
fiscal period ended October 31, 1996 the fund paid $1,197,253, in
management fees, some of which was paid to G.R. Phelps & Co.,
investment advisor, prior to March 18, 1996.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limiting fund
expenses that previously applied, the Manager had voluntarily
undertaken that the Fund's total expenses in any fiscal year
(including the investment advisory fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manager's
undertaking is therefore inapplicable and has been withdrawn.
During the Fund's last fiscal year, the Fund's expenses did not
exceed the most stringent state regulatory limit and the voluntary
undertaking was not invoked.
The Investment 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. The
advisory agreement permits the Manager to act as investment adviser
for any other person, firm or corporation and to use the name
"Oppenheimer" in connection with its other investment activities.
If the Manager shall no longer act as investment adviser to the
Fund, the right of the Fund to use the name "Oppenheimer" as part
of their corporate names may be withdrawn.
The Distributor. Under its General Distributor's
Agreement with the Fund, the Distributor acts as the Fund's
principal underwriter in the continuous public offering of the
Fund's shares, but is not obligated to sell a specific number of
shares. Expenses normally attributable to sales (other than those
paid under the Distribution and Service Plans, but including
advertising and the cost of printing and mailing prospectuses other
than those furnished to existing shareholders), are borne by the
Distributor. During the Fund's fiscal years ended December 31,
1994 and 1995 and the fiscal period ended October 31, 1996 the
aggregate sales charges on sales of the Fund's Class A shares were
$902,663, $559,650 and $703,460 respectively, of which the
Distributor and an affiliated broker-dealer retained $0, $0 and
$501,951 in those respective years. During the Fund's fiscal
period ended October 31, 1996 the contingent deferred sales
charges collected on the Fund's Class B shares totalled $12,848.
During the fiscal year ended October 31, 1996, sales charges
advanced to broker/dealers by the Distributor on sales of the
Fund's Class B shares totalled $93,675 of which $60,694 was paid to
an affiliated broker/dealer. During the Fund's fiscal years ended
October 31, 1996 there were no contingent deferred sales charges
collected on the Fund's Class C shares. During the fiscal period
ended October 31, 1996, sales charges advanced to broker/dealers by
the Distributor on sales of the Fund's Class C shares totalled
$1,236 of which $0 was paid to an affiliated broker/dealer. For
additional information about distribution of the Fund's shares and
the expenses connected with such activities, please refer to
"Distribution and Service Plans," below.
For additional information about distribution of the Fund's
shares and the expenses connected with such activities, please
refer to "Distribution and Service Plans," below.
The Transfer Agent. OppenheimerFunds Services, the
Fund's transfer agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under each advisory agreement is to
arrange the portfolio transactions for the Fund. The advisory
agreement contains provisions relating to the employment of broker-
dealers ("brokers") to effect the Fund's portfolio transactions.
In doing so, the Manager is authorized by the advisory agreement to
employ such broker-dealers, including "affiliated" brokers, as that
term is defined in the Investment Company Act, as may, in its best
judgment based on all relevant factors, implement the policy of the
Fund to obtain, at reasonable expense, the "best execution" (prompt
and reliable execution at the most favorable price obtainable) of
such transactions. The Manager need not seek competitive
commission bidding, but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the
Fund as established by the Board of Directors.
Under the advisory agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its
affiliates have investment discretion. The commissions paid to
such brokers may be higher than another qualified broker would have
charged, if a good faith determination is made by the Manager 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 the Fund and other investment
companies managed by the Manager or its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Most
purchases made by the Fund are principal transactions at net
prices, and the Fund 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 agreement 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 Fund engages in an option transaction, ordinarily the
same broker will be used for the purchase or sale of the option and
any transaction in the securities to which the option relates.
When possible, concurrent orders to purchase or sell the same
security by more than one of the accounts managed by the Manager
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 Fund
and one or more of such other accounts. Such research, which may
be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt
of market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If
a research service also assists the Manager in a non-research
capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to
the Manager in the investment decision-making process may be paid
in commission dollars. The Board of 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 the Fund's portfolio or being considered for
purchase. The Board of Directors, including the "independent"
Directors of the Company (those Directors of the Company 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 Plan
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 1994 and 1995 calendar years was
$379,734 and $211,491 respectively. During the Fund's fiscal
period ended October 31, 1996 total brokerage commissions paid by
the Fund was $118,259, $111,769 was paid to brokers as commission
in return for research services, the total aggregate dollar amount
of those transactions was $79,885,929.
Performance of the Fund
Yield and Total Return Information. From time to time, as set
forth in the 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 the 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.
The 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.
The 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 the 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 the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its 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
the Fund of future yields or rates of return on its shares. The
yields and total returns of Class A, Class B and Class C shares of
the 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. The 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 the Fund to shareholders in
the 30-day period, but is a hypothetical yield based upon the net
investment income from the Fund's portfolio investments calculated
for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally,
because each class of shares is subject to different expenses, it
is likely that the standardized yields of the Fund's classes of
shares will differ.
Dividend Yield and Distribution Return. From time to time the
Fund may quote a "dividend yield" or a "distribution return" for
each class. Dividend yield is based on the dividends paid on
shares of a class from dividends derived from net investment income
during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains
declared during a stated period. Under those calculations, the
dividends and/or distributions for that class declared during a
stated period of one year or less (for example, 30 days) are added
together, and the sum is divided by the maximum offering price per
share of that class) on the last day of the period. When the
result is annualized for a period of less than one year, the
"dividend yield" is calculated as follows:
<PAGE>
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. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return," and "total return at net
asset value" of an investment in a class of shares of the Fund may
be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations
is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each advertised class of
shares of the Fund for the 1,5, and 10-year periods (or the life of
the class, if less) ending as of the most recently-ended calendar
quarter prior to the publication of the advertisement. This enable
an investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for
comparison with other investments. An investment in the Fund is
not insured; its returns and share prices are not guaranteed and
normally will fluctuate on a daily basis. When redeemed, an
investor's shares may be worth more or less than their original
cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of each
class of shares of the Fund are affected by portfolio quality, the
type of investments the Fund holds and its operating expenses
allocated to the particular class.
Average Annual Total Returns. The "average annual total
return" of each class of the Fund 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
The average annual total returns on an investment in Class A
shares of the Fund for the one, five and ten year periods ended
October 31, 1996 and for the period from September 16, 1985
(commencement of operations) to October 31, 1996 were 5.07%,
10.10%, 10.76%, and 11.74% respectively.
The average annual total return on Class B shares for the one-
year period ended October 31, 1996 and for the period October 2,
1995 (commencement of the public offering of the class) through
October 31, 1996 were 5.58% and 6.20%, respectively.
The "cumulative total return" on Class C shares for the period
May 1, 1996 (commencement of the public offering of the class)
through October 31, 1996 was 3.08%. The "cumulative total return"
on Class A from September 16, 1985 to October 31, 1996 was 243.86%.
The "cumulative total return on Class B for the period from October
2, 1995 through October 31, 1996 was 6.72%. The "cumulative total
return" on Class C shares for the period from May 1, 1996 to
October 31, 1996 was 3.08%.
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% as a percentage of the offering
price, is deducted from the initial investment ("P"), unless the
return is shown at net asset value, as discussed below. For Class
B shares 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 C shares, the
1.0% contingent deferred sales charge is applied to the investment
results for the one-year period (or less). 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 the Fund
may also quote an "average annual total return at net asset value"
or a cumulative "total return at net asset value" for Class A,
Class B or Class C shares, 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.
The average annual total returns at net asset value on the
Fund's Class A shares for the one, five and ten year periods ended
October 31, 1996 and from September 16, 1995 (commencement of
operations) to October 31, 1996 were 11.48%, 11.41%, 11.42% and
12.34%. The average annual total returns at net asset value for
the Fund's Class B shares for the one year period ended October 31,
1996 and for the period from October 2, 1995 (commencement of the
public offering of the class) through October 31, 1996 were 10.58%
and 9.88%. The cumulative total returns at net asset value for the
Fund's Class C shares for the period May 1, 1996 (commencement of
the public offering of the Class) through October 31, 1996 was
4.08%.
The "cumulative total returns at net asset value" of the
Fund's Class A shares for the period from inception to October 31,
1996 was 264.84%. For Class B shares, the "cumulative total
returns at net asset value for the period from inception through
October 31, 1996 was 10.72%. For Class C shares, the cumulative
total return at net asset value from inception to October 31, 1996
was 4.08%.
Other Performance Comparisons. From time to time the Fund may
also include in its advertisements and sales literature performance
information about the Fund or rankings of the 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 the Funds may publish the star ranking of
the performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories,
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
returns. Investment return measures a fund's or class's one,
three, five and ten-year average annual total returns (depending on
the inception of the fund or class) in excess of 90-day U.S.
Treasury bill returns after considering the fund's sales charges
and expenses. Risk measures a fund's or class's performance below
90-day U.S. Treasury bill returns. Risk and investment return are
combined to produce star rankings reflecting performance relative
to the average fund in the fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%"), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The
current star ranking is the fund's or class's 3-year ranking or its
combined 3- and 5-year ranking (weighted 60%/40%), respectively, or
its combined 3-, 5- and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception of the fund or class.
Rankings are subject to change monthly.
A Fund may also compare its performance to that of other funds
in its Morningstar Category. In addition to its star rankings,
Morningstar also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparisons by Morningstar
are based on the same risk and return measurements as its star
rankings but do not consider the effect of sales charges.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A Shares and a
Distribution and Service Plan for Class B shares under Rule 12b-1
of the Investment Company Act. The 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, the 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 Prospectus. Each
Plan has been approved by a vote of (i) the Board of Directors of
the Company, 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 Fund.
In addition, under the Plans, the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make 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 Company'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 the Fund
automatically convert into Class A shares after six years, the Fund
is required by a Securities and Exchange Commission rule to obtain
the approval of Class B as well as Class A shareholders for a
proposed amendment to 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 Fund 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 the
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 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.
For the fiscal period ended October 31, 1996, payments under
this Class A Plan totaled $474,151, of which $324,243 was paid to
an affiliate of the Distributor. Any unreimbursed expenses
incurred by the Distributor with respect to Class A shares for any
fiscal year may not be recovered in subsequent fiscal years.
Payments received by the Distributor under Class A Plan 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.
Payments made under the Class B plan for the fiscal year ended
October 31, 1996, total $19,225 of which $15,073 was retained by
the Distributor. Payments made under the Class C plan for the
fiscal year ended October 31, 1996, totaled $276, of which $0 was
retained by 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 Conduct Rules of the
National Association of Securities Dealers, Inc. The Distributor
anticipates that it will take a number of years for it to recoup
(from the Fund's payments to the Distributor under the Class B 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.
Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without the assessment of
a front-end sales load and at the same time permit the Distributor
to compensate brokers and dealers in connection with the sale of
Class B and Class C shares of the Fund. 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 the Fund during that period. Such payments are
made in recognition that the Distributor (i) pays sales commissions
to authorized brokers and dealers at the time of sale, (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. The Fund offers 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 the Fund instead.
The 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 the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total 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 the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange on each day the Exchange is open by dividing the value of
the Fund's net assets attributable to that class by the number of
shares of that class outstanding. The Exchange normally closes at
4:00 P.M., New York time, but may close earlier on some days (for
example, in case of weather emergencies or on days falling before
a holiday). The Exchange's most recent annual holiday schedule
(which is subject to change) states that it will close 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 the Fund will not
be calculated at such times, if securities held in the Fund's
portfolio are traded at such time, the net asset values per share
of Class A, Class B and Class C shares of the Fund may be
significantly affected on such days when shareholders do not have
the ability to purchase or redeem shares.
The Company's Board of Directors has established procedures
for the valuation of the Fund's securities, generally as follows:
(i) equity securities traded on a U.S. securities exchange or on
NASDAQ for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day or
closing "bid" 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 the Company'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 "ask" 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 "ask" prices determined by a portfolio pricing
service approved by the Company'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 397 days or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between the "bid" and "ask" prices determined by a pricing
service approved by the 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 "ask" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "ask" price is
available).
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity, and other special factors involved. The Manager may use
pricing services approved by the Board of 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 the 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 "ask"
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 "ask" prices obtained
by the Manager from two active market makes (which in certain cases
may be "bid" price if "ask" price is not available).
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. The credit is adjusted ("marked-to market")
to reflect the current market value of the call or put. In
determining the Fund's gain on investments, if a call or put
written by the Fund is exercised, the proceeds are increased by the
premium received. If a call or put written by the Fund expires,
the Fund has a gain in the amount of the premium; if the Fund
enters into a closing purchase transaction, it will have a gain or
loss depending on whether the premium received was more or less
than the cost of the closing transaction. If the Fund exercises a
put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by
the fund.
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 the 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 the Fund three days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. A reduced sales charge rate may be obtained
for Class A shares under Right of Accumulation and Letters of
Intent because of the economies of sales efforts and reduction in
expenses realized by the Distributor, dealers and brokers making
such sales. No sales charge is imposed in certain other
circumstances described in the 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 Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Multiple Strategies 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 Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Bond Fund for Growth
Limited-Term New York Municipal Fund*
Rochester Fund Municipals*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer Developing Markets Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
________________________-
* Shares of the Fund are not presently exchangeable for shares of
this fund.
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 the 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 the Fund (and other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of
Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the 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 the Fund, that those amendments will apply automatically to
existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended amount and exceed the amount needed to qualify
for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of
such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value 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. If you make payments from your bank account to
purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to
the investment dates selected in the Account Application. Neither
the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares resulting from
delays in ACH transactions.
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.
The Fund reserves the right to amend, suspend, or discontinue
offering such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
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 Fund is stated in the
Prospectuses. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The 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 the 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". The Fund's Prospectus states that payment
for shares tendered for redemption is ordinarily made in cash.
However, if the Board of Directors of the Company determines that
it would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of a redemption order
wholly or partly in cash, 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. The Fund has elected to be governed
by Rule 18f-1 under the Investment Company Act, pursuant to which
the Fund is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net assets of the Fund during any
90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other
costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the
method the Fund uses to value its portfolio securities described
above under "Determination of Net Asset Values Per Share" and 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 the 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 "Director, OppenheimerFunds Retirement Plans," c/o the Transfer
Agent at its address listed in "How To Sell Shares" in the 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 the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension 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 Fund, the Manager, the
Distributor, the Director and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase 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 the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before
the date you select in the Account Application. If a contingent
deferred sales charge applies to the redemption, the amount of the
check or payment will be reduced accordingly. The Fund cannot
guarantee receipt of 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 as well as the Prospectuses. These
provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically
apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and 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 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
the Fund purchased for and held under the Plan, but the Transfer
Agent will credit all such shares to the account of the Planholder
on the records of 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 the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (receipt of
payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How to Exchange Shares. As stated in the 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. and Daily Cash
Accumulation Fund Inc., which only offer Class A shares and
Oppenheimer Main Street California Tax Exempt Fund, which only
offers Class A and Class B shares. Class B and Class C shares of
Oppenheimer Cash reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or
available for direct purchases 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 the 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.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of 10 or
more accounts. The Fund may accept requests for exchanges of up to
50 accounts per day from representatives of authorized dealers that
qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the 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. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the 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 Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares
held of record at the time of the previous determination of net
asset value, or as otherwise described in "How to Buy Shares."
Daily dividends 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 the 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 the 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 the 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. The Fund qualified as a regulated investment
company in its last fiscal year and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue
Code contains a number of complex tests to determine whether the
Fund will qualify, and the Fund might not meet those tests in a
particular year. For example, if the Fund derives 30% or more of
its gross income from the sale of securities held less than three
months, it may fail to qualify (see "Tax Aspects of Covered Calls
and Hedging Instruments," above). If it does not qualify, the 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 the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Fund's Board and the Manager might determine in a particular
year that it would be in the best interest of shareholders for the
Fund not to make such distributions at the required levels and to
pay the excise tax on the undistributed amounts. That would reduce
the amount of income or capital gains available for distribution to
shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges" above, at net
asset value without sales charge. To elect this option, the
shareholder must notify the Transfer Agent in writing and either
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 the Fund on the same basis.
Additional Information About The Fund
The Custodian. State Street Bank and Trust Company is the
Custodian of the Fund's assets. The Custodian's responsibilities
include safeguarding and controlling the Fund's portfolio
securities, collecting income on the portfolio securities and
handling the delivery of such securities to and from the Fund.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Oppenheimer
Disciplined Allocation Fund:
We have audited the accompanying statements of investments and
assets and liabilities of Oppenheimer Disciplined
Allocation Fund (formerly Connecticut Mutual Growth Account) as of
October 31, 1996, and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the ten month period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial Statements and financial highlights based on our audit.
The statement of changes in net assets for the year ended December 31, 1995
and the financial highlights for the five years ended December 31, 1995
were audited by other auditors whose report dated February 9, 1996, expressed
an unqualified opinion on this information.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and dates in the
financial statements. Our procedures included confirmation of securities
owned as of October 31, 1996 by correspondence with the custodian and brokers;
and where confirmations were not received from
brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material
respects, the financial position of Oppenheimer Disciplined Allocation
Fund as of October 31, 1996, and the results of its operations,
the changes in its net assets, and the financial highlights for the
ten month period ended October 31, 1996, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1996
STATEMENT OF INVESTMENTS October 31, 1996
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ----------------
<S> <C>
<C>
MORTGAGE-BACKED OBLIGATIONS--8.7%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
GOVERNMENT AGENCY--7.4%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
FHLMC/FNMA/SPONSORED--3.8% Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1992-15, Cl. KZ, 7%, 2/25/22 $ 688,495
$ 597,270
Gtd. Multiclass Mtg. Participation Certificates, 6%, 3/1/09 913,902
889,117
Gtd. Multiclass Mtg. Participation Certificates, Series 1337,
Cl. D, 6%, 8/15/07 1,000,000
942,180
Gtd. Multiclass Mtg. Participation Certificates, Series 1820,
Cl. Pl, 5.75%, 7/15/06 1,000,000
979,063
Gtd. Multiclass Mtg. Participation Certificates, Series 1994-43,
Cl. PE, 6%, 12/25/19 800,000
790,496
Series 1849, Cl. VA, 6%, 12/15/10 947,402
932,301
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 937,679
921,383
6.50%, 3/1/26 754,821
722,251
7.50%, 1/1/08 414,136
422,079
7.50%, 3/1/08 366,445
373,459
7.50%, 6/1/08 254,522
259,394
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series
1993-181, Cl. C, 5.40%, 10/25/02 400,000
397,000
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series
1993-190, Cl. Z, 5.85%, 7/25/08 297,833
293,599
Interest-Only Stripped Mtg.-Backed Security, Series 1993-223,
Cl. PM, 7.709%, 10/25/23(1) 2,655,775
442,346
----------
8,961,938
- ----------------------------------------------------------------------------------------------------------------
- ----------------
GNMA/GUARANTEED--3.6% Government National Mortgage Assn.:
6.50%, 10/15/23--4/15/24 5,806,473
5,593,732
7%, 4/15/09--2/15/24 1,622,059
1,613,111
7.50%, 3/15/09 805,644
824,311
8%, 5/15/17 557,587
577,967
----------
8,609,121
- ----------------------------------------------------------------------------------------------------------------
- ----------------
PRIVATE--1.3%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
COMMERCIAL--0.6% Chase Commercial Mortgage Securities Corp.,
Commercial Mtg. Obligations, Series 1996-1, Cl. A2, 7.60%,
7/18/28 1,500,000
1,539,023
- ----------------------------------------------------------------------------------------------------------------
- ----------------
MANUFACTURED HOUSING--0.2% Green Tree Financial Corp., Series 1994-7, Cl. A3, 8%, 3/15/20 500,000
511,405
- ----------------------------------------------------------------------------------------------------------------
- ----------------
MULTI-FAMILY--0.2% Housing Securities, Inc., Series 1994-3, Cl. A3, 7.25%, 9/25/12 362,868
363,548
- ----------------------------------------------------------------------------------------------------------------
- ----------------
RESIDENTIAL--0.3% GE Capital Mortgage Securities, Inc., Series-HE2, Cl. A3, 7.30%,
3/25/12 700,000
709,516
----------
Total Mortgage-Backed Obligations (Cost $20,512,673)
20,694,551
================================================================================================================
================
U.S. GOVERNMENT OBLIGATIONS--36.3%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
AGENCY--22.4%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Federal Home Loan Bank Consolidated Disc. Nts.:
5.16%, 11/14/96 20,000,000
19,962,733
5.50%, 11/1/96 26,200,000
26,200,000
- -------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.18%, 11/18/96 7,000,000
6,982,877
----------
53,145,610
</TABLE>
5 Oppenheimer Disciplined Allocation Fund
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ----------------
<S> <C>
<C>
TREASURY--13.9% U.S. Treasury Bonds:
7.50%, 11/15/16 $8,475,000
$ 9,168,891
8.75%, 5/15/17 8,250,000
10,065,000
- -------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.75%, 8/15/03 300,000
292,231
6.50%, 8/15/05 4,000,000
4,042,500
7.25%, 8/15/04 5,600,000
5,913,247
7.50%, 11/15/01 3,400,000
3,600,412
------------
33,082,281
------------
Total U.S. Government Obligations (Cost $84,369,697)
86,227,891
================================================================================================================
================
FOREIGN GOVERNMENT OBLIGATIONS--0.3%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Colombia (Republic of) Unsub. Nts., 7.125%, 5/11/98 300,000
301,125
- -------------------------------------------------------------------------------------------------
United Mexican States Bonds, 6.97%, 8/12/00 250,000
234,062
------------
Total Foreign Government Obligations (Cost $537,244)
535,187
================================================================================================================
================
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--21.3%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
BASIC MATERIALS--2.2%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
CHEMICALS--1.3% Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 500,000
506,585
- -------------------------------------------------------------------------------------------------
FMC Corp., 8.75% Sr. Nts., 4/1/99 500,000
525,588
- -------------------------------------------------------------------------------------------------
Lyondell Petrochemical Co., 8.25% Nts., 3/15/97 1,100,000
1,109,749
- -------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 500,000
612,666
- -------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 250,000
301,076
------------
3,055,664
- ----------------------------------------------------------------------------------------------------------------
- ----------------
METALS--0.4% Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 850,000
921,706
- ----------------------------------------------------------------------------------------------------------------
- ----------------
PAPER--0.5% Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 500,000
501,875
- -------------------------------------------------------------------------------------------------
Georgia-Pacific Corp., 9.85% Credit Sensitive Nts., 6/15/97 750,000
768,057
------------
1,269,932
- ----------------------------------------------------------------------------------------------------------------
- ----------------
CONSUMER CYCLICALS--2.3%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
AUTOS & HOUSING--0.3% Black & Decker Corp., 6.625% Nts., 11/15/00 700,000
703,212
- ----------------------------------------------------------------------------------------------------------------
- ----------------
LEISURE & ENTERTAINMENT--0.7% Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 500,000
502,509
- -------------------------------------------------------------------------------------------------
Walt Disney Co., 6.375% Sr. Unsec. Bonds, Series A, 3/30/01 1,250,000
1,248,499
------------
1,751,008
- ----------------------------------------------------------------------------------------------------------------
- ----------------
MEDIA--0.6% Reed Elsevier, Inc., 6.625% Nts., 10/15/23(2) 400,000
358,176
- -------------------------------------------------------------------------------------------------
Tele-Communications, Inc., 7.14% Sr. Medium-Term Nts., 2/3/98 400,000
401,018
- -------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 700,000
710,599
------------
1,469,793
- ----------------------------------------------------------------------------------------------------------------
- ----------------
RETAIL: GENERAL--0.7% Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 350,000
383,039
- -------------------------------------------------------------------------------------------------
Price/Costco, Inc., 7.125% Sr. Nts., 6/15/05 400,000
398,918
- -------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000
314,879
- -------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc., 5.875% Nts., 10/15/05 500,000
471,089
------------
1,567,925
</TABLE>
6 Oppenheimer Disciplined Allocation Fund
<PAGE> 7
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ----------------
<S> <C>
<C>
CONSUMER NON-CYCLICALS--2.0%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
BEVERAGES--0.2% Fomento Economico Mexico SA, 9.50% Unsub. Nts., 7/22/97 $ 450,000
$ 456,188
- ----------------------------------------------------------------------------------------------------------------
- ----------------
FOOD--0.9% ConAgra, Inc., 9.75% Sr. Nts., 11/1/97 500,000
518,719
- -------------------------------------------------------------------------------------------------
CPC International, Inc., 6.15% Unsec. Nts., Series C, 1/15/06 500,000
480,722
- -------------------------------------------------------------------------------------------------
Dole Food Co., 6.75% Nts., 7/15/00 530,000
533,275
- -------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 500,000
514,489
----------
2,047,205
- ----------------------------------------------------------------------------------------------------------------
- ----------------
HEALTHCARE/DRUGS--0.4% Roche Holdings, Inc., 2.75% Bonds, 4/14/00 950,000
859,156
- ----------------------------------------------------------------------------------------------------------------
- ----------------
HEALTHCARE/SUPPLIES & Tenet Healthcare Corp., 8.625% Sr. Unsec. Nts., 12/1/03 500,000
531,250
SERVICES--0.2%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
HOUSEHOLD GOODS--0.3% Electrolux AB, 7.75% Sr. Unsub. Debs., 6/17/97 500,000
505,000
- -------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 290,000
305,042
----------
810,042
- ----------------------------------------------------------------------------------------------------------------
- ----------------
ENERGY--2.5%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
ENERGY SERVICES & Coastal Corp., 8.125% Sr. Nts., 9/15/02 500,000
533,086
PRODUCERS--0.7%
- -------------------------------------------------------------------------------------------------
Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01 500,000
520,000
- -------------------------------------------------------------------------------------------------
Petroliam Nasional Berhad, 6.875% Nts., 7/1/03(2) 500,000
505,377
----------
1,558,463
- ----------------------------------------------------------------------------------------------------------------
- ----------------
OIL-INTEGRATED--1.8% BP America, Inc., 8.875% Gtd. Debs., 12/1/97 500,000
515,641
- -------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 915,000
918,045
- -------------------------------------------------------------------------------------------------
Norsk Hydro AS, 8.75% Bonds, 10/23/01 500,000
542,500
- -------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 6.27% Medium-Term Nts., 11/8/00 1,000,000
990,307
- -------------------------------------------------------------------------------------------------
Phillips Petroleum Co., 7.53% Pass-Through Certificates,
Series 1994-A1, 9/27/98 733,269
743,704
- -------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 500,000
626,030
----------
4,336,227
- ----------------------------------------------------------------------------------------------------------------
- ----------------
FINANCIAL--8.3%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
BANKS--1.3% BankAmerica Corp., 6% Nts., 7/15/97 500,000
500,810
- -------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 10.125% Sub. Nts., 11/1/00 250,000
281,550
- -------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 550,000
533,401
- -------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 500,000
514,866
- -------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 250,000
282,204
- -------------------------------------------------------------------------------------------------
Marshall & Ilsley Corp., 6.95% Medium-Term Nts., Series C, 3/31/97 500,000
502,739
- -------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 400,000
402,520
----------
3,018,090
- ----------------------------------------------------------------------------------------------------------------
- ----------------
DIVERSIFIED FINANCIAL--6.6% American General Finance Corp.:
7.70% Sr. Nts., 11/15/97 500,000
509,242
8.50% Sr. Nts., 8/15/98 500,000
520,978
- -------------------------------------------------------------------------------------------------
Aristar, Inc., 8.125% Sr. Nts., 12/1/97 250,000
255,684
- -------------------------------------------------------------------------------------------------
Associates Corp. of North America, 6.75% Sr. Nts., 10/15/99 500,000
506,862
- -------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 500,000
503,502
- -------------------------------------------------------------------------------------------------
Chrysler Financial Corp., 5.875% Nts., 2/7/01 1,000,000
977,424
- -------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 1,000,000
966,297
</TABLE>
7 Oppenheimer Disciplined Allocation Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ----------------
<S> <C> <C>
<C>
DIVERSIFIED FINANCIAL Countrywide Funding Corp.:
(CONTINUED) 6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 $ 400,000
$ 392,143
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 500,000
497,200
6.57% Gtd. Medium-Term Nts., Series A, 8/4/97 250,000
251,470
- -------------------------------------------------------------------------------------------------
Fleet Mtg. Group, Inc.:
6.125% Nts., 8/15/97 1,000,000
1,002,308
6.50% Nts., 9/15/99 250,000
251,544
- -------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
6.25% Unsub. Nts., 2/26/98 500,000
503,240
8% Nts., 12/1/97 500,000
510,781
- -------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.65% Medium-Term Nts., 12/15/97 1,000,000
997,437
7.75% Medium-Term Nts., 1/17/97 750,000
750,919
- -------------------------------------------------------------------------------------------------
Golden West Financial Corp., 10.25% Sub. Nts., 5/15/97 500,000
511,471
- -------------------------------------------------------------------------------------------------
Household Finance Corp. Ltd., 6% Gtd. Sr. Nts., 6/30/98 250,000
249,124
- -------------------------------------------------------------------------------------------------
Household International BV, 6% Gtd. Sr. Nts., 3/15/99 500,000
496,279
- -------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6% Nts., 3/1/01 500,000
490,235
6.50% Nts., 4/1/01 500,000
499,441
- -------------------------------------------------------------------------------------------------
Norwest Financial, Inc., 6.50% Sr. Nts., 11/15/97 500,000
503,435
- -------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 750,000
779,938
- -------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 1,000,000
1,046,846
- -------------------------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp., 5.99% Medium-Term Nts.,
Series 1, 12/26/00 500,000
492,422
- -------------------------------------------------------------------------------------------------
TransAmerica Finance Corp.:
6.75% Sr. Nts., 8/15/97 500,000
503,454
6.80% Sr. Nts., 3/15/99 250,000
253,357
- -------------------------------------------------------------------------------------------------
U.S. Leasing International, 7% Nts., 11/1/97 500,000
505,296
-----------
15,728,329
- ----------------------------------------------------------------------------------------------------------------
- ----------------
INSURANCE--0.4% Equitable Life Assurance Society (U.S.A.), 6.95% Surplus Nts.,
12/1/05(2) 500,000
493,904
- -------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 450,000
473,497
-----------
967,401
- ----------------------------------------------------------------------------------------------------------------
- ----------------
INDUSTRIAL MATERIALS--0.2% American Standard, Inc., 10.875% Sr. Nts., 5/15/99 490,000
523,075
- ----------------------------------------------------------------------------------------------------------------
- ----------------
INDUSTRIAL SERVICES--0.4% Bass America, Inc., 6.75% Gtd. Nts., 8/1/99 250,000
254,002
- -------------------------------------------------------------------------------------------------
PHH Corp., 6.50% Nts., 2/1/00 350,000
351,469
- -------------------------------------------------------------------------------------------------
Procter & Gamble Co., 9.36% Debs., 1/1/21 250,000
305,908
-----------
911,379
- ----------------------------------------------------------------------------------------------------------------
- ----------------
MANUFACTURING--0.6% Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 400,000
409,000
- -------------------------------------------------------------------------------------------------
Tenneco, Inc.:
10% Debs., 8/1/98 375,000
398,892
9.25% Sr. Nts., 11/1/96 500,000
500,000
-----------
1,307,892
- ----------------------------------------------------------------------------------------------------------------
- ----------------
TRANSPORTATION--0.8% Federal Express Corp., 6.25% Nts., 4/15/98 750,000
751,807
- -------------------------------------------------------------------------------------------------
Union Pacific Corp.:
7% Nts., 6/15/00 500,000
509,773
7.60% Nts., 5/1/05 500,000
520,770
-----------
1,782,350
</TABLE>
8 Oppenheimer Disciplined Allocation Fund
<PAGE> 9
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ----------------
<S> <C> <C>
<C>
TECHNOLOGY--0.4%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
AEROSPACE/DEFENSE--0.2% British Aerospace plc, 8% Debs., 5/27/97 $500,000
$ 505,938
- ----------------------------------------------------------------------------------------------------------------
- ----------------
TELECOMMUNICATIONS- MCI Communications Corp., 7.125% Sr. Nts., 1/20/00 500,000
512,657
TECHNOLOGY--0.2%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
UTILITIES--1.6%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
ELECTRIC UTILITIES--0.3% Consumers Power Co., 8.75% Mtg. Nts., 2/15/98 500,000
513,559
- -------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 250,000
250,625
-----------
764,184
- ----------------------------------------------------------------------------------------------------------------
- ----------------
GAS UTILITIES--1.0% Columbia Gas System, Inc., 6.80% Nts., Series C, 11/28/05 500,000
493,576
- -------------------------------------------------------------------------------------------------
NorAm Energy Corp., 9.875% Nts., 4/15/97 750,000
763,407
- -------------------------------------------------------------------------------------------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 500,000
502,148
- -------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 650,000
617,183
-----------
2,376,314
- ----------------------------------------------------------------------------------------------------------------
- ----------------
TELEPHONE UTILITIES--0.3% GTE Corp., 8.85% Debs., 3/1/98 750,000
776,892
-----------
Total Non-Convertible Corporate Bonds and Notes (Cost $50,451,488)
50,512,272
<CAPTION>
SHARES
================================================================================================================
================
<S> <C> <C>
<C>
COMMON STOCKS--32.7%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
BASIC MATERIALS--1.7%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
CHEMICALS--1.0% Cabot Corp. 9,900
238,837
- -------------------------------------------------------------------------------------------------
Potash Corp. of Saskatchewan, Inc. 12,700
900,112
- -------------------------------------------------------------------------------------------------
Union Carbide Corp. 28,000
1,193,500
-----------
2,332,449
- ----------------------------------------------------------------------------------------------------------------
- ----------------
METALS--0.3% UCAR International, Inc.(3) 19,100
747,287
- ----------------------------------------------------------------------------------------------------------------
- ----------------
PAPER--0.4% Fort Howard Corp.(3) 41,900
1,073,687
- ----------------------------------------------------------------------------------------------------------------
- ----------------
CONSUMER CYCLICALS--3.6%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
AUTOS & HOUSING--0.3% Black & Decker Corp. 20,500
766,187
- ----------------------------------------------------------------------------------------------------------------
- ----------------
LEISURE & ENTERTAINMENT--0.7% AMR Corp.(3) 13,300
1,117,200
- -------------------------------------------------------------------------------------------------
Northwest Airlines Corp., Cl. A(3) 17,100
566,437
-----------
1,683,637
- ----------------------------------------------------------------------------------------------------------------
- ----------------
RETAIL: GENERAL--2.0% Eckerd Corp.(3) 47,600
1,320,900
- -------------------------------------------------------------------------------------------------
Federated Department Stores, Inc.(3) 33,000
1,089,000
- -------------------------------------------------------------------------------------------------
Price/Costco, Inc.(3) 61,100
1,214,362
- -------------------------------------------------------------------------------------------------
U.S. Industries, Inc.(3) 43,700
1,179,900
-----------
4,804,162
- ----------------------------------------------------------------------------------------------------------------
- ----------------
RETAIL: SPECIALTY--0.6% Toys 'R' Us, Inc.(3) 37,900
1,283,862
- ----------------------------------------------------------------------------------------------------------------
- ----------------
CONSUMER NON-CYCLICALS--5.1%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
BEVERAGES--0.6% Anheuser-Busch Cos., Inc. 37,200
1,432,200
- ----------------------------------------------------------------------------------------------------------------
- ----------------
FOOD--2.1% American Stores Co. 36,100
1,493,637
- -------------------------------------------------------------------------------------------------
Archer-Daniels-Midland Co. 54,780
1,191,465
- -------------------------------------------------------------------------------------------------
Dole Food Co. 22,900
893,100
- -------------------------------------------------------------------------------------------------
Kroger Co.(3) 30,500
1,361,062
-----------
4,939,264
</TABLE>
9 Oppenheimer Disciplined Allocation Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C>
<C>
HEALTHCARE/DRUGS--0.7% Bristol-Myers Squibb Co. 14,700
$1,554,525
- ----------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/SUPPLIES & Columbia/HCA Healthcare Corp. 20,850
745,388
SERVICES--0.8%
- -----------------------------------------------------------------------------------------------
OrNda Healthcorp(3) 44,400
1,209,900
----------
1,955,288
- ----------------------------------------------------------------------------------------------------------------
- --------------
HOUSEHOLD GOODS--0.9% Premark International, Inc. 53,100
1,108,463
- -----------------------------------------------------------------------------------------------
Tupperware Corp. 20,400
1,048,050
----------
2,156,513
- ----------------------------------------------------------------------------------------------------------------
- --------------
ENERGY--2.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------
Amoco Corp. 16,000
1,212,000
- -----------------------------------------------------------------------------------------------
Chevron Corp. 28,900
1,900,175
- -----------------------------------------------------------------------------------------------
Mobil Corp. 15,000
1,751,250
----------
4,863,425
- ----------------------------------------------------------------------------------------------------------------
- --------------
FINANCIAL--5.4%
- ----------------------------------------------------------------------------------------------------------------
- --------------
BANKS--3.2% Bank of Boston Corp. 39,800
2,547,200
- -----------------------------------------------------------------------------------------------
BankAmerica Corp. 25,400
2,324,100
- -----------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 7,500
643,125
- -----------------------------------------------------------------------------------------------
NationsBank Corp. 10,900
1,027,325
- -----------------------------------------------------------------------------------------------
PNC Bank Corp. 31,500
1,141,875
----------
7,683,625
- ----------------------------------------------------------------------------------------------------------------
- --------------
DIVERSIFIED FINANCIAL--0.8% Crescent Real Estate Equities, Inc. 11,000
459,250
- -----------------------------------------------------------------------------------------------
Salomon, Inc. 29,800
1,344,725
----------
1,803,975
- ----------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE--1.4% AFLAC, Inc. 29,600
1,187,700
- -----------------------------------------------------------------------------------------------
General Re Corp. 7,100
1,045,475
- -----------------------------------------------------------------------------------------------
Travelers/Aetna Property Casualty Corp., Cl. A 39,700
1,191,000
----------
3,424,175
- ----------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL--4.4%
- ----------------------------------------------------------------------------------------------------------------
- --------------
MANUFACTURING--3.9% AGCO Corp. 36,900
936,338
- -----------------------------------------------------------------------------------------------
Case Corp. 26,100
1,213,650
- -----------------------------------------------------------------------------------------------
Deere & Co. 26,100
1,089,675
- -----------------------------------------------------------------------------------------------
General Signal Corp. 28,600
1,165,450
- -----------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 26,000
1,082,250
- -----------------------------------------------------------------------------------------------
Mark IV Industries, Inc. 23,939
517,681
- -----------------------------------------------------------------------------------------------
Textron, Inc. 21,300
1,890,375
- -----------------------------------------------------------------------------------------------
Tyco International Ltd. 28,400
1,409,350
----------
9,304,769
- ----------------------------------------------------------------------------------------------------------------
- --------------
TRANSPORTATION--0.5% PACCAR, Inc. 6,600
367,950
- -----------------------------------------------------------------------------------------------
Union Pacific Corp. 14,100
791,363
----------
1,159,313
</TABLE>
10 Oppenheimer Disciplined Allocation Fund
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
TECHNOLOGY--5.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
AEROSPACE/DEFENSE--3.5% General Dynamics Corp. 23,500
$ 1,612,688
- ---------------------------------------------------------------------------------------------------
Goodrich (B.F.) Co. 20,500
868,688
- ---------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 20,071
1,798,863
- ---------------------------------------------------------------------------------------------------
McDonnell Douglas Corp. 30,500
1,662,250
- ---------------------------------------------------------------------------------------------------
Rockwell International Corp. 22,000
1,210,000
- ---------------------------------------------------------------------------------------------------
TRW, Inc. 13,500
1,221,750
------------
8,374,239
- ----------------------------------------------------------------------------------------------------------------
- ------------------
COMPUTER HARDWARE--1.4% Dell Computer Corp.(3) 12,300
1,000,913
- ---------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(3) 10,200
480,038
- ---------------------------------------------------------------------------------------------------
Storage Technology Corp. (New)(3) 42,300
1,803,038
------------
3,283,989
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRONICS--0.7% Atmel Corp.(3) 3,500
88,813
- ---------------------------------------------------------------------------------------------------
Intel Corp. 12,000
1,318,500
- ---------------------------------------------------------------------------------------------------
Waters Corp.(3) 7,500
232,500
------------
1,639,813
- ----------------------------------------------------------------------------------------------------------------
- ------------------
UTILITIES--4.8%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRIC UTILITIES--2.0% American Electric Power Co., Inc. 18,000
747,000
- ---------------------------------------------------------------------------------------------------
CalEnergy, Inc.(3) 32,200
933,800
- ---------------------------------------------------------------------------------------------------
Entergy Corp. 38,600
1,080,800
- ---------------------------------------------------------------------------------------------------
FPL Group, Inc. 25,500
1,173,000
- ---------------------------------------------------------------------------------------------------
Texas Utilities Co. 22,800
923,400
------------
4,858,000
- ----------------------------------------------------------------------------------------------------------------
- ------------------
GAS UTILITIES--2.3% Columbia Gas System, Inc. (The) 47,800
2,903,850
- ---------------------------------------------------------------------------------------------------
PanEnergy Corp. 55,400
2,132,900
- ---------------------------------------------------------------------------------------------------
Questar Corp. 11,900
428,400
------------
5,465,150
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TELEPHONE UTILITIES--0.5% GTE Corp. 25,300
1,065,763
------------
Total Common Stocks (Cost $65,858,120)
77,655,297
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TOTAL INVESTMENTS, AT VALUE (COST $221,729,222) 99.3%
235,625,198
- ----------------------------------------------------------------------------------------------------------------
- ------------------
OTHER ASSETS NET OF LIABILITIES 0 .7
1,771,142
------
------------
NET ASSETS 100 .0%
$237,396,340
======
============
</TABLE>
1. Interest-Only Strips represent the right to
receive the monthly interest payments on an
underlying pool of mortgage loans. These
securities typically decline in price as
interest rates decline. Most other fixed-income
securities increase in price when interest rates
decline. The principal amount of the underlying
pool represents the notional amount on which
current interest is calculated. The price of
these securities is typically more sensitive to
changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA
pass-throughs). Interest rates disclosed
represent current yields based upon the current
cost basis and estimated timing and amount of
future cash flows.
2. Represents a security sold under Rule 144A,
which is exempt from registration under the
Securities Act of 1933, as amended. This
security has been determined to be liquid under
guidelines established by the Board of
Directors. These securities amount to
$1,357,457, or 0.57% of the Fund's net assets,
at October 31, 1996.
3. Non-income producing security.
See accompanying Notes to Financial Statements.
11 Oppenheimer Disciplined Allocation Fund
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES October 31, 1996
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
- --------
<S> <C> <C>
ASSETS Investments, at value (cost $221,729,222)--see accompanying statement
$235,625,198
- ------------------------------------------------------------------------------------------------------
Cash
110,935
- ------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends
2,113,722
Investments sold
632,933
Shares of capital stock sold
141,735
- ------------
Total assets
238,624,523
- ----------------------------------------------------------------------------------------------------------------
- --------
LIABILITIES Payables and other liabilities:
Investments purchased
900,187
Shares of capital stock redeemed
82,560
Shareholder reports
63,295
Transfer and shareholder servicing agent fees
53,762
Distribution and service plan fees
50,177
Directors' fees
30,614
Other
47,588
- ------------
Total liabilities
1,228,183
- ----------------------------------------------------------------------------------------------------------------
- --------
NET ASSETS
$237,396,340
============
- ----------------------------------------------------------------------------------------------------------------
- --------
COMPOSITION OF Par value of shares of capital stock
$14,831
NET ASSETS
- ------------------------------------------------------------------------------------------------------
Additional paid-in capital
201,832,445
- ------------------------------------------------------------------------------------------------------
Undistributed net investment income
1,524,191
- ------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
20,128,897
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3
13,895,976
- ------------
Net assets
$237,396,340
============
- ----------------------------------------------------------------------------------------------------------------
- --------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $233,289,068 and 14,577,178 shares of capital stock outstanding)
$16 .00
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price)
$16 .98
- ------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per
share (based on net assets of $3,919,201 and 242,457 shares
of capital stock outstanding)
$16 .16
- ------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $188,071 and 11,803 shares of capital stock outstanding)
$15 .93
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Disciplined Allocation Fund
<PAGE> 13
STATEMENT OF OPERATIONS For the Ten Months Ended October 31, 1996(1)
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
- ---------------
<S>
<C>
INVESTMENT INCOME Interest
$ 7,400,106
- ------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $348)
1,483,168
------------
Total income
8,883,274
================================================================================================================
===============
EXPENSES Management fees--Note 4
1,197,253
- ------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A
474,151
Class B
19,225
Class C
276
- ------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4
241,712
- ------------------------------------------------------------------------------------------------
Legal and auditing fees
62,507
- ------------------------------------------------------------------------------------------------
Custodian fees and expenses
49,857
- ------------------------------------------------------------------------------------------------
Shareholder reports
46,129
- ------------------------------------------------------------------------------------------------
Directors' fees and expenses--Note 1
30,614
- ------------------------------------------------------------------------------------------------
Accounting fees
12,500
- ------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A
2,177
Class B
964
Class C
56
- ------------------------------------------------------------------------------------------------
Other
3,742
------------
Total expenses
2,141,163
================================================================================================================
===============
NET INVESTMENT INCOME
6,742,111
================================================================================================================
===============
REALIZED AND UNREALIZED GAIN Net realized gain on investments
20,224,060
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
(12,786,272)
------------
Net realized and unrealized gain
7,437,788
================================================================================================================
===============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$14,179,899
===========
</TABLE>
1. The Fund changed its fiscal year end from
December 31 to October 31.
See accompanying Notes to Financial Statements.
13 Oppenheimer Disciplined Allocation Fund
<PAGE> 14
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED
TEN MONTHS ENDED
DECEMBER 31,
OCTOBER 31, 1996(1)
1995
================================================================================================================
==================
<S> <C> <C>
<C>
OPERATIONS Net investment income $ 6,742,111
$ 8,004,370
- ---------------------------------------------------------------------------------------------------
Net realized gain 20,224,060
7,754,106
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (12,786,272)
26,965,439
------------
------------
Net increase in net assets resulting from operations 14,179,899
42,723,915
================================================================================================================
==================
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income:
TO SHAREHOLDERS Class A (5,234,654)
(7,977,727)
Class B (50,540)
(2,581)
Class C (1,461)
--
- ---------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (786,458)
(7,615,071)
Class B (8,614)
(20,687)
Class C (45)
--
================================================================================================================
==================
CAPITAL STOCK Net increase in net assets resulting from
TRANSACTIONS capital stock transactions--Note 2:
Class A 7,182,619
13,085,898
Class B 3,182,132
651,526
Class C 184,182
--
================================================================================================================
==================
NET ASSETS Total increase 18,647,060
40,845,273
- ---------------------------------------------------------------------------------------------------
Beginning of period 218,749,280
177,904,007
------------
------------
End of period (including undistributed net investment income
of $1,524,191 and $68,633, respectively) $237,396,340
$218,749,280
============
============
</TABLE>
1. The Fund changed its fiscal year end from
December 31 to October 31.
See accompanying Notes to Financial Statements.
14 Oppenheimer Disciplined Allocation Fund
<PAGE> 15
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
- ------------------------------------------------------------------------------
TEN MONTHS
ENDED
OCTOBER 31, YEAR ENDED DECEMBER 31,
1996(3) 1995 1994 1993 1992
1991
================================================================================================================
===========
<S> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $15.46 $13.44 $14.54 $13.81 $14.02
$11.94
- ----------------------------------------------------------------------------------------------------------------
- -----------
Income (loss) from investment operations:
Net investment income .46 .60 .55 .48 .50
.54
Net realized and unrealized
gain (loss) .49 2.59 (.86) 1.70 .86
2.79
-------- -------- ------- -------- --------
-------
Total income (loss) from
investment operations .95 3.19 (.31) 2.18 1.36
3.33
- ----------------------------------------------------------------------------------------------------------------
- -----------
Dividends and distributions to shareholders:
Dividends from net investment
income (.36) (.60) (.55) (.48) (.50)
(.54)
Distributions from net realized gain (.05) (.57) (.24) (.97) (1.07)
(.71)
-------- -------- -------- -------- --------
-------
Total dividends and distributions
to shareholders (.41) (1.17) (.79) (1.45) (1.57)
(1.25)
- ----------------------------------------------------------------------------------------------------------------
- -----------
Net asset value, end of period $16.00 $15.46 $13.44 $14.54 $13.81
$14.02
======== ======== ======== ======== ========
=======
================================================================================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(4) 6.27% 23.95% (2.11)% 15.89% 9.90%
28.21%
================================================================================================================
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $233,289 $218,099 $177,904 $171,205 $109,701
$86,455
- ----------------------------------------------------------------------------------------------------------------
- -----------
Average net assets (in thousands) $228,203 $200,172 $187,655 $138,629 $96,016
$74,749
- ----------------------------------------------------------------------------------------------------------------
- -----------
Ratios to average net assets:
Net investment income 3.52%(5) 4.00% 3.80% 3.40% 3.61%
4.02%
Expenses 1.11%(5) 1.17% 0.96% 1.02% 1.11%
1.20%
- ----------------------------------------------------------------------------------------------------------------
- -----------
Portfolio turnover rate(6) 85.4% 55.2% 115.0% 155.2% 177.9%
122.4%
Average brokerage
commission rate(7) $0.0636 -- -- -- --
--
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------- --------
TEN MONTHS PERIOD PERIOD
ENDED ENDED ENDED
OCTOBER 31, DEC. 31, OCT. 31,
1996(3) 1995(2) 1996(1)
==================================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $15.66 $15.48 $15.71
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 .07 .30
Net realized and unrealized
gain (loss) .54 .70 .32
-------- -------- --------
Total income (loss) from
investment operations .85 .77 .62
- -------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.30) (.07) (.35)
Distributions from net realized gain (.05) (.52) (.05)
-------- -------- --------
Total dividends and distributions
to shareholders (.35) (.59) (.40)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $16.16 $15.66 $15.93
======== ======== ========
=================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 5.51% 4.93% 4.08%
=================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $3,919 $650 $188
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,324 $375 $ 57
- -------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.86%(5) 0.73%(5) 2.90%(5)
Expenses 1.85%(5) 1.92%(5) 1.87%(5)
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 85.4% 55.2% 85.4%
Average brokerage
commission rate(7) $0.0636 -- $0.0636
</TABLE>
1. For the period from May 1, 1996 (inception of
offering) to October 31, 1996.
2. For the period from October 1, 1995 (inception
of offering) to December 31, 1995.
3. The Fund changed its fiscal year end from
December 31 to October 31. On March 18, 1996,
OppenheimerFunds, Inc. became the investment adviser
to the Fund.
4. Assumes a hypothetical initial investment on the
business day before the first day of the fiscal
period (or inception of offering), with all
dividends and distributions reinvested in
additional shares on the reinvestment date, and
redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total
returns are not annualized for periods of less than
one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio
securities for a period, divided by the monthly
average of the market value of portfolio
securities owned during the period. Securities with
a maturity or expiration date at the time of
acquisition of one year or less are excluded from
the calculation. Purchases and sales of investment
securities (excluding short-term securities) for
the period ended October 31, 1996 were $166,027,550
and $159,855,450, respectively.
7. Total brokerage commissions paid on applicable
purchases and sales of portfolio securities for the
period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
15 Oppenheimer Disciplined Allocation Fund
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Disciplined Allocation Fund (the Fund), a
series of Oppenheimer Series Fund, Inc. (the Company)
is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management
investment company. On August 15, 1996, the Board of
Directors elected to change the fiscal year end of the
Fund from December 31 to October 31. Accordingly, these
financial statements include information for the ten
month period from January 1, 1996 to October 31, 1996.
The Fund's investment objective is to seek high total
investment return (current income and capital
appreciation in the value of its shares). Until March
18, 1996, the Fund and the Company were named
Connecticut Mutual Total Return Account and Connecticut
Mutual Investment Accounts, Inc., respectively. On
January 27, 1996, the policyholders of Connecticut
Mutual Life Insurance Company (CML) approved a merger
of CML with Massachusetts Mutual Life Insurance Company
(MML). In line with this change, effective March 18,
1996, OppenheimerFunds, Inc. (the Manager) became the
adviser of the Company. The Fund offers Class A, Class
B and Class C shares. Class A shares are sold with a
front-end sales charge. Class B and Class C shares may
be subject to a contingent deferred sales charge. All
three classes of shares have identical rights to
earnings, assets and voting privileges, except that
each class has its own distribution and/or service
plan, expenses directly attributable to a particular
class and exclusive voting rights with respect to
matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after
the date of purchase. The following is a summary of
significant accounting policies consistently followed
by the Fund.
--------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for which
such information is regularly reported are valued at
the last sale price of the day or, in the absence of
sales, at values based on the closing bid or the last
sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by the
Board of Directors. Such securities which cannot be
valued by the approved portfolio pricing service are
valued using dealer-supplied valuations provided the
Manager is satisfied that the firm rendering the quotes
is reliable and that the quotes reflect current market
value, or are valued under consistently applied
procedures established by the Board of Directors to
determine fair value in good faith. Short-term "money
market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization
to maturity of any premium or discount.
--------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian
to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value
of the underlying securities is required to be at least
102% of the resale price at the time of purchase. If
the seller of the agreement defaults and the value of
the collateral declines, or if the seller enters an
insolvency proceeding, realization of the value
of the collateral by the Fund may be delayed or
limited.
--------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
16 Oppenheimer Disciplined Allocation Fund
<PAGE> 17
- --------------------------------------------------------------------------------
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
DIRECTORS' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
directors. Benefits are based on years of service and
fees paid to each director during the years of service.
During the ten months ended October 31, 1996, a
provision of $22,420 was made for the Fund's
projected benefit obligations, resulting in an
accumulated liability of $22,420.
--------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply
with provisions of the Internal Revenue Code applicable
to regulated investment companies and to distribute all
of its taxable income, including any net realized gain
on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income or
excise tax provision is required.
--------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
--------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The
character of the distributions made during the year
from net investment income or net realized gains may
differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividend
distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund.
During the period ended October 31,
1996, the Fund adjusted the classification of net
investment income and capital gain (loss) to reflect
the differences between financial statement amounts and
distributions determined in accordance with income tax
regulations. During the period ended October 31, 1996,
amounts have been reclassified to reflect a decrease in
paid-in capital of $49,014, an increase in
accumulated net realized gain of $48,912 and an
increase in undistributed net investment income of
$102.
--------------------------------------------------------
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date)
and dividend income is recorded on the ex-dividend
date. Discount on securities purchased is amortized
over the life of the respective securities, in
accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for
federal income tax purposes.
The preparation of financial statements
in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
the reported amounts of income and expenses during the
reporting period. Actual results could differ from
those estimates.
17 Oppenheimer Disciplined Allocation Fund
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
2. SHARES OF
CAPITAL STOCK
The Fund has authorized 450 million of $0.001 par value
shares of capital stock. Transactions in shares of
capital stock were as follows:
<TABLE>
<CAPTION>
TEN MONTHS ENDED OCTOBER 31, 1996(2) YEAR ENDED
DECEMBER 31, 1995(1)
------------------------------------
- -------------------------------
SHARES AMOUNT SHARES
AMOUNT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C>
Class A:
Sold 2,232,163 $ 34,798,022 1,998,083
$29,691,366
Dividends and distributions
reinvested 380,285 5,902,477 1,003,774
15,305,644
Redeemed (2,143,354) (33,517,880) (2,126,335)
(31,911,112)
---------- ------------ -----------
------------
Net increase 469,094 $7,182,619 875,522
$ 13,085,898
========== ============ ===========
============
- -------------------------------------------------------------------------------------------------------
Class B:
Sold 222,321 $3,523,228 40,033
$628,572
Dividends and distributions
reinvested 3,640 57,138 1,471
22,954
Redeemed (25,008) (398,234) --
--
---------- ------------ -----------
------------
Net increase 200,953 $3,182,132 41,504
$651,526
========== ============ ===========
============
- -------------------------------------------------------------------------------------------------------
Class C:
Sold 11,772 $183,684 --
$ --
Dividends and distributions
reinvested 95 1,489 --
--
Redeemed (64) (991) --
--
---------- ------------ -----------
------------
Net increase 11,803 $184,182 --
$ --
========== ============ ===========
============
</TABLE>
1. For the year ended December 31, 1995 for Class A
shares and for the period from October 1, 1995
(inception of offering) to December 31, 1995 for Class
B shares.
2. For the ten months ended October 31, 1996 for Class
A and Class B shares and for the period from May 1,
1996 (inception of offering) to October 31, 1996 for
Class C shares. The Fund changed its fiscal year end
from December 31 to October 31.
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At October 31, 1996, net unrealized appreciation on
investments of $13,895,976 was composed of gross
appreciation of $15,320,901, and gross depreciation of
$1,424,925.
18 Oppenheimer Disciplined Allocation Fund
<PAGE> 19
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager are in accordance
with the investment advisory agreement with the Fund
which provides for a fee of 0.625% on the first $300
million of average annual net assets, 0.50% of the next
$100 million and 0.45% of net assets in excess of $400
million. Prior to March 18, 1996, management fees were
paid to G.R. Phelps & Co. (the former Manager) at an
annual rate of 0.625% of the Fund's average net assets.
The Manager has agreed to reimburse the Fund if
aggregate expenses (with specified exceptions) exceed
the most stringent applicable regulatory limit on Fund
expenses.
For the period ended October 31, 1996,
commissions (sales charges paid by investors) on sales
of Class A shares totaled $703,460, of which $501,951
was retained by OppenheimerFunds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of
the Fund's Class B and Class C shares totaled $93,675
and $1,236, of which $60,694 was paid to an affiliated
broker/dealer for Class B. During the period ended
October 31, 1996, OFDI received contingent deferred
sales charges of $12,848 upon redemption of Class B
shares as reimbursement for sales commissions advanced
by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a
division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of
providing such services are allocated ratably to these
companies.
The Fund has adopted a Service Plan for
Class A shares to reimburse OFDI for a portion of its
costs incurred in connection with the personal service
and maintenance of accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that
may not exceed 0.25% of the average annual net assets
of Class A shares of the Fund. OFDI uses the service
fee to reimburse brokers, dealers, banks and other
financial institutions quarterly for providing personal
service and maintenance of accounts of their customers
that hold Class A shares. During the period ended
October 31, 1996, OFDI paid $324,243 to an affiliated
broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
The Fund has adopted compensation type
Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing
accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B
and Class C shares, as compensation for sales
commissions paid from its own resources at the time of
sale and associated financing costs. OFDI also receives
a service fee of 0.25% per year as compensation for
costs incurred in connection with the personal service
and maintenance of accounts that hold shares of the
Fund, including amounts paid to brokers, dealers, banks
and other financial institutions. Both fees are
computed on the average annual net assets of Class B
and Class C shares, determined as of the close of each
regular business day. During the period ended October
31, 1996, OFDI paid $15,073 to an affiliated
broker/dealer as compensation for Class B personal
service and maintenance expenses. If the Plans are
terminated by the Fund, the Board of Directors may
allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred
before the Plans were terminated. As of October 31,
1996, OFDI had incurred unreimbursed expenses of
$59,091 for Class B and $2,436 for Class C.
<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>
APPENDIX B: 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.
<PAGE>
Oppenheimer Disciplined Allocation 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 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
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov
& Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER LIFESPAN GROWTH FUND
OPPENHEIMER LIFESPAN BALANCED FUND
OPPENHEIMER LIFESPAN INCOME FUND
Supplement dated February 25, 1997 to the
Prospectus dated February 25, 1997
The Prospectus is changed as follows:
1. In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares" on page 46, (2) sales of Class B shares described
in the fifth paragraph in "Distribution and Service Plans for Class
B and Class C Shares" on page 54, and (3) sales of Class C shares
described in the sixth paragraph in "Distribution and Service Plans
for Class B and Class C Shares" on page 54, the Distributor will pay
additional commission to each broker, dealer and financial
institution that has a sales agreement with the Distributor and
agrees to accept that additional commission (these are referred to
as "participating firms") for Class A, Class B and Class C shares
of the Fund sold in "qualifying transactions" (the "promotion").
The additional commission will be 1.00% of the offering price of
shares of the Fund sold by a registered representative or sales
representative of a participating firm during the promotion. If the
additional commission is paid on the sale of Class A shares of
$500,000 or more or the sale of Class A shares to a SEP IRA with 100
or more eligible participants and those shares are redeemed within
13 months from the end of the month in which they were purchased,
the participating firm will be required to return the additional
commission.
"Qualifying transactions" are aggregate sales of $150,000 or
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-SEP
IRAs using the A.G. Edwards & Sons, Inc. prototype IRA agreement,
if the rollover contribution or trustee-to-trustee payment is
received during the promotion period. "Qualifying transactions" do
not include (1) purchases of Class A shares intended but not yet
made under a Letter of Intent, and (2) purchases of Class A, Class
B and/or Class C shares with the redemption proceeds from an
existing Oppenheimer funds account.
February 25, 1997 PS0305.007
<PAGE>
OPPENHEIMER
LifeSpan Funds
Prospectus Dated February 25, 1997
The Oppenheimer LifeSpan Funds are three individual asset
allocation mutual funds having different objectives. Each Fund's
assets are invested, in differing proportions, in two broad asset
classes -- stock and bonds -- with investments in those classes
allocated to a number of different types of securities, or
"components."
Oppenheimer LifeSpan Growth Fund seeks long-term capital
appreciation. It invests in a strategically allocated portfolio
consisting primarily of stocks. Current income is not a primary
consideration.
Oppenheimer LifeSpan Balanced Fund seeks a blend of capital
appreciation and income. It invests in a strategically allocated
portfolio of stocks and bonds with a slightly stronger emphasis on
stocks.
Oppenheimer LifeSpan Income Fund seeks high current income, with
opportunities for capital appreciation. It invests in a
strategically allocated portfolio consisting primarily of bond
instruments.
Please refer to "Investment Policies and Strategies" for more
information about the types of securities each Fund invests in and
to "Investment Risks" for a discussion of the risks of investing in
the Funds.
This Prospectus explains concisely what you should know
before investing in the Funds. Please read this Prospectus
carefully and keep it for future reference. You can find more
detailed information about each Fund in the February 25, 1997
Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Funds' 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).
[logo] OppenheimerFunds
Shares of the Funds 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 FUNDS
Expenses
A Brief Overview of the Funds
Financial Highlights
Investment Objectives and Policies
Investment Risks
Investment Techniques and Strategies
How the Funds are Managed
Performance of the Funds
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
A-1 Appendix A: Description of Securities Ratings
B-1 Appendix B: Special Sales Charge Arrangements
<PAGE>
ABOUT THE FUNDS
Expenses
Each 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 a Fund and the share of a
Fund's business operating expenses that you will bear indirectly.
The numbers below are based on the Funds' expenses during the
fiscal period from January 1, 1996 to October 31, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of a 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
Shares Shares Shares
<S> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None
Maximum Deferred Sales Charge
(as a % of the lower of the original
offering price or redemption proceeds)
None(1) 5% in the 1% if shares are
first year, redeemed within
declining to 12 months of
1% in the purchase(2)
sixth year
and eliminated
thereafter(2)
Maximum Sales Charge on
Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee 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 a Fund's
assets and represent the Fund's expenses in operating its business.
For example, each 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 Funds are Managed," below. A 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 a Fund's Financial Statements in the Statement of
Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets):
Class A Class B Class C
Shares Shares Shares
Management Fees
Growth Fund 0.85% 0.85% 0.85%
Balanced Fund 0.85% 0.85% 0.85%
Income Fund 0.75% 0.75% 0.75%
12b-1 Plan Fees
Growth Fund 0.25% 1.00% 1.00%
Balanced Fund 0.25% 1.00% 1.00%
Income Fund 0.25% 1.00% 1.00%
Other Expenses
Growth Fund 0.51% 0.52% 0.59%
Balanced Fund 0.46% 0.47% 0.43%
Income Fund 0.56% 0.56% 0.50%
Total Fund Operating Expenses
Growth Fund 1.61% 2.37% 2.44%
Balanced Fund 1.56% 2.32% 2.28%
Income Fund 1.56% 2.31% 2.25%
The numbers for the Class A and Class B shares in the chart
above are based on the Fund's expenses for the fiscal period from
January 1, 1996 to October 31, 1996. These amounts are shown as a
percentage of the average net assets of each class of each Fund's
shares for that period. Class C shares were not publicly offered
prior to May 1, 1996. Accordingly, the "Other Expenses" for Class
C shares reflect the expenses of that class for that period. 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 a Fund's assets
represented by each class of shares.
"12b-1 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 charge 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 each Fund, and each 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
Growth Fund $73 $105 $140 $237
Balanced Fund $72 $104 $138 $232
Income Fund $72 $104 $138 $232
1 year 3 years 5 years
10 years
Class B Shares
Growth Fund $74 $104 $147 $234
Balanced Fund $74 $102 $144 $229
Income Fund $73 $102 $143 $229
1 year 3 years 5 years
10 years
Class C Shares
Growth Fund $35 $ 76 $129 $277
Balanced Fund $33 $ 71 $121 $260
Income Fund $33 $ 70 $120 $258
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years
10 years
Class A Shares
Growth Fund $73 $105 $140 $237
Balanced Fund $72 $104 $138 $232
Income Fund $72 $104 $138 $232
1 year 3 years 5 years
10 years
Class B Shares
Growth Fund $24 $74 $127 $234
Balanced Fund $24 $72 $124 $229
Income Fund $23 $72 $123 $229
Class C Shares
Growth Fund $25 $76 $129 $277
Balanced Fund $23 $71 $121 $260
Income Fund $23 $70 $120 $258
*In the example on the previous page, expenses include the
Class A initial sales charge and the applicable Class B or Class C
contingent deferred sales charge. In the example above, Class A
expenses include the initial sales charge, but Class B and Class C
expenses do not include contingent deferred sales charges. The
Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the
effect of the asset-based sales charge and the contingent deferred
sales charge imposed on Class B and Class C shares, long-term 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" 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 Funds, which may be more or less than the
amounts shown.
A Brief Overview of the Funds
Some of the important facts about each 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 a
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What are the Funds' Investment Objectives? Each LifeSpan
Fund has its own investment objective:
LifeSpan Growth Fund seeks long-term capital appreciation. Current
income is not a primary consideration.
LifeSpan Balanced Fund seeks a blend of capital appreciation and
income.
LifeSpan Income Fund seeks high current income, with opportunities
for capital appreciation.
What do the Funds Invest In? Each Fund is an asset
allocation fund and seeks to achieve its investment objective by
allocating its assets among two broad classes of investments stocks
and bonds. The stock class includes equity securities of all types.
The bond class includes all varieties of fixed-income instruments.
The Manager diversifies each Fund's stock class by allocating
the Fund's stock portfolio among four stock components:
international stocks, value/growth stocks, growth and income stocks
and small-capitalized growth stocks (small cap). Each stock
component may invest a portion of its assets in bonds to enhance
appreciation or income.
The Manager diversifies a Fund's bond class by allocating the
Fund's bond portfolio among three bond components: government and
corporate bonds, high yield/high risk bonds (also called "junk
bonds") and short-term bonds.
There is no requirement that the Manager allocate a Fund's
assets among all stock or bond components at all times. Each Fund's
normal allocation is shown in the chart on page ___ but the
allocation ranges are subject to change. The Funds' investments are
more fully explained in "Investment Objectives and Policies,"
starting on page ___.
Who Manages the Funds? The Funds' investment adviser is
OppenheimerFunds, Inc., which (including a subsidiary) advises
investment company portfolios having over $62 billion in assets at
December 31, 1996. The Funds' Board of Directors, elected by
shareholders, oversees the investment advisor and the portfolio
managers. The Manager is paid an advisory fee by each Fund, based
on its net assets. The Manager has engaged three Sub-advisers to
manage specific components of each Fund: Babson-Stewart Ivory
International manages the assets in the international components;
BEA Associates manages the high yield/high risk components; and
Pilgrim Baxter & Associates Ltd. manages the small cap stocks
components. The Manager manages the remaining components using its
own investment management personnel. Please refer to "How the Funds
are Managed," starting on page ___ for more information about the
Manager, the Sub-Advisers and their fees.
How Risky are the Funds? All investments carry risks to some
degree. Allocating assets among different types of investments
allows each Fund to take advantage of opportunities in different
types of investments, but also subjects the Fund to the risks of
those investment types. Stock values fluctuate in response to the
activities of individual companies and general market economic
conditions. The values of bonds fluctuate based on changes in
interest rates and in the credit quality of the issuer. A Fund's
investments in foreign securities are subject to additional risks
associated with investing abroad. Non-investment grade securities
may have speculative characteristics and be subject to a greater
credit risk than investment grade securities. These changes affect
the value of a Fund's investments and its share prices for each
class of its shares. The Growth Fund, a stock fund, is expected to
be more volatile than the Balanced Fund, an income and growth fund,
which in turn is generally expected to be more volatile than the
Income Fund.
While the Manager and Subadvisers try to reduce risks by
diversifying investments, by carefully researching securities
before they are purchased and in some cases the Manager may use
hedging techniques, there is no guarantee of success in achieving
a Fund's objective. Your shares may be worth more or less than
their original cost when you redeem them. Please refer to
"Investment Risks" starting on page ___ for a more complete
discussion of each 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? Each 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
____. Each Fund also offers exchange privileges to other
Oppenheimer funds, described in "How to Exchange Shares" on page
___.
How Have the Funds Performed? Each Fund measures its
performance by quoting its average annual total returns and
cumulative total returns, and in the case of LifeSpan Income Fund,
its yield which measure historical performance. Those yields and
returns can be compared to the yields and returns (over similar
periods) of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's performance
can also be compared to broad market indices, which we have done on
pages 36-41. Please remember that past performance does not
guarantee future results.
Financial Highlights
The tables on the following pages present selected audited
financial information about the Funds, including per share data and
expense ratios and other data based on each Fund's respective
average net assets. Class B shares have been offered since October
2, 1995. Class C shares have been offered since May 1, 1996. Each
of the Funds recently changed its fiscal year from December 31 to
October 31. The information for each of the Fund's last fiscal
period has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report for the fiscal period ended
October 31, 1996 is included in the Statement of Additional
Information. Additional information about the performance of each
Fund is contained in its 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. The information
in the tables for the fiscal periods prior to 1996 was audited by
the Fund's previous independent auditors.
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------- ----------------------------- -------------
TEN MONTHS EIGHT MONTHS TEN MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31,
1996(2) 1995(4) 1996(2) 1995(3) 1996(1)(2)
======================================================================================================================
==============
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.70 $10.00 $10.74 $10.45 $10.53
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .48 .37 .41 .12 .25
Net realized and unrealized gain (loss) (.02) .73 (.02) .32 .16
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations .46 1.10 .39 .44 .41
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.48) (.36) (.41) (.11) (.25)
Distributions from net realized gain (.03) (.04) (.03) (.04) (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.51) (.40) (.44) (.15) (.28)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.65 $10.70 $10.69 $10.74 $10.66
===============================================================================
======================================================================================================================
==============
TOTAL RETURN, AT NET ASSET VALUE(5) 4.45% 11.22% 3.69% 4.30% 3.96%
======================================================================================================================
==============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $26,328 $24,619 $456 $192 $1
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $25,463 $22,128 $350 $107 $1
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets (annualized):
Net investment income 5.43% 5.35% 4.93% 5.23% 4.68%
Expenses 1.56% 1.50% 2.31% 2.25% 2.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 75.3% 45.8% 75.3% 45.8% 75.3%
Average brokerage commission rate(7) $0.0694 -- $0.0694 -- $0.0694
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31,
1996.
2. The Fund changed its fiscal year end from December 31 to October 31. On
March 18, 1996, OppenheimerFunds, Inc. became the investment adviser to the
Fund.
3. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
4. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1996 were $19,773,295 and $17,995,443,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------- ----------------------------- -------------
TEN MONTHS EIGHT MONTHS TEN MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31,
1996(2) 1995(4) 1996(2) 1995(3) 1996(1)(2)
======================================================================================================================
==============
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.05 $10.00 $11.16 $10.95 $11.74
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .29 .24 .20 .05 .13
Net realized and unrealized gain .81 1.29 .82 .45 .24
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.10 1.53 1.02 .50 .37
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.25) (.17) (.06) (.20)
Distributions from net realized gain (.03) (.23) (.03) (.23) (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.25) (.48) (.20) (.29) (.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.90 $11.05 $11.98 $11.16 $11.88
===============================================================================
======================================================================================================================
==============
TOTAL RETURN, AT NET ASSET VALUE(5) 10.04% 15.33% 9.22% 4.49% 3.21%
======================================================================================================================
==============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $52,104 $41,861 $1,893 $441 $828
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $47,116 $37,417 $1,225 $247 $551
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets (annualized):
Net investment income 3.15% 3.47% 2.41% 3.01% 2.53%
Expenses 1.56% 1.55% 2.32% 2.30% 2.27%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 61.0% 76.3% 61.0% 76.3% 61.0%
Average brokerage commission rate(7) $0.0078 -- $0.0078 -- $0.0078
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31,
1996.
2. The Fund changed its fiscal year end from December 31 to October 31. On
March 18, 1996, OppenheimerFunds, Inc. became the investment adviser to the
Fund.
3. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
4. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1996 were $35,034,336 and $27,288,614,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
<PAGE>
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------- ----------------------------- -------------
TEN MONTHS EIGHT MONTHS TEN MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31,
1996(2) 1995(4) 1996(2) 1995(3) 1996(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.39 $10.00 $11.47 $11.14 $12.49
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .18 .16 .08 .03 .11
Net realized and unrealized gain 1.34 1.63 1.36 .56 .27
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.52 1.79 1.44 .59 .38
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.09) (.17) (.06) (.03) (.09)
Distributions from net realized gain (.04) (.23) (.04) (.23) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.13) (.40) (.10) (.26) (.13)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.78 $11.39 $12.81 $11.47 $12.74
===============================================================================
======================================================================================================================
==============
TOTAL RETURN, AT NET ASSET VALUE(5) 13.37% 18.02% 12.58% 5.34% 3.04%
======================================================================================================================
==============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $43,980 $34,368 $2,405 $561 $141
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $39,576 $29,046 $1,475 $230 $54
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets (annualized):
Net investment income 1.81% 2.32% 1.11% 1.70% 1.32%
Expenses 1.61% 1.55% 2.37% 2.30% 2.43%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 64.2% 71.8% 64.2% 71.8% 64.2%
Average brokerage commission rate(7) $0.0059 -- $0.0059 -- $0.0059
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31,
1996.
2. The Fund changed its fiscal year end from December 31 to October 31. On
March 18, 1996, OppenheimerFunds, Inc. became the investment adviser to the
Fund.
3. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
4. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1996 were $29,483,842 and $23,866,392,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.<PAGE>
Investment Objectives and Policies
Objectives. Each LifeSpan Fund has its own investment objective:
LifeSpan Growth Fund seeks long-term capital appreciation. Current
income is not a primary consideration.
LifeSpan Balanced Fund seeks a blend of capital appreciation and
income.
LifeSpan Income Fund seeks high current income, with opportunities
for capital appreciation.
Investment Policies and Strategies. Each Fund is an asset
allocation fund and seeks to achieve its investment objective by
allocating its assets among two broad classes of investments stocks
and bonds. The stock class includes equity securities of many
types. The bond class includes several varieties of fixed-income
instruments. Allocating assets among different types of investments
allows each Fund to take advantage of a greater variety of
investment opportunities than funds that invest in only one asset
class, but also subjects the Fund to the risks of those types of
investments. The general risks of stock and bond investments are
discussed in "Investment Risks," below.
The Manager has the ability to allocate a Fund's assets within
specified ranges. A Fund's normal allocation indicates the
benchmark for its combination of investments in each asset class
over time. As market and economic conditions change, however, the
Manager may adjust the asset mix between the stock and bond classes
within a normal asset allocation range as long as the relative risk
and return characteristics of the three Funds remain distinct and
each Fund's investment objective is preserved. The Manager will
review normal allocations between the stock and bond classes
quarterly and, if necessary, will rebalance the investment
allocation at that time. Additional adjustments may be made if an
asset allocation shift of 5% or more is warranted.
The Asset Class Components. The Manager will diversify each
Fund's investments among four stock components: international
stocks, value/growth stocks, growth and income stocks and
small-capitalized growth stocks ("small cap" stocks). Each stock
component is also permitted to invest a portion of its assets in
bonds when the Manager or relevant Subadviser determines that
increased flexibility in portfolio management is desirable to
enhance appreciation or income.
The Manager will diversify a Fund's bond investments among
three bond components: government and corporate bonds, high
yield/high risk bonds (also called "junk bonds") and short-term
bonds. Although the Balanced Fund will normally invest 25% of its
assets in fixed-income senior securities, there is no other
requirement that the Manager allocate a Fund's assets among all
stock or bond components at all times. These stock and bond
components have been selected because the Manager believes that
this additional level of asset diversification will provide each
Fund with the potential for higher returns with lower overall
volatility. Each Fund's normal allocation is shown in the chart
below.
<PAGE>
Asset Classes and Components
<TABLE>
<CAPTION>
Growth Fund Balanced Fund Income Fund
Normal Normal Normal
Allocation Range Allocation Range Allocation Range
<S> <C> <C> <C> <C> <C> <C>
Stocks 80% 70-90% 60% 50-70% 25% 15-35%
International 20% 15-25% 15% 5-20% 0% 0%
Value/Growth 20% 15-30% 15% 10-25% 0% 0%
Growth/Income 20% 15-30% 15% 10-25% 25% 15-35%
Small Cap 20% 15-25% 15% 5-20% 0% 0%
Bonds 20% 10-30% 40% 30-50% 75% 65-85%
Government/Corporate 10% 5-15% 15% 10-25% 35% 30-45%
High Yield/High Risk
Bonds 10% 5-15% 15% 5-20% 15% 5-20%
Short Term Bonds 0% 0% 10% 5-20% 25% 15-30%
</TABLE>
All percentage limitations apply at the time of purchase of a
security. The Manager may rebalance the asset allocations quarterly
to realign them in response to market conditions. Once the Manager
has determined the weightings of the stock and bond asset classes
and the components of each Fund, the Manager or the relevant
Subadviser will then select the individual securities to be
included in each component. It is important to note that the types
of securities normally held in each component are not exclusive to
that component; other components may hold foreign securities
besides the International component, for example. Therefore the
percentage allocation ranges do not limit a Fund's holdings of
particular types of securities to a particular component.
The Subadvisers. The Manager has engaged three subadvisers
(each is referred to as a "Subadviser") to manage certain
components of each Fund's investment portfolio. Each Subadviser
manages the portion of a Fund's assets in the particular component
assigned to it by the Manager. The Manager has assigned the
management of the components as follows:
Subadviser Component Managed by Subadviser
Babson-Stewart Ivory International International Stocks
Pilgrim Baxter & Associates, Ltd. Small Cap Stocks
BEA Associates High Yield/High Risk Bonds
The Manager manages the remaining components using its own
investment management personnel. See "How the Funds Are Managed"
for additional information.
Stock Investments. Each Fund will invest the portion of its assets
which are allocated to stock investments among four components,
each of which invests principally in equity securities. Each
differs with respect to investment criteria and characteristics as
described below:
International Component. This component seeks long-term
growth of capital primarily through a diversified portfolio of
marketable international equity securities. The investments in the
international component will be allocated among several countries.
In addition, up to 25% of the assets in this component may be
invested in stocks and bonds of companies based in emerging
countries. The component's assets generally will be invested in
equity securities of seasoned companies that are listed on foreign
stock exchanges and which the Subadviser considers to have
attractive characteristics as to profitability, growth and
financial resources. "Seasoned" companies are those known for the
quality and acceptance of their products or services and for their
ability to generate profits. There are no issuer capitalization
requirements for investments. Stocks are purchased on the basis of
fundamental and valuation analyses, but investments are not based
on the Subadviser's integration of any particular analytical
disciplines.
Consistent with the provisions of the Investment Company Act,
the component's assets may be invested in the securities of
closed-end investment companies that invest in foreign securities.
A portion of the international component's investments may be held
in corporate bonds and government securities of foreign issuers and
cash and short-term instruments. The special risks of investing in
foreign securities and emerging markets are described in
"Investment Risks," below.
Value/Growth Component. This component seeks to achieve
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 not a primary
consideration. Stocks with low price-earnings ratios and favorable
earnings surprises are identified by the Manager using fundamental
securities analysis to select individual stocks for purchase. When
the price/earnings ratio of a stock held by the value/growth
component moves significantly above the multiple of the overall
stock market, or the company reports a material earnings
disappointment, the Manager may consider selling the stock. Up to
15% of the component's assets may be invested in stocks of foreign
issuers that generally have a substantial portion of their business
in the United States, and in American Depository Receipts ("ADRs").
A portion of the component's assets may be held in cash and in
short-term investments.
Growth/Income Component. This component seeks to enhance
each Fund's total return through capital appreciation and dividend
income by investing primarily in common stocks with low
price-earnings ratios, better-than-anticipated earnings and better
than market average dividend yields. Stocks with low price-earnings
ratios (for example, below the price-earnings ratio of the S&P 500
Index), favorable earnings surprises and above-average yields are
identified by the Manager using fundamental securities analysis to
select individual stocks for this component. When the
price-earnings ratio of a stock held by the component moves
significantly above the multiple of the overall stock market, or
the company reports a material earnings disappointment, or when the
yield drops significantly below the market yield, normally that
stock will be sold.
Up to 15% of the component's assets may be invested in stocks
of foreign issuers that generally have a substantial portion of
their business in the United States, and in ADRs. A portion of the
component's investments may be held in investment grade or below
investment grade convertible securities, corporate bonds and U.S.
Government securities, cash and short-term instruments.
Small Cap Component. This component seeks long-term growth
of capital by investing primarily in stocks of companies with
relatively small market capitalization, typically between $250
million to $2 billion. Capitalization is the aggregate value of a
company's stock, or its price per share times the number of shares
outstanding. Current income is a secondary consideration. When
selecting individual securities for the component's portfolio, the
Subadviser seeks companies that have an outlook for strong growth
in earnings and the potential for significant capital appreciation,
particularly in industry segments that are experiencing rapid
growth. Securities will be sold when the Subadviser believes that
anticipated appreciation is no longer probable and that alternative
investments offer superior appreciation prospects, or the risk of
a decline in market price is too great. Historical results tend to
confirm the benefits of investing in companies with small
capitalizations. A portion of the component's investments may also
be held in cash and short-term instruments.
Bond Investments. Each Fund will invest those assets which are
allocated to the bond class among three components. Each component
invests in an array of fixed-income securities as described below.
The LifeSpan Balanced Fund will invest at least 25% of its assets
in fixed-income senior securities.
Government/Corporate Component. This component seeks current
income and the potential for capital appreciation by investment
primarily in fixed-income debt securities, including investment
grade corporate debt obligations of foreign and U.S. issuers and
securities issued by the U.S. Government and its agencies and
instrumentalities and by foreign governments. Although the
component may invest in securities with maturities across the
entire slope of the yield curve, including long bonds (having
maturities of 10 or more years), intermediate notes (with
maturities of 3 to 10 years) and short term notes (with maturities
of 1 to 3 years), the Manager expects that normally the component
will have an intermediate average maturity and duration.
The Manager may take into account prepayment features when
determining the maturity of an investment. The Manager's investment
strategy includes the purchase of bonds that are underpriced
relative to other debt securities having similar risk profiles. The
Manager evaluates a broad array of factors, including maturity,
creditworthiness, cash flow certainty and interest rate volatility,
and compares yields in relation to trends in the economy, the
financial and commodity markets and prevailing interest rates. The
component may also invest a portion of its assets in cash and
short-term instruments.
High Yield/High Risk Bond Component. This component seeks to
earn as high a level of current income as is consistent with the
risks associated with high yield investments. The component's
assets are invested primarily in bonds that are rated BB or lower
by Standard & Poor's or Ba or lower by Moody's Investor Service,
Inc. or, if not rated, that are deemed by the Subadviser to be of
comparable quality to rated securities in those categories. These
are commonly referred to as "junk bonds." This component may invest
in bonds that are in default. Bonds in default are not making
interest or principal payments on the date due.
The Subadviser employs an active sector rotational style
utilizing all sectors of the high yield market, with an emphasis on
diversification to control risk. The Subadviser typically favors
higher quality companies in the non-investment grade market, senior
debt over junior debt, and secured over unsecured investments. The
Subadviser screens individual securities for such characteristics
as minimum yield and issue size, issue liquidity and financial and
operational strength. In-depth credit research will then be
conducted to arrive at a core group of securities within the high
yield universe for the component. Continuous credit monitoring and
adherence to sell disciplines associated with both price
appreciation and depreciation are utilized to seek the overall
yield and price objectives of the component. The component may also
invest a portion of its assets in cash and short-term instruments.
The special risks of investing in below-investment grade securities
are described in "Investment Risks," below.
Short-Term Bond Component. This component seeks a high level
of current income consistent with prudent investment risk and
preservation of capital by investing primarily in debt obligations
of foreign and U.S. issuers and securities issued by the U.S.
Government and its agencies and instrumentalities and by foreign
governments. This component invests primarily in fixed-income
securities generally maturing within five years of date of
purchase, or in securities having prepayment or similar features
which, in the view of the Manager, give the instrument a remaining
effective maturity of up to five years. It is anticipated that the
average dollar weighted maturity of the component will generally
range between two and three years.
The Manager's investment management process incorporates
analysis of an issuer's debt service capability, financial
flexibility and liquidity, as well as the fundamental trends and
the outlook for an issuer and its industry. Credit risk management
is also an important factor. The Manager conducts credit research,
and carefully selects individual issues and attempts to broadly
diversify portfolio holdings by industry sector and issuer. The
Manager believes that determination of an issuer's attractiveness
relative to alternative issues and/or valuations within the
marketplace are important considerations in its investment
decision-making. The component may also invest a portion of its
assets in cash and money market securities.
Can a Fund's Investment Objective and Policies Change? Each Fund
has an investment objective, described above, as well as investment
policies it follows to try to achieve its objective. Additionally,
each Fund uses certain investment techniques and strategies in
carrying out those investment policies. A 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." Each Fund's investment objective is not a
fundamental policy. Fund shareholders will be given 30 days'
advance written notice of a change to a Fund's investment
objective.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of a 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). A Fund's
Board of Directors may change non-fundamental policies without
shareholder approval, although significant changes will be
described in amendments to this Prospectus.
Portfolio Turnover. A change in the securities held by a
Fund is known as "portfolio turnover." The Funds ordinarily do not
engage in short-term trading to try to achieve their objectives.
Growth Fund's and Income Fund's portfolio turnover rate is not
expected to exceed 80%. The portfolio turnover rates of the fixed
income portion and the equity portion of the Balanced Fund are not
expected to exceed 70% and 85%, respectively. The "Financial
Highlights," above, show the Funds' portfolio turnover rates during
past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and
other transaction costs, and results in a Fund's realization of
capital gains or losses for tax purposes. It may also affect the
ability of a 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. Each
Fund qualified as such in the fiscal period from January 1, 1996 to
October 31, 1996 and intends to do so in the future, 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 a Fund
may hold are described below. They affect the value of a Fund's
investments, its investment performance, and the prices of its
shares. These risks collectively form the risk profile of a Fund.
Because of the types of securities each Fund invests in and
the investment techniques each Fund uses differ, each Fund has a
different risk profile. The LifeSpan Growth Fund and Balanced Fund
are designed for investors who are investing for the long term but
not seeking assured income. The LifeSpan Income Fund is designed
for investors having a greater emphasis on income rather than
growth. While the Manager and Subadvisers try to reduce risks by
diversifying investments, by carefully researching securities
before they are purchased, and in some cases by using hedging
strategies, changes in securities market prices can occur at any
time, and there is no assurance that the Funds will achieve their
investment objectives. When you redeem your shares, they may be
worth more or less than what you paid for them.
Stock Investment Risks. Each Fund may invest in common
stocks, preferred stocks, convertible securities, warrants and
other equity securities of domestic or foreign companies of any
size. At times, the stock markets can be volatile, and stock prices
can change substantially. This market risk will affect a 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, or changes in government regulations affecting an
industry). Not all of these factors can be predicted.
Each Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of stock
of any one company and by not investing too great a percentage of
a Fund's assets in any one company. Also the Funds do not
concentrate their investments in any one industry or group of
industries.
Interest Rate Risks. In addition to credit risks, described
below, debt securities are subject to changes in their value 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 a 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.
Special Risks of Lower-Grade Securities. Each Fund can
invest in 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 below.
These risks mean that a Fund may not achieve the expected income
from lower-grade securities, and that a Fund's net asset value per
share may be affected by declines in value of these securities.
Hedging Instruments Can Be Volatile Investments and May
Involve Special Risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different from what is required for normal portfolio management. If
the Manager or a Subadviser uses a hedging instrument at the wrong
time or judges market conditions incorrectly, hedging strategies
may reduce a Fund's return. A 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 a Fund's income and
distributions. There are also special risks in particular hedging
strategies. For example, if a covered call written by a 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. In writing puts, there is a risk
that a Fund may be required to buy the underlying security at a
disadvantageous price. The use of Forward Contracts may reduce the
gain that would otherwise result from a change in the relationship
between the U.S. dollar and a foreign currency. Interest rate swaps
are subject to the risk that the other party will fail to meet its
obligations (or that the underlying issuer will fail to pay on
time), as well as interest rate risks. A Fund could be obligated to
pay more under its swap agreements than it receives under them, as
a result of interest rate changes. These risks are described in
greater detail in the Statement of Additional Information.
There Are Special Risks in Investing in Derivative
Investments. The company issuing the instrument may fail to pay the
amount due on the maturity of the instrument. Also, the underlying
investment or security might not perform the way the Manager or
relevant Subadviser expected it to perform. Markets, underlying
securities and indices may move in a direction not anticipated by
the Manager or relevant Subadviser. 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 a
Fund will realize less principal or income from the investment than
expected. Certain derivative investments held by a Fund may be
illiquid. Please refer to "Illiquid and Restricted Securities."
Foreign Securities Have Special Risks. While foreign
securities offer special investment opportunities, there are
special risks. Because each Fund may purchase securities
denominated in foreign currencies or traded primarily in foreign
markets, a change in the value of a foreign currency against the
U.S. dollar will result in a change in the U.S. dollar value of
those foreign securities. Foreign issuers are not required to use
generally-accepted accounting principles that apply to U.S.
issuers. If foreign securities are not registered for sale in the
U.S. under U.S. securities laws, the issuer does not have to comply
with the disclosure requirements that U.S. companies are subject
to. The value of foreign investments may be affected by other
factors, including 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.
In addition, it is generally more difficult to obtain court
judgements outside the U.S. if a Fund were to sue a foreign issuer
or broker. Additional costs may be incurred because foreign
brokerage commissions are generally higher than U.S. rates, and
there are additional custodial costs associated with holding
securities abroad. More information about the risks and potential
rewards of investing in foreign securities is contained in the
Statement of Additional Information.
Emerging Market Investments are Volatile. Investments in
emerging market countries may involve risks in addition to those
identified above for investments in foreign securities. Securities
issued by emerging market countries and by companies located in
those countries may be subject to extended settlement periods, and
a Fund might not receive principal and/or income on a timely basis.
Its net asset values could be affected. Emerging market countries
may have smaller, less well-developed markets and exchanges; there
may be a lack of liquidity for emerging market securities; interest
rates and foreign currency exchange rates may be more volatile;
sovereign limitations on foreign investments may be more likely to
be imposed; there may be significant balance of payment deficits;
and their economies and markets may respond in a more volatile
manner to economic changes than those of developed countries.
Investment Techniques and Strategies
The Funds may also use the investment techniques and strategies
described below, which involve certain risks. The Statement of
Additional Information contains more detailed information about
these practices, including limitations on their use that may help
to reduce some of the risks.
Investing in Lower-Grade 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 domestic or foreign rating organizations, or they are not
rated by a nationally-recognized rating organization but the
Manager or Sub-Adviser judges them to be comparable to lower-rated
securities. A Fund may invest in securities rated as low as "D" by
Standard & Poor's or "C" by Moody's. Appendix A to this Prospectus
describes the rating categories of Moody's and Standard & Poor's.
There are special risks investing in lower-grade securities,
discussed in "Investment Risks," above.
As of October 31, 1996, the Funds portfolio included fixed
income securities in the following rating categories of Standard &
Poor's Corporation (S&P) or if unrated, determined by the Manager
to be comparable to the category indicated (the amounts shown are
the dollar-weighted average values of the bonds in each category
measured as a percentage of the Fund s total assets): LifeSpan
Growth Fund: AAA, .14%; AA, .43%; A, 1.08%; BBB, 1.36%; BB, 1.73%;
B, 6.83%; CCC, 1.05% and CC .08%; LifeSpan Balanced Fund : AAA,
.49%; AA, 1.42%; A, 5.63%; BBB, 4.63%; BB, 3.14%; B, 10.92%; CCC,
1.76% and CC .14%; LifeSpan Income Fund: AAA, 1.35%; AA, 3.74%; A,
15.70%; BBB, 12.70%; BB, 6.37%; B, 11.41%; CCC, 1.60% and CC .15%;
The allocation of the Funds' assets in securities in the different
rating categories will vary over time, and the proportion listed
above should not be viewed as representing the Fund s current or
future proportionate ownership of securities in particular rating
categories. Appendix A to this Prospectus describes the rating
categories.
Investing in Emerging Market Countries. Babson-Stewart Ivory
International ("Babson-Stewart"), as the Subadviser to the
international component, may invest a portion of a Fund's assets in
companies located in emerging countries. The Subadviser considers
emerging countries to include any country that is defined as an
emerging or developing economy by the International Bank for
Reconstruction and Development, the International Finance
Committee, The United Nations or its authorities, or the MSCI
Emerging Markets Index. There are special risks investing in
emerging markets, discussed in "Investment Risks," above.
ADRs, EDRs and GDRs. Each Fund may invest in ADRs, EDRs and
GDRs. ADRs are receipts issued by a U.S. bank or trust company
which evidence ownership of underlying securities of foreign
corporations. ADRs are traded on domestic exchanges or in the U.S.
over-the-counter market and, generally, are in registered form. To
the extent a Fund acquires ADRs through banks which do not have a
contractual relationship with the foreign issuer of the security
underlying the ADR to issue and service that ADR, there may be an
increased possibility that the Fund would not become aware of and
be able to respond in a timely manner to corporate actions such as
stock splits or rights offerings involving the foreign issuer. A
Fund may also invest in EDRs and GDRs, which 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.
Eurodollars and Yankee Dollars. The Funds may also invest in
obligations of foreign branches of U.S. banks (denominated in
Eurodollars) 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, including potential unfavorable political and economic
developments, different tax provisions, seizure of foreign
deposits, currency controls, interest limitations or other
governmental restrictions which might affect payment of principal
or interest.
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 a Fund may invest in. Other mortgage-related
U.S. Government Securities the Funds invest in that are issued or
guaranteed by federal agencies or government-sponsored entities are
not supported by the full faith and credit of the U.S. Government.
Those securities include obligations supported by the right of the
issuer to borrow from the U.S. Treasury, such as obligations of
Federal Home Loan Mortgage Corporation ("Freddie Mac"), obligations
supported only by the credit of the instrumentality, such as
Federal National Mortgage Association ("Fannie Mae") 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. Other U.S. Government Securities a Fund may invest
in are collateralized mortgage obligations ("CMOs").
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 a 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."
Short-Term Debt Securities. Each Fund may 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 banks and savings loan associations. While the
LifeSpan Income Fund may use these investments primarily for income
purposes, each Fund may invest in these securities in greater
amounts for temporary defensive purposes when market conditions are
unstable, or for liquidity purposes.
Mortgage-Backed Securities, CMOs and REMICs. Certain
mortgage-backed securities, whether issued by the U.S. Government
or by private issuers, "pass-through" to investors the interest and
principal payments generated by a pool of mortgages assembled for
sale by government agencies. Pass-through mortgage-backed
securities entail the risk that principal may be repaid at any time
because of prepayments on the underlying mortgages. That may result
in greater price and yield volatility than traditional fixed-income
securities that have a fixed maturity and interest rate.
Each Fund may also invest in CMOs, which generally are
obligations fully collateralized by a portfolio of mortgages or
mortgage-related securities, and in real estate mortgage investment
conduits ("REMICs"). Payment of the interest and principal
generated by the pool of mortgages on CMOs and REMICs are passed
through to the holders as the payments are received. CMOs and
REMICs are issued with a variety of classes or series which have
different maturities. Certain CMOs and REMICs may be more volatile
and less liquid than other types of mortgage-related securities,
because of the possibility of the prepayment of principal due to
prepayments on the underlying mortgage loans. The Funds do not
intend to acquire "residual" interests in REMICs.
"Stripped" Securities. Each Fund may also invest in CMOs and
REMICs that are "stripped." That means that the security is divided
into two parts, one of which receives some or all of the principal
payments (and is known as a "principal-only" security or "P/O") and
the other which receives some or all of the interest (and is known
as an "interest-only" security, or "I/O"). P/Os and I/Os are
generally referred to as "derivative investments," discussed
further below.
The yield to maturity on the class that receives only interest
is extremely sensitive to the rate of payment of the principal on
the underlying mortgages. Principal prepayments increase that
sensitivity. Stripped securities that pay "interest only" are
therefore subject to greater price volatility when interest rates
change, and they have the additional risk that if the underlying
mortgages are prepaid, a Fund will lose the anticipated cash flow
from the interest on the prepaid mortgages. That risk is increased
when general interest rates fall, and in times of rapidly falling
interest rates, a Fund might receive back less than its investment.
The value of "principal only" securities generally increases
as interest rates decline and prepayment rates rise. The price of
these securities is typically more volatile than that of
coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and
sold by institutional investors through investment banking firms.
At present, established trading markets have not yet developed for
these securities. Therefore, most private-issuer stripped
securities may be deemed "illiquid." If a Fund holds illiquid
stripped securities, the amount it can hold will be subject to the
Fund's investment policy limiting investments in illiquid
securities to 15% of the Fund's net assets, discussed below.
Asset-Backed Securities. A Fund may invest in "asset-backed"
securities. These represent interests in pools of consumer loans
and other trade receivables, similar to mortgage-backed securities.
They are issued by trusts and "special purpose corporations." They
are backed by a pool of assets, such as credit card or auto loan
receivables, which are the obligations of a number of different
parties. The income from the underlying pool is passed through to
holders, such as one of the Funds. These securities may be
supported by a credit enhancement, such as a letter of credit, a
guarantee or a preference right. However, the extent of the credit
enhancement may be different for different securities and generally
applies to only a fraction of the security's value. These
securities present special risks. For example, in the case of
credit card receivables, the issuer of the security may have no
security interest in the related collateral.
Structured Notes. A structured note is a debt security
having an interest rate or principal repayment requirement based on
the performance of a benchmark asset or market, such as stock
prices, currency exchange rates or commodity prices. They provide
exposure to the benchmark market while fixing the maximum loss if
that market does not perform as expected. Depending on the terms of
the note, the Fund could forego all or part of the interest and
principal that would be payable on a comparable conventional note,
and the Fund's loss could not exceed that amount.
Inverse Floating Rate Instruments. The Funds may invest in
inverse floating rate debt instruments ("inverse floaters"),
including leveraged inverse floaters and inverse floating rate
mortgage-backed securities, such as inverse floating rate "interest
only" stripped mortgage-backed securities. The interest rate on
inverse floaters resets in the opposite direction from the market
rate of interest to which the inverse floater is indexed. An
inverse floater may be considered to be leveraged to the extent
that its interest rate varies by a magnitude that exceeds the
magnitude of the change in the index rate of interest. The higher
degree of leverage inherent in inverse floaters is associated with
greater volatility in their market values.
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. A Fund may invest up to 5% of its total assets in
warrants or rights. That 5% limitation does not apply to warrants
a Fund has acquired as part of units with other securities or that
are attached to other securities. No more than 2% of a 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. For
further details, see "Warrants and Rights" in the Statement of
Additional Information.
Small, Unseasoned Companies. Each Fund may invest in
securities of small, unseasoned companies. These are companies that
have been in operation less than three years, including the
operations of any predecessors. Securities of these companies may
have limited liquidity (which means that a Fund may have difficulty
selling them at an acceptable price when it wants to) and the price
of these securities may be volatile. See "Investing in Small,
Unseasoned Companies" in the Statement of Additional Information
for a further discussion of the risks involved in such investments.
Loans of Portfolio Securities. To attempt to increase its
income or raise cash for liquidity purposes, each Fund may lend its
portfolio securities, other than in repurchase transactions, to
brokers, dealers and other financial institutions. A 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 Funds presently do not intend to engage in loans of securities,
but if a Fund does so it does not intend to lend securities in
amounts that will exceed 5% of the Fund's total assets in the
coming year.
"When-Issued" and Delayed Delivery Transactions. Each 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 a Fund if the value of the security declines prior
to the settlement date.
Repurchase Agreements. Each Fund may enter into repurchase
agreements. In a repurchase transaction, a 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,
a Fund may experience costs in disposing of the collateral and may
experience losses if there is any delay in doing so.
Illiquid and Restricted Securities. Under the policies
established by the Funds' Board of Directors, the Manager
determines the liquidity of certain of the Funds' 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. Each Fund cannot invest more than 15% of its net assets in
illiquid securities (including repurchase agreements having a
maturity beyond 7 days, securities that are not readily marketable,
certain restricted securities, over-the-counter options and
privately-issued stripped mortgage-backed securities. Each Fund
cannot invest more than 15% of its total assets in restricted
securities. The Manager monitors holdings of illiquid securities on
an ongoing basis and at times the Fund may be required to sell some
holdings to maintain adequate liquidity.
Hedging. Each Fund may write covered call options on
securities, stock or bond indices and foreign currency. Each may
purchase and sell certain kinds of futures contracts, forward
contracts, and options on futures, broadly-based stock or bond
indices and foreign currency, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments."
While the Funds currently do not engage extensively in hedging, a
Fund may use these instruments for hedging and non-hedging purposes
as described below.
A 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. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as
selling futures and writing covered calls, hedge a Fund's portfolio
against price fluctuations.
Other hedging strategies, such as buying futures, tend to
increase a Fund's exposure to the securities market. Forward
contracts may be used to try to manage foreign currency risks on a
Fund's foreign investments. Foreign currency options may be used to
try to protect against declines in the dollar value of foreign
securities a 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 a Fund for liquidity purposes,
defensive reasons, or to raise cash to distribute to shareholders.
Hedging strategies entail special risks, described in "Investment
Risks," above.
Futures. A Fund may buy and sell futures contracts for
hedging and non-hedging purposes that relate to (1) foreign
currencies (these are referred to as "Forward Contracts" and are
discussed below), (2) financial indices, such as U.S. or foreign
government securities indices, corporate debt securities indices or
equity securities indices (these are referred to as Financial
Futures), and (3) interest rates (these are referred to as Interest
Rate Futures). These types of Futures are described in "Hedging" in
the Statement of Additional Information.
Covered Call Options and Options on Futures. A Fund may
write (that is, sell) call options on securities, indices and
foreign currencies for hedging purposes and write call options on
Futures for hedging and non-hedging purposes, but only if all such
calls are "covered." This means a Fund must own the security
subject to the call while the call is outstanding or, in the case
of calls on futures or indices, segregate appropriate liquid
assets. When a 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 a 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).
A Fund may purchase put options on Futures. Buying a put on an
investment gives a Fund the right to sell the investment at a set
price to a seller of a put on that investment. A Fund may sell a
put on Futures, but only if the puts are covered by segregated
liquid assets.
A Fund may sell covered call options that are traded on U.S.
or foreign securities or commodity exchanges or are traded in the
over-the-counter markets. In the case of foreign currency options,
they may be quoted by major recognized dealers in those options.
Options traded in the over-the-counter market may be "illiquid,"
and therefore may be subject to a Fund's restrictions on illiquid
investments.
Forward Contracts. Forward Contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. A Fund may use them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has purchased or sold, or to protect
against possible losses from changes in the relative value of the
U.S. dollar and a foreign currency. A Fund may also use "cross
hedging," where the Fund hedges against changes in currencies other
than the currency in which a security it holds is denominated. No
Fund will speculate in foreign exchange.
Interest Rate Swaps. A Fund may enter into interest rate
swaps both for hedging and to seek to increase total return. In an
interest rate swap, a Fund and another party exchange their right
to receive, or their obligation to pay, interest on a security. For
example, they may swap a right to receive floating rate interest
payments for fixed rate payments. A Fund enters into swaps only on
a net basis, which means the two payment streams are netted out,
with the Fund receiving or paying, as the case may be, only the net
amount of the two payments. A Fund will segregate liquid assets of
any type (such as cash, U.S. Government, equity or debt
securities) to cover any amounts it could owe under swaps that
exceed the amounts it is entitled to receive, and it will adjust
that amount daily, as needed.
Derivative Investments. Each 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.
A Fund may not purchase or sell physical commodities; however, a
Fund may purchase and sell foreign currency in hedging
transactions. This shall not prevent a Fund from buying or selling
options and futures contracts or from investing in securities or
other instruments backed by physical commodities. There are special
risks of investing in derivatives, described in "Investment Risks,"
above.
Derivative investments used by a Fund are used 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."
"Index-linked" or "commodity-linked" notes are debt securities
that call for interest payments or repayment of principal in
different terms than a typical note where the borrower agrees to
pay a fixed sum on the maturity of the note. Principal or interest
payments on an index-linked note depend on the performance of one
or more market indices, such as the S&P 500 Index or a weighted
index of commodity futures, such as crude oil, gasoline and natural
gas. A Fund may invest in "debt exchangeable for common stock" of
an issuer or "equity-linked" debt securities of an issuer. At
maturity, the principal amount of the debt security is exchanged
for common stock of the issuer or is payable in an amount based on
the issuer's common stock price at the time of maturity. In either
case there is a risk that the amount payable at maturity will be
less than the expected principal amount of the debt.
Other Investment Restrictions. The Funds have other investment
restrictions which are "fundamental" policies. Among these
fundamental policies, each Fund cannot do any of the following:
A Fund cannot 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, mortgage
dollar rolls, futures contracts, options on futures contracts,
securities or indices and forward commitment transactions shall not
constitute borrowing.
A Fund cannot 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.
A Fund cannot 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. The Funds have undertaken, as a
matter of non-fundamental policy, to apply this restriction to 25%
or more of their assets.
With respect to 75% of its total assets, a Fund cannot
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.
Unless the prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment, and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Funds are Managed
Organization and History. The Funds are series of Oppenheimer
Series Fund, Inc. (the "Company"), which was organized in 1981 as
a Maryland corporation. It is an open-end management investment
company. Organized as a series fund, the Company presently has five
series, each of which is diversified, including the three LifeSpan
Funds. Prior to March 18, 1996, the LifeSpan Funds were called CMIA
LifeSpan Capital Appreciation Fund, CMIA LifeSpan Balanced Fund and
CMIA LifeSpan Diversified Income Fund.
The Company (including the Funds) 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 each Fund's activities, review its
performance, and review the actions of the Manager and the
Subadvisers. "Directors and Officers of the Fund" in the Statement
of Additional Information names the Directors and officers of the
Funds and provides more information about them. Although the Funds
will not normally hold annual meetings of shareholders, they 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 Company's
Articles of Incorporation.
The Board of Directors has the power, without shareholder
approval, to divide unissued shares of the Company into two or more
classes. The Board has done so, and each Fund currently has three
classes of shares, Class A, Class B and Class C. All classes invest
in the same investment portfolio. Each class has its own dividends
and distributions, and pays certain expenses which may be different
for the different classes. Each class may have a different net
asset value. Each share has one vote at shareholder meetings, with
fractional shares voting proportionally 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, the Sub-Advisers and their Affiliates. The Funds
are managed by the Manager, OppenheimerFunds, Inc., which
supervises each Fund's investment program and handles its
day-to-day business. The Manager carries out its duties, subject to
the policies established by the Board of Directors, under separate
Investment Advisory Agreements for each Fund which state the
Manager's responsibilities. The Agreements set forth the rates of
the management fees paid by a Fund to the Manager, and describes
the expenses that a Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
The Subadvisers. The Manager has engaged three Subadvisers
to provide day-to-day portfolio management for certain components
of the Funds. Babson-Stewart, One Memorial Drive, Cambridge, MA
02142, the Subadviser to the international component, was
established in 1987. The general partners of Babson-Stewart are
David L. Babson & Co., which is an indirect subsidiary of
Massachusetts Mutual Life Insurance Company, and Stewart Ivory &
Co., Ltd. As of December 31, 1996, Babson-Stewart had approximately
$3.3 billion in assets under management.
BEA Associates, One Citicorp Center, 153 East 53rd Street,
57th Floor, New York, NY 10022, the Subadviser to the high
yield/high risk bond component, has been providing fixed-income and
equity management services to institutional clients since 1984. BEA
is a partnership between Credit Suisse Capital Corporation and CS
Advisors Corp. As of December 31, 1995, BEA Associates, together
with its global affiliate, had $27.4 billion in assets under
management.
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), 1255 Drummers
Lane, Wayne, PA 19087, the Subadviser to the small cap component,
was established in 1982 to provide specialized equity management
for institutional investors including other investment companies.
Pilgrim Baxter is a wholly-owned subsidiary of United Asset
Management Corporation. As of December 31, 1996, Pilgrim Baxter
had over $14 billion in assets under management. Each Subadviser is
responsible for choosing the investments of its respective
component for each Fund and its duties and responsibilities are set
forth in its respective contract with the Manager. The Manager, not
the Funds, pay the Subadvisers.
Portfolio Managers. The Manager supervises each Fund's
investment program and regularly reviews the asset allocation among
each Fund's classes and components. The Manager's personnel manage
certain of the components. The Portfolio Managers of each component
are listed below.
<TABLE>
<CAPTION>
Component Portfolio Manager/Business Experience (Last 5 Years)
<S> <C>
International
(Babson-Stewart) James W. Burns: Managing Director, Babson-Stewart
(1993-present) and Director, Stewart-Ivory & Co. Ltd.
(since 1990) John G.L. Wright: Managing Director,
Babson-Stewart (1987-present); Director, Stewart Ivory & Co.
Ltd. (since 1971)
Value/Growth
(the Manager) Peter M. Antos, C.F.A.: Principal Portfolio Manager, Vice
President of the Fund and Senior Vice President of the Manager;
portfolio manager of other Oppenheimer funds; previously
Vice President and Senior Portfolio Manager,
Equities G.R. Phelps & Co. ("G.R. Phelps"), a
subsidiary of Connecticut Mutual Life Insurance Company
("CML") (1989-1996)
Michael C. Strathearn, C.F.A.: Vice President of the Funds and
the Manager since March, 1996; portfolio manager of other
Oppenheimer funds; previously a Portfolio Manager, Equities,
CML (1988-1996)
Kenneth B. White, C.F.A.: Vice President of the Funds and the
Manager since March, 1996; portfolio manager of other
Oppenheimer funds; previously a Portfolio Manager, Equities
CML (1987-1992)
Growth/Income
(the Manager) Michael C. Strathearn, C.F.A.: (see biographical data above)
Peter M. Antos, C.F.A.: (see biographical data above)
Stephen F. Libera, C.F.A.: Vice President of the Funds and the
Manager since March, 1996; portfolio manager of other
Oppenheimer funds; previously a Vice President and Senior
Portfolio Manager, Fixed Income--G.R. Phelps (1985-1996)
Kenneth B. White, C.F.A.: (see biographical data above)
Small Cap Stocks
(Pilgrim Baxter) Gary L. Pilgrim: Director, Member of Executive Committee,
President and Chief Investment Officer, Pilgrim Baxter (1985-Present)
Michael D. Jones: Portfolio Manager/Analyst, Pilgrim Baxter
(since 1995); Vice President/Portfolio Manager, Bank of New
York (1990-1995)
Government Securities/Corporate Bonds
(the Manager) Stephen F. Libera, C.F.A.: (see biographical data above)
High Yield Bonds
(BEA Associates) Richard J. Lindquist: Managing Director and High Yield
Portfolio Manager,BEA Associates (since 1995); CS First Boston (1989-1995)
Short-Term Bonds
(the Manager) Stephen F. Libera, C.F.A.: (see biographical data above)
</TABLE>
Fees and Expenses. Under separate Investment Advisory
Agreements, each Fund pays the Manager a monthly fee. For the
LifeSpan Growth and Balanced Funds, the fee is at the following
annual rates: 0.85% of the average daily net assets up to $250
million and 0.75% of average daily net assets over $250 million.
For the LifeSpan Income Fund, the annual rates are: 0.75% of
average daily net assets up to $250 million and 0.65% of average
daily net assets over $250 million.
Under its Investment Subadvisory Agreements with
Babson-Stewart for the LifeSpan Growth and LifeSpan Balanced Funds,
the Manager pays Babson-Stewart a monthly fee, at the following
annual rates, which decline as the average daily net assets of that
portion of the respective Fund's component allocated to
Babson-Stewart grow: 0.75% of the first $10 million of average
daily net assets allocated to Babson-Stewart, 0.625% of the next
$15 million, 0.50% of the next $25 million and 0.375% of such
assets in excess of $50 million. The net assets of all Funds
allocated to Babson-Stewart are not aggregated in applying these
breakpoints.
Under its Investment Subadvisory Agreements with BEA for each
LifeSpan Fund, the Manager pays BEA a quarterly fee at the
following annual rates, which decline as the combined average daily
net assets of each Fund allocated to BEA grow: 0.45% of the first
$25 million of combined average daily net assets allocated to BEA,
0.40% of the next $25 million, 0.35% of the next $50 million and
0.25% of the assets in excess of $100 million.
Under its Investment Subadvisory Agreements with Pilgrim
Baxter, the Manager pays Pilgrim Baxter a monthly fee equal to
0.60% of the combined average daily net assets of the Funds
allocated to Pilgrim Baxter. For purposes of calculating the fees
payable to BEA and Pilgrim Baxter, the net asset values of those
portions of the assets of each Fund subadvised by BEA and Pilgrim
Baxter are aggregated with those portions of the net assets of
Panorama Series Fund, Inc. managed by BEA and Pilgrim Baxter,
respectively.
Each 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 a 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 Agreements and the other expenses
paid by the Funds is contained in the Statement of Additional
Information.
There is also information about the Funds' 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 Funds' portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreements to consider whether brokers have
sold shares of the Funds or any other funds for which the Manager
serves as investment adviser.
The Distributor. Each 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 each 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. Each Fund's transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for each 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 Funds
Explanation of Performance Terminology. Each 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 a 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). A 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 a 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 a Fund's
performance. A 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 a Fund's performance. Total return is the change in
value of a hypothetical investment in a 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 a 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
considering the effect of the sales charge, and those returns would
be less if sales charges were deducted.
How has the Fund Performed? Below is a discussion by the Manager
of the performance of each Fund during its fiscal period of January
1, 1996 to October 31, 1996, followed by a graphical comparison of
the Fund's performance to an appropriate broad-based market index.
Management's Discussion of Performance.
Oppenheimer LifeSpan Growth Fund - During the fiscal
period from January 1, 1996 to October 31, 1996, the domestic stock
market performed strongly, reaching record highs. The Fund
outperformed the S&P 500, due primarily to the Manager's allocation
of Fund assets primarily in equity securities. The Fund's small
cap equity component was the strongest performing equity component
of the Fund, whose returns were fueled by a relatively large
weighing in technology stocks. The High Yield and International
components followed with above-average returns. The Value/Growth
component of the portfolio provided a moderate increase, primarily
from the Fund's investments in U.S. companies undergoing corporate
restructuring. The Corporate/Government component returns were
down, mainly the result of rising interest rates.
Oppenheimer LifeSpan Balanced Fund - During the fiscal
period from January 1, 1996 to October 31, 1996, the domestic stock
market performed strongly, reaching record highs, while segments of
the bond market declined. The Fund's performance was positively
affected by the larger allocation of Fund assets in equities. The
majority of the Fund's return during the period came from the Small
Cap and International components, with the Value/Growth and
Growth/Income components reporting more modest contributions to the
Fund's performance. Of the fixed income portion of the portfolio,
the High Yield component was the strongest performer while the
Short-Term Bond and Government/Corporate Bond components
underperformed.
Oppenheimer LifeSpan Income Fund. - During the fiscal
period from January 1, 1996 to October 31, 1996, segments of the
bond market declined due to rising interest rates. Over that
period, the Fund's performance was favorably affected by the
Manager's focus on earning high current income. The High Yield
Bond segment provided the greatest contribution to performance
while the Growth/Income component was also a primary contributor to
the Fund's positive performance. However, the Government/Corporate
Bond component declined and the Short-Term Bond component showed
only a modest increase as a result of the rising interest rate
environment.
Each Fund's portfolio and its portfolio manager's strategies
are subject to change.
Oppenheimer LifeSpan Growth Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer LifeSpan Growth Fund and
the Whilshire 5000 Index
[Graph]
Past performance is not predictive of future performance.
Oppenheimer LifeSpan Growth Fund
Average Annual Total Returns of the Fund at 10/31/96
Class A Shares (1)
1-Year Life
12.44% 16.73%
Class B Shares(2)
1-Year Life
13.49% 13.44%
Cumulative Total Return of Class C Shares (3)
Life
2.04%
___________________
Total returns and the ending account values in the graphs show
change in share value and include reinvestment of all dividends and
capital gains distributions.
1. The inception date of the Fund (Class A shares) was 05/1/95.
The average annual total returns and the ending account value in
the graph show change in share value and include reinvestment of
all dividends and capital gains distributions and are shown net of
the applicable 5.75% maximum sales charge.
2. Class B shares of the Fund first publicly offered on 10/2/95.
The average annual total return reflect reinvestment of all
dividends and capital gains distributions. The 1-year return is
shown net of the applicable 4% contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on May 1,
1996. The Life-of-Class is shown net of the applicable 1%
contingent deferred sales charge. Past performance is not
predictive of future performance. Graphs are not drawn to same
scale.
Oppenheimer LifeSpan Balanced Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer LifeSpan Balanced Fund and
the S&P 500 Index and
Lehman Brothers Corporate Government Index
[Graph]
Past performance is not predictive of future performance.
Oppenheimer LifeSpan Balanced Fund
Average Annual Total Returns of the Fund at 10/31/96
Class A Shares (1)
1-Year Life
8.30% 12.68%
Class B Shares(2)
1-Year Life
8.81% 9.33%
Cumulative Total Return of Class C Shares (3)
Life
2.21%
___________________
1. The inception date of the Fund (Class A shares) was 05/1/95.
The average annual total returns and the ending account value in
the graph show change in share value and include reinvestment of
all dividends and capital gains distributions and are shown net of
the applicable 5.75% maximum sales charge.
2. Class B shares of the Fund first publicly offered on 10/2/95.
The average annual total return reflect reinvestment of all
dividends and capital gains distributions. The 1-year return is
shown net of the applicable 4% contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on May 1
1996. The Life-of-Class is shown net of the applicable 1%
contingent deferred sales charge. Past performance is not
predictive of future performance. Graphs are not drawn to same
scale.
Oppenheimer LifeSpan Income Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer LifeSpan Income Fund and
the Lehman Brothers Intermediate Government/Corporate Bond Index
[Graph]
Past performance is not predictive of future performance.
Oppenheimer LifeSpan Income Fund
Average Annual Total Returns of the Fund at 10/31/96
Class A Shares (1)
1-Year Life
1.91% 6.22%
Class B Shares2)
1-Year Life
2.36% 3.82%
Cumulative Total Return of Class C Shares (3)
Life
2.96%
___________________
1. The inception date of the Fund (Class A shares) was 05/1/95.
The average annual total returns and the ending account value in
the graph show change in share value and include reinvestment of
all dividends and capital gains distributions and are shown net of
the applicable 5.75% maximum sales charge.
2. Class B shares of the Fund first publicly offered on 10/2/95.
The average annual total return reflect reinvestment of all
dividends and capital gains distributions. The 1-year return is
shown net of the applicable 4% contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on May 1,
1996. The Life-of-Class is shown net of the applicable 1%
contingent deferred sales charge. Past performance is not
predictive of future performance. Graphs are not drawn to same
scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. Each Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices. "
Class A Shares. If you buy Class A shares, you 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 Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 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.
Which Class of Shares Should You Choose? Once you decide that a
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. A
Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time
and you plan to purchase additional shares, you should re-evaluate
those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in a
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 a 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 or 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 a 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 are 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 a 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.
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 a 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 Fund 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 Fund shares (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 may be
net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, a 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:
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
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%
</TABLE>
The Distributor reserves the right to reallow the entire
commission to dealers. If that occurs, the dealer may be considered
an "underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under Section
401(a) if the retirement plan has total plan assets of $500,000 or
more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (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 $100,000 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 commissions 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 gain
distributions) or (2) the original offering price (which is the
original net asset value) of the redeemed shares. However, the
Class A contingent deferred sales charge will not exceed the
aggregate 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, a 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 a 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.
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 a 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 a Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. More information is
contained in the Application and in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of a
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 a 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 Fund
shares);
(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 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 a 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 a 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 Fund shares, 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 redemption 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
commissions 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 or
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 services; (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. Each Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion
of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the
average annual net assets of Class A shares of each 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 a Fund's Board
of Directors authorizes such reimbursements, which no Fund Board
has done as yet) for its other expenditures under the Plan.
Services to be provided include, among others, answering
customer inquiries about a Fund, assisting in establishing and
maintaining accounts in a Fund, making a Fund's investment plans
available and providing other services at the request of a Fund or
the Distributor. Payments are made by the Distributor quarterly at
an annual rate not to exceed 0.25% of the average annual net assets
of Class A shares held in accounts of the service providers or 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 the
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 a
Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, a 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 a Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, a 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. Each
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, a Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class B shares that are outstanding
for 6 years or less and on Class C shares. The Distributor also
receives a service fee of 0.25% per year.
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 of the respective
class per year.
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 a 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 C shares.
The Distributor currently pays sales commissions of 3.75% on
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 retains the asset-based sales charge during
the first year Class C shares are outstanding to recoup the sales
commissions it has paid, the advances of service fee payments it
has made, and its financing costs and other expenses. 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 a Fund
under the Distribution and Service Plans for Class B and C shares.
If a Fund terminates either of its Plans, 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 a 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
a 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 a 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. Each 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 of a Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge. This
privilege applies to Class A shares that you purchased subject to
an initial sales charge and to Class A or Class B shares on which
you paid a contingent deferred sales charge when you redeemed them.
This privilege does not apply to Class C shares. You must be sure
to ask the Distributor for this privilege when you send your
payment. Please consult the Statement of Additional Information for
more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible
tax-exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including 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.
Each 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 Funds 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
Your 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 for requests by mail: Send courier or
Express Mail
requests to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217 OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
To redeem shares through a service representative, call
1-800-852-8457
To redeem shares automatically on PhoneLink, call
1-800-533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 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
a 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 that
service, please 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 a 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 your Fund and the fund whose shares you
want to buy must offer the exchange privilege.
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day.
You must meet the minimum purchase requirements for the
fund you purchase by exchange.
Before exchanging into a fund, you should obtain and read
its prospectus.
Shares of a particular class may be exchanged only for shares
of the same class in the other Oppenheimer Funds. For example, you
can exchange Class A shares of a 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 a Fund.
Because excessive trading can hurt fund performance and
harm shareholders, a 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.
A Fund may amend, suspend or terminate the exchange
privilege at any time. Although a 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 a Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Board of Directors of the Funds has
established procedures to value each 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 a Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by a Fund at
any time. If an account has more than one owner, a 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 a Fund may be liable for losses due to
unauthorized transactions, but otherwise neither the Transfer Agent
nor a 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 a Fund if the
dealer performs any transaction erroneously.
The redemption price for shares will vary from day to day
because the value of the securities in a Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by a
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 a Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from a 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 a
Fund a certified Social Security or Employer Identification Number
when you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of income.
A 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, each Fund will mail only one copy of its 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. Each Fund declares dividends separately for Class A,
Class B and Class C shares from net investment income. LifeSpan
Growth Fund intends to pay dividends, if any, annually, normally on
the last business day in December. LifeSpan Balanced Fund intends
to pay dividends, if any, quarterly, normally on the last business
day of March, June, September and December. LifeSpan Income Fund
will declare dividents from net investment income on each regular
business day and pay those dividends to shareholders monthly.
Distributions may be made monthly by LifeSpan Income Fund, annually
by the LifeSpan Growth Fund and quarterly by LifeSpan Balanced Fund
from any net short-term capital gains the Fund realizes in selling
securities. The Board of Directors can change those date.
Dividends paid on Class A shares generally are expected to be
higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher
than for Class A shares. There is no fixed dividend rate and there
can be no assurance that a Fund will pay any dividends.
Capital Gains. Each Fund may make distributions annually in
December out of any net short-term or long-term capital gains. Each
Fund may make supplemental distributions of long-term capital
gains following the end of its fiscal year. 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 your 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 Your Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of your Fund.
Reinvest Capital Gains Only. You can elect to reinvest
long-term capital gains in your 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 Funds
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 a Fund. A 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 a Fund from short-term
capital gains and net investment income 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 a Fund's distributions treated as
ordinary income, subject to applicable limitations under the
Internal Revenue Code. Every year your Fund will send you and the
IRS a statement showing the amount of the dividends and other
distributions you received for the previous year.
"Buying a Dividend". When a Fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy
shares on or just before the ex-dividend date, or just before your
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 their Fund shares as capital assets. Such a
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 same Fund or
another Oppenheimer fund.
Returns of Capital. In certain cases distributions made by
your 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 your Fund shares
but will not be taxable except to the extent it exceeds such tax
basis.
Foreign Taxes. Each Fund may be subject to foreign
withholding taxes or other foreign taxes on income (possibly
including capital gains) on certain of its foreign investments, if
any. These taxes may be reduced or eliminated pursuant to an income
tax treaty in some cases. The Funds do not expect to qualify to
pass such foreign taxes and any related tax deductions or credits
through to their 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 a Fund on your
particular tax situation.
<PAGE>
Appendix A
Description of Ratings-Categories of Rating Services
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.<PAGE>
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 A and Class B shares of a 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 Funds
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 an Oppenheimer 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.
<TABLE>
<CAPTION>
Front-End Front-End Sales
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
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
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 in "How To Buy Shares."
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 a Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class A
shares of any of the Former Quest for Value Funds purchased without
an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders.
Class A shares of a 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 a 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 Distributor will pay a commission to the dealer for purchases
of Fund shares as described above in "Class A Contingent Deferred
Sales Charge."
Class A and Class B 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 or B shares
of a 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 Class B 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 or B shares of a 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 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 or B 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.
II. Special Sales Charge Arrangements for Shareholders of a 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 Funds 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 Funds and the other former Connecticut Mutual
Funds are entitled to continue to make additional purchases of
Class A shares at net asset value without a Class A initial sales
charge, but subject to the Class A contingent deferred sales charge
that was in effect prior to March 18, 1996 (the "prior Class A
CDSC"). Under the prior Class A CDSC, if any of those shares are
redeemed within one year of purchase, they will be assessed a 1%
contingent deferred sales charge on an amount equal to the current
market value or the original purchase price of the shares sold,
whichever is smaller (in such redemptions, any shares not subject
to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC
are: (1) persons whose purchases of Class A shares of a Fund and
other Former Connecticut Mutual Funds were $500,000 or more 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 a net asset value
without being subject to the Class A initial sales charge.
Any of the Class A shares of a Fund and the other Former
Connecticut Mutual Funds that were purchased at net asset value
prior to March 18, 1996, remain subject to the prior Class A CDSC,
or if any additional shares are purchased by those shareholders at
net asset value pursuant to this arrangement, they will be subject
to the prior Class A CDSC.
Class A Sales Charge Waivers. Additional Class A shares of
a Fund may be purchased without a sales charge by a person who was
in one (or more) of the categories below and acquired Class A
shares prior to March 18, 1996, and still holds Class A shares:
(1) any purchaser, provided the total initial amount invested in
the Fund or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more, including investments made pursuant to
the Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial purchase
and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a fund into which such fund merged;
(2) any participant in a qualified plan, provided that the total
initial amount invested by the plan in the Fund or any one or more
of the Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former
Connecticut Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual
Financial Services, L.L.C. ("CMFS"), the 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 a Fund may be purchased
without 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 was beyond the
applicable surrender charge period and which was used to fund a
qualified plan, who exchanges the variable annuity contract 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 a Fund and exchanges of Class A or
Class B shares of a Fund into Class A or Class B shares of a Former
Connecticut Mutual Fund provided that the Class A or Class B shares
of the Fund to be redeemed or exchanged were (i) acquired prior to
March 18, 1996 or (ii) were acquired by exchange from an
Oppenheimer Fund that was a Former Connecticut Mutual Fund 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 a Fund due to a combination with another
investment company by virtue of a merger, acquisition or similar
reorganization transaction; (7) in connection with a 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>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIFESPAN INCOME FUND
Graphic material included in Prospectus of Oppenheimer
LifeSpan Income Fund: "Comparison of Total Return of Oppenheimer
LifeSpan Income Fund with the Lehman Brothers Intermediate
Government/Corporate Index - Change in Value of $10,000
Hypothetical Investments in Class A, Class B and Class C Shares of
Oppenheimer LifeSpan Income Fund and the Lehman Brothers
Intermediate Government/Corporate Index."
Linear graphs will be included in the Prospectus of
Oppenheimer LifeSpan Income Fund (the "Fund") depicting the initial
account value and subsequent account value of a hypothetical
$10,000 investment in the Fund. In the case of the Fund's Class A
shares, that graph will cover the period from inception (5/1/95)
through 10/31/96, in the case of the Fund's Class B, that graph
will cover the period from inception (10/2/95) through 10/31/96,
and in the case of Class C shares, that graph will cover the period
from the inception of the class (5/1/96) through 10/31/96. The
graph will compare such values with hypothetical $10,000
investments over the same time periods in the Lehman Brothers
Intermediate Government/Corporate Bond Index. Set forth below are
the relevant data points that will appear on the linear graph.
Additional information with respect to the foregoing, including a
description of the Lehman Brothers Intermediate Goverment/Corporate
Bond Index, is set forth in the Prospectus under "Performance of
the Fund - Comparing the Fund's Performance to the Market."
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class A Index
- --------------- ----------------- -------------------
5/1/95(1) $ 9,425 $10,000
12/31/95 $10,482 $10,914
10/31/96 $10,949 $11,280
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class B Index
- --------------- ------------------- -------------------
10/02/95(2) $10,000 $10,000
12/31/95 $10,430 $10,352
10/31/96 $10,414 $10,699
_______________
(1) Class A Shares of the Fund were first publicly offered on
5/1/95.
(2) Class B shares of the Fund were first publicly offered on
10/02/95.
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class C Index
- -------------- ----------------- -------------------
05/01/96(3) $10,000 $10,000
10/31/96 $10,296 $10,459
- ----------------
(3) Class C shares of the Fund were first publicly offered on
05/01/96.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIFESPAN BALANCED FUND
Graphic material included in Prospectus of
Oppenheimer LifeSpan Balanced Fund: "Comparison of Total Return of
Oppenheimer LifeSpan Balanced Fund with the S&P 500 Index and the
Lehman Brothers Corporate/Government Index - Change in Value of
$10,000 Hypothetical Investments in Class A, Class B and Class C
Shares of Oppenheimer LifeSpan Balanced Fund and the S&P 500 Index
and the Lehman Brothers Corporate/Government Index."
Linear graphs will be included in the Prospectus
of Oppenheimer LifeSpan Balanced Fund (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. In the case of the
Fund's Class A shares, that graph will cover the period from
inception (5/1/95) through 10/31/96, in the case of the Fund's
Class B, that graph will cover the period from inception (10/2/95)
through 10/31/96, and in the case of Class C shares, that graph
will cover the period from the inception of the class (5/1/96)
through 10/31/96. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the
S&P 500 Index and the Lehman Brothers Corporate/Government Index.
Set forth below are the relevant data points that will appear on
the linear graph. Additional information with respect to the
foregoing, including a description of the S&P 500 Index and the
Lehman Brothers Corporate/ Goverment Index, is set forth in the
Prospectus under "Performance of the Fund - Comparing the Fund's
Performance to the Market."
<TABLE>
<CAPTION>
Oppenheimer Lehman Brothers
Fiscal LifeSpan Balanced S&P Corporate/Government
Period Ended Fund Class A 500 Index Index
- ----------------- ----------------------- ----------- --------------------
<S> <C> <C> <C>
5/1/95(1) $ 9,425 $10,000 $10,000
12/31/95 $10,870 $11,444 $11,202
10/31/96 $11,962 $14,200 $11,446
Oppenheimer Lehman Brothers
Fiscal LifeSpan Balanced S&P Corporate/Government
Period Ended Fund Class B 500 Index Index
- ----------------- ----------------------- ------------ --------------------
- ----
10/02/95(2) $10,000 $10,000 $10,000
12/31/95 $10,450 $ 9,964 $10,466
10/31/96 $11,013 $12,364 $10,694
________________
(1) Class A Shares of the Fund were first publicly offered on 5/01/95.
(2) Class B shares of the Fund were first publicly offered on 10/02/95.
Oppenheimer Lehman Brothers
Fiscal LifeSpan Balanced S&P Corporate/Government
Period Ended Fund Class C 500 Index Index
- ----------------- ----------------------- ----------- --------------------
- ----
05/01/96(3) $10,000 $10,000 $10,000
10/31/96 $10,221 $10,908 $10,535
- ----------
(3) Class C shares of the Fund were first publicly offered on 5/01/96.
</TABLE>
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIFESPAN GROWTH FUND
Graphic material included in Prospectus of Oppenheimer
LifeSpan Growth Fund: "Comparison of Total Return of Oppenheimer
LifeSpan Growth Fund with the Wilshire 5000 Index - Change in
Value of $10,000 Hypothetical Investments in Class A, Class B and
Class C Shares of Oppenheimer LifeSpan Growth Fund and the Wilshire
5000 Index."
Linear graphs will be included in the Prospectus of
Oppenheimer LifeSpan Growth Fund (the "Fund") depicting the initial
account value and subsequent account value of a hypothetical
$10,000 investment in the Fund. In the case of the Fund's Class A
shares, that graph will cover the period from inception (5/1/95)
through 10/31/96, in the case of the Fund's Class B, that graph
will cover the period from inception (10/2/95) through 10/31/96,
and in the case of Class C shares, that graph will cover the period
from the inception of the class (5/1/96) through 10/31/96. The
graph will compare such values with hypothetical $10,000
investments over the same time periods in the Wilshire 5000 Index.
Set forth below are the relevant data points that will appear on
the linear graph. Additional information with respect to the
foregoing, including a description of the Wilshire 5000 Index, is
set forth in the Prospectus under "Performance of the Fund -
Comparing the Fund's Performance to the Market."
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class A Index
- ----------------- ------------------- -------------------
5/01/95(1) $ 9,425 $10,000
12/31/95 $11,123 $11,400
10/31/96 $12,611 $13,605
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class B Index
- ----------------- ---------------------------------------
10/02/95(2) $10,000 $10,000
12/31/95 $10,534 $ 9,887
10/31/96 $11,459 $11,799
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class C Index
- ----------------- ------------------ ----------------
5/01/96(3) $10,000 $10,000
10/31/96 $10,204 $10,517
- ----------------
(1) Class A shares of the Fund were first publicly offered on
5/01/95.
(2) Class B shares of the Fund were first publicly offered on
10/02/95.
(3) Class C shares of the Fund were first publicly offered on
5/01/96.
<PAGE>
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income 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 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
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, NY 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 Funds, 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.
PR0000.305.0297 Printed on recycled paper
<PAGE>
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 25, 1997
This Statement of Additional Information is not a
Prospectus. This document contains additional information about
the Funds and supplements information in the Funds' Prospectus
dated February 25, 1997. It should be read together with the
Prospectus 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.
Contents
Page
About the Funds
Investment Objective and Policies. . . . . . . . . . . . 2
Investment Policies and Strategies . . . . . . . . . . . 2
Other Investment Restrictions. . . . . . . . . . . . .19
How the Funds are Managed. . . . . . . . . . . . . . . .23
Organization and History . . . . . . . . . . . . . . .23
Directors and Officers of the Funds. . . . . . . . . .23
The Manager and Its Affiliates . . . . . . . . . . . .30
Brokerage Policies of the Funds. . . . . . . . . . . . .33
Performance of the Funds . . . . . . . . . . . . . . . .35
Distribution and Service Plans . . . . . . . . . . . . .40
About Your Account
How to Buy Shares. . . . . . . . . . . . . . . . . . . .42
How to Sell Shares . . . . . . . . . . . . . . . . . . .49
How to Exchange Shares . . . . . . . . . . . . . . . . .53
Dividends, Capital Gains and Taxes . . . . . . . . . . .55
Additional Information About the Funds . . . . . . . . .56
Financial Information About the Funds
Independent Auditors' Report . . . . . . . . . . . . . .57
Financial Statements . . . . . . . . . . . . . . . . . .58
Appendix A: Corporate 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. Consistent with the limitations on
foreign investing set forth in the Prospectus, each Fund may invest
in foreign securities. Each 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 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 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. 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.
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. 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. The Funds 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").
Each Fund 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. The Funds 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. 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. The
bank obligations each 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. Additional information about some of
the types of equity securities each 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. 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. 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. Each 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. 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
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 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. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to 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, a Fund must also use short futures and options 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.
Certain foreign currency exchange contracts (Forward
Contracts) in which a Fund may invest are treated as "Section 1256
contracts." Gains or losses relating to Section 1256 contracts
generally are characterized under the Internal Revenue Code as 60%
long-term and 40% short-term capital gains or losses. However,
foreign currency gains or losses arising from certain Section 1256
contracts (including Forward Contracts) generally are treated as
ordinary income or loss. In addition, Section 1256 contracts held
by the Fund at the end of each taxable year are "marked-to-market"
with the result that unrealized gains or losses are treated as
though they were realized. These contracts also may be marked-to-
market for purposes of the excise tax applicable to investment
company distributions and for other purposes under rules prescribed
pursuant to the Internal Revenue Code. An election can be made by
the Fund to exempt these transactions from this mark-to-market
treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the timing and character of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, generally gains or losses
attributable to fluctuations in exchange rates that occur between
the time the Fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and
the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated
as ordinary gain or loss. Currency gains and losses are offset
against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may
increase or decrease the amount of the Fund's investment company
income available for distribution to its shareholders.
Risks Of Hedging With Options and Futures. 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.
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.
Each of the LifeSpan Funds 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
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 Capital Appreciation Fund,
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Municipal
Bond Fund, Oppenheimer Growth Fund, Oppenheimer Discovery Fund,
Oppenheimer Global Growth & Income Fund, Oppenheimer Global
Emerging Growth Fund, Oppenheimer Gold & Special Minerals Fund,
Oppenheimer Money Market Fund, Inc., Oppenheimer Tax-Free Bond
Fund, Oppenheimer New York Municipal Fund, Oppenheimer California
Municipal Fund, Oppenheimer Multi-State Tax-Exempt Trust,
Oppenheimer Multiple Strategies Fund, Oppenheimer Developing Market
Fund, Oppenheimer Series Fund, Oppenheimer U.S. Government Trust,
Oppenheimer Multi-Sector Income Trust and Oppenheimer World Bond
Fund (collectively the "New York-based Oppenheimer funds"), except
that Ms. Macaskill is not a director of Oppenheimer Money Market
Fund, Inc. Ms. Macaskill, Messrs. 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 February 7, 1997, the Directors and officers of the Fund as
a group owned of record or beneficially less than 1% of each class
of shares of the Fund. The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for
employees of the Manager (for which plan a Trustee and an officer
listed below, Ms. Macaskill and Mr. Donohue, respectively, are
Directors), other than the shares beneficially owned under that
plan by officers of the Funds listed below.
Leon Levy, Chairman of the Board of Directors; Age: 71
31 West 52nd Street, New York, NY 10019
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 OppenheimerFunds, Inc. (the "Manager");
formerly he held the following positions: Vice President and
Counsel of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; Executive Vice President & General Counsel
and 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
adviser subsidiaries of the Manager, a director of Shareholder
Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Manager and an officer
of other Oppenheimer funds.
Benjamin Lipstein, Director; Age: 73
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc (Publishers of Psychology Today and Mother Earth
News) and of Spy Magazine, L.P.
_________________________
*A Director who is an "interested person" of the Company as defined
in the Investment Company Act.
Bridget A. Macaskill, President and Director*; Age: 48
President, Chief Executive Officer and a Director of the Manager
and HarbourView; Chairman and a director of SSI, and SFSI;
President and a director of OAC and Oppenheimer Partnership
Holdings, Inc., a holding company subsidiary of the Manager; a
director of Oppenheimer Real Asset Management, Inc.; formerly an
Executive Vice President of the Manager.
Elizabeth B. Moynihan, Director; Age: 67
801 Pennsylvania Avenue, N.W., Washington, D.C. 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, and of the
Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randell, 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
Lumbermens 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. (health care provider); formerly New
York State Comptroller and trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (corporate governance
consulting); a director of Professional Staff Limited (U.K.); a
trustee of Mystic Seaport Museum, International House, Greenwich
Historical Society.
_______________
*A Director who is an "interested person" of the Company as defined
in the Investment Company Act.
<PAGE>
Donald W. Spiro, Vice Chairman and Director*; Age: 71
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Director; Age: 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Director; Age 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, 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) and Texas
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, General Counsel and a Director of the
Manager, the Distributor, HarbourView, SSI, SFSI, Oppenheimer
Partnership Holdings, Inc. and MultiSource Services, Inc. (a
broker-dealer); President and a director of Centennial;
President and a director of Oppenheimer Real Asset Management,
Inc.; General Counsel of OAC; an officer of other Oppenheimer
funds.
Robert C. Doll, Jr., Vice President; Age: 44
Executive Vice President and 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
6803 Tucsan Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; President, Treasurer and a director of Centennial
Capital Corporation; Senior Vice President, Treasurer and
Secretary of SSI; Vice President, Treasurer and Secretary of SFSI;
Treasurer of OAC; Treasurer of Oppenheimer Partnership Holdings,
Inc.; Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a
director of MultiSource Services, Inc. (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; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
6803 Tucsan Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
_______________
*A Director who is an "interested person" of the Company as defined
in the Investment Company Act.
Scott T. Farrar, Assistant Treasurer; Age: 31
6803 Tucsan Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Remuneration of Directors. The officers of the Funds and
certain Directors of the Funds (Ms. Macaskill and Messrs. Galli and
Spiro; Ms. Macaskill is also an officer) who are affiliated with
the Manager receive no salary or fee from the Funds. The remaining
Directors of the Fund received the compensation shown below from
the Fund. The compensation from the Fund was paid during its
fiscal year ended October 31, 1996. The compensation of all the
New York-based Oppenheimer funds includes the Fund and is
compensation received as a director, trustee, or member of a
committee of the Board of those funds during the calendar year
1996. The chart below sets forth the fees paid by each Fund to its
Directors and certain other information for the fiscal year ended
October 31, 1995.
Compensation Received from each Fund
All
LifeSpan
Funds
Leon Levy, Chairman and Trustee 0
Benjamin Lipstein, Study Committee 0
Chairman, Audit Committee and
Trustee(2)
Elizabeth B. Moynihan, Study 0
Committee Member and Trustee
Kenneth A. Randall, Audit 0
Committee Chairman and Trustee
Edward V. Regan, Proxy Committee 0
Chairman, Audit Committee Member
and Trustee
Russell S. Reynolds, Jr., Proxy Committee 0
Member and Trustee
Pauline Trigere, Trustee 0
Clayton K. Yeutter, Proxy Committee 0
Member and Trustee
<PAGE>
<TABLE>
<CAPTION>
Pension or Retirement Benefits Accrued as a Fund Expenses
LifeSpan LifeSpan LifeSpan
Growth Balanced Income
Fund Fund Fund
<S> <C> <C> <C>
Leon Levy, Chairman and Trustee $321 $426 $409
Benjamin Lipstein, Study Committee $197 $260 $250
Chairman, Audit Committee and
Trustee(2)
Elizabeth B. Moynihan, Study $197 $260 $250
Committee Member and Trustee
Kenneth A. Randall, Audit Committee $179 $237 $228
Chairman and Trustee
Edward V. Regan, Proxy Committee $157 $208 $200
Chairman, Audit Committee Member
and Trustee
Russell S. Reynolds, Jr., Proxy $119 $157 $151
Committee Member and Trustee
Pauline Trigere, Trustee $119 $157 $151
Clayton K. Yeutter, Proxy Committee $119 $157 $151
Member and Trustee
</TABLE>
Total Compensation From All New York-based Oppenheimer Funds
All
LifeSpan
Funds(1)
Leon Levy, Chairman and Trustee $141,000
Benjamin Lipstein, Study Committee $ 88,200
Chairman, Audit Committee and
Trustee(2)
Elizabeth B. Moynihan, Study $ 86,200
Committee Member and Trustee
Kenneth A. Randall, Audit Committee $ 78,400
Chairman and Trustee
Edward V. Regan, Proxy Committee $ 68,800
Chairman, Audit Committee Member
Russell S. Reynolds, Jr., Proxy $ 52,100
Committee Member and Trustee
Pauline Trigere, Trustee $ 52,100
Clayton K. Yeutter, Proxy Committee $ 52,100
Member and Trustee
_________________
1 For the 1996 calendar year.
2 Committee position held during a portion of the period shown.
The Company has adopted a retirement plan that provides for
payment to a retired Director of up to 80% of the average
compensation paid during the Director's five years of service in
which the highest compensation was received. A Director 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 Director's retirement benefits will depend on the
amount of the Director'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 February 7, 1997, no person owned of
record or was known by the Fund to own beneficially 5% or more of
the Fund's outstanding Class A, Class B or Class C shares except
for LifeSpan Income Fund: (i) Mass Mutual Life Insurance Co, c\o
Investment Services Dept., 1295 State Street, Springfield, MA
01111-0001, who owned 2,242,911.950 Class A shares (approximately
88.13% of the Fund's Class A shares then outstanding); (ii) RPSS
TS Rollover IRA, FBO Kathy R, Somkins, 314 W 1700 S, Orem, UT
84058-7542, who owned 11,032.961 Class B shares (approximately
19.99% of the Fund's Class B shares then outstanding); (iii) Grace
H. Kleine Kracht, 2931 Arlington Road, Louisville, KY 40220-1337,
who owned 5,094.403 Class B shares (approximately 9.23% of the
Fund's Class B shares then outstanding); (iv) Davie E. & Gail M.
Tilton, REV Trust, 34 Wawayanda Road , Warwick, NY 10990-3339,
who owned 4,967.563 (approximately 9% of the Fund's Class B shares
then outstanding); (v) First National Bank of Onaga, FBO Bobbie K.
Mayne, 301 Leonard Street, Onaga, KS 66521-9734, who owned
2,933.044 Class B shares (approximately 5.31% of the Fund's Class
B shares then outstanding); (vi) Donald B. Levy, 42 Coolidge Road,
Amsterdam, NY 12010-1723, who owned 2,878.908 Class B shares
(approximately 5.23% of the Fund's Class B shares then
outstanding); (vii) RPSS TS IRA, Barbara H. Curnan, 5 Espie Road,
Rhinebeck, NY 12572-2405, who owned 2,793.791 Class B shares
(approximately 5.06% of the Fund's Class B shares then
outstanding); (viii)RPSS TR Rollover IRA, FBO Robin R. Prafke, P.
O. Box 88. New Auburn, MN 55366-0088, who owned 415.865 Class C
shares (approximately 44.90% of the Fund's Class C shares then
outstanding); (ix) Gary R. & Sammie A. Close, JT Tne Wros. NOT TC,
11295 Hetrick Avenue, Arroyo, Grande, CA 93420-5955, who owned
414.286 Class C shares (approximately 44.82% of the Fund's Class C
shares then outstanding); (x) OppenheimerFunds, Inc., Gary Tyc,
3410 South Galena Street, Denver, Co. 80231-5078, who owned
94.877 Class C shares (approximately 10.27% of the Fund's Class C
shares then outstanding);
LifeSpan Balanced Fund: (i) Mass Mutual Life Insurance Co,
c\o Investment Services Dept., 1295 State Street, Springfield, MA
01111-0001, who owned 3,687,706.371 Class A shares (approximately
79.57% of the Fund's Class A shares then outstanding); (ii) NFSC
FEBO, William R. Trimmer, Shring PL, 890 Mill Street 202, Reno, NV
89502, who owned 37,878.767 Class B shares (approximately 15.35%
of the Fund's Class B shares then outstanding); (iii) Frank Casey
Trust, 1866 W Tweed Road, Inverness IL 60067-4251, who owned
16,822.394 Class B shares, (approximately 6.81% of the Fund's Class
B shares then outstanding); (iv) RPSS TR IRA, FBO William R.
Massey, 1960 31 E North, Gallatin, TN 37066, who owned 35,460.645
Class C shares (approximately 42.24% of the Fund's Class C shares
then outstanding); (v) RPSS RT IRA, FBO James D. Oakley, 322
Church Street, Hartsville TN 37074-1702, who owned 17,760.197
Class C shares (approximately 21.15% of the Fund's Class C shares
then outstanding); (v) RPSS TR IRA, FBO William T. Porterfield,
113 Rolynn Drive, Nashville TN 37210-5443, who owned 10,365.449
Class C shares (approximately 12.34% of the Fund's Class C shares
then outstanding);
LifeSpan Growth Fund: (i) Mass Mutual Life Insurance Co, c\o
Investment Services Dept., 11295 State Street, Springfield MA
01111-0001, who owned 2,764,119.524 Class A shares (approximately
72.90% of the Fund's Class A shares then outstanding); (ii) Frank
Casey Trust, 1866 W Tweed Road, Inverness IL 60067-4251, who owned
16,447.083 Class B shares (approximately 7% of the Fund's Class B
shares then outstanding); (iii) Merrill Lynch Pierce Fenner & Smith
Inc., attn: Fund Administation, 4800 Deer Lake Drive E FL 3,
Jacksonville FL 32246-6484, who owned 7,545.257 Class C shares
(approximately 29.84% of the Fund's Class C shares then
outstanding); (iv) RPSS TR Rollover IRA, FBO Ingrid Galyan, 170 S
Amberwood Street, Orange CA 92869-5615, who owned 4,660.395 Class
C shares (approximately 18.43% of the Fund's Class C shares then
outstanding); (v) RPSS TR Rollover IRA, FBO Joyce A. Allen, 620
New Street, Spring City PA 19475-1639, who owned 2,646.084 Class
C shares (approximately 110.46% of the Fund's Class C shares then
outstanding); Mila H. & Tod Joseph Cangelosi, 8646 Butte Circle
Apt. 607-C, Huntington Beach, CA 92646-5738, who owned 1,661.457
Class C shares (approximately 6.57% of the Fund's Class C shares
then outstanding) and RPSS TR Rollover IRA, FBO James H. Durrett,
1944 Bienville Drive, Jackson MS 39212-2536, who owned 1,291.364
Class C shares (approximately 5.10% of the Fund's Class C shares
then outstanding).
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 (Ms. Macaskill and Messrs. Spiro and Galli)
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.
For the fiscal period from May 1, 1995 through December 31,
1995 the Management fee paid to G.R. Phelps & Co., the Fund's
Investment Advisor, by LifeSpan Growth Fund was $166,212. For
the fiscal period ended October 31, 1996 the fund paid $290,999, in
management fees, some of which was paid to G. R. Phelps & Co.,
investment advisor, prior to March 18, 1996.
For the fiscal period from May 1, 1995 through December 31,
1995 the Management fee paid to G.R. Phelps & Co., the Fund's
Investment Advisor, by LifeSpan Balanced Fund was $214,011. For
the fiscal period ended October 31, 1996 the fund paid $344,756, in
management fees, some of which was paid to G. R. Phelps & Co.,
investment advisor, prior to March 18, 1996.
For the fiscal period from May 1, 1995 through December 31,
1995 the Management fee paid to G.R. Phelps & Co., the Fund's
Investment Advisor, by LifeSpan Income Fund was $111,599. For
the fiscal period ended October 31, 1996 the fund paid $161,101, in
management fees, some of which was paid to G. R. Phelps & Co.,
investment advisor, prior to March 18, 1996.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limited fund
expenses that previously applied, the Manager had voluntarily
undertaken that the Fund's total expenses in any fiscal year
(including the investment advisory fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manager's
undertaking is therefore inapplicable and has been withdrawn.
During the Fund's last fiscal year, the Fund's expenses did not
exceed the most stringent state regulatory limit and the voluntary
undertaking was not invoked.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith, 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 September 30,
1995, Babson-Stewart had approximately $917 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 $28.9 billion in assets under
management as of June 30, 1995. 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 May 31, 1995, Pilgrim had over
$4 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 General Distributor's 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.
During LifeSpan Growth Fund's fiscal period from May 1, 1995
through December 31, 1995 and the fiscal period ended October 31,
1996 the aggregate sales charges on sales of the Fund's Class A
shares were $151,750 and $103,757 respectively, of which the
Distributor and an affiliate broker-dealer retained $0 and $69,069
in those respective years. During the Fund's fiscal period ended
October 31, 1996 there were no contingent deferred sales charges
collected on the Fund's Class B shares. During the fiscal year
ended October 31, 1996, sales charges advanced to broker/dealers by
the Distributor on sales of the Fund's Class B shares totalled
$41,465 of which $34,992 was paid to an affiliated broker/dealer.
During the Fund's fiscal years ended October 3, 1996 there were no
contingent deferred sales charges collected on the Fund's Class C
shares. During the fiscal period ended October 31, 1996, sales
charges advanced to broker/dealers by the Distributor on sales of
the Fund's Class C shares totalled $989 all of which the
Distributor retained.
During LifeSpan Balanced Fund's fiscal period from May 1, 1995
through December 31, 1995 and the fiscal period ended October 31,
1996 the aggregate sales charges on sales of the Fund's Class A
shares were $123,711 and $84,043 respectively, of which the
Distributor and an affiliate broker-dealer retained $0 and $67,555
in those respective years. During the Fund's fiscal period ended
October 31, 1996 there were no contingent deferred sales charges
collected on the Fund's Class B shares. During the fiscal year
ended October 31, 1996, sales charges advanced to broker/dealers by
the Distributor on sales of the Fund's Class B shares totalled
$30,673 of which $28,990 was paid to an affiliated broker/dealer.
During the Fund's fiscal years ended October 3, 1996 there were no
contingent deferred sales charges collected on the Fund's Class C
shares. During the fiscal period ended October 31, 1996, sales
charges advanced to broker/dealers by the Distributor on sales of
the Fund's Class C shares totalled $7,796 all of which the
Distributor retained.
During LifeSpan Income Fund's fiscal period from May 1, 1995
through December 31, 1995 and the fiscal period ended October 31,
1996 the aggregate sales charges on sales of the Fund's Class A
shares were $75,262 and $29,128 respectively, of which the
Distributor and an affiliate broker-dealer retained $0 and $21,324
in those respective years. During the Fund's fiscal period ended
October 31, 1996 there were no contingent deferred sales charges
collected on the Fund's Class B shares. During the fiscal year
ended October 31, 1996, sales charges advanced to broker/dealers by
the Distributor on sales of the Fund's Class B shares totalled
$4,276 of which $4,276 was paid to an affiliated broker/dealer.
During the Fund's fiscal years ended October 3, 1996 there were no
contingent deferred sales charges collected on the Fund's Class C
shares. During the fiscal period ended October 31, 1996, there
were no sales charges advanced to broker/dealers by the Distributor
on sales of the Fund's Class C shares.
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 1995 calendar year for the
LifeSpan Growth Fund was $62,173. During the Fund's fiscal period
ended October 31, 1996 total brokerage commissions paid by the Fund
$24,933, of which $21,828 was paid to brokers as commission in
return for research services, the total aggregate dollar amount of
those transactions was $10,124,746.
Brokerage commissions for the 1995 calendar year for the
LifeSpan Balanced Fund was $58,577. During the Fund's fiscal period
ended October 31, 1996 total brokerage commissions paid by the Fund
$35,123, of which $31,505 was paid to brokers as commission in
return for research services, the total aggregate dollar amount of
those transactions was $12,222,661.
Brokerage commissions for the 1995 calendar year for the
LifeSpan Income Fund was $12,083. During the Fund's fiscal period
ended October 31, 1996 total brokerage commissions paid by the Fund
$3,639, of which $3,639 was paid to brokers as commission in return
for research services, the total aggregate dollar amount of those
transactions was $1,984,483.
Performance of the Funds
Yield and Total Return Information. 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
advertised class of shares of a Fund for the 1, 5 and 10-year
periods (or the life of the class, if less) ending as of the most
recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare 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 or Class C 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 LifeSpan Growth, LifeSpan
Balanced and LifeSpan Income Fund (the "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 the Funds, 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 C shares, the 1.0% contingent deferred sales
charge is applied to the investment results for the one-year period
(or less). 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.
LifeSpan Growth Fund
The "average annual total returns" on an investment in Class A
shares of the Fund for the one year period ended October 31, 1996
and for the period from May 1, 1995 (commencement of operations) to
October 31, 1996 were 12.44% and 16.73%, respectively. The
cumulative "total return" on Class A shares for the period from
inception through October 31, 1996 was 26.11%.
The "average annual total returns" on Class B shares for the
one- year period ended October 31, 1996 and for the period October
2, 1995 (commencement of the public offering of the class) through
October 31, 1996 were 13.49% and 13.44%, respectively. The
cumulative "total return" on Class B shares for the period from
inception through October 31, 1996 was 14.60%.
The "cumulative total return" on Class C shares for the period
from May 1, 1996 (commencement of the public offering of the
class) to October 31, 1996 was 2.04%.
LifeSpan Balanced Fund
The "average annual total returns" on an investment in Class A
shares of the Fund for the one- year period ended October 31, 1996
and for the period from May 1, 1995 (commencement of operations) to
October 31, 1996 were 8.30% and 12.68%, respectively. The
cumulative "total return" on Class A shares for the period from
inception through October 31, 1996 was 19.62%.
The "average annual total return" on Class B shares for the one-
year period ended October 31, 1996 and for the period October 2,
1995 (commencement of the public offering of the class) through
October 31, 1996 were 8.81% and 9.33%, respectively. The
cumulative "total return" on Class B shares for the period from
inception through October 31, 1996 was 10.12%.
The "cumulative total return" on Class C shares for the period
from May 1, 1996 (commencement of the public offering of the
class) to October 31, 1996 was 2.21%.
LifeSpan Income Fund
The "average annual total returns" on an investment in Class A
shares of the Fund for the one- year period ended October 31, 1996
and for the period from May 1, 1995 (commencement of operations) to
October 31, 1996 were 1.91% and 6.22%, respectively. The cumulative
"total return" on Class A shares for the period from inception
through October 31, 1996 was 9.48%.
The "average annual total return" on Class B shares for the one-
year period ended October 31, 1996 and for the period October 2,
1995 (commencement of the public offering of the class) through
October 31, 1996 were 2.36% and 3.82%, respectively. The
cumulative "total return" on Class B shares for the period from
inception through October 31, 1996 was 4.14%.
The "cumulative total return" on Class C shares for the period
from May 1, 1996 (commencement of the public offering of the
class) to October 31, 1996 was 2.96%.
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 or Class C 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.
LifeSpan Growth Fund
The average annual total returns at net asset value on the
Fund's Class A shares for the one- year period ended October 31,
1996 and from May 1, 1995 (commencement of operations) to October
31, 1996 were 19.30% and 21.43%. The average annual total returns
at net asset value for the Fund's Class B shares for the one- year
period ended October 31, 1996 and for the period from October 2,
1995 (commencement of the public offering of the class) through
October 31, 1996 were 18.49% and 17.10%.
The cumulative total return at net asset value of the Fund's
Class A shares for the period from inception to October 31, 1996
was 33.81%. For Class B shares, the cumulative total return at net
asset value for the period from inception through October 31, 1996
was 18.60%. For Class C shares, the cumulative total return at net
asset value from May 1, 1996 (commencement of the public offering
of the Class) through October 31, 1996 was 3.04%.
LifeSpan Balanced Fund
The average annual total returns at net asset value on the
Fund's Class A shares for the one- year period ended October 31,
1996 and from May 1, 1995 (commencement of operations) to October
31, 1996 were 14.91% and 17.22%. The average annual total returns
at net asset value for the Fund's Class B shares for the one- year
period ended October 31, 1996 and for the period from October 2,
1995 (commencement of the public offering of the class) through
October 31, 1996 were 13.81% and 13.01%.
The cumulative total return at net asset value of the Fund's
Class A shares for the period from inception to October 31, 1996
was 26.91%. For Class B shares, the cumulative total return at net
asset value for the period from inception through October 31, 1996
was 14.12%. For Class C shares, the cumulative total return at net
asset value from May 1, 1996 (commencement of the public offering
of the Class) through October 31, 1996 was 3.21%.
LifeSpan Income Fund
The average annual total returns at net asset value on the
Fund's Class A shares for the one- year period ended October 31,
1996 and from May 1, 1995 (commencement of operations) to October
31, 1996 were 8.13% and 10.50%. The average annual total returns
at net asset value for the Fund's Class B shares for the one- year
period ended October 31, 1996 and for the period from October 2,
1995 (commencement of the public offering of the class) through
October 31, 1996 were 7.36% and 7.51%.
The cumulative total return at net asset value of the Fund's
Class A shares for the period from inception to October 31, 1996
was 16.16%. For Class B shares, the cumulative total return at net
asset value for the period from inception through October 31, 1996
was 8.14%. For Class C shares, the cumulative total return at net
asset value from May 1, 1996 1996 (commencement of the public
offering of the Class) through October 31, 1996 was 3.96%.
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 may publish the star ranking of the
performance of its Class A, Class B and Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories;
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
returns. Investment return measures a fund's or class' one, three,
five and ten-year average annual total returns (depending on the
inception of the fund or class) in excess of 90-day U.S. Treasury
bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class' performance, below 90-
day U.S. Treasury bill returns. Risk and investment return are
combined to produce star rankings reflecting performance relative
to the average fund in the fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The
current star ranking is the fund's or class' 3-year ranking or its
combined 3- and 5-year ranking (weighted 60%/40%, respectively, or
its combined 3-, 5- and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception of the fund or class.
Rankings are subject to change monthly.
A Fund may also compare its performance to that of other funds
in its Morningstar Category. In addition to its star ranking,
Morningstar also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparisons by
Morningstar are based on the same risk and return measurements as
its star rankings but do not consider the effect of sales charges.
From time to time, a Fund's Manager may publish rankings 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 or Class C 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 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 by a Securities and Exchange Commission
rule to obtain the approval of Class B as well as Class A
shareholders for a proposed amendment to 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. For the LifeSpan Growth Fund for the fiscal period
ended October 31, 1996, payments under this Class A Plan totaled
$82,572 of which $61,978 was paid to and affiliate of the
Distributor. For the LifeSpan Balanced Fund for the fiscal period
ended October 31, 1996, payments under this Class A Plan totaled
$98,043 of which $74,687 was paid to an affiliate of the
Distributor. For the LifeSpan Income Fund for the fiscal period
ended October 31, 1996, payments under this Class A Plan totaled
$52,975 of which $39,635 was paid to an affiliate of the
Distributor. 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.
For the LifeSpan Growth Fund payments made under the Class B
Plan for the fiscal year ended October 31, 1996, totaled $12,255,
of which $9,324 was paid to a dealer affiliated with the
Distributor.
For the LifeSpan Balanced Fund payments made under the Class B Plan
for the fiscal year ended October 31, 1996, totaled $10,171, of
which $7,774 was retained by the Distributor. For the LifeSpan
Income Fund payments made under the Class B Plan for the fiscal
year ended October 31, 1996, totaled $2,911, of which $2,102 was
retained by the Distributor.
For the LifeSpan Growth Fund payments made under the Class C
Plan for the fiscal year ended October 31, 1996, totaled $268, none
of which was retained by the Distributor.For the LifeSpan Balanced
Fund payments made under the Class C Plan for the fiscal year ended
October 31, 1996, totaled $2,745, of which $2,733 was retained by
the Distributor. For the LifeSpan Income Fund payments made under
the Class C Plan for the fiscal year ended October 31, 1996,
totaled $4, none of which was retained by 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 Conduct Rules 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.
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. Each LifeSpan Fund offers 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 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 and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to 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
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution and/or Service Plan
fees, (ii) incremental transfer and shareholder servicing agent
fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a
specific class rather than to 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 shares of
a Fund are determined as of the close of business of The New York
Stock Exchange (the "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 or Class C 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 Trustees 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" prices
that day); (ii) securities traded on a foreign securities exchange
are valued 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 "ask" 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 "ask" 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
397 days or less when issued, which have a remaining maturity of 60
days or less are valued at the mean between "bid" and "ask" 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 have 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 under determined 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 "ask" prices provided by a single active
market maker.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity, and other special factors involved. The Manager may use
pricing services approved by the Board of 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 Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
When a Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. The credit is adjusted ("marked-to-market")
to reflect the current market value of the call or put. In
determining a Fund's gain on investments, if a call written by a
Fund is exercised, the proceeds are increased by the premium
received. If a call or put written by the Fund expires, a Fund has
a gain in the amount of the premium; if a Fund enters into a
closing purchase transaction, it will have a gain or loss depending
on whether the premium received was more or less than the cost of
the closing transaction. If a Fund exercises a put it holds, the
amount a Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by a Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy 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, brothers and
sisters, aunts, uncles, nieces and nephews, sons- and daughters-in-
law, 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 Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Multiple Strategies 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 Developing Markets 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
Rochester Fund Municipals*
The Bond Fund for Growth
Limited Term New York Municipal 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.
_____________
*Shares of the Fund are not presently exchangeable for shares of
the Fund.
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 deferred 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 plans" 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, or (ii) Class A shares and/or Class B shares
that were subject to the contingent deferred sales charge when
redeemed. This privilege does not apply to Class C shares. The
reinvestment may be made without sales charge only in Class A
shares of a Fund or any of the other Oppenheimer funds into which
shares of a Fund are exchangeable as described in "How to Exchange
Shares" below, at the net asset value next computed after receipt
by the Transfer Agent of the reinvestment order. The shareholder
must ask the Distributor for such privilege at the time of
reinvestment. Any capital gain that was realized when the shares
were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of a Fund or another of the Oppenheimer funds
within 90 days of payment of the sales charge, the shareholder's
basis in the shares of the Fund that were redeemed may not include
the amount of the sales charge paid. That would reduce the loss or
increase the gain recognized from the redemption. However, in that
case, the sales charge would be added to the basis of the shares
acquired by the reinvestment of the redemption proceeds. A Fund
may amend, suspend or cease offering this reinvestment privilege at
any time as to shares redeemed after the date of such amendment,
suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of 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 on behalf of their
customers. The shareholders should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from a dealer or broker
after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value if
the order was received by the dealer or broker from its 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
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the 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 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., which only offer Class A shares and
Oppenheimer Main Street California Tax Exempt Fund, which only
offers Class A and Class B shares (Class B and Class C shares of
Oppenheimer Cash reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A current list showing
which funds offer which classes can be obtained by calling the
Distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge).
Shares of a Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) 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 more
than one account. 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.
Tax Status of the Funds' Dividends and Distributions.
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.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Oppenheimer Series Fund, Inc.:
We have audited the accompanying statements of investments and assets and
liabilities of LifeSpan Income, LifeSpan Balanced and
LifeSpan Growth Funds (collectively Oppenheimer Series Fund, Inc.)
as of October 31, 1996 and the related statements of operations,
the statements of changes in net assets, and the financial
highlights for the ten month period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The statements
of changes in net assets for the period ended December 31, 1995 and the
financial highlights for the period from May 1, 1995 (commencement
of oPerations) to December 31, 1995 were auditedby other auditors whose
report dated February 15, 1996, expressed an unqualified opinion on
this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of October 31, 1996
by correspondence with the custodian and brokers; and where confirmations were
not received from brokers, we performed other auditing procedures. An
audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material
respects, the financial positions of LifeSpan Income,
LifeSpan Balanced and LifeSpan Growth Funds as of October 31,
1996, and the results of their operations, the changes in their net assets,
and the financial highlights for the
ten month period ended October 31, 1996, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
- --------------------------
KPMG Peat Marwick LLP
Denver, Colorado
November 21, 1996
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
================================================================================================================
===================
<S> <C>
<C>
MORTGAGE-BACKED OBLIGATIONS - 9.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
GOVERNMENT AGENCY - 8.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, 5.50%, 5/1/98 $ 81,238
$ 80,540
Gtd. Multiclass Mtg. Participation Certificates, 6%, 3/1/09 356,421
346,756
Gtd. Multiclass Mtg. Participation Certificates, Series 1574,
Cl. PD, 5.50%, 3/15/13 75,000
74,625
Series 1843, Cl. VB, 7%, 4/15/03 85,000
85,824
Series 1849, Cl. VA, 6%, 12/15/10 284,220
279,690
- ----------------------------------------------------------------------------------------------------------------
- -------------
Federal National Mortgage Assn.:
6%, 12/1/03 288,001
282,996
6.50%, 4/1/26 197,498
188,976
7%, 4/1/00 147,351
148,529
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 1993-
181, Cl. C, 5.40%, 10/25/02 320,000
317,600
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 1993-
190, Cl. Z, 5.85%, 7/25/08 178,700
176,159
Series 1994-13, Cl. B, 6.50%, 2/25/09 200,000
192,562
----------------
2,174,257
- ----------------------------------------------------------------------------------------------------------------
- -------------------
PRIVATE - 1.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
GE Capital Mortgage Securities, Inc., Series-HE2, Cl. A3,
7.30%, 3/25/12 160,000
162,175
- ----------------------------------------------------------------------------------------------------------------
- -------------
Olympic Automobile Receivables Trust, Series 1996-A,
Cl. A4, 5.85%, 7/15/01 145,000
144,048
----------------
306,223
----------------
Total Mortgage-Backed Obligations (Cost $2,463,995)
2,480,480
================================================================================================================
===================
U.S. GOVERNMENT OBLIGATIONS - 9.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,645,000
1,779,685
- ----------------------------------------------------------------------------------------------------------------
- -------------
U.S. Treasury Nts.:
6.50%, 8/15/05 450,000
454,781
6.75%, 6/30/99 130,000
132,722
7.25%, 8/15/04 280,000
295,662
----------------
Total U.S. Government Obligations (Cost $2,589,817)
2,662,850
================================================================================================================
===================
CORPORATE BONDS AND NOTES - 52.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
BASIC INDUSTRY - 7.8%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CHEMICALS - 3.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 145,000
146,910
- ----------------------------------------------------------------------------------------------------------------
- -------------
DuPont E.I. De Nemours & Co., 8.50% Debs., 2/15/03 150,000
162,934
- ----------------------------------------------------------------------------------------------------------------
- -------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec.
Disc. Nts., 7/15/01 50,000
51,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
IMC Global, Inc., 6.25% Cv. Sub. Debs., 12/1/01 100,000
117,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
ISP Holdings, Inc., 9.75% Sr. Nts., 2/15/02 (1) 21,000
21,682
- ----------------------------------------------------------------------------------------------------------------
- -------------
LaRoche Industries, Inc., 13% Sr. Sub. Nts., 8/15/04 75,000
81,281
</TABLE>
5 Oppenheimer LifeSpan Funds
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C> <C>
<C>
CHEMICALS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -------------
Lyondell Petrochemical Co., 8.25% Nts., 3/15/97 $ 105,000
$ 105,931
- ----------------------------------------------------------------------------------------------------------------
- -------------
Morton International, Inc., 9.25% Credit Sensitive Nts.,
6/1/20 (6) 85,000
104,153
- ----------------------------------------------------------------------------------------------------------------
- -------------
PPG Industries, Inc., 9% Debs., 5/1/21 85,000
102,366
- ----------------------------------------------------------------------------------------------------------------
- -------------
Viridian, Inc., 10.50% Debs., 3/31/14 75,000
89,437
----------------
983,694
- ----------------------------------------------------------------------------------------------------------------
- -------------------
METALS/MINING - 0.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 165,000
178,919
- ----------------------------------------------------------------------------------------------------------------
- -------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts.,
2/1/03 50,000
51,875
----------------
230,794
- ----------------------------------------------------------------------------------------------------------------
- -------------------
PAPER - 2.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 145,000
145,544
- ----------------------------------------------------------------------------------------------------------------
- -------------
Crown Packaging Holdings Ltd., 0%/12.25% Sr. Sub. Disc.
Nts., Series B, 11/1/03 (2) 100,000
39,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs.,
5/15/05 50,000
54,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
Georgia-Pacific Corp., 9.85% Credit Sensitive Nts., 6/15/97 (6) 290,000
296,982
- ----------------------------------------------------------------------------------------------------------------
- -------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 50,000
54,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 100,000
100,000
----------------
691,276
- ----------------------------------------------------------------------------------------------------------------
- -------------------
STEEL - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Gulf States Steel, Inc., Alabama, 13.50% First Mtg. Nts.,
Series B, 4/15/03 50,000
47,312
- ----------------------------------------------------------------------------------------------------------------
- -------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts.,
12/15/01 25,000
23,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02 50,000
56,062
- ----------------------------------------------------------------------------------------------------------------
- -------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000
47,750
----------------
174,499
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CONSUMER RELATED - 7.8%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CONSUMER PRODUCTS - 2.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Black & Decker Corp., 6.625% Nts., 11/15/00 145,000
145,665
- ----------------------------------------------------------------------------------------------------------------
- -------------
Electrolux AB, 7.75% Sr. Unsub. Debs., 6/17/97 290,000
292,900
- ----------------------------------------------------------------------------------------------------------------
- -------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 85,000
89,409
- ----------------------------------------------------------------------------------------------------------------
- -------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000
51,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14.04%, 3/15/98 (3) 50,000
44,312
----------------
623,536
- ----------------------------------------------------------------------------------------------------------------
- -------------------
FOOD/BEVERAGES/TOBACCO - 1.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Dole Food Co., 6.75% Nts., 7/15/00 150,000
150,927
- ----------------------------------------------------------------------------------------------------------------
- -------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 145,000
149,202
- ----------------------------------------------------------------------------------------------------------------
- -------------
Philip Morris Cos., Inc., 8.75% Debs., 12/1/96 60,000
60,124
----------------
360,253
- ----------------------------------------------------------------------------------------------------------------
- -------------------
HEALTHCARE - 2.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 160,000
162,006
- ----------------------------------------------------------------------------------------------------------------
- -------------
Health o meter Products, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. sub. nts., 8/15/02 and
one warrant to purchase 10.96 ordinary shares) (4) 50,000
55,250
</TABLE>
6 Oppenheimer LifeSpan Funds
<PAGE> 7
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C>
<C>
HEALTHCARE (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -------------
Integrated Health Services, Inc., 9.625% Sr. Sub. Nts.,
Series A, 5/31/02 $ 50,000
$ 51,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts.,
8/15/06 50,000
46,938
- ----------------------------------------------------------------------------------------------------------------
- -------------
Roche Holdings, Inc., 2.75% Bonds, 4/14/00 300,000
271,313
----------------
586,507
- ----------------------------------------------------------------------------------------------------------------
- -------------------
HOTEL/GAMING - 2.0%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Argosy Gaming Co., 13.25% First Mtg. Nts., 6/1/04 50,000
48,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts.,
8.594%, 6/15/98 (3) 75,000
66,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg. Nts.,
3/15/04 50,000
54,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts.,
8/15/03 (1) 50,000
51,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
GB Property Funding Corp., 10.875% First Mtg. Nts.,
1/15/04 25,000
22,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
GNF Corp., 10.625% Gtd. First Mtg. Nts., Series B, 4/1/03 50,000
55,438
- ----------------------------------------------------------------------------------------------------------------
- -------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 25,000
32,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000
104,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000
31,275
- ----------------------------------------------------------------------------------------------------------------
- -------------
Trump Atlantic City Associates/Trump Atlantic City
Funding, Inc., 11.25% First Mtg. Nts., 5/1/06 25,000
23,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
Trump's Castle Funding, Inc., 11.75% Mtg. Nts., 11/15/03 50,000
47,500
----------------
537,588
- ----------------------------------------------------------------------------------------------------------------
- -------------------
ENERGY - 1.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 85,000
90,625
8.75% Sr. Nts., 5/15/99 55,000
58,087
- ----------------------------------------------------------------------------------------------------------------
- -------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (5) 58,711
52,465
- ----------------------------------------------------------------------------------------------------------------
- -------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 100,000
100,333
- ----------------------------------------------------------------------------------------------------------------
- -------------
Maxus Energy Corp., 9.875% Nts., 10/15/02 50,000
51,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 85,000
89,819
----------------
442,704
- ----------------------------------------------------------------------------------------------------------------
- -------------------
FINANCIAL SERVICES - 14.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
BANKS & THRIFTS - 4.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
BankAmerica Corp., 6% Nts., 7/15/97 300,000
300,486
- ----------------------------------------------------------------------------------------------------------------
- -------------
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 60,000
62,979
- ----------------------------------------------------------------------------------------------------------------
- -------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 55,000
55,411
- ----------------------------------------------------------------------------------------------------------------
- -------------
Citicorp, 5.625% Sr. Nts., 2/15/01 90,000
87,284
- ----------------------------------------------------------------------------------------------------------------
- -------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts.,
4/1/98 55,000
56,635
- ----------------------------------------------------------------------------------------------------------------
- -------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 55,000
55,533
- ----------------------------------------------------------------------------------------------------------------
- -------------
First USA Bank, 5.35% Medium-Term Nts., 12/27/96 150,000
149,876
- ----------------------------------------------------------------------------------------------------------------
- -------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 145,000
163,678
- ----------------------------------------------------------------------------------------------------------------
- -------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 145,000
145,611
- ----------------------------------------------------------------------------------------------------------------
- -------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 185,000
186,165
- ----------------------------------------------------------------------------------------------------------------
- -------------
Security Pacific Corp., 7.75% Nts., 12/1/96 55,000
55,082
----------------
1,318,740
</TABLE>
7 Oppenheimer LifeSpan Funds
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C>
<C>
DIVERSIFIED FINANCIAL - 7.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 $ 60,000
$ 62,517
- ----------------------------------------------------------------------------------------------------------------
- -------------
Associates Corp. of North America, 7.40% Medium-Term
Nts., 7/7/99 60,000
61,837
- ----------------------------------------------------------------------------------------------------------------
- -------------
Beneficial Corp., 9.125% Debs., 2/15/98 145,000
150,535
- ----------------------------------------------------------------------------------------------------------------
- -------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 75,000
75,525
- ----------------------------------------------------------------------------------------------------------------
- -------------
Chrysler Financial Corp., 6.65% Medium-Term Nts.,
04/28/97 120,000
120,604
- ----------------------------------------------------------------------------------------------------------------
- -------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 145,000
140,113
- ----------------------------------------------------------------------------------------------------------------
- -------------
Countrywide Funding Corp.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 90,000
88,232
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 60,000
59,664
6.57% Gtd. Medium-Term Nts., Series A, 8/4/97 60,000
60,353
- ----------------------------------------------------------------------------------------------------------------
- -------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 145,000
145,940
- ----------------------------------------------------------------------------------------------------------------
- -------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 175,000
169,080
5.65% Medium-Term Nts., 12/15/97 300,000
299,231
- ----------------------------------------------------------------------------------------------------------------
- -------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 55,000
57,321
- ----------------------------------------------------------------------------------------------------------------
- -------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 50,000
50,813
- ----------------------------------------------------------------------------------------------------------------
- -------------
Merrill Lynch & Co., Inc.:
6.50% Nts., 4/1/01 150,000
149,832
8.25% Debs., 11/18/96 85,000
85,068
- ----------------------------------------------------------------------------------------------------------------
- -------------
Norwest Financial, Inc., 6.50% Sr. Nts., 11/15/97 55,000
55,378
- ----------------------------------------------------------------------------------------------------------------
- -------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 55,000
57,195
- ----------------------------------------------------------------------------------------------------------------
- -------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D,
3/1/99 160,000
167,495
----------------
2,056,733
- ----------------------------------------------------------------------------------------------------------------
- -------------------
INSURANCE - 1.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Cigna Corp., 7.90% Nts., 12/14/98 150,000
154,800
- ----------------------------------------------------------------------------------------------------------------
- -------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 120,000
126,266
- ----------------------------------------------------------------------------------------------------------------
- -------------
Travelers/Aetna Property Casualty Corp., 6.75% Nts.,
4/15/01 145,000
146,428
----------------
427,494
- ----------------------------------------------------------------------------------------------------------------
- -------------------
HOUSING RELATED - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
BUILDING MATERIALS - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 70,000
74,725
- ----------------------------------------------------------------------------------------------------------------
- -------------------
HOMEBUILDERS/REAL ESTATE - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec.
Unsub. Nts., 1/26/01 60,000
59,586
- ----------------------------------------------------------------------------------------------------------------
- -------------------
MANUFACTURING - 2.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
AEROSPACE/ELECTRONICS/COMPUTERS - 1.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------
British Aerospace plc, 8% Debs., 5/27/97 60,000
60,713
- ----------------------------------------------------------------------------------------------------------------
- -------------
Digital Equipment Corp., 7% Nts., 11/15/97 215,000
215,983
- ----------------------------------------------------------------------------------------------------------------
- -------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000
51,500
----------------
328,196
- ----------------------------------------------------------------------------------------------------------------
- -------------------
AUTOMOTIVE - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Venture Holdings Trust, 9.75% Sr. Sub. Nts., 4/1/04 39,000
35,100
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CAPITAL GOODS - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Day International Group, Inc., 11.125% Sr. Sub. Nts.,
Series B, 6/1/05 50,000
52,500
</TABLE>
8 Oppenheimer LifeSpan Funds
<PAGE> 9
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C> <C>
<C>
CAPITAL GOODS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 $ 50,000
$ 52,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000
53,125
- ----------------------------------------------------------------------------------------------------------------
- -------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/03 25,000
24,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 40,000
40,900
- ----------------------------------------------------------------------------------------------------------------
- -------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000
54,000
----------------
277,275
- ----------------------------------------------------------------------------------------------------------------
- -------------------
MEDIA - 4.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
BROADCASTING - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
New World Communications Group Holding Corp., Zero
Coupon Sr. Disc. Nts., Series B, 10.985%, 6/15/99 (3) 75,000
61,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Park Broadcasting, Inc., 11.75% Sr. Nts., 5/15/04 (1) 50,000
57,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000
48,750
----------------
168,000
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CABLE TELEVISION - 1.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Australis Media Ltd., Units (each unit consists of $1,000
principal amount of 0%/14% sr. sub. disc. nts., 5/15/03 and
one warrant to purchase 57.721 ordinary shares) (2)(4) 75,000
44,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
Bell Cablemedia plc, 0%/11.95% Sr. Disc. Nts., 7/15/04 (2) 75,000
62,063
- ----------------------------------------------------------------------------------------------------------------
- -------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000
50,313
- ----------------------------------------------------------------------------------------------------------------
- -------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07 (2) 75,000
48,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts.,
Series B, 11/1/03 (6) 100,000
102,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
International CableTel, Inc., 0%/11.50% Sr. Deferred
Coupon Nts., Series B, 2/1/06 (2) 100,000
61,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
United International Holdings, Inc., Zero Coupon Sr. Sec.
Disc. Nts., Series B, 14%, 11/15/99 (3) 100,000
70,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Wireless One, Inc., Units (each unit consists of $1,000
principal amount of 0%/13.50% sr. disc. nts., 8/1/01 and one
warrant to purchase 2.274 ordinary shares) (2)(4) 50,000
26,750
----------------
465,626
- ----------------------------------------------------------------------------------------------------------------
- -------------------
DIVERSIFIED MEDIA - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Time Warner, Inc., 7.45% Nts., 2/1/98 145,000
147,196
- ----------------------------------------------------------------------------------------------------------------
- -------------------
ENTERTAINMENT/FILM - 1.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------
American Skiing Corp., 12% Sr. Sub. Nts., 7/15/06 (7) 75,000
76,125
- ----------------------------------------------------------------------------------------------------------------
- -------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 145,000
145,728
- ----------------------------------------------------------------------------------------------------------------
- -------------
Marvel III Holdings, Inc., 9.125% Sr. Sec. Nts., Series B,
2/15/98 25,000
11,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
Walt Disney Co., 6.375% Sr. Unsec. Bonds, Series A,
3/30/01 220,000
219,736
----------------
452,964
- ----------------------------------------------------------------------------------------------------------------
- -------------------
PUBLISHING/PRINTING - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Reed Publishing (USA), Inc., 7.24% Gtd. Medium-Term
Nts., 2/10/97 70,000
70,281
- ----------------------------------------------------------------------------------------------------------------
- -------------------
OTHER - 0.8%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CONGLOMERATES - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Alpine Group, Inc., 12.25% Sr. Nts., 7/15/03 38,000
40,185
</TABLE>
9 Oppenheimer LifeSpan Funds
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C> <C>
<C>
SERVICES - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Monarch Marketing Systems, Inc., 12.50% Sr. Nts., 7/1/03 $ 75,000
$ 82,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 (1) 75,000
77,156
----------------
160,031
- ----------------------------------------------------------------------------------------------------------------
- -------------------
RETAIL - 4.0%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
DEPARTMENT STORES - 2.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Dayton Hudson Co., 9.40% Debs., 12/15/01 150,000
165,520
- ----------------------------------------------------------------------------------------------------------------
- -------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 60,000
65,664
- ----------------------------------------------------------------------------------------------------------------
- -------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 50,000
50,625
- ----------------------------------------------------------------------------------------------------------------
- -------------
Price/Costco, Inc., 7.125% Sr. Nts., 6/15/05 120,000
119,675
- ----------------------------------------------------------------------------------------------------------------
- -------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 290,000
304,383
----------------
705,867
- ----------------------------------------------------------------------------------------------------------------
- -------------------
DRUG STORES - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Duane Reade, 12% Sr. Nts., Series B, 9/15/02 50,000
48,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03 (2) 100,000
69,000
----------------
117,750
- ----------------------------------------------------------------------------------------------------------------
- -------------------
SPECIALTY RETAILING - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Hills Stores Co., 12.50% Sr. Nts., Series B, 7/1/03 50,000
45,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 50,000
56,375
----------------
101,875
- ----------------------------------------------------------------------------------------------------------------
- -------------------
SUPERMARKETS - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts.,
3/15/04 50,000
48,125
- ----------------------------------------------------------------------------------------------------------------
- -------------
Farm Fresh, Inc., 12.25% Sr. Nts., Series A, 10/1/00 50,000
40,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts.,
3/1/06 50,000
53,500
----------------
141,625
- ----------------------------------------------------------------------------------------------------------------
- -------------------
TRANSPORTATION - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
RAILROADS - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Union Pacific Corp., 7% Nts., 6/15/00 150,000
152,932
- ----------------------------------------------------------------------------------------------------------------
- -------------------
SHIPPING - 0.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Federal Express Corp., 6.25% Nts., 4/15/98 240,000
240,578
- ----------------------------------------------------------------------------------------------------------------
- -------------------
UTILITIES - 6.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
ELECTRIC UTILITIES - 3.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Consumers Power Co., 8.75% Mtg. Nts., 2/15/98 145,000
148,932
- ----------------------------------------------------------------------------------------------------------------
- -------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 75,000
75,188
- ----------------------------------------------------------------------------------------------------------------
- -------------
NorAm Energy Corp., 9.875% Nts., 4/15/97 290,000
295,184
- ----------------------------------------------------------------------------------------------------------------
- -------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 220,000
220,945
- ----------------------------------------------------------------------------------------------------------------
- -------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec.
Debs., 2/1/06 100,000
94,951
----------------
835,200
- ----------------------------------------------------------------------------------------------------------------
- -------------------
TELECOMMUNICATIONS - 3.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs.,
Series B, 11/30/07 50,000
46,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
American Communications Services, Inc., 0%/13% Sr. Disc.
Nts., 11/1/05 (2) 75,000
42,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
Arch Communications Group, Inc., 0%/10.875% Sr. Disc.
Nts., 3/15/08 (2) 75,000
41,625
</TABLE>
10 Oppenheimer LifeSpan Funds
<PAGE> 11
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
TELECOMMUNICATIONS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 $ 50,000
$ 49,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
GTE Corp., 8.85% Debs., 3/1/98 60,000
62,151
- ----------------------------------------------------------------------------------------------------------------
- -------------
Intermedia Communications, Inc., 13.50% Sr. Nts., Series B, 6/1/05 50,000
57,125
- ----------------------------------------------------------------------------------------------------------------
- -------------
MCI Communications Corp.:
7.125% Sr. Nts., 1/20/00 145,000
148,671
7.625% Sr. Nts., 11/7/96 60,000
60,007
- ----------------------------------------------------------------------------------------------------------------
- -------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 25,000
20,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
MFS Communications Co., Inc., 0%/9.375% Sr. Disc. Nts.,
1/15/04 (2) 75,000
64,031
- ----------------------------------------------------------------------------------------------------------------
- -------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts.,
8/15/04 (2) 100,000
63,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
Peoples Telephone Co., Inc., 12.25% Sr. Nts., 7/15/02 50,000
52,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Plantronics, Inc., 10% Sr. Nts., 1/15/01 75,000
78,188
- ----------------------------------------------------------------------------------------------------------------
- -------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr.
Nts., 8/15/06 50,000
50,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (2) 25,000
16,188
9.875% Sr. Nts., 7/1/06 25,000
25,656
- ----------------------------------------------------------------------------------------------------------------
- -------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 (7) 50,000
50,188
----------------
930,955
----------------
Total Corporate Bonds and Notes (Cost $13,845,812)
13,939,765
<CAPTION>
SHARES
================================================================================================================
===================
<S> <C> <C>
<C>
COMMON STOCKS - 21.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
BASIC INDUSTRY - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CHEMICALS - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Dexter Corp. 4,300
133,300
- ----------------------------------------------------------------------------------------------------------------
- -------------
Millenium Chemicals, Inc. (8) 528
10,692
----------------
143,992
- ----------------------------------------------------------------------------------------------------------------
- -------------------
STEEL - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Carpenter Technology Corp. 3,200
104,400
- ----------------------------------------------------------------------------------------------------------------
- -------------
UNR Industries, Inc. 23,000
155,250
----------------
259,650
- ----------------------------------------------------------------------------------------------------------------
- -------------------
CONSUMER RELATED - 1.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
FOOD/BEVERAGES/TOBACCO - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Anheuser-Busch Cos., Inc. 3,000
115,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Imperial Tobacco Group plc, ADR (8) 1,850
21,600
----------------
137,100
- ----------------------------------------------------------------------------------------------------------------
- -------------------
HEALTHCARE - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Bristol-Myers Squibb Co. 1,500
158,625
- ----------------------------------------------------------------------------------------------------------------
- -------------
Glaxo Wellcome plc, Sponsored ADR 3,800
119,700
----------------
278,325
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Restaurants - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Piccadilly Cafeterias, Inc. 6,900
60,375
- ----------------------------------------------------------------------------------------------------------------
- -------------------
ENERGY - 3.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Amoco Corp. 1,400
106,050
- ----------------------------------------------------------------------------------------------------------------
- -------------
Atlantic Richfield Co. 1,200
159,000
</TABLE>
11 Oppenheimer LifeSpan Funds
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C>
<C>
ENERGY (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Chevron Corp. 2,300
$ 151,225
- ----------------------------------------------------------------------------------------------------------------
- -------------
El Paso Natural Gas Co. 3,800
184,300
- ----------------------------------------------------------------------------------------------------------------
- -------------
Exxon Corp. 1,500
132,937
- ----------------------------------------------------------------------------------------------------------------
- -------------
Mobil Corp. 1,200
140,100
----------------
873,612
- ----------------------------------------------------------------------------------------------------------------
- -------------------
FINANCIAL SERVICES - 2.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
BANKS & THRIFTS - 2.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Bank of Boston Corp. 2,600
166,400
- ----------------------------------------------------------------------------------------------------------------
- -------------
BankAmerica Corp. 1,800
164,700
- ----------------------------------------------------------------------------------------------------------------
- -------------
Chase Manhattan Corp. (New) 500
42,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
NationsBank Corp. 800
75,400
- ----------------------------------------------------------------------------------------------------------------
- -------------
PNC Bank Corp. 4,000
145,000
----------------
594,375
- ----------------------------------------------------------------------------------------------------------------
- -------------------
INSURANCE - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Hartford Steam Boiler Inspection & Insurance Co. 2,500
107,812
- ----------------------------------------------------------------------------------------------------------------
- -------------------
HOUSING RELATED - 2.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Camden Property Trust 4,800
130,800
- ----------------------------------------------------------------------------------------------------------------
- -------------
Capstone Capital Corp. 5,900
127,588
- ----------------------------------------------------------------------------------------------------------------
- -------------
Crescent Real Estate Equities, Inc. 1,800
75,150
- ----------------------------------------------------------------------------------------------------------------
- -------------
Health & Retirement Property Trust 6,800
123,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
Meditrust Corp. 3,100
111,600
----------------
568,388
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Manufacturing - 2.4%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
General Dynamics Corp. 2,600
178,425
- ----------------------------------------------------------------------------------------------------------------
- -------------
Goodrich (B.F.) Co. 3,200
135,600
- ----------------------------------------------------------------------------------------------------------------
- -------------
Lockheed Martin Corp. 1,200
107,550
- ----------------------------------------------------------------------------------------------------------------
- -------------
Rockwell International Corp. 2,000
110,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
TRW, Inc. 1,200
108,600
----------------
640,175
- ----------------------------------------------------------------------------------------------------------------
- -------------------
OTHER - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Hanson plc, ADR 7,400
47,175
- ----------------------------------------------------------------------------------------------------------------
- -------------------
RETAIL - 0.8%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Brown Group, Inc. 6,500
134,063
- ----------------------------------------------------------------------------------------------------------------
- -------------
New England Business Service, Inc. 5,000
90,000
----------------
224,063
- ----------------------------------------------------------------------------------------------------------------
- -------------------
UTILITIES - 6.4%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
ELECTRIC UTILITIES - 5.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------
American Electric Power Co., Inc. 3,000
124,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
Entergy Corp. 4,300
120,400
- ----------------------------------------------------------------------------------------------------------------
- -------------
FPL Group, Inc. 3,000
138,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Illinova Corp. 4,000
109,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
Kansas City Power & Light Co. 5,000
137,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
National Fuel Gas Co. 3,700
137,825
- ----------------------------------------------------------------------------------------------------------------
- -------------
PanEnergy Corp. 6,100
234,850
- ----------------------------------------------------------------------------------------------------------------
- -------------
Questar Corp. 4,100
147,600
- ----------------------------------------------------------------------------------------------------------------
- -------------
Texas Utilities Co. 2,400
97,200
- ----------------------------------------------------------------------------------------------------------------
- -------------
Western Resources, Inc. 3,900
117,000
----------------
1,363,875
</TABLE>
12 Oppenheimer LifeSpan Funds
<PAGE> 13
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------------
<S> <C>
<C>
TELECOMMUNICATIONS - 1.3%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Ameritech Corp. 2,100
$ 114,975
- ----------------------------------------------------------------------------------------------------------------
- -------------
GTE Corp. 2,600
109,525
- ----------------------------------------------------------------------------------------------------------------
- -------------
NYNEX Corp. 2,700
120,150
----------------
344,650
----------------
Total Common Stocks (Cost $4,834,333)
5,643,567
================================================================================================================
===================
PREFERRED STOCKS - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg.
(Cost $115,000) 1,200
138,000
</TABLE>
<TABLE>
<CAPTION>
UNITS
================================================================================================================
===================
<S> <C>
<C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Intermedia Communications, Inc. Wts., Exp. 6/00
(Cost $470) 50
2,500
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
================================================================================================================
===================
<S> <C>
<C>
REPURCHASE AGREEMENT - 5.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------------
Repurchase agreement with State Street Bank and Trust Co.,
4.50%, dated 10/31/96, to be repurchased at $1,404,176 on
11/1/96, collateralized by U.S. Treasury Nts., 7.75%, 2/15/01,
with a value of $1,451,083 (Cost $1,404,000) $ 1,404,000
1,404,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
TOTAL INVESTMENTS, AT VALUE (COST $25,253,427) 98.1%
26,271,162
- ----------------------------------------------------------------------------------------------------------------
- -------------
OTHER ASSETS NET OF LIABILITIES 1.9
513,453
------------
----------------
NET ASSETS 100.0%
$ 26,784,615
============
================
</TABLE>
1. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established
by the Board of Directors. These securities amount to $207,588 or 0.78%
of the Fund's net assets, at October 31, 1996.
2. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
3. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
4. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For
units which represent debt securities, face amount disclosed represents
total underlying principal.
5. Interest or dividend is paid in kind.
6. Represents the current interest rate for a variable rate security.
For credit sensitive notes, the interest rate is dependent on the credit
rating of the issuer.
7. Identifies issues considered to be illiquid. These securities amount
to $126,313 or 0.47% of the Fund's net assets, at October 31, 1996.
8. Non-income producing security.
See accompanying Notes to Financial Statements.
13 Oppenheimer LifeSpan Funds
<PAGE> 14
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
================================================================================================================
==============
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 3.4%
- ----------------------------------------------------------------------------------------------------------------
- --------------
GOVERNMENT AGENCY - 2.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 5.50%, 6/1/98 $ 60,440 $
59,902
Gtd. Multiclass Mtg. Participation Certificates, 6%, 3/1/09 205,627
200,051
Gtd. Multiclass Mtg. Participation Certificates, Series 1574, Cl.
PD, 5.50%, 3/15/13 100,000
99,500
Series 1843, Cl. VB, 7%, 4/15/03 65,000
65,630
Series 1849, Cl. VA, 6%, 12/15/10 208,428
205,106
- ----------------------------------------------------------------------------------------------------------------
- --------
Federal National Mortgage Assn.:
6%, 12/1/03 204,280
200,730
6.50%, 4/1/26 148,123
141,732
7%, 4/1/00 98,234
99,019
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Series 1993-181, Cl. C, 5.40%, 10/25/02 250,000
248,125
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Series 1993-190, Cl. Z, 5.85%, 7/25/08 142,960
140,928
Series 1994-13, Cl. B, 6.50%, 2/25/09 150,000
144,422
- ------------------
1,605,145
- ----------------------------------------------------------------------------------------------------------------
- --------------
PRIVATE - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- --------------
GE Capital Mortgage Securities, Inc., Series-HE2, Cl. A3, 7.30%,
3/25/12 125,000
126,699
- ----------------------------------------------------------------------------------------------------------------
- --------
Olympic Automobile Receivables Trust, Series 1996-A,
Cl. A4, 5.85%, 7/15/01 110,000
109,278
- ------------------
235,977
- ------------------
Total Mortgage-Backed Obligations (Cost $1,829,067)
1,841,122
================================================================================================================
==============
U.S. GOVERNMENT OBLIGATIONS - 5.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,295,000
1,401,028
- ----------------------------------------------------------------------------------------------------------------
- --------
U.S. Treasury Nts.:
6.50%, 8/15/05 650,000
656,906
6.75%, 6/30/99 370,000
377,747
7.25%, 8/15/04 360,000
380,137
- ------------------
Total U.S. Government Obligations (Cost $2,741,607)
2,815,818
================================================================================================================
==============
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 27.6%
- ----------------------------------------------------------------------------------------------------------------
- --------------
BASIC MATERIALS - 4.0%
- ----------------------------------------------------------------------------------------------------------------
- --------------
CHEMICALS - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 110,000
111,449
- ----------------------------------------------------------------------------------------------------------------
- --------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 120,000
130,348
- ----------------------------------------------------------------------------------------------------------------
- --------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc.
Nts., 7/15/01 100,000
103,500
- ----------------------------------------------------------------------------------------------------------------
- --------
ISP Holdings, Inc., 9.75% Sr. Nts., 2/15/02 (1) 75,000
77,437
- ----------------------------------------------------------------------------------------------------------------
- --------
LaRoche Industries, Inc., 13% Sr. Sub. Nts., 8/15/04 100,000
108,375
- ----------------------------------------------------------------------------------------------------------------
- --------
Lyondell Petrochemical Co., 8.25% Nts., 3/15/97 75,000
75,665
</TABLE>
14 Oppenheimer LifeSpan Funds
<PAGE> 15
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
CHEMICALS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 (6) $ 65,000 $
79,647
- ----------------------------------------------------------------------------------------------------------------
- --------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (2) 100,000
82,750
- ----------------------------------------------------------------------------------------------------------------
- --------
PPG Industries, Inc., 9% Debs., 5/1/21 65,000
78,280
- ------------------
847,451
- ----------------------------------------------------------------------------------------------------------------
- --------------
METALS - 1.1%
- ----------------------------------------------------------------------------------------------------------------
- --------
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 125,000
135,545
- ----------------------------------------------------------------------------------------------------------------
- --------
Gulf States Steel, Inc., Alabama, 13.50% First Mtg. Nts.,
Series B, 4/15/03 100,000
94,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 100,000
103,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts.,
12/15/01 50,000
46,750
- ----------------------------------------------------------------------------------------------------------------
- --------
WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02 100,000
112,125
- ----------------------------------------------------------------------------------------------------------------
- --------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 100,000
95,500
- ------------------
588,295
- ----------------------------------------------------------------------------------------------------------------
- --------------
PAPER - 1.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 110,000
110,412
- ----------------------------------------------------------------------------------------------------------------
- --------
Crown Packaging Holdings Ltd., 0%/12.25% Sr. Sub. Disc. Nts.,
Series B, 11/1/03 (2) 200,000
79,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Fort Howard Corp., 9% Sr. Sub. Nts., 2/1/06 75,000
75,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 100,000
109,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Georgia-Pacific Corp., 9.85% Credit Sensitive Nts., 6/15/97 (6) 220,000
225,297
- ----------------------------------------------------------------------------------------------------------------
- --------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 100,000
108,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 50,000
50,000
- ------------------
758,209
- ----------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER CYCLICALS - 8.0%
- ----------------------------------------------------------------------------------------------------------------
- --------------
AUTOS & HOUSING - 0.8%
- ----------------------------------------------------------------------------------------------------------------
- --------
Black & Decker Corp., 6.625% Nts., 11/15/00 110,000
110,505
- ----------------------------------------------------------------------------------------------------------------
- --------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 50,000
49,655
- ----------------------------------------------------------------------------------------------------------------
- --------
Electrolux AB, 7.75% Sr. Unsub. Debs., 6/17/97 220,000
222,200
- ----------------------------------------------------------------------------------------------------------------
- --------
Venture Holdings Trust, 9.75% Sr. Sub. Nts., 4/1/04 78,000
70,200
- ------------------
452,560
- ----------------------------------------------------------------------------------------------------------------
- --------------
LEISURE & ENTERTAINMENT - 2.8%
- ----------------------------------------------------------------------------------------------------------------
- --------
American Skiing Corp., 12% Sr. Sub. Nts., 7/15/06 (3) 125,000
126,875
- ----------------------------------------------------------------------------------------------------------------
- --------
Argosy Gaming Co., 13.25% First Mtg. Nts., 6/1/04 100,000
97,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts.,
8.594%, 6/15/98 (4) 125,000
110,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg.
Nts., 3/15/04 100,000
109,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 110,000
110,552
- ----------------------------------------------------------------------------------------------------------------
- --------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 75,000
77,062
- ----------------------------------------------------------------------------------------------------------------
- --------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 (1) 150,000
153,000
- ----------------------------------------------------------------------------------------------------------------
- --------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000
45,500
- ----------------------------------------------------------------------------------------------------------------
- --------
GNF Corp., 10.625% Gtd. First Mtg. Nts., Series B, 4/1/03 100,000
110,875
</TABLE>
15 Oppenheimer LifeSpan Funds
<PAGE> 16
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Marvel III Holdings, Inc., 9.125% Sr. Sec. Nts., Series B,
2/15/98 $ 50,000 $
22,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 50,000
64,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000
104,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 91,000
63,245
- ----------------------------------------------------------------------------------------------------------------
- --------
Trump Atlantic City Associates/Trump Atlantic City Funding,
Inc., 11.25% First Mtg. Nts., 5/1/06 75,000
71,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Trump's Castle Funding, Inc., 11.75% Mtg. Nts., 11/15/03 100,000
95,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Walt Disney Co., 6.375% Sr. Unsec. Bonds, Series A, 3/30/01 160,000
159,808
- ------------------
1,521,167
- ----------------------------------------------------------------------------------------------------------------
- --------------
MEDIA - 2.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Australis Media Ltd., Units (each unit consists of $1,000
principal amount of 0%/14% sr. sub. disc.
nts., 5/15/03 and one warrant to purchase 57.721 ordinary
shares) (2)(5) 150,000
88,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Bell Cablemedia plc, 0%/11.95% Sr. Disc. Nts., 7/15/04 (2) 150,000
124,125
- ----------------------------------------------------------------------------------------------------------------
- --------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 100,000
100,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07 (2) 125,000
81,250
- ----------------------------------------------------------------------------------------------------------------
- --------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04 (2) 100,000
70,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts.,
Series B, 11/1/03 (6) 50,000
51,250
- ----------------------------------------------------------------------------------------------------------------
- --------
International CableTel, Inc., 0%/11.50% Sr. Deferred
Coupon Nts., Series B, 2/1/06 (2) 250,000
152,500
- ----------------------------------------------------------------------------------------------------------------
- --------
New World Communications Group Holding Corp., Zero Coupon Sr.
Disc. Nts., Series B, 10.995%, 6/15/99 (4) 200,000
164,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Park Broadcasting, Inc., 11.75% Sr. Nts., 5/15/04 (1) 75,000
86,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Reed Publishing (USA), Inc., 7.24% Gtd. Medium-Term Nts.,
2/10/97 70,000
70,281
- ----------------------------------------------------------------------------------------------------------------
- --------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 100,000
97,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Time Warner, Inc., 7.45% Nts., 2/1/98 110,000
111,666
- ----------------------------------------------------------------------------------------------------------------
- --------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc.
Nts.: (4) 100,000
70,000
Series B, 14%, 11/15/99 12.376%, 11/15/99 (4) 50,000
35,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Wireless One, Inc., Units (each unit consists of $1,000
principal amount of 0%/13.50% sr. disc. nts.,
8/1/06 and one warrant to purchase 2.274 ordinary shares) (2)(5) 100,000
53,500
- ------------------
1,357,447
- ----------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: GENERAL - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Dayton Hudson Co., 9.40% Debs., 2/15/01 120,000
132,416
- ----------------------------------------------------------------------------------------------------------------
- --------
Duane Reade, 12% Sr. Nts., 9/15/02 100,000
97,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 40,000
43,776
- ----------------------------------------------------------------------------------------------------------------
- --------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 100,000
101,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03 (2) 200,000
138,000
</TABLE>
16 Oppenheimer LifeSpan Funds
<PAGE> 17
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
<C>
RETAIL: GENERAL (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Price/Costco, Inc., 7.125% Sr. Nts., 6/15/05 $ 90,000 $
89,756
- ----------------------------------------------------------------------------------------------------------------
- --------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 220,000
230,912
- ------------------
833,610
- ----------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: SPECIALTY - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
Hills Stores Co., 12.50% Sr. Nts., Series B, 7/1/03 100,000
91,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 100,000
112,750
- ------------------
203,750
- ----------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER NON-CYCLICALS - 2.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------
FOOD - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts.,
3/15/04 100,000
96,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Dole Food Co., 6.75% Nts., 7/15/00 120,000
120,741
- ----------------------------------------------------------------------------------------------------------------
- --------
Farm Fresh, Inc., 12.25% Sr. Nts., Series A, 10/1/00 100,000
80,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 115,000
118,333
- ----------------------------------------------------------------------------------------------------------------
- --------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts.,
3/1/06 150,000
160,500
- ------------------
575,824
- ----------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/DRUGS - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
Roche Holdings, Inc., 2.75% Bonds, 4/14/00 200,000
180,875
- ----------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/SUPPLIES & SERVICES - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 120,000
121,504
- ----------------------------------------------------------------------------------------------------------------
- --------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 (1) 125,000
134,375
- ----------------------------------------------------------------------------------------------------------------
- --------
Health o meter Products, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. sub. nts., 8/15/02 and one
warrant to purchase 10.96 ordinary shares) (5) 100,000
110,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Integrated Health Services, Inc., 9.625% Sr. Sub. Nts.,
Series A, 5/31/02 100,000
102,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 100,000
93,875
- ------------------
562,254
- ----------------------------------------------------------------------------------------------------------------
- --------------
HOUSEHOLD GOODS - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 65,000
68,372
- ----------------------------------------------------------------------------------------------------------------
- --------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 100,000
102,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 12.674%, 3/15/98 (4) 100,000
88,625
- ------------------
259,497
- ----------------------------------------------------------------------------------------------------------------
- --------------
TOBACCO - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- --------
Philip Morris Cos., Inc., 8.75% Debs., 12/1/96 45,000
45,093
- ----------------------------------------------------------------------------------------------------------------
- --------------
ENERGY - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- --------------
ENERGY SERVICES & PRODUCERS - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 65,000
69,301
- ----------------------------------------------------------------------------------------------------------------
- --------
8.75% Sr. Nts., 5/15/99 35,000
36,964
- ----------------------------------------------------------------------------------------------------------------
- --------
Maxus Energy Corp., 9.875% Nts., 10/15/02 100,000
102,750
- ------------------
209,015
- ----------------------------------------------------------------------------------------------------------------
- --------------
OIL-INTEGRATED - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 75,000
75,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 65,000
68,685
- ------------------
143,935
</TABLE>
17 Oppenheimer LifeSpan Funds
<PAGE> 18
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C>
FINANCIAL - 5.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------
BANKS - 1.6%
- ----------------------------------------------------------------------------------------------------------------
- --------
BankAmerica Corp., 6% Nts., 7/15/97 $ 200,000 $
200,324
- ----------------------------------------------------------------------------------------------------------------
- --------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 35,000
35,261
- ----------------------------------------------------------------------------------------------------------------
- --------
Citicorp, 5.625% Sr. Nts., 2/15/01 65,000
63,038
- ----------------------------------------------------------------------------------------------------------------
- --------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts.,
4/1/98 35,000
36,041
- ----------------------------------------------------------------------------------------------------------------
- --------
First Union Corp., 6.75% Sr. Nts., 1/15/98 35,000
35,339
- ----------------------------------------------------------------------------------------------------------------
- --------
First USA Bank, 5.35% Medium-Term Nts., 12/27/96 100,000
99,917
- ----------------------------------------------------------------------------------------------------------------
- --------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 110,000
124,170
- ----------------------------------------------------------------------------------------------------------------
- --------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 110,000
110,464
- ----------------------------------------------------------------------------------------------------------------
- --------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 145,000
145,913
- ----------------------------------------------------------------------------------------------------------------
- --------
Security Pacific Corp., 7.75% Nts., 12/1/96 35,000
35,052
- ------------------
885,519
- ----------------------------------------------------------------------------------------------------------------
- --------------
DIVERSIFIED FINANCIAL - 2.8%
- ----------------------------------------------------------------------------------------------------------------
- --------
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 45,000
46,888
- ----------------------------------------------------------------------------------------------------------------
- --------
Associates Corp. of North America, 7.40% Medium-Term Nts.,
7/7/99 45,000
46,378
- ----------------------------------------------------------------------------------------------------------------
- --------
Beneficial Corp., 9.125% Debs., 2/15/98 110,000
114,199
- ----------------------------------------------------------------------------------------------------------------
- --------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 50,000
50,350
- ----------------------------------------------------------------------------------------------------------------
- --------
Chrysler Financial Corp., 6.65% Medium-Term Nts.,
04/28/97 80,000
80,403
- ----------------------------------------------------------------------------------------------------------------
- --------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 110,000
106,293
- ----------------------------------------------------------------------------------------------------------------
- --------
Countrywide Funding Corp.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 65,000
63,723
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 45,000
44,748
6.57% Gtd. Medium-Term Nts., Series A, 8/4/97 45,000
45,265
- ----------------------------------------------------------------------------------------------------------------
- --------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 110,000
110,713
- ----------------------------------------------------------------------------------------------------------------
- --------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 125,000
120,771
5.65% Medium-Term Nts., 12/15/97 200,000
199,487
- ----------------------------------------------------------------------------------------------------------------
- --------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 35,000
36,477
- ----------------------------------------------------------------------------------------------------------------
- --------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 125,000
127,031
- ----------------------------------------------------------------------------------------------------------------
- --------
Merrill Lynch & Co., Inc.:
6.50% Nts., 4/1/01 100,000
99,888
8.25% Debs., 11/18/96 80,000
80,064
- ----------------------------------------------------------------------------------------------------------------
- --------
Norwest Financial, Inc., 6.50% Sr. Nts., 11/15/97 35,000
35,240
- ----------------------------------------------------------------------------------------------------------------
- --------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 35,000
36,397
- ----------------------------------------------------------------------------------------------------------------
- --------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D,
3/1/99 125,000
130,856
- ------------------
1,575,171
- ----------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE - 0.7%
- ----------------------------------------------------------------------------------------------------------------
- --------
Cigna Corp., 7.90% Nts., 12/14/98 120,000
123,840
- ----------------------------------------------------------------------------------------------------------------
- --------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 125,000
131,527
- ----------------------------------------------------------------------------------------------------------------
- --------
Travelers/Aetna Property Casualty Corp., 6.75% Nts.,
4/15/01 110,000
111,084
- ------------------
366,451
- ----------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL - 2.2%
- ----------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL MATERIALS - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 100,000
106,750
</TABLE>
18 Oppenheimer LifeSpan Funds
<PAGE> 19
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
<C>
INDUSTRIAL SERVICES - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Beverly Enterprises, Inc., 9% Gtd. Unsec. Bonds, 2/15/06 $ 100,000 $
99,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Monarch Marketing Systems, Inc., 12.50% Sr. Nts., 7/1/03 50,000
55,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 (1) 125,000
128,594
- ------------------
282,844
- ----------------------------------------------------------------------------------------------------------------
- --------------
MANUFACTURING - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Alpine Group, Inc., 12.25% Sr. Nts., 7/15/03 37,000
39,127
- ----------------------------------------------------------------------------------------------------------------
- --------
Day International Group, Inc., 11.125% Sr. Sub. Nts.,
Series B, 6/1/05 100,000
105,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 100,000
104,000
- ----------------------------------------------------------------------------------------------------------------
- --------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 100,000
106,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/03 50,000
49,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 30,000
30,675
- ----------------------------------------------------------------------------------------------------------------
- --------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 100,000
108,000
- ------------------
542,552
- ----------------------------------------------------------------------------------------------------------------
- --------------
TRANSPORTATION - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Federal Express Corp., 6.25% Nts., 4/15/98 165,000
165,398
- ----------------------------------------------------------------------------------------------------------------
- --------
Union Pacific Corp., 7% Nts., 6/15/00 105,000
107,052
- ------------------
272,450
- ----------------------------------------------------------------------------------------------------------------
- --------------
TECHNOLOGY - 3.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------
AEROSPACE/DEFENSE - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
British Aerospace plc, 8% Debs., 5/27/97 45,000
45,534
- ----------------------------------------------------------------------------------------------------------------
- --------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 100,000
103,000
- ------------------
148,534
- ----------------------------------------------------------------------------------------------------------------
- --------------
COMPUTER HARDWARE - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
Digital Equipment Corp., 7% Nts., 11/15/97 159,000
159,727
- ----------------------------------------------------------------------------------------------------------------
- --------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Allbritton Communications Co., 9.75% Sr. Sub. Debs.,
Series B, 11/30/07 100,000
93,750
- ----------------------------------------------------------------------------------------------------------------
- --------
American Communications Services, Inc., 0%/13% Sr.
Disc. Nts., 11/1/05 (2) 125,000
71,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Arch Communications Group, Inc., 0%/10.875% Sr. Disc.
Nts., 3/15/08 (2) 150,000
83,250
- ----------------------------------------------------------------------------------------------------------------
- --------
CAI Wireless Systems, Inc., 12.25% Sr. Nts., 9/15/02 100,000
98,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 100,000
98,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Hyperion Telecommunications, Inc., 0%/13% Sr. Disc. Nts.,
Series B, 4/15/03 (2) 250,000
142,500
- ----------------------------------------------------------------------------------------------------------------
- --------
MCI Communications Corp.:
7.125% Sr. Nts., 1/20/00 110,000
112,785
7.625% Sr. Nts., 11/7/96 45,000
45,005
- ----------------------------------------------------------------------------------------------------------------
- --------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 100,000
83,500
- ----------------------------------------------------------------------------------------------------------------
- --------
MFS Communications Co., Inc., 0%/9.375% Sr. Disc. Nts.,
1/15/04 (2) 150,000
128,063
- ----------------------------------------------------------------------------------------------------------------
- --------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts.,
8/15/04 (2) 200,000
127,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Paging Network, Inc., 10.125% Sr. Sub. Nts., 8/1/07 100,000
100,875
- ----------------------------------------------------------------------------------------------------------------
- --------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11%
Sr. Nts., 8/15/06 100,000
101,750
</TABLE>
19 Oppenheimer LifeSpan Funds
<PAGE> 20
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (2) $ 50,000 $
32,375
9.875% Sr. Nts., 7/1/06 50,000
51,313
- ------------------
1,371,416
- ----------------------------------------------------------------------------------------------------------------
- --------------
UTILITIES - 1.7%
- ----------------------------------------------------------------------------------------------------------------
- --------------
ELECTRIC UTILITIES - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
Consumers Power Co., 8.75% Mtg. Nts., 2/15/98 110,000
112,983
- ----------------------------------------------------------------------------------------------------------------
- --------------
GAS UTILITIES - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 50,000
50,125
- ----------------------------------------------------------------------------------------------------------------
- --------
NorAm Energy Corp., 9.875% Nts., 4/15/97 220,000
223,933
- ----------------------------------------------------------------------------------------------------------------
- --------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 180,000
180,773
- ----------------------------------------------------------------------------------------------------------------
- --------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs.,
2/1/06 75,000
71,213
- ------------------
526,044
- ----------------------------------------------------------------------------------------------------------------
- --------------
TELEPHONE UTILITIES - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
GTE Corp., 8.85% Debs., 3/1/98 45,000
46,614
- ----------------------------------------------------------------------------------------------------------------
- --------
Intermedia Communications, Inc., 13.50% Sr. Nts., Series B,
6/1/05 100,000
114,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 (3) 100,000
100,375
- ------------------
261,239
- ------------------
Total Non-Convertible Corporate Bonds and Notes
(Cost $15,033,486)
15,150,662
================================================================================================================
==============
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 40,000
41,986
- ----------------------------------------------------------------------------------------------------------------
- --------
IMC Global, Inc., 6.25% Cv. Sub. Debs., 12/1/01 90,000
105,525
- ------------------
Total Convertible Corporate Bonds and Notes (Cost $140,597)
147,511
<CAPTION>
SHARES
================================================================================================================
==============
<S> <C> <C> <C>
COMMON STOCKS - 54.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------
BASIC MATERIALS - 2.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------
CHEMICALS - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Cabot Corp. 200
4,825
- ----------------------------------------------------------------------------------------------------------------
- --------
Daicel Chemical Industries Ltd. 15,000
75,963
- ----------------------------------------------------------------------------------------------------------------
- --------
Dexter Corp. 4,400
136,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Hoechst AG 1,500
56,328
- ----------------------------------------------------------------------------------------------------------------
- --------
Millenium Chemicals, Inc. (7) 528
10,692
- ----------------------------------------------------------------------------------------------------------------
- --------
Potash Corp. of Saskatchewan, Inc. 1,600
113,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Union Carbide Corp. 3,700
157,712
- ------------------
555,320
- ----------------------------------------------------------------------------------------------------------------
- --------------
GOLD - 0.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Normandy Mining Ltd. 11,618
15,847
- ----------------------------------------------------------------------------------------------------------------
- --------------
METALS - 0.9%
- ----------------------------------------------------------------------------------------------------------------
- --------
Carpenter Technology Corp. 3,200
104,400
- ----------------------------------------------------------------------------------------------------------------
- --------
RTZ Corp. plc 4,000
64,029
- ----------------------------------------------------------------------------------------------------------------
- --------
UCAR International, Inc. (7) 2,000
78,250
- ----------------------------------------------------------------------------------------------------------------
- --------
UNR Industries, Inc. 25,000
168,750
</TABLE>
20 Oppenheimer LifeSpan Funds
<PAGE> 21
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
METALS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Western Mining Corp. Holdings Ltd. 10,000 $
62,887
- ------------------
478,316
- ----------------------------------------------------------------------------------------------------------------
- --------------
PAPER - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
Fort Howard Corp. (7) 4,100
105,062
- ----------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER CYCLICALS - 10.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------
AUTOS & HOUSING - 2.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Autoliv AB 2,000
84,879
- ----------------------------------------------------------------------------------------------------------------
- --------
Autopistas Concesionaria Espanola SA 4,200
48,268
- ----------------------------------------------------------------------------------------------------------------
- --------
Black & Decker Corp. 1,700
63,537
- ----------------------------------------------------------------------------------------------------------------
- --------
Bridgestone Corp. 3,000
50,642
- ----------------------------------------------------------------------------------------------------------------
- --------
Camden Property Trust 4,800
130,800
- ----------------------------------------------------------------------------------------------------------------
- --------
Capstone Capital Corp. 5,900
127,587
- ----------------------------------------------------------------------------------------------------------------
- --------
Groupe SEB SA 500
101,308
- ----------------------------------------------------------------------------------------------------------------
- --------
Health & Retirement Property Trust 6,800
123,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Honda Motor Co. 3,000
71,743
- ----------------------------------------------------------------------------------------------------------------
- --------
Lend Lease Corp. Ltd. 4,500
76,333
- ----------------------------------------------------------------------------------------------------------------
- --------
Meditrust Corp. 3,400
122,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Rinnai Corp. 3,000
64,094
- ----------------------------------------------------------------------------------------------------------------
- --------
United Industrial Corp. Ltd. 70,000
58,127
- ------------------
1,122,968
- ----------------------------------------------------------------------------------------------------------------
- --------------
LEISURE & ENTERTAINMENT - 2.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
AMR Corp. (7) 1,300
109,200
- ----------------------------------------------------------------------------------------------------------------
- --------
Atlas Air, Inc. (7) 5,000
184,375
- ----------------------------------------------------------------------------------------------------------------
- --------
CDL Hotels International Ltd. 180,000
93,116
- ----------------------------------------------------------------------------------------------------------------
- --------
Dover Downs Entertainment, Inc. (7) 3,600
72,450
- ----------------------------------------------------------------------------------------------------------------
- --------
Einstein/Noah Bagel Corp. (7) 2,000
67,250
- ----------------------------------------------------------------------------------------------------------------
- --------
EMI Group plc 3,000
58,964
- ----------------------------------------------------------------------------------------------------------------
- --------
Granada Group plc 5,000
72,057
- ----------------------------------------------------------------------------------------------------------------
- --------
Landry's Seafood Restaurants, Inc. (7) 3,200
65,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Northwest Airlines Corp., Cl. A (7) 1,700
56,312
- ----------------------------------------------------------------------------------------------------------------
- --------
Papa John's International, Inc. (7) 1,750
87,062
- ----------------------------------------------------------------------------------------------------------------
- --------
Piccadilly Cafeterias, Inc. 6,900
60,375
- ----------------------------------------------------------------------------------------------------------------
- --------
Regal Cinemas, Inc. (7) 5,100
132,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Swire Pacific Ltd., Cl. B 54,500
76,475
- ----------------------------------------------------------------------------------------------------------------
- --------
VideoServer, Inc. (7) 3,200
151,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Wyndham Hotel Corp. (7) 4,400
83,600
- ------------------
1,371,036
- ----------------------------------------------------------------------------------------------------------------
- --------------
MEDIA - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Elsevier NV 4,000
66,513
- ----------------------------------------------------------------------------------------------------------------
- --------
Emmis Broadcasting Corp., Cl. A (7) 2,100
76,125
- ----------------------------------------------------------------------------------------------------------------
- --------
Heftel Broadcasting Corp., A Shares (7) 1,900
68,875
- ----------------------------------------------------------------------------------------------------------------
- --------
Reed International plc 4,500
83,830
- ----------------------------------------------------------------------------------------------------------------
- --------
Reuters Holdings plc 8,000
99,593
- ----------------------------------------------------------------------------------------------------------------
- --------
Television Broadcasts Ltd. 17,000
59,581
- ----------------------------------------------------------------------------------------------------------------
- --------
Wolters Kluwer NV 600
77,163
- ------------------
531,680
- ----------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: GENERAL - 2.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
Dollar Tree Stores, Inc. (7) 2,000
75,500
</TABLE>
21 Oppenheimer LifeSpan Funds
<PAGE> 22
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
RETAIL: GENERAL (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Eckerd Corp. (7) 3,000 $
83,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Federated Department Stores, Inc. (7) 3,400
112,200
- ----------------------------------------------------------------------------------------------------------------
- --------
Marks & Spencer plc 13,000
109,233
- ----------------------------------------------------------------------------------------------------------------
- --------
Nautica Enterprises, Inc. (7) 5,600
172,200
- ----------------------------------------------------------------------------------------------------------------
- --------
North Face, Inc. (The) (7) 3,100
62,775
- ----------------------------------------------------------------------------------------------------------------
- --------
Price/Costco, Inc. (7) 4,900
97,387
- ----------------------------------------------------------------------------------------------------------------
- --------
St. John Knits, Inc. 2,900
132,675
- ----------------------------------------------------------------------------------------------------------------
- --------
U.S. Industries, Inc. (7) 4,300
116,100
- ----------------------------------------------------------------------------------------------------------------
- --------
Wolverine World Wide, Inc. 4,350
107,662
- ----------------------------------------------------------------------------------------------------------------
- --------
Zeneca Group plc 4,000
109,038
- ------------------
1,178,020
- ----------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: SPECIALTY - 2.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
adidas AG 480
40,319
- ----------------------------------------------------------------------------------------------------------------
- --------
Brown Group, Inc. 7,300
150,562
- ----------------------------------------------------------------------------------------------------------------
- --------
CDW Computer Centers, Inc. (7) 2,900
182,519
- ----------------------------------------------------------------------------------------------------------------
- --------
Cifra SA de CV, Unsponsored ADR, B Shares (7) 45,000
57,393
- ----------------------------------------------------------------------------------------------------------------
- --------
Finish Line, Inc., Cl. A (7) 3,000
127,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Jusco Co. 2,000
59,434
- ----------------------------------------------------------------------------------------------------------------
- --------
Koninklijke Ahold NV 1,733
101,166
- ----------------------------------------------------------------------------------------------------------------
- --------
New England Business Service, Inc. 5,100
91,800
- ----------------------------------------------------------------------------------------------------------------
- --------
Next plc 10,700
97,225
- ----------------------------------------------------------------------------------------------------------------
- --------
Regis Corp. of Minnesota 4,000
97,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Shimamura Co. Ltd. 2,000
73,501
- ----------------------------------------------------------------------------------------------------------------
- --------
Toys 'R' Us, Inc. (7) 4,000
135,500
- ----------------------------------------------------------------------------------------------------------------
- --------
U.S. Office Products Co. (7) 4,300
124,700
- ------------------
1,338,619
- ----------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER NON-CYCLICALS - 7.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------
BEVERAGES - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- --------
Anheuser-Busch Cos., Inc. 6,600
254,100
- ----------------------------------------------------------------------------------------------------------------
- --------
Embotelladora Andina SA, Sponsored ADR 2,200
75,900
330,000
- ----------------------------------------------------------------------------------------------------------------
- --------------
EDUCATION - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
ITT Educational Services, Inc. (7) 2,000
72,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Learning Tree International, Inc. (7) 2,400
101,400
- ------------------
174,150
- ----------------------------------------------------------------------------------------------------------------
- --------------
FOOD - 1.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
American Stores Co. 3,400
140,675
- ----------------------------------------------------------------------------------------------------------------
- --------
Archer-Daniels-Midland Co. 5,460
118,755
- ----------------------------------------------------------------------------------------------------------------
- --------
Carrefour Supermarche SA 160
88,861
- ----------------------------------------------------------------------------------------------------------------
- --------
Danisco AS 1,250
71,623
- ----------------------------------------------------------------------------------------------------------------
- --------
Dole Food Co. 2,300
89,700
- ----------------------------------------------------------------------------------------------------------------
- --------
Kroger Co. (7) 2,800
124,950
- ----------------------------------------------------------------------------------------------------------------
- --------
William Morrison Supermarkets plc 40,000
104,218
- ------------------
738,782
- ----------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/DRUGS - 2.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
Astra AB Free, Series A 1,500
68,907
- ----------------------------------------------------------------------------------------------------------------
- --------
Bristol-Myers Squibb Co. 2,800
296,100
- ----------------------------------------------------------------------------------------------------------------
- --------
Ciba-Geigy AG 100
122,743
- ----------------------------------------------------------------------------------------------------------------
- --------
Clintrials Research, Inc. (7) 2,600
96,525
</TABLE>
22 Oppenheimer LifeSpan Funds
<PAGE> 23
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
HEALTHCARE/DRUGS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Dura Pharmaceuticals, Inc. (7) 2,800 $
96,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Glaxo Wellcome plc, Sponsored ADR 3,800
119,700
- ----------------------------------------------------------------------------------------------------------------
- --------
Jones Medical Industries, Inc. 2,450
106,575
- ----------------------------------------------------------------------------------------------------------------
- --------
Medicis Pharmaceutical Corp., Cl. A (7) 1,800
90,450
- ----------------------------------------------------------------------------------------------------------------
- --------
Sandoz AG 100
115,175
- ----------------------------------------------------------------------------------------------------------------
- --------
Schering AG 1,000
80,111
- ----------------------------------------------------------------------------------------------------------------
- --------
Takeda Chemical Industries Ltd. 5,000
85,722
- ------------------
1,278,608
- ----------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/SUPPLIES & SERVICES - 2.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
CNS, Inc. (7) 3,800
64,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Columbia/HCA Healthcare Corp. 2,550
91,162
- ----------------------------------------------------------------------------------------------------------------
- --------
Compdent Corp. (7) 2,200
75,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Luxottica Group SpA, Sponsored ADR 1,000
63,500
- ----------------------------------------------------------------------------------------------------------------
- --------
National Surgery Centers, Inc. (7) 2,400
64,800
- ----------------------------------------------------------------------------------------------------------------
- --------
OrNda Healthcorp (7) 4,100
111,725
- ----------------------------------------------------------------------------------------------------------------
- --------
Orthodontic Centers of America, Inc. (7) 4,200
60,375
- ----------------------------------------------------------------------------------------------------------------
- --------
Pediatrix Medical Group, Inc. (7) 3,300
129,937
- ----------------------------------------------------------------------------------------------------------------
- --------
Physician Sales & Service, Inc. (7) 5,300
112,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Renal Treatment Centers, Inc. (7) 3,800
101,650
- ----------------------------------------------------------------------------------------------------------------
- --------
Rural/Metro Corp. (7) 3,000
109,500
- ----------------------------------------------------------------------------------------------------------------
- --------
SmithKline Beecham plc 13,447
166,089
- ----------------------------------------------------------------------------------------------------------------
- --------
Total Renal Care Holdings, Inc. (7) 3,000
117,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Veterinary Centers of America, Inc. (7) 2,300
42,262
- ------------------
1,310,850
- ----------------------------------------------------------------------------------------------------------------
- --------------
HOUSEHOLD GOODS - 0.8%
- ----------------------------------------------------------------------------------------------------------------
- --------
Blyth Industries, Inc. (7) 3,600
139,950
- ----------------------------------------------------------------------------------------------------------------
- --------
L'OREAL 250
84,717
- ----------------------------------------------------------------------------------------------------------------
- --------
Premark International, Inc. 5,600
116,900
- ----------------------------------------------------------------------------------------------------------------
- --------
Tupperware Corp. 2,100
107,887
- ------------------
449,454
- ----------------------------------------------------------------------------------------------------------------
- --------------
TOBACCO - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- --------
Imperial Tobacco Group plc, ADR (7) 1,850
21,600
- ----------------------------------------------------------------------------------------------------------------
- --------
PT Gudang Garam 9,000
35,946
- ------------------
57,546
- ----------------------------------------------------------------------------------------------------------------
- --------------
ENERGY - 2.6%
- ----------------------------------------------------------------------------------------------------------------
- --------------
ENERGY SERVICES & PRODUCERS - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
Input/Output, Inc. (7) 3,300
98,175
- ----------------------------------------------------------------------------------------------------------------
- --------------
OIL-INTEGRATED - 2.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
Amoco Corp. 2,700
204,525
- ----------------------------------------------------------------------------------------------------------------
- --------
Atlantic Richfield Co. 1,300
172,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Chevron Corp. 5,600
368,200
- ----------------------------------------------------------------------------------------------------------------
- --------
Exxon Corp. 1,600
141,800
- ----------------------------------------------------------------------------------------------------------------
- --------
Mobil Corp. 2,500
291,875
- ----------------------------------------------------------------------------------------------------------------
- --------
Total SA, B Shares 1,641
128,467
- ------------------
1,307,117
- ----------------------------------------------------------------------------------------------------------------
- --------------
FINANCIAL - 5.8%
- ----------------------------------------------------------------------------------------------------------------
- --------------
BANKS - 2.9%
- ----------------------------------------------------------------------------------------------------------------
- --------
Banco Bradesco SA, Preference 9,210,438
79,339
- ----------------------------------------------------------------------------------------------------------------
- --------
Banco Popular Espanol SA 400
76,533
</TABLE>
23 Oppenheimer LifeSpan Funds
<PAGE> 24
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
BANKS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Bangkok Bank Public Co. Ltd. 4,000 $
42,658
- ----------------------------------------------------------------------------------------------------------------
- --------
Bank of Boston Corp. 5,600
358,400
- ----------------------------------------------------------------------------------------------------------------
- --------
BankAmerica Corp. 4,100
375,150
- ----------------------------------------------------------------------------------------------------------------
- --------
Chase Manhattan Corp. (New) 700
60,025
- ----------------------------------------------------------------------------------------------------------------
- --------
HSBC Holdings plc 2,000
40,738
- ----------------------------------------------------------------------------------------------------------------
- --------
Malayan Banking Berhad 8,000
79,156
- ----------------------------------------------------------------------------------------------------------------
- --------
NationsBank Corp. 2,100
197,925
- ----------------------------------------------------------------------------------------------------------------
- --------
PNC Bank Corp. 7,300
264,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Thai Farmers Bank Public Co. Ltd. 4,500
34,405
- ------------------
1,608,954
- ----------------------------------------------------------------------------------------------------------------
- --------------
DIVERSIFIED FINANCIAL - 1.6%
- ----------------------------------------------------------------------------------------------------------------
- --------
Amresco, Inc. (7) 4,900
103,512
- ----------------------------------------------------------------------------------------------------------------
- --------
Crescent Real Estate Equities, Inc. 3,100
129,425
- ----------------------------------------------------------------------------------------------------------------
- --------
First Pacific Co. Ltd. 46,000
63,357
- ----------------------------------------------------------------------------------------------------------------
- --------
Haw Par Brothers International Ltd. 30,000
60,895
- ----------------------------------------------------------------------------------------------------------------
- --------
ING Groep NV 2,552
79,604
- ----------------------------------------------------------------------------------------------------------------
- --------
Nichiei Co. Ltd. 1,300
86,636
- ----------------------------------------------------------------------------------------------------------------
- --------
Oxford Resources Corp., Cl. A (7) 2,800
71,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Perlis Plantations Berhad 20,000
57,388
- ----------------------------------------------------------------------------------------------------------------
- --------
Salomon, Inc. 2,900
130,862
- ----------------------------------------------------------------------------------------------------------------
- --------
Sirrom Capital Corp. 2,800
102,200
- ------------------
885,279
- ----------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE - 1.3%
- ----------------------------------------------------------------------------------------------------------------
- --------
AFLAC, Inc. 3,100
124,387
- ----------------------------------------------------------------------------------------------------------------
- --------
AXA SA 1,714
107,137
- ----------------------------------------------------------------------------------------------------------------
- --------
General Re Corp. 500
73,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Hartford Steam Boiler Inspection & Insurance Co. 2,700
116,437
- ----------------------------------------------------------------------------------------------------------------
- --------
HCC Insurance Holdings, Inc. 2,550
65,025
- ----------------------------------------------------------------------------------------------------------------
- --------
Sumitomo Marine & Fire Insurance Co. 14,000
100,440
- ----------------------------------------------------------------------------------------------------------------
- --------
Travelers/Aetna Property Casualty Corp., Cl. A 4,100
123,000
- ------------------
710,051
- ----------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL - 7.7%
- ----------------------------------------------------------------------------------------------------------------
- --------------
ELECTRICAL EQUIPMENT - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- --------
ABB AG 65
80,039
- ----------------------------------------------------------------------------------------------------------------
- --------
Johnson Electric Holdings Ltd. 35,000
76,497
- ----------------------------------------------------------------------------------------------------------------
- --------
Mabuchi Motor Co. 800
40,795
- ------------------
197,331
- ----------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL MATERIALS - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- --------
Cie de Saint Gobain 250
33,769
- ----------------------------------------------------------------------------------------------------------------
- --------
THK Co. Ltd. 2,000
31,124
- ------------------
64,893
- ----------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL SERVICES - 2.8%
- ----------------------------------------------------------------------------------------------------------------
- --------
Alternative Resources Corp. (7) 2,900
58,362
- ----------------------------------------------------------------------------------------------------------------
- --------
CIBER, Inc. (7) 3,600
127,800
- ----------------------------------------------------------------------------------------------------------------
- --------
Corestaff, Inc. (7) 5,600
142,800
- ----------------------------------------------------------------------------------------------------------------
- --------
Corrections Corp. of America (7) 5,400
140,400
- ----------------------------------------------------------------------------------------------------------------
- --------
HA-LO Industries, Inc. (7) 400
12,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Kurita Water Industries Ltd. 5,000
100,668
- ----------------------------------------------------------------------------------------------------------------
- --------
NGK Spark Plug Co. 6,000
61,720
</TABLE>
24 Oppenheimer LifeSpan Funds
<PAGE> 25
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
INDUSTRIAL SERVICES (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Precision Response Corp. (7) 1,600 $
57,200
- ----------------------------------------------------------------------------------------------------------------
- --------
SGS Societe Generale de Surveillance Holding SA, Series B 30
67,875
- ----------------------------------------------------------------------------------------------------------------
- --------
SITEL Corp. (7) 7,000
138,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Southcorp Holdings Ltd. 29,000
88,311
- ----------------------------------------------------------------------------------------------------------------
- --------
Tetra Tech, Inc. (7) 5,000
111,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Transaction Systems Architects, Inc., Cl. A (7) 4,000
166,000
- ----------------------------------------------------------------------------------------------------------------
- --------
United Waste Systems, Inc. (7) 6,800
233,750
- ------------------
1,506,786
- ----------------------------------------------------------------------------------------------------------------
- --------------
MANUFACTURING - 3.6%
- ----------------------------------------------------------------------------------------------------------------
- --------
AGCO Corp. 4,200
106,575
- ----------------------------------------------------------------------------------------------------------------
- --------
Bic Corp. 700
105,105
- ----------------------------------------------------------------------------------------------------------------
- --------
Canon Sales Co., Inc. 3,000
76,226
- ----------------------------------------------------------------------------------------------------------------
- --------
Case Corp. 2,600
120,900
- ----------------------------------------------------------------------------------------------------------------
- --------
Chicago Miniature Lamp, Inc. (7) 3,200
95,200
- ----------------------------------------------------------------------------------------------------------------
- --------
Deere & Co. 2,600
108,550
- ----------------------------------------------------------------------------------------------------------------
- --------
General Signal Corp. 2,800
114,100
- ----------------------------------------------------------------------------------------------------------------
- --------
Hanson plc, ADR 7,400
47,175
- ----------------------------------------------------------------------------------------------------------------
- --------
Hutchison Whampoa Ltd. 10,000
69,837
- ----------------------------------------------------------------------------------------------------------------
- --------
Ingersoll-Rand Co. 2,900
120,713
- ----------------------------------------------------------------------------------------------------------------
- --------
Komatsu Ltd. 7,000
57,359
- ----------------------------------------------------------------------------------------------------------------
- --------
Mannesmann AG 195
75,796
- ----------------------------------------------------------------------------------------------------------------
- --------
Mark IV Industries, Inc. 2,310
49,954
- ----------------------------------------------------------------------------------------------------------------
- --------
Mitsubishi Heavy Industries Ltd. 7,000
53,851
- ----------------------------------------------------------------------------------------------------------------
- --------
Nippon Electric Glass Co. Ltd. 1,000
15,298
- ----------------------------------------------------------------------------------------------------------------
- --------
NSK Ltd. 7,000
46,404
- ----------------------------------------------------------------------------------------------------------------
- --------
Shinmaywa Industries Ltd. 6,000
51,961
- ----------------------------------------------------------------------------------------------------------------
- --------
Sidel SA 1,200
80,130
- ----------------------------------------------------------------------------------------------------------------
- --------
SMC Corp. 500
32,442
- ----------------------------------------------------------------------------------------------------------------
- --------
Sophus Berendsen AS, Series B 605
74,745
- ----------------------------------------------------------------------------------------------------------------
- --------
Textron, Inc. 2,100
186,375
- ----------------------------------------------------------------------------------------------------------------
- --------
Tyco International Ltd. 2,800
138,950
- ----------------------------------------------------------------------------------------------------------------
- --------
U.S. Filter Corp. (7) 4,750
163,875
- ------------------
1,991,521
- ----------------------------------------------------------------------------------------------------------------
- --------------
TRANSPORTATION - 0.8%
- ----------------------------------------------------------------------------------------------------------------
- --------
Brambles Industries Ltd. 5,000
82,871
- ----------------------------------------------------------------------------------------------------------------
- --------
Hays plc 13,000
109,021
- ----------------------------------------------------------------------------------------------------------------
- --------
PACCAR, Inc. 600
33,450
- ----------------------------------------------------------------------------------------------------------------
- --------
Union Pacific Corp. 1,500
84,188
- ----------------------------------------------------------------------------------------------------------------
- --------
Wisconsin Central Transportation Corp. (7) 3,600
129,600
- ------------------
439,130
- ----------------------------------------------------------------------------------------------------------------
- --------------
TECHNOLOGY - 12.5%
- ----------------------------------------------------------------------------------------------------------------
- --------------
AEROSPACE/DEFENSE - 2.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
General Dynamics Corp. 4,600
315,675
- ----------------------------------------------------------------------------------------------------------------
- --------
Goodrich (B.F.) Co. 5,800
245,775
- ----------------------------------------------------------------------------------------------------------------
- --------
Lockheed Martin Corp. 2,900
259,913
- ----------------------------------------------------------------------------------------------------------------
- --------
McDonnell Douglas Corp. 2,600
141,700
- ----------------------------------------------------------------------------------------------------------------
- --------
Rockwell International Corp. 3,900
214,500
- ----------------------------------------------------------------------------------------------------------------
- --------
TRW, Inc. 2,400
217,200
- ------------------
1,394,763
</TABLE>
25 Oppenheimer LifeSpan Funds
<PAGE> 26
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
COMPUTER HARDWARE - 1.2%
- ----------------------------------------------------------------------------------------------------------------
- --------
Canon, Inc. 5,000 $
95,833
- ----------------------------------------------------------------------------------------------------------------
- --------
Citrix Systems, Inc. (7) 2,200
121,550
- ----------------------------------------------------------------------------------------------------------------
- --------
Dell Computer Corp. (7) 1,200
97,650
- ----------------------------------------------------------------------------------------------------------------
- --------
Gateway 2000, Inc. (7) 1,000
47,063
- ----------------------------------------------------------------------------------------------------------------
- --------
Henry (Jack) & Associates, Inc. 1,400
56,525
- ----------------------------------------------------------------------------------------------------------------
- --------
Network Appliance, Inc. (7) 2,100
73,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Storage Technology Corp. (New) (7) 3,600
153,450
- ------------------
645,571
- ----------------------------------------------------------------------------------------------------------------
- --------------
COMPUTER SOFTWARE - 4.7%
- ----------------------------------------------------------------------------------------------------------------
- --------
Applix, Inc. (7) 2,900
70,325
- ----------------------------------------------------------------------------------------------------------------
- --------
Cambridge Technology Partners, Inc. (7) 5,400
178,200
- ----------------------------------------------------------------------------------------------------------------
- --------
Computer Horizons Corp. (7) 3,900
120,900
- ----------------------------------------------------------------------------------------------------------------
- --------
Cooper & Chyan Technology, Inc. (7) 900
27,563
- ----------------------------------------------------------------------------------------------------------------
- --------
Dendrite International, Inc. (7) 3,100
82,538
- ----------------------------------------------------------------------------------------------------------------
- --------
Electronics for Imaging, Inc. (7) 2,100
151,200
- ----------------------------------------------------------------------------------------------------------------
- --------
EPIC Design Technology, Inc. (7) 3,100
75,950
- ----------------------------------------------------------------------------------------------------------------
- --------
Inso Corp. (7) 1,900
93,575
- ----------------------------------------------------------------------------------------------------------------
- --------
JDA Software Group, Inc. (7) 2,300
79,063
- ----------------------------------------------------------------------------------------------------------------
- --------
McAfee Associates, Inc. (7) 1,612
73,346
- ----------------------------------------------------------------------------------------------------------------
- --------
Medic Computer Systems, Inc. (7) 1,800
50,850
- ----------------------------------------------------------------------------------------------------------------
- --------
MetaTools, Inc. (7) 2,900
55,825
- ----------------------------------------------------------------------------------------------------------------
- --------
National Data Corp. 1,400
57,575
- ----------------------------------------------------------------------------------------------------------------
- --------
NOVA Corp. (7) 2,100
45,675
- ----------------------------------------------------------------------------------------------------------------
- --------
Pegasystems, Inc. (7) 3,000
90,375
- ----------------------------------------------------------------------------------------------------------------
- --------
Project Software & Development, Inc. (7) 4,000
136,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Rational Software Corp. (7) 6,400
245,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Remedy Corp. (7) 2,800
136,500
- ----------------------------------------------------------------------------------------------------------------
- --------
SAP AG, Preference 400
53,706
- ----------------------------------------------------------------------------------------------------------------
- --------
Sapient Corp. (7) 1,900
87,875
- ----------------------------------------------------------------------------------------------------------------
- --------
Scopus Technology, Inc. (7) 2,500
96,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Security Dynamics Technologies, Inc. (7) 1,300
105,625
- ----------------------------------------------------------------------------------------------------------------
- --------
Technology Solutions Co. (7) 1,200
46,650
- ----------------------------------------------------------------------------------------------------------------
- --------
Verilink Corp. (7) 2,900
104,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Veritas Software Corp. (7) 2,700
136,350
- ----------------------------------------------------------------------------------------------------------------
- --------
Viasoft, Inc. (7) 300
14,775
- ----------------------------------------------------------------------------------------------------------------
- --------
Visio Corp. (7) 2,100
96,863
- ----------------------------------------------------------------------------------------------------------------
- --------
Wind River Systems (7) 1,900
80,750
- ------------------
2,594,304
- ----------------------------------------------------------------------------------------------------------------
- --------------
ELECTRONICS - 2.0%
- ----------------------------------------------------------------------------------------------------------------
- --------
Atmel Corp. (7) 300
7,613
- ----------------------------------------------------------------------------------------------------------------
- --------
Bowthorpe plc 11,000
84,367
- ----------------------------------------------------------------------------------------------------------------
- --------
Electrocomponents plc 15,000
101,246
- ----------------------------------------------------------------------------------------------------------------
- --------
Getronics NV 2,400
59,013
- ----------------------------------------------------------------------------------------------------------------
- --------
Intel Corp. 1,000
109,875
- ----------------------------------------------------------------------------------------------------------------
- --------
Keyence Corp. 600
69,632
- ----------------------------------------------------------------------------------------------------------------
- --------
Kyocera Corp. 1,000
66,028
- ----------------------------------------------------------------------------------------------------------------
- --------
Matsushita Electric Industrial Co. 4,000
64,006
- ----------------------------------------------------------------------------------------------------------------
- --------
Matsushita Electric Works Ltd. 5,000
48,356
- ----------------------------------------------------------------------------------------------------------------
- --------
Nitto Denko Corp. 5,000
74,292
</TABLE>
26 Oppenheimer LifeSpan Funds
<PAGE> 27
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
ELECTRONICS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- --------
Samsung Electronics Co., Sponsored GDR (1) 2,400 $
51,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Sony Corp. 1,500
90,074
- ----------------------------------------------------------------------------------------------------------------
- --------
Supertex, Inc. (7) 2,600
58,500
- ----------------------------------------------------------------------------------------------------------------
- --------
TDK Corp. 1,000
58,730
- ----------------------------------------------------------------------------------------------------------------
- --------
Waters Corp. (7) 4,000
124,000
- ------------------
1,067,332
- ----------------------------------------------------------------------------------------------------------------
- --------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.1%
- ----------------------------------------------------------------------------------------------------------------
- --------
Allen Group, Inc. (7) 2,000
31,750
- ----------------------------------------------------------------------------------------------------------------
- --------
Aspect Telecommunications Corp. (7) 3,200
190,400
- ----------------------------------------------------------------------------------------------------------------
- --------
Cable Design Technologies Corp. (7) 2,950
76,700
- ----------------------------------------------------------------------------------------------------------------
- --------
Comverse Technology, Inc. (7) 4,300
150,500
- ----------------------------------------------------------------------------------------------------------------
- --------
DSP Communications, Inc. (7) 4,400
167,200
- ----------------------------------------------------------------------------------------------------------------
- --------
L.M. Ericsson Telephone Co., Cl. B, ADR 3,520
97,240
- ----------------------------------------------------------------------------------------------------------------
- --------
Premisys Communications, Inc. (7) 1,600
80,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Telecom Corp. of New Zealand Ltd. 25,000
129,976
- ----------------------------------------------------------------------------------------------------------------
- --------
Telecom Italia Mobile SpA 19,000
39,282
- ----------------------------------------------------------------------------------------------------------------
- --------
Vitesse Semiconductor Corp. (7) 2,900
92,438
- ----------------------------------------------------------------------------------------------------------------
- --------
Vodafone Group plc 28,000
108,289
- ------------------
1,163,775
- ----------------------------------------------------------------------------------------------------------------
- --------------
UTILITIES - 6.2%
- ----------------------------------------------------------------------------------------------------------------
- --------------
ELECTRIC UTILITIES - 2.6%
- ----------------------------------------------------------------------------------------------------------------
- --------
American Electric Power Co., Inc. 4,600
190,900
- ----------------------------------------------------------------------------------------------------------------
- --------
CalEnergy, Inc. (7) 2,400
69,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Entergy Corp. 8,400
235,200
- ----------------------------------------------------------------------------------------------------------------
- --------
FPL Group, Inc. 5,300
243,800
- ----------------------------------------------------------------------------------------------------------------
- --------
Illinova Corp. 4,000
109,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Kansas City Power & Light Co. 5,000
137,500
- ----------------------------------------------------------------------------------------------------------------
- --------
Texas Utilities Co. 5,100
206,550
- ----------------------------------------------------------------------------------------------------------------
- --------
Veba AG 2,000
106,502
- ----------------------------------------------------------------------------------------------------------------
- --------
Western Resources, Inc. 4,100
123,000
- ------------------
1,422,052
- ----------------------------------------------------------------------------------------------------------------
- --------------
GAS UTILITIES - 2.5%
- ----------------------------------------------------------------------------------------------------------------
- --------
Columbia Gas System, Inc. (The) 3,800
230,850
- ----------------------------------------------------------------------------------------------------------------
- --------
El Paso Natural Gas Co. 4,100
198,850
- ----------------------------------------------------------------------------------------------------------------
- --------
Hong Kong & China Gas Co. Ltd. 39,600
69,651
- ----------------------------------------------------------------------------------------------------------------
- --------
National Fuel Gas Co. 4,100
152,725
- ----------------------------------------------------------------------------------------------------------------
- --------
PanEnergy Corp. 10,900
419,650
- ----------------------------------------------------------------------------------------------------------------
- --------
Questar Corp. 5,700
205,200
- ----------------------------------------------------------------------------------------------------------------
- --------
RWE AG, Preference 1,850
62,341
- ------------------
1,339,267
- ----------------------------------------------------------------------------------------------------------------
- --------------
TELEPHONE UTILITIES - 1.1%
- ----------------------------------------------------------------------------------------------------------------
- --------
Ameritech Corp. 2,200
120,450
- ----------------------------------------------------------------------------------------------------------------
- --------
DDI Corp. 13
97,723
- ----------------------------------------------------------------------------------------------------------------
- --------
GTE Corp. 5,600
235,900
- ----------------------------------------------------------------------------------------------------------------
- --------
NYNEX Corp. 2,800
124,600
- ----------------------------------------------------------------------------------------------------------------
- --------
Telefonica de Espana, ADS 2,000
40,165
- ------------------
618,838
- ------------------
Total Common Stocks (Cost $24,873,763)
30,091,397
</TABLE>
27 Oppenheimer LifeSpan Funds
<PAGE> 28
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES SEE NOTE
1
================================================================================================================
==============
<S> <C> <C> <C>
PREFERRED STOCKS - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- --------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. 1,200 $
138,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Renong Berhad, 4% Irredeemable Cv. Unsec. Loan Stocks (7) 4,400
1,611
- ------------------
Total Preferred Stocks (Cost $116,561)
139,611
<CAPTION>
UNITS
<C> <C> <C>
================================================================================================================
==============
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ----------------------------------------------------------------------------------------------------------------
- --------------
Haw Par Brothers International Ltd. Wts., Exp. 3/01 3,000
2,512
- ----------------------------------------------------------------------------------------------------------------
- --------
Hong Kong & China Gas Co. Ltd. Wts., Exp. 9/97 3,300
1,216
- ----------------------------------------------------------------------------------------------------------------
- --------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01 (3) 250
11,250
- ----------------------------------------------------------------------------------------------------------------
- --------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 100
5,000
- ----------------------------------------------------------------------------------------------------------------
- --------
Renong Berhad Wts., Exp. 2/97 2,750
229
- ----------------------------------------------------------------------------------------------------------------
- --------
Thai Farmers Bank Public Co. Ltd. Wts., Exp. 9/02 (3) 562
--
- ------------------
Total Rights, Warrants and Certificates (Cost $4,043)
20,207
<CAPTION>
FACE
AMOUNT
<C> <C>
================================================================================================================
==============
REPURCHASE AGREEMENT - 7.4%
- ----------------------------------------------------------------------------------------------------------------
- --------------
Repurchase agreement with State Street Bank and Trust Co.,
4.50%, dated 10/31/96, to be repurchased at $4,048,506 on
11/1/96, collateralized by U.S. Treasury Nts., 6.25%-7.75%,
6/30/98-2/15/01, with a value of $4,180,608 (Cost $4,048,000) $ 4,048,000
4,048,000
- ----------------------------------------------------------------------------------------------------------------
- --------
TOTAL INVESTMENTS, AT VALUE (COST $48,787,124) 99.0%
54,254,328
- ----------------------------------------------------------------------------------------------------------------
- --------
OTHER ASSETS NET OF LIABILITIES 1.0
571,013
---------------
- -----------------
NET ASSETS 100.0% $
54,825,341
===============
=================
</TABLE>
1. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established
by the Board of Directors. These securities amount to $631,631 or 1.15%
of the Fund's net assets, at October 31, 1996.
2. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
3. Identifies issues considered to be illiquid. These securities amount
to $243,500 or 0.44% of the Fund's net assets, at October 31, 1996.
4. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
5. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For
units which represent debt securities, face amount disclosed represents
total underlying principal.
6. Represents the current interest rate for a variable rate security.
For credit sensitive notes, the interest rate is dependent on the credit
rating of the issuer.
7. Non-income producing security.
See accompanying Notes to Financial Statements.
28 Oppenheimer LifeSpan Funds
<PAGE> 29
STATEMENT OF INVESTMENTS October 31, 1996
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
================================================================================================================
=======
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- -------
GOVERNMENT AGENCY - 1.4%
- ----------------------------------------------------------------------------------------------------------------
- -------
Federal Home Loan Mortgage Corp.:
Gtd. Multiclass Mtg. Participation Certificates, 6%, 3/1/09 $ 28,330 $
27,563
Gtd. Multiclass Mtg. Participation Certificates, Series 1574,
Cl. PD, 5.50%, 3/15/13 100,000
99,500
Series 1843, Cl. VB, 7%, 4/15/03 20,000
20,194
Series 1849, Cl. VA, 6%, 12/15/10 28,422
27,969
- -----------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 56,930
55,941
6.50%, 4/1/26 49,374
47,244
7%, 4/1/00 98,234
99,019
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 1993-
181, Cl, C, 5.40%, 10/25/02 100,000
99,250
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series 1993-
190, Cl, Z, 5.85%, 7/25/08 47,598
46,922
Series 1994-13, Cl. B, 6.50%, 2/25/09 100,000
96,281
- -----------------
619,883
- ----------------------------------------------------------------------------------------------------------------
- -------
PRIVATE - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- -------
GE Capital Mortgage Securities, Inc., Series-HE2, Cl. A3,
7.30%, 3/25/12 50,000
50,680
- -----------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Series 1996-A,
Cl. A4, 5.85%, 7/15/01 15,000
14,901
- -----------------
65,581
- -----------------
Total Mortgage-Backed Obligations (Cost $679,852)
685,464
================================================================================================================
=======
U.S. GOVERNMENT OBLIGATIONS - 4.7%
- ----------------------------------------------------------------------------------------------------------------
- -------
U.S. Treasury Bonds, 7.50%, 11/15/16 890,000
962,869
- -----------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.75%, 6/30/99 310,000
316,490
7.25%, 8/15/04 390,000
411,815
7.50%, 11/15/01 475,000
502,999
- -----------------
Total U.S. Government Obligations (Cost $2,144,044)
2,194,173
================================================================================================================
=======
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 12.4%
- ----------------------------------------------------------------------------------------------------------------
- -------
BASIC MATERIALS - 1.9%
- ----------------------------------------------------------------------------------------------------------------
- -------
CHEMICALS - 0.7%
- -----------------------------------------------------------------------------------------------------------------
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 20,000
20,263
- -----------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 40,000
43,449
- -----------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec.
Disc. Nts., 7/15/01 50,000
51,750
- -----------------------------------------------------------------------------------------------------------------
ISP Holdings, Inc., 9.75% Sr. Nts., 2/15/02 (1) 42,000
43,365
- -----------------------------------------------------------------------------------------------------------------
LaRoche Industries, Inc., 13% Sr. Sub. Nts., 8/15/04 25,000
27,094
- -----------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts.,
6/1/20 (5) 20,000
24,507
- -----------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (2) 100,000
82,750
</TABLE>
29 Oppenheimer LifeSpan Funds
<PAGE> 30
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -----
<S> <C> <C>
CHEMICALS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 $ 20,000 $ 24,086
- -----------------
317,264
- ----------------------------------------------------------------------------------------------------------------
- -----
METALS - 0.5%
- ---------------------------------------------------------------------------------------------------------------
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 50,000 54,218
- ---------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc., Alabama, 13.50% First Mtg. Nts.,
Series B, 4/15/03 50,000 47,312
- ---------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts.,
12/15/01 25,000 23,375
- ---------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10.50% Sr. Gtd. Nts., Series B, 3/1/02 50,000 56,062
- ---------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 47,750
- -----------------
228,717
- ----------------------------------------------------------------------------------------------------------------
- -----
PAPER - 0.7%
- ---------------------------------------------------------------------------------------------------------------
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 20,000 20,075
- ---------------------------------------------------------------------------------------------------------------
Crown Packaging Holdings Ltd., 0%/12.25% Sr. Sub. Disc.
Nts., Series B, 11/1/03 (2) 100,000 39,500
- ---------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs.,
5/15/05 50,000 54,875
- ---------------------------------------------------------------------------------------------------------------
Georgia-Pacific Corp., 9.85% Credit Sensitive Nts., 6/15/97 (5) 40,000 40,963
- ---------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 50,000 54,375
- ---------------------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 50,000 53,125
- ---------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 50,000 50,000
- -----------------
312,913
- ----------------------------------------------------------------------------------------------------------------
- -----
CONSUMER CYCLICALS - 4.5%
- ----------------------------------------------------------------------------------------------------------------
- -----
AUTOS & HOUSING - 0.3%
- ---------------------------------------------------------------------------------------------------------------
Black & Decker Corp., 6.625% Nts., 11/15/00 20,000 20,092
- ---------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec.
Unsub. Nts., 1/26/01 40,000 39,724
- ---------------------------------------------------------------------------------------------------------------
Electrolux AB, 7.75% Sr. Unsub. Debs., 6/17/97 40,000 40,400
- ---------------------------------------------------------------------------------------------------------------
Venture Holdings Trust, 9.75% Sr. Sub. Nts., 4/1/04 39,000 35,100
- -----------------
135,316
- ----------------------------------------------------------------------------------------------------------------
- -----
LEISURE & ENTERTAINMENT - 1.8%
- ---------------------------------------------------------------------------------------------------------------
American Skiing Corp., 12% Sr. Sub. Nts., 7/15/06 (3) 75,000 76,125
- ---------------------------------------------------------------------------------------------------------------
Argosy Gaming Co., 13.25% First Mtg. Nts., 6/1/04 75,000 72,750
- ---------------------------------------------------------------------------------------------------------------
Bally's Casino Holdings, Inc., Zero Coupon Sr. Disc. Nts.,
8.594%, 6/15/98 (4) 75,000 66,000
- ---------------------------------------------------------------------------------------------------------------
Bally's Park Place Funding, Inc., 9.25% Gtd. First Mtg. Nts.,
3/15/04 100,000 109,750
- ---------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 20,000 20,100
- ---------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 75,000 77,062
- ---------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts.,
8/15/03 (1) 75,000 76,500
- ---------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts.,
1/15/04 25,000 22,750
- ---------------------------------------------------------------------------------------------------------------
GNF Corp., 10.625% Gtd. First Mtg. Nts., Series B, 4/1/03 50,000 55,437
- ---------------------------------------------------------------------------------------------------------------
Marvel III Holdings, Inc., 9.125% Sr. Sec. Nts., Series B,
2/15/98 25,000 11,375
- ---------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 25,000 32,000
- ---------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 31,275
</TABLE>
30 Oppenheimer LifeSpan Funds
<PAGE> 31
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C> <C>
LEISURE & ENTERTAINMENT (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------
Showboat, Inc., 9.25% First Mtg. Bonds, 5/1/08 $ 50,000 $
49,000
- -----------------------------------------------------------------------------------------------------------------
Trump Atlantic City Associates/Trump Atlantic City
Funding, Inc., 11.25% First Mtg. Nts., 5/1/06 50,000
47,500
- -----------------------------------------------------------------------------------------------------------------
Trump's Castle Funding, Inc., 11.75% Mtg. Nts., 11/15/03 50,000
47,500
- -----------------------------------------------------------------------------------------------------------------
Walt Disney Co., 6.375% Sr. Unsec. Bonds, Series A, 3/30/01 25,000
24,970
- -----------------
820,094
- ----------------------------------------------------------------------------------------------------------------
- -------
MEDIA - 1.5%
- -----------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd., 0%/15% Sr. Sec. Disc. Nts.,
11/1/02 (2)(3) 100,000
56,000
- -----------------------------------------------------------------------------------------------------------------
Bell Cablemedia plc, 0%/11.95% Sr. Disc. Nts., 7/15/04 (2) 75,000
62,062
- -----------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000
50,313
- -----------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs.,
11/15/07 (2) 50,000
32,500
- -----------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec.
Disc. Nts., 3/15/04 (2) 50,000
35,313
- -----------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts.,
Series B, 11/1/03 (5) 50,000
51,250
- -----------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred
Coupon Nts., Series B, 2/1/06 (2) 150,000
91,500
- -----------------------------------------------------------------------------------------------------------------
New World Communications Group Holding Corp., Zero
Coupon Sr. Disc. Nts., Series B, 11%, 6/15/99 (4) 125,000
102,500
- -----------------------------------------------------------------------------------------------------------------
Park Broadcasting, Inc., 11.75% Sr. Nts., 5/15/04 (1) 50,000
57,750
- -----------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000
48,750
- -----------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 20,000
20,303
- -----------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec.
Disc. Nts., Series B, 14%, 11/15/99 (4) 100,000
70,000
- -----------------------------------------------------------------------------------------------------------------
Wireless One, Inc., Units (each unit consists of $1,000
principal amount of 0%/13.50% sr. disc. nts., 8/1/06 and one
warrant to purchase 2.274 ordinary shares) (2)(6) 50,000
26,750
- -----------------
704,991
- ----------------------------------------------------------------------------------------------------------------
- -------
RETAIL: GENERAL - 0.7%
- -----------------------------------------------------------------------------------------------------------------
Dayton Hudson Co., 9.40% Debs., 2/15/01 40,000
44,139
- -----------------------------------------------------------------------------------------------------------------
Duane Reade, 12% Sr. Nts., 9/15/02 50,000
48,750
- -----------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 10,000
10,944
- -----------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 50,000
50,625
- -----------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc., 0%/10.75% Jr. Sub. Deferred Coupon
Nts., 11/1/03 (2) 100,000
69,000
- -----------------------------------------------------------------------------------------------------------------
Price/Costco, Inc., 7.125% Sr. Nts., 6/15/05 60,000
59,838
- -----------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 40,000
41,984
- -----------------
325,280
- ----------------------------------------------------------------------------------------------------------------
- -------
RETAIL: SPECIALTY - 0.2%
- -----------------------------------------------------------------------------------------------------------------
Hills Stores Co., 12.50% Sr. Nts., Series B, 7/1/03 50,000
45,500
- -----------------------------------------------------------------------------------------------------------------
Waban, Inc., 11% Sr. Sub. Nts., 5/15/04 50,000
56,375
- -----------------
101,875
- ----------------------------------------------------------------------------------------------------------------
- -------
CONSUMER NON-CYCLICALS - 1.4%
- ----------------------------------------------------------------------------------------------------------------
- -------
FOOD - 0.6%
- -----------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts.,
3/15/04 50,000
48,125
</TABLE>
31 Oppenheimer LifeSpan Funds
<PAGE> 32
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -----
<S> <C> <C>
FOOD (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
Dole Food Co., 6.75% Nts., 7/15/00 $ 40,000 $ 40,247
- ---------------------------------------------------------------------------------------------------------------
Farm Fresh, Inc., 12.25% Sr. Nts., Series A, 10/1/00 50,000 40,000
- ---------------------------------------------------------------------------------------------------------------
Fresh Del Monte Produce NV, 10% Sr. Nts., Series B,
5/1/03 75,000 69,375
- ---------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 15,000 15,435
- ---------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts.,
3/1/06 50,000 53,500
- -----------------
266,682
- ----------------------------------------------------------------------------------------------------------------
- -----
HEALTHCARE/SUPPLIES & SERVICES - 0.6%
- ---------------------------------------------------------------------------------------------------------------
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 45,000 45,564
- ---------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 (1) 75,000 80,625
- ---------------------------------------------------------------------------------------------------------------
Health o meter Products, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. sub. nts., 8/15/02 and
one warrant to purchase 10.96 ordinary shares) (6) 50,000 55,250
- ---------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.625% Sr. Sub. Nts., Series
A, 5/31/02 50,000 51,000
- ---------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts.,
8/15/06 50,000 46,938
- -----------------
279,377
- ----------------------------------------------------------------------------------------------------------------
- -----
HOUSEHOLD GOODS - 0.2%
- ---------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 20,000 21,037
- ---------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,250
- ---------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14.04%, 3/15/98 (4) 50,000 44,313
- -----------------
116,600
- ----------------------------------------------------------------------------------------------------------------
- -----
ENERGY - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- -----
ENERGY SERVICES & PRODUCERS - 0.2%
- ---------------------------------------------------------------------------------------------------------------
Coastal Corp., 8.125% Sr. Nts., 9/15/02 20,000 21,323
- ---------------------------------------------------------------------------------------------------------------
Maxus Energy Corp., 9.875% Nts., 10/15/02 50,000 51,375
- -----------------
72,698
- ----------------------------------------------------------------------------------------------------------------
- -----
OIL-INTEGRATED - 0.2%
- ---------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (7) 55,651 49,730
- ---------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 20,000 20,067
- ---------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 20,000 21,134
- -----------------
90,931
- ----------------------------------------------------------------------------------------------------------------
- -----
FINANCIAL - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- -----
BANKS - 0.2%
- ---------------------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 20,000 19,396
- ---------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 20,000 22,576
- ---------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 20,000 20,084
- ---------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 30,000 30,189
- -----------------
92,245
- ----------------------------------------------------------------------------------------------------------------
- -----
DIVERSIFIED FINANCIAL - 0.6%
- ---------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 20,000 20,763
- ---------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 10,000 10,070
- ---------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 20,000 19,326
- ---------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., 6.05% Gtd. Medium-Term
Nts., Series D, 3/1/01 20,000 19,607
</TABLE>
32 Oppenheimer LifeSpan Funds
<PAGE> 33
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE
1
- ----------------------------------------------------------------------------------------------------------------
- -----------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -----
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 $ 20,000 $
20,130
- ----------------------------------------------------------------------------------------------------------------
- -----
General Motors Acceptance Corp., 5.625% Nts., 2/15/01 50,000
48,308
- ----------------------------------------------------------------------------------------------------------------
- -----
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 75,000
76,219
- ----------------------------------------------------------------------------------------------------------------
- -----
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 20,000
19,978
- ----------------------------------------------------------------------------------------------------------------
- -----
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D,
3/1/99 50,000
52,342
- -----------------
286,743
- ----------------------------------------------------------------------------------------------------------------
- -----------
INSURANCE - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- -----
Cigna Corp., 7.90% Nts., 12/14/98 40,000
41,280
- ----------------------------------------------------------------------------------------------------------------
- -----
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 50,000
52,611
- ----------------------------------------------------------------------------------------------------------------
- -----
Travelers/Aetna Property Casualty Corp., 6.75% Nts.,
4/15/01 20,000
20,197
- -----------------
114,088
- ----------------------------------------------------------------------------------------------------------------
- -----------
INDUSTRIAL - 0.9%
- ----------------------------------------------------------------------------------------------------------------
- -----------
INDUSTRIAL MATERIALS - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- -----
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 60,000
64,050
- ----------------------------------------------------------------------------------------------------------------
- -----------
INDUSTRIAL SERVICES - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- -----
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 (1) 75,000
77,156
- ----------------------------------------------------------------------------------------------------------------
- -----------
MANUFACTURING - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- -----
Alpine Group, Inc., 12.25% Sr. Nts., 7/15/03 25,000
26,438
- ----------------------------------------------------------------------------------------------------------------
- -----
Day International Group, Inc., 11.125% Sr. Sub. Nts.,
Series B, 6/1/05 50,000
52,500
- ----------------------------------------------------------------------------------------------------------------
- -----
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000
52,000
- ----------------------------------------------------------------------------------------------------------------
- -----
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000
53,125
- ----------------------------------------------------------------------------------------------------------------
- -----
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/03 25,000
24,750
- ----------------------------------------------------------------------------------------------------------------
- -----
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 10,000
10,225
- ----------------------------------------------------------------------------------------------------------------
- -----
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000
54,000
- -----------------
273,038
- ----------------------------------------------------------------------------------------------------------------
- -----------
TRANSPORTATION - 0.0%
- ----------------------------------------------------------------------------------------------------------------
- -----
Federal Express Corp., 6.25% Nts., 4/15/98 20,000
20,048
- ----------------------------------------------------------------------------------------------------------------
- -----
Union Pacific Corp., 7% Nts., 6/15/00 20,000
20,391
- -----------------
40,439
- ----------------------------------------------------------------------------------------------------------------
- -----------
TECHNOLOGY - 1.7%
- ----------------------------------------------------------------------------------------------------------------
- -----------
AEROSPACE/DEFENSE - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- -----
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000
51,500
- ----------------------------------------------------------------------------------------------------------------
- -----------
COMPUTER HARDWARE - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- -----
Digital Equipment Corp., 7% Nts., 11/15/97 45,000
45,206
- ----------------------------------------------------------------------------------------------------------------
- -----------
TELECOMMUNICATIONS-TECHNOLOGY - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- -----
Allbritton Communications Co., 9.75% Sr. Sub. Debs.,
Series B, 11/30/07 50,000
46,875
- ----------------------------------------------------------------------------------------------------------------
- -----
American Communications Services, Inc., 0%/13% Sr. Disc.
Nts., 11/1/05 (2) 100,000
57,000
- ----------------------------------------------------------------------------------------------------------------
- -----
Arch Communications Group, Inc., 0%/10.875% Sr. Disc.
Nts., 3/15/08 (2) 100,000
55,500
- ----------------------------------------------------------------------------------------------------------------
- -----
CAI Wireless Systems, Inc., 12.25% Sr. Nts., 9/15/02 50,000
49,250
- ----------------------------------------------------------------------------------------------------------------
- -----
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 50,000
49,375
- ----------------------------------------------------------------------------------------------------------------
- -----
MCI Communications Corp., 7.125% Sr. Nts., 1/20/00 20,000
20,506
</TABLE>
33 Oppenheimer LifeSpan Funds
<PAGE> 34
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Metrocall, Inc., 10.375% Sr. Sub. Nts., 10/1/07 $ 75,000
$ 62,625
- ----------------------------------------------------------------------------------------------------------------
- ------------
MFS Communications Co., Inc., 0%/9.375% Sr. Disc. Nts.,
1/15/04 (2) 75,000
64,031
- ----------------------------------------------------------------------------------------------------------------
- ------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts.,
8/15/04 (2) 100,000
63,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
Paging Network, Inc., 10.125% Sr. Sub. Nts., 8/1/07 50,000
50,438
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr.
Nts., 8/15/06 75,000
76,313
- ----------------------------------------------------------------------------------------------------------------
- ------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (2) 50,000
32,375
9.875% Sr. Nts., 7/1/06 50,000
51,313
- -----------------
679,476
- ----------------------------------------------------------------------------------------------------------------
- ------------------
UTILITIES - 0.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRIC UTILITIES - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Consumers Power Co., 8.75% Mtg. Nts., 2/15/98 20,000
20,542
- ----------------------------------------------------------------------------------------------------------------
- ------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 10,000
10,025
- -----------------
30,567
- ----------------------------------------------------------------------------------------------------------------
- ------------------
GAS UTILITIES - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------
NorAm Energy Corp., 9.875% Nts., 4/15/97 40,000
40,715
- ----------------------------------------------------------------------------------------------------------------
- ------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 70,000
70,301
- ----------------------------------------------------------------------------------------------------------------
- ------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec.
Debs., 2/1/06 25,000
23,738
- -----------------
134,754
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TELEPHONE UTILITIES - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Intermedia Communications, Inc., 13.50% Sr. Nts., Series B,
6/1/05 50,000
57,125
- ----------------------------------------------------------------------------------------------------------------
- ------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 (3) 50,000
50,188
- -----------------
107,313
- -----------------
Total Non-Convertible Corporate Bonds and Notes (Cost $5,702,402)
5,769,313
================================================================================================================
==================
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
IMC Global, Inc., 6.25% Cv. Sub. Debs., 12/1/01
(Cost $108,917) 100,000
117,250
SHARES
================================================================================================================
==================
COMMON STOCKS - 70.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
BASIC MATERIALS - 2.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
CHEMICALS - 1.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Cabot Corp. 500
12,062
- ----------------------------------------------------------------------------------------------------------------
- ------------
Daicel Chemical Industries Ltd. 14,000
70,899
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dexter Corp. 4,600
142,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hoechst AG 1,500
56,328
- ----------------------------------------------------------------------------------------------------------------
- ------------
Millenium Chemicals, Inc. (8) 585
11,846
- ----------------------------------------------------------------------------------------------------------------
- ------------
Potash Corp. of Saskatchewan, Inc. 1,700
120,487
- ----------------------------------------------------------------------------------------------------------------
- ------------
Union Carbide Corp. 3,900
166,237
- -----------------
580,459
- ----------------------------------------------------------------------------------------------------------------
- ------------------
GOLD - 0.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Normandy Mining Ltd. 11,618
15,847
</TABLE>
34 Oppenheimer LifeSpan Funds
<PAGE> 35
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
METALS - 1.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Carpenter Technology Corp. 3,400
$ 110,925
- ----------------------------------------------------------------------------------------------------------------
- ------------
RTZ Corp. plc 4,350
69,631
- ----------------------------------------------------------------------------------------------------------------
- ------------
UCAR International, Inc. (8) 2,100
82,162
- ----------------------------------------------------------------------------------------------------------------
- ------------
UNR Industries, Inc. 27,300
184,275
- ----------------------------------------------------------------------------------------------------------------
- ------------
Western Mining Corp. Holdings Ltd. 9,600
60,372
- -----------------
507,365
- ----------------------------------------------------------------------------------------------------------------
- ------------------
PAPER - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Fort Howard Corp. (8) 4,600
117,875
- ----------------------------------------------------------------------------------------------------------------
- ------------------
CONSUMER CYCLICALS - 13.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
AUTOS & HOUSING - 2.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Autoliv AB 2,200
93,366
- ----------------------------------------------------------------------------------------------------------------
- ------------
Autopistas Concesionaria Espanola SA 4,200
48,268
- ----------------------------------------------------------------------------------------------------------------
- ------------
Black & Decker Corp. 1,900
71,012
- ----------------------------------------------------------------------------------------------------------------
- ------------
Bridgestone Corp. 4,000
67,522
- ----------------------------------------------------------------------------------------------------------------
- ------------
Camden Property Trust 5,100
138,975
- ----------------------------------------------------------------------------------------------------------------
- ------------
Capstone Capital Corp. 6,300
136,237
- ----------------------------------------------------------------------------------------------------------------
- ------------
Groupe SEB SA 500
101,308
- ----------------------------------------------------------------------------------------------------------------
- ------------
Health & Retirement Property Trust 6,800
123,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Honda Motor Co. 3,000
71,743
- ----------------------------------------------------------------------------------------------------------------
- ------------
Lend Lease Corp. Ltd. 5,000
84,814
- ----------------------------------------------------------------------------------------------------------------
- ------------
Meditrust Corp. 3,400
122,400
- ----------------------------------------------------------------------------------------------------------------
- ------------
Rinnai Corp. 5,000
106,823
- ----------------------------------------------------------------------------------------------------------------
- ------------
United Industrial Corp. Ltd. 80,000
66,431
- -----------------
1,232,149
- ----------------------------------------------------------------------------------------------------------------
- ------------------
LEISURE & ENTERTAINMENT - 3.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------
AMR Corp. (8) 1,500
126,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Atlas Air, Inc. (8) 5,700
210,187
- ----------------------------------------------------------------------------------------------------------------
- ------------
CDL Hotels International Ltd. 200,000
103,462
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dover Downs Entertainment, Inc. (8) 4,000
80,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Einstein/Noah Bagel Corp. (8) 2,500
84,062
- ----------------------------------------------------------------------------------------------------------------
- ------------
EMI Group plc 4,000
78,619
- ----------------------------------------------------------------------------------------------------------------
- ------------
Granada Group plc 5,000
72,057
- ----------------------------------------------------------------------------------------------------------------
- ------------
Landry's Seafood Restaurants, Inc. (8) 3,600
73,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
Northwest Airlines Corp., Cl. A (8) 1,700
56,312
- ----------------------------------------------------------------------------------------------------------------
- ------------
Papa John's International, Inc. (8) 2,350
116,912
- ----------------------------------------------------------------------------------------------------------------
- ------------
Piccadilly Cafeterias, Inc. 7,300
63,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
Regal Cinemas, Inc. (8) 5,775
150,150
- ----------------------------------------------------------------------------------------------------------------
- ------------
Swire Pacific Ltd., Cl. B 60,000
84,192
- ----------------------------------------------------------------------------------------------------------------
- ------------
VideoServer, Inc. (8) 3,600
170,550
- ----------------------------------------------------------------------------------------------------------------
- ------------
Wyndham Hotel Corp. (8) 5,000
95,000
- -----------------
1,565,678
- ----------------------------------------------------------------------------------------------------------------
- ------------------
MEDIA - 1.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Elsevier NV 5,000
83,142
- ----------------------------------------------------------------------------------------------------------------
- ------------
Emmis Broadcasting Corp., Cl. A (8) 2,400
87,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Heftel Broadcasting Corp., A Shares (8) 2,200
79,750
- ----------------------------------------------------------------------------------------------------------------
- ------------
Reed International plc 5,000
93,144
- ----------------------------------------------------------------------------------------------------------------
- ------------
Reuters Holdings plc 9,000
112,042
- ----------------------------------------------------------------------------------------------------------------
- ------------
Television Broadcasts Ltd. 19,000
66,591
</TABLE>
35 Oppenheimer LifeSpan Funds
<PAGE> 36
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
MEDIA (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Wolters Kluwer NV 800
$ 102,884
- -----------------
624,553
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RETAIL: GENERAL - 2.8%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dollar Tree Stores, Inc. (8) 2,200
83,050
- ----------------------------------------------------------------------------------------------------------------
- ------------
Eckerd Corp. (8) 3,700
102,675
- ----------------------------------------------------------------------------------------------------------------
- ------------
Federated Department Stores, Inc. (8) 3,500
115,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Marks & Spencer plc 15,000
126,038
- ----------------------------------------------------------------------------------------------------------------
- ------------
Nautica Enterprises, Inc. (8) 6,300
193,725
- ----------------------------------------------------------------------------------------------------------------
- ------------
North Face, Inc. (The) (8) 3,400
68,850
- ----------------------------------------------------------------------------------------------------------------
- ------------
Price/Costco, Inc. (8) 5,100
101,362
- ----------------------------------------------------------------------------------------------------------------
- ------------
St. John Knits, Inc. 3,200
146,400
- ----------------------------------------------------------------------------------------------------------------
- ------------
U.S. Industries, Inc. (8) 4,800
129,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Wolverine World Wide, Inc. 4,900
121,275
- ----------------------------------------------------------------------------------------------------------------
- ------------
Zeneca Group plc 4,250
115,852
- -----------------
1,304,327
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RETAIL: SPECIALTY - 3.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------
adidas AG 480
40,319
- ----------------------------------------------------------------------------------------------------------------
- ------------
Brown Group, Inc. 7,800
160,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
CDW Computer Centers, Inc. (8) 3,350
210,841
- ----------------------------------------------------------------------------------------------------------------
- ------------
Cifra SA de CV, Unsponsored ADR, B Shares (8) 49,000
62,495
- ----------------------------------------------------------------------------------------------------------------
- ------------
Finish Line, Inc., Cl. A (8) 3,300
140,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Jusco Co. 2,000
59,434
- ----------------------------------------------------------------------------------------------------------------
- ------------
Koninklijke Ahold NV 1,733
101,166
- ----------------------------------------------------------------------------------------------------------------
- ------------
New England Business Service, Inc. 5,500
99,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Next plc 14,700
133,571
- ----------------------------------------------------------------------------------------------------------------
- ------------
Regis Corp. of Minnesota 4,500
109,125
- ----------------------------------------------------------------------------------------------------------------
- ------------
Shimamura Co. Ltd. 2,000
73,501
- ----------------------------------------------------------------------------------------------------------------
- ------------
Toys 'R' Us, Inc. (8) 4,000
135,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
U.S. Office Products Co. (8) 5,000
145,000
- -----------------
1,471,077
- ----------------------------------------------------------------------------------------------------------------
- ------------------
CONSUMER NON-CYCLICALS - 9.8%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
BEVERAGES - 0.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Anheuser-Busch Cos., Inc. 6,600
254,100
- ----------------------------------------------------------------------------------------------------------------
- ------------
Embotelladora Andina SA, Sponsored ADR 2,200
75,900
- -----------------
330,000
- ----------------------------------------------------------------------------------------------------------------
- ------------------
EDUCATION - 0.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------
ITT Educational Services, Inc. (8) 2,300
83,662
- ----------------------------------------------------------------------------------------------------------------
- ------------
Learning Tree International, Inc. (8) 2,700
114,075
- -----------------
197,737
- ----------------------------------------------------------------------------------------------------------------
- ------------------
FOOD - 1.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------
American Stores Co. 3,700
153,087
- ----------------------------------------------------------------------------------------------------------------
- ------------
Archer-Daniels-Midland Co. 5,775
125,606
- ----------------------------------------------------------------------------------------------------------------
- ------------
Carrefour Supermarche SA 150
83,307
- ----------------------------------------------------------------------------------------------------------------
- ------------
Danisco AS 1,250
71,623
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dole Food Co. 2,400
93,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Kroger Co. (8) 2,700
120,487
- ----------------------------------------------------------------------------------------------------------------
- ------------
William Morrison Supermarkets plc 31,000
80,769
- -----------------
728,479
</TABLE>
36 Oppenheimer LifeSpan Funds
<PAGE> 37
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
HEALTHCARE/DRUGS - 3.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Astra AB Free, Series A 1,800
$ 82,688
- ----------------------------------------------------------------------------------------------------------------
- ------------
Bristol-Myers Squibb Co. 3,000
317,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Ciba-Geigy AG 105
128,881
- ----------------------------------------------------------------------------------------------------------------
- ------------
Clintrials Research, Inc. (8) 2,900
107,662
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dura Pharmaceuticals, Inc. (8) 3,300
113,850
- ----------------------------------------------------------------------------------------------------------------
- ------------
Glaxo Wellcome plc, Sponsored ADR 4,100
129,150
- ----------------------------------------------------------------------------------------------------------------
- ------------
Jones Medical Industries, Inc. 2,800
121,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
Medicis Pharmaceutical Corp., Cl. A (8) 2,100
105,525
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sandoz AG 105
120,934
- ----------------------------------------------------------------------------------------------------------------
- ------------
Schering AG 1,075
86,119
- ----------------------------------------------------------------------------------------------------------------
- ------------
Takeda Chemical Industries Ltd. 5,000
85,722
- -----------------
1,399,581
- ----------------------------------------------------------------------------------------------------------------
- ------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
CNS, Inc. (8) 4,300
73,100
- ----------------------------------------------------------------------------------------------------------------
- ------------
Columbia/HCA Healthcare Corp. 3,000
107,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Compdent Corp. (8) 2,500
85,937
- ----------------------------------------------------------------------------------------------------------------
- ------------
Luxottica Group SpA, Sponsored ADR 1,000
63,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
National Surgery Centers, Inc. (8) 2,700
72,900
- ----------------------------------------------------------------------------------------------------------------
- ------------
OrNda Healthcorp (8) 4,600
125,350
- ----------------------------------------------------------------------------------------------------------------
- ------------
Pediatrix Medical Group, Inc. (8) 3,900
153,562
- ----------------------------------------------------------------------------------------------------------------
- ------------
Physician Sales & Service, Inc. (8) 6,000
127,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Renal Treatment Centers, Inc. (8) 4,800
128,400
- ----------------------------------------------------------------------------------------------------------------
- ------------
Rural/Metro Corp. (8) 3,400
124,100
- ----------------------------------------------------------------------------------------------------------------
- ------------
SmithKline Beecham plc 14,462
178,626
- ----------------------------------------------------------------------------------------------------------------
- ------------
Total Renal Care Holdings, Inc. (8) 3,300
128,700
- ----------------------------------------------------------------------------------------------------------------
- ------------
Veterinary Centers of America, Inc. (8) 2,500
45,937
- -----------------
1,414,862
- ----------------------------------------------------------------------------------------------------------------
- ------------------
HOUSEHOLD GOODS - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Blyth Industries, Inc. (8) 4,200
163,275
- ----------------------------------------------------------------------------------------------------------------
- ------------
L'OREAL 250
84,717
- ----------------------------------------------------------------------------------------------------------------
- ------------
Premark International, Inc. 5,800
121,075
- ----------------------------------------------------------------------------------------------------------------
- ------------
Tupperware Corp. 2,300
118,162
- -----------------
487,229
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TOBACCO - 0.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Imperial Tobacco Group plc, ADR (8) 2,050
23,935
- ----------------------------------------------------------------------------------------------------------------
- ------------
PT Gudang Garam 9,000
35,946
- -----------------
59,881
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ENERGY - 3.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ENERGY SERVICES AND PRODUCERS - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Input/Output, Inc. (8) 3,600
107,100
- ----------------------------------------------------------------------------------------------------------------
- ------------------
OIL-INTEGRATED - 3.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Amoco Corp. 3,100
234,825
- ----------------------------------------------------------------------------------------------------------------
- ------------
Atlantic Richfield Co. 1,400
185,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Chevron Corp. 5,800
381,350
- ----------------------------------------------------------------------------------------------------------------
- ------------
Exxon Corp. 1,800
159,525
- ----------------------------------------------------------------------------------------------------------------
- ------------
Mobil Corp. 2,500
291,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
Total SA, B Shares 1,641
128,467
- -----------------
1,381,542
</TABLE>
37 Oppenheimer LifeSpan Funds
<PAGE> 38
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
FINANCIAL - 7.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
BANKS - 3.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Banco Bradesco SA, Preference 9,977,974
$ 85,951
- ----------------------------------------------------------------------------------------------------------------
- ------------
Banco Popular Espanol SA 430
82,273
- ----------------------------------------------------------------------------------------------------------------
- ------------
Bangkok Bank Public Co. Ltd. 4,500
47,991
- ----------------------------------------------------------------------------------------------------------------
- ------------
Bank of Boston Corp. 5,900
377,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
BankAmerica Corp. 4,700
430,050
- ----------------------------------------------------------------------------------------------------------------
- ------------
Chase Manhattan Corp. (New) 800
68,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
HSBC Holdings plc 2,400
48,886
- ----------------------------------------------------------------------------------------------------------------
- ------------
Malayan Banking Berhad 8,000
79,156
- ----------------------------------------------------------------------------------------------------------------
- ------------
NationsBank Corp. 2,100
197,925
- ----------------------------------------------------------------------------------------------------------------
- ------------
PNC Bank Corp. 7,700
279,125
- ----------------------------------------------------------------------------------------------------------------
- ------------
Thai Farmers Bank Public Co. Ltd. 5,000
38,228
- -----------------
1,735,785
- ----------------------------------------------------------------------------------------------------------------
- ------------------
DIVERSIFIED FINANCIAL - 2.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Amresco, Inc. (8) 5,500
116,188
- ----------------------------------------------------------------------------------------------------------------
- ------------
Crescent Real Estate Equities, Inc. 3,300
137,775
- ----------------------------------------------------------------------------------------------------------------
- ------------
First Pacific Co. Ltd. 50,000
68,867
- ----------------------------------------------------------------------------------------------------------------
- ------------
Haw Par Brothers International Ltd. 33,000
66,984
- ----------------------------------------------------------------------------------------------------------------
- ------------
ING Groep NV 2,752
85,843
- ----------------------------------------------------------------------------------------------------------------
- ------------
Nichiei Co. Ltd. 1,000
66,643
- ----------------------------------------------------------------------------------------------------------------
- ------------
Oxford Resources Corp., Cl. A (8) 3,100
79,050
- ----------------------------------------------------------------------------------------------------------------
- ------------
Perlis Plantations Berhad 22,500
64,562
- ----------------------------------------------------------------------------------------------------------------
- ------------
Salomon, Inc. 3,200
144,400
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sirrom Capital Corp. 3,200
116,800
- -----------------
947,112
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INSURANCE - 1.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------
AFLAC, Inc. 3,100
124,388
- ----------------------------------------------------------------------------------------------------------------
- ------------
AXA SA 1,800
112,513
- ----------------------------------------------------------------------------------------------------------------
- ------------
General Re Corp. 500
73,625
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hartford Steam Boiler Inspection & Insurance Co. 3,000
129,375
- ----------------------------------------------------------------------------------------------------------------
- ------------
HCC Insurance Holdings, Inc. 3,000
76,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sumitomo Marine & Fire Insurance Co. 15,000
107,614
- ----------------------------------------------------------------------------------------------------------------
- ------------
Travelers/Aetna Property Casualty Corp., Cl. A 4,400
132,000
- -----------------
756,015
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INDUSTRIAL - 10.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRICAL EQUIPMENT - 0.5%
- ----------------------------------------------------------------------------------------------------------------
- ------------
ABB AG 70
86,196
- ----------------------------------------------------------------------------------------------------------------
- ------------
Johnson Electric Holdings Ltd. 35,000
76,497
- ----------------------------------------------------------------------------------------------------------------
- ------------
Mabuchi Motor Co. 900
45,894
- -----------------
208,587
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INDUSTRIAL MATERIALS - 0.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Cie de Saint Gobain 290
39,172
- ----------------------------------------------------------------------------------------------------------------
- ------------
THK Co. Ltd. 3,000
46,685
- -----------------
85,857
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INDUSTRIAL SERVICES - 3.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Alternative Resources Corp. (8) 3,300
66,413
- ----------------------------------------------------------------------------------------------------------------
- ------------
CIBER, Inc. (8) 4,100
145,550
- ----------------------------------------------------------------------------------------------------------------
- ------------
Corestaff, Inc. (8) 6,200
158,100
- ----------------------------------------------------------------------------------------------------------------
- ------------
Corrections Corp. of America (8) 6,200
161,200
</TABLE>
38 Oppenheimer LifeSpan Funds
<PAGE> 39
Statement of Investments (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
INDUSTRIAL SERVICES (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- ------------
HA-LO Industries, Inc. (8) 500
$ 15,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Kurita Water Industries Ltd. 4,000
80,535
- ----------------------------------------------------------------------------------------------------------------
- ------------
NGK Spark Plug Co. 6,000
61,720
- ----------------------------------------------------------------------------------------------------------------
- ------------
Precision Response Corp. (8) 1,900
67,925
- ----------------------------------------------------------------------------------------------------------------
- ------------
SGS Societe Generale de Surveillance Holding SA, Series B 33
74,663
- ----------------------------------------------------------------------------------------------------------------
- ------------
SITEL Corp. (8) 8,400
165,900
- ----------------------------------------------------------------------------------------------------------------
- ------------
Southcorp Holdings Ltd. 33,000
100,492
- ----------------------------------------------------------------------------------------------------------------
- ------------
Tetra Tech, Inc. (8) 6,125
136,281
- ----------------------------------------------------------------------------------------------------------------
- ------------
Transaction Systems Architects, Inc., Cl. A (8) 4,600
190,900
- ----------------------------------------------------------------------------------------------------------------
- ------------
United Waste Systems, Inc. (8) 8,500
292,188
- -----------------
1,717,367
- ----------------------------------------------------------------------------------------------------------------
- ------------------
MANUFACTURING - 4.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------
AGCO Corp. 4,200
106,575
- ----------------------------------------------------------------------------------------------------------------
- ------------
Bic Corp. 800
120,121
- ----------------------------------------------------------------------------------------------------------------
- ------------
Canon Sales Co., Inc. 3,000
76,226
- ----------------------------------------------------------------------------------------------------------------
- ------------
Case Corp. 2,800
130,200
- ----------------------------------------------------------------------------------------------------------------
- ------------
Chicago Miniature Lamp, Inc. (8) 3,600
107,100
- ----------------------------------------------------------------------------------------------------------------
- ------------
Deere & Co. 2,600
108,550
- ----------------------------------------------------------------------------------------------------------------
- ------------
General Signal Corp. 2,600
105,950
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hanson plc, ADR 8,200
52,275
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hutchison Whampoa Ltd. 11,000
76,820
- ----------------------------------------------------------------------------------------------------------------
- ------------
Ingersoll-Rand Co. 2,700
112,388
- ----------------------------------------------------------------------------------------------------------------
- ------------
Komatsu Ltd. 8,000
65,553
- ----------------------------------------------------------------------------------------------------------------
- ------------
Mannesmann AG 210
81,626
- ----------------------------------------------------------------------------------------------------------------
- ------------
Mark IV Industries, Inc. 2,310
49,954
- ----------------------------------------------------------------------------------------------------------------
- ------------
Mitsubishi Heavy Industries Ltd. 7,000
53,851
- ----------------------------------------------------------------------------------------------------------------
- ------------
Nippon Electric Glass Co. Ltd. 3,000
45,894
- ----------------------------------------------------------------------------------------------------------------
- ------------
NSK Ltd. 8,000
53,033
- ----------------------------------------------------------------------------------------------------------------
- ------------
Shinmaywa Industries Ltd. 6,000
51,961
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sidel SA 1,300
86,807
- ----------------------------------------------------------------------------------------------------------------
- ------------
SMC Corp. 500
32,442
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sophus Berendsen AS, Series B 687
84,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
Textron, Inc. 2,200
195,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Tyco International Ltd. 3,200
158,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
U.S. Filter Corp. (8) 5,350
184,575
- -----------------
2,140,826
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TRANSPORTATION - 1.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Brambles Industries Ltd. 6,000
99,446
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hays plc 14,000
117,408
- ----------------------------------------------------------------------------------------------------------------
- ------------
PACCAR, Inc. 800
44,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Union Pacific Corp. 1,600
89,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
Wisconsin Central Transportation Corp. (8) 3,600
129,600
- -----------------
480,854
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TECHNOLOGY - 15.9%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
AEROSPACE/DEFENSE - 3.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------
General Dynamics Corp. 4,700
322,538
- ----------------------------------------------------------------------------------------------------------------
- ------------
Goodrich (B.F.) Co. 6,400
271,200
- ----------------------------------------------------------------------------------------------------------------
- ------------
Lockheed Martin Corp. 2,900
259,913
- ----------------------------------------------------------------------------------------------------------------
- ------------
McDonnell Douglas Corp. 2,800
152,600
</TABLE>
39 Oppenheimer LifeSpan Funds
<PAGE> 40
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
AEROSPACE/DEFENSE (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Rockwell International Corp. 4,200
$ 231,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
TRW, Inc. 2,600
235,300
- -----------------
1,472,551
- ----------------------------------------------------------------------------------------------------------------
- ------------------
COMPUTER HARDWARE - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Canon, Inc. 6,000
114,999
- ----------------------------------------------------------------------------------------------------------------
- ------------
Citrix Systems, Inc. (8) 2,400
132,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dell Computer Corp. (8) 1,000
81,375
- ----------------------------------------------------------------------------------------------------------------
- ------------
Gateway 2000, Inc. (8) 1,000
47,063
- ----------------------------------------------------------------------------------------------------------------
- ------------
Henry (Jack) & Associates, Inc. 1,600
64,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Network Appliance, Inc. (8) 2,400
84,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Storage Technology Corp. (New) (8) 3,800
161,975
- -----------------
686,612
- ----------------------------------------------------------------------------------------------------------------
- ------------------
COMPUTER SOFTWARE - 6.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Applix, Inc. (8) 3,300
80,025
- ----------------------------------------------------------------------------------------------------------------
- ------------
Cambridge Technology Partners, Inc. (8) 4,400
145,200
- ----------------------------------------------------------------------------------------------------------------
- ------------
Computer Horizons Corp. (8) 4,400
136,400
- ----------------------------------------------------------------------------------------------------------------
- ------------
Cooper & Chyan Technology, Inc. (8) 1,000
30,625
- ----------------------------------------------------------------------------------------------------------------
- ------------
Dendrite International, Inc. (8) 3,500
93,188
- ----------------------------------------------------------------------------------------------------------------
- ------------
Electronics for Imaging, Inc. (8) 2,400
172,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
EPIC Design Technology, Inc. (8) 3,700
90,650
- ----------------------------------------------------------------------------------------------------------------
- ------------
Inso Corp. (8) 2,200
108,350
- ----------------------------------------------------------------------------------------------------------------
- ------------
JDA Software Group, Inc. (8) 2,400
82,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
McAfee Associates, Inc. (8) 1,762
80,171
- ----------------------------------------------------------------------------------------------------------------
- ------------
Medic Computer Systems, Inc. (8) 2,000
56,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
MetaTools, Inc. (8) 3,300
63,525
- ----------------------------------------------------------------------------------------------------------------
- ------------
NOVA Corp. (8) 2,400
52,200
- ----------------------------------------------------------------------------------------------------------------
- ------------
National Data Corp. 1,600
65,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
Pegasystems, Inc. (8) 3,300
99,413
- ----------------------------------------------------------------------------------------------------------------
- ------------
Project Software & Development, Inc. (8) 4,500
153,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Rational Software Corp. (8) 7,300
280,138
- ----------------------------------------------------------------------------------------------------------------
- ------------
Remedy Corp. (8) 3,100
151,125
- ----------------------------------------------------------------------------------------------------------------
- ------------
SAP AG, Preference 430
57,734
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sapient Corp. (8) 2,100
97,125
- ----------------------------------------------------------------------------------------------------------------
- ------------
Scopus Technology, Inc. (8) 2,800
107,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
Security Dynamics Technologies, Inc. (8) 1,500
121,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
Technology Solutions Co. (8) 1,400
54,425
- ----------------------------------------------------------------------------------------------------------------
- ------------
Verilink Corp. (8) 3,200
115,200
- ----------------------------------------------------------------------------------------------------------------
- ------------
Veritas Software Corp. (8) 3,000
151,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Viasoft, Inc. (8) 300
14,775
- ----------------------------------------------------------------------------------------------------------------
- ------------
Visio Corp. (8) 2,400
110,700
- ----------------------------------------------------------------------------------------------------------------
- ------------
Wind River Systems (8) 2,100
89,250
- -----------------
2,861,994
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRONICS - 2.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Atmel Corp. (8) 200
5,075
- ----------------------------------------------------------------------------------------------------------------
- ------------
Bowthorpe plc 12,000
92,037
- ----------------------------------------------------------------------------------------------------------------
- ------------
Electrocomponents plc 15,000
101,246
- ----------------------------------------------------------------------------------------------------------------
- ------------
Getronics NV 2,800
68,848
- ----------------------------------------------------------------------------------------------------------------
- ------------
Intel Corp. 1,000
109,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
Keyence Corp. 600
69,632
</TABLE>
40 Oppenheimer LifeSpan Funds
<PAGE> 41
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
ELECTRONICS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Kyocera Corp. 1,000
$ 66,028
- ----------------------------------------------------------------------------------------------------------------
- ------------
Matsushita Electric Industrial Co. 5,000
80,007
- ----------------------------------------------------------------------------------------------------------------
- ------------
Matsushita Electric Works Ltd. 6,000
58,027
- ----------------------------------------------------------------------------------------------------------------
- ------------
Nitto Denko Corp. 5,000
74,292
- ----------------------------------------------------------------------------------------------------------------
- ------------
Samsung Electronics Co., Sponsored GDR (1) 2,700
58,050
- ----------------------------------------------------------------------------------------------------------------
- ------------
Sony Corp. 1,500
90,074
- ----------------------------------------------------------------------------------------------------------------
- ------------
Supertex, Inc. (8) 2,900
65,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
TDK Corp. 1,000
58,730
- ----------------------------------------------------------------------------------------------------------------
- ------------
Waters Corp. (8) 4,500
139,500
- -----------------
1,136,671
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Allen Group, Inc. (8) 2,200
34,925
- ----------------------------------------------------------------------------------------------------------------
- ------------
Aspect Telecommunications Corp. (8) 3,500
208,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Cable Design Technologies Corp. (8) 3,350
87,100
- ----------------------------------------------------------------------------------------------------------------
- ------------
Comverse Technology, Inc. (8) 5,100
178,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
DSP Communications, Inc. (8) 5,100
193,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
L.M. Ericsson Telephone Co., Cl. B, ADR 3,720
102,765
- ----------------------------------------------------------------------------------------------------------------
- ------------
Premisys Communications, Inc. (8) 1,800
90,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Telecom Corp. of New Zealand Ltd. 15,000
77,986
- ----------------------------------------------------------------------------------------------------------------
- ------------
Telecom Italia Mobile SpA 22,000
45,484
- ----------------------------------------------------------------------------------------------------------------
- ------------
Vitesse Semiconductor Corp. (8) 3,300
105,188
- ----------------------------------------------------------------------------------------------------------------
- ------------
Vodafone Group plc 29,000
112,156
- -----------------
1,236,154
- ----------------------------------------------------------------------------------------------------------------
- ------------------
UTILITIES - 7.8%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRIC UTILITIES - 3.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------
American Electric Power Co., Inc. 4,800
199,200
- ----------------------------------------------------------------------------------------------------------------
- ------------
CalEnergy, Inc. (8) 2,500
72,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Entergy Corp. 9,000
252,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
FPL Group, Inc. 5,600
257,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Illinova Corp. 4,400
119,900
- ----------------------------------------------------------------------------------------------------------------
- ------------
Kansas City Power & Light Co. 5,600
154,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
Texas Utilities Co. 5,200
210,600
- ----------------------------------------------------------------------------------------------------------------
- ------------
Veba AG 2,130
113,425
- ----------------------------------------------------------------------------------------------------------------
- ------------
Western Resources, Inc. 4,200
126,000
- -----------------
1,505,225
- ----------------------------------------------------------------------------------------------------------------
- ------------------
GAS UTILITIES - 3.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Columbia Gas System, Inc. (The) 4,000
243,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
El Paso Natural Gas Co. 4,500
218,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hong Kong & China Gas Co. Ltd. 45,600
80,204
- ----------------------------------------------------------------------------------------------------------------
- ------------
National Fuel Gas Co. 4,100
152,725
- ----------------------------------------------------------------------------------------------------------------
- ------------
PanEnergy Corp. 11,800
454,300
- ----------------------------------------------------------------------------------------------------------------
- ------------
Questar Corp. 5,800
208,800
- ----------------------------------------------------------------------------------------------------------------
- ------------
RWE AG, Preference 2,000
67,396
- -----------------
1,424,675
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TELEPHONE UTILITIES - 1.5%
- ----------------------------------------------------------------------------------------------------------------
- ------------
Ameritech Corp. 2,500
136,875
- ----------------------------------------------------------------------------------------------------------------
- ------------
DDI Corp. 13
97,723
- ----------------------------------------------------------------------------------------------------------------
- ------------
GTE Corp. 6,100
256,963
- ----------------------------------------------------------------------------------------------------------------
- ------------
NYNEX Corp. 3,100
137,950
</TABLE>
41 Oppenheimer LifeSpan Funds
<PAGE> 42
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
TELEPHONE UTILITIES (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- ------------
Telefonica de Espana, ADS 2,300
$ 46,189
- -----------------
675,700
- -----------------
Total Common Stocks (Cost $26,926,124)
32,597,726
================================================================================================================
==================
PREFERRED STOCKS - 0.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Renong Berhad, 4% Irredeemable Cv. Unsec. Loan Stocks (8) 5,200
1,904
- ----------------------------------------------------------------------------------------------------------------
- ------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. 1,200
138,000
- -----------------
Total Preferred Stocks (Cost $116,882)
139,904
UNITS
================================================================================================================
==================
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Haw Par Brothers International Ltd. Wts., Exp. 3/01 3,300
2,764
- ----------------------------------------------------------------------------------------------------------------
- ------------
Hong Kong & China Gas Co. Ltd. Wts., Exp. 9/97 3,800
1,400
- ----------------------------------------------------------------------------------------------------------------
- ------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 50
2,500
- ----------------------------------------------------------------------------------------------------------------
- ------------
Renong Berhad Wts., Exp. 2/97 3,250
270
- ----------------------------------------------------------------------------------------------------------------
- ------------
Thai Farmers Bank Public Co. Ltd. Wts., Exp. 9/02 (3) 625
--
- -----------------
Total Rights, Warrants and Certificates (Cost $3,949)
6,934
FACE
AMOUNT
================================================================================================================
==================
REPURCHASE AGREEMENT - 10.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Repurchase agreement with State Street Bank and Trust Co.,
4.50%, dated 10/31/96, to be repurchased at $4,857,607 on 11/1/96,
collateralized by U.S. Treasury Nts., 6.125%-8.875%,
2/15/99-2/15/01, with a value of $5,016,067 (Cost $4,857,000) $ 4,857,000
4,857,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
TOTAL INVESTMENTS, AT VALUE (COST $40,539,170) 99.7%
46,367,764
- ----------------------------------------------------------------------------------------------------------------
- ------------
OTHER ASSETS NET OF LIABILITIES 0.3
158,448
------------
- -----------------
NET ASSETS 100.0%
$ 46,526,212
============
=================
</TABLE>
1. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established
by the Board of Directors. These securities amount to $393,446 or 0.85%
of the Fund's net assets, at October 31, 1996.
2. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
3. Identifies issues considered to be illiquid. These securities amount
to $184,813 or 0.40% of the Fund's net assets, at October 31, 1996.
4. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
5. Represents the current interest rate for a variable rate security.
For credit sensitive notes, the interest rate is dependent on the credit
rating of the issuer.
6. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For
units which represent debt securities, face amount disclosed represents
total underlying principal.
7. Interest or dividend is paid in kind.
8. Non-income producing security.
See accompanying Notes to Financial Statements.
42 Oppenheimer LifeSpan Funds
<PAGE> 43
STATEMENTS OF ASSETS AND LIABILITIES October 31, 1996
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER
LIFESPAN LIFESPAN
LIFESPAN
INCOME BALANCED
GROWTH
FUND FUND
FUND
- ------------------------------------------------
<S> <C> <C>
<C>
ASSETS:
Investments, at value (cost * ) (including repurchase
agreements**) - see accompanying statements $26,271,162 $54,254,328
$46,367,764
Cash 159,343 320,078
98,146
Receivables:
Dividends, interest and principal paydowns 394,275 445,844
243,458
Shares of capital stock sold 29,862 127,173
24,049
Investments sold 7,174 105,792
155,778
- ------------------------------------------------
Total assets 26,861,816 55,253,215
46,889,195
- ------------------------------------------------
LIABILITIES:
Payables and other liabilities:
Dividends 5,197 -
-
Investments purchased - 314,057
304,182
Shares of capital stock redeemed 27,172 50,000
375
Distribution and service plan fees 5,566 11,348
9,910
Transfer and shareholder servicing agent fees 1,765 -
1,427
Custodian fees 18,768 30,896
29,906
Legal and auditing fees 12,745 13,008
13,196
Other 5,988 8,565
3,987
- ------------------------------------------------
Total liabilities 77,201 427,874
362,983
- ------------------------------------------------
NET ASSETS $26,784,615 $54,825,341
$46,526,212
================================================
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock $2,514 $4,604
$3,640
Additional paid-in capital 25,394,222 47,659,769
38,260,329
Undistributed net investment income 11 194,574
171,706
Accumulated net realized gain from investments and foreign
currency transactions 370,133 1,499,219
2,261,956
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 1,017,735 5,467,175
5,828,581
- ------------------------------------------------
NET ASSETS $26,784,615 $54,825,341
$46,526,212
================================================
*Cost $25,253,427 $48,787,124
$40,539,170
================================================
**Repurchase agreements $1,404,000 $4,048,000
$4,857,000
================================================
NET ASSET VALUE PER SHARE:
CLASS A SHARES:
Net asset value and redemption price per share (based on net
assets and shares of capital stock outstanding):
Net assets $26,327,935 $52,103,832
$43,980,330
Shares of capital stock 2,471,146 4,376,638
3,440,864
Price per share $10.65 $11.90
$12.78
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price for each fund) $11.30 $12.63
$13.56
- ------------------------------------------------
CLASS B SHARES:
Net asset value, redemption price and offering price per share (based
on net assets and shares of capital stock outstanding):
Net assets $455,667 $1,893,260
$2,405,006
Shares of capital stock 42,628 158,021
187,750
Price per share $10.69 $11.98
$12.81
- ------------------------------------------------
CLASS C SHARES:
Net asset value, redemption price and offering price per share (based
on net assets and shares of capital stock outstanding):
Net assets $1,013 $828,249
$140,876
Shares of capital stock 95 69,708
11,060
Price per share $10.66 $11.88
$12.74
</TABLE>
See accompanying Notes to Financial Statements.
43 Oppenheimer LifeSpan Funds
<PAGE> 44
STATEMENTS OF OPERATIONS For the Ten Months Ended October 31, 1996(1)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
OPPENHEIMER
LIFESPAN LIFESPAN
LIFESPAN
INCOME BALANCED
GROWTH
FUND FUND
FUND
- ------------------------------------------------
<S> <C> <C>
<C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $560, $8,785
and $6,613, respectively) $1,273,168 $1,467,536
$694,534
Dividends (net of foreign withholding taxes of $760, $9,950
and $8,112, respectively) 230,383 444,888
474,870
- ------------------------------------------------
Total income 1,503,551 1,912,424
1,169,404
- ------------------------------------------------
EXPENSES:
Management fees - Note 4 161,101 344,756
290,999
Distribution and service plan fees - Note 4:
Class A 52,975 98,043
82,572
Class B 2,911 10,171
12,255
Class C 4 2,745
268
Transfer and shareholder servicing agent fees - Note 4 20,248 9,652
14,280
Accounting services fees 35,000 57,500
50,000
Custodian fees and expenses 32,648 67,073
26,768
Legal and auditing fees 20,143 25,443
69,845
Shareholder reports 4,199 5,755
5,398
Directors' fees and expenses - Note 1 2,506 2,606
1,968
Registration and filing fees:
Class A 547 2,059
1,557
Class B 80 415
514
Class C - 249
42
Other 5,098 16,295
2,539
- ------------------------------------------------
Total expenses 337,460 642,762
559,005
- ------------------------------------------------
NET INVESTMENT INCOME 1,166,091 1,269,662
610,399
- ------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments 375,456 1,564,495
2,329,401
Foreign currency transactions - (109,219)
(122,180)
- ------------------------------------------------
Net realized gain 375,456 1,455,276
2,207,221
Net change in unrealized appreciation or depreciation on:
Investments (394,375) 2,176,127
2,508,017
Translation of assets and liabilities denominated in
foreign currencies - (265,460)
(269,797)
- ------------------------------------------------
Net change (394,375) 1,910,667
2,238,220
- ------------------------------------------------
Net realized and unrealized gain (loss) (18,919) 3,365,943
4,445,441
- ------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,147,172 $4,635,605
$5,055,840
================================================
</TABLE>
1. The Funds changed their fiscal year end from December 31 to October 31.
See accompanying Notes to Financial Statements.
44 Oppenheimer LifeSpan Funds
<PAGE> 45
STATEMENTS OF CHANGES IN NET ASSETS For the Ten Months Ended October 31, 1996
and the Eight Months Ended December 31, 1995
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN
INCOME BALANCED
FUND FUND
- -------------------------------------------------------------
1996(2) 1995(1) 1996(2)
1995(1)
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $1,166,091 $793,232 $1,269,662
$868,937
Net realized gain 375,456 159,534 1,455,276
923,770
Net change in unrealized appreciation or depreciation (394,375) 1,412,110 1,910,667
3,556,508
- -------------------------------------------------------------
Net increase in net assets resulting from operations 1,147,172 2,364,876 4,635,605
5,349,215
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income:
Class A (1,164,346) (779,588) (919,554)
(890,951)
Class B (14,052) (1,302) (21,226)
(2,117)
Class C (24) -- (10,575)
--
Distributions from net realized gain:
Class A (63,862) (99,296) (140,249)
(824,982)
Class B (925) (772) (3,811)
(8,662)
Class C (2) -- (1,725)
--
CAPITAL STOCK TRANSACTIONS:
Net increase in net assets resulting from capital stock
- Note 2:
Class A 1,803,488 23,138,358 6,793,292
38,241,838
Class B 264,631 189,259 1,370,222
437,351
Class C 1,000 -- 821,670
- -------------------------------------------------------------
NET ASSETS:
Total increase 1,973,080 24,811,535 12,523,649
42,301,692
Beginning of period 24,811,535 -- 42,301,692
--
- -------------------------------------------------------------
End of period $26,784,615 $24,811,535 $54,825,341
$42,301,692
=============================================================
Undistributed (overdistributed) net investment income $11 $12,342 $194,574
($24,131)
<CAPTION>
OPPENHEIMER
LIFESPAN
GROWTH
FUND
-----------------------------
1996(2) 1995(1)
-----------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $610,399 $450,654
Net realized gain 2,207,221 770,151
Net change in unrealized appreciation or depreciation 2,238,220 3,590,361
-----------------------------
Net increase in net assets resulting from operations 5,055,840 4,811,166
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income:
Class A (289,194) (478,706)
Class B (9,326) (951)
Class C (143) --
Distributions from net realized gain:
Class A (129,620) (680,837)
Class B (4,802) (11,119)
Class C (65) --
CAPITAL STOCK TRANSACTIONS:
Net increase in net assets resulting from capital stock
- Note 2:
Class A 5,139,745 30,735,209
Class B 1,697,392 553,763
Class C 137,860 --
NET ASSETS:
-----------------------------
Total increase 11,597,687 34,928,525
Beginning of period 34,928,525 --
-----------------------------
End of period $46,526,212 $34,928,525
=============================
Undistributed (overdistributed) net investment income $171,706 ($29,003)
</TABLE>
1. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
2. The Funds changed their fiscal year end from December 31 to October 31.
See accompanying Notes to Financial Statements.
45 Oppenheimer LifeSpan Funds
<PAGE> 46
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
CLASS C
----------------------------- -----------------------------
-------------
TEN MONTHS EIGHT MONTHS TEN MONTHS THREE MONTHS
SIX MONTHS
ENDED ENDED ENDED ENDED
ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
OCTOBER 31,
1996(2) 1995(4) 1996(2) 1995(3)
1996(1)(2)
================================================================================================================
====================
<S> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.70 $10.00 $10.74 $10.45
$10.53
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Income (loss) from investment operations:
Net investment income .48 .37 .41 .12
.25
Net realized and unrealized gain (loss) (.02) .73 (.02) .32
.16
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Total income from investment
operations .46 1.10 .39 .44
.41
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.48) (.36) (.41) (.11)
(.25)
Distributions from net realized gain (.03) (.04) (.03) (.04)
(.03)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Total dividends and distributions
to shareholders (.51) (.40) (.44) (.15)
(.28)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Net asset value, end of period $10.65 $10.70 $10.69 $10.74
$10.66
===============================================================================
================================================================================================================
====================
TOTAL RETURN, AT NET ASSET VALUE(5) 4.45% 11.22% 3.69% 4.30%
3.96%
================================================================================================================
====================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $26,328 $24,619 $456 $192
$1
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Average net assets (in thousands) $25,463 $22,128 $350 $107
$1
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Ratios to average net assets (annualized):
Net investment income 5.43% 5.35% 4.93% 5.23%
4.68%
Expenses 1.56% 1.50% 2.31% 2.25%
2.25%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Portfolio turnover rate(6) 75.3% 45.8% 75.3% 45.8%
75.3%
Average brokerage commission rate(7) $0.0694 -- $0.0694 --
$0.0694
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31,
1996.
2. The Fund changed its fiscal year end from December 31 to October 31. On
March 18, 1996, OppenheimerFunds, Inc. became the investment adviser to the
Fund.
3. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
4. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1996 were $19,773,295 and $17,995,443,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
46 Oppenheimer LifeSpan Funds
<PAGE> 47
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
CLASS C
----------------------------- -----------------------------
-------------
TEN MONTHS EIGHT MONTHS TEN MONTHS THREE MONTHS
SIX MONTHS
ENDED ENDED ENDED ENDED
ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
OCTOBER 31,
1996(2) 1995(4) 1996(2) 1995(3)
1996(1)(2)
================================================================================================================
====================
<S> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.05 $10.00 $11.16 $10.95
$11.74
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Income from investment operations:
Net investment income .29 .24 .20 .05
.13
Net realized and unrealized gain .81 1.29 .82 .45
.24
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Total income from investment
operations 1.10 1.53 1.02 .50
.37
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.25) (.17) (.06)
(.20)
Distributions from net realized gain (.03) (.23) (.03) (.23)
(.03)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Total dividends and distributions
to shareholders (.25) (.48) (.20) (.29)
(.23)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Net asset value, end of period $11.90 $11.05 $11.98 $11.16
$11.88
===============================================================================
================================================================================================================
====================
TOTAL RETURN, AT NET ASSET VALUE(5) 10.04% 15.33% 9.22% 4.49%
3.21%
================================================================================================================
====================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $52,104 $41,861 $1,893 $441
$828
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Average net assets (in thousands) $47,116 $37,417 $1,225 $247
$551
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Ratios to average net assets (annualized):
Net investment income 3.15% 3.47% 2.41% 3.01%
2.53%
Expenses 1.56% 1.55% 2.32% 2.30%
2.27%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Portfolio turnover rate(6) 61.0% 76.3% 61.0% 76.3%
61.0%
Average brokerage commission rate(7) $0.0078 -- $0.0078 --
$0.0078
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31,
1996.
2. The Fund changed its fiscal year end from December 31 to October 31. On
March 18, 1996, OppenheimerFunds, Inc. became the investment adviser to the
Fund.
3. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
4. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1996 were $35,034,336 and $27,288,614,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
47 Oppenheimer LifeSpan Funds
<PAGE> 48
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
CLASS C
----------------------------- -----------------------------
-------------
TEN MONTHS EIGHT MONTHS TEN MONTHS THREE MONTHS
SIX MONTHS
ENDED ENDED ENDED ENDED
ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
OCTOBER 31,
1996(2) 1995(4) 1996(2) 1995(3)
1996(1)(2)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
<S> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.39 $10.00 $11.47 $11.14
$12.49
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Income from investment operations:
Net investment income .18 .16 .08 .03
.11
Net realized and unrealized gain 1.34 1.63 1.36 .56
.27
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Total income from investment
operations 1.52 1.79 1.44 .59
.38
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.09) (.17) (.06) (.03)
(.09)
Distributions from net realized gain (.04) (.23) (.04) (.23)
(.04)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Total dividends and distributions
to shareholders (.13) (.40) (.10) (.26)
(.13)
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Net asset value, end of period $12.78 $11.39 $12.81 $11.47
$12.74
===============================================================================
================================================================================================================
====================
TOTAL RETURN, AT NET ASSET VALUE(5) 13.37% 18.02% 12.58% 5.34%
3.04%
================================================================================================================
====================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $43,980 $34,368 $2,405 $561
$141
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Average net assets (in thousands) $39,576 $29,046 $1,475 $230
$54
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Ratios to average net assets (annualized):
Net investment income 1.81% 2.32% 1.11% 1.70%
1.32%
Expenses 1.61% 1.55% 2.37% 2.30%
2.43%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Portfolio turnover rate(6) 64.2% 71.8% 64.2% 71.8%
64.2%
Average brokerage commission rate(7) $0.0059 -- $0.0059 --
$0.0059
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31,
1996.
2. The Fund changed its fiscal year end from December 31 to October 31. On
March 18, 1996, OppenheimerFunds, Inc. became the investment adviser to the
Fund.
3. For the period from October 1, 1995 (inception of offering) to December 31,
1995.
4. For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1996 were $29,483,842 and $23,866,392,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
48 Oppenheimer LifeSpan Funds
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer LifeSpan Income Fund, Oppenheimer LifeSpan Balanced Fund and
Oppenheimer LifeSpan Growth Fund (the Funds), are separate series of
Oppenheimer Series Fund, Inc. (the Company), a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. On August 15, 1996, the Board of Directors elected to
change the fiscal year end of the Funds from December 31 to October 31.
Accordingly, these financial statements include information for the ten
month period from January 1, 1996 to October 31, 1996. Until March 18,
1996, the Funds were named CMIA LifeSpan Diversified Income Account, CMIA
LifeSpan Balanced Account and CMIA LifeSpan Capital Appreciation Account,
and the Company was named Connecticut Mutual Investment Accounts, Inc. On
January 27, 1996, the policyholders of Connecticut Mutual Life Insurance
Company (CML) approved a merger of CML with Massachusetts Mutual Life
Insurance Company (MML). In line with this change, effective March 1, 1996,
OppenheimerFunds, Inc. (the Manager) became the adviser of the Company. The
Funds' investment objectives are as follows:
OPPENHEIMER LIFESPAN INCOME FUND seeks a high level of current income, with
opportunities for capital appreciation. It invests in a strategically
allocated portfolio consisting primarily of bond instruments.
OPPENHEIMER LIFESPAN BALANCED FUND seeks a blend of capital appreciation and
income. It invests in a strategically allocated portfolio of stocks and
bonds with a slightly stronger emphasis on stocks.
OPPENHEIMER LIFESPAN GROWTH FUND seeks long-term capital appreciation. It
invests in a strategically allocated portfolio consisting primarily of
stocks.
The Funds offer Class A, Class B and Class C shares. Class A shares are
sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All three classes of shares
have identical rights to earnings, assets and voting privileges, except that
each class has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with respect
to matters affecting a single class. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The
following is a summary of significant accounting policies consistently
followed by the Funds.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities
for which such information is regularly reported are valued at the last sale
price of the day or, in the absence of sales, at values based on the closing
bid or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Directors. Such securities which
cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by
the Board of Directors to determine fair value in good faith. Short-term
"money market type" debt securities having a remaining maturity of 60 days
or less are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the Funds' Statements of Operations.
REPURCHASE AGREEMENTS. The Funds require the custodian to take possession,
to have legally segregated in the Federal Reserve Book Entry System or to
have segregated within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value of the underlying
securities is required to be at least 102% of the resale price at the time
of purchase. If the seller of the agreement defaults and the value of the
collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Funds may be delayed or
limited.
49 Oppenheimer LifeSpan Funds
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion
of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
DIRECTORS' FEES AND EXPENSES. The Funds have adopted a nonfunded retirement
plan for the Funds' independent directors. Benefits are based on years of
service and fees paid to each director during the years of service.
FEDERAL TAXES. Each Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain (loss) was recorded by
the Funds. In addition, to properly reflect foreign currency loss in the
components of capital, foreign exchange loss determined according to U.S.
federal income tax rules has been reclassified from accumulated net realized
gain to undistributed net investment income as follows:
<TABLE>
<S> <C>
LifeSpan Balanced Fund . . . . . . . $50,483
LifeSpan Growth Fund . . . . . . . . $60,004
</TABLE>
During the period ended October 31, 1996, the Funds also adjusted the
classification of net investment income and capital gain (loss) to reflect
other differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Changes in
classification during the period ended October 31, 1996 are shown below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Adjustments for the Period Ended October 31, 1996
- ----------------------------------------------------------------------------------------
Undistributed Net Investment Income Accumulated Net Realized Gain on
Investments
- ----------------------------------------------------------------------------------------------------------------
- ------
<S> <C> <C>
LifeSpan Balanced Fund $(49,119) $49,119
- ----------------------------------------------------------------------------------------------------------------
- ------
LifeSpan Growth Fund $(51,023) $51,023
- ----------------------------------------------------------------------------------------------------------------
- ------
</TABLE>
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an identified
cost basis, which is the same basis used for federal income tax purposes.
Interest on payment-in-kind debt instruments is accrued as income at the
coupon rate and a market adjustment is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
2. SHARES OF CAPITAL STOCK
Each Fund has authorized 450 million shares of $0.001 par value capital
stock. Transactions in shares of capital stock were as follows:
50 Oppenheimer LifeSpan Funds
<PAGE> 51
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SHARES OF CAPITAL STOCK (continued)
<TABLE>
<CAPTION>
OPPENHEIMER LIFESPAN INCOME FUND
TEN MONTHS ENDED OCTOBER 31, 1996(2) PERIOD ENDED DECEMBER 31,
1995(1)
------------------------------------
- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 146,543 $1,546,169 2,218,682
$22,279,583
Dividends and distributions reinvested 112,062 1,180,611 82,386
860,578
Redeemed (88,357) (923,292) (170)
(1,803)
--------- ----------- -------------
- ------------
Net increase 170,248 $1,803,488 2,300,898
$23,138,358
========= =========== =============
============
Class B:
Sold 23,725 $ 253,904 17,728 $
187,546
Dividends and distributions reinvested 1,286 13,606 194
2,074
Redeemed (271) (2,879) (34)
(361)
--------- ----------- -------------
- ------------
Net increase 24,740 $ 264,631 17,888 $
189,259
========= =========== =============
============
Class C:
Sold 95 $ 1,000 -- $
--
Dividends and distributions reinvested -- -- --
--
Redeemed -- -- --
--
--------- ----------- -------------
- ------------
Net increase 95 $ 1,000 -- $
--
========= =========== =============
============
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER LIFESPAN BALANCED FUND
TEN MONTHS ENDED OCTOBER 31, 1996(2) PERIOD ENDED DECEMBER 31,
1995(1)
------------------------------------
- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 591,611 $ 6,806,310 3,635,283
$36,581,861
Dividends and distributions reinvested 90,394 1,056,157 156,931
1,714,405
Redeemed (92,638) (1,069,175) (4,943)
(54,428)
------------ ------------ ------------
- ------------
Net increase 589,367 $ 6,793,292 3,787,271
$38,241,838
============ ============ ============
============
Class B:
Sold 118,679 $ 1,371,576 38,550 $
427,035
Dividends and distributions reinvested 2,108 24,736 939
10,442
Redeemed (2,244) (26,090) (11)
(126)
----------- ------------ ------------
- ------------
Net increase 118,543 $ 1,370,222 39,478 $
437,351
=========== ============ ============
============
Class C:
Sold 68,739 $ 810,364 -- $
--
Dividends and distributions reinvested 1,054 12,284 --
--
Redeemed (85) (978) --
--
----------- ------------ ------------
- ------------
Net increase 69,708 $ 821,670 -- $
--
=========== ============ ============
============
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER LIFESPAN GROWTH FUND
TEN MONTHS ENDED OCTOBER 31, 1996(2) PERIOD ENDED DECEMBER 31,
1995(1)
------------------------------------
- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 424,020 $5,146,023 2,945,839
$29,923,957
Dividends and distributions reinvested 33,590 418,507 103,358
1,158,877
Redeemed (35,427) (424,785) (30,516)
(347,625)
---------- ----------- -----------
- ------------
Net increase 422,183 $5,139,745 3,018,681
$30,735,209
========== =========== ===========
============
Class B:
Sold 154,309 $1,879,045 47,790 $
541,170
Dividends and distributions reinvested 1,098 13,603 1,104
12,593
Redeemed (16,551) (195,256) --
--
---------- ----------- -----------
- ------------
Net increase 138,856 $1,697,392 48,894 $
553,763
========== =========== ===========
============
Class C:
Sold 11,124 $ 138,640 -- $
--
Dividends and distributions reinvested 16 198 --
--
Redeemed (80) (978) --
--
---------- ----------- -----------
- ------------
Net increase 11,060 $ 137,860 -- $
--
========== =========== ===========
============
</TABLE>
1. For the period from May 1, 1995 (commencement of operations) to December
31, 1995 for Class A shares and for the period from October 1, 1995 (inception
of offering) to December 31, 1995 for Class B shares.
2. For the ten months ended October 31, 1996 for Class A and Class B shares
and for the period from May 1, 1996 (inception of offering) to October 31, 1996
for Class C shares. The Funds changed their fiscal year end from December 31
to October 31.
51 Oppenheimer LifeSpan Funds
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS (Continued)
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1996, net unrealized appreciation on investments consisted of
the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
LifeSpan Income Fund LifeSpan Balanced Fund LifeSpan
Growth Fund
- ----------------------------------------------------------------------------------------------------------------
- ---------
<S> <C> <C>
<C>
Gross appreciation $1,262,426 $6,347,922
$6,646,045
- ----------------------------------------------------------------------------------------------------------------
- ---------
Gross depreciation 244,691 880,718
817,451
- ----------------------------------------------------------------------------------------------------------------
- ---------
Net unrealized appreciation $1,017,735 $5,467,204
$5,828,594
- ----------------------------------------------------------------------------------------------------------------
- ---------
</TABLE>
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreements with the Funds. For Oppenheimer LifeSpan Income Fund,
the agreement provides for a fee of 0.75% on the first $250 million of the
Fund's average annual net assets and 0.65% on net assets over $250 million.
For Oppenheimer LifeSpan Balanced Fund and Oppenheimer LifeSpan Growth Fund,
the fees are 0.85% on the first $250 million of average annual net assets
and 0.75% on net assets in excess of $250 million. Prior to March 1, 1996,
management fees were paid to G.R. Phelps & Co., Inc. (the former Manager).
The Manager has agreed to reimburse the Funds if aggregate expenses (with
specified exceptions) exceed the most stringent applicable regulatory limit
on Fund expenses. Effective July 1, 1996, the Manager acts as the
accounting agent for each Fund at an annual fee of $15,000, plus
out-of-pocket costs and expenses reasonably incurred. Prior to July 1,
accounting services fees were paid to State Street Bank and Trust Company.
For Oppenheimer LifeSpan Income Fund, the Manager has entered into a
sub-advisory agreement with BEA Associates (the Sub-Adviser) to assist in
the selection of portfolio investments for the components of the Fund. For
these services, the Manager pays BEA Associates negotiated fees. For
Oppenheimer LifeSpan Balanced Fund and Oppenheimer LifeSpan Growth Fund, the
Manager has entered into sub-advisory agreements with three Sub-Advisers to
assist in the selection of portfolio investments for the components of the
Funds. For these services, the Manager pays Babson-Stewart Ivory
International, BEA Associates and Pilgrim Baxter & Associates (the
Sub-Advisers) negotiated fees.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Funds, and for other registered
investment companies. OFS's total costs of providing such services are
allocated ratably to these companies.
For the period ended October 31, 1996, (1) commissions (sales charges paid
by investors) on sales of Class A shares, (2) commission amounts retained by
OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as
general distributor, and by affiliated broker/dealers, (3) sales charges
advanced to broker/dealers by OFDI on sales of the Funds' Class B and Class
C shares, and (4) sales charges advanced to affiliated broker/dealers were
as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
(1) Commissions (2) Commissions Retained (3) Sales Charges Advanced (4) Paid
to Affiliates
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C> <C> <C>
<C>
LifeSpan Income Fund, Class A $29,128 $21,324
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Class B $4,276
$4,276
- ----------------------------------------------------------------------------------------------------------------
- ------------------
LifeSpan Balanced Fund, Class A $84,043 $67,555
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Class B $30,673
$28,990
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Class C $7,796
$7,796
- ----------------------------------------------------------------------------------------------------------------
- ------------------
LifeSpan Growth Fund, Class A $103,757 $69,069
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Class B $41,465
$34,992
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Class C $989
- -
- ----------------------------------------------------------------------------------------------------------------
- ------------------
</TABLE>
The Funds have adopted Service Plans for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service
and maintenance of accounts that hold Class A shares. Reimbursement is made
52 Oppenheimer LifeSpan Funds
<PAGE> 53
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
quarterly at an annual rate that may not exceed 0.25% of the average annual
net assets of Class A shares of the Funds. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their
customers that hold Class A shares. During the period ended October 31,
1996, OFDI made payments to an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses as follows:
<TABLE>
<S> <C>
LifeSpan Income Fund . . . . . . . $39,635
LifeSpan Balanced Fund . . . . . . $74,687
LifeSpan Growth Fund . . . . . . . $61,978
</TABLE>
The Funds have adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the
Plans, the Funds pay OFDI an annual asset-based sales charge of 0.75% per
year on Class B and Class C shares, as compensation for sales commissions
paid from their own resources at the time of sale and associated financing
costs. OFDI also receives a service fee of 0.25% per year as compensation
for costs incurred in connection with the personal service and maintenance
of accounts that hold shares of the Funds, including amounts paid to
brokers, dealers, banks and other financial institutions. Both fees are
computed on the average annual net assets of Class B and Class C shares,
determined as of the close of each regular business day. If the Plans are
terminated by the Funds, the Board of Directors may allow the Funds to
continue payments of the asset-based sales charge to OFDI for certain
expenses they incurred before the Plans were terminated. During the period
ended October 31, 1996, OFDI retained certain amounts as compensation for
Class B and Class C personal service and maintenance expenses. These
amounts, as well as unreimbursed expenses incurred by OFDI at October 31,
1996 are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Amount Retained by OFDI Unreimbursed
Expenses
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund, Class B $2,102
$2,575
- ---------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class B $7,774
$18,853
- ---------------------------------------------------------------------------------------------------------
Class C $2,733
$13,272
- ---------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class B $9,324
$42,580
- ---------------------------------------------------------------------------------------------------------
Class C --
$2,054
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<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
<PAGE>
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
A-1
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 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
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, NY 10036
i:\legal\prosp\305sai#3
